Las Vegas's copyright crapshoot could maim social media

January 6, 2011: 12:39 PM ET

Righthaven founder Steve Gibson is going after copyright infringers using the murky legal definition of fair use to power a sue-first strategy. Yet with sharing tools booming online, could clicking a Like button lead to a lawsuit?

By John Patrick Pullen, contributor

Every year billions in wagers are laid down in the gambling halls of Las Vegas. Last spring, however, one local company, Righthaven LLC, started a new game by betting on the unlikeliest of entities in the local courts — print media. By aggressively suing alleged copyright infringers, Righthaven has taken the shooter position in an consequential game of craps that is sure to impact the future of online media, if not the entire Internet. Meanwhile, newspapers, bloggers, lawyers, and civil liberty groups have all flocked to the table to place bets of their own — and see if they can change the odds.

Formed this past spring, Righthaven is the brainchild of CEO and Las Vegas-based lawyer Steve Gibson. Though Gibson declines to elaborate on Righthaven's relationship with the Las Vegas Review-Journal, its first client, the newspaper itself has reported that they invested in and contracted with the self-described technology firm. Righthaven is owned by two entities: Net Sortie Systems, a Las Vegas-based limited liability company owned by Gibson, and SI Content Monitor, an Arkansas-based LLC owned by the Stephens family, which also owns the Review-Journal. "We have a holistic approach to deal with unauthorized reproductions and attempt to strike a balance between the ocean of the infringements out there and what the content owner provides," says Gibson.

Read a Q&A with Gibson

That approach is novel. It involves transferring the copyright of content that has been reproduced on the Internet — either entirely or in part — from the Review-Journal to Righthaven, which then files lawsuits against the alleged infringers. While the standard industry practice is to send Digital Millennium Copyright Act takedown notices to copyright offenders, Righthaven instead moves straight to litigation. Since forming this past spring, Righthaven has filed more than 195 cases seeking the copyright law's maximum of $150,000 in statutory damages as well as ownership of the domain name of offending websites. Most of the cases have settled out of court for four figure sums.

According to Gibson, Righthaven requests the offender's domain name —  an unprecedented penalty in copyright law — to guarantee that the unauthorized reproduction of content will stop. "Let's say we serve, someone refuses to answer and they default. Then they refuse to give up to their domain name and continue to infringe. The only way stop the infringementment is to have the court exercise its power," he says. "That is one scenario that we believe the court ought to be empowered."

But according to opponents of Righthaven, like the San Francisco-based Electronic Frontier Foundation (EFF), this penalty is an overreach of the law. A nonprofit legal services group aimed at promoting civil liberties online, the EFF is primarily concerned with the rights of bloggers and specifically interested in the fair use of intellectual property on the Internet. They are currently representing clients in two unsettled Righthaven cases, and are contributing to or actively organizing pro bono representation in several others. "In essence these cases are trying to extract settlements regardless of whether somebody has a meritorious defense," says Kurt Opsahl, EFF's senior staff attorney.

Splashing the Pot

By seeking the maximum penalty of $150,000 plus seizure of the domain name in every case, Righthaven is forcing alleged infringers to either settle for a fraction of the penalty or amass larger legal bills while fighting the lawsuit. "People will say it's too expensive to defend, even if they have a meritorious defense," says Opsahl. "This creates a troubling business model."

Critics of Righthaven claim that it's easier for them to profit by bringing suit against poorer defendants, but Gibson disagrees. "We don't have the ability to determine the relative wealth when we file a lawsuit," he says. "There are many individuals that are wealthier than some companies, and there are many non-profits that have a funding stream that is substantial."

"If pure greed was the only single motivator,"he adds, "we would potentially ignore those who don't have as much money as the others."

Indeed Righthaven hasn't. On December 8, they filed a claim against the Drudge Report on behalf of client NewsMedia Group and The Denver Post, alleging that the conservative news aggregator, valued in the tens of millions of dollars, posted an illustration from the paper without consent. The case elevated Righthaven's profile considerably, showing that while they'll sue small organizations over stories and excerpts on behalf of the Review-Journal, they'll also take action against wealthy entities over illustrations for outside clients.

