The decision stems from litigation Righthaven filed against David Allen and Democratic Underground, a suit thrown out June 14 due to a lack of standing.
At the sanction hearing, Judge Roger Hunt said the company made misleading statements before the court and hid newspaper publisher Stephens Media’s role in the suits. The companies had made a Strategic Alliance Agreement (SAA) assigning to Righthaven the right to sue over Stephens Media copyrights and earn 50% commission.
“In the court’s view, the arrangement between Righthaven and Stephens Media is nothing more, nor less, than a law firm – which incidentally I don’t think is licensed to practice law in this state – with a contingent fee arrangement masquerading as a company,” Hunt reportedly said at the hearing.
Righthaven has been fined $5,000.
In addition, Hunt has also ordered Righthaven to provide copies of his order dismissing their complaint against Democratic Underground in all pending cases, as well as provide its SAA with Stephens Media to all the defendants it has sued of infringing the company’s copyrights.
This is a blow for the company, which has been accused by defendants of not owning the copyrights it asserts against bloggers and websites.
Marc Randazza, who has written about the company’s various suits on his blog, The Legal Satyricon, and whose firm is involved in matters involving Righthaven, told Managing IP: “I think that the Righthaven ship was already sinking, but at this point it’s just a stern sticking out in the icy water.”
“I’m pretty sure that at least some of the people that have settled with them are going to meet them again in court,” Randazza added.
The company had not returned Managing IP’s requests for comment at the time of going to press.
The ruling comes just as Righthaven re-filed a suit yesterday against loan auditor Dean Mostofi, who republished a Las Vegas Review-Journal article on his blog. The complaint came just hours after a Nevada District Court dismissed another suit Righthaven brought against Mostofi for lack of standing.
This time, Righthaven is suing based on an amended agreement with Stephens Media.
“The Mostofi I decision did not consider Righthaven’s standing based on the terms of the (SAA) clarification, the restated (SAA) amendment and the specific assignment for the work (R-J story),” said Righthaven in the new lawsuit.
“These previous unconsidered materials in Mostofi I unquestionably establish Righthaven’s standing to seek redress for defendant’s blatant and willful copyright infringement of the work,” it continued.
But Mostofi told Managing IP via email that regardless of how many times the companies amend their SAA, Righthaven can never establish Article III standing because it has not suffered a cognizable injury. In the event it can show injury, it would be “self-inflicted” to manufacture standing to sue, which is not permitted under the statute, he added.
“The Copyright Act’s intent was not to give rise to an aftermarket for lawsuits, but that is precisely what Righthaven and Stephens Media are unsuccessfully attempting to establish with their scheme,” said Mostofi. “I categorically deny any wrongdoing and will vigorously defend myself,” he added.
Mostofi has retained Todd Kincannon, who has been involved in Righthaven litigation in Nevada and South Carolina, as counsel.
