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UNITED STATES DISTRICT COURT DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION Righthaven LLC, Plaintiff, v. Dana Eiser, Defendant. The Defendant Dana Eiser moves for an order allowing the filing of a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), FED.R.CIV.P., that exceeds the 35 page limit established by Local Civil Rule 7.05(B)(1). The proposed motion to dismiss and its exhibits are attached to this motion for provisional review by the Court to determine whether to allow a filing in excess of the page limitation. The bases for the length of the motion are: (1) the complex and detailed history of Plaintiff Righthavens nationwide litigation campaign; (2) the relatively arcane nature of the areas of law involved; and (3) Defendants desire to preserve the parties and the Courts resources by obtaining as comprehensive a ruling as possible on the standing and subject matter jurisdictional issues raised in the motion. Undersigned counsel certifies compliance with Local Civil Rule 7.02. Undersigned counsel contacted opposing counsel twice since Thursday of last week about this and related matters but have not obtained a response. Defendant Dana Eiser respectfully requests this Honorable Court grant the motion to exceed page limits and allow the filing of the attached motion to dismiss and accompanying exhibits. MOTION TO EXCEED PAGE LIMITS RE MOTION TO DISMISS Civil Action No. 2:10-CV-3075-RMG-JDA

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Respectfully submitted,

s/J. Todd Kincannon J. TODD KINCANNON, ID #10057 THE KINCANNON FIRM 1329 Richland Street Columbia, South Carolina 29201 Office: 877.992.6878 Fax: 888.704.2010 Email: Todd@TheKincannonFirm.com s/Thad T. Viers THAD T. VIERS, ID #10509 COASTAL LAW LLC 1104 Oak Street Myrtle Beach, South Carolina 29578 Office: 843.488.5000 Fax: 843.488.3701 Email: tviers@coastal-law.com July 5, 2011

s/Bill Connor BILL CONNOR, ID #9783 HORGER AND CONNOR LLC 160 Centre Street Orangeburg, South Carolina 29115 Office: 803.531.1700 Fax: 803.531.0160 Email: bconnor@horgerlaw.com

Attorneys for Defendant

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UNITED STATES DISTRICT COURT DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION Righthaven LLC, Plaintiff, v. Dana Eiser, Defendant. The Defendant Dana Eiser moves to dismiss Righthavens Amended Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), FED.R.CIV.P. Righthaven claims to own the copyright allegedly infringed by Eiser. Righthaven supposedly obtained this ownership by virtue of an assignment. The basis of this motion is that Righthavens copyright assignments are invalid, therefore Righthaven is not the true owner of the copyright at issue. As a result, Righthaven lacks standing to assert a claim for copyright infringement. With an invalid assignment, Righthaven has no legally cognizable interest in its claim against Eiser. Accordingly, there is no case or controversy between Righthaven and Eiser over copyright infringement, and Righthavens Amended Complaint must be dismissed for lack of subject matter jurisdiction. E.g., Warth v. Seldin, 422 U.S. 490, 498-99 (1975) (In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a case or controversy between himself and the defendant within the meaning of Art. III. This is the threshold question in every federal case, determining the power of the court to entertain the suit.). Defendant Eiser respectfully submits the following combined motion to dismiss and supporting memorandum for consideration by this Honorable Court: MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION Civil Action No. 2:10-CV-3075-RMG-JDA

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TABLE OF CONTENTS Table of Authorities .......................................................................................................................4 Table of Exhibits ............................................................................................................................7 I. II. Legal Standard ......................................................................................................................9 Background .........................................................................................................................10

III. Righthavens assignments are invalid under the Copyright Act ....................................14 A. B. C. D. The Copyright Act forbids transfers of the bare right to sue. .................................14 Righthaven claims to hold all exclusive rights ............................................................15 Righthaven actually holds no exclusive rights, because its assignments are invalid under the Copyright Act ...................................................................................16 Righthavens new strategy: importing the mulligan to copyright practice .................19

IV. Righthaven is not an assignee, it is a law firm in disguise ...............................................22 A. B. A look at form over substance ......................................................................................22 Righthavens scheme has been tried before .................................................................23 i. ii. iii. iv. v. vi. ILLEGAL IN UTAH.................................................................................................23 ILLEGAL IN NEW YORK, EVEN WHEN LAWYERS FILE THE LAWSUITS ....................24 MICHIGAN FOLLOWS NEW YORK .........................................................................25 WISCONSIN REJECTS THE RIGHTHAVEN SCHEME TOO ..........................................25 NEW MEXICO FOLLOWS SUIT ...............................................................................26 WEST VIRGINIA COMES TO THE SAME CONCLUSION .............................................28

vii. IOWA SAYS NO TO THE RIGHTHAVEN SCHEME ......................................................29 viii. SOUTH CAROLINA REJECTS THE SCHEME AS WELL ...............................................30 ix. C. D. COLORADO LIKEWISE BARS ASSIGNMENTS OF THIS NATURE ................................31

Righthavens patent analogy in no way rescues its business model ............................35 How to determine the (in)validity of an assignment ....................................................37 i. GENERAL PRINCIPLES ..........................................................................................38 Page 2 of 60

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ii. iii. E. F. V.

A DOZEN FACTORS COURTS CONSIDER .................................................................39 ANALYZING THE RIGHTHAVEN OPERATION, FACTOR BY FACTOR ........................42

State law can invalidate a copyright assignment, and South Carolina law certainly invalidates Righthavens assignment ............................................................49 Why? ............................................................................................................................51

The burden shifts to Righthaven .......................................................................................53 A. B. MediaNews Group did not validly assign any rights to Righthaven, much less full ownership ..............................................................................................................53 MediaNews Group is not the author of the Rosen Letter.............................................55

VI. Conclusion ...........................................................................................................................58

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TABLE OF AUTHORITIES United States Constitutional Provisions Article III .......................................................................................................................1, 12, 41, 46 United States Code Sections 17 U.S.C. 101(2) .........................................................................................................................56 17 U.S.C. 106 .................................................................................................................. 14-16, 51 17 U.S.C. 501(b) .........................................................................................................................14 17 U.S.C. 505 ..............................................................................................................................59 United States Supreme Court Cases Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979) .............................................................49 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)..................................................................59 Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) ................................... 55-56 Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004) ..............................................15 Jacobellis v. Ohio, 378 U.S. 184 (1964) ........................................................................................39 Mollan v. Torrance, 9 Wheat. 537 (1824) .....................................................................................15 Secretary of State of Md. v. Joseph H. Munson Co., 467 U.S. 947 (1984) ...................................41 Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269 (2008) ..............................................................................................................................38, 40 Warth v. Seldin, 422 U.S. 490 (1975)..............................................................................................1 Fourth Circuit Court of Appeals Cases Adams v. Bain, 697 F.2d 1213 (4th Cir. 1982)....................................................................9, 19, 53 Darden v. Peters, 488 F.3d 277 (4th Cir. 2007) .............................................................................15 Other Federal Circuit Courts of Appeal Cases ABKCA Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971 (2d Cir. 1991) .............................15 Compton v. Atwell, 207 F.2d 139 (D.C. Cir. 1953) ......................................................................39 Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d. Cir. 1982) ......................... 14-15 Page 4 of 60

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Fantastic Fakes, Inc. v. Pickwick Intl, Inc., 661 F.2d 479 (5th Cir. 1981) ...................................49 Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20 (2d Cir. 1983) ...........................................41 Palazzo v. Gulf Oil Corp., 764 F.2d 1381 (11th Cir. 1985)...........................................................41 Playboy Enterprises, Inc. v. Dumas, 53 F.3d 549 (2d Cir. 1995) ..................................................56 Rawlings v. Natl Molasses Co., 394 F.2d 645 (9th Cir. 1968)......................................... 36-37, 41 SGS-Thomson Microelectronics, Inc. v. International Rectifier Corp., 1994 WL 374529 (Fed. Cir. Jul. 14, 1994) ..............................................................................36, 41 Silvers v. Sony Pictures Entertainment, 402 F.3d 881 (9th Cir. 2005)............................. 11, 14, 41 Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870 (Fed. Cir. 1991) ................................................................................................... 36-37, 40, 41 Federal District Court Cases Cantley v. Simmons, 179 F.Supp.2d 654 (S.D. W.Va 2002) ..........................................................9 South Carolina State Court Cases Carolina Care Plan, Inc. v. United HealthCare Services, Inc., 606 S.E.2d 752 (S.C. 2004) ............................................................................................................................50 In re Unauthorized Practice of Law Rules, 422 S.E.2d 123 (S.C. 1992) .......................................39 Moore v. Weinberg, 644 S.E.2d 740 (S.C. Ct. App. 2007) .....................................................51, 54 Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007) .................................11, 30-31, 39-40, 50-51, 54 Sheldon v. Blauvelt, 29 S.C. 453 (S.C. 1888) ...............................................................................50 Other State Court Cases Bay County Bar Assn v. Fin. Sys., Inc., 76 N.W.2d 23 (Mich. 1956) .........................................25 Bank of Cave Spring v. Gold Kist, Inc., 327 S.E.2d 800 (Ga. Ct. App. 1985) .............................39 Brown v. Unauthorized Practice of Law Comm., 742 S.W.2d 34 (TEx. Lt. App. 1987) ........................................................................................................................... 41 Burkhardt v. Bailey, 680 N.W.2d 453 (Mich. Ct. App. 2004) ......................................................40 Christiansen v. Melinda, 857 P.2d 345 (Alaska 1993) ..................................................................41 Hospital Credit Exchange v. Shapiro, 59 N.Y.S.2d 812 (N.Y. Mun. Ct. 1946) ................ 24-25, 40

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Iowa Supreme Court Commn on Unauthorized Practice of Law v. A-1 Associates Ltd., 623 N.W.2d 803 (Iowa 2001) .............................................................. 29-30 Nelson v. Smith, 154 P.2d 634 (Utah 1944) ............................................................................23, 27 People v. Adams, 243 P.3d 256 (Colo. 2010)......................................................... 31-34, 38, 40-42 Roberts v. Holland & Hart, 857 P.2d 492 (Colo. Ct. App. 1993)..................................................41 State ex rel. Frieson v. Isner, 285 S.E.2d 641 (W.Va. 1981) ............................................. 28-29, 31 State ex rel. Norvell v. Credit Bureau of Albuquerque, Inc., 514 P.2d 40 (N.M. 1973) .................................................................................................. 26-27, 31, 38, 40 State ex rel. State Bar of Wis. v. Bonded Collections, Inc., 154 N.W.2d 250 (Wis. 1967) .....................................................................................................................26, 31 Thibodeaux v. Creditors Services, Inc., 551 P.2d 714 (Colo. 1976) .............................................38 Rules Rule 12(b)(1), FED.R.CIV.P .........................................................................................................1, 9 Rule 12(b)(6), FED.R.CIV.P .......................................................................................................9, 59 Rule 404(b), FED.R.EVID ...............................................................................................................54 Rule 801(d)(2), FED.R.EVID ..........................................................................................................54 Rule 803(24), FED.R.EVID .............................................................................................................54 Rule 5.4(a), SCRPC .......................................................................................................................52 Other Authority Sir Winston Churchill, Remarks to the House of Commons of the Parliament of the United Kingdom, (June 4, 1940) available at audio.theguardian .tv/sys-audio/Guardian/audio/2007/04/20/Churchill.mp3 ....................................................51

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TABLE OF EXHIBITS Referred to as: SAA SAA Clarification Order Unsealing SAA Democratic Underground Dismissal Hoehn Dismissal DiBiase Dismissal Barham Dismissal Jama Summary Judgment Order to Show Cause by Judge Mahan Order to Show Cause by Judge Hicks Full Citation Righthavens Strategic Alliance Agreement with Stephens Media, LLC dated 1-18-2010 Clarification and Amendment to Strategic Alliance Agreement dated 5-9-2011 Order dated 4-14-2011, Dkt. #93, Righthaven v. Democratic Underground, 2:10-cv-01356-RLH-GWF, 2011 WL 1457743 (D. Nev.) (HUNT, J.) Order dated 6-14-2011, Dkt. #116, Righthaven v. Democratic Underground, 2:10-cv-01356-RLH-GWF, ___ F.Supp.2d ___, 2011 WL 2378186 (D. Nev. June 14, 2011) (HUNT, J.) Order dated 6-20-2011, Dkt. #28, Righthaven v. Hoehn, 2:11cv-00050-PMP-RJJ, ___ F.Supp.2d ___, 2011 WL 2441020 (D. Nev.) (PRO, J.) Order dated 6-22-2011, Dkt. #72, Righthaven v. DiBiase, 2:10cv-01343-RLH-PAL, 2011 WL 2473531 (D. Nev. June 22, 2011) (HUNT, J.) Order dated 6-22-2011, Dkt. #20, Righthaven v. Barham, 2:10cv-02150-RLH-RJJ, 2011 WL 2473602 (D. Nev. June 22, 2011) (HUNT, J.) Order dated 4-22-2011, Dkt. #28, Righthaven v. Jama, 2:10-cv01322-JCM-LRL, 2011 WL 1541613 (D. Nev. April 22, 2011) (MAHAN, J.) Order dated 4-28-2011, Dkt. #21, Righthaven v. Pahrump Life, 2:10-cv-01575-JCM-PAL (D. Nev.) (MAHAN, J.) Order dated 6-28-2011, Dkt. #7, Righthaven v. Kirk, 2:11-cv00722-LRH-PAL (D. Nev.) (HICKS, J.) (also filed in all other Righthaven cases assigned to Judge Hicks) Ex. A B

District of Colorado Order dated 5-19-2011, Dkt. #21, Righthaven v. Sumner, 1:11Stay Order cv-00222-JLK (D. Colo.) (KANE, J.) (also filed in all other by Judge Kane Righthaven cases in the District of Colorado) Righthaven Intervention Righthavens Application to Intervene as of Right Pursuant to Federal Rule of Civil Procedure 24(A)(2) dated 6-23-2011, Dkt. #120, Righthaven v. Democratic Underground, 2:10-cv-01356RLH-GWF (D. Nev.)

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Righthaven Response to Amici

Plaintiff Righthaven LLCs Omnibus Response to the Amicus Curiae Briefs of Democratic Underground and Professor Jason Schultz dated 6-22-2011, Dkt. #44, Righthaven v. Pahrump Life, 2:10-cv-01575-JCM-PAL (D. Nev.)

Arkansas Democrat- Toby Manthey, Firm Holds Websites to the Law, Arkansas Gazette Story Democrat-Gazette, August 26, 2010 New York Times Story Wired.com Story Gibson Interview Rosen Freelance Column Denver Westword Story about Rosen Plagiarism Rocky Mountain News Shutdown Rosen Rocky Mountain News Column Rosen Real Clear Politics Column Dan Frosch, Enforcing Copyrights Online, for a Profit, New York Times, May 2, 2011 David Kravets, Newspaper Chains New Business Plan: Copyright Suits, Wired.com, July 22, 2010 Face to Face Interview with Steve Gibson, June 22, 20111 Mike Rosen, Social Securitys insolvency, The Denver Post, April 14, 2011 Michael Roberts, Mike Rosen plagiarized himself in Denver Post column? He says he did nothing wrong, Denver Westword, February 17, 2011 Lynn DeBruin & Lisa Ryckman, Rocky Mountain News to close, publish final edition Friday, Rocky Mountain News, February 26, 2009 Mike Rosen, Educrats vs. common sense, Rocky Mountain News, February 20, 2009 Mike Rosen, Another Nutty Professor, Real Clear Politics, November 25, 2005

N O P Q

U V

Righthaven Website Righthavens Website at www.righthaven.com Citizens Against Litigation Abuse, Inc. v. Righthaven LLC (S.C. S.C. Supreme Court Sup. Ct. filed June 27, 2011) (original jurisdiction action seeking Original Jurisdiction unauthorized practice of law declaratory judgment and Petition injunction) (also involving Lowcountry 9/12 Project as plaintiff) Verification and Authentication Verification and Authentication by J. Todd Kincannon

The interview is available online at www.lasvegassun.com/videos/2011/jun/22/5268/ Page 8 of 60

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I. LEGAL STANDARD There are two distinct types of motions to dismiss for lack of subject matter jurisdiction: facial and factual. E.g., Cantley v. Simmons, 179 F.Supp.2d 654, 655 (S.D. W.Va. 2002). The first type accepts the jurisdictional facts asserted in the complaint and argues that even so, there is no subject matter jurisdiction. Id. The second type denies the jurisdictional allegations in the complaint. Id. This motion is the second type, and for motions of this type, The burden of proving subject matter jurisdiction on a motion to dismiss is on the plaintiff, the party asserting jurisdiction. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). A trial court may consider evidence by affidavit, depositions or live testimony without converting the proceeding to one for summary judgment. Id. Unlike the procedure in a 12(b)(6) motion where there is a presumption reserving the truth finding role to the ultimate factfinder, the court in a 12(b)(1) hearing weighs the evidence to determine its jurisdiction. Id. This does not usually present a serious problem except in those cases where the jurisdictional facts are intertwined with the facts central to the merits of the dispute. Id. There is no intertwining here. Righthavens claim is that Defendant infringed a copyright. Whether Righthaven actually owns the copyright, and therefore has standing, is a completely different issue. Further, as described below, a number of courts have dismissed Righthaven cases based on lack of standing or are in the process of considering the standing issue in isolation.

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II. BACKGROUND Righthaven LLC is a Nevada company. It is not a law firm, yet its exclusive business is prosecuting contingency-fee lawsuits for the benefit of its clients. After finding media clients who have potential copyright infringement claims, Righthaven obtains assignments of those claims and agrees to divide litigation proceeds 50/50 with the client. Righthaven then files lawsuits in its own name275 suits against approximately 500 defendants so far in Nevada, Colorado, and South Carolina. Each of Righthavens complaints allege that it holds all right, title, and interest in the copyrights over which it sues. The Amended Complaint in this action is no different. See Dkt. #36 9, 10, 17, 24-27. Righthaven claims to have obtained these rights by virtue of assignments from its media clientsStephens Media LLC, owner of the Las Vegas Review-Journal, or MediaNews Group Inc., owner of The Denver Post.2 The terms of the assignments are governed by Righthavens so-called Strategic Alliance Agreement (SAA) it has with its clients. See SAA, Ex. A. The SAA with Stephens Media was unsealed on April 14, 2011. See Order Unsealing SAA, Ex. C at 5. Righthavens SAA with MediaNews Group has terms that are legally indistinguishable from the Stephens Media SAA.3

Of the 275 Righthaven lawsuits, 274 have been over material appearing in either the Las Vegas Review-Journal or The Denver Post. There is a single exception, Righthaven v. Allec, 2:11-cv00532-KJD-PAL (D.Nev.) where Righthaven is asserting copyright infringement claims on behalf of an entity called Stevo Design.
3

Righthaven is set to produce the MediaNews Group SAA on or about July 8, 2011, in a Colorado action, Righthaven v. Wolf, 1:11-cv-830-JLK (D. Colo.). The Defendant in this case has not fought to obtain the SAA because of its imminent production in another action, so as to save time and resources of the parties and the Court. Even so, the terms of the MediaNews Group SAA are clearly identical in practical effect to the Stephens Media SAA because of the statements and conduct of the parties. Page 10 of 60

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After the SAA was revealed, debate over its legality effect began immediately. Flaws in the agreement quickly became evident. For one, it was clear that Righthavens rights were purely illusory and that the assignments transferred only the bare right to sue. But attempting to assign the bare right to sue over copyright infringement actually assigns nothing, because the Copyright Act doesnt allow it. E.g., Silvers v. Sony Pictures Entertainment, 402 F.3d 881, 890 (9th Cir. 2005) (the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.) (quotation omitted). A second problem, even more fundamental, is that Righthavens assignments are not assignments, they are representation agreements, and an assignment that is actually a representation agreement is void. E.g., Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007) (invalidating assignments that are representation agreements in disguise). Righthaven defendants in Nevada and Colorado are now seeking dismissals because the assignments are invalid and Righthaven has no standing to sue. In Nevada, Judge Hunt issued an order to that effect in Righthaven v. Democratic Underground, as did Judge Pro in Righthaven v. Hoehn. Democratic Underground Dismissal, Ex. D at 15; Hoehn Dismissal, Ex. E at 10. In Democratic Underground, Judge Hunt forcefully rejected Righthavens citation to prior favorable rulings, writing: As the undersigned issued one of the orders Righthaven cites [to support its standing arguments], the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction[.] Democratic Underground Dismissal, Ex. D at 10. Judge Hunt has gone on to dismiss Righthavens complaints in Righthaven v. Barham and Righthaven v. DiBiase for lack of standing and will undoubtedly dismiss all Righthaven complaints before him in short order. See generally DiBiase Dismissal, Ex. F; Barham Dismissal, Ex. G.

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Additionally, Judges Mahan and Hicks in Nevada have issued orders to show cause why Righthaven cases should not be dismissed for lack of standing: [T]he defendant has contested Righthavens ownership of the disputed copyright, noting that the plaintiff has not produced a written document evidencing ownership in the copyright in the Article. . . . [T]he court finds resolution of the issue sufficiently pressing as to warrant immediate consideration. Righthavens ownership of its assigned copyrights has been generally contested in a case before Judge Hunt, Righthaven LLC v. Democratic Underground LLC et al. In Democratic Underground, the newly unsealed Strategic Alliance Agreement, governing all purported copyright assignments from Stephens Media to Righthaven, appears to support [defendants] claim that Righthaven does not have standing to sue for copyright infringement. . . . This court believes that the issue should be addressed at the outset of Righthaven litigation, as it goes to the plaintiffs standing to bring a copyright infringement claim at all. Thus, in the interest of judicial economy, the court issues this order to show cause why the case should not be dismissed for plaintiffs lack of beneficial ownership of the copyright, and, therefore, lack of standing to sue. Order to Show Cause by Judge Mahan, Ex. I at 1-2 (citations and quotations omitted). Standing to sue is an indispensable part of a federal courts Article III jurisdiction and must be addressed by the court even if the parties fail to raise it. The federal courts are under an independent obligation to examine their own jurisdiction, and standing is perhaps the most important of the jurisdictional doctrines. In the ten above-captioned cases, the pleadings and other papers on file reveal that the standing issues are likely identical to the standing issues determined adversely to Righthaven in Democratic Underground and Hoehn. Because substantial doubt exists as to Righthavens standing and the courts subject-matter jurisdiction, Righthaven is hereby ordered to show cause why each of the above-captioned cases should not be dismissed for lack of standing. At minimum, Righthavens written response shall include copies of the SAA, the Clarification, and the assignments of the particular works in question, and shall specifically address whether and how the facts and legal issues relating to Righthavens alleged standing are identical to the standing issues addressed in Democratic Underground and Hoehn, and if not, in what material respects they differ. Order to Show Cause by Judge Hicks, Ex. J at 4-5 (citations and quotations omitted).

