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Company acting over use of newspaper snippets did not have right to sue, says US court


A company which sued internet users who quoted from a newspaper did not have the right to pursue that legal action, a US judge has said. The company may face legal action itself over claims made to the court.

US District Judge Roger Hunt of Nevada has ordered Righthaven to explain why it should not be punished for its 'flagrantly false' ownership claims in over 200 copyright lawsuits.

Righthaven had a deal with the publisher of the Las Vegas Review-Journal, Stephens Media, that it could take copyright infringement actions against people who posted parts of stories online.

The company has been relying on a loophole in copyright law to pursue websites, including personal blogs and discussion forums.Righthaven claimed that Stephens Media had transferred copyright in articles from the Las Vegas Review-Journal to Righthaven under a Strategic Alliance Agreement (SAA). This agreement gave the company the right to sue when content from the newspaper was used.

In a case over the use of a four-line excerpt by a user of political forum Democratic Underground it was told that it did not have the right to take action.

Judge Hunt discovered that the SAA merely transferred a 'bare right to sue' for copyright infringement, while Stephens Media retained ownership and publishing rights over the articles. Only a copyright owner can sue for breach of copyright.

"The court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the court," Judge Hunt said in his ruling (16-page / 137KB PDF).

Judge Hunt noted that Righthaven and Stephens Media had agreed to share the proceeds of any damages awards or settlements equally under the SAA. In each of the cases Righthaven failed to disclose whether third parties had a 'pecuniary interest', which is a legal requirement in the state of Nevada.

The judge suggested the company had likely deceived other judges to allow lawsuits on behalf of Stephens Media copyrights to go forward.

"Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this district," the ruling said.

"Accordingly, the court orders Righthaven to show cause, in writing, no later than two weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the court," the ruling said.

Righthaven has filed 274 copyright lawsuits since March 2010, according to the Associated Press.

Michael McCue of Lewis and Roca, a law firm which has represented more than a dozen of the people targeted by Righthaven, told OUT-LAW Radio that most people chose to settle the cases because they could not afford to go to court to defend themselves.

"Although they believe that what they have done is legal and believe that they have strong defences, in most cases it is not worth spending money on lawyers to defend them. It is much more prudent to spend a few thousand dollars in some cases to just settle the case," he said.

Technology law news is also available from Bootlaw, a free resource for technology start-ups, with regular events hosted by Pinsent Masons.

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