Righthaven could now be called “Rights Haven’t” for real. Long-time Righthaven critic Steve Green gleefully reports that a Las Vegas federal judge has stripped Righthaven of 278 copyrights and its own trademark.
Apparently Righthaven couldn’t even be bothered to show up at the hearing, and the judge decided they had acquiesced to the transferal by default.
Marc Randazza, a Las Vegas attorney representing Hoehn, said after the hearing that [Judge Philip] Pro’s order wipes out Righthaven’s interest in all of its pending lawsuits and appeals. Since Righthaven now owns no copyrights, it has nothing to sue over or litigate over in appeals courts, he said.
“It moots them,” Randazza said of the appeals.
The transfer is for the sole purpose of satisfying the legal fee award of just one of the defendants Righthaven sued for copyright violation. There are a number of other victorious defendants lining up to have their legal fees compensated, and Green suggests that they might go after Righthaven’s backers and investors since the company no longer had any assets to satisfy those awards. It’s unclear to me how they can do this, given that Righthaven was an LLC, which should theoretically limit the liability to just the company itself, but perhaps there’s some legal loophole they can use.
Regardless, the whole thing couldn’t happen to a better company, and it sends the message that using copyrights, the Internet, and the already-overloaded legal system as your business model just won’t fly. Now if only someone could do the same to the patent trolls…
It depends on why an LLC is set up. If it was set up to commit fraud, they can definitely go back after whoever set it up. That’s fairly difficult to prove, but not impossible if true. In Righthavens case all they would need to find is documentation proving that the backers knew that Righthaven didn’t actually have the rights to sue. They should also be going after sanctions for the lawyers involved with Righthaven too. They really should have known they didn’t have rights to sue.
I’m not quite sure if copyright law was clearly enough defined when Righthaven began its copyright jihad to legally justify ‘breaking the corporate veil” to go after the investors or breaking with the usual (and vile) practice in law that lets lawyers make threats they know no court will support.
Instead, we can only delight in the fact that copyright law has been sufficiently clarified that it is unlikely that in the future a band of investors and lawyers will try something similar. To me, the reasoning in the court decision was sound: if you don’t lose money when a copyright is violated, you can’t sue for damages. You can’t simply buy the rights to damages that others suffered.
And while we can’t punish those involved as effectively as we might hope, we can do what we can to compensate those who actually faced out-of-pocket expenses for their lawsuits. Apply all the money we can squeeze out of what’s left of Righthaven for that.
For the rest of the money that’d be needed, I’d suggest that the various state legal societies compensate the lawyers who defended these victims for the services they provided, sparing the victims that cost. State bar associations have funds set aside to deal with situations where people suffer from the unethical behavior of lawyers. This would be an appropriate use of those funds. It might even provide a rationale to yank the licenses of Righthaven’s lawyers for unprofessional conduct. The definition of that is broader than illegality.