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Additionally, Judge Kane of Coloradohandling all Righthaven cases therehas expressed doubts about Righthavens standing and stayed all cases in Colorado except Righthaven v. Wolf, 1:11-cv-00830 (D. Colo.), where he will issue a ruling on standing: Because Righthaven is the party seeking to invoke federal jurisdiction, it bears the burden, when jurisdiction is challenged, of establishing it is both statutorily and constitutionally proper as a matter of law. Because there are serious questions as to whether my exercise of subject matter jurisdiction over Righthavens claim of copyright infringement is proper, I think it most prudent to stay the proceedings in all pending cases in this District in which Righthaven is the named Plaintiff. Should I find that I lack subject matter jurisdiction over Righthavens claim of copyright infringement, it is likely that I will be required to dismiss all pending actions. A stay will best conserve the parties and the Courts resources pending resolution of this fundamental inquiry. District of Colorado Stay Order by Judge Kane, Ex. K at 2 (citation omitted). Seeing the handwriting on the wall, Righthaven attempted to rewrite the SAA by issuing a clarification. See SAA Clarification, Ex. B. But even the clarified SAA fails to give Righthaven standing, as Judges Pro and Hunt have indicated. See Hoehn Dismissal, Ex. E at 10 (holding that SAA Clarification still fails to provide standing); see also Democratic Underground Dismissal, Ex. D at 8 n.1 (suggesting in dicta that SAA clarification is ineffective and merely cosmetic). Defendant Eiser submits that Righthaven has no standing to bring a claim of copyright infringement in this action because the assignment allegedly providing Righthaven with standing is invalid, in accordance with the clear judicial reaction to Righthaven cases in other jurisdictions. Accordingly, Righthavens Amended Complaint must be dismissed for lack of subject matter jurisdiction.

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III. RIGHTHAVENS ASSIGNMENTS ARE INVALID UNDER THE COPYRIGHT ACT A. The Copyright Act forbids transfers of the bare right to sue. Section 501(b) of the 1976 Copyright Act, codified at 17 U.S.C. 501(b), establishes who is legally entitled to sueand therefore who has standing to sueover copyright infringement. The statute limits standing to a legal or beneficial owner of an exclusive right under a copyright[.] The Copyright Act is clear: if a copyright infringement plaintiff is not the legal or beneficial owner of an exclusive right under a copyright, the plaintiff lacks standing. The exclusive rights are listed in 17 U.S.C. 106, and five of the six apply to newspaper articles like the one at issue in this case.4 The relevant exclusive rights are: (1) to reproduce the work; (2) to prepare derivative works based on the work; (3) to distribute copies of the work to the public by various methods; (4) to perform the work publicly; and (5) to display the work publicly. 17 U.S.C. 106. Notably, the right to sue over infringement is not listed. Accordingly, the general rule is that where a copyright holder purports to transfer rights to a third party, the transfer must include one of these exclusive rights if the transferee is to have any hope of having standing to sue over infringement. A specific application of this rule is that an assignment of only the right to sue over infringement actually conveys nothing, because a party having only the right to sue lacks any of the exclusive rights in Section 106. Without at least one of the exclusive rights, a party has no standing to sue under Section 501(b). This was the holding in Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881 (9th Cir. 2005), which followed Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d. Cir.

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1982) (superseded by rule and statute on other grounds). See also ABKCA Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (citing Eden Toys, the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.) The counterargument is that there is a general common law right to assign causes of action; therefore, the right to sue over copyright infringement should be assignable by itself. This argument is entirely foreclosed in the Fourth Circuit by Darden v. Peters, 488 F.3d 277, 284 (4th Cir. 2007) (Copyright is solely a creature of statute; whatever rights and remedies exist do so only because Congress provided them.). Congress has provided the remedy of a copyright infringement lawsuit only to the owner of one of the Section 106 exclusive rights. Therefore, if Righthaven was not the owner of one of the Section 106 exclusive rights when it filed this case on December 2, 2010,5 it does not have standing to pursue a copyright infringement action. B. Righthaven claims to hold all exclusive rights. Righthavens Complaint (Dkt. #1) and Amended Complaint (Dkt. #36) both allege that Righthaven is the owner of the copyright in this action. Complaint, Dkt. #1 at 9; Amended Complaint, Dkt. #36 at 9. The Amended Complaint adds an allegation that Righthaven obtained ownership of the copyright . . . through a valid and enforceable assignment from the original owner[.] The Assignment granted Righthaven full ownership in and to the copyright to the Work[.] Amended Complaint, Dkt. #36 10. In addition to generally claiming that Righthaven holds all right, title, and interest in the copyright, both the Complaint and the Amended Complaint specifically allege that Righthaven

[T]he jurisdiction of the court depends upon the state of things at the time of the action brought. Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570 (2004) (quoting Mollan v. Torrance, 9 Wheat. 537, 539 (1824)). Page 15 of 60

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holdsand that Defendant infringed uponfour of the five exclusive rights6 under 17 U.S.C. 106, specifically the rights (1) to reproduce the work; (2) to prepare derivative works based on the work; (3) to distribute copies of the work to the public by various methods; and (5) to display the work publicly. Complaint, Dkt. #1 23-26; Amended Complaint, Dkt. #36 24-27. Further, the copyright application attached as Exhibit 3 to both the Complaint and Amended Complaint identifies the assignor as the author of the work (a work for hire) as Media News Group, Inc. (sic: MediaNews Group, Inc., the parent company of The Denver Post). Exhibit 3 to the Complaint, Dkt. #1-1 at 19; Exhibit 3 to the Amended Complaint, Dkt. #36-1 at 19. Righthavens assertion of standing boils down to two factual claims: (1) prior to filing this action on December 2, 2010, MediaNews Group, Inc. validly assigned Righthaven full ownership in the copyright to the Rosen Letter, i.e. the Work; and (2) MediaNews Group had the ownership rights to assign because it was the author of the Rosen Letter as a work for hire. C. Righthaven actually holds no exclusive rights, because its C. assignments are invalid under the Copyright Act. Righthaven claims in its complaints that it has full ownership of the copyrights it sues over, having acquired this ownership by way of assignment. The text of the assignments does purport to convey all right, title, and interest (though with a right of reversion, which is fatal, as described infra). SAA, Ex. A at 16. But each assignment is controlled by Righthavens SAA, which operates to take back the rights the assignment purports to grant. See Democratic Underground Dismissal, Ex. D at 6. (Righthaven argues that the SAAs provisions . . . do not alter the unambiguous language of the Assignment or limit the rights it obtained . . . in the

Righthaven appears not to specifically allege ownership of the public performance right because it does not allege Defendant violated that right. Nonetheless, Righthaven definitely claims to hold all right, title, and interest in the copyright at issue. Page 16 of 60

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Assignment. This conclusion is flagrantly falseto the point that the claim is disingenuous, if not outright deceitful.). Judge Hunt in Democratic Underground and Judge Pro in Hoehn both found part of Section 7.2 of the SAA to be extremely problematic: Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Righthavens maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Medias right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights. SAA 7.2, Ex. A at 4. Judge Hunt concluded: The plain and simple effect of [Section 7.2] was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights. Democratic Underground Dismissal, Ex. D at 5; see also Hoehn Dismissal, Ex. E at 8. Further, the assignment is subject to termination at any time, another exceptionally problematic component of the SAA: Stephens Medias Right of Reversion. Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assignment (the Assignment Termination) and enjoy a right of complete reversion to the ownership of any copyright that is the subject of a Copyright Assignment; provided, however, that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effecting termination of such action including, without limitation, all Losses associated with any dismissal with prejudice. SAA 8, Ex. A at 4. And Section 3.3 of the SAA provides Stephens Media with the right to prohibit Righthaven from suing. Id. at 2. Though the Section 3.3 right to prohibit lawsuits is

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couched in limiting language, in truth there is no limit. To stop a lawsuit, the assignor need only conclude that the action would be adverse to the assignor. Id. And if for some bizarre reason the assignors tautological right to stop any lawsuit it wants to stop under Section 3.3 proved insufficient, the assignor could always exercise its rights under Section 8, revert the copyright, and kill any inconvenient litigation. Id. at 4. But the conclusion that Righthaven really doesnt even have the right to sue need not be drawn based only on the four corners of the SAAits confirmed by statements from the clients themselves. Righthaven has three media clients: Stephens Media (the Las Vegas Review-Journal and others), MediaNews Group (The Denver Post and others), and WEHCO Media, Inc. (the Arkansas Democrat-Gazette and others).7 Officers of each of these clients have publicly stated that the media entities, not Righthaven, have the right to dictate who can and cannot be sued. Stephens Medias general counsel Mark Hinueber has said, I can tell Righthaven not to sue somebody. See Arkansas Democrat-Gazette Story, Ex. N at 3. In the same article, WEHCO Medias president Paul Smith is quoted as saying that if Righthaven discovers someone has violated WEHCOs copyright, it would be [WEHCOs] decision whether or not to move forward with it[.] Id. Finally, in the New York Times, MediaNews Groups vice president Sara Glines clearly indicated that MediaNews Group had the same authority, stating that her company reviewed every violation and only approved actions against sites that carried advertising and were not charities. See New York Times Story, Ex. O at 3. But even keeping to the four corners of the SAA, Judge Hunt found the extreme limitations and reversionary language destroy[ed] Righthavens supposed rights in the work. Democratic Underground Dismissal, Ex. D at 5. Likewise Judge Pro: These carveouts deprive

Righthaven has never filed a case for WEHCO Media, Inc., for reasons unknown to Defendant. Page 18 of 60

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Righthaven of any of the rights normally associated with ownership of an exclusive right necessary to bring suit for copyright infringement and leave Righthaven no rights except to pursue infringement actions, a right which itself is subject to Stephens Medias veto. Hoehn Dismissal, Ex. E at 8. Defendant Eiser submits Judges Hunt and Pro are absolutely right, and that Righthavens Amended Complaint in this case must be dismissed for the same reason. Righthaven has not yet produced the MediaNews Group SAA but, as described in footnote 3, supra, the MediaNews Group SAA will shortly be produced in another case and will no doubt be unsealed shortly thereafter. However, given the nature of this motion, Defendant Eiser is under no obligation to prove the MediaNews Group SAA doesnt provide standing. Instead, under Adams v. Bain, the burden is now on Righthaven to prove that the MediaNews Group SAA is valid and gives Righthaven standing. D. Righthavens new strategy: importing the mulligan to copyright practice. Righthaven has not stood idly by while its cottage industry of copyright lawsuits goes by the wayside. Righthaven has already issued one clarification of the Stephens Media SAA and promises more are on the way if that one doesnt work. Righthavens clear intent is to rewrite its assignments over and over until it finds the magic words that give it standing under the Copyright Act. In fact, Righthavens CEO Steve Gibson stated during a television interview that the entire purpose of the federal judiciarys investigation of the standing issue is to give guidance to Righthaven (and its competitors) on what their documentation should be in these cases.8

Gibson: The hardworking federal judges are saying: This type of documentation needs to be enhanced. See Gibson Interview at 5:43, available at www.lasvegassun.com/videos/2011/ jun/22/5268/. I think what the judges are saying is listen, folks, Righthaven is filing a lot of lawsuits. They understand that were potentially genuine with respect to upholding copyrights. They dont want to see Righthaven competitors potentially come on with not solid documentation, and theyre giving us guidance as to what the documentation should be. Id. at 8:13. Page 19 of 60

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But Righthavens new documentation hasnt gotten them far. Judge Pro found it did nothing to change the character of the original, invalid assignment: Even assuming that the May 9, 2011 Clarification can change the jurisdictional facts as they existed at the time of filing of the suit, it still does not correct the deficiencies with respect to lack of standing. The May 9, 2011 Clarification offers recitals stating the parties intent to convey all ownership rights in and to any identified Work to Righthaven . . . so that Righthaven would be the rightful owner of any identified Work and entitled to seek copyright registration. However, it does not provide Righthaven with any exclusive rights necessary to bring suit. The May 9, 2011 Clarification provides Righthaven with only an illusory right to exploit or profit from the Work, requiring 30 days advance notice to Stephens Media before being able to exploit the Work for any purpose other than bringing an infringement action. Stephens Media has, in its sole discretion, the option to repurchase the Copyright Assignment for a nominal amount within 14 days, thereby retaining the ability to prevent Righthaven from ever exploiting or reproducing the Work. Stephens Medias power to prevent Righthaven from exploiting the Work for any purpose other than pursuing infringement actions is further bolstered by the Clarifications provision that every exploitation of the Work by Righthaven other than pursuing an infringement action without first giving Stephens Media notice constitutes irreparable harm to Stephens Media. Stephens Media may obtain injunctive relief against Righthaven to prevent such irreparable harm and, pursuant to the Clarification, Righthaven has no right to oppose Stephens Medias request for injunctive relief. Accordingly, Righthaven does not have any exclusive rights in the Work and thus does not have standing to bring an infringement action. Hoehn Dismissal, Ex. E at 10; see also SAA Clarification, Ex. B. Further, while dismissing Righthavens complaint solely on the fact that the original SAA didnt convey standing, Judge Hunt also stated his belief in dicta that the clarification was merely cosmetic. Democratic Underground Dismissal, Ex. D at 8 n.1. In response, Righthaven has now petitioned for intervention in Democratic Underground on the strength of the clarification Judge Hunt had called cosmetic just a few days prior. See generally Righthaven Intervention, Ex. L. And if Judge Hunt remains convinced that the clarified SAA is invalid and denies Righthaven intervention, even that wont be the end of it. A recent filing in Righthaven v. Pahrump Life indicates Righthaven will just keep rewriting its agreements over and over again:

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As set forth in its previous memorandum, Righthaven believes that the original Assignment and SAA between Righthaven and Stephens Media were sufficient to give Righthaven standing to sue. But since this Court issued its Order to Show Cause, another court in this District has held that these agreements failed to effect a copyright assignment to Righthaven. While Righthaven respectfully disagrees with Judge Hunts decision, it will not burden this Court with those arguments and will instead address its arguments to the Amendment. Another court in this District has also recently held that Righthaven lacks standing, even under the Amendment. Righthaven disagrees with that decision and intends to appeal. Nonetheless, Righthaven and Stephens Media are considering further amending their agreements in order to prevent other courts from erroneously concluding that Righthaven lacks standing. If and when the parties do so, they will promptly provide the Court with all amended agreements. Righthaven Response to Amici, Ex. M at 5 n.1. Righthavens persistence wouldnt be quite so problematic if its defendants didnt have to foot half the legal bill for its exploration into the validity of copyright assignments.9 Righthaven needs to face a hard truth. Its clients cant assign the bare right to sue; the Copyright Act wont let them. But they are clearly unwilling to legitimately assign Righthaven any actual exclusive rights, and any attempt to do so now is an obvious sham. And as described in the next section, the Copyright Act isnt Righthavens only obstacle. Righthaven has a much more fundamental problem, one that cannot be cured no matter how many mulligans Righthaven takes.
9

Righthavens take-no-prisoners approach to litigation forced Defendant Eiser, for example, to file a 1003 paragraph, 119 page Second Amended Answer and Counterclaims (Dkt. #53), raising in good faith every possible defense and compulsory counterclaim potentially available to Defendant. By comparison, Eisers first Amended Answer and Counterclaims (Dkt. #22) was only 14 pages and 81 paragraphs long. Despite being a perfectly normal answer and counterclaim, Righthaven filed a Motion to Dismiss, or Alternatively Strike (Dkt. #23) with a 19 page memorandum. Righthaven even went so far as to argue that Defendants unfair trade practices counterclaim should be dismissed because Defendant cannot show that Righthavens conduct affects the public interest. Righthaven made this argument despite having sued approximately 500 defendants from all over the country in nearly 300 lawsuits in Nevada, Colorado, and South Carolina. Considering its litigation conduct in other venues as well, it is clear Righthaven is a plaintiff that will do or say just about anything to win, no matter how ridiculous or disingenuous it might be. That sort of litigant poses special challenges for opposing counsel, who have no interest in bothering the Court with pleadings and arguments that might be absurdly comprehensive in any other case. But with Righthaven, undersigned counsel simply have no alternative. Page 21 of 60

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IV. RIGHTHAVEN IS NOT AN ASSIGNEE, IT IS A LAW FIRM IN DISGUISE A. A look at form over substance. Defendant Eiser invites the Court to ignore the entire Righthaven enterprise for a moment and consider a general proposition: Assume that a company has an actionable claim. The company wants to hire someone to pursue a lawsuit over the claim. The company finds a firm that employs lawyers and handles lawsuits to do just that. In fact, prosecuting lawsuits is all the firm does. So the company and the firm strike a deal: the firm will prosecute the claim, and the firm and the company will split any recovery, after expenses, 50/50. In the real world, that arrangement is called a contingency fee representation agreement, the company is the client, and the firm is a law firm. But Righthaven does not appear to operate in the real world. Righthaven claims this exact arrangement is actually an assignment, that it is not a law firm but a copyright enforcer, and that its clients are not clients but are key relationships. See Righthaven Website, Ex. V. This is nothing but corporate doublespeak, deployed in an attempt to camouflage an arrangement that is totally impermissible outside the context of a lawyer-client relationship. Moreover, Righthaven claims to be engaged in a novel pursuit presenting new and undecided issues in copyright enforcement. Those claims are accurate only so long as one does not consider precedents relating to the validity of assignments and the unauthorized practice of law. What Righthaven tries to present as some inventive new way of enforcing copyrights is nothing more than a copyright-specific form of a scheme that has been rejected, so far as Defendant Eiser can determine, by every court that has ever examined it. When considering the

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following arguments and authorities, Defendant Eiser submits that it will be extremely useful to keep in mind this language from the SAA: [Assignor] hereby engages Righthaven . . . to undertake . . . the pursuit of Infringement Actions. SAA 3.4, Ex. A at 3. B. Righthavens scheme has been tried before. Righthaven is by no means the first entity to obtain an assignment in the nature of a representation agreement, file a lawsuit in its own name, and kick back a portion of any recovery to the assignor. American courts have consistently refused to allow such a scheme and have found assignments of this nature to be plainly illegal. i. ILLEGAL IN UTAH. An early leading opinion is Nelson v. Smith, 154 P.2d 634 (Utah 1944), where the Utah Supreme Court found such assignments to be shams designed to enable the unauthorized practice of law: When the defendants solicit the placement of claims with them for collection, they are asking third parties to allow them to render the service of collecting the claim. At that time the collection agency has absolutely no interest, either legal or beneficial, in the claim. The only interest they ever get comes by virtue of a promise to prosecute the claim. Courts cannot remain blind to the fact that the assignment of the claim to the defendants for collection is not made as a gratuity. The percentage of the amount collected which is allowed to the defendants is given to them for one purpose only; to compensate them for services rendered in the collection thereof. Where the collection practice involves the preparing of legal papers, furnishing legal advice and other legal services, the compensation allowed must be assumed to be in part allowed to pay for the legal services so rendered. No matter how one looks at it, this constitutes the rendering of legal services for others as a regular part of a business carried on for financial gain. This essential fact cannot be hidden by the subterfuge of an assignment. The assignment itself, if used to permit this practice, is for an illegal purpose. . . . The taking of an assignment under circumstances such as those detailed above cannot possibly change the essential fact that the defendants are rendering legal services for another for gain. Id. at 639-640.

