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Righthaven Loses Big Yet Again, Cementing Two Previous Issues

from the no-standing-and-fair-use dept

It appears that Righthaven continues to lose big in its questionable mass lawsuit business model strategy. The latest ruling (embedded below) in one of the cases reinforces two key issues on which Righthaven has already lost in previous rulings, and once again suggests that the entire basis for Righthaven's existence may be a castle made of sand that has long since washed away.

First up, we have the question of standing -- which was what last week's big ruling was about. In that case, Judge Roger Hunt took apart Righthaven and Stephens Media's bogus claim that Righthaven ever actually owned one of the key rights granted by copyright law. As we've explained a few times, in order to be able to sue over copyright, you have to actually hold one of the specific rights listed in Section 106 of the copyright law. What's not allowed is the transferring of the "bare" right to sue. If you hold one of the enumerated rights, you can also take with it the right to sue over any infringement of that right. But without the rights, you're in trouble. This is the second judge that has found Righthaven in serious trouble over this issue.

As in the Hunt ruling, this ruling, by Judge Philip Pro, finds that it's quite clear from the nature of the agreement between Stephens and Righthaven, that the entire point of those agreements was to try to get around what the law says, and provide Righthaven with just the right to sue, and that's not allowed:
Here, 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. Accordingly, Righthaven does not possess an exclusive right in the Work and therefore does not have standing to bring a suit for infringement.
It seems pretty straightforward: if you don't have any of the specific rights under section 106, you don't have a right to sue. Done deal.

Separately, Judge Pro, like Judge Hunt, indicates that Righthaven and Stephens Media's attempt at the beginning of May to "clarify" their agreement fails to fix this basic problem. Righthaven has been insisting that the "Clarification" solved any questions of standing, but both of the judges seem to indicate otherwise.

Judge Pro then goes on to point out that even if Righthaven had the copyright and had standing, it would still lose, because of fair use. This is the second such case to find that, and once again highlights how for all the complaints about Righthaven, it's aggressive attempt to stretch copyright law has served to help create a wonderful body of case law that will be quite useful in the future. We've regularly seen people claim -- incorrectly -- that if you use the full work, there is no fair use. Yet, there are plenty of cases that prove this to be untrue, and now we've got another one, with the explanation clearly laid out. Judge Pro walks neatly through the four factors test:
  1. The Purpose and Character of the Use: Here, the judge finds the fact that Hoehn was using the article in order to create a discussion, and was doing so in a way entirely differently than the rightsholder, to lean towards a ruling of fair use:
    It is undisputed that Hoehn did not and could not profit from posting the Work. Under Sony, noncommercial/nonprofit use is presumptively fair. Additionally, this factor focuses on the purpose or character of the new work. Here, Hoehn posted the Work as part of an online discussion. Hoehn avers he posted the Work to foster discussion in a specific interactive website forum regarding the recent budget shortfalls facing state governments. This purpose is consistent with comment, for which 17 U.S.C. § 107 provides fair use protection. There is no genuine issue of material fact that Hoehn’s noncommercial use of the Work for comment favors a finding that the use was fair.
    This is a great ruling for people who post works of others for the purpose of discussion.

  2. The Nature of the Copyrighted Work: This is a surprising, but welcome statement from Judge Pro. He notes that much of the article in question may not actually deserve any real copyright protection at all, as it just provides factual data, and such is not intended to be protected by copyright law.
    The Work is an editorial originally published in the LVRJ. The Work is a combination of an informational piece with some creative elements. 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. While the Work does have some creative or editorial elements, these elements are not enough to consider the Work a purely “creative work” in the realm of fictional stories, song lyrics, or Barbie dolls. Accordingly, the Work is not within “the core of intended copyright protection.”
    This part of the ruling could certainly be useful in future cases, in noting that just because someone writes an article or creates some form of content, it shouldn't automatically get copyright on the entirety of the work, if not all of it reaches the level of creative input necessary to qualify for copyright. This is a point that is often lost in discussions of copyright.

