Amicus Brief Calls Into Question The Legality Of Righthaven's Entire Business Model

Marc Randazza was kind enough to send over the amicus brief his law firm filed on behalf of the Media Bloggers' Association in response to one of Righthaven's lawsuits. You should read the whole thing (it's embedded below). I'll repeat: you should read the whole thing. It rips apart Righthaven's entire strategy and shreds it to pieces, accusing the company of champerty among other things. Here's just a snippet:

If the Las Vegas Review-Journal (hereinafter, the "LVRJ") or its parent company,Stephens Media LLC (hereinafter, "Stephens Media"), were the plaintiffs in these cases, thisargument would not apply. But Righthaven's exercise in champerty seeks to make an end-runaround the rule of law limiting the right to sue for copyright infringement to creators and thoselegitimate enterprises that make creativity possible and protectable. Nobody can seriouslybelieve that Righthaven, which publishes nothing anywhere, has acquired the full ownership ofthe articles it sues upon. The assignments it secures -- only after finding "infringed" articles tosue over -- contain mysterious (and heretofore unexamined) language about a "right of reversion"which, on frank consideration, demonstrates how transparently illegitimate these "assignments"are.

Phony "assignments" are not the only venal and manipulative aspects of the Righthavenscheme. By design, Righthaven sues mostly retirees who, terrified of losing their retirementsavings, generally settle their cases quickly and without discovery. But this Court should notrestrain its own duty to inquire into the underlying law and facts on which both Righthaven’sclaims and Righthaven's coerced settlements are based when considering its decision ondamages in this case. This Court should hold serious doubts about the propriety of Righthavenbringing these suits with rights obtained from a third party that has no stated stake in thislitigation or related cases. Either the LVRJ and Stephens Media are "selling lawsuits," which isimpermissible under Silvers, 402 F. 3d at 884-85, or Righthaven is simply a law firm in disguise,engaged in champerty, which is impermissible in Nevada, as it is almost everywhere legal ethicsand fundamental justice are a concern of the law. Schwartz v. Eliades, 113 Nev. 586, 589 (Nev.1997); Lum v. Stinnett, 87 Nev. 402, 408 (Nev. 1971). Without revealing exactly what exclusiverights Righthaven has acquired in the works, if acquiring any at all, Righthaven essentially buysthe bare right to sue for copyright infringement -- which purchase is banned by copyright law --and uses it to sue small website operators by the hundreds. Left unchallenged, Righthaven'spractices create a secondary commodities market for copyrights, or exclusive subsidiary rights incopyrights, to be used only in suing others who may have valid defenses, but cannot afford toraise them -- or engage counsel whatsoever, as is the situation in this case. This is inimical to thepurpose of the Copyright Act, which was intended to protect the intellectual investments ofcreators, rather than creating lawsuit mills that use registered copyrights -- only after theirinfringement was discovered -- as a source of income, rather than a shield against others'misappropriation. See Silvers, 402 F.3d at 886.

We've seen some of the defenses to Righthaven suits raise some of these issues, but never in such a detailed manner. And it's especially interesting in this case, where the filing comes as an amicus brief, rather than lawyers for the defendant. In fact the defendant in the case, Bill Hyatt, did not reply. As we've discussed in the past, normally when that happens, the court will make a default judgment -- basically giving the plaintiff everything requested. However, they don't have to and Randazza points out that Righthaven's claims reach far beyond reasonable. Among other things, it also challenges Righthaven's ridiculous standard demand that those sued hand over their entire domain name, noting that copyright law does not allow such a remedy.

There's also a very long and worthwhile section on why the demand for $150,000 is not just ridiculous, but goes against the law. I won't post that whole thing, but here's a snippet:

The Due Process clause of the U.S. Constitution has long been a source of limitation onall forms of damages awarded in judicial proceedings. Damages beyond those actually sufferedby a plaintiff, awarded as a deterrent against similar unlawful acts in the future -- known asexemplary damages -- have been tightly limited by the courts under the Due Process clause.Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 42 (1992); State Farm Mut. Ins. Co. v.Campbell, 538 U.S. 408, 417 (2003). Because these exemplary damages may become detachedfrom the harm actually caused to the plaintiff by defendant, these awards may fail to serve anylegitimate purpose, and instead hold a "devastating potential for harm." Campbell, 538 U.S. at417.

This due process protection is both substantive and procedural in nature. See Id. Courtsanalyze three figures in relation to any award of exemplary damages to determine whether anysuch award is grossly excessive:

1) The degree of reprehensibility of the defendant’s conduct;
2) The disparity between the actual or potential harm suffered by the plaintiff andthe punitive damages award; and
3) The difference between the punitive damages awarded by the jury and the civilpenalties authorized or imposed in similar cases.

Id. at 418; Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436 (2001); BMWof N. Am. v. Gore, 517 U.S. 559, 575 (1996). Though the Court has not yet awarded anydamages in this case, the third factor, weighing the difference between awarded damages in thiscase and the penalties authorized in similar cases, should consider the damages sought byRighthaven in comparison to those authorized in other cases.

This analysis and scrutiny applies to the Copyright Act, just as it does to any federal law.Every act of Congress, including the enactment of the Copyright Act, is subject to due processlimitations on account of the Fifth Amendment’s limits on Congress’ power. Nebbia v. N.Y., 291U.S. 502, 510 (1934). These statutory damages allow by the Copyright Act serve the samepurpose as punitive damages awarded by a jury (to punish and deter unlawful conduct) andtherefore require the same level of constitutional scrutiny.

The argument here is quite interesting, since we're likely to see similar arguments made in the Jammie Thomas and Joel Tenenbaum appeals on the constitutionality of the damages awards.

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