Righthaven Loses Again; Has To Pay Legal Fees

from the that-business-model-is-looking-great dept

Wed, Jul 6th 2011 6:21am — Mike Masnick

Righthaven's disastrous legal strategy keeps getting worse day by day. The latest is that in one of its many cases, the company didn't just have its case dismissed, but a judge has ordered it to pay legal fees (see attached ruling below). In this case, it appears that (among the many other problems Righthaven has faced lately) it failed to serve the defendants properly or in a timely manner with an amended complaint. Because of that, the court dismissed the complaint. While the defendant had originally defended himself, when the judge called a hearing to discuss whether or not the defendant was properly served, one of the defendants (Michael Leon) retained a lawyer (J. Malcolm DeVoy IV from the Randazza Legal Group) on a pro bono basis. Righthaven fought having to pay legal fees, claiming that it had been under the impression that any fees would go to charity (this is not clear, but I assume that point had been raised earlier), and saying that there shouldn't be any legal fees because the representation was pro bono. The court, however, didn't buy any of that and pointed out that you can still reward reasonable legal fees for pro bono representation and accepted DeVoy's submitted fees of $3,815.00, even though most of the time was spent working on the filings to get those same legal fees.

Righthaven's business model was already in trouble with questions over standing and its failure to declare who had monetary interest in the cases. However, if judges now flip the equation and start requiring the firm to pay legal fees as well, the business model might go from bad to downright costly.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: legal fees
Companies: righthaven

28 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

The eejit (profile), 6 Jul 2011 @ 6:17am

tHIS IS CLEARLY JUST A CASE OF JUDGE ACTIVISM AND ANTI-COMPETITIVE PRACTICE!
[ link to this | view in thread ]
The eejit (profile), 6 Jul 2011 @ 6:18am

Re:
Posted too soon, was going to add:

...oh, wait....
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 6:40am

Has Righthaven filed any new cases recently? Anyone know?
[ link to this | view in thread ]
Ken, 6 Jul 2011 @ 6:49am

Re:
No new cases have been filed since early May and June became the first month of no new filings since Righthaven began.
[ link to this | view in thread ]
Comboman (profile), 6 Jul 2011 @ 7:21am

Legal Reform
Law firms that do pro bono lawsuits should ALWAYS have to pay the legal fees of the defendants if they lose. That would reduce the number of frivolous lawsuits pretty damn quick, and hopefully reduce the number of innocent people/businesses who settle out of court because they can't afford to defend themselves.
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 7:27am

Message to righthaven

"Pro tip - Stop, the hole you are digging is too deep"
[ link to this | view in thread ]
Mike C. (profile), 6 Jul 2011 @ 7:37am

Re: Legal Reform
The problem is, that a case settled out of court often isn't a loss so no fees are due. I'd love to see reform where any civil suit filed MUST be resolved as a "win" or "loss". If you choose to dismiss a case you've filed, that officially counts as a judgement against you including all associated jeapordies and liabilities - including fees.

The way things are now, civil suits are mostly risk free. If things go your way, the other party will offer to settle. If they don't, you offer to settle. In the end, money changes hands, lawyers get rich and zero precedents are getting set leading to further confusion of the issues.
[ link to this | view in thread ]
sophisticatedjanedoe (profile), 6 Jul 2011 @ 8:08am

Randazza
Talking about Randazza, am I the only one who experience cognitive dissonance? His company is known for writing beautiful briefs in Righthaven cases, playing an important role in sinking this troll.

As for p2p porn copyright trolling, Randazza is a troll. Remember Leprechauns and Unicorns? Also, it is not widely known, Randazza is another troll's (Sperlein of IO Group - covered by TorrentFreak recently) proxy in a clear-cut trolling case in Florida. This is one of few showcases filed by Sperlein against individuals to increase pressure to settle. Read more on Sperlein in my blog.

I understand that we don't live in a Hollywood movie with good guys/bad guys and no shades of gray, but still...
[ link to this | view in thread ]
Ikarushka (profile), 6 Jul 2011 @ 8:43am

Re:
Come on, this is not what you think: the judge doesn't want to see Righthaven competitors' opponents potentially come on with bigger attorney fees, and he is giving them guidance as to what the legal fees should be.
[ link to this | view in thread ]
Thomas (profile), 6 Jul 2011 @ 8:45am

less than 4,000?
A shame the jude didn't award triple fees or quadruple fees and also sanction the righthaven thugs (aka lawyers).
[ link to this | view in thread ]
The Devil's Coachman (profile), 6 Jul 2011 @ 8:50am

Righthaven should self-immolate!
Then, we'd have to still find a way to dispose of the toxic ash remaining, but it would be worth it. Hell, I'd store it in my basement.
[ link to this | view in thread ]
DannyB (profile), 6 Jul 2011 @ 9:00am

Re:
Tips for Righthaven:

Please continue digging! Dig faster!

