Righthaven defendant wins first lawsuit dismissal motion

By Steve Green

Published Wednesday, Oct. 20, 2010 | 12:54 p.m.

Updated Wednesday, Oct. 20, 2010 | 1:54 p.m.

The Las Vegas Review-Journal online copyright infringement lawsuit campaign sustained a setback Tuesday when a judge granted a real estate agent's motion for dismissal, ruling his posting of part of a Review-Journal story on his website amounted to fair use under copyright law.

But in another case involving a Review-Journal story on Wednesday, copyright enforcement company Righthaven LLC received a boost when a second judge denied a motion to dismiss and authorized the parties to engage in evidence-gathering through discovery.

In the first case involving the real estate agent, this apparently was the first time a defendant sued by Righthaven, the Review-Journal's copyright enforcement partner, has won a dismissal motion on the merits.

Many of the 151 Righthaven lawsuits filed since March have been settled and others are in various stages of litigation.

Righthaven is a Las Vegas company that detects online infringements to Review-Journal material, obtains copyrights to that material and then sues alleged infringers on a retroactive basis and typically without warning.

An affiliate of the parent company of Review-Journal owner Stephens Media LLC has invested in Righthaven, and Stephens Media participates in the lawsuits by providing the copyrights at issue, causing some observers to call Righthaven the Review-Journal's copyright enforcement partner.

U.S. District Judge Larry Hicks granted a motion to dismiss filed by an attorney for Las Vegas real estate agent Michael Nelson, who along with Realty One Group Inc. and a Realty One executive were sued by Righthaven after Nelson allegedly posted Review-Journal stories on his website.

Court records show these postings appeared to include links to the Review-Journal website, but that Nelson in some cases didn't credited the Review-Journal for the information. This caused Righthaven to accuse him of plagiarism.

Righthaven, in its June 25 lawsuit, alleged Nelson and codefendants "copied, on an unauthorized basis, a significant and substantial portion" of an April 30 Review-Journal story called "Program may level housing sale odds" as well as two other Review-Journal stories about real estate.

The "housing sale odds" story that Righthaven obtained a copyright for and sued over consisted of 30 sentences, but Nelson reproduced "only" the first eight sentences, Hicks wrote in his ruling that was filed Tuesday.

"The court finds that this use weighs in favor of a fair use of the copyrighted material," Hicks wrote in his ruling, citing case law stating "copying only as much as necessary in a greater work (story) to provide relevant factual information weighs in favor of fair use."

As to whether the online posting affected the potential market for the Review-Journal story, Hicks wrote: "Nelson’s use of the copyrighted material is likely to have little to no effect on the market for the copyrighted news article. Nelson’s copied portion of the work (story) did not contain the author’s commentary. As such, his use does not satisfy a reader’s desire to view and read the article in its entirety the author’s original commentary and thereby does not dilute the market for the copyrighted work. Additionally, Nelson directed readers of his blog to the full text of the work. Therefore, Nelson’s use supports a finding of fair use."

Hicks ruled in favor of Nelson despite finding that his blogsite where the information was posted was commercial in nature, writing "the underlying purpose of providing this information is to create business for himself as a duly licensed Realtor."

In Nelson's favor, Hicks found the portion of the story that Nelson copied contained "factual news reporting about a new federal housing program, which supports Nelson’s fair use of the copyrighted information."

While the Review-Journal story at issue included both "factual news reporting and reporter commentary," Hicks found Nelson's posting of the factual reporting part of the story was protected under case law in which a rebroadcast "of a video depicting a news report was a fair use because it was informational rather than creative."

This case gained some notoriety when Nelson's Las Vegas attorney, Sergio Salzano, accused Righthaven in court papers of coming to the case with "unclean hands" and of "barratry," or the persistent incitement of litigation -- charges denied by Righthaven. Hicks didn't address those issues in Tuesday's ruling.

The lawsuit remains active against Realty One, which never responded to the lawsuit and for which a "clerk's default" was issued on Oct. 6.

Unless Realty One moves to have the clerk's default canceled, Righthaven can now seek a judgment with damages against Realty One.

Righthaven CEO Steven Gibson, a Las Vegas attorney, on Wednesday said Righthaven likely won't appeal the Nelson ruling since it reached a confidential settlement with Nelson prior to the ruling being filed.

It's unclear if the judge could have been aware of that settlement, since there's no mention of it in the court docket. The judge's ruling was issued without a hearing and was based on the paperwork on file with the court.

``I would have welcomed the opportunity to have a hearing before the judge on the motion'' to dismiss, Gibson said.

If a settlement was not in place, Righthaven would consider appealing the ruling to the 9th U.S. Circuit Court of Appeals, Gibson said.

Gibson said his reading of the ruling indicates that fair use wouldn't be a viable defense if the entire story had been posted without authorization, which he said is the situation in the vast majority of Righthaven's lawsuits.

Righthaven observers were surprised that the case against Nelson would be dismissed at this early stage of the proceedings, with copyright scholar Eric Goldman saying "it is extremely unusual to win a fair use defense on a motion to dismiss."