  3. The Amount Used: This is the big question. This is why many people, falsely, assume that any time "all" of a work is being used, it cannot be fair use. However, as we've pointed out time and time again, that's simply not true, and this case reinforces that point. Here, Judge Pro notes that there's no dispute that all of the work was being used, but points out that this is just one factor in the four factor test, and that "wholesale copying does not preclude a finding of fair use." If the other sections weigh heavily towards fair use, that'll outweigh this point -- which is what happened in this case.

  4. The Effect Upon the Potential Market for the Work: In the end, for all the discussions of the four factors, it's this factor that quite frequently is the make-or-break factor in determining fair use, which intuitively makes sense. If the use hurts a market, people are generally wary of saying it's fair. If it doesn't hurt the market, it's much easier to claim it's fair. In this case, the court notes that there's no real impact on the market:
    It is undisputed that Hoehn’s use of the Work is noncommercial. Challenges to noncommercial use require a showing that the particular use is harmful or negatively impacts the potential market for the copyrighted work. Id. Righthaven has not presented evidence raising a genuine issue of material fact that Hoehn’s use is harmful. Rather, Righthaven contends that because Hoehn replicated the entirety of the Work “[s]uch circumstances warrant the conclusion that [Hoehn’s] infringement has likely caused a substantial impairment on the potential market for the Work and that [Hoehn’s] infringing copy of the Work fulfilled the demand for the original.” (Resp. (Doc. #13) at 12-13.) Additionally, Righthaven argues that the market for the Work was impacted negatively because potential readers are able to read the Work on the Website and would have no reason to view the Work at its original source of publication. However, Righthaven has not presented any evidence of harm or negative impact from Hoehn’s use of the Work on the Website between November 29, 2010 and January 6, 2011. Merely arguing that because Hoehn replicated the entirety of the Work the market for the Work was diminished is not sufficient to show harm. Therefore, Righthaven has not presented evidence raising a genuine issue of material fact that the fourth factor favors a finding of fair use.
    I have to admit that I think this section could be much stronger against Righthaven, and am a bit disappointed that the judge didn't take the next step. It's important to note that this factor is supposed to be about the impact on the market for the copyright holder, and if we assume (as the court is doing in this case) that Righthaven is, in fact, the copyright holder, the argument on this factor looks even worse for Righthaven. That's because, based on Righthaven's situation and the limited rights it has, the only "market" it has control over is the market to sue. That's it's sole source of revenue for what bits of this copyright it might own (but probably doesn't). So, if we look at that, we see no impact whatsoever, because it's not as if the guy here (Hoehn) is going to compete with Righthaven in suing over the work.
Either way, it's yet another good ruling for sanity, and another nail in the coffin for Righthaven on both counts -- while at the same time adding some more case law to the pile. Of course, these are only district court rulings, and this could get interesting depending on what an appeals court says (if it gets ahold of one these cases). In the meantime though, it seems like Righthaven is giving us some nice case law to build on.

Filed Under: copyright, fair use, standing
Companies: righthaven

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  1. identicon
    Anonymous Coward, 23 Jun 2011 @ 6:21am

    Re: Re: Re: Re:

    Yes. This is what you said: "Judge Pro relies on two cases in his standing analysis: Nafal and Lahiri." Perhaps it was not what you meant to say, but "those were the only cases he looked at" is what any reasonable person would get from this sentence.

    The other cases he looked at (Sybersound, Silvers, and I think there was another one, I can't remember at this point) were just to say what the rule is. No one denies what the rule is. That's not interesting. It's in his application of the rule that he used Nafal and Lahiri. And that's the interesting part. That's where I think he erred. Sorry if it's misled anyone. Didn't mean to.

    Yes, I did. And you're wrong. The issue was whether the plaintiff was a "co-exclusive owner" of the copyright. In the court's own words:

    In order to be considered a co-owner of an exclusive license, Plaintiff must in some manner be similarly situated with respect to Sima, meaning that he has an independent and equivalent power to exercise his rights in the License Agreement. Unless this burden is satisfied, this Court must hold that Plaintiff has in effect been assigned the right to file this lawsuit — which has been barred by the Silvers Court. [Emphasis in original]

    You're a little confused here. It says "co-owner of an exclusive license." The court also refers to this as a "co-exclusive licensee." They mean exactly the same thing. In fact, if I recall correctly, the section you're quoting from is even called, "Whether Plaintiff is in Fact a Co-Exclusive Licensee?" A "co-owner of an exclusive license" is a "co-exclusive licensee."