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This is exactly what Righthaven is doing. Righthavens assignments are absolutely for the purpose of permitting it, a non-law firm, to practice law and to earn a fee for the provision of legal services. As the Utah Supreme Court said nearly seventy years ago, this essential fact cannot be hidden by the subterfuge of an assignment. Such an assignment is not an assignment; it is a contingency fee representation agreement. Again, consider the language in the SAA: Assignor hereby engages Righthaven to undertake the pursuit of Infringement Actions. See SAA 3.4, Ex. A. at 3 (adapted for readability). Righthavens assignments are representation agreements. ii. ILLEGAL IN NEW YORK, EVEN WHEN LAWYERS FILE THE LAWSUITS. The representation-agreement-in-disguise scheme did not end in Utah. Two years later, the City of New York had a run-in with a would-be Righthaven, dressed up as a charitable organization. The Hospital Credit Exchange was a collection agency that solicited causes of action from New Yorks charitable hospitals. Hospital Credit Exchange v. Shapiro, 59 N.Y.S.2d 812, 813-14 (N.Y. Mun. Ct. 1946). The Credit Exchange took assignments of these claims for the sole and express purpose of instituting suit thereon in its own name although in behalf of such hospitals. Id. at 814. The Credit Exchange used its own lawyers to handle the claims. Id. The Credit Exchange would then take whatever recoveries it obtained and divide them between itself and the assignor. Id. The New York court found the Credit Exchange engaged in the practice of law contrary to public policy and in violation of the Penal Law. Id. at 814. The court refused to allow the sham, stating: Not so easily is the law circumvented which prevents collection agencies from carrying on a legal practice. Id. at 816. Foreshadowing Righthaven, the court went on:

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This might be very good business for the officials of a closely managed collection agency, who could thus grant themselves very satisfactory compensation for conducting what is tantamount to a law practice. It is not necessary that such compensation take the form of dividends or a distribution of profits; it may be paid in salaries or commissions. Id. at 816-17. iii. MICHIGAN FOLLOWS NEW YORK. A decade after New Yorks rejection of the representation-agreement-in-disguise scheme, the Michigan Supreme Court found itself faced with yet another proto-Righthaven, a collection agency taking assignments of claims and bringing suits in its own name in which the assignors retained an interest. Bay County Bar Assn v. Fin. Sys., Inc., 76 N.W.2d 23 (Mich. 1956). The Michigan Supreme Court found the scheme to be the unauthorized practice of law. Id. The Michigan Supreme Court could not escape the conclusion that the assignments were invalid. Id. at 29. And just as in New York, it did not matter that the assignee used licensed attorneys to file the suits. Id. The assignee itself had to be authorized to practice law, i.e. a lawyer or a law firm. Id. When this is done by one not licensed as an attorney it constitutes the unauthorized practice of law whether done by him in person or through his agent, regardless of whether the latter be a laymen or a licensed attorney. Id. The corporate defendant has engaged in the unlawful practice [of law]. Id. Righthavens use of lawyers is therefore no insulation to these arguments. iv. WISCONSIN REJECTS THE RIGHTHAVEN SCHEME TOO. Another decade passed and someone tried the representation-agreement-in-disguise scheme in Wisconsin. The Wisconsin Supreme Court flatly rejected it, stating:

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It is sheer hypocrisy to conclude that the percentage retained by the collection agency represents its equity or ownership share of the claim. It is its fee or charge for professional services rendered. Under these circumstances the property right of the creditor is directly affected and his recovery is dependent upon the litigation undertaken. There is no doubt that the client whose interests must be served and represented in the suit for collection under a normal and lawful lawyer-client relationship is the creditor. State ex rel. State Bar of Wis. v. Bonded Collections, Inc., 154 N.W.2d 250, 256 (Wis. 1967). The Wisconsin Supreme Court went on to say, in no uncertain terms: The collection agency by going into court representing itself as the client perpetrates a fraud on the court. Id. And the Wisconsin Supreme Court, as had its counterparts in New York and Michigan, found that the collection agency in that case was practicing law even though it hired a lawyer to go to court: The fact that the defendants in some instances employ a regularly licensed attorney to prepare necessary legal papers and conduct the trial of a suit does not make their conduct legal. One cannot do through an employee or an agent that which he cannot do by himself. If the attorney is in fact the agent or employee of the lay agency, his acts are the acts of his principal or master. When an attorney represents an individual or corporation, he acts as a servant or agent. Since he acts for others in a representative capacity, doing those things which are customarily done by an attorney, he practices law[.] Id. Again, Righthavens use of lawyers to prosecute its claims is no defense to these arguments. v. NEW MEXICO FOLLOWS SUIT. Just four years later in New Mexico, the Credit Bureau of Albuquerque decided to try the Righthaven path to prosperity. In State ex rel. Norvell v. Credit Bureau of Albuquerque, Inc., 514 P.2d 40 (N.M. 1973), the Credit Bureau took claims for enforcement under a contingency fee agreement with the creditor. Id. The agreement also require[d] the creditor to assign his claim to the Credit Bureau when requested to do so. Id. If pre-suit collection failed, the Credit Bureau then obtained an assignment of the claim for the purpose of allowing the Credit Bureau to file suit in its own name. Id. The Credit Bureau

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did not pay for the assignment, it just assumed the claim in its own name with the contingency fee agreement still in place. Id. The Credit Bureau then filed lawsuits, and if a judgment was collected in such a suit, the creditor-assignor would receive the agreed percentage. Id. at 44. After apparently employing these tactics for some time, the Credit Bureau finally crossed the wrong person. One David Norvelle was targeted by the Credit Bureau, and his lawyer realized the scheme was not debt collection but the unauthorized practice of law. After this revelation, it appears victims of the Credit Bureau came out of the woodwork and tried to intervene, and so did the New Mexico Attorney General. Id. at 42. The New Mexico Supreme Court held that the Credit Bureau was engaged in the unauthorized practice of law: [C]ollection agencies as a part of their business of serving others, clearly should not be permitted to prepare legal papers, commence suits, appear in court, prepare judgments and generally manage law suits for its various customers. Id. at 45. It does not matter what particular form or name they give their procedure the practice of furnishing or performing legal services for another is essentially the same. Id. The Norvell court then quoted extensively from Nelson v. Smith before stating: Such a business conducted for the purpose of bringing legal actions on claims owned by third parties and consisting of the payment of all costs and the furnishing of all legal services incident to the bringing of the actions is the practice of law. Where, as here, the agency rendering the service is a lay agency, it is the illegal practice of law. Such is the almost uniform holding of the authorities as applied to collection agencies operating along similar lines. Id. at 45-46 (citations and quotations omitted). The New Mexico Supreme Court went on: And so with the right of a plaintiff to try his own lawsuit in any court. If it is really his own litigation the right is unquestioned and unquestionable. But if it is anothers lawsuit or action, placed in plaintiffs name so as to enable him to render service to that other under the pretext of trying his own case, it does not come under the protection of the rule. And if it is done by one who engages in it

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as a business and holds himself out as peculiarly qualified or equipped, it comes under the ban of illegal practice of law. Id. at 47 (quotations omitted). Righthaven holds itself out as The Nations Pre-Eminent Copyright Enforcer on its website. See Righthaven Website, Ex. V. This would seem to satisfy the peculiarly qualified or equipped requirements. And just as in the Righthaven cases, The assignments procured by the Credit Bureau were not in truth taken for the purpose of acquiring title and ownership, but rather to facilitate the furnishing of legal services for a consideration. Id. at 49. The unending theme of these cases is that an entity pursuing the Righthaven representation-agreement-in-disguise scheme is entering into sham documents and committing a fraud on the court. Further, the courts are not as interested in the language of the assignments as in the intent of the parties. But here, the intent of Righthaven and its clients is made clear both by their conduct and by the language of the assignment: [Assignor] hereby engages Righthaven . . . to undertake . . . the pursuit of Infringement Actions. See SAA 3.4, Ex. A at 3. This language, simply and plainly, evidences a fundamental intent to retain a representativean agentnot to divest interest in a claim. vi. WEST VIRGINIA COMES TO THE SAME CONCLUSION. It would appear based on studying the precedents that every few years, in some state or another, someone cooks up the representation-agreement-in-disguise scheme anew, and it never meets with success. In State ex rel. Frieson v. Isner, 285 S.E.2d 641 (W.Va. 1981), yet another collection agency gave the Righthaven scheme a try. The West Virginia Supreme Court was not pleased: The operation of a collection agency, in and of itself, does not constitute the unauthorized practice of law. . . . Where, however, a person, association or corporation which collects debts as a regular business attempts to enforce the

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claims of others by resort to legal proceedings, the debt collector is extending his or its business to include legal representation of creditors. The collection agency is holding itself out not only as an entity which will collect amounts owed to creditors but also as an agent which will render legal services in order to recover debts. It sells its services as a representative in legal actions as part and parcel of its debt collection business. Such activity can be viewed in no other light than as the unauthorized practice of law. * * * The Associated Collection Agencies of West Virginia suggest in their Defendant Eiser curiae brief, however, that South Charleston Adjustment Bureau was not rendering legal services to the petitioners creditors as a part of its debt collection business, but rather had obtained an assignment of the claims from the creditors and was asserting its own claim. . . . The association argues that because the collection agency is asserting its own claim as assignee rather than acting as a representative of the creditor-assignor, it does not violate the prohibition against laymen engaging in the unauthorized practice of law. Generally an unsettled account or debt due is a chose in action which is assignable, and by virtue of statute the assignee may sue in his own name to recover the debt. . . . Where, however, a collection agency takes an assignment of a creditors claim solely for the purpose of enabling the agency to maintain suit thereon, numerous jurisdictions have held that the fact that the collection agency, as assignee, is the real party in interest by virtue of the assignment and entitled to maintain suit in its own name is not determinative of the question of whether in so doing the collection agency is engaging in the practice of law. Id. at 650-51. Delivering the final nail in the coffin of the Righthaven scheme in West Virginia, the Supreme Court held: In such instances the assignment has been held to be a sham or fraud perpetrated upon the court to allow the collection agency to avoid the prohibition on the unauthorized practice of law. Id. at 651. vii. IOWA SAYS NO TO THE RIGHTHAVEN SCHEME. The Iowa Supreme Court had a run in with the Righthaven scheme just ten years ago. In Iowa Supreme Court Commn on Unauthorized Practice of Law v. A-1 Associates Ltd., 623 N.W.2d 803 (Iowa 2001), the court found that an entity (other than a law firm) engages in the

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unauthorized practice of law when, as a regular part of its business, it procures or takes assignments for collection where the creditor still retains an interest in the underlying debt and the collection agency institutes and maintains legal action to recover the unpaid debt. Id. at 805. The Iowa Supreme Court rejected the idea that such a legal relationship between a creditor and a debt collector is an assignment. Id. at 807. [W]e are convinced that A-1s practices are not consistent with the ordinary meaning of assignment recognized at common law and by statute. Id. The court went on: The assignment form executed by A-1s clients purports to transfer absolutely all right, title, and interest in described accounts receivable owned by A-1s clients. If such instrument actually meant what it said, it would come within the ordinary meaning of assignmenta transfer of the assignors entire interest or rights in the property. And it would plainly give A-1 the right to maintain an action on the debt in its own name and represent itself in court on a pro se basis if it chose to do so. Id. at 808 (citations omitted). But the Iowa Supreme Court rejected the assignment as a sham. A-1s claimed status as a bona fide assignee is defeated under this record, however, because the assignmentthough absolute in formis, in fact, a transfer intended primarily to secure payment for services rendered. Id. Righthaven does not dispute that its right of recovery from its cases is primarily intended to secure payment for services rendered, i.e. copyright enforcement. Righthavens clients do not enter into assignments. They enter into contingency fee representation agreements for legal services. viii. SOUTH CAROLINA REJECTS THE SCHEME AS WELL. Just four years ago, the South Carolina Supreme Court encountered the representationagreement-in-disguise scheme. In Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007), a debt collector approached a creditor to sign an assignment of a judgment to him. Id. at 476. He would attempt to collect the debt for a fee of one-third of the recovery. Id. The debt collector used

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various legal mechanisms to try to compel payment, including asserting that the claim was now his to pursue pro se and accordingly appearing in court. See generally id. The South Carolina Supreme Court was as unimpressed with representation agreements in disguise as the rest of the courts cited above, and in fact held the assignment to be a contingency fee representation agreement for legal services with an individual who was not a lawyer. Id. at 478-79. The Roberts court approvingly cited many of the precedents above which describe the scheme as a sheer hypocrisy, a fraud on the court, and a sham perpetrated on the court to enable unauthorized practice of law. Id. (citing Bonded Collections, supra; Frieson v. Isner, supra). Finally, the South Carolina Supreme Court indicated that in such a situation, the assignee had no genuine title, equity, or ownership in the claim. Id. at 478 (citing Bonded Collections, supra; Norvell, supra). ix. COLORADO LIKEWISE BARS ASSIGNMENTS OF THIS NATURE. In November of 2010at the height of the Righthaven enterprisethe Colorado Supreme Court handed down an opinion completely foreclosing Righthavens operation. In People v. Adams, 243 P.3d 256 (Colo. 2010), the Colorado Supreme Court invalidated an assignment and found unauthorized practice of law by the assignee on facts practically identical to the Righthaven cases. For an assignee to litigate in Colorado, or anywhere else, the assignor must permanently and totally extinguish all of its rights in favor of the assignee. [A]n assignment must be complete and effective in order for the assignee to be become the real party in interest with the right to maintain an action in his own name. Id. at 261. The assignment of any common law or statutory claim must be clear and final so that defendants are protected from collateral actions by

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alleged assignors. Id. at 263. [T]he intent to make an assignment must be clearly reflected in the plain language of the parties agreements. Id. Righthavens assignments are in no way clear and final. The original assignment has been held invalid by two federal judges in Nevada: Judge Hunt in Righthaven v. Democratic Underground and Judge Pro in Righthaven v. Hoehn. See Democratic Underground Dismissal, Ex. D at 15; Hoehn Dismissal, Ex. E at 10. The clarified assignment was also held invalid by Judge Pro, while Judge Hunt clearly indicated his belief that the new assignment was still invalid because the amendments were merely cosmetic. See Hoehn Dismissal, Ex. E at 10; Democratic Underground Dismissal, Ex. D at 8 n.1. Judges Mahan and Hicks in Nevada and Judge Kane in Colorado have all expressed concerns about the assignments as well. A clear and final assignment would not have met with this sort of reaction from the judiciary. While the judicial skepticism has so far been based on the Copyright Acts prohibition on right-to-sue assignments, the analysis under basic assignment law is even more revealing. As discussed above, the Righthaven assignments vest exclusive rights of reversion in the assignor. The SAA states: [Assignor] shall have the right at any time to terminate, in good faith, any Copyright Assignment[.] SAA 8, Ex. A at 4. Ditto the clarified SAA: [Assignor] has, in its sole discretion, the option to repurchase the Copyright Assignment for a nominal amount within 14 days[.] See Hoehn Dismissal, Ex. E at 10; see also SAA Clarification 8.1, Ex. B at 2. There is no clear and final assignment here, and the reason is obvious: Righthaven exists for the sole purpose of suing people for the copyright claims of others. Righthaven has no interest in obtaining assignments of copyrights otherwise. Righthavens media clients fully intend to maintain their copyrights for all purposes other than litigation, which necessitates reversionary language in the assignments. That fact alone invalidates the assignments.

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Yet Righthaven claims the courts should not look to the intention of the parties, only to the self-serving documents they have created. But [a]n assignment which appears to be absolute on its face may not be completely effective if parol evidence demonstrates an intent departing from the terms of the assignment. Adams at 263. Reams of evidence prove beyond any doubt that Righthavens clients dont intend to give clear-and-final assignments but to simply loan their copyrights to Righthaven for lawsuits, then retrieve them afterwards. The law of assignment absolutely forbids this. Even if Righthaven and its media clients entered into a permanent assignment of all right, title, and interest, a court could still police the intent of the parties and invalidate the assignment if the documents are merely self-serving shams, which, if Righthaven is involved, they always will be. Righthaven could show up at the courthouse with clarified assignments from here to eternity, but they will never hide the true intent behind Righthaven. The intent is only to loan a sufficient quantum of rights to Righthaven to sneak the assignment by the federal judiciarys standing inquiry, just long enough to extract a settlement from the defendant. Righthavens assignment also fails under Adams because it is a mere cover for a representation relationship. Colorado, like every other jurisdiction, bans this: In this case we determine that the assignments were not final and effective. However, we do not base our conclusion that Adams engaged in the unauthorized practice of law solely upon the ineffective assignments. Instead, we rely on the facts in the record of this case in reaching our conclusion that Adams appeared for the subcontractors in a representative capacity in bankruptcy court. The assignments Adams based his bankruptcy court filings upon were not complete, final and valid assignments. The subcontractors/assignors retained a significant interest in their claims. The assignments at issue were not effective because they did not wholly divest the purported assignors of any interest in their claims as demonstrated by admissible parol evidence. Testimony before the [special master] coupled with the terms of the assignment contracts demonstrated that these assignments were not binding, because Adams subcontractor clients maintained the right to reassignment of their claims. According to their testimony, the clients

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were expected to assist and cooperate in the pursuit of the claims in court, and they had significant influence upon and control over their claims. Adams at 264 (citations omitted). The Adams court found the assignments were actually representation agreements because the assignors maintained authority over their assigned claims. This is exactly the situation with Righthaven, and it always will be. Consider the previously-cited statements of Righthavens clients about their control of the litigation: Stephens Medias Mark Hinueber: I can tell Righthaven not to sue somebody. Arkansas Democrat-Gazette Story, Ex. N at 3. WEHCO Medias Paul Smith: [If Righthaven discovers someone has violated WEHCOs copyright], it would be [WEHCOs] decision whether or not to move forward with it[.] Id. MediaNews Groups Sara Glines: [MediaNews Group] reviewed every violation and only approved actions against sites that carried advertising and were not charities. New York Times Story, Ex. O at 3. The Adams court invalidated assignments because [t]he record supports a conclusion that the assignments the subcontractors executed at various times created a client-collector relationship which included the ability of the purported assignor/subcontractors to control the litigation by demanding reassignment of their claims. Adams at 265. Again, the Righthaven situation is identical. The SAA states: Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assignment . . . and enjoy a right of complete reversion to the ownership of any copyright that is the subject of a Copyright Assignment; provided, however, that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effective termination of such action[.] SAA 8, Ex. A at 4. This language doesnt just fail to give Righthaven standing under the principles of copyright law, it renders the entire assignment invalid under basic assignment law. Righthaven is

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not a bona fide assignee, it is a representative of the assignors in the claims that it brings. In fact, another previously-cited section of the SAA proves this contention beyond any doubt: [Assignor] hereby engages Righthaven . . . to undertake . . . the pursuit of Infringement Actions. See SAA 3.4, Ex. A at 3. Righthavens media associates arent assignors, they are clients who have engaged Righthaven to pursue copyright infringement lawsuits. This invalidates the assignment. The law is crystal clear. An assignment cannot bear any hallmarks of a representation agreement, nor can the conduct of the parties betray such a relationship even if the assignment does not. For an assignment to be valid, it has to be a complete hand-off, both in word and in deed. The assignor cannot lurk in the shadows making litigation decisions (or any other decisions). To do so gives rise to a representative relationship wholly inconsistent with a legal assignment. The assignment is therefore invalid, and since Righthaven is not a bona fide assignee, it does not have standing to pursue this action in its own name. C. Righthavens patent analogy in no way rescues its business model. The previously cited cases are factually identical to the Righthaven situation. Further analysis is almost redundant. Each of the businesses and individuals mentioned above operated identically to Righthaven. Every single one of the foregoing courts would find Righthavens assignments to be invalid because they are actually representation agreements. Righthaven claims there is something different about copyright law (and patent law) that allows it to operate the way it does. But nothing in the preceding citations in any way discloses that the rule should be different based on the nature of the claim. A claim is a claim, and an assignment that is actually a representation agreement assigns nothing.

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Righthaven argues that the purpose of a transaction is irrelevant, that the courts should just accept Righthavens claim to titleagain, backed up by self-serving documentsand move on. For this proposition, Righthavens filings have cited an unpublished case, SGS-Thomson Microelectronics, Inc. v. International Rectifier Corp., 1994 WL 374529 (Fed. Cir. Jul. 14, 1994), and Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870 (Fed. Cir. 1991) (also involving American Trim Products, Inc.). The first point to be made is a very simple one. Consider the names of the parties in these cases: SGS-Thomson Microelectronics, International Rectifier Corporation, Vaupel

Textilmaschinen KG, Meccanica Euro Italia SPA, and American Trim Products. The first two are bona fide electronics companies and the last three are bona fide textile companies. These five companies are in the business of business, not the business of litigation. Examining each case demonstrates facts and circumstances far removed from the Righthaven cases. In SGS-Thomson, the court found that the assignments at issue were not shams because no party put in any evidence of a sham. Id. at *5. Further, the assignments were purchased for value$10,000. Id. No party presented the SGS-Thomson court with the argument that the underlying suit was being prosecuted by a law firm in disguise. See generally id. The absence of this argument was not because of bad lawyering, but because it clearly was not the case. Both parties in SGS-Thomson were bona fide participants in the electronics business. This case stands as no defense to the arguments presented herein. The SGS-Thomson court cites Rawlings v. Natl Molasses Co., 394 F.2d 645, 684 (9th Cir. 1968), which Righthaven also points to in its filings. In that case, the Ninth Circuit encountered joint owners of a patent who learned of infringement. One wanted to sue, one didnt.

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Id. at 647-48. The owner not wishing to engage in litigation assigned the rights to the co-owner, who proceeded with litigation. Id. at 648. The assignment was not in the nature of a representation agreement, nor was the assignee in the business of engaging in these sorts of transactions. It was a one-time transaction made between bona fide owners clearly not done to enable the assignee to provide legal services. Id. Again, no one raised that issue in the case because it wasnt an issue in the case. Another case Righthaven claims for support is Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870 (1991). But the Vaupel case is no better for Righthaven, as Vaupel was actually using a patent as a licensee when it discovered infringement. See generally id. The essential facts are as follows. Vaupels original license contemplated enforcement of the patent approximately ten years before discovering any infringement. Id. The original license indicated the patentee and Vaupel would work together on a case-by-case basis to determine whether to sue over infringements that might crop up in the future. Id. at 875. After an infringement was discovered, the patentee and Vaupel agreed on an assignment so that Vaupel could pursue the litigation, with Vaupel to get a portion of the proceeds. Id. Again, the key difference between that case and Righthaven is this: Vaupel was not in the business of litigation. Vaupel and the patentee had a bona fide business relationship and arranged their affairs so as to defend against a mutual enemy. No one argued the Vaupel assignment was cover for a representation agreement. The arrangement was made for mutual business benefit, not so that Vaupel could represent a client in litigation. D. How to determine the (in)validity of an assignment. Not every contingent-payment assignment is per se invalid in every jurisdiction. Where such an assignment is not a representation agreement in disguise, it can survive judicial scrutiny.