In addition, Righthaven's attack on the right-leaning site changes how some have looked at the company, which earlier this year filed complaints against the Democratic Party of Nevada, the Washington D.C.-based comedy website Democratic Underground, and the National Organization for Reform of Marijuana Laws (NORML). Since then, in addition to Drudge, they have also brought charges against Nevada Republican Senate candidate Sharron Angle as well as Americans Against Food Taxes. "First we were accused of being in bed with conservative Republicans, then we were a tool of the Obama administration," says Gibson. "None of those people took the time to intelligently ask quesitons and examine the issues. Neither are true statements."

Playing Fair (Use)

Regardless of Righthaven and Gibson's party leanings — if they even have any — the law doesn't discriminate over politics. What's really at play in Righthaven's cases is a refining of the fair use doctrine, which, in its own definition with the U.S. Copyright Office, is described as "unclear and not easily defined." Fair use allows quotations or excerpts to be used for scholarly work, parody, summarization, library archiving, legislative proceedings, news reports, and educational purposes. But four other factors help determine whether a particular use of copyright content is "fair": the purpose (whether commercial or educational) of the use, the nature of the copyright work, the amount used, and the effect on the market or value of the original work.

"We are absolutely continuing to develop the law of copyright in the area in respect to fair use," says Gibson. "There is very substantial guidance in the courts already that make it clear that the kinds of reproduction that Righthaven is addressing is not fair use. One hundred percent takings are seldom fair use, whether by a for-profit or a non-profit institute. The notion of fair use has been very stretched by advocates of reproductions."

Advocates, like the EFF, beg to differ. In Righthaven v. Democratic Underground, which the EFF is providing direct counsel for, the offending content was roughly 10% of the original article, says Opsahl. In Righthaven v. the Center for Intercultural Organizing (CIO), former EFF fellow Jason Schultz filed a friend of the court brief stating that "the Supreme Court, the Ninth Circuit, and this Court have all found the use of entire copyrighted works to be consistent with the fair-use doctrine."

Game Over — For Whom?

Recent hearings in Righthaven's case against CIO may have weakened the firm's future claims for damages. According to coverage by the Las Vegas Sun, the Review-Journal's main competitor, on December 28, U.S. District Judge James Mahan questioned if any harm was done when the Portland, Ore.-based immigrant and refugee rights organization reposted the content of a Review-Journal article titled "Misdemeanor violations leading to deportations" on its own website in July 2010. Righthaven, which currently holds the copyright on the piece, argues that both they and the Review-Journal are harmed because viewers are able to access the story via the CIO website instead of www.lvrj.com, where the the newspaper would benefit from site traffic seeing advertisements that accompany the content. Judge Mahan, however, disagreed with Righthaven, describing the firm as an organization that "only sues people, apparently."

"There is no market for the copyrighted work," the Sun reports Judge Mahan as saying. "You are not publishing it. You are not operating a newspaper."

"I think the issue of harm is not technically concordant with the principles of the copyright act," said Gibson in an interview after the hearing. "The copyright owner is entitled to seek out the infringement and receive damage from that infringement. Righthaven is the copyright owner, and we are following the law with respect to the courts." Neither the CIO nor their lawyers would comment on the case for Fortune.

Is sharing a story on Facebook a copyright violation?

But the damages to society, print publications, and the Internet at large may far surpass any fine, no matter how substantial. These cases will define where — in the social media era — sharing ends, stealing begins, and fair use applies. According to Opsahl, the Review-Journal currently offers users 19 different ways to share and promote articles online. Are the days of posting stories to Facebook, emailing articles to friends, or printing out pieces numbered? Is a copyright holder waiving their rights if they enable users to "steal" their content and post it to say, their Facebook page? The answers are unsurprisingly hazy.

"This is about the way that the web works — where people on blogs find an interesting story, talk about it, and provide some commentary on it," says Opsahl. "They are genuinely linking to it and they are helping to build a conversation around it. It's beneficial to society to have news be part of an ongoing conversation."

Gibson, of course, disagrees. "What really is happening here is a realization of the infringement community that the days of merely receiving a takedown letter are over, and that people will have a means to protect their ownership rights," he says. "Like you're taught in grammar school, it's not right to take someone else's work, whether it's cheating or plagiarizing. Whether the Internet permits you to do it, that doesn't make it right."

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