Recapping Righthaven Developments from the Past Two Weeks

By Eric Goldman

I blogged about Righthaven two weeks ago (“Righthaven Benchslapped in Ruling Saying It Lacks Standing“) and then went offline during a business trip to Russia (I have more to say about that trip shortly, but you can see the photos now). A lot has happened in the intervening two weeks, and this post catches up on the action.

Righthaven v. Hoehn, 2011 WL 2441020 (D. Nev. June 20, 2011)

In the Democratic Underground case, Judge Hunt said that Righthaven lacked standing because it didn’t own or have an exclusive right to the copyright when it filed the complaint. In this ruling Judge Pro, also in the Nevada district, reaches the same conclusion as Judge Hunt. Judge Pro says:

the rights in the copyrighted Work retained by Stephens Media deprive Righthaven of everything except the right to pursue alleged infringers, a right that is still subject to Stephens Media’s oversight

Judge Pro went further than Judge Hunt and rejected the “clarification” amendment between Stephens Media and Righthaven. (Judge Hunt had cast doubt on the amendment’s efficacy in a footnote but resolved the case without reaching the amendment’s validity). Embracing substance over form, Judge Pro says the amendment “provides Righthaven with only an illusory right to exploit or profit from the Work.”

Separately, Judge Pro ruled in favor of Hoehn on fair use. The four factor analysis:

* Nature of use: Hoehn didn’t and couldn’t profit from the article. Plus, Hoehn was facilitating “comment” when “he posted the Work to foster discussion in a specific interactive website forum regarding the recent budget shortfalls facing state governments.”

* Nature of the work: The court says “Roughly eight of the nineteen paragraphs of the Work provide purely factual data, about five are purely creative opinions of the author, and the rest are a mix of factual and creative elements.” This is not enough to consider the work a “purely creative work.” Plus, this factor “is not terribly relevant.”

* Amount used: Hoehn took the whole article but this doesn’t preclude a fair use finding.

* Market effect: Righthaven failed to show any evidence that Hoehn’s republication harmed it. “Merely arguing that because Hoehn replicated the entirety of the Work the market for the Work was diminished is not sufficient to show harm.”

This last point is interesting because fair use is an affirmative defense, so normally the burden is on the defendant to establish the elements. Citing the Ninth Circuit Napster case, the court shifts the burden on the fourth factor to the plaintiff. I think this burden-shift is completely appropriate, especially because everyone (except Righthaven and the newspapers) believe the Righthaven defendants haven’t caused any harm to the newspapers. Kudos to the judge for demanding more than Righthaven bluster. (On that front, check out the EFF’s mockery of Righthaven’s bluster).

Note that Judge Pro didn’t rest his fourth factor analysis on the fact that Righthaven acquired the copyright as Judge Mahan did in the Jama/CIO case. Thus, Judge Pro broadened the bases on which the fourth factor could count against Righthaven.

Judge Pro’s discussion on the second point (nature of the work) has attracted some criticism, perhaps justifiably so. It’s difficult to say that a 19 paragraph editorial doesn’t have the same level of creativity as other highly creative works. I tend not to obsess about the details of any fair use analysis given its nature as an equitable defense. The judge was twisting the analysis to make it clear Righthaven should lose. Denigrating the editorial’s creativity is an awkward way to get there, but it demonstrates that judges aren’t buying what Righthaven is selling.

Overall, Righthaven has lost the following three fair use rulings:

* Realty One. The defendant republished an excerpt, and the court granted the fair use defense on a motion to dismiss.

* Jama/CIO. Full republication of an article qualified as fair use.

* Hoehn. This case also says a full republication is a fair use.

Judge Mahan didn’t grant summary judgment on fair use in the Choudry case but I still think Righthaven has a low chance of winning that case. The VCDL case (discussed in a moment) rejects fair use on a motion to dismiss; we’ll have to see what the judge thinks after the case is more fully developed.

