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September 1, 2014

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Can Righthaven survive latest legal blow?

VEGAS Inc archives

Righthaven LLC’s obituary has been written before — prematurely, that is.

That’s why not everyone is convinced that the Las Vegas copyright lawsuit filer will be done in immediately by a federal judge’s order Monday granting a request that a receiver be appointed to auction Righthaven’s key assets: its copyrights.

Such an auction, if it happens, would seem to put Righthaven out of business as it would no longer have copyrights to sue over. In addition, it wouldn’t be able to prosecute existing lawsuits and wouldn’t be able to continue with appeals over rights it no longer owns.

The back story is well known: Righthaven started making headlines in March 2010 with what turned out to be 275 no-warning infringement lawsuits over unauthorized online posts of material from the Las Vegas Review-Journal and the Denver Post.

After initially earning what are believed to be hundreds of thousands of dollars in settlements, Righthaven has suffered a series of courtroom defeats. In four cases, defendants were protected by the fair use doctrine in using material from the R-J. In addition, six federal judges in Nevada and Colorado have found Righthaven lacked standing to sue because, even after obtaining copyrights for its lawsuits from the newspapers, the newspapers maintained control of the content at issue.

Along with the legal defeats for Righthaven come financial consequences for Righthaven in the form of orders that it pay the legal fees of prevailing defendants.

Righthaven, however, has so far survived and managed to not comply with court orders that it pay the $63,000-plus in attorney’s fees of Wayne Hoehn, a defendant who defeated Righthaven in court.

Even after U.S. Marshals were ordered to seize the company’s assets to cover Hoehn’s judgment, they apparently came away with less than $1,000 and Righthaven continued to accrue expenses litigating its other lawsuits.

Monday’s order by U.S. District Judge Philip Pro in Las Vegas sets in motion a process proposed by Hoehn’s attorneys in which Lara Pearson, a Lake Tahoe-area intellectual property attorney with the firm Rimon Law Group P.C., becomes Righthaven’s receiver.

Then, under Pro’s order, Righthaven must transfer all its intellectual property and other intangible property to Pearson, who is supposed to auction it in partial satisfaction of Hoehn’s $63,000 in costs. The property would include the copyrights, a Righthaven trademark and its website domain name.

The order approved by Pro on Monday gives Righthaven seven days to transfer these assets to Pearson and then certify to the court it has complied with the receivership order.

Should it fail to do so, the order says, the court should “issue a writ of bodily attachment for Righthaven’s officers” so U.S. Marshals can haul them to court to get them to comply.

One of Hoehn’s attorneys, Marc Randazza, has repeatedly pointed out Righthaven could have avoided this trouble if it simply put up a few thousand dollars to obtain a bond of $34,045 — the amount of Hoehn’s initial fee award against Righthaven after he defeated Righthaven in Pro’s court on both standing and fair use grounds.

The bond would ensure Randazza Legal Group would get paid should Hoehn’s victory be upheld by the 9th U.S. Circuit Court of Appeals.

“I will never understand why Gibson was not willing to be reasonable before it came to this,” Randazza said Monday, commenting on Las Vegas attorney and Righthaven CEO Steven Gibson.

A request for comment on Pro’s order was placed with Righthaven on Monday. Pro noted in his order that after Randazza filed the request for a receiver and copyright auction on Nov. 14, Righthaven didn’t acknowledge or respond to the court filing.

“Plaintiff has failed to file a response and therefore, in accord with the local rules of this court, consents to the granting of defendant’s motion,” the judge wrote in his order.

On top of that, U.S. Magistrate Judge Robert Johnston on Monday ordered Gibson and his wife, Raisha “Drizzle” Gibson, to appear in court on Jan. 5 for a judgment debtor examination to “provide testimony under oath concerning the location of Righthaven’s assets.”

One Las Vegas attorney familiar with Righthaven says he suspects there may be more court action before Pearson obtains Righthaven’s 277 copyrights, which cover newspaper and sports betting content and two porn movies.

Righthaven has based 275 of its copyright infringement lawsuits filed since March 2010 on the copyrights it obtained from the Review-Journal and Denver Post. It has filed one suit over sports betting content, but hasn’t sued anyone over the porn movies.

“With Steve Gibson, expect the unexpected. One thing is for certain — he will not go down without a fight,” said the attorney, who spoke on the condition his name not be used.

Whether Gibson would appeal Pro’s ruling, put Righthaven into bankruptcy or take some other step to hold on to the copyrights was unknown late Monday.

The order approved by Pro on Monday even anticipates that Gibson will try to thwart the receivership request.

“Righthaven will seek further delays — this court should not grant them,” Randazza’s filing says as it recounts numerous instances of Righthaven stalling in many cases.

“Fraudulent transfers (to insiders) are the only outcome of Righthaven’s delays,” the filing says.

Pro’s order comes at a time when Righthaven — suffering from the series of courtroom defeats — has continued to spend money on outside attorneys performing legal work in federal courts in Nevada, Colorado and South Carolina; and in the 9th and 10th U.S. Circuit Courts of Appeals where it’s appealing some of its legal setbacks.

But, as Randazza has noted, the $63,000 owed to Hoehn’s legal team is just the beginning of Righthaven’s troubles when it comes to paying the fees of defendants who prevail against Righthaven lawsuits.

Three judgment creditors are owed $215,000 and more fee awards are likely against Righthaven, particularly in its failed and heavily-litigated lawsuit against the Democratic Underground.

Righthaven has been hoping one of the Nevada federal judges would uphold its right to sue under a new lawsuit contract with the R-J — a pact Righthaven says gives it full control of the copyrights.

With its right to sue revived, Righthaven could start suing again and then start collecting lawsuit judgments and, theoretically, start paying off some of its creditors.

But through Monday, two key federal judges hadn’t ruled in longstanding Righthaven cases where Righthaven has been hoping for a reversal of its fortunes.

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  1. Chunky says:

    He hopes the courts can eventually force Mr. Gibson, his wife and their partners to reveal where the money went.

    They've been gaming the legal system since day one and seem to be somewhat well versed at it so there's no reason to believe they won't go down without a fight.

    That's what Chunky thinks!

  2. One thing for certain. Righthaven lawyers were good at strong arming settlements but very bad at lawyering. They are still convinced they can talk their way out of anything but in fact they are only digging themselves in deeper.

  3. When the auction is scheduled I call dibs on Stevie's bluetooth gizmo

    file:///C:/Users/Agent/Desktop/0803_sun_righthaven_t653.jpg

  4. Yea Dave, What's that IP address again?