Property, intangible

a blog about ownership of intellectual property rights and its licensing

Righthaven’s Failed Assignment Agreement

I haven’t been blogging about the Righthaven case because there are many other bloggers doing a great job. You know, Righthaven, who is going around finding bloggers reproducing articles from the Denver Post and the Las Vegas Review-Journal and suing them for copyright infringement.  But I thought that I’d show you how miserably Righthaven screwed up the fundamental basis for its entire business model.

The Electronic Frontier Foundation, representing the Democratic Underground, smelled a rat, namely that it was unlikely that Righthaven actually owned the copyrights. It successfully obtained a copy of the agreement between Righthaven and Stephens Media LLC, the publisher of the Las Vegas Review-Journal, outlining all the terms of their deal. And the court was very, very, unhappy with what the agreement said.

It’s black letter law that the assignment of a bare right to sue is not allowed under the Copyright Act:

While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights.  Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee. One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright.  

So this was the assignment language in the agreement between Righthaven and Stephens Media LLC:

Note that the assignments to be executed were expressly “subject to the other terms and provisions of this Agreement,” which included this exclusion:

7.2 Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Righthaven’s maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Media’s right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights. . . .

(Emphasis added by court). The court explained that:

The plain and simple effect of this section was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights. Even Righthaven’s right to sue is not absolute. The SAA gives Stephens Media the right to prevent Righthaven from suing an alleged copyright infringer for various specific reasons, including that the lawsuit might “result in an adverse result to Stephens Media.”  (Id., Section 3.3.)  Other sections also give Stephens Media a right to reversion and other rights which, collectively, destroy Righthaven’s supposed rights in the Work.

As pointed out by the court, the Strategic Alliance Agreement went to great lengths to allow Stephens Media to keep full control of the copyrights.  See for yourself – what were they thinking?
Strategic Alliance Agreement Between Righthaven and Stephens Media

Incidentally, there’s a new state lawsuit just filed in South Carolina against Righthaven alleging barratry (the improper incitement and prosecution of lawsuits) and unfair trade practices. This news article details some of Righthaven’s interesting behavior. Did you ever copy a clip from a web page, paste it, and get some extra text added to what you cut, like “Read more: Rosen: A letter to the Tea Partyers – The Denver Post,” with a link to the article? Guess what – that’s NOT the newspaper all happy about the fact that you’re linking to it. That, according to the lawsuit, is “a unique per-customer code generated to allow the Denver Post to associate a particular pasted copy with a specific customer’s IP address for the purpose of identifying defendants for prosecution—and persecution—by Righthaven. . . . The Denver Post’s software could easily be configured to insert ‘Notice: You are violating The Denver Post’s copyright.’ Instead, the software tricks unknowing users into believing they have done nothing wrong while simultaneously helping Righthaven sue them later.”  Yowza. Throughout these cases I’ve always wondered whether the lawyer skipped the class on equitable defenses.

Understatement of the day, from the South Carolina lawsuit: “Righthaven’s barratry business model is marginally profitable with regard to successful cases, i.e. settlements, but is horrendously undercapitalized when liabilities are taken into account.”

EFF case page on the Democratic Underground case here.

Righthaven LLC v. Democratic Underground, LLC, No. 2:10-cv-01356-RLH-GWF (D.  Nev. June 14, 2011).

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