Righthaven Benchslapped in Ruling Saying It Lacks Standing–Righthaven v. Democratic Underground

By Eric Goldman

Righthaven LLC v. Democratic Underground, LLC, 2:10-cv-01356-RLH-GWF (D. Nev. June 14, 2011)

This is another stinging defeat for Righthaven. The judge emphatically rejects Righthaven’s substantive arguments about its copyright assignment from Stephens Media and harshly criticizes Righthaven’s procedural conduct.

Regarding the assignment, the court focuses on the contract’s effect: it was designed to give Righthaven only the right to sue and get the resulting cash, but Stephens Media retained all other control over the copyrighted asset. Thus, Stephens Media never assigned any portion of a Section 106 copyright right.

The opinion indicates that Stephens Media and Righthaven could fix this by giving Righthaven more control over the asset. I believe the contract amendment tried to do that, but it may not have gone far enough. Judge Hunt intimates as much, saying he “expresses doubt that these seemingly cosmetic adjustments change the nature and practical effect of the SAA.” I remain skeptical that Stephens Media wants to give up enough control to Righthaven to satisfy the standing requirements.

The judge then indicates that Righthaven can’t fix the existing contract defect for the existing litigation because standing is measured when the complaint is filed. This could lead to dismissal of all pending Review-Journal litigation and, depending on the exact wording of the MediaNews contract, possibly the Denver Post litigation as well.

If Righthaven can’t get this opinion reversed on appeal and other judges defer to this opinion on the standing question (which I think it likely), Righthaven may be back at square one with its entire business. Thus, I assume Righthaven will appeal this decision. However, this is a pretty well-constructed opinion, so Righthaven will have an uphill battle overturning it on appeal. I wonder if the other pending cases will go on hold until an appeal is resolved.

Democratic Underground’s declaratory judgment suit of non-infringement also survives dismissal. In doing so, the judge cites an unnecessarily inflammatory editorial posted by former Las Vegas Review-Journal publisher Sherman Frederick, who threatened to introduce his “little friend called Righthaven” to people who republished Las Vegas Review-Journal content. This quote invokes a famous line from the climatic scene in the film Scarface, where Al Pacino’s “little friend” was an M-16A1 machine gun with a grenade launcher. I have always been baffled by the implicit symbolism of Frederick’s analogy. Did he really mean to analogize Righthaven to a murderous weapon used by a drug lord to mow down his rivals in an ultimately futile last-stand?

In addition to the adverse substantive ruling, the judge criticized Righthaven unusually harshly in this opinion. The “high”lights:

* the judge rejects Righthaven’s basic substantive argument as “flagrantly false—to the point that the claim is disingenuous, if not outright deceitful.”

* the judge emphatically rejects Righthaven’s attempt to argue that other judges had already upheld the copyright assignment, saying that “at best, this argument is disingenuous.” Righthaven took the very aggressive position of citing one of the judge’s earlier rulings back to him–and he seemed pretty angry that Righthaven sandbagged him in the prior ruling and then tried to estop him.

* the judge summarizes the overall ruling by saying “the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court.”

* the judge then goes on to lambaste Righthaven for not identifying Stephens Media as an interested party in the lawsuit, calling that omission “brazen” and “egregious.”

The judge requires Righthaven to explain why the judge should not order sanctions. Given the tenor of this opinion, it seems like a sanctions order is inevitable. The opinion also hints that Democratic Underground may get its attorneys’ fees. All told, this case is probably going to cost Righthaven dearly. And after a ruling like this, Righthaven’s entire enterprise is on the ropes.

Other coverage from EFF (rightly touting its success) and Steve Green/Las Vegas Sun. In a rare move, the Las Vegas Review-Journal covered its own story, and it quotes some reactions from Righthaven. You can read it at http://www.lvrj.com/news/federal-judge-rules-las-vegas-firm-can-t-sue-over-copyright-infringement-123882024.html — but do you even want to give them an extra page impression?

My prior blog posts on Righthaven:

* Another Defense-Favorable Righthaven Ruling–Righthaven v. Choudhry

* Republishing Entire Newspaper Story is Fair Use–Righthaven v. CIO

* Blogger Wins Fair Use Defense…On a Motion to Dismiss!–Righthaven v. Realty One