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And even a bought-and-paid-for, unqualified assignment can be struck down as a disguised representation agreement if the parties true intent is not reflected in the assignment. i. GENERAL PRINCIPLES. Courts generally investigate all the facts and circumstances surrounding an assignment to determine its validity. For example, where a contingent-payment assignment is not a pretext for legal representation, it can be upheld. The previously cited Norvell case hints at such a situation: [I]f it is anothers lawsuit or action, placed in plaintiffs name so as to enable him to render service to that other under the pretext of trying his own case, it does not come under the protection of the rule [that a plaintiff can sue in his own name]. And if it is done by one who engages in it as a business and holds himself out as peculiarly qualified or equipped, it comes under the ban of illegal practice of law. Id. at 47 (quotations omitted). The Norvell court clearly looked to the parties intent, finding on those facts the contingent-payment assignments were contracts for legal services. But courts have upheld contingent-payment assignments on different fact patterns where there was no intent to provide representation. Good examples are the Righthaven-cited patent cases discussed in the prior section. As another example, some courts allow unqualified assignments of contractual debts to be the subject of a contingent-payment assignment, usually by analogy with promissory notes. For example, the United States Supreme Court and the Colorado Supreme Court have upheld these assignments.10 This is by no means a universal holdingmany states, including South Carolina, reject contingent-payment assignments on a per se basis, even over sum-certain,

10

E.g., Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 269 (2008) (Syllabus: Held: An assignee of a legal claim for money owed has standing to pursue that claim in federal court, even when the assignee has promised to remit the proceeds of the litigation to the assignor.); People v. Adams, 243 P.3d 256, 266 (Colo. 2010) (With a valid assignment and counsel, a licensed collection agency that is also a corporation may recover accounts payable, even when those accounts are assigned on a contingency payment basis.) (citing Thibodeaux v. Creditors Services, Inc., 551 P.2d 714 (Colo. 1976). Page 38 of 60

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contractual debts.11 But the rule that an assignment cannot be cover for a representation agreement has no exceptions. American courts have not articulated a single test for determining whether an assignment is a representation agreement in disguise. Most courts engage in a fact-specific inquiry, looking at the language of the assignment, the conduct of the parties, and the totality of the circumstances involved. This is entirely reflective of the similarly-motivated judicial reticence to define the practice of law. In that regard, many jurisdictions adopt some form of the famous I know it when I see it test from Jacobellis v. Ohio, 378 U.S. 184 (1964) (STEWART, J. concurring).12 But in the context of representation agreements masquerading as assignments, the authorities provide several guideposts for courts considering the issue. ii. A DOZEN FACTORS COURTS CONSIDER.13 1. An assignment must be an absolute, unconditional, and completed transfer of all right,

title, and interest in the property that is the subject of the assignment . . . with the concomitant total relinquishment of any control over the property. Bank of Cave Spring v. Gold Kist, Inc., 327 S.E.2d 800, 802 (Ga. Ct. App. 1985). In the text of the assignment, the assignor must
11

Roberts v. LaConey, supra (S.C. 2007); Compton v. Atwell, 207 F.2d 139, 140-141 (D.C. Cir. 1953) ([W]hether an assignee for collection only is the real party in interest . . . has produced a variance of judicial opinion and has so divided other courts).
12

E.g., In re Unauthorized Practice of Law Rules, 422 S.E.2d 123 (S.C. 1992). We are convinced, however, that it is neither practicable nor wise to attempt a comprehensive definition by way of a set of rules. Instead, we are convinced that the better course is to decide what is and what is not the unauthorized practice of law in the context of an actual case or controversy. Id. at 124.
13

Defendant Eiser in no way suggests that the foregoing twelve factors constitute a twelve-factor test that is necessary for resolving the question before the Court. Complex, multi-factor tests are often met with criticism, and justifiably so. Rather, Defendant Eisers purpose in this section is to catalogue the various considerations courts use when deciding the fundamental question of whether an assignment for litigation is valid, then to analyze how the Righthaven business model compares to these considerations. Page 39 of 60

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manifest an intent to transfer and must not retain any control or any power of revocation. Burkhardt v. Bailey, 680 N.W.2d 453, 463 (Mich. Ct. App. 2004). 2. Facts showing that the assignor-assignee relationship is really one of master-servant will

invalidate an assignment. Id. Where litigation is involved, the assignee is exposed to liability for unauthorized practice of law. E.g., Roberts v. LaConey, supra. 3. An assignment for the express purpose of litigation raises the specter of an impermissible

representation relationship and the unauthorized practice of law. E.g., Hospital Credit Exchange, supra. 4. Likewise, a contingent-payment assignment involving litigation raises the specter of an

impermissible representation relationship and the unauthorized practice of law, even moreso when litigation is the exclusive enterprise of the assignee. E.g., Norvell, supra; Hospital Credit Exhange, supra. 5. An assignee who makes a regular business out of obtaining assignments and filing

lawsuits over the claims is exponentially more likely to be engaged in improper transactions than a one-time assignee engaged in the same conduct. Compare Norvell, supra with Vaupel, supra. 6. An assignee-for-litigation who holds himself out as peculiarly qualified or equipped to

engage in the litigation is likely committing the unauthorized practice of law. Norvell, supra, at 47. 7. When an assignee litigates an assigned claim on contingency, assignments for

collection, i.e. accounts payable, promissory notes, or contractual debt, are far more likely to be upheld than assignments of causes of action that are not for a sum-certain debt. Sprint Communications, supra, at 269. (holding limited to legal claim for money owed); Adams, supra, at 262 (refusing to permit assignment of claims for statutory penalties, penalties that are identical

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in nature to the $150,000 available under the Copyright Act for willful copyright infringement). Further, some causes of actionincluding copyright infringement claimsare per se unassignable. E.g., Silvers at 890 (the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.); Roberts v. Holland & Hart, 857 P.2d 492, 495 (Colo. Ct. App. 1993) (holding legal malpractice claims unassignable). 8. An assignment for litigation incident to bona fide business operations of the assignee and

assignor is likely to be upheld. E.g., SGS-Thomson, supra; Rawlings, supra; Vaupel, supra. 9. If the assignors cooperation will be necessary or is expected in a subsequent lawsuit by

assignee, the assignment is more likely to be held invalid. Adams at 264. 10. Creative attempts to use a valid-in-form assignment to accomplish a forbidden purpose

are wholly ineffective. E.g., Palazzo v. Gulf Oil Corp., 764 F.2d 1381, 1385 (11th Cir. 1985) (corporation could not assign claims to an officer to bring them pro se); Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 23 (2d Cir. 1983) (procedural device of an assignment cannot circumvent rules preventing a lay person from representing a corporation); Christiansen v. Melinda, 857 P.2d 345, 349 (Alaska 1993) (A statutory power of attorney does not entitle an agent to appear pro se in his principals place.); Brown v. Unauthorized Practice of Law Comm., 742 S.W.2d 34, 42 (TEx. Lt. App. 1987) (contracts to act as plaintiffs agent on a contingency to collect personal injury claims constituted the unauthorized practice of law). 11. Considerations of public policy and prudence are also relevant. E.g., Secretary of State of

Md. v. Joseph H. Munson Co., 467 U.S. 947, 955 (1984) (In addition to the limitations on standing imposed by Art. IIIs case-or-controversy requirement, there are prudential considerations that limit the challenges courts are willing to hear. The plaintiff generally must

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assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.) (quotation omitted). 12. Even if the text is satisfactory, the claim is ordinarily assignable, and there are no

unauthorized practice of law issues, courts can still go behind the language of an assignment and investigate the conduct and true intentions of the parties. If this investigation shows that the assignor retained some level of control or a power of revocationeven where the documents denied that powerthe assignment is invalid. Adams, supra, at 263-65. Where the intent is lacking, the assignment fails. This appears to be, by far, the most important factor. iii. ANALYZING THE RIGHTHAVEN OPERATION, FACTOR BY FACTOR. As to the first factor, the right of reversion in the SAA entirely defeats the idea that this is an assignment of any type. [Assignor] shall have the right at any time to terminate, in good faith, any Copyright Assignment[.] See SAA 8, Ex. A at 4. A true assignment cannot be terminated, because it isnt a temporary condition. Assignments are permanent transfers from one party to another. The clear intention of Righthaven is to simply borrow rightsenough to sue overand then return the copyright to the assignor after (or even during) the litigation. That transaction is simply not an assignment. The analysis is no different under the clarified SAA: [Assignor] has, in its sole discretion, the option to repurchase the Copyright Assignment for a nominal amount within 14 days[.] Hoehn Dismissal, Ex. E at 10; see also SAA Clarification 8.1, Ex. B at 2. The first factor, by itself, invalidates the assignment. The second factor requires that the assignor-assignee relationship not be one of masterservant. Righthaven cannot even come close on this factor. The SAA indicates that copyright assignors engage Righthaven to undertake the pursuit of copyright infringement lawsuits. See SAA 3.4, Ex. A at 3. Further, statements made to the media by officers of Righthavens clients

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indicate that they ultimately control the litigation, not Righthaven. See Arkansas DemocratGazette Story, Ex. N at 3; New York Times Story, Ex. O at 3. Based on these facts, the second factorby itselfinvalidates the assignments. As to the third and fourth factors, the assignments in question are exclusively intended to enable litigation. See SAA 3.4, Ex. A at 3. And payment for the assignments is entirely contingent on success in litigation. Id. at 5, Ex. A. at 3 (remitting 50% net litigation proceeds to Righthaven client). The third and fourth factors weigh entirely against Righthaven. As to the fifth and sixth factors, all Righthaven does is file lawsuits. There is no other component to the Righthaven business. And Righthaven most certainly holds itself out as peculiarly qualified and equipped for filing lawsuits, calling itself The Nations Pre-Eminent Copyright Enforcer. See Righthaven Website, Ex. V. The fifth and sixth factors also come down against Righthaven. With regard to the seventh factor, Righthaven does not file suit over contractual debt; these assignments are not for collection. They are assignments of copyright infringement claims, which are per se unassignable. The seventh factor is squarely against Righthaven. Under the eighth factor, where an assignment is made incident to bona fide business operations, it is likely to be upheld. But Righthaven engages in no bona fide business operations. Righthavens operations are entirely limited to the prosecution of lawsuits. Righthavens assignments are in no way incidental to some genuine mutual business, Righthavens litigation over assignments is its business. Accordingly, the eighth factor weighs against Righthaven. The ninth factor examines whether the assignors cooperation with the assignee is needed or expected in the prosecution of a lawsuit, and if so, the assignment is more likely to be invalid. In this situation, Righthavens SAA requires its clients to cooperate fully and candidly

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with Righthaven with respect to the Infringement Action[.] See SAA 9.6, Ex. A at 6. This is irrefutable evidence that the relationship is not one of assignor-assignee. The ninth factor invalidates the assignment. The tenth factor examines whether a valid-in-form assignment is being used to creatively accomplish a forbidden purpose. While the Righthaven assignments are invalid, even if they somehow were valid, they are clearly intended to allow a non-law firm to engage in the practice of law and to allow a law-firm-in-disguise to have non-lawyer ownership and investment, something forbidden by the rules of professional conduct. In addition, and perhaps even more fundamentally, any assignment made by Righthaven in the future is nothing but a creative attempt to avoid the prohibition on assignments of the bare right to sue over copyright infringement. Righthavens only purpose in life is to file copyright infringement claims, and any assignment purporting to provide any other rights is just an attempt to sneak past the Copyright Acts prohibition on right-to-sue assignments. That ipso facto invalidates the assignment. The tenth factor is squarely against Righthaven. The eleventh factor considers public policy and prudence. Judge Mahan has already held Righthavens scheme to be offensive to public copyright policy: [Righthaven]s litigation strategy has a chilling effect on potential fair uses of Righthaven-owned articles, diminishes public access to the facts contained therein and does nothing to advance the Copyright Acts purpose of promoting artistic creation. Jama Summary Judgment, Ex. H at 7. Another important policy consideration is that many if not all of Righthavens lawsuits involve no or de minimis actual damages, and a substantial portion of them likewise involve no or de minimis infringement. So far as Defendant Eiser can determine, Righthavenhaving sued

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approximately 500 defendants in 274 lawsuits over newspaper materialhas yet to put forward a scintilla of evidence that either it or its clients suffered any actual damages. This is an astounding fact. Righthaven has demanded about $100,000 per case. 14 That means that Righthaven has, in the aggregate, engaged the federal judiciary seeking approximately $50,000,000 in statutory damages without having yet shown one dime of actual damages. Neither the Copyright Act of 1976, as amended, nor the Judiciary Act of 1789, as amended, were intended to enable this sort of scheme. Assuming for the sake of argument that Righthavens assignments are not fatally flawed, Defendant Eiser submits this is exactly the sort of situation where the federal judiciary should deny standing on prudential grounds. Righthavens CEO Steve Gibson has hungrily stated his belief that there are millions if not billions of copyright infringements on the Internet 15and, obviously, he would dearly like to sue over each and every one. There is certainly a place in the world for copyright litigation, but Righthaven has made clear that it is institutionally incapable of distinguishing between real content pirates and unintentional infringement. In many cases, Righthaven cant even distinguish between infringement and obvious fair use.16 Righthavens scheme visits real consequences on people totally disconnected from it. The federal judiciary does not have infinite resources to handle cases, and Righthavens dime-store damages are, to put it bluntly, not worth this Courts time. The Righthaven cases have occupied this Court, all ten district judges in Nevada, at least four of the six magistrate judges in Nevada, a
14

Early Righthaven cases sought $75,000 in statutory damages. Later Righthaven cases, including this one, seek full statutory damages of $150,000.
15

Gibson: We perceive there to be millions, if not billions, of infringements out there[.] Wired.com Story, Ex. P at 3.
16

For example, Righthavens no-warning suit against the Democratic Underground website was over four paragraphs from a 34 paragraph story posted as part of a political discussion. Page 45 of 60

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district judge in Colorado (who is handling over 50 Righthaven cases), and two panels of the Ninth Circuit. How many real cases have been delayed as a result of Righthaven? 17 And how many real cases would be delayed if Gibsons wish of millions or billions of copyright lawsuits comes true? Between active judges, senior-status judges still handling cases, and magistrate judges, there are at most about 2,000 individuals in the United States with the authority to adjudicate or partially adjudicate copyright suits. Gibsons plan is to saddle each of them with between a thousand and a million de minimis lawsuits each, all captioned Righthaven v. . . . The federal judiciary is not a national network of small claims courts. This is not to say the courthouse doors should ordinarily be closed to plaintiffs with small actual damages in federal question casessuch a decision should be reserved for the rarest of cases. But the law does not require the bench to turn a blind eye to Righthavens special brand of nonsense. All Americans are equal before the law, but all lawsuits arent. Denying standing to Righthaven as a matter of prudence is well within the sound discretion of the judiciary. Defendant Eiser submits that even if Righthaven ever managed to manufacture Article III standingwhich, frankly, it cannota prudential denial would be completely appropriate. The twelfth factor relates to intent, and is by far the most important. No matter what an assignment says, if the intent of the parties is inconsistent with an absolute, unconditional, and

17

Even worse is that Righthavens subterfuge regarding its assignments has caused a tremendous waste of judicial resources and the resources of Righthaven defendants. Righthaven defendants have, in the aggregate, probably spent close to a million dollars on legal fees so that their attorneys could defend on the traditional grounds of fair use, implied license, etc. Righthaven has already lost several cases on fair use. But now it turns out Righthaven never even had standing because its assignments are shams. It is no different than if a defendant spent a fortune defending a wreck case, got a defense verdict, then found out while walking out of the courtroom that the plaintiff had been lying the whole time about being in the other car. This is exactly what Righthaven has done. Page 46 of 60

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complete transfer from assignor to assignee, the assignment fails. But Righthaven and its media clients in no way intend for Righthaven to get an absolute, unconditional, or complete transfer of anything. It is beyond dispute at this point that Righthavens intent is not to be an assignee but merely to look like one to all the worldand to the federal judiciarywhile, in truth, the only rights Righthaven had were merely on loan. Righthavens assignments arent just run-of-themill shams, they are quintessential, blue-ribbon examples. And the fact that Righthaven clients have reversionary rights doesnt just doom the original SAA and its clarification, it dooms the entire enterprise now and forever. Words can be changed far more easily than intent. Righthavens next tactic is to simply rewrite its assignments until it hits upon the magic words that give it standing under the Copyright Act. See Righthaven Response to Amici, Ex. M at 5 n.1. But when an assignment is the basis for standing, magic words arent enough. Not only do the parties have to recite a permanent, unconditional transferthey actually have to mean it. But Righthaven doesnt, and it never will.18 Even if Righthaven came to court tomorrow with an assignment of all right, title, and interest containing no reversionary language whatsoever, the practices of Righthaven and its clients for the past year and a half would be a millstone around Righthavens neck that could never be removed. At this point, Righthaven cannot ever make a satisfactory showing that an

18

Actually, Righthaven likely doesnt care one way or another. Righthavens media clients are almost certainly the obstacle to Righthaven obtaining genuine assignments. Righthavens clients are newspapers who rightly value the integrity of their archives. The Denver Post and the Las Vegas Review-Journal dont want their archives compromised by permanent, piecemeal assignments to a third party for litigation that is ephemeral compared to the lifetime of a newspaper. But they cant have it both wayseither the archives are compromised, or the assignments are shams. The fundamental failure of Righthaven lies in the need of its media clients to have their cake and eat it too. The law of assignment simply does not allow that. Page 47 of 60

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assignment isnt a sham. Righthaven cant ever show19 that it doesnt have a backroom deal with its media client to transfer the copyright back after the lawsuit is over. Theyve already done it. Their only mistake was that they put it in writing, and they wont make that mistake again. Regarding the twelfth factor, the intent of the parties is clear in this case. Frankly, not only do Righthaven and its clients lack the requisite intent to assign, they actually posses a clear intent to enter into sham assignments.20 Accordingly, the twelfth factorthe most important factordestroys the entire Righthaven operation, now and forever. Out of the twelve factors courts appear to use in determining whether an assignment is a representation agreement in disguise, every single one is is squarely against Righthaven. Several of the factors areby themselvesindependently fatal to Righthaven. Accordingly, it is crystal clear that the Righthaven assignments are void. Righthaven is not a bona fide assignee, it is a law

19

The Defendant does not intend to raise the idea of burden shifting here. But it seems clear, at least as a practical matter, that the burden is squarely on Righthaven from this point forward to prove that future assignments arent shams. That burden is one Righthaven can never meet.
20

Comparing the Righthaven enterprise with the other cases cited in this brief leads to an interesting conclusion: Righthaven is a rare and possibly unique example of a sham assignee who actively sought to suppress evidence of the sham assignment. Righthavens failure to file proper financial disclosures coupled with its aggressive objection to releasing the original SAA show that Righthaven appreciated the illegality of its conduct and pressed on. In the cases cited in this brief, most if not all of the parties found to have gone over the line did so unintentionally and never made any attempt to hide what they were doing. By and large, those parties were operating in good faith and unknowingly and unintentionally ended up on the wrong side of the law. Righthaven has in no way operated in good faith, instead trying to suppress all evidence of the true nature of its transactions so that it could continue its sham modus operandi. Righthavens uniqueness on this point is not enviable. See Democratic Underground Dismissal, Ex. D at 10 (finding Righthaven breached its duty of candor to the federal judges in Nevada, and in so doing induced them to make procedural rulings in Righthavens favor: As the undersigned issued one of the orders Righthaven cites [to support its standing arguments], the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction[.]) Page 48 of 60

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firm in disguise. Its assignors arent giving up their rights, they are retaining counsel. As a result, Righthaven has no standing to pursue this action or any other. E. State law can invalidate a copyright assignment, and South E. Carolina law certainly invalidates Righthavens assignment. At first blush, it may seem unusual that state law plays a role in determining the validity of a copyright assignment. But on general matters of contract law, state law provides the rule of decision in copyright cases: The only state laws applied by the court below were Georgia rules of contract construction. While the context of copyright law in which the agreement exists cannot be overlooked, application of Georgia rules to determine parties contractual intent is not preempted by either copyright act nor does their application violate federal copyright policy. . . . Cf. Aronson v. Quick Point Pencil Co., 440 U.S. 257 [] (1979) (state law is not displaced merely because contract relates to intellectual property). It is possible to hypothesize situations where application of particular state rules of construction would so alter rights granted by the copyright statutes as to invade the scope of copyright law or violate its policies. We need not, however, set forth these extreme situations for it is clear that the application of Georgia rules of construction in the case at bar is not one of them. Fantastic Fakes, Inc. v. Pickwick Intl, Inc., 661 F.2d 479, 483 (5th Cir. 1981). The law of assignment is a subset of contract law, therefore state law can most certainly invalidate a copyright assignment, unless the state law in question violates federal copyright policy. The particular law of assignment implicated here relates to the impropriety of assignments that are actually representation agreements, a matter wholly unrelated to federal copyright policy and squarely within the purview of traditional state authority. Nothing in the Copyright Act or embodied in any federal copyright policy discloses an intention to displace state law on sham assignments or unauthorized practice. In fact, the Righthaven operation threatens federal copyright policy. As Judge Mahan noted, [Righthaven]s litigation strategy has a chilling effect on potential fair uses of Righthaven-owned articles,

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diminishes public access to the facts contained therein and does nothing to advance the Copyright Acts purpose of promoting artistic creation. Jama Summary Judgment, Ex. H at 7. State assignment law provides the rule of decision as to the general validity of the Righthaven assignments. The next question, therefore, is which states assignment law is applied. In South Carolina, the law applicable to an assignment is ordinarily the law of the place where the assignment was made, i.e. lex loci contractus. There is a public policy exception, however, which clearly applies here. Where the enforcement of a foreign assignment would violate the public policy of South Carolina, the assignment cannot be enforced in South Carolina. E.g., Carolina Care Plan, Inc. v. United HealthCare Services, Inc., 606 S.E.2d 752, 758 (S.C. 2004) (The general rule is that courts will not enforce a contract which is violative of public policy, statutory law, or provisions of the Constitution.); Sheldon v. Blauvelt, 29 S.C. 453 (S.C. 1888) (refusing to enforce assignment made in and valid in New York where state law declared that such assignments were absolutely null and void.). Further, the general rule of lex loci contractus would not apply to Defendant Eiser in any event, as she was not a party to the assignment and knew nothing of it until she was served with the summons and complaint. Under South Carolina law, the Righthaven assignments are void for at least two distinct reasons and completely unsalvageable for a third. The first reason Righthavens assignments are void is that the assignments are given to enable the assignee to engage in litigation and are purchased on a contingency. Such an assignment is void against South Carolina public policy under Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007). The second reason is that Righthavens assignments are simply not assignments under South Carolina law. In South Carolina, Three elements constitute an assignment: (1) an assignor; (2) an assignee; and (3) transfer of control of the thing assigned from the assignor to

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the assignee. Moore v. Weinberg, 644 S.E.2d 740, 745 (S.C. Ct. App. 2007). With Righthaven, there is a media client assignor and the assignee is Righthaven itself. But there is no transfer of control of the thing assigned from the assignor to the assignee. Righthaven gets no control over any of the 17 U.S.C. 106 exclusive rights, nor does Righthaven even get control over the only thing it truly wants, the right to sue, because at all times that right is subject to veto by its clients. The immediate consequence is that Righthavens Amended Complaint must be dismissed for lack of standing. But this outcome is not temporal, and the dismissal should be with prejudice. Despite its stated intent to fight on the beaches, on the landing grounds, in the fields, in the streets, in the hills, and never surrender,21 Righthaven simply cannot fix what is wrong. Righthavens raison dtre is to prosecute copyright infringement actions on contingency for the benefit of clients. See generally SAA, Ex. A. But in South Carolina, there is exactly one way such an arrangement is legal: when it is between a lawyer or law firm and a client. Roberts v. LaConey isnt just about voiding assignments of a certain form; the South Carolina Supreme Courts holding goes much further than that. Roberts v. LaConey stands for a broad proposition: any arrangement that involves an agent prosecuting lawsuits for a client, regardless of its form, is invalid unless the agent is authorized to practice law. No amount of transactional trickery can avoid the reach of the rule, and that fact is lethal to Righthaven in South Carolina. F. Why? The Court may wonderas have many Righthaven observerswhy Righthaven could not simply operate as a law firm. After all, Righthavens cases are not filed pro se, so why take the risk of the whole scheme being declared illegal? The answer is as simple as it is green:

21

Cf. Sir Winston Churchill, Remarks to the House of Commons of the Parliament of the United Kingdom, (June 4, 1940) at 11:27, available at audio.theguardian.tv/sys-audio/Guardian/audio /2007/04/20/Churchill.mp3. Page 51 of 60

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money. Righthaven is a for-profit business that needed investors to float venture capital to get it started. No American jurisdiction authorizes this arrangement with law firmsnon-lawyers cannot invest in law firms, nor can lawyers split fees with non-lawyers. E.g., Rule 5.4(a), SCRPC (A lawyer or law firm shall not share legal fees with a nonlawyer[.]). While these rules are sometimes criticized with free market arguments, Righthaven demonstrates the wisdom of those restrictions. Righthaven is a lawsuit mill, and the demands of its investors have clearly created an environment where its attorneys have dispatched with the quaint notions of properly investigating lawsuits prior to filing, avoiding misrepresentations to courts, etc. Righthaven calls itself an enforcer. And that is certainly what Righthaven is, in the most pejorative sense of the term. Righthavens complaints are not requests for courts to remediate injustice, they are clubs used to extract settlement dollars from Righthaven targets. Consider a world where Righthavens scheme is legitimate. Every law school in the country should close its doors and every state bar should begin winding up its affairs. Anyone who is not a licensed practitioner can strike a deal with anyone holding an actionable claim: Has someone injured you? Damaged your property? Call the Abe Jackson Assignment Firm at 1-800GET-CASH! Assign Abe your claims. We handle the lawsuit, and we give you two-thirds of the recovery. Over 20 years practicing assignment in state and federal court. We dont get paid unless you get paid! It is not an exaggeration to say that this imaginary ad is precisely what Righthaven does. Righthaven has filed 275 lawsuits and promises to file many more, holding itself out as The Nations Pre-Eminent Copyright Enforcer. Copyright is a legal right, and a business whose sole occupation is the enforcement of legal rights in court is necessarily either a law firm or a business is engaged in the unauthorized practice of law. Righthaven is the latter.