    So, no, the issue was not whether Nafal (the plaintiff) "had the exact same rights as his co-exclusive licensee." The issue was whether the rights Nafal was granted were "independent and equivalent." And the court focused mainly on the "independent" part.

    Having the "exact same rights" is another way to say "independent and equivalent" rights. Not sure what your beef is with this.

    It is mostly the same situation as in Righthaven... except that Righthaven is claiming sole ownership while holding the same rights as Nafal. The case is entirely on point, 1909 rules or no.

    Righthaven is claiming to be the owner and licensor of those rights. Nafal didn't claim to be a licensor of the rights that his purported co-exclusive licensee possessed which he didn't. This is where the cases differ significantly, and why I think Nafal's situation is markedly different. A licensor retains an ownership interest where a licensee who has different rights than another licensee does not.

    About that... I hadn't read that part of the case yet. The reasoning behind using the 1909 rules in Nike and Nafal are totally different, you're right about that.

    However, the ruling on standing is not merely dicta, as the standing issue was explicitly upheld by the appeals court:

    What's funny about that is I think the district court judge in the Nafal case got it wrong, and it was the 1976 Act that was in fact controlling of the issue. I think the judge analyzed it under both the 1909 Act and the 1976 Act just to be sure. Why the Ninth Circuit declined to correct this mistake puzzles me. I suspect they weren't sure either. The fact is that standing in the realm of intellectual property is quite elusive. It doesn't follow the same rules that typical Article III standing analysis does. It does its own thing.

    But to be clear, since the district court judge had already held that the 1909 Act controlled and Nafal didn't have standing as a matter of law, then technically all of his analysis under the 1976 Act was by definition dicta. It doesn't matter if the circuit court agreed with that analysis--that doesn't transform it into something else. Basically, the Ninth Circuit panel is saying that they're not going to say whether the 1909 Act or the 1976 Act controls. If it's the 1909 Act, then Nafal doesn't have standing as a matter of law. It's not even worth mentioning, and in fact, they didn't even mention it. If it's the 1976 Act, then they said the district court's analysis is right under Silvers.

    Of course, you need to remember what the test was that was being applied, namely whether Nafal had the same rights as his co-exclusive licensee. The circuit court does say that Nafal has no ownership interest, true, but I don't think that same analysis necessarily applies when you're talking about a licensor since a licensor can grant an exclusive license yet still have an ownership interest in the copyright. This is some really subtle shit, no?

    Say what? Judge Pro ruled that it did not transfer ownership:

    The Court finds the SAA in its original form qualifies the Assignment with restrictions or rights of reversion, such that in the end, Righthaven is not left with ownership of any exclusive rights.

    First he said that the assignment transferred ownership to Righthaven. Then when he looks at what the SAA does and says that the restrictions it imposes means that ownership wasn't in fact transferred. I disagree with this analysis. When a licensor grants an exclusive license, that licensor still has an ownership interest in the copyright. I don't think the right of reversion or the other restrictions change the fact that ownership transferred to Righthaven. As the district court judge in the Nafal case explains, when an issue isn't preempted by federal law, you look to state law for contractual analysis. I think Judge Pro should have been analyzing the ownership issue under Nevada contract law.

    The SAA predated, and controlled, any copyright assignments. Righthaven was prohibited from owning the copyrights before they were even assigned to Righthaven.

    So, you're making a complete straw man argument. You have been for a while, in fact. The copyrights were never transferred to Righthaven in the first place. That is what everyone except you recognizes as the truth.

    The SAA is to be read in conjunction with the assignment. I don't see it as Righthaven being prohibited from owning the copyright, I see it as Righthaven contracting to have ownership limited by certain conditions. Under contract law, though, I think ownership still transferred.

    It's fun to chat with you about this. I will admit that I think both your interpretation and my interpretation have merit, and I'm coming around to the realization that perhaps neither one of us is wrong. That's the best I'll give you at this point. :)

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