The Righthaven lawsuits: What is fair use of online publications?

By Jeff Neuburger of Proskauer Rose LLP

Righthaven LLC is an intellectual property enforcement firm that was formed by a group of copyright attorneys and Stephens Media, the publisher of the Law Vegas Review-Journal. The company has been making a name for itself; since early 2010, has brought two hundred copyright infringement suits in the District of Nevada alone against Web site owners, forum operators and bloggers alleged to have unauthorized copies of the Review-Journal's articles on their sites. Recently, it has added other media company clients and expanded its enforcement efforts to other federal districts. Righthaven is also drawing considerable fire from critics who have denounced the company as a copyright troll, and an attack dog. The criticism is directed at Righthaven's business model.    

The lawsuits target individuals and small, usually non-profit entities and other Web sites that have failed to take advantage of the DMCA safe harbor protection against liability for material posted by a third party. Righthaven makes no takedown demands prior to filing its complaints, which seek not only damages but transfer of the defendant's domain name. The company then presses for a quick settlement.

So far, about half of the Righthaven lawsuits have settled, probably for the low four figures. Righthaven Lawsuits, a Web site that tracks the Righthaven litigation, estimates that Righthaven has taken in about $364,000 thus far. But some Righthaven targets are fighting back, raising defenses such as copyright fair use and implied license, in several cases with the assistance of the Electronic Frontier Foundation.

Righthaven's lawsuits in the District of Nevada have so far yielded two rulings on the copyright fair use defense and the doctrine of implied license, and may soon yield further rulings on those issues. These opinions should be noted by content owners. The opinions in Righthaven v. Klerks and Righthaven v. Realty One Group suggest a broad view of the fair use doctrine in the online context, and perhaps a potentially even broader view of the application of the doctrine of implied license.

Righthaven v. Klerks - Fair Use a "Meritorious Defense"

Jan Klerks raised the defense of fair use after he learned from a newspaper reporter that Righthaven had brought an action against him and was about to obtain a default judgment. Klerks, the complaint alleged, was the registrant of a domain name at which an online forum was hosted; the article in question had been posted by a third party user of the forum. In Righthaven v. Klerks, in an opinion rendered on September 17, 2010, Judge Gloria Navarro agreed that Klerks's fair use defense was "sufficiently meritorious" to warrant reopening the case.

Judge Navarro found that the use of the entire article weighed against a finding of fair use, but concluded that two of the other fair use factors weighed in favor of Klerks. Regarding the purpose and character of the use, Judge Navarro concluded that "it could be found" that the third-party user who posted a complete copy of the news article did so "for the non-commercial purpose of sharing information and not for making a profit for the reader or the site." Regarding the nature of the copyrighted work, the court found that the article was "primarily informational," and, therefore, favored a fair use finding. The court left for future consideration, as a question of fact, what effect the posting of the article had on the market for or value of the copyrighted work.

The Defense of Implied License

Judge Navarro also found that Klerks had made a plausible argument that his use fell under the doctrine of implied license, pointing to the fact that the newspaper publisher "encouraged people to save and share the article with others without restrictions, and permitted users to "right-click" and copy the article from its website." Judge Navarro found that Klerks had made a plausible argument that there was an implied license "especially in light of the established and accepted custom of users freely and openly sharing certain information posted on the Internet."

Righthaven v. Realty One Group - Fair Use as a Matter of Law

Righthaven sued Realty One Group and its agent Michael Nelson, who maintained a blog on which he posted an eight-sentence excerpt from a thirty-sentence Las Vegas Review-Journal article, along with a link to the source. On October 19, in Righthaven v. Realty One Group, Judge Larry Hicks dismissed the action as to Nelson, finding that the his use of the article was fair as a matter of law.

Judge Hicks found that while Nelson's blog was both educational and commercial, its underlying purpose was to promote Nelson's business, thus this factor weighed against a finding of fair use. But the three other fair use factors weighed in favor of Nelson. Judge Hicks found that the article contained both factual news reporting and reporter commentary, and the broker copied only the factual portion of the article, not the commentary. As to the amount used, the court pointed to the fact that only eight out of thirty sentences were used.

In contrast to Judge Navarro, who found that the effect of the use upon the potential market for the work requires fact-finding, Judge Hicks concluded as a matter of law that this factor favored Nelson. He reasoned that because Nelson did not copy the reporter's commentary, "his use does not satisfy a reader's desire to view and read [the entire article including] the author's original commentary and thereby does not dilute the market for the copyrighted work." The court also noted that Nelson had included a link to the source of the article containing the full text.

Although Righthaven ultimately settled with Nelson, the company deliberately suffered the entry of an adverse judgment with respect to Nelson's employer, Realty One, and filed a notice of appeal to the Ninth Circuit on February 11.

Righthaven v. Democratic Underground - The Copyright Troll Defense

Righthaven v. Democratic Underground is one of the cases in which the EFF has become involved. The defendants are an online political forum and its operator, David Allen. Righthaven seeks to hold them responsible for the posting of an article by a third party user of the forum. In addition to raising fair use and implied license, the EFF's answer and counterclaim filed in the case challenge every aspect of Righthaven's litigation campaign, describing is as "a particularly abusive instance of a broad and aggressive strategy" by a "sham" plaintiff.