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V. THE BURDEN SHIFTS TO RIGHTHAVEN As described above, Righthavens assertion of standing boils down to two factual claims: (1) prior to filing this action on December 2, 2010, MediaNews Group, Inc. validly assigned Righthaven full ownership in the copyright to the Rosen Letter, i.e. the Work; and (2) MediaNews Group had the ownership rights to assign because it was the author of the Rosen Letter as a work for hire. Defendant Eiser submits that both are untrue and demands Righthaven submit sufficient evidence to meet its burden of proving jurisdictional facts under Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Defendant Eiser makes the following contrary factual allegations and provides evidentiary support for each: A. MediaNews Group did not validly assign any A. rights to Righthaven, much less full ownership. 1. Righthaven is a company whose sole line of work is the filing of copyright infringement

actions over material created by others. Righthaven is not a law firm. Evidence: Righthavens complaints, the SAA (Ex. A), the SAA Clarification (Ex. B), and the various rulings from the District of Nevada of which this Court can take judicial notice. 2. Righthaven files these actions for its clients but in its own name. Righthavens clients

engage it under contracts known as strategic alliance agreements. Evidence: id. 3. The terms of the SAA relevant to Righthavens copyright infringement actions are the

same, or are different in immaterial ways, for each of its clients. Evidence: id., and such evidence is applicable to all Righthaven-client relationships by Rule 404(b), FED.R.EVID., as proof of a common plan.

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4.

The intent of each Righthaven-client relationship is the same: to let Righthaven sue in its

own name over claims belonging to the client. Evidence: id., also applicable to all Righthavenclient relationships by Rule 404(b), FED.R.EVID., as proof of motive and intent. 5. Righthavens clients truly control Righthaven litigation. Evidence: the SAA (Ex. A), the

SAA Clarification (Ex. B), the Hoehn Dismissal, Ex. E at 8 (holding that Righthavens right to sue is subject to Stephens Medias veto), the Democratic Underground Dismissal, Ex. D at 5 (Even Righthavens right to sue is not absolute.), and statements by Righthavens clients about their control of the litigation: Stephens Medias Mark Hinueber: I can tell Righthaven not to sue somebody. Arkansas Democrat-Gazette Story, Ex. N at 3. WEHCO Medias Paul Smith: [If Righthaven discovers someone has violated WEHCOs copyright], it would be [WEHCOs] decision whether or not to move forward with it[.] Id. The foregoing evidence applies under Rule 404(b), FED.R.EVID. as proof of motive and intent. The media statements are admissible as admissions by a party opponent under Rule 801(d)(2). Further, direct evidence with regard to MediaNews Group is provided by MediaNews Group vice president Sara Glines: [MediaNews Group] reviewed every violation and only approved actions against sites that carried advertising and were not charities. New York Times Story, Ex. O at 3. This statement is admissible as an admission by a party opponent under Rule 801(d)(2) and pursuant to the residual hearsay exception, Rule 803(24), FED.R.EVID. 6. The assignment by which Righthaven claims ownership of the copyright in the Rosen

Letter at issue in this case is ineffective under the Copyright Act because it attempts to assign Righthaven the bare right to sue, and even that right is subject to control by Righthavens clients. All of the foregoing evidence supports this allegation.

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7.

The assignment is also void because it violates South Carolina public policy as expressed

in Roberts v. LaConey, 650 S.E.2d 474 (S.C. 2007). All of the foregoing evidence supports this allegation. 8. The assignment is also void because it is simply not an assignment under South Carolina

law in that no control over anything is actually assigned from Righthavens clients to Righthaven. See Moore v. Weinberg, 644 S.E.2d 740, 745 (S.C. Ct. App. 2007). All of the foregoing evidence supports this allegation. 9. None of these problems can be addressed by editing or redrafting the assignment, because

any attempt at doing so would be a sham designed to hide the true intent behind the Righthaven scheme. Righthavens problems could be repaired only if it were to reorganize as a law firm, obtain authorization to practice in this Court, and file suit in the name of MediaNews Group, Inc. All of the foregoing evidence supports this allegation. B. MediaNews Group is not the author of the Rosen Letter. 10. Mike Rosen wrote the Rosen Letter. This fact is evident from the face of the Rosen Letter

and is not disputed by the parties. 11. Mike Rosen has never been an employee of MediaNews Group, Inc., owner of The

Denver Post. The evidentiary support for this allegation lies in the fact that MediaNews Group, Inc. d/b/a The Denver Post and Rosen each hold out his relationship as being that of freelance columnist. See Rosen Freelance Column, Ex. Q at 2 (Freelance columnist Mike Rosens radio show airs weekdays from 9 a.m. to noon on 850-KOA). 12. The meaning of the word freelance necessitates a finding that a freelance columnist

is an independent contractor, not an employee. See also Community for Creative Non-Violence

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v. Reid, 490 U.S. 730 (1989) (describing how to determine whether a work is made by an employee or employer for copyright purposes). 13. For the work of an independent contractor to be a work for hire, it must be a work

specially ordered or commissioned for use as a contribution to a collective work . . . if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. 17 U.S.C. 101(2). 14. There is no doubt that the Rosen Letter was produced for use as a contribution to a

collective work, i.e. the September 23rd, 2010 edition of The Denver Post. 15. However, the Rosen Letter was not specially ordered or commissioned. In Playboy

Enterprises, Inc. v. Dumas, 53 F.3d 549, 561-63 (2d Cir. 1995), the Second Circuit extensively discussed the Copyright Acts specially ordered or commissioned language. The Second Circuit concluded that test as to whether a work is specially ordered or commissioned is whether the motivating factor in producing the work was the person requesting preparation of the work who induced its creation. Id. at 562 (quotations and citations omitted). 16. Mike Rosen has been a newspaper columnist for approximately 30 years. See Denver

Westword Story about Rosen Plagiarism, Ex. R at 2 (When contacted about the columns, Rosen responded via e-mail with this: So what? Ive been writing columns for 30 years.). 17. 18. Mike Rosen has only written columns for The Denver Post for just over two years. Prior to that, Rosen was a freelance weekly columnist for the Rocky Mountain News, a

Denver-area newspaper that shut down on February 27, 2009. See generally Rocky Mountain News Shutdown, Ex. S; Rosen Rocky Mountain News Column, Ex. T. 19. Mike Rosen has published columns elsewhere, including but not limited to Real Clear

Politics. See generally Rosen Real Clear Politics Column, Ex. U.

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20.

Rosens purpose in publishing columns is to disseminate his political views and publicize

his primary occupation as host of a political talk radio show on 850 KOA in Denver, which is advertised on all or nearly all of his columns, including every column cited herein and the Rosen Letter at issue in this case. Compare Complaint Exhibit 1, Dkt. 1-1 at 3 (Mike Rosens radio show airs weekdays from 9 a.m. to noon on 850-KOA.) with Rosen Freelance Column, Ex. Q. at 2 (Freelance columnist Mike Rosens radio show airs weekdays from 9 a.m. to noon on 850KOA.) and Rosen Rocky Mountain News Column, Ex. T at 1 (Mike Rosens radio show airs weekdays from 9 a.m. to noon on 850 KOA.) and Rosen Real Clear Politics Column, Ex. U at 2 (Mike Rosens radio show airs daily from 9 a.m. to noon on 850 KOA.). 21. The Denver Post is not the impetus behind Rosen writing columns. Rosen has regularly

written columns for 30 yearsonly the last two years has Rosen written for The Denver Post. If The Denver Post terminated Rosens column, he would continue to regularly produce it and shop it to other media outlets. 22. MediaNews Group, Inc. is not the motivating factor behind Mike Rosen writing

newspaper columns. Rosens personal interest in promoting his political views along with his professional interest in advertising his radio show are the motivating factors behind Rosens work as a columnist. Therefore, Rosens columns are not specially ordered or commissioned. 23. Because Rosens columns are not specially ordered or commissioned, they are not

works for hire. Because they are not works for hire, MediaNews Group, Inc. is not the author for the purposes of copyright lawMike Rosen is. 24. Righthaven claims to derive title to the Rosen Letter by assignment from the author of the

Rosen Letter as a work for hire, MediaNews Group, Inc. But the Rosen Letter is not a work for hire, therefore Righthavens claims about its derivation of title are inaccurate.

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VI. CONCLUSION Given Righthavens publicly expressed plans to subject its targets to endless litigation over injuries it did not suffer for claims it does not own, Defendant Eiser respectfully submits that a decision on the various grounds asserted in this brief would not only be a perfectly legitimate basis for deciding the standing issues in this case, it would provide a sorely-needed permanent resolution to Righthavens copyright claims against Eiser.22 American courts generally seek to make decisions on the narrowest grounds possible, for a variety of reasons. That tendency is at its height in federal court, where advisory rulings are constitutionally prohibited. But Defendant Eiser submits that nothing herein seeks an advisory ruling. All issues raised on this motion go directly and exclusively to standing and are properly before the Court in a motion to dismiss based upon standing. Defendant Eiser requests this Court specifically find Righthaven lacks standing for each reason argued herein. A ruling on this basis will give clarity and finality to all parties, including Righthaven. Given Righthavens expressed intention to keep tinkering with its assignments until
22

Righthavens conduct strongly suggests it intends to pursue an action at some point in the future against the Lowcountry 9/12 Project, the nonprofit, eleemosynary corporation on whose blog the Rosen Letter was posted. Accordingly, the Lowcountry 9/12 Project has filed a Petition for Original Jurisdiction in the South Carolina Supreme Court to enjoin Righthaven from taking any action against it or pursuing any future actions in South Carolina. Undersigned counsel represent the Petitioners in that action and a copy of the initial filing is attached as Exhibit W to this motion. The Lowcountry 9/12 Project is joined in that action by Citizens Against Litigation Abuse, Inc., a South Carolina nonprofit corporation that focuses on opposing abusive litigation in areas relating to political speech and strategic lawsuits against public participation, known as SLAPP lawsuits. This original jurisdiction petition was filed due to the distinct possibility that Righthavens copyright action against Eiser may be ended in a way that does not collaterally estop Righthaven from pursuing the Lowcountry 9/12 Project, and since the Lowcountry 9/12 Project is not a party to this action, Righthaven may very well be able to pursue it in the future absent an advisory ruling from the South Carolina Supreme Court. Defense counsel in no way seek to needlessly multiply litigationinstead, Righthavens stated intent to rewrite, reassign, and refile ad infinitum necessitated a preemptively defensive strategy. Page 58 of 60

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it finds magic words that keep it in court, this sort of ruling would save inordinate amounts of judicial resources and the resources of the parties, again including Righthaven. Additionally, such a ruling would give Righthaven the guidance it claims to seek as to how copyright cases can be pursued by third-party copyright enforcers. Such a practice is perfectly legitimate when such claims are brought by bona fide law firms representing bona fide clients. Unless directed otherwise by the Court, Defendant Eiser intends to submit a proposed order with, or possibly in lieu of, a reply to any response filed by Righthaven. Pursuant to 17 U.S.C. 505, Defendant Eiser further respectfully petitions the Court for an award of all costs and reasonable attorneys fees in the event Righthavens Amended Complaint is dismissed or Eiser otherwise prevails on Righthavens copyright infringement claim. Undersigned counsel certifies compliance with Local Civil Rule 7.02. Consultation is not required on motions to dismiss. Undersigned counsel again apologize to the Court for the extremely comprehensive nature of this motion to dismiss. Defendant Eiser made a prior motion to dismiss (Dkt. #37) based on failure to state a claim that was just over two pages long and could not have been more concise.23 But given Righthavens current litigation tactics nationwide, it is abundantly clear to undersigned counsel that anything less than a comprehensive order dismissing the copyright action with prejudice will not end this litigation.

23

Defendant has no objection to withdrawing its prior motion to dismiss (Dkt. #37) and substituting this one for adjudication. A dismissal for failure to state a claim based on Rule 12(b)(6) and Bell Atlantic Corp. v. Twombly would be without prejudice and would only serve to prolong this litigation, as Righthaven would immediately file a new complaint attempting to address the deficiencies that led to the first dismissal. Page 59 of 60

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Defendant Dana Eiser respectfully requests this Honorable Court dismiss Plaintiffs Amended Complaint against her for lack of subject matter jurisdiction as described herein. Defendant Eiser also respectfully requests an order allowing her to recover costs and a reasonable attorneys fee against Plaintiff pursuant to 17 U.S.C. 505. Respectfully submitted,

s/J. Todd Kincannon J. TODD KINCANNON, ID #10057 THE KINCANNON FIRM 1329 Richland Street Columbia, South Carolina 29201 Office: 877.992.6878 Fax: 888.704.2010 Email: Todd@TheKincannonFirm.com s/Thad T. Viers THAD T. VIERS, ID #10509 COASTAL LAW LLC 1104 Oak Street Myrtle Beach, South Carolina 29578 Office: 843.488.5000 Fax: 843.488.3701 Email: tviers@coastal-law.com July 5, 2011

s/Bill Connor BILL CONNOR, ID #9783 HORGER AND CONNOR LLC 160 Centre Street Orangeburg, South Carolina 29115 Office: 803.531.1700 Fax: 803.531.0160 Email: bconnor@horgerlaw.com

Attorneys for Defendant

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Exhibit B to Defendant Eisers Rule 12(b)(1) Motion

SAA Clarification

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Exhibit C to Defendant Eisers Rule 12(b)(1) Motion

Order Unsealing SAA

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 RIGHTHAVEN LLC, ) ) Plaintiff, ) ) vs. ) ) DEMOCRATIC UNDERGROUND, LLC, ) a District of Columbia limited-liability ) company, and DAVID ALLEN, an ) individual, ) ) Defendants. ) ____________________________________) ) DEMOCRATIC UNDERGROUND, LLC, ) a District of Columbia limited-liability ) company, ) ) Counterclaimant, ) ) vs. ) ) RIGHTHAVEN LLC, a Nevada Limited- ) liability compamy; and and STEPHENS ) MEDIA LLC, a Nevada limited liability ) company, ) ) Counterdefendants. ) ____________________________________)

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

***

Case No. 2:10-cv-1356-RLH-GWF ORDER (Request to Unseal#85) (Motion to Strike#87)

Before the Court is Defendants Democratic Underground, LLC and David Allens Request to Unseal Exhibit A to Pulgram Declaration and Related Filings [dkt ## 74, 79] (#85, filed March 29, 2011). Plaintiff Righthaven filed a Response and Request for Order to Show Cause (#88) on March 30, 2011. Defendant filed an opposition to the next motion to be discussed which the Court considers to also be a reply in support of this Request (see #90). 1

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2. 3. 1.

Contemporaneous to it Response and Request identified above, and in the same document, Counter-Defendant Stephens Media filed a Motion to Strike Defendants Request to Unseal (#87, filed March 30, 2011). Plaintiff Righthaven filed a Joinder to the Motion (#89) on March 30, 2011. Defendants filed an Opposition to the Motion to Strike and a Response (Reply) to its Request to Unseal (#90) on March 31, 2011. Stephens Media filed a Reply (#91) on April 11, 2011, which was Joined (#92) by Righthaven. Defendants Request to Unseal is based on the fact that when the Court permitted the Defendants Supplemental Memorandum to be filed under seal, it directed the parties, within 14 days, to either file a stipulation as to which portions would remain under seal or Stephens Media and Righthaven will file their justification for retaining the documents in question under seal. Defendants immediately made overtures to obtain a stipulation, but were immediately rebuffed by Righthaven and Stephens Media. Defendant waited 21 days, a week longer than the Courts Order required, and then, having received no justification for keeping the documents under seal made the Request presently before the Court. Righthaven and Stephens Medias Response, and the basis for their Motion to Strike, is that the procedure required in this Courts Order subverted the terms of the Stipulated Protective Order because it provided for a different procedure for requesting that confidential documents be unsealed. They argue that Paragraph 19 of the Stipulated Protective Order require: If the parties disagree over the designation, they are to negotiate in good faith regarding the Designated Material. The uncontested facts are that Defendants tried to negotiate in good faith, but Righthaven and Stevens Media refused to do so. The Challenging Party then objects to the designation. The Designating Party then modifies or refuses to modify the designation. It is noted that a refusal to modify was made, suggesting that there was an objection to the designation as required. 2

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4.

The Challenging Party then makes a motion seeking a determination of whether the designated material is entitled to protection, with the Designating Party bearing the ultimate burden of proving that the material was entitled to protection, with the documents being treated as designated until the motion is decided. In fact, the documents have continued to be treated as designated to the present. It appears that Righthaven and Stephens Medias objection is that the designated

documents were filed, albeit in a sealed condition, with a motion where Defendants had slip[ped] a paragraph into the proposed order, before any attempt at negotiation or formal objection, and was followed three weeks later by a request to unseal, does not constitute a motion as required by the Protective Order. Their argument puts form over substance, chronology over obligation. Righthaven and Stephens Media accuse Defendants of being underhanded by proposing the 14-day response period in the Courts Order permitting the filing under seal. There was nothing underhanded done at all. The proposed order was filed. The Courts Order was also served on Righthaven and Stephens Media. Unless they confess to not reading, or ignoring, this Courts Order, their lament is not persuasive. Righthaven and Stephens Media also accuse Defendants counsel (who, they make a point of reminding the Court, are from out-of-town) of disingenuous gamesmanship. They demand the Court issue an Order to Show Cause why Defendants should not be held in contempt for violating the Protective Order. It is this demand that is disingenuous. This Court entered the Protective Order. This Court certainly has the authority to modify its procedures as it sees fit, which it did in establishing provision for the filing of the Supplemental Memorandum, because of the lateness of the disclosure by Righthaven and Stephens Media, and the potential imminent decision on the Motion to Dismiss and the Motion for Summary Judgment. The use of phrases, in the Motion to Strike, such as underhanded, a ruse, blatantly ignored, brazen attempt, fumbling attempt, purposefully muddle, and Defendants complaint reeks of hypocrisy, is a very unprofessional attempt to attack counsel rather than address 3

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the issues. There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here. There has been presented absolutely no basis to strike the Request to Unseal, and that motion will be denied. Addressing the issue of whether the Request to Unseal should be granted, the Court confesses that its initial evaluation caused it to lean in favor of keeping the use of the Designated Materials limited to this case, i.e., keeping them sealed, except as to those who should have access to them in the pursuit or defense of this case. As I have read these and other motions in this case, and considered the multitude of cases filed by Righthaven, on the claimed basis that Righthaven owns the copyrights to certain Stephens Media copy, it appears to the Court that there is certainly an interest and even a right in all the other defendants sued by Plaintiff to have access to this material. Furthermore, because these cases have generated a great deal of public interest, particularly in the media and on the internet, that there is a right of the public to this information which overrides any claimed confidential commercial rights. First, Righthaven and Stephens Media fail to even attempt at a justification for confidentiality in their response to the Request to Unseal. They only make a feeble attempt at justification in their Replies in support of their Motion to Strike. In Stephens Media Reply it is only addressed as part of one paragraph. In Righthavens Reply it is addressed in only one and one-half paragraphs. The concerns raised are (1) it would impair Righthavens ability to negotiate similar agreements with other clients and provide invaluable insight to Righthavens competitors regarding the way it structures client contracts. (There is no evidence of any other potential clients.), (2) it would make available to direct competitors of Righthaven the nature of its negotiated contracts and give them an unfair advantage. (They allege that a defendant in another of their lawsuits appears to be based upon the Righthavens business model, i.e., Hush-Hush Entertainment, Inc. As a defendant 4

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in one of their cases, Hush-Hush certainly would have the right to obtain this same information), and (3) dissemination of the information would be published by Stephens Media competitor, the Las Vegas Sun newspaper, and would be disseminated widely throughout the internet. (The Las Vegas Sun and the internet have already widely disseminated articles about Righthavens numerous lawsuits in this district and also the various favorable and adverse rulings that have been rendered.) This substantiates the public interest in this matter and this information, which has been generated by Righthaven and Stephens Medias own actions. The right of other defendants in Righthavens lawsuits, and of the public to understand the full facts regarding the bases for Righthaven and Stephens Medias actions, outweighs the feeble concerns noted above. IT IS THEREFORE ORDERED that Request to Unseal Exhibit A to Pulgram Declaration and Related Filings [dkt ## 74, 79] (#85) is GRANTED. IT IS FURTHER ORDERED that Stephens Medias Motion to Strike Defendants Request to Unseal (#87) and Righthavens Joinder (#89) thereto, are DENIED. Dated: April 14, 2011.