File new lawsuits.

Start suing over smaller and smaller usages of content on RJ and other Righthaven partner websites. Ideally, sue over phrases of two to five words in length, asking for maximum statutory damages.

Have RJ copy content from a blog, unattributed, then sue the blog!

I'll be back with more fantastic ideas for you later, but I've got to get some more popcorn.
[ link to this | view in thread ]
Rich Fiscus (profile), 6 Jul 2011 @ 9:12am

This is where Righthaven's legal relationship to the actual copyright holders becomes much more important. If (when) Righthaven is dissolved as a corporation, what liability will the actual copyright holders, or even Righthaven's owners, have for paying any outstanding damage awards?

The entire purpose of Righthaven has been to act as a buffer for these sorts of liabilities. Even though this is clearly fraudulent, since they are essentially acting as a contractor on behalf of the real copyright holders, that fraud is a separate issue. If Righthaven goes out of business it would seem to require lawsuits against the owners of the copyrights involved and Righthaven's owners to prevent those debts from being wiped out with the company.
[ link to this | view in thread ]
Ken, 6 Jul 2011 @ 9:13am

Re: Re: Legal Reform
There should be a risk to the plaintiff with lawsuits. They should be a last resort after all else fails. The courts should not be used as an ATM or someone's personal collection agency.
[ link to this | view in thread ]
Ken, 6 Jul 2011 @ 9:17am

Re:
This is Righthaven's ultimate purpose to be a throw away company if things go badly. However by creating a system where Stephens Media and Media News group share in the proceeds of lawsuits they will not be able to escape liability if Righthaven goes bankrupt.
[ link to this | view in thread ]
bordy (profile), 6 Jul 2011 @ 9:38am

Re:
The biggest question I had when this whole saga began to unfold was "Why set up the scheme this way?" That is, why this transfer-license back relationship? I initially and still do believe it was partially an attempt to reflect any negative PR away from Stephens Media (and may I add, dynamite work on that front, boys). And there's also the attempt to contract around Silvers.

The worse this gets, the more I believe that this worst case scenario was probably contemplated by the principals and Righthaven was set up to absorb liability in Stephens' place. Stephens may have hoped that if its shell went bankrupt and became judgment proof, the story would simply end there.
[ link to this | view in thread ]
Rich Fiscus (profile), 6 Jul 2011 @ 9:58am

Re: Re:
I'd like to be sure of that, but I foresee a lot of finger pointing, with corporate executives claiming they were acting on advice from the lawyers and lawyers claiming they were just arguing legal theories dreamed up by the executives. Proving fraud will be difficult unless someone comes up with documentation proving knowledge that the copyright assignments were invalid.
[ link to this | view in thread ]
sophisticatedjanedoe (profile), 6 Jul 2011 @ 10:04am

Re: Randazza
As a matter of fact, there was and article about Randazza's trolling tactics on ArsTechnica. The comments section is an interesting read: most of the commenters call these tactics by its actual name: extortion.

Also, what kind of lawyer discusses "A reason to swallow and a reason to spit" on his professional blog, albeit jokingly?
[ link to this | view in thread ]
bordy (profile), 6 Jul 2011 @ 10:11am

Re: Re: Re:
The SAA was pretty damaging, but I doubt it creates liability for fraud in and of itself. Never say never, but I can't imagine there being any cold evidence that Righthaven or Stephens knew the scheme was fraudulent.

That being the case, they were terribly misguided and this mess was reasonably forseeable. All their post hoc disingenuous excuses have not done them any favors.
[ link to this | view in thread ]
Mike Masnick (profile), 6 Jul 2011 @ 10:50am

Re: Re:
Come on, this is not what you think: the judge doesn't want to see Righthaven competitors' opponents potentially come on with bigger attorney fees, and he is giving them guidance as to what the legal fees should be.

Ha!
[ link to this | view in thread ]
Rich Fiscus (profile), 6 Jul 2011 @ 11:46am

Re: Re: Re: Re:
I agree. That's one of the problems I have with our legal system. In most professions where certain responsibilities are assumed under the law, such as medical doctors or CPAs, there are fairly well defined boundaries for what they can be assumed to know. If a doctor harms patients because he ignores standard accepted practices, relying instead on his own pet theories, he opens himself up to liability for damages, may have his license taken away, and could even face criminal charges.

If a lawyer does the same thing, he gets to hide behind his responsibility in the adversarial process. Within certain boundaries, this is a necessary evil. The common understanding of laws is more fluid than medical standards or accounting practices. But at some point there needs to be a line you can't step over. Otherwise the adversarial process ceases to be an instrument of justice and instead becomes a tool for circumventing the law. We have long since passed that point.

