Dec
01
2010

Suing Your Readers for Spite and Profit

Copyright suits final hope or last gasp of print media?

Righthaven LLC has emerged from the ongoing meltdown of the newspaper industry with a new business model: sue the hell out of every person who reprints, in part or in full, any article without the express consent of the article’s copyright owner.

From March through November 2010, Righthaven has filed over 160 suits against individual bloggers, Web domain registrants and non-profits such as Citizens for Responsibility and Ethics in Washington (CREW), the National Organization for the Reform of Marijuana Laws (NORML) and the Second Amendment Foundation, as well as political organizations and candidates.

lvrjSuits brought by Righthaven have three key common features: All suits are filed in the Federal District Court of Nevada. All defendants are charged with copyright infringement for republishing work that originally appeared in the Las Vegas Review-Journal, without the express consent of LVRJ or its parent company, Stephens Media LLC. And it appears that in all cases, the defendant was first notified of their alleged infringement through a summons and notice of suit having been filed against them.

Righthaven does not believe in asking nicely.

steve gibson“Let’s assume that there are in fact millions of infringers out there. Well, who’s going to pay for Righthaven to send out—on a very diligent basis—these million letters to stop all these infringers?” asks Righthaven CEO Steve Gibson. “And would that stop them? Would that stop infringement in the future?... It has been generally the case and the experience of a wide array of actors out there that people, more often than not, ignore cease and desist letters,” adds Gibson.

Also common to most—if not all—Righthaven suits is a demand for a $75,000 to $150,000 award and forfeiture of the offending Web domain by the defendant.

According to Steve Green, a reporter for the Las Vegas Sun who has been following the emergence of the Righthaven sue-the-hell-out-of-everybody business model, it is these exceptionally high demands—in combination with the lack of fair warning for what many see as fair use—that have attracted the most criticism, and aroused speculation that the true impetus behind these suits is less preservation of intellectual property rights and more generation of revenue (Las Vegas Sun, 8/6/10).

As is reflected in court documents associated with these cases, Righthaven scours the vast realm of the Internet seeking out LVRJ articles. Once a prospective suit is identified, Righthaven then acquires copyrights to the article and files suit. A summons is then served to the alleged offending party.

According to Kurt Opsahl, senior staff attorney at the Electronic Frontier Foundation, this strategy of confronting small-time bloggers with sudden legal action and the threat of maximum statutory damages and domain forfeiture has worked to Righthaven’s advantage, scaring many defendants into smaller settlements of a few thousand dollars. EFF is providing pro bono counsel to Democratic Underground, a progressive online forum being sued by Righthaven for the partial publication of an LVRJ article.

The details of Righthaven’s settlements are not public record, and Gibson refused to discuss any details of these settlements with Extra!.

“Well, it appears they are trying to make money,” said Opsahl.

They’re trying to exploit the statutory damages in the Copyright Act, combined with the cost of defense of a copyright action, to be able to threaten people with ruinous damages, and therefore push them into settlements for $5,000 or $10,000—and pay less than that in order to accomplish it so that they can make money.

Righthaven told the Las Vegas Sun (8/4/10) that it employed about 10 people. In addition to whatever operating cost may be sustained during the course of each case, the firm must also ante up a $350 filing fee per case to the clerk of the U.S. District Court of Nevada—which would total at least $56,000 in filing fees alone over the past eight months.

According to Green, two Righthaven cases have ended with public disclosure of a monetary settlement. In June, the marijuana legalization group NORML settled with Righthaven for $2,185 (8/4/10). According to court documents, this amount, offered by NORML’s counsel, was reached by multiplying the retail cost of an issue of LVRJ, $2.95, by 247—the number of possible views the article, “Marijuana as Medicine” (6/5/10), could have had while posted on the NORML site—and tripling that total.

In the other case where a settlement sum was publicly disclosed, Righthaven v. Odds on Racing, no explanation for the $5,000 figure was cited in the public record.

copyrightAccording to court records, about 60 of these cases, or roughly one third, have been resolved. If the NORML and Odds on Racing case settlements are representative, Righthaven will have only raked in some $215,000 over the past year. Minus court filing fees this amount drops to $162,000—not much to cover a staff of 10 and other operating costs, including the purchase of copyrights from Stephens Media.

When asked for comment on what sort of impact the unlicensed reproduction of the newpaper’s content has had on its revenue stream, and what makes Right-haven’s tactics necessary, LVRJ publisher Sherman Frederick declined to comment, directing all inquiries to Stephens Media vice president and general counsel Mark Hinueber.

Hinueber, in turn, declined to comment on any aspect of the media group’s relationship with Righthaven—other than to state in no uncertain terms that Righthaven is an independent entity with no corporate relationship to Stephens—and directed further inquiry to Gibson.

When asked whether Righthaven receives any external funding for its operations, Gibson answered: “I’m not going to discuss that.”

While it may be true that Righthaven is not a subsidiary of Stephens per se, Gibson has represented the company in numerous civil cases in Nevada in recent years. And the paper trails behind Righthaven’s operations point to a closer corporate kinship than Stephens would like you to know about.

Legal documents in various cases name two corporate entities besides Righthaven with “direct pecuniary interests” in the Righthaven suits: Nevada-based Net Sortie Systems LLC and Arkansas-based SI Content Monitor LLC. Net Sortie is the registered agent and managing officer of Righthaven, and Gibson is its managing—and only listed—officer. (Merriam-Webster defines “sortie” as “an assault by troops from a besieged place against the besiegers.”)

SI Content Monitor was incorporated by Jackson Farrow, Jr., on January 11, 2010—three days prior to Righthaven’s inception. Farrow is general counsel and managing director of Stephens Capital Partners, part of the conglomerate that owns Stephens Media. Farrow is also one of three officers (along with billionaire Warren Stephens) of SF Holding, another Stephens affiliate that is just above Stephens Media in the corporate organizational chart.