____________________________________ Roger L. Hunt Chief United States District Judge

2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-5

Page 1 of 17

Exhibit D to Defendant Eisers Rule 12(b)(1) Motion

Democratic Underground Dismissal

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UNITED STATES DISTRICT COURT DISTRICT OF NEVADA ***

RIGHTHAVEN LLC, a Nevada limited-liability ) company, ) ) Plaintiff, ) ) vs. ) ) DEMOCRATIC UNDERGROUND, LLC, a ) District of Columbia limited-liability company; ) and DAVID ALLEN, an individual, ) ) Defendants. ) _______________________________________) ) DEMOCRATIC UNDERGROUND, LLC, a ) District of Columbia limited-liability company, ) ) Counterclaimant, ) ) vs. ) ) RIGHTHAVEN, LLC, a Nevada limited) liability company; and STEPHENS MEDIA ) LLC, a Nevada limited-liability company, ) ) Counterdefendants. ) _______________________________________) / / 1 Case No.: 2:10-cv-01356-RLH-GWF ORDER (Motion for Voluntary Dismissal with Prejudice#36; Motion to Dismiss or Strike#38; Motion for Summary Judgment#45)

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Before the Court is Plaintiff/Counterdefendant Righthaven LLCs Motion for Voluntary Dismissal with Prejudice (#36, filed Aug. 10, 2010). The Court has also considered Defendant/Counterclaimant Democratic Underground, LLC and David Allens (collectively Democratic Underground) Opposition (#44, filed Dec. 7, 2010), and Righthavens Reply (#57, filed Jan. 7, 2011). Also before the Court is Counterdefendant Stephens Media LLCs Motion to Dismiss or Strike (#38, filed Nov. 17, 2010). The Court has also considered the Democratic Undergrounds Opposition (#46, filed Dec. 7, 2010), and Stephens Medias Reply (#56, filed Jan. 7, 2011). Also before the Court is Democratic Undergrounds Motion for Summary Judgment (#45, filed Dec. 7, 2010). The Court has also considered Righthavens Opposition (#58, filed Jan. 8, 2011), and Democratic Undergrounds Reply (#62, filed Jan. 28, 2011). Finally, the Court allowed and ordered supplemental briefing relevant to the three motions under consideration because of important evidence that only came to light after these motions were fully briefed. Accordingly, the Court has considered Democratic Undergrounds Supplemental Memorandum Addressing Recently Produced Evidence (#79, filed Mar. 9, 2011), Stephens Medias Response (#99, filed May 9, 2011), Righthavens Response (#100, filed May 9, 2011), and Democratic Undergrounds Replies (##107 and 108, filed May 20, 2011). BACKGROUND This dispute arises out of Democratic Undergrounds allegedly copyright infringing conduct. About May 13, 2010, a Democratic Underground user posted a comment on Democratic Undergrounds website which included a portion of a Las Vegas Review-Journal (LVRJ) article about Nevada politics, particularly about the Tea Party effect on Sharon Angles senatorial campaign (the Work). The posting included a link to the full article and the LVRJs website. As such, Democratic Underground displayed this selection from the article on its website and Righthaven claims that this infringed on the copyright. 2

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Righthaven claims that after the Work was posted on Democratic Undergrounds website, it purchased the copyright to the Work from Stephens Media, the owner of the LVRJ, along with the right to sue for past infringement. (Dkt. #102, Decl. of Steve Gibson, Ex. 1, Copyright Assignment (hereinafter referred to as the Assignment).) Righthaven then registered the copyright with the United States Copyright office. Thereafter, Righthaven sued Democratic Underground alleging copyright infringement. Democratic Underground, in turn, filed a counterclaim for a declaratory judgment of non-infringement against both Righthaven and Stephens Media, which was not originally a party to this case. Righthaven has since filed a motion for voluntary dismissal with prejudice due to an adverse fair use ruling by the Honorable Larry R. Hicks, United States District Judge for this district (Righthaven is appealing that decision), Stephens Media has filed a motion to dismiss or strike the counterclaim and a partial joinder to Righthavens motion, and Democratic Underground has filed a motion for summary judgment on Righthavens claim. After these motions were fully briefed, Stephens Media disclosed to Democratic Underground the Strategic Alliance Agreement (SAA) between Stephens Media and Righthaven. The SAA defines their relationship and governs all future copyright assignments between them (including the assignment at issue here). (Dkt. #79, Supplemental Mem. Ex. 1, SAA, dated Jan. 18, 2010.) After learning the details of this agreement, Democratic Underground sought leave to file a supplemental memorandum addressing this newly discovered evidence and its effect on the outstanding motions. The Court allowed the supplemental briefing as it too considered the SAA highly relevant to Righthavens standing in this and a multitude of other pending Righthaven cases. After considering the supplemental brief and for the reasons discussed below, the Court dismisses Righthaven for lack of standing and, therefore, denies both Righthavens motion and Democratic Undergrounds motion as moot. The Court also denies Stephens Medias motion. / 3

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DISCUSSION I. Righthavens Standing to Assert Copyright Claims As stated above, before the Court are two motions to dismiss and a motion for summary judgment. However, the Court must first address the supplemental briefing addressing the SAA and the question of Righthavens standing to pursue this copyright infringement claim. The Court will then address the outstanding motions. A. Background - The Strategic Alliance Agreement Months prior to purportedly assigning the Work to Righthaven, Stephens Media and Righthaven signed a Strategic Alliance Agreement governing future copyright assignments between them. (Dkt. #79, Ex. 1, SAA, dated Jan. 18, 2010.) The SAA details the relationship between Righthaven and Stephens Media, explains the rights and responsibilities of each party, and limits and defines future copyright assignments between them. (See generally, id.) As such, it limits and explains the intent behind the Assignment, which was executed in July 2010. Critically, the SAA expressly denies Righthaven any rights from future assignments (including the Assignment of the Work) other than the bare right to bring and profit from copyright infringement actions. This conclusion is clearly expressed in Section 7.2 of the SAA: 7.2 Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Righthaven's maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Media's right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights. . . . / 4

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(Id., Section 7.2 (bold emphasis added, italicization in original)). The plain and simple effect of this section was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights. Even Righthavens right to sue is not absolute. The SAA gives Stephens Media the right to prevent Righthaven from suing an alleged copyright infringer for various specific reasons, including that the lawsuit might result in an adverse result to Stephens Media. (Id., Section 3.3.) Other sections also give Stephens Media a right to reversion and other rights which, collectively, destroy Righthavens supposed rights in the Work. (See generally, id.) Now that the SAA has shed light upon Righthavens true interest in the copyright to the Work, Democratic Underground asserts that Righthaven lacks standing to maintain this lawsuit. B. Legal Standard Pursuant to Section 501(b) of the 1976 Copyright Act, 17 U.S.C. 101, et. seq., (the Act) only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement. Silvers v. Sony Pictures Entm't Inc., 402 F.3d 881, 884 (9th Cir. 2005) (en banc). In so holding, the Ninth Circuit followed the Second Circuits decision in Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir. 1982), superseded by rule and statute on other grounds. See also, ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (citing Eden Toys, the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.) Section 106 of the Act defines and limits the exclusive rights under copyright law. Id. at 88485. While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights. Id. Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee. Id. at 890. One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright. See id. Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment. See generally, id. 5

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C.

Analysis 1. Contract Construction

Righthaven argues that the SAAs provisions, which necessarily include Section 7.2, do not alter the unambiguous language of the Assignment or limit the rights it obtained from Stephens Media in the Assignment. This conclusion is flagrantly falseto the point that the claim is disingenuous, if not outright deceitful. The entirety of the SAA was designed to prevent Righthaven from becoming an owner of any exclusive right in the copyright. . . ., Silvers, 402 F.3d at 886 (emphasis in original), regardless of Righthaven and Stephens Medias post hoc, explanations of the SAAs intent or later assignments, (see generally Dkt. #101, Decl. of Mark A. Hineuber; Dkt. #102, Decl. of Steven A. Gibson). Prior to the Assignment, Stephens Media possessed all of the exclusive rights to the Work and, therefore, the right to sue. Because the SAA limited the language of the Assignment, the Assignment changed nothing save for Righthavens claim to have the right to sue. The companies current attempt to reinterpret the plain language of their agreement changes nothing. In reality, Righthaven actually left the transaction with nothing more than a fabrication since a copyright owner cannot assign a bare right to sue after Silvers. To approve of such a transaction would require the Court to disregard the clear intent of the transaction and the clear precedent set forth by the en banc Ninth Circuit in Silvers. 2. Stephens Media and Righthavens Intent

Righthaven contends that the Court should construe the SAA to grant Righthaven whatever rights are necessary for it to have standing in a copyright infringement action. First, Righthaven argues that the Court should construe the contract in this manner because in situations where a contract is ambiguous, the Court should look to the parties intent. Sheehan & Sheehan v. Nelson Malley and Co., 117 P.3d 219, 22324 (Nev. 2005). Accordingly, Righthaven argues that the plain intent of the SAA is to give Righthaven all rights necessary to bring a copyright infringement action. The Court, however, disagrees with Righthavens premise because the SAA is not ambiguous. Righthaven and Stephens Media went to great lengths in the SAA to be sure 6

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that Righthaven did not obtain any rights other than the bare right to sue. Thus, the Court finds that the plain language of the SAA conveys the intent to deprive Righthaven of any right, save for the right to sue alleged infringers and profit from such lawsuits. As such, the SAA is not ambiguous and the Court shall not read any ambiguity into it. Second, Righthaven argues that Section 15.1 of the SAA gives the Court authority to correct any provision of the SAA that is deemed void or unenforceable to approximate the manifest intent of the parties. The problem is that this argument requires a provision of the SAA to be void or unenforceable. However, Righthavens problem is not that any provision of the SAA is void or unenforceable but that the SAA simply does not grant Righthaven any of the exclusive rights defined in Section 106 of the Act required for standing. Therefore, the SAA is not void or unenforceable, it merely prevents Righthaven from obtaining standing to sue from the Assignment. Accordingly, the Court need not and shall not amend or reinterpret the SAA to suit Righthavens current desires. 3. Righthaven and Stephens Medias Amendment to the SAA

Notwithstanding the actual transaction that occurred, Righthaven argues that the amendment it executed with Stephens Media on May 9, 2011, the day that they filed their response to the supplemental memorandum validates or fixes any possible errors in the original SAA that would prevent Righthaven from having standing in this matter. (Dkt. #102, Gibson Decl. Ex. 3, Clarification and Amendment to SAA.) However, this amendment cannot create standing because [t]he existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed. Lujan v. Defenders of Wildlife, 504 U.S. 555, 571 n.4 (1992) (quoting Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989)) (emphasis in Lujan). Although a court may allow parties to amend defective allegations of jurisdiction, it may not allow the parties to amend the facts themselves. Newman-Green, 490 U.S. at 830. As an example, a party who misstates his domicile may amend to correctly state it. This is an amendment of the allegation. However, that party is not permitted to subsequently move in order to change his 7

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domicile and amend accordingly. This would be an amendment of the jurisdictional facts, which is not allowed. See id. Here, Righthaven and Stephens Media attempt to impermissibly amend the facts to manufacture standing. Therefore, the Court shall not consider the amended language of the SAA, but the actual transaction that took place as of the time the complaint was filed.1 Regardless of this legal principle, Righthaven argues that courts routinely allow parties to a copyright transfer to subsequently clarify or amend their agreements in order to express their original intent to grant the assignee the right to sue for infringement. Righthavens assertion is not entirely wrong, but the cases Righthaven cites in support of its proposition are all distinguishable as they deal with matters significantly different than those presently before the Court. For instance, Righthaven cites multiple cases where courts allowed an oral assignment made prior to initiation of a lawsuit to be confirmed in writing after the initiation of the lawsuit. See Billy-Bob Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 591 (7th Cir. 2003) (allowing an oral assignment to be confirmed in a later writing).2 These cases are all distinguishable in that the assignor and assignee in these cases had agreements to transfer the necessary, exclusive rights prior to the initiation of a lawsuit. The only thing lacking was the written document necessary for a court to recognize the transfer. In each of these cases, the courts merely gave effect to what the parties had actually done, i.e. recognized rights already actually transferred. Here, Righthaven does not ask the Court to recognize an oral transfer with a late made written memorandum of the deal, but to fundamentally rewrite the agreement between Righthaven and Stephens Media to grant Righthaven rights that it never actually received.

The Court does not determine whether or not the amended SAA would transfer sufficient rights to Righthaven for it to have standing in suits filed after amendment as the Court need not make that determination to rule on these motions. Nonetheless, the Court expresses doubt that these seemingly cosmetic adjustments change the nature and practical effect of the SAA. See also, Imperial Residential Design, Inc. v. Palms Dev. Group, Inc., 70 F.3d 96, 99 (11th Cir. 1995) ([A] copyright owners later execution of a writing which confirms an earlier oral agreement validates the transfer ab initio.); Arthur Rutenberg Homes, Inc. v. Drew Homes, Inc., 29 F.3d 1529, 1532 (11th Cir. 1994); Sabroso Publg, Inc. v. Caiman Records Am., Inc., 141 F. Supp. 2d 224, 228 (D.P.R. 2001).
2

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Righthaven cites three other district court cases from other circuits which deal with matters other than oral assignments later ratified by written agreements. First is a district court case, Intimo Inc. v. Briefly Stated, Inc., 948 F. Supp. 315 (S.D.N.Y. 1996), wherein the court allowed the parties to the assignment agreement to amend the agreement to include the right to sue for pre-assignment copyright violations. Notably, the plaintiff in that case would have maintained standing as not all claims were based on pre-assignment copyright violations. Id. at 31819. Nonetheless, the Intimo court allowed amendment to correct what it found was merely an oversight on the part of the parties because the agreement was silent on pre-assignment copyright violations despite the parties intent to transfer the right to sue on those violations. Here, Righthaven and Stephens Media may have wanted Righthaven to be able to sue, but the SAA was anything but silent in making sure that Stephens Media retained complete control over the Work rather than actually effectuate the necessary transfer of rights. The entirety of the SAA is concerned with making sure that Righthaven did not obtain any rights other than the right to sue. This careful exclusion of rights made even that transfer ineffectual under Silvers. The other two cases are also distinguishable. The second case, Infodek, Inc. v. Meredith-Webb Printing Co., Inc., 830 F. Supp. 614 (N.D. Ga. 1993), is based on facts largely similar to Intimo and the same analysis distinguishes it from the present case. The third is an unreported district court case, Gondinger Silver Art Co., Ltd. v. Intl Silver Co., No. 95 CIV. 9199, 1995 WL 702357 (S.D.N.Y. Nov. 28, 1995), that dealt with a later assignment because there was a dispute as to whether the relevant work was a work made for hire or whether the plaintiff was a coauthor of the work. The Gondinger court did not expressly determine the issue, finding that it was irrelevant as there was another basis for standing. Id. at *45. In sum, not one of the cases cited by Righthaven persuade, much less require, the Court to find standing based on Righthaven and Stephens Medias Amended SAA. / / 9

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4.

Democratic Undergrounds Standing to Challenge the SAA

Righthaven also contends that Democratic Underground lacks standing to challenge the validity of the SAA. However, Democratic Underground does not actually attack the SAAs validity, Democratic Underground only contends that the SAA prevented the Assignment from transferring the rights Righthaven and Stephens Media currently argue the Assignment transferred. In essence, Democratic Underground simply argues that, under the SAA, the Assignment only transferred one particular right, which failed to have the effect Righthaven wishes it had. Democratic Underground does not contest the SAAs validity or argue that it should be undone in any way. Further, the Sylvers court necessarily allowed the defendant to challenge whether the necessary rights were transferred from the rights holder to the plaintiff in that action. Otherwise the Ninth Circuit would not have been able address the plaintiffs lack of standing in Silvers and hold that a mere right to sue is insufficient to bring a copyright infringement action. 5. Prior Rulings within this District

Finally, Righthaven contends that multiple courts within this district have already determined that Righthaven has standing to bring claims for past infringement under the Silver standard based on the plain language of the copyright assignment. At best, this argument is disingenuous. As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Medias pecuniary interests. As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthavens and Stephens Medias current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Medias right to proceeds from these lawsuits. (Dkt. #79, Ex. 1, SAA Section 5 (granting Stephens Media a fifty percent interest in any recovery, minus costs).) / 10

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Since those orders were tainted by Righthavens failure to disclose the SAA and Stephens Medias true interest, those decisions are not persuasive and do not support standing here. D. Righthaven Lacks Standing to Bring this Action Because the SAA prevents Righthaven from obtaining any of the exclusive rights necessary to maintain standing in a copyright infringement action, the Court finds that Righthaven lacks standing in this case. Accordingly, the Court dismisses Righthaven from this case. However, Righthaven requests that upon such a finding, the Court grant it leave to join Stephens Media as a plaintiff to cure the jurisdictional defect. Adding Stephens Media, however, would not cure the jurisdictional defect as to Righthaven. Eden Toys, 697 F.2d at 32 n.3 (While [Federal Rule of Civil Procedure] 17(a) ordinarily permits the real party in interest to ratify a suit brought by another party, the Copyright Law is quite specific in stating that only the owner of an exclusive right under a copyright may bring suit. (internal citations and quotations omitted).) Also, as Stephens Media has already been brought into this suit as a counter-defendant to a declaratory judgment claim, the Court finds it unnecessary to join Stephens Media as a plaintiff. If Stephens Media wishes to assert claims against Democratic Underground, it may do so separately. II. Righthavens Motion and Democratic Undergrounds Motion are Both Moot Because the Court has dismissed Righthaven for lack of standing, the Court denies both Righthavens motion for voluntary dismissal with prejudice and Democratic Undergrounds motion for summary judgment on Righthavens claim as moot. Since Righthaven has been dismissed, its complaint is also dismissed. This, of course, does not affect Democratic Undergrounds right to bring a motion for attorney fees under the Act. Also, the counterclaim against Stephens Media remains and so the Court now turns its attention to Stephens Medias motion. / / / 11

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III.

Stephens Medias Motion to Dismiss or Strike A. Legal Standard 1. Motion to Dismiss Standard

In this action, as in all actions before a federal court, the necessary and constitutional predicate for any decision is a determination that the court has jurisdictionthat is the powerto adjudicate the dispute. Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998). The purpose of a complaint is two-fold: to give the defendant fair notice of the basis for the courts jurisdiction and of the factual basis of the claim. See Fed. R. Civ. P. 8; Skaff v. Meridien North Am. Beverly Hills, LLC., 506 F.3d 832, 843 (9th Cir. 2007). Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face that are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 98485 (9th Cir. 2008). Although the defendant is the moving party in a motion to dismiss brought under Rule 12(b)(1), the plaintiff is the party invoking the courts jurisdiction. As a result, the plaintiff bears the burden of proving that the case is properly in federal court. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). Attacks on jurisdiction pursuant to Rule 12(b)(1) can be either facial, confining the inquiry to the allegations in the complaint, or factual, permitting the court to look beyond the complaint. See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. Safe Air for Everyone v. Myer, 373 F.3d 1035, 1039 (9th Cir. 2004). A factual attack made pursuant to Rule 12(b)(1) may be accompanied by extrinsic evidence. Whitethorn v. F.C.C., 235 F. Supp. 12

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2d 1092, 109596 (D. Nev. 2002) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). Dismissal for lack of subject matter jurisdiction is appropriate if the complaint, considered in its entirety, fails to allege facts that are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 98485 (9th Cir. 2008). 2. Motion to Strike Standard

Under Rule 12(f) a court may strike from a pleading any redundant, immaterial, impertinent, or scandalous matter. Matter is immaterial if it has no bearing on the controversy before the court. In re 2TheMart.com, Inc Sec. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000). Allegations are impertinent if they are not responsive to the issues that arise in the action and that are admissible as evidence. Id. Scandalous matter is that which casts a cruelly derogatory light on a party or other person. Id. A court need not wait for a motion from the parties; it may act on its own to strike matter from a pleading. Fed. R. Civ. P. 12(f)(1). B. Analysis Stephens Medias motion essentially relies on two separate arguments for its position that there is no justiciable case or controversy: (1) that Stephens Media assigned all of the rights in and to the Work to Righthaven, thus negating the possibility of any case or controversy between Stephens Media and Democratic Underground, and (2) that Democratic Undergrounds counterclaim will necessarily be adjudicated by a decision on the original complaint and, therefore, should be stricken. The Court dispelled Stephens Medias first argument in the analysis above. Stephens Media expressly avoided transferring the exclusive rights to the Work to Righthaven by neutering future assignments in the SAA. As to Stephens Medias second argument, setting aside the fact that Stephens Media was never a party to Righthavens complaint, that argument is now moot as the Court has dismissed Righthavens complaint. Since the complaint has been dismissed, the issues raised by the counterclaim can only be adjudicated by litigating the counterclaim, not the now defunct complaint. 13

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1.

Justiciable Case or Controversy

Stephens Medias principle contention for why there is no justiciable case or controversy between Stephens Media and Democratic Underground relied on the Assignment of rights to Righthaven. Though the Court has refuted this particular argument, the Court will, nonetheless, quickly address the case or controversy requirement for a declaratory judgment action as it still pertains to this case. The Supreme Court has held that declaratory judgment claims must arise from disputes that are definite and concrete, touching the legal relations of parties having adverse legal interests, . . . real and substantial, and beget specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118, 127 (2007). Nonetheless, a party need not bet the farm and always actually engage in planned conduct that would result in threatened legal action before bringing a declaratory judgment suit. Id. at 13334. Contrary to its assertions in its moving papers, Stephens Media has threatened Democratic Underground with litigation because, according to the SAA, Stephens Media approved or consented to suit against Democratic Underground. (Dkt. #79, Ex. 1, SAA Section 3.3.) Additionally, Stephens Medias then CEO, Sherman Frederick, generally threatened potential defendants that he would send his little friend called Righthaven after them. (Dkt. #13, Answer and Countercl. 33.) Here, Stephens Media actually did send Righthaven after Democratic Underground. Further, Democratic Underground desires to re-post the allegedly infringing material to maintain a full archive of prior posts on its website. This could result in new copyright infringement litigation against Democratic Underground if the Court does not declare that the post did not infringe the copyright in the first instance. This threat of suit is sufficiently real and substantial that an actual case and controversy exists between these parties and warrants a declaratory judgment suit. Accordingly, and because the Court dismissed Righthaven and its complaint, the Court denies Stephens Medias motion. 14

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IV.

