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Righthaven: The Country’s First “Copyright Troll” and its Potential Impact on the Dissemination of Information on the Internet

Published onJun 14, 2011
Righthaven: The Country’s First “Copyright Troll” and its Potential Impact on the Dissemination of Information on the Internet

The availability of articles online from sources such as the Wall Street Journal and the New York Times has made it easy for bloggers and other internet users to take the newspaper’s work and put it on their own websites without the original holder’s permission.  To perhaps deal with this phenomenon, a company called Righthaven has risen and attracted a great deal of criticism and scrutiny.  Righthaven has been deemed a “copyright enforcer for the Las Vegas Review-Journal” which was created by Las Vegas attorney Steven Gibson.  On behalf of the Las Vegas Review-Journal, Righthaven peruses the internet in search of online infringement of the Review-Journal’s copyright.  When it finds a potential infringement, Righthaven purchases the copyrights from the Las Vegas Review-Journal and then proceeds to file a lawsuit.  What makes this particular method unusual is that it is common practice in the newspaper industry for copyright holders to ask for infringers to take down infringing material by e-mail or through a cease and desist letter before pursuing legal remedies.  Many of the defendants in Righthaven lawsuits are non-profit organizations or small-time bloggers who simply do not have the financial resources to litigate.  Consequently, the vast majority of suits have led to settlements.  While each individual settlement is small, ranging from $2,000 to $5,000 in most cases, in total, the revenue that Righthaven accumulates with little work is significant.  As of May 6, 2011, Righthaven has filed 275 copyright infringement lawsuits and has accumulated an estimated $490,000 in total money settlements.  Righthaven filed its first complaint on March 13, 2010.

One of the countless Righthaven lawsuits, but one of the only two which is currently on appeal is Righthaven LLC v. Realty One Group, Inc. The defendant in the case is Michael Nelson, who is a licensed realtor is Las Vegas, Nevada who manages a blog which provides information regarding home ownership in the area.  On or around May 10, 2010, Nelson posted an unauthorized copy of a news article which had been published by the Las Vegas Review-Journal.  The article included both factual information concerning a new federal housing program along with the author’s commentary on the impact that the program would have on the Las Vegas housing market.  On June 25, 2010, Righthaven filed a complaint against Nelson alleging copyright infringement pursuant to 17 U.S.C. § 501.  Nelson then filed a motion to dismiss alleging the defense of fair use.  In granting the defendant’s motion to dismiss, the court weighed the four fair use factors and held that the defendant’s use of the plaintiff’s work constituted fair use.  Under federal copyright law, fair use may be justified for purposes such as criticism, news reporting, comment, scholarship, teaching, or research.  In deciding whether a particular use falls under the fair use exception to copyright infringement, the following four factors should be analyzed: (1) the character and purpose of the use, including whether the use is for commercial purposes or for nonprofit educational purposes; (2) “the nature of the copyrighted work”; (3) the substantiality and the amount of the work used compared to the total copyrighted work; and (4) the effect of the use on the value of the copyrighted work or its potential market.

Concerning the first factor, the purpose and the character of the use, the court found that the use was both educational and commercial.  The purpose of Nelson’s blog was to provide information to potential and current homeowners in the Las Vegas market as well as providing recent developments in the industry and Nelson’s opinion on the condition of the market.  In spite of this arguably educational use of the copyrighted material, the principal purpose of the defendant’s blog was to attract business for himself as a realtor in the Las Vegas market.  Concerning the second factor, the nature of the Las Vegas Review-Journal’s article was both factual and opinion-based given that the article included news reporting as well as reporter commentary.  However, the portion copied by the defendant contained factual news reporting concerning a federal housing program that had recently come into effect.  The court compared the defendant’s use to the CBS Broadcasting casewhere the republication of a video which depicted a news report was held to be fair use as it was a factual information republication rather than a creative one.

Concerning the third factor, the portion of the copyrighted work used, the defendant only copied eight out of the thirty sentences in the news article, meaning approximately twenty-seven percent of the original article was used by the defendant.  If an individual copies only however much is necessary of the greater work for the purpose of providing “relevant factual information,” this supports fair use.  The court reasoned that the defendant’s use of only eight sentences of a thirty sentence article weighed in favor of fair use.  Considering the fourth factor, the effect of the use on the market, the court found that the defendant’s use would likely have a minimal effect or no effect at all on the market for the copyrighted article.  Notably, the defendant did not copy the portion of the article that contained the Las Vegas Review-Journal author’s original commentary.  As a result, a reader’s desire to read the entire original article was not compromised due to the defendant’s use of just a portion of the article, and thus the market for the copyrighted work was not diluted.  In addition, the defendant directed readers of his blog to the original article on the Las Vegas Review-Journal’s website.  By balancing the four fair use factors, the court found that the defendant’s use did indeed constitute fair use.

What makes this decision so remarkable is that the court granted the defendant’s fair use argument on a motion to dismiss, which is exceptionally rare.  It is extremely difficult to analyze fair use questions without relying on disputed facts; this is why fair use questions are rarely decided on a motion to dismiss.  The court’s decision in this case makes it seem as if the court cut some procedural corners, probably due to the fact that it has been bombarded with several hundred Righthaven lawsuits in less than a year.

By filing a high volume of small copyright infringement claims against out-of-state defendants, Righthaven places defendant’s in a position where litigating the case exceeds the value of the disputed claims.  By immediately pursuing a lawsuit rather than sending a cease and desist letter as is standard in the industry, Righthaven has been able to accumulate settlements that exceed the “reasonable value of the claim.”  Copyright owners most certainly have a right to enforce their rights against infringing use.  However, when legal remedies are used in an unreasonable manner for the primary purpose of generating revenue, the legal system is demeaned and public perception of reasonable intellectual property protection is undercut.

In Righthaven cases that do proceed to trial in the future, it is probable that judges will only award Righthaven the minimum statutory damages and no fees.  This would be a blow to Righthaven as it would have to use its time and financial resources to litigate a case that would yield less than its typical initial settlement offer.  Thus, there are two possible ways to deal with the Righthaven problem.  One would be to encourage defendants to litigate their cases against Righthaven if they have meritorious claims rather than agreeing to settlements.  If a large number of defendants engage in litigation against Righthaven, the firm’s profit margin will be vastly reduced.  Eventually, Righthaven would reach a point where its “business model” would no longer be profitable.  Another possible solution would have to come from Congress.  If the Copyright Act were revised to reflect the new challenges to copyright that are presented by the internet, such as a more expansive fair use doctrine, accessibility would be increased.  Regardless of a solution, Righthaven’s tactics are disturbing and should be curtailed in some manner. Unfortunately, there does not seem to be a quick fix to the Righthaven presence on the internet at the moment.

* Vlad Vidaeff is a third-year JD/MBA student at Wake Forest University and is Development Editor for the Wake Forest Journal of Business and Intellectual Property Law.  He holds a Bachelor of Arts in Sport Management and a minor in French from the University of Michigan.  Upon graduation in May 2013, Mr. Vidaeff intends to either practice intellectual property law, international law, or sports and entertainment law.

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