Procedurally, the court (at this point) must accept all of Righthaven's factual allegations as true, and the court is not permitted to resolve any factual disputes between the parties. (Absent the settlement) I could see Righthaven protesting that the court made its decision based on disputed facts. ... This ruling could be vulnerable on those procedural grounds," said Goldman, an associate professor at the Santa Clara University School of Law in California and director of the university's High Tech Law Institute.

Goldman, a critic of Righthaven's business plan that has been criticized as involving frivolous lawsuits and settlement shakedowns, added: "Putting aside the procedural issues, the court's message to Righthaven was clear: the judge cut some procedural corners because Righthaven's lawsuits -- especially this case -- are bogus."

"The court nails it when the opinion says `Nelson’s use of the copyrighted material is likely to have little to no effect on the market for the copyrighted news article.' Everyone but Righthaven and the Las Vegas Review-Journal have known this from the start; but it's noteworthy that the judge embraced this obvious reality on a motion to dismiss. Because the case so clearly lacked merit, the judge prudently is trying to end the case early rather than letting it drag on for months and years, wasting lots of time and money in the process," Goldman said.

"Righthaven has repeatedly insisted that almost all of its lawsuits involve copies of 100 percent of the article. This opinion shows why that approach makes sense, because a lawsuit over a blog reposting eight factual sentences of a 30 sentence newspaper article is ridiculous," he said. "If the ruling holds up, this could be a good case for cost- and fee-shifting, which could result in Righthaven writing a check to the defendant. Obviously, any such fee-shifting awards against Righthaven would severely degrade its profits."

Ryan Gile, a Las Vegas attorney at the firm Weide & Miller Ltd who has represented other Righthaven defendants, noted this case involved just the first eight sentences of a 30-sentence story.

"This was an important factor in supporting a fair use defense that you don’t see in a lot of the other Righthaven cases. I think most of the other cases that Righthaven has pursued since that time have been against websites/blogs posting the entire article – and it can be more difficult to invoke the fair use defense when the entire article is copied verbatim," Gile said.

"So while this is an important decision for those defendants that only copied and pasted some portion of the Review-Journal’s article because it shows the court’s willingness to make a fair use determination on a motion to dismiss, it probably does not impact the majority of the cases currently pending. Righthaven probably should’ve never filed this complaint in the first place and probably will not appeal the court’s decision," Gile said.

Hicks' ruling does not establish a precedent for the other Nevada federal judges hearing Righthaven cases.

But it's sure to attract the attention of defense attorneys -- for instance attorneys for the Electronic Frontier Foundation defending the Democratic Underground in a Righthaven case they have suggested is even weaker than the Nelson/Realty One case.

That's because the Democratic Underground case allegedly involved an even smaller portion of a Review-Journal story being copied -- and in that case the material allegedly was posted by a third-party message board user as opposed to being posted by the website owner or webmaster.

Separately on Wednesday, Gibson and Righthaven prevailed when U.S. District Judge Howard McKibben in Reno denied a motion for dismissal in a Righthaven lawsuit against the operator of a nonprofit emergency medical services website based in New Hampshire called EMTCity.com.

EMTCity attorneys with the Las Vegas office of the law firm Lewis and Roca LLP argued in the dismissal motion among other things that the case was frivolous in that a Review-Journal story posted on the website was posted not by website operator Christopher Malley but by a third party from Texas.

Righthaven, however, has repeatedly argued that website operators are responsible for unauthorized news postings on their sites -- particularly if they don't comply with the Digital Millennium Copyright Act (DMCA).

The DMCA has a provision that websites seeking protection from unauthorized posts must provide a mechanism for the sites to be notified of infringements and register this information with the copyright office.

McKibben, in denying the motion for dismissal without prejudice during a telephone hearing with the attorneys, found that factual issues over jurisdiction can be explored for 45 days and at that time Lewis and Roca can renew its motion for dismissal.

Gibson, however, indicated Wednesday he's hopeful a settlement can be reached given the ruling on the dismissal motion in Righthaven's favor.

In another Righthaven development, the Bureau of National Affairs (BNA) is out with a criticism of Righthaven and its legal tactics, suggesting Righthaven has caused outrage in the legal and media spheres and that better approaches are possible between newspapers and unauthorized users of their content.

BNA says it's the largest independent publisher of information and analysis products for professionals in business and government.

Righthaven and the Review-Journal, however, say their copyright infringement lawsuit campaign is necessary to deter infringements of Review-Journal material.

Separately, Righthaven reached additional confidential settlements with these defendants:

--Gaming industry publisher Anthony Curtis, whose case attracted attention since it involved a story Curtis had made possible by supplying information to the Review-Journal

--The Free Republic, a big conservative website

--John Glenn

--Herbalscience Ltd.

--Bisig Impact Group

--American Political Action Committee

--Tom Johnson and Alan Potasnik

--Breakdown of America and Stacy Nason

--Dr. Shezad Malik Law Firm