Order to Show Cause As shown in the preceding pages, the Court believes that Righthaven has made

multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthavens failure to disclose Stephens Media as an interested party in Righthavens Certificate of Interested Parties. (Dkt. #5.) Rule 7.1-1 of the Local Rules of Practice for the District of Nevada requires parties to disclose all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case. This Local Rule requires greater disclosure than Federal Rule 7.1, which only requires non-governmental corporate parties to disclose parent corporations or corporations owning more than 10% of the partys stock. Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isnt sure what would. 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. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court. / / / / / / / / 15

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CONCLUSION Accordingly, and for good cause appearing, IT IS HEREBY ORDERED that Righthaven is dismissed from this case for lack of standing. As such, Righthavens complaint is dismissed in its entirety. IT IS FURTHER ORDERED that Righthavens Motion for Voluntary Dismissal with Prejudice (#36) is DENIED as moot. IT IS FURTHER ORDERED that Stephens Medias Motion to Dismiss or Strike (#38) is DENIED. IT IS FURTHER ORDERED that the Democratic Undergrounds Motion for Summary Judgment (#45) is DENIED as moot. IT IS FURTHER ORDERED that Righthaven show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned. Dated: June 14, 2011.

____________________________________ ROGER L. HUNT Chief United States District Judge

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Exhibit E to Defendant Eisers Rule 12(b)(1) Motion

Hoehn Dismissal

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1 2 3 4 5 6 7 8 9 10 WAYNE HOEHN, 11 Defendant. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 v. RIGHTHAVEN, LLC, Plaintiff, UNITED STATES DISTRICT COURT DISTRICT OF NEVADA *** ) ) ) ) ) ) ) ) ) ) ) )

2:11-CV-00050-PMP-RJJ

ORDER

Presently before the Court is Defendants Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. #16), filed on April 17, 2011. Plaintiff filed a Response (Doc. #23), on May 9, 2011. Defendant filed a Reply (Doc. #26), on May 15, 2011. Also before the Court is Defendants Motion for Summary Judgment (Doc. #8), filed on February 11, 2011. Plaintiff filed a Response (Doc. #13), on March 7, 2011. Defendant filed a Reply (Doc. #14), on March 24, 2011. This Court held a hearing on the Motion for Summary Judgment on May 3, 2011. (Mins. of Proceedings (Doc. #19).) I. BACKGROUND This is a copyright infringement action brought by Plaintiff Righthaven LLC (Righthaven) against Defendant Wayne Hoehn (Hoehn), who is and was at all relevant times a registered user and content contributor to the website <madjacksports.com> (the Website). (Pl.s Resp. To Mot. For Summ. J. [Resp.] (Doc. #13).) Hoehn has never been employed by the Websites owner and operator. (Id.) On or about November 29, 2010, Hoehn displayed an unauthorized reproduction of a copyrighted literary work entitled

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Public Employee Pensions. We Cant Afford Them (the Work) as part of the content contributed by him to the Website. (Id.) In his reproduction, Hoehn attributed the source of the Work to the Las Vegas Review Journal (LVRJ). (Compl. (Doc. #1).) Hoehn avers that he did not post the Work for profit and that there was no mechanism for him to profit by posting the Work on the website. (Def.s Mot. For Summ. J. [MSJ] (Doc. #8), Hoehn Decl., Ex. A.) Hoehn states he removed the Work from the Website on January 6, 2011. (Id.) At the time of the posting, Righthaven was not the owner of the Work, rather the Work was owned by Stephens Media. (Gibson Decl. (Doc. #24), Ex 1.) In January 2010, Righthaven and Stephens Media entered into the Strategic Alliance Agreement (the SAA), governing the ongoing relationship between Righthaven and Stephens Media regarding assignment of copyrights originally owned by Stephens Media. (Gibson Decl.) Section 3.3 of the SAA governs the rights and responsibilities of Righthaven and Stephens Media with respect to pursuing alleged infringers and states in part: If Righthaven chooses in the Remediation Option Notice to not pursue an Infringement Action (the Remediation Declination), then Righthaven shall reassign the Assigned Copyright to Stephens Media that is the subject of the Remediation Declination . . . . Notwithstanding any other provision of this Agreement, Stephens Media shall have the right to Notify Righthaven, within five (5) Business Days after receipt of a respective Remediation Option Notice, that Righthaven should not take any Infringement Action with respect to a particular putative infringer as indicated in any Remediation Option Notice (the Declination Notice) and upon receipt of a Declination Notice, Righthaven shall not take any Infringement Action with respect to the particular putative infringer set forth in any Declination Notice; provided, however, that Stephens Media shall only send any Declination Notice on a reasonable basis with the grounds of reasonability being that a particular infringer is a charitable organization, is likely without financial resources, is affiliated with Stephens Media directly or indirectly, is a present or likely future valued business relationship of Stephens Media or otherwise would be a Person that, if the subject of an Infringement Action, would result in an adverse result to Stephens Media. (Gibson Decl., Ex. 2.) 2

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (Id.) (Id.)

Section 7.2 of the SAA states in part: Despite any such Copyright Assignment, Stephens Media Shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Righthavens maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Medias right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights.

Section 8 of the SAA is titled Stephens Medias Right of Reversion. Section 8 states in part: Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assignment (the Assignment Termination) and enjoy a right of complete reversion to the ownership of any copyright that is subject of a Copyright Assignment. . . . In order to effect termination of the [sic] any Copyright Assignment, Stephens Media shall be required to provided Righthaven with thirty (30) days prior written notice. Within thirty (30) days after receipt of termination of the [sic] any Copyright Assignment, Righthaven shall commence documentation to effect reassignment of the Stephens Media Assigned Copyrights to Stephens Media.

On December 6, 2010, Stephens Media, the original owner of the Work, assigned all rights, title, and interest in and to the Work, including the right to seek redress for all past, present, and future infringements, to Plaintiff Righthaven (the Assignment). (Gibson Decl.) The Assignment states in part: Assignor hereby transfers, vests and assigns the work described in Exhibit A, attached hereto and incorporated herein by this reference (the Work), to Righthaven, subject to the Assignors rights of reversion, all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress 3

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for past, present and future infringements of the copyright, both accrued and unaccrued, in and to the Work. (Gibson Decl., Ex. 1.) Plaintiff Righthaven brought the present suit against Hoehn on January 11, 2011, based on Hoehns posting of the Work on the Website. (Compl. (Doc. #1).) The suit seeks a permanent injunction prohibiting Hoehn from posting the Work and an award of statutory damages. On April 17, 2011, Hoehn filed a Motion to Dismiss for lack of subject matter jurisdiction, arguing that Righthaven did not have the requisite standing to bring a copyright infringement suit because it was not the owner of an exclusive right. On May 9, 2011, Stephens Media and Righthaven entered into the Clarification and Amendment to Strategic Alliance Agreement (the Clarification). (Gibson Decl., Ex. 3.) The Clarification states that the intent of the parties when they entered into the SAA was to grant Stephens Media a license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever without in any way hindering the right of Righthaven to seek redress for any past, present or future infringements of such copyright. (Id.) The Clarification amends section 7.2 of the SAA and replaces it with the following: Automatically upon execution of a Copyright Assignment, Stephens Media is granted a non-exclusive license to Exploit the Stephens Media Assigned Copyright to the greatest extent permitted by law in consideration for payment in the amount of One Dollar and Zero Cents ($1.00) per year to Righthaven as a license or royalty for each Stephens Media Assigned Copyright as Consideration for the license granted herein (the License Fee). Any License Fee required under this amended and revised Section 7.2 shall be retroactive to the Effective Date. In the event that Righthaven decides to Exploit or participate in receipt of royalties from Exploitation of a Stephens Media Assigned Copyright other than in association with a Recovery, Righthaven shall give Stephens Media 30 days prior written notice. The parties acknowledge that failure to provide such notice would be a material breach of this Agreement and would cause Stephens Media irreparable harm, remediable through injunctive relief, which Righthaven and those asserting rights obtained from it shall have no right to oppose. 4

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(Id.) Additionally, the Clarification amends section 8 of the SAA and replaces it with sections 8.1 and 8.2, including the following: At any time, within its sole discretion, Stephens Media shall have the option, within 14 days of providing notice of the exercise of such option, to purchase all right and title to the Stephens Media Assigned Copyright in consideration for payment in the amount of Ten Dollars and Zero Cents ($10.00) (Exercised Option). (Id.) The Clarification states it is to be retroactively effective to the original date of the SAA. (Id.) Also on May 9, 2011, Righthaven filed the Declarations of Steven A. Gibson (Gibson), CEO of Righthaven, and Mark Hinueber (Hinueber), General Counsel of Stephens Media. (Gibson Decl.; Hinueber Decl. (Doc. #25).) Both Gibson and Hinueber state that it was the parties intent to grant all ownership rights in the Work to Righthaven together with the right to sue for all past, present, and future copyright infringement. (Id.) Hinueber also states that it was not the intent of Stephens Media to divest or otherwise impair Righthavens ability to file or otherwise maintain copyrighted infringement actions based on content . . . specifically assigned to Righthaven through the license-back rights described in the SAA. Rather it was [the parties] intent in this regard to acknowledge Stephens Medias ability to continue to use the assigned content as a licensee. (Hinueber Decl.) Hoehn now moves to dismiss, arguing this Court does not have subject matter jurisdiction over this matter because Righthaven does not own any exclusive rights in the copyright necessary to bring suit. Hoehn further contends that the May 9, 2011 Clarification to the SAA does not correct these deficiencies and ultimately deprives Righthaven of any exclusive rights in the assigned copyright. Righthaven responds that it has standing to bring this suit, and in any event, the May 9, 2011 Clarification cures any alleged defect in standing. Further, Righthaven argues the SAA reflects promises made 5

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between Righthaven and Stephens Media with regard to future transactions, but itself does not cause an assignment of rights. Rather, Righthaven argues, the assignment of rights is governed by the Assignment entered into on December 6, 2010. Additionally, Hoehn moves for summary judgment, arguing that his use of the Work is protected as fair use. Righthaven responds that summary judgment on fair use is premature as Plaintiff has not been permitted to engage in discovery and, in any case, Defendant fails to establish that his conduct is protected as fair use. Defendant replies that Plaintiff was given the opportunity to engage in discovery and did not do so. Additionally, Defendant states that because both parties agree as to the facts of the case, there is no genuine issue of material fact and summary judgment is appropriate. II. MOTION TO DISMISS FOR LACK OF JURISDICTION To hear a case, a federal court must have subject matter jurisdiction over the matter at hand. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Central to the issue of subject matter jurisdiction is the issue of standing, requiring the party invoking jurisdiction to establish actual or imminent harm. Id. at 560. The invoking party bears the burden of establishing standing with the same burden of proof required at the successive stages of the litigation. Id. at 561. If a court does not set a hearing on a motion to dismiss, a plaintiff must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendants motion to dismiss. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). [O]nly copyright owners and exclusive licensees of copyright may enforce a copyright. Sybersound Records v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir. 2008). Exclusive rights in a copyright are enumerated in 17 U.S.C. 106 and include the exclusive rights: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; [and] (3) to distribute copies or phonorecords of the copyrighted work to the public by 6

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sale or other transfer of ownership, or by rental, lease, or lending. Id. The right to sue for an accrued claim for infringement is not an exclusive right under 106. Silvers v. Sony Pictures Entmt, Inc., 402 F.3d 881, 884 (2005). Exclusive rights in a copyright may be transferred and owned separately, but . . . [there are] no exclusive rights other than those listed in 106. Id. at 885. While the right to sue is not an exclusive right, it may be transferred to another party if accompanied with an exclusive right. Id. at 890 n.1. Additionally, the right to sue for past infringement can be transferred to another party so long as it is expressly included in the assignment along with an exclusive right. Id. at 889-90. Plaintiff Righthaven alleges it has presented evidence in the form of the Assignment that Stephens Media transferred to Righthaven exclusive rights in the Work coupled with the right to sue based on infringement of the copyrighted Work. Additionally, Righthaven argues that to the extent the Court finds the Assignment ambiguous, the Court should look to the parties intent, evidenced by the Gibson and Hinueber declarations, that the parties intended to transfer the exclusive rights in the Work along with the right to sue based on past, present, and future infringement of the copyrighted Work. Ownership of the exclusive right to reproduce the copyrighted work is necessary to bring a suit for infringement based on reproduction of the copyrighted work. Sybersound, 517 F.3d at 1144. The language of the Assignment transfers all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present and future infringements of the copyright. Additionally, Hinueber states that Stephens Media assigned all rights, title and interest in and to the Work, including the right to seek redress for all past, present and future infringements of the Work to Righthaven on December 6, 2010. (Hinueber Decl.) /// 7

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However, the Assignment cannot be read in isolation. The SAA governs the parties relationship with respect to Copyright Assignments. (Gibson Decl., Ex. 2 at 7.1.) Additionally, the blank form Assignment is incorporated as an attachment to the SAA, indicating that the two documents together govern the transfer of Copyright Assignments rather than the Assignment alone. (Id., Ex. 1.) The Assignment together with the SAA are unambiguous. The Court finds the SAA in its original form qualifies the Assignment with restrictions or rights of reversion, such that in the end, Righthaven is not left with ownership of any exclusive rights. Under Section 3.3 of the SAA, Righthaven is obligated to reassign the rights to the Work if it does not pursue an infringement action within 60 days of the Assignment. Additionally, this section gives Stephens Media the right to direct Righthaven not to pursue an action against an alleged infringer. Further, under Section 7.2, Righthaven has no right of license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights . . . . Stephens Media has the unilateral right, at any time, to terminate the Copyright Assignment and enjoy a complete right of reversion. These carveouts deprive Righthaven of any of the rights normally associated with ownership of an exclusive right necessary to bring suit for copyright infringement and leave Righthaven no rights except to pursue infringement actions, a right which itself is subject to Stephens Medias veto. In Nafal v. Carter, the court faced a similar disconnect between the parties label of a transfer of exclusive rights in a copyright assignment and the reality of their transfer. 540 F. Supp. 2d 1128 (C.D. Cal. 2007). The Nafal court found that despite an assignment purporting to give the plaintiff an undivided one-half (50%) of [assignors] rights, title and interest [in the work], this label could not subvert summary judgment where the reality of the assignment left the plaintiff with little to no rights in the copyrighted work. Id. at 114142. The court found that the assignment did not make the plaintiff a co-exclusive 8

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licensee with the right to sue for infringement because the assignment gave the plaintiff no discretion in deciding when to sue an alleged infringer; the plaintiffs interest in the copyrighted work would be terminable if the plaintiff did not bring an infringement lawsuit within a certain time period; nearly every effort by the plaintiff to exploit the copyrighted work had to be approved in advance; and the plaintiff did not offer facts that would permit the inference that he had rights to do anything beyond negotiating compulsory mechanical licenses, which does not confer Plaintiff with the power to exploit any exclusive rights. 1 Id. at 1143. Although the Court is evaluating Righthavens standing at the dismissal stage, rather than summary judgment as in Nafal, similar factors lead the Court to the same conclusion. Stephens Media retains discretion over when to bring suit for infringement and Righthavens rights will be terminated if it does not bring suit within a specified time period. Righthaven has no right to exploit or profit from the work in any way other than that associated with recovery from an infringement action. The Copyright Assignment is fully terminable by Stephens Media at any time. Righthaven has no meaningful rights other than the bare right to sue, something that is not transferable under Silvers. 402 F.3d at 884. Similarly, in Lahiri v. Universal Music & Video Distrib. Corp., the Court found that an assignment that used ownership language but was too restrictive to convey such a right could not transfer an exclusive right. 606 F.3d 1216, 1222 (9th Cir. 2010). The assignment the plaintiff relied on to establish a right in the copyrighted work transferred only an interest in the recovery based on copyright infringement and no interest in the work itself. Here, the rights in the copyrighted Work retained by Stephens Media deprive Righthaven of everything except the right to pursue alleged infringers, a right that is still

A mechanical license grants third parties the non-exclusive right to reproduce a musical composition on phonorecords, provided that the copyright owner has already authorized the use of such work, during the manufacture and sale of phonorecords. Nafal, 540 F. Supp. 2d at 1143. 9

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subject to Stephens Medias oversight. Accordingly, Righthaven does not possess an exclusive right in the Work and therefore does not have standing to bring a suit for infringement. Even assuming that the May 9, 2011 Clarification can change the jurisdictional facts as they existed at the time of the filing of the suit, it still does not correct the deficiencies with respect to lack of standing. The May 9, 2011 Clarification offers recitals stating the parties intent to convey all ownership rights in and to any identified Work to Righthaven . . . so that Righthaven would be the rightful owner of any identified Work and entitled to seek copyright registration. However, it does not provide Righthaven with any exclusive rights necessary to bring suit. The May 9, 2011 Clarification provides Righthaven with only an illusory right to exploit or profit from the Work, requiring 30 days advance notice to Stephens Media before being able to exploit the Work for any purpose other than bringing an infringement action. Stephens Media has, in its sole discretion, the option to repurchase the Copyright Assignment for a nominal amount within 14 days, thereby retaining the ability to prevent Righthaven from ever exploiting or reproducing the Work. Stephens Medias power to prevent Righthaven from exploiting the Work for any purpose other than pursuing infringement actions is further bolstered by the Clarifications provision that every exploitation of the Work by Righthaven other than pursuing an infringement action without first giving Stephens Media notice constitutes irreparable harm to Stephens Media. Stephens Media may obtain injunctive relief against Righthaven to prevent such irreparable harm and, pursuant to the Clarification, Righthaven has no right to oppose Stephens Medias request for injunctive relief. Accordingly, Righthaven does not have any exclusive rights in the Work and thus does not have standing to bring an infringement action. The Court therefore will grant Defendants Motion to Dismiss for lack of standing. /// 10

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III. SUMMARY JUDGMENT Assuming Righthaven was found to have standing to bring this action, the Court nonetheless finds Hoehn is entitled to summary judgment on the ground of fair use of the Work. Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories and admissions, and affidavits demonstrate there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. Where a party fails to offer evidence sufficient to establish an element essential to its case, no genuine issue of material fact can exist, because a complete failure of proof concerning an essential element of the nonmoving partys case necessarily renders all other facts immaterial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The party seeking summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings . . . which it believes demonstrate the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the non-moving party to go beyond the pleadings and set forth specific facts demonstrating there is a genuine issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). The Court views all evidence in the light most favorable to the non-moving party. County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001). Under Federal Rule of Civil Procedure 56(b) a party may file a motion for summary judgment at any time until 30 days after the close of all discovery. If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may defer consideration of a motion or deny it, allow the parties time to complete additional discovery, or grant other appropriate 11

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relief. Fed. R. Civ. P. 56(d). The party requesting additional time to conduct discovery to oppose summary judgment must present an affidavit stating the specific facts it hopes to elicit from further discovery, that the facts exist, and that the facts are essential to oppose summary judgment. Family Home & Fin. Ctr, Inc. v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 827 (9th Cir. 2008). If the nonmovant does not satisfy these requirements, the court may proceed to rule on summary judgment without granting additional discovery. Id. Fair use is a defense to use of a copyrighted work which otherwise would be copyright infringement if the work is used for purposes such as criticism, comment, news reporting, teaching . . ., scholarship, or research. 17 U.S.C. 107. Factors to be considered when determining fair use include(1) the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. Id. Fair use is evaluated on a case-by-case basis. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994). Fair use is a mixed question of law and fact. If there are no genuine issues of material fact, . . . and a reasonable trier can reach only one conclusion, a court may conclude as a matter of law whether the challenged use qualifies as a fair use of the copyrighted work. Los Angeles News Serv. v. KCAL-TV Channel 9, 108 F.3d 1119, 1120 (9th Cir. 1997) (quotation omitted). Where material facts are not in dispute, fair use is appropriately decided on summary judgment. Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 800 (9th Cir. 2003). As an initial matter, Righthaven argues that summary judgment is premature because Righthaven has not conducted discovery. Hoehn responds that Righthaven has had the opportunity to conduct discovery and has failed to do so. Additionally, Hoehn argues 12

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that all facts necessary to decide summary judgment are undisputed and before the Court. Hoehns motion complies with the time strictures set by Rule 56(b). Righthaven has not presented an affidavit showing the specified reasons it needs to conduct discovery to oppose summary judgment, or, the types of facts it hopes to elicit, that these facts exist, and that these facts are necessary to oppose summary judgment. Accordingly, the Court will deny additional discovery on this matter and decide Hoehns motion on the facts before the Court. 1) The Purpose and Character of the Use The first factor of fair use is the purpose and character of the use. 17 U.S.C. 107. Noncommercial, nonprofit use is presumptively fair. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449 (1984). The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562 (1985). This factor focuses on whether the new work merely replaces the object of the original creation or instead adds a further purpose or different character. In other words, this factor asks whether and to what extent the new work is transformative. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir. 2001) (quotation omitted). If the character of the use differs from the original usage, the use may be considered fair. Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1117 (9th Cir. 2000) (duplicating a churchs religious book for use by a different church was not transformative and was not protected by fair use). However, mere transmission of a copyrighted work in a different medium is likely not fair use. Napster, 239 F.3d at 1015. It is undisputed that Hoehn did not and could not profit from posting the Work. Under Sony, noncommercial/nonprofit use is presumptively fair. Additionally, this factor focuses on the purpose or character of the new work. Here, Hoehn posted the Work as part 13

