Friday, May 10, 2013
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Ninth Circuit Says Alleged Copyright ‘Troll’ Lacked Standing
By KENNETH OFGANG, Staff Writer
A copyright owner may not assign a bare right to sue infringers to another party while retaining other rights in the material, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The court upheld the dismissal of two suits by Righthaven LLC, a company formed by Las Vegas attorney Steven Gibson to engage in what critics call “copyright trolling”—searching the Internet for possible infringement of copyrighted content, then bringing lawsuits based upon purported assignments of the rights in that material.
Yesterday’s ruling came on consolidated appeals by Righthaven in two cases in which separate judges in the District of Nevada ruled that the company lacked standing because the substantive rights in the copyrighted articles still belonged to the assignor, Stephens Media LLC, owner of the Las Vegas Review-Journal.
Judge Richard Clifton wrote for the Ninth Circuit:
“Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg. But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so. Before us is a case about a lawyer who tried to establish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership. Heeding Lincoln’s wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.”
Some Settlements
According to media accounts, Righthaven has sued about 275 alleged infringers, many of whom settled, generally for a few thousand dollars each.
In one of the suits ruled on yesterday, Righthaven claimed that Thomas A. Dibiase, a former federal prosecutor, had infringed a copyrighted Review-Journal article in a post on his blog at nobodycases.com, where he discusses how to prosecute murder cases in which no corpse was ever recovered. In the other case, Righthaven sued Wayne Hoehn, a sports betting enthusiast, for pasting an opinion piece about public pensions into a comment on madjacksports.com, a site to which he frequently posted.
Discovery in the two cases revealed that Righthaven and Stephens had, subsequent to the alleged infringements but before the lawsuits were filed, entered into an agreement assigning Stephens’ rights in the articles to Righthaven, subject to the publishing company’s “rights of reversion.” Discovery further revealed that Righhaven and Stephens had a “strategic alliance agreement” under which Stephens retained all rights to the content of the articles other than the right to sue for infringement, which Righthaven could exercise only with Stephens’ approval, and the parties agreed to split the proceeds of infringement suits evenly.
‘Clarification and Amendment’
After Hoehn and Dibiase moved to dismiss the two suits, Righthaven and Stevens entered into a “clarification and amendment” of their agreement, purporting to make Righthaven the “rightful owner” of the copyrights in the articles.
District Judge Phillip M. Pro ruled for Hoehn, dismissing the action and awarding more than $30,000 in fees and costs. He held that Righthaven lacked standing, and in the alternative that Hoehn’s utilization of the material constituted fair use.
Techdirt.com reported in March that Hoehn had forced Righthaven into receivership, and had moved to seize its purported rights in the Review-Journal’s articles. The matter was resolved when Stephens agreed to “buy back” its copyrights for $80,000, which was added to the $5,000 already in the receivership estate.
Lawyers’ Fees
The estate was then distributed, with $55,000 going to Hoehn’s attorneys, the Randazza Law Group of Las Vegas, with the remainder divided between Hoehn and the receivers, the website reported.
In Dibiase’s case, Senior Judge Roger Hunt found a lack of standing, and ruled for the defendant as well.
Clifton, writing yesterday for the Ninth Circuit, said the district judges ruled correctly as to standing, because the substance of Righthaven’s transactions with Stevens did not amount to a transfer of copyright, regardless of the form.
As long as Righthaven could not “reproduce the works, distribute them, or exploit any other exclusive right under the Copyright Act,” he wrote, all that it had left was a bare right to sue, which the Ninth Circuit has previously held insufficient to confer standing.
The “clarification and amendment” did not improve Righthaven’s position, Clifton went on to say.
Assuming for purposes of argument that any transaction occurring after the filing of the lawsuit could supply jurisdiction that didn’t exist at time of filing, contrary to the general rule, the judge wrote, several features of the amendment—including one requiring Righthaven 30 days’ prior notice before exploiting a work while giving Stephens unilateral rights to repurchase the work from Righthaven for $10-made it clear that Righthaven still did not own any exclusive rights under the Copyright Act.
The court vacated the portion of Pro’s order finding that Hoehn had engaged in fair use. While it was understandable for the judge to reach the merits and thus avoid the need for another appeal if the Ninth Circuit found standing on appeal, Clifton explained, the lack of standing left the court without jurisdiction to rule on the substantive defense.
The appeal was argued by Erik S. Syverson of Miller Barondess, LLP in Los Angeles for Righthaven, Kurt Opsahl of the Electronic Frontier Foundation in San Francisco for DiBiase, and Marc J. Randazza for Hoehn.
The case is Righthaven LLC v. Hoehn, 11-6751.
Copyright 2013, Metropolitan News Company