The EFF has focused on Righthaven's status as an assignee of the rights that it asserts, alleging that it has filed multiple lawsuits, that it is in the business of enforcing copyright rights, and that it does not otherwise exploit the assigned rights. As to Stephens Media, the original copyright owner, the answer and counterclaim details at length various aspects of its online presence, including the fact that, according to the EFF, Stephens Media has not properly filed a proper designation of agent to receive notices of infringement under the DMCA. The legal relevance of these and other assertions going to the conduct of Righthaven and Stevens is left unstated.

The EFF has also raised the implied license defense noted by Judge Navarro in the Klerks case, asserting that the Law Vegas Review-Journal makes its news articles available for copying and downloading "at least 19 different ways," including bookmarking them on social media sites, e-mailing them, and printing physical copies.

EFF v. Righthaven

Following the ruling in the Realty One case in which Judge Hicks found fair use as a matter of law, Righthaven sought to voluntarily dismiss the complaint in the Democratic Underground case, which is factually similar in that it involves a five-sentence excerpt from a 54-sentence article. Stating that it disagreed with the Realty One ruling, Righthaven asserted that it was nevertheless moving to dismiss "in the interest of judicial economy." The EFF objected, arguing that the action was "meritless from its inception" and should only be dismissed on the condition that the defendants be permitted to apply for an award of attorney fees. The respective motions are pending.

The EFF is also involved in the representation of the defendants in Righthaven v. Center for Intercultural Organizing, which involves the posting of an entire article by the operator of the CIO site. On the same day that Righthaven filed its motion to dismiss the Democratic Underground case, Judge James Mahan, who is presiding over the CIO case as well, sua sponte ordered a hearing on whether that case should be dismissed on grounds of fair use as well. The parties are now contesting the need for further proceedings, with Righthaven arguing that further fact-finding is needed before the fair use issue is decided and the EFF pressing for an immediate decision. The court has allowed the submission of a amicus brief on the issue of whether further fact-finding is needed to determine the fair use issue, over Righthaven's objection that the amici, Professor Jason Schultz of Boalt Hall School of Law, is affililiated with the EFF.

The motion in the CIO case is set for hearing before Judge Mahan in March.

The resolution of the motions in the Democratic Underground and CIO cases are likely set the direction of Righthaven litigation in the District of Nevada for the foreseeable future, at least until the Ninth Circuit rules on the appeal filed in the Realty One case.

What's Missing from the Righthaven Rulings

Regardless of one's position on the issues raised by the Righthaven litigation, the opinions rendered thus far are unsatisfying and incomplete in their treatment of the fair use and implied license doctrines. That may be understandable in the Klerks case, where the court was determining only whether the fair use defense was meritorious as a threshold matter. Nevertheless, some of the statements in the opinion are troubling in that they express a less than complete view of the jurisprudence on fair use.

For example, the court in Righthaven v. Klerks found that the use of an entire work merely weighs against a finding of fair use. But there is significant authority that use of an entire work weighs heavily against such a finding, even where the purpose of the use is not for profit. An example may be found in Los Angeles Times v. Free Republic, decided in the District of California in 2000, in which the court ruled that the online posting of full-text copies of newspaper articles for the purpose of criticism and comment was not fair use. "There is little transformative about copying the entirety or large portions of a work verbatim," the court in the Free Republic case found, citing numerous opinions.

As evidenced by the Free Republic ruling, fair use determinations are notoriously fact-sensitive and require careful weighing and balancing of the fair use factors, including the over-arching issue of whether the use is tranformative. Yet in the Realty One opinion where fair use was found as a matter of law, there is no discussion of whether the copying of an article excerpt was transformative.

The treatment of the implied license issue in the Klerks case was also truncated by the preliminary nature of the court's ruling. But it is nevertheless concerning, in that it presents only one aspect of the implied license doctrine, that is, conduct on the part of a copyright owner from which consent to a use may be inferred. The court's preliminary treatment of the issue suggests that any copyright owner that makes its content available on the Internet is, by that act alone. consenting to the unrestricted copying and dissemination of the work by third parties, in unlimited venues and contexts, including online posting. The court's sweeping reference to the "established and accepted custom" of information-sharing on the Internet ignores the role of online terms of use in limiting the dissemination and use of works posted online.

Conclusion

There will be more to come from Righthaven, the EFF, and the courts, on the issues of fair use and implied license. But important lessons can be taken from these cases, even at this stage.

Online publishers should consider the argument the EFF is making that allowing users to share content gives rise to a very broad implied license to distribute publications online, and revisit the substance and presentation of their online terms of use. Making clear to users what kinds of sharing is permitted and what is prohibited may guard against a similar argument being made with respect to their content. For example, the Las Vegas Review-Journal's online terms includes an express license to reproduce the headline and the first paragraph of a story, along with a link back to the source article. The effect of that provision has yet to be addressed.

The simplest lesson is for Web site owners. Those who have been sued by Righthaven as a result of material posted by users of their site could have avoided litigation by adopting DMCA-compliant terms of use and designating a DMCA agent. It costs nothing, it is simple to do, and (assuming all DMCA requirements are met), it is effective protection against copyright infringement lawsuits resulting from third-party posting.

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