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of an online discussion. Hoehn avers he posted the Work to foster discussion in a specific interactive website forum regarding the recent budget shortfalls facing state governments. This purpose is consistent with comment, for which 17 U.S.C. 107 provides fair use protection. There is no genuine issue of material fact that Hoehns noncommercial use of the Work for comment favors a finding that the use was fair. 2) The Nature of the Copyrighted Work The second factor is the nature of the copyrighted work. 17 U.S.C. 107. Generally, creative works are closer to the core of intended copyright protection than informational and functional works. Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1402 (9th Cir. 1997) (quotation omitted). The scope of fair use is greater when informational as opposed to creative works are involved. Hustler Magazine Inc. v. Moral Majority Inc., 796 F.2d 1148, 1153-54 (9th Cir. 1986). The types of works deemed to be creative to tilt this factor against a finding of fair use have been complete works of fiction, song lyrics, and Barbie Dolls. Dr. Seuss, 109 F.3d at 1402; Leadsinger, Inc. v. BMG Music Publg, 512 F.3d 522, 531 (9th Cir. 2008); and Mattel, 353 F.3d at 803. However, this factor [is] not terribly significant in the overall fair use balancing. Dr. Seuss, 109 F.3d at 1402. The Work is an editorial originally published in the LVRJ. The Work is a combination of an informational piece with some creative elements. Roughly eight of the nineteen paragraphs of the Work provide purely factual data, about five are purely creative opinions of the author, and the rest are a mix of factual and creative elements. While the Work does have some creative or editorial elements, these elements are not enough to consider the Work a purely creative work in the realm of fictional stories, song lyrics, or Barbie dolls. Accordingly, the Work is not within the core of intended copyright protection. Dr. Seuss, 109 F.3d at 1402. Rather, because the Work contains a significant informational element, the scope of fair use is greater than it would be for a creative work, 14

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but likely less than it would for a purely informational work. However, this factor is not terribly relevant in the overall fair use balancing, and the lesser creative element of the Work lessens the impact further. Accordingly, this factor must be balanced with the other fair use factors to determine if Hoehns use of the Work was fair. 3) The Amount Used The third factor of fair use is the amount of the use of the copyrighted work. 17 U.S.C. 107. [T]he extent of permissible copying varies with the purpose and character of the use. Campbell, 510 U.S. at 586-87. While wholesale copying does not preclude fair use per se, copying an entire work militates against finding a fair use. Napster, 239 F.3d at 1016 (quotation omitted). However, copying of an entire copyrighted work has been deemed justified where the purpose of the new work differs from the original. Kelly v. Arriba Soft Corp., 336 F.3d 811, 821 (9th Cir. 2003); see also Sony, 464 U.S. at 449-50 (videotaping whole broadcast television programs for later private viewing constituted fair use). It is undisputed that Hoehn posted the entire work in his comment on the Website. Posting an entire work generally militates against finding a fair use. Napster, 239 F.3d at 1016. However, while wholesale copying of the Work shifts this factor against finding fair use, wholesale copying does not preclude a finding of fair use. Id. The three other factors need to be balanced to determine if fair use is appropriate. 4) The Effect Upon the Potential Market for the Work The final factor to be weighed is the effect on the potential market for or value of the copyrighted work. 17 U.S.C. 107. Fair use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied. Harper, 471 U.S. 566-67 (quotation omitted). Additionally, [a] challenge to noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential 15

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market for the copyrighted work. Napster, 239 F.3d at 1016 (quotation omitted). It is undisputed that Hoehns use of the Work is noncommercial. Challenges to noncommercial use require a showing that the particular use is harmful or negatively impacts the potential market for the copyrighted work. Id. Righthaven has not presented evidence raising a genuine issue of material fact that Hoehns use is harmful. Rather, Righthaven contends that because Hoehn replicated the entirety of the Work [s]uch circumstances warrant the conclusion that [Hoehns] infringement has likely caused a substantial impairment on the potential market for the Work and that [Hoehns] infringing copy of the Work fulfilled the demand for the original. (Resp. (Doc. #13) at 12-13.) Additionally, Righthaven argues that the market for the Work was impacted negatively because potential readers are able to read the Work on the Website and would have no reason to view the Work at its original source of publication. However, Righthaven has not presented any evidence of harm or negative impact from Hoehns use of the Work on the Website between November 29, 2010 and January 6, 2011. Merely arguing that because Hoehn replicated the entirety of the Work the market for the Work was diminished is not sufficient to show harm. Therefore, Righthaven has not presented evidence raising a genuine issue of material fact that the fourth factor favors a finding of fair use. There is no genuine issue of material fact that the above factors favor a finding of fair use. Of the four factors, only the fact that Hoehn replicated the entire Work weighs against a finding of fair use. Hoehn used the Work for a noncommercial and nonprofit use that was different from the original use. The copyrighted Work was an informational work with only some creative aspects, and the Work was used for an informational purpose. Righthaven did not present any evidence that the market for the Work was harmed by Hoehns noncommercial use for the 40 days it appeared on the Website. Accordingly, there is no genuine issue of material fact that Hoehns use of the Work was fair and summary judgment is appropriate. 16

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IV.

CONCLUSION IT IS THEREFORE ORDERED that Defendants Motion to Dismiss for Lack of

Jurisdiction (Doc. #16) and Defendants Motion for Summary Judgment (Doc. #8) are hereby GRANTED, and Plaintiffs Complaint is hereby DISMISSED.

DATED: June 20, 2011.

_______________________________ PHILIP M. PRO United States District Judge

17

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Entry Number 57-7

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Exhibit F to Defendant Eisers Rule 12(b)(1) Motion

DiBiase Dismissal

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AO 72 (Rev. 8/82)

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA ***

RIGHTHAVEN LLC, a Nevada limited-liability ) company, ) ) Plaintiff, ) ) vs. ) ) THOMAS A. DIBIASE, an individual, ) ) Defendant. ) _______________________________________) Case No.: 2:10-cv-01343-RLH-PAL ORDER (Motion to Dismiss#47)

Before the Court is Defendant Thomas A. DiBiases Motion to Dismiss (#47, filed May 4, 2011) based on a lack of subject matter jurisdiction. The Court has also considered Plaintiff Righthaven LLCs Opposition (#53, filed May 18, 2011), and DiBiases Reply (#64, filed June 3, 2011). BACKGROUND DiBiase maintains a website that publishes information regarding the prosecution of so-called no-body murder casesa homicide prosecution where the alleged victim is missing and presumed dead, but no body is found. On August 9, 2010, Righthaven filed suit against DiBiase for copyright infringement alleging that DiBiase displayed a Las Vegas Review Journal article concerning a no-body murder case (the Work) on his website. Righthaven claims to be 1

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the copyright owner of that article. DiBiase answered the complaint on October 29, 2011, and brought a declaratory judgment counterclaim against Righthaven asking the Court to declare that he did not infringe on Righthavens alleged copyright. In a separate case before this Court, Stephens Media, the original owner of the Work, disclosed the Strategic Alliance Agreement (SAA) entered into between Stephens Media and Righthaven which governs future assignments from Stephens Media to Righthaven and the relationship between them.1 Stephens Media and Righthaven entered into the SAA in January 2010, prior to Stephens Media assigning the work to Righthaven. For the reasons discussed below, the Court grants DiBiases motion and dismisses Righthavens complaint for lack of standing, however, the Court also dismisses DiBiases counterclaim for lack of standing. DISCUSSION Recently this Court determined that Righthaven lacked standing to pursue copyright infringement claims based on assignments made under the SAA because the SAA prevents subsequent assignments from transferring the exclusive rights necessary to maintain standing in a copyright infringement action. Righthaven v. Democratic Underground, 2:10-cv-01356-RLHGWF, --- F. Supp. 2d ---, 2011 WL 2378186 at *6 (D. Nev. June 14, 2011); see also Righthaven v. Hoehn, 2:10-cv-00050-PMP-RJJ, --- F. Supp. 2d ---, 2011 WL 2441020 at *6 (D. Nev. June 20, 2011). The standing issues in this case are the same as those in Democratic Underground and Hoehn. Because the issues are the same, the same analysis applies and the Court directs readers to the reasoning in those cases on the issue of standing. As the Court did in both of those cases, the Court dismisses Righthaven for lack of standing. Because the Court has held that Righthaven does not have standing to assert a copyright infringement claim against DiBiase, the Court must consider whether DiBiase has
1

The Court takes judicial notice of the following cases and directs the reader to these cases for further information regarding the background of the SAA: Righthaven v. Democratic Underground, 2:10-cv-01356RLH-GW F, --- F. Supp. 2d ---, 2011 W L 2378186 (D. Nev. June 14, 2011) and Righthaven v. Hoehn, 2:10-cv00050-PMP-RJJ, --- F. Supp. 2d ---, 2011 W L 2441020 (D. Nev. June 20, 2011).

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standing to assert a declaratory judgment claim seeking a declaration of non-infringement against Righthaven. As Righthaven does not hold the copyright to the Work, DiBiase lacks standing to assert his claim against Righthaven just as Righthaven lacks standing to assert its purported claim. Accordingly, the Court sua sponte dismisses DiBiases claim for lack of standing. CONCLUSION Accordingly, and for good cause appearing, IT IS HEREBY ORDERED that DiBiases Motion to Dismiss (#47) is GRANTED. IT IS FURTHER ORDERED that DiBiases counterclaim is DISMISSED. As no claims remain pending, the Clerk of the Court is directed to close this case. Dated: June 22, 2011.

____________________________________ ROGER L. HUNT United States District Judge

2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-8

Page 1 of 4

Exhibit G to Defendant Eisers Rule 12(b)(1) Motion

Barham Dismissal

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AO 72 (Rev. 8/82)

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA ***

RIGHTHAVEN LLC, a Nevada limited-liability ) company, ) ) Plaintiff, ) ) vs. ) ) DANIEL BARHAM, an individual; and ) URBAN NEIGHBOURHOOD, an entity of ) unknown origin and nature, ) ) Defendant. ) _______________________________________) Case No.: 2:10-cv-02150-RLH-PAL ORDER (Motion to Dismiss#6; Motion to Dismiss#14)

Before the Court is Defendant Daniel Barhams Motion to Dismiss (#6, filed Jan. 11, 2011), based on a lack of subject matter jurisdiction. The Court has also considered Plaintiff Righthaven LLCs Opposition (#8, filed Jan. 25, 2011), and Barhams Reply (#12, filed Feb. 24, 2011). Also before the Court is Righthavens Motion to Dismiss or Strike Counterclaim (#14, filed Feb. 28, 2011), based on a failure to state a claim, or alternatively, because the counterclaim is redundant. Barham did not respond. / 1

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BACKGROUND This dispute arises out of Barhams alleged copyright infringement of a Las Vegas Review-Journal (LVRJ) illustration. Barham operates a website called Urban Neighbourhood. This website discusses global architectural issues. In October 2010, Barham published a post which included an illustration entitled Vdara death-ray, which had originally been published by the LVRJ. Righthaven claims that it purchased the rights to this illustration sometime after Barham republished it. Righthaven then brought suit against Barham and his website in December alleging copyright infringement. Barham answered the complaint in February 2011, and also brought a declaratory judgment counterclaim seeking a declaration of non-infringement. In a separate case before this Court, Stephens Media, the original owner of Vdara death-ray, disclosed the Strategic Alliance Agreement (SAA) entered into between Stephens Media and Righthaven which governs future assignments from Stephens Media to Righthaven and the relationship between them.1 Stephens Media and Righthaven entered into the SAA in January 2010, prior to Stephens Media assigning Vdara death-ray to Righthaven. For the reasons discussed below, the Court grants Barhams motion and dismisses Righthavens complaint for lack of standing, however, the Court also grants Righthavens motion and dismisses Barhams counterclaim for lack of standing. DISCUSSION Recently this Court determined that Righthaven lacked standing to pursue copyright infringement claims based on assignments made under the SAA because the SAA prevents subsequent assignments from transferring the exclusive rights necessary to maintain standing in a copyright infringement action. Righthaven v. Democratic Underground, 2:10-cv-01356-RLHGWF, --- F. Supp. 2d ---, 2011 WL 2378186 at *6; see also Righthaven v. Hoehn, 2:10-cv-000501

The Court takes judicial notice of the following cases and directs the reader to these cases for further information regarding the background of the SAA: Righthaven v. Democratic Underground, 2:10-cv-01356RLH-GW F, --- F. Supp. 2d ---, 2011 W L 2378186 (D. Nev. June 14, 2011) and Righthaven v. Hoehn, 2:10-cv00050-PMP-RJJ, --- F. Supp. 2d ---, 2011 W L 2441020 (D. Nev. June 20, 2011).

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PMP-RJJ, --- F. Supp. 2d ---, 2011 WL 2441020 at *6 (D. Nev. June 20, 2011). The standing issues in this case are the same as those in Democratic Underground and Hoehn. Because the issues are the same, the same analysis applies and the Court directs readers to the reasoning in those cases on the issue of standing. As the Court did in both of those cases, the Court dismisses Righthaven for lack of standing. The Court, however, also grants Righthavens motion and dismisses Barhams counterclaim. First, the Court could grant Righthavens motion as unopposed. However, the Court also grants the motion based on its above analysis that Righthaven does not have standing to assert its copyright infringement claim. As Righthaven does not hold the Vdara death-ray copyright, Barham lacks standing to assert his claim against Righthaven just as Righthaven lacks standing to assert its purported claim. Accordingly, the Court grants Righthavens motion and dismisses Barhams counterclaim for a lack of standing. CONCLUSION Accordingly, and for good cause appearing, IT IS HEREBY ORDERED that Barhams Motion to Dismiss (#6) is GRANTED. IT IS FURTHER ORDERED that Righthavens Motion to Dismiss (#14) is GRANTED. As no claims remain outstanding, the Clerk of the Court is directed to close this case. Dated: June 22, 2011.

____________________________________ ROGER L. HUNT United States District Judge

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Date Filed 07/05/11

Entry Number 57-9

Page 1 of 9

Exhibit H to Defendant Eisers Rule 12(b)(1) Motion

Jama Summary Judgment

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

James C. Mahan U.S. District Judge

RIGHTHAVEN, LCC, a Nevada limited liability company, Plaintiff, v. KAYSE JAMA, an individual, and CENTER FOR INTERCULTURAL ORGANIZING, a non-profit organization, Defendants.

2:10-CV-1322 JCM (LRL)

ORDER Presently before the court is the order to show cause (doc. #12) why the court should not dismiss the instant action under the 17 U.S.C. 107 fair use exception. Plaintiff Righthaven filed a response (doc. #14) to the order to show cause, alternatively requesting a chance to conduct discovery pursuant to Federal Rule of Civil Procedure 56(f).1 The court also permitted (doc. #19) Professor Jason Schultz to file an amicus brief (doc. #21). I. Background This dispute centers on a newspaper article, first published by the Las Vegas Review-Journal (LVRJ) on June 28, 2010. On July 8, 2010, defendant Center for Intercultural Organizing (CIO)

Under the recent amendments to the Federal Rules of Civil Procedure, the court notes that the proper citation should be Rule 56(d), which allows the court to allow time for discovery where a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its position. . . .

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posted the article in its entirety on the CIO website. Thereafter, on July 26, 2008, the LVRJ assigned ownership of the copyright to plaintiff Righthaven, which filed suit against CIO on August 5, 2010, alleging copyright infringement under 17 U.S.C. 501. The disputed article discusses whether police in the Las Vegas area were targeting minorities. Defendants, an Oregon nonprofit organization dedicated to helping immigrants become aware of immigration-related issues in the United States, posted the article in its entirety on their website, purportedly to educate the public about the issues contained therein. On December 28, 2010, this court held a show cause hearing, which was adjourned to give plaintiff an opportunity to file a list of disputed, material facts. (Doc. #27). Thereafter, plaintiff filed a response (doc. #28), to which the defendants (doc. #29) and the amicus (doc. #30) replied. The court again held a hearing on the order to show cause on March 18, 2011, (doc. #33) and, having considered the papers and pleadings submitted, as well as the oral arguments of the parties present, now finds that there are no disputed material facts to present a genuine issue for trial. Accordingly, the defendants are entitled to judgment as a matter of law. II. Legal Standard Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving party, there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996); FED . R. CIV . P. 56(c). The moving party bears the burden of presenting authenticated evidence to demonstrate the absence of any genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); see Orr v. Bank of America, 285 F.3d 764 (9th Cir. 2002) (articulating the standard for authentication of evidence on a motion for summary judgment). The court may [a]fter giving notice and a reasonable time to respond . . . (1) grant summary judgment for a nonmovant; (2) grant the motion on grounds not raised by a party; or (3) consider summary judgment on its own after identifying for the parties material facts that may not genuinely be in dispute. FED . R. CIV . P. 56(f). Here, the court has invoked subdivision (f) and given the parties a reasonable time to respond to the order to show cause. Although the plaintiff has requested

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James C. Mahan U.S. District Judge

discovery, noting that the party against whom summary judgment is granted must be on notice that she had to come forward with all of her evidence, Celotex Corp., 477 U.S. at 326, the court finds that further discovery is unnecessary, as the court already possesses enough information to rule as a matter of law on the issue of fair use. III. Fair Use Analysis A plaintiff must satisfy two requirements to present a prima facie case of copyright infringement: (1) ownership of the allegedly infringed material, and (2) that the alleged infringers violated at least one exclusive right granted to copyright holders. 17 U.S.C. 106, 501(a). However, even where a plaintiff has alleged a prima facie case of copyright infringement, the defendant may refute the claim if the defendant has engaged in a fair use of the material. The fair use doctrine is an affirmative defense to a claim of infringement, which protects certain uses of a copyright. The court considers four factors to determine whether the use of a copyrighted work is fair: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C. 107. The four factors should be considered in light of the purposes of copyright to promote the progress of science and useful arts and to serve the welfare of the public. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1163 (9th Cir. 2007) (internal citations omitted). Fair use is a mixed question of law and fact. If there are no genuine issues of material fact, or if, even after resolving all issues in favor of the opposing party, a reasonable trier of fact can reach only one conclusion, a court may conclude as a matter of law whether the challenged use qualifies as a fair use of the copyrighted work. Los Angeles News Serv. v. KCAL-TV Channel 9, 108 F.3d 1119, 1120 (9th Cir. 1997) (citing Hustler Magazine, Inc. v. Moral Majority, Inc., 796 F.2d 1148, 1150 (9th Cir.1986) (quoting Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 559 (1985))). Here, weighing each of the four use factors and resolving all issues in favor of plaintiff Righthaven, the court finds that a reasonable trier of fact could only reach one conclusion that the

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alleged infringement qualifies as fair use. (A) Purpose and Character of the Use

[T]he fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. 17 U.S.C. 107. This first factor addresses whether the new work replaces the object of the original creation or instead adds a further purpose or different character . . . [and] is transformative. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir. 2001) (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994)). This factor also requires the court to determine whether the new use is commercial or non-commercial. Id. First, CIOs use of the article is transformative. Although the former owner, the LVRJ, used the article for news-reporting, the court focuses on the current copyright owners use, which, at this juncture, has been shown to be nothing more than litigation-driven. Accordingly, CIOs use of the article to educate the public is transformative and does not constitute a substitution of the plaintiffs use. See Perfect 10, 508 F.3d at 1146 (discussing the effect of market substitution in relation to the first and fourth factors). Second, the court finds that the purpose of the use here was non-commercial. The parties agree that defendant CIO is a non-profit corporation with an educational mission; indeed the plaintiff has characterized the defendant as such on the face of the complaint. (See doc. #1, 4) (referring to CIO as a not-for-profit Oregon entity). Additionally, the declaration of defendant and CIO executive Kayse Jama (doc. #7-2) evidences CIOs educational mission and establishes that defendants did not sell, license, or publish the work commercially. In light of this evidence, the court also concludes that defendants solicitation of donations on their website is immaterial, and no reasonable jury could conclude that the defendants used the disputed article for a commercial purpose. Accordingly, the first factor weighs in favor of a finding of fair use. (B) Nature of the Copyrighted Work

The second factor considers the nature of the copyrighted work. Works that are creative in nature are closer to the core of intended copyright protection than are more fact-based works.

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Napster, 239 F.3d at 1016 (citing Campbell, 510 U.S. at 586). Where the disputed use can be characterized as news-reporting, this factor weighs heavily in favor of a finding of fair use. Los Angeles News Serv., 108 F.3d at 1121. The court concludes that a reasonable trier of fact could only reach one conclusion as to the nature of the disputed article it is an informational work, which readily lends itself to a productive use by others and, thus, deserves less protection than a creative work of entertainment. Sony Corp. Of Am. v. Universal City Studios, Inc., 464 U.S. 417, 49697 (1984). Discovery and additional factfinding are unnecessary to reach this conclusion, which the court draws simply from reading the article itself. Accordingly, this factor weighs heavily in favor of a finding of fair use. (C) Amount/Substantiality of the Portion Used in Relation to the Work as a Whole

The third factor considers whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole . . . are reasonable in relation to the purpose of the copying. Campbell, 510 U.S. at 586. Although wholesale copying does not preclude fair use per se, copying an entire work militates against a finding of fair use. Napster, 239 F.3d at 1016 (internal quotations omitted). Thus, under some circumstances, a court may determine that a use is fair even where the protected work is copied in its entirety. Id. (citing Sony, 464 U.S. at 44950). Here, the court finds that, although the defendants posted the work in its entirety, the amount used was reasonable in light of the purpose of the use, which was to educate the public about immigration issues. Because of the factual nature of the work, and to give the full flavor of the information, the defendants used the entire article rather than trying to distill it. The court finds that it would have been impracticable for defendants to cut out portions or edit the article down. See e.g, Campbell, 510 U.S. at 58889 (noting that for a parody to be effective, it must take enough material to evoke the original). Additionally, the court finds Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 110, 1118 (9th Cir. 2000), relied on heavily by the plaintiff, distinguishable. That case does not stand for the broad proposition that use of an entire work precludes a fair-use finding. Id. at 1118 (recognizing that wholesale copying does not necessarily preclude a finding of fair use). In

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Worldwide Church, a church owned the copyright in a 380-page book written by its founder. 227 F.3d at 1112. The church discontinued distribution of the book, following a change in church doctrine. Id. at 1113. However, a splinter group within the church countermanded the directive by printing and distributing 30,000 copies of the book and ignoring a cease-and-desist letter. Id. Ultimately, distribution of the book drew thousands to the new congregation, and those members tithed ten-percent of the churchs income. Id. at 1118. The instant action and Worldwide Church are distinguishable. First, the alleged infringers here are using the work for informational purposes, rather than to garner membership in an organization competing directly with the plaintiff. Second, the infringement in Worldwide Church was of an entire published book, rather than one news article in an online newspaper. Third, the infringers in Worldwide Church deleted the plaintiffs copyright information from their version of the book