Any solution would no doubt be just as complex as the problem. However, when a judge calls your arguments, "flagrantly false-to the point that the claim
is disingenuous, if not outright deceitful," wherever the line is, you have almost certainly crossed it. And it's not just an offense against the defendants. Practices like this are harmful to society as a whole. Beyond the financial cost to the public, which is no small thing considering the number of cases Righthaven has pursued, it taints the entire legal system with the stink of corruption.

A justice system which appears to be corrupt is virtually indistinguishable from one that actually is. People who do not trust the the legal system to give them justice are unlikely to use that system to pursue it. Likewise, those who perceive that it can be an instrument of injustice will only be emboldened to use it for exactly that purpose.
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 12:05pm

Re: Re:
Thanks, Ken.
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 1:39pm

Re: Legal Reform
Wait, what?

Why do you want to discourage pro bono representation but not have the same disincentives for people who can afford to pay attorneys?
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 1:47pm

Re: Randazza
Attorneys advocate on behalf of their clients. That shouldn't really be news.

Moreover, it shouldn't surprise anyone that an IP attorney might willingly represent a paying client (or a pro bono client) as a copyright infringement plaintiff, and yet also take on a pro bono client as a copyright infringement defendant.

There are a lot of differences between the Righthaven cases and the mass copyright infringement cases you're referencing, even though all IP plaintiffs tend to get painted with the same brush around here.
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 2:05pm

Re: Re: Legal Reform
"The way things are now, civil suits are mostly risk free."

If you don't count your attorney fees, bad publicity, the risk of counterclaims...
[ link to this | view in thread ]
sophisticatedjanedoe (profile), 6 Jul 2011 @ 3:48pm

Re: Re: Randazza
I see more commonalities than differences. EFF sees it the same way: Righthaven and p2p porn cases are listed on the same page - "copyright trolls".

No doubt lawyers both defend and prosecute, and this is normal, but we are not talking about copyright infringement cases with merit and probable cause, we are talking about this new phenomenon � predatory copyright trolling. After spending a couple of hours researching, a reasonable person will certainly agree that all the trolls are unethical, regardless of their subspecies. Do not jump to conclusions without thorough research.

Yes, of course there are differences, but methods are basically the same - pay up or face financial devastation (i.e. extortion - plain and simple). And the root of both cases is the same: abusing flawed laws.

I sadly observe that Righthaven victims tend to paint themselves as white knights of Fair Use and think about us, p2p troll victims, as a bunch of thieves. Again, we don't live in a Hollywood movie; the reality is far more complex. It is statistically idiotic to believe that every one of hundreds of thousands accused is guilty. And those who are not have ended up in much worse situation than bloggers harassed by Righthaven - we found ourselves in a Kafkian world of reversed Blackstone formulation and perverted presumption of innocence, we have to prove that we are innocent, not the other way around. Even those who in fact downloaded those filthy movies don't deserve the treatment they get: the entire scheme is built to make it impossible to fight back without fear of revenge. Antonio Almeida managed to anger Sperlein, and that�s why he is selectively targeted with Randazza�s help. I talked to Antonio: he does not even know the fucking difference between BitTorrent and eDonkey! His life is turned to hell so some greedy lowlifes would pocket more green paper.

I watch Righthaven cases, and wish you get informed about our problem. You are doing a great job with your blog and have a good heart, just misinformed IMHO. I find it unproductive to concentrate on differences, because clearly developments on one front impact the other.

Peace.
[ link to this | view in thread ]
Anonymous Coward, 6 Jul 2011 @ 4:52pm

Re: Re: Re: Randazza
"more similarities than differences" isn't really a meaningful standard. I mean, I see more similarities than differences between onions and applies, in comparision to many other things, but that doesn't mean I'd be shocked to find someone who eats apples but not onions.

As far as "not having merit," I don't think that's really clear with the mass infringement suits. They certainly have some procedural problems (i.e., filing suit over people where there may not be personal jurisdiction) and they may have swept up a few innocents along with actual infringers. But they allege facts that are pretty clearly infringing, whereas Righthaven cases often allege facts that may not be infringing.

Regarding the threat to pay up or face litigation costs, that is true of every civil lawsuit, so it's not really any basis for comparing/contrasting types of suits.

I don't have a blog, and "probable cause" is not a concept relevant to civil copyright suits, so I'm not sure if you're quite as "sophisticated" as your name.
[ link to this | view in thread ]
Anonymous Alcoholic, 6 Jul 2011 @ 6:21pm

Re: Re: Re: Re: Randazza
Since you are full of courage to launch an unprovoked ad hominem attack on a lady, I'm not sure you're quite as "coward" as your name suggests.
[ link to this | view in thread ]