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Copyright Trolls and the Importance of § 512(c) Protections

By William Leef

After launching its first set of lawsuits in May 2010, copyright troll Righthaven, LLC ("Righthaven") finds itself close to declaring bankruptcy. Righthaven filed a motion last week requesting that a Nevada judge not stay an order requiring it to pay $30,000 for a defendant's legal fees. Some see this turn of events as Righthaven getting its comeuppance, yet had more websites chosen to take advantage of the "safe harbor" protections, which require little more than submission of a $105 filing fee, many of these claims would not have been able to proceed.

Contracting with newspaper groups Stephens Media (publisher of the Las Vegas Review-Journal) and MediaNews Group (owner of The Denver Post as well as 50 other publications), Righthaven was granted the sole right to sue on these ownership groups' behalves for copyright infringement. However, the Strategic Alliance Agreement ("SAA") between Righthaven and Stephens Media stated, "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." The ownership groups still maintained an exclusive interest to exploit, license and distribute their own protected works.

Acting under authority granted by the SAA, Righthaven has since filed approximately 275 copyright infringement claims, finding quick settlements in many actions, against websites and media organizations both large and small. However, in a key ruling, a Federal Judge for the District of Nevada recently dismissed Righthaven as a party in its case against Democratic Underground, a satirical political blog. The dismissal and sanctions that followed will likely spell the end of the remaining cases brought by Righthaven.

In the case of Righthaven v. Democratic Underground, Righthaven alleged infringement when a Democratic Underground user posted a comment containing a link and a few paragraphs from a Las Vegas Review-Journal article about Sharon Angle and the Tea Party. Contrary to the limited grant of rights pursuant to the SAA, Righthaven went on to allege in its complaint that:

Righthaven holds the exclusive right to reproduce the Work;
Righthaven holds the exclusive right to prepare derivative works based upon the Work;
Righthaven holds the exclusive right to distribute copies of the Work; and
Righthaven holds the exclusive right to publicly display the Work
Righthaven, LLC v. Democratic Underground, LLC Case No.: 2:10-cv-01356

According to Section 501(b) of the 1976 Copyright Act, 17 U.S.C. §101 (2010) (the "Act") only the "legal or beneficial owner of an exclusive right under a copyright is entitled...to institute an action for any infringement..." The bare right to sue, not being one of the exclusive rights defined and limited by the Act, cannot be transferred in a manner that confers standing - a crucial requirement for anyone wishing to bring a claim for copyright infringement. In a June 14, 2011 ruling on various motions for dismissal and summary judgment, Chief District Judge Roger L. Hunt went as far as to call Righthaven's interpretation of the SAA with Stephens Media "disingenuous, if not outright deceitful." Judge Hunt ordered Righthaven dismissed from the case for lack of standing, and ordered Righthaven to show cause as to why it should not be sanctioned. On July 14, 2011, Righthaven was ordered to pay $5,000 in sanctions and to file the court transcript containing the rebuke in the other copyright cases for which it was a party.

This holding came on the heels of a May 2011 order, where a Colorado Federal Judge froze 35 pending lawsuits due to lack of standing. (Righthaven, LLC v. William Sumner and Dailykix.com, Civil Action No. 1:11-cv-00222-JLK.) This past week, MediaNews Group's chief executive John Paton said that the newspaper publisher would be ending its relationship with Righthaven, which was "a dumb idea from the start" (David Kravets, Newspaper Group Drops Righthaven - 'It was a Dumb Idea,' Sept, 8 2011, http://www.wired.com/threatlevel/2011/09/medianews-righthaven-dumb-idea/). Further. Righthaven recently requested a stay of judgment pending appeal to prevent an order that it pay $30,000 in legal fees for another infringement claim where (aside from the lack of standing), the court determined that the defendant's use of third party content qualified as a proper fair use. (Righthaven, LLC v. Wayne Hoehn, Case No.: 2:11-cv-00050-PMP-RJJ.)

While it looks as though Righthaven may soon have to declare bankruptcy, many blogs and websites could have avoided the entire ordeal by registering a DMCA takedown agent with the U.S. Copyright Office. Registration under section 512(c) of the Digital Millennium Copyright Act requires the completion and submission of an Interim Designation of Agent to Receive Notification of Claimed Infringement form accompanied by a $105 check or money order. In addition to these technical requirements, immunity is enjoyed so long as the website (1) does not receive a financial benefit directly attributable to the alleged infringing content, (2) does not have actual knowledge of the alleged infringement; and (3) promptly removes the infringing material once notified (See 17 U.S.C. § 512(c)(1)(A)(i)-(iii)).

Plagiarismtoday.com provided some factors for determining whether a website should register an agent:

For a blog that gets relatively few comments, it probably isn't worthwhile. The comments can be easily moderated and suspicious material is usually removed long before anyone else is aware of the infringement. However, a larger forum where users upload a wide variety of content that is almost impossible to moderate may want to look at designating a DMCA agent. (Jonathan Bailey, How $105 Can Help you Avoid a Copyright Lawsuit http://www.plagiarismtoday.com/2011/03/28/how-105-can-help-you-avoid-a-copyright-lawsuit/.)

It appears as if Righthaven was specifically targeting websites and media organizations that lacked § 512(c) protections. Knowing that they could potentially be subject to $150,000 in liabilities, many organizations would rather settle quickly and move on. Yet in a landscape where the risk of infringement by a user is so great, and it is nearly impossible to detect each instance of infringement, it would be in the best interest of websites that see a great deal of user comments and submissions to register a DMCA agent.

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This page contains a single entry from the blog posted on September 13, 2011 10:43 AM.

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