As a jurisprudential corpus, this fair use caselaw is becoming quite defense-favorable. Steve Green revisits the irony:

Thanks to Righthaven, newspapers and other media organizations now have less copyright protection for their hard-earned content than they did just three months ago. And that’s more than a little odd, given Righthaven’s stated mission of protecting newspapers from online content infringers.

Righthaven v. Barham, 2011 WL 2473602 (D. Nev. June 22, 2011) and

Righthaven v. DiBiase, 2:10-cv-01343-RLH-PAL (D. Nev. June 22, 2011) (see a prior ruling in the DiBiase case)

Citing the Democratic Underground and Hoehn cases, Judge Hunt dismisses both cases for Righthaven’s lack of standing. He also dismisses both defendants’ counterclaims against Righthaven because Righthaven isn’t the copyright owner.

Righthaven v. Virginia Citizens Defense League, 2011 WL 2550627 (D. Nev. June 23, 2011)

Judge Navarro rejected a motion to dismiss on personal jurisdiction grounds. I can’t recall Righthaven losing on personal jurisdiction grounds–am I forgetting something?–so that ruling isn’t very surprising.

Her next two rulings indicate that she’s not a fan of using 12(b)(6) motions to clean out bogus cases early. Many judges have differing views/styles about how aggressively they manage their docket. Judge Navarro appears to subscribe to the “better safe than sorry” approach.

Judge Navarro rejected fair use as grounds for a 12(b)(6) dismissal. The Realty One case notwithstanding, it’s rare to win a fair use defense on a motion to dismiss, so Judge Navarro’s caution isn’t unusual. She does give some guidance about her considerations for a summary judgment motion, including a tidbit that “posting the entire article weighs against fair use if it was feasible for Defendants to just post a link on its webpage.” I hope the VCDL defendants will help Judge Navarro understand why a link to the article isn’t always as useful as a republication. See, e.g., Steve Green’s article on FluTracker’s responses to Righthaven’s in terroram campaign.

Judge Navarro also rejects the standing issue as grounds for a 12(b)(6) dismissal. She says “the extent of the assignment is generally best determined through the discovery process.” In a footnote, she acknowledges the Democratic Underground case, which came out after the defendant briefed the case. My guess is that she will be persuaded on summary judgment.

Despite this failed 12(b)(6) motion to dismiss, it seems inevitable that Righthaven’s pending cases will fall like dominoes on the standing ground–if not on 12(b)(6) motions to dismiss, then on summary judgment. Righthaven could amend its agreements with newspapers to fix the standing problem and refile the cases, but this will degrade its already questionable margins. Otherwise, as I mentioned in my Democratic Underground post, losing the standing battle effectively acts as a reset on Righthaven’s entire business.

Assessment

Righthaven’s business is in tatters. Consider:

* Their existing inventory of cases is shrinking rapidly as judges clear their dockets.

* They are rarely expanding their inventory by filing new cases, probably because they have their hands unexpectedly full fighting tooth-and-nail over their existing cases.

* They have completely alienated the district court judges deciding their cases. As Steve Green says, “it appears federal judges don’t appreciate their courtrooms being used as ATM machines by Righthaven.”

* They unquestionably will be writing checks to some defendants in due course, and that’s going to take a huge bite out of their revenues to date.

* Given how amateurish Righthaven looks plus the risk of public relations and legal blowback, I can’t imagine any new newspapers will sign up for their services in the foreseeable future.

* They have been plagued by staff turnover.

* They are potentially going to answer to the professional disciplinary authorities–a risk exacerbated by their harsh benchslap in the Democratic Underground case.

Short of completing a hail mary pass in the Ninth Circuit, there is only one possible endgame for Righthaven, and it won’t be pretty.

Amazingly, Steve Gibson, Righthaven’s CEO, continues to publicly deny that his business is going down the toilet. Watch this hilarious video interview where Gibson characteristically engages in misdirection and tendentious sophistry as the moderator justifiably works him over mercilessly.

Disclosure note: One of my ongoing clients was sued by Righthaven and settled its case.

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