Since many Righthaven cases have been settled out of court, Opsahl notes, the merits of Righthaven’s suits have never been thoroughly examined in court. One case, however, Righthaven v. Klerks, offers a possible line of defense.

On May 19, Righthaven filed suit against Jan Klerks and Stichting Wolkenkrabbers, registrants of the domain Skyscraper-City.com. The suit alleged that the site had violated the U.S. Copyright Act when a user posted an LVRJ article (“Possible Loan From China Bank Keeps High-Speed Rail Plan Alive,” 2/2/10) on a discussion board dedicated to urban development.

The user credited both LVRJ and its reporter, Adrienne Packer. Moreover, according to court documents, SkyscraperCity is a not-for-profit website and the defendants did not profit from the third-party reproduction of the LVRJ article. Under federal copyright law, Klerks faced a maximum $150,000 penalty for “willful infringement.”

The offending article had been posted on February 2. Illustrative of its search-and-destroy tactics, Righthaven obtained copyright to the article on April 27 and filed suit on May 19. This practice of acquiring rights to Stephens Media articles only after the alleged offense has occurred has raised serious questions about the validity of the group’s claims (EFF, 9/28/10).

On July 8, Righthaven filed an affidavit in the District Court of Nevada stating that Klerks had been served with a summons on June 14. Since Klerks hadn’t responded within the 21-day period allowed under federal civil procedure, Righthaven entered a motion for default judgment. According to Klerks’ lawyer, Michael McCue, Klerks never received any summons, and only found out about the suit when a reporter at the Las Vegas Sun called him for comment about Righthaven’s motion.

Klerks then hired McCue, who asked Righthaven to drop the motion for default judgment, allowing Klerks and McCue to challenge the merits of the case. Righthaven declined. McCue’s motion to set aside the default judgment, aside from arguing that the defendants never received any summons, laid out a foundation for a legal challenge to Righthaven’s case.

McCue’s motion (7/9/10) described Righthaven as “a ‘copyright troll’—an entity formed for the sole purpose of acquiring copyrights of allegedly infringed articles published in the Las Vegas Review-Journal and then suing, without prior notice, any website operator whose site contains any portion of the article.” It noted several legal justifications for Skyscraper-City, “including fair use, de minimis copying and implied license.”

The court recognized the possible merits of these defenses to the Righthaven allegations and set aside the motion for default judgment. The case is ongoing.

EFF’s Opsahl says that Democratic Underground will assert several of these defenses, including the doctrine of de minimis non curat lex—roughly translated, “the law doesn’t care about trivia.” DU and EFF have already filed a counterclaim against Righthaven for what they allege is essentially a frivolous suit.

On May 13, a user posted a five-sentence excerpt of a LVRJ article, “Tea Party Fuels Angle,” on a DU discussion board dedicated to “breaking news.” The excerpt included a link to the original article, published the same day on the LVRJ website.

(It should be noted that, indicative of Righthaven’s non-discriminatory approach, the firm also sued Nevada’s Republican Senate candidate Sharron Angle, the subject of the article for which DU is being sued, because her website carried a reprint of a LVRJ article touting Angle over incumbent Sen. Harry Reid. Ironically, not only did the article quote Angle, but on October 3 LVRJ endorsed Angle.)

According to Opsahl, the “fair use doctrine” applies to the DU instance—and many other cases—of infringement alleged by Righthaven, in that the alleged infringement meets all of the criteria laid out for “fair use” under copyright law: a non-commercial, non-profit educational purpose and character of use; the nonfictional nature of the copyrighted work; the proportion of the original work used; and the minimal effect on the original’s market value.

Another key point to both the Klerks and DU defenses is that of “implied license.” As stated by McCue in Righthaven v. Klerks:

The original owner of the copyright in the work at issue, the Las Vegas Review-Journal, offered the allegedly infringed work to the world for free when it was originally published. It encouraged people to save links to the work or to send links to the work to others anywhere in the world at no cost and without restriction. The [LVRJ] website also enables third parties to “right click” and copy the text of articles on the site. Accordingly, based on this implied license, the allegedly infringing copy was, in fact, authorized by [LVRJ] and therefore is not an infringement.

On October 18, U.S. District Court of Nevada Judge Larry Hicks issued the first order of dismissal in a Righthaven suit, Righthaven vs. Realty One Group, a Las Vegas real estate firm.

Realty One agent Michael Nelson had posted eight sentences of a 30-sentence LVRJ article about housing sales on his blog (5/10/10). According to Nelson’s attorney, Sergio Salzano, Nelson found out that he was being sued, like other Righthaven defendants, when he received a phone call from a reporter at the Las Vegas Sun seeking comment. He immediately shut down his entire blog.

Hicks ruled that even though Nelson’s use of the LVRJ excerpt was ultimately motivated by his own potential commercial gain as a realtor, it still qualified as fair use, noting that Nelson had only used a portion of the article and had provided a link to the entire article on the LVRJ website.

Still, for Nelson the victory is bittersweet: A settlement deal had been struck between the two parties before Hicks had returned his opinion. Salzano says his client intends to honor the deal because it would stop Righthaven from seeking further damages for two other LVRJ works posted by Nelson on his blog and named in the complaint against him.

As for himself and his partners at Righthaven, Gibson says Hicks’ ruling is of little consequence to the firm’s mission. The “vast preponderance” of Righthaven cases, says Gibson, deal with claims where more than a partial “taking” is involved. Furthermore, he says, he believes there is “merit in the appealability” of Hicks’ decision. So the war against the LVRJ’s readers will continue.

 

Beau Hodai is a freelance writer and regular contributor to Extra!.