When’s the last time –in an intellectual property case or any case– you’ve heard of counterclaims of champerty (an improper arrangement where a party with no interest in a lawsuit agrees to finance and bear the expense of litigation in exchange for a portion of the proceeds) or barratry (creating legal business by stirring up disputes and quarrels, generally for the benefit of the lawyer who sees fees in the matter)?
Perhaps it’s long overdue. These are the counterclaims now being levied against the specious litigation mill, Righthaven, LLC. Righthaven, which is co-owned by Vegas attorney Steven Gibson and Stephens Medial, LLC, has an interesting [alleged] lawsuit business model: First, it scours the Internet for copyrighted content owned by its newspaper clients, including Fair Use multi-line excerpts of articles (not entire works). Next, the newspaper-client licenses the work to Righthaven. Righthaven then sues –without any takedown request– the party alleged to have infringed the work. Many, if not most, of the 215 suits filed so far in the U.S. Court for the District of Nevada are mom & pop bloggers. As part of its business model, Righthaven claims damages of up to $150,000 under the Copyright Act’s statutory damages provisions and demands transfer of the Web site domain to Righthaven. These threats have been successfully used, thus far, to intimidate some defendants into a quick settlement.
Righthaven has already lost one or two suits under Fair Use. In Righthaven v. Realty One Group, Inc., the court granted a Motion to Dismiss on Fair Use grounds. As aptly argued, by counsel for Realty One:
Plaintiff brings these claims with unclean hands, which mandates dismissal of this action. The defense of unclean hands can be invoked as a defense in a copyright infringement action. See 4 Nimmer on Copyright § 13.09[B]. The actions of Plaintiff Righthaven in pursuing the instant action for copyright infringement smack of barratry. Righthaven was created by its counsel, Steven Gibson, apparently to pursue violations of the copyrights it purchased from the Review Journal. Righthaven is not the author of the work that was alleged to have been copied. In fact, Righthaven purchased the copyright in the Program Article sometime after the alleged infringement occurred, and likely purchased the copyright with the specific intention of pursuing this action against Mr. Nelson.
The barratry claim was not reached in Realty One, because the case settled one day before the Order granting the Motion to Dismiss issued. But, separately, a judge in Righthaven LLC v. Center For Intercultural Organizing sua sponte ordered Righthaven to show cause why the case should not be dismissed under the 17 U.S.C. § 107 Fair Use exception. The show cause hearing is set for February 10, 2011.
And most recently, counsel for Choudhry and Pak.org –in addition to filing a Motion to Dismiss– filed separately an Answer and counterclaim for, inter alia, “barratry, champerty, and maintenance.”
Technologically, Righthaven v. Choudhry may be interesting, because Righthaven is suing for an allegedly protected work that appeared to exist on Choudhry’s site, but which Choudhry alleges actually was not hosted by his site. In the Motion to Dismiss, Choudhry’s counsel explains that the image was substituted in by the client’s browser by means of an “inline link . . . by virtue of an automated RSS feed published by a third party.” Choudhry defined inline link as, “a line of computer code used in internet web pages to direct a user’s browser program to a third-party site to retrieve an image directly from that thirdparty site.” Relying on Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1160-1161 (9th Cir. 2007), Choudhry argued that inline linking does not reproduce, distribute, or display copyrighted material. Rather than providing an image directly to an end user, inline linking directs the web browsers of its users to load content from a third party source. Thus, it is the third party that is reproducing, distributing, or displaying any allegedly infringing image, not the provider of the inline link.
More importantly, the Choudhry case, and others appear to demonstrate a lack of a good faith inquiry into the facts, as required by Fed.R.Civ.P. Rule 11. The pro se defendant in Righthaven v. Eiser, argued as much, when she alleged in her response that she did not post the newspaper column at issue, and that Righthaven’s suit “was undertaken without any diligence in determining the facts or party allegedly responsible for placing the allegedly owned and copyrighted article on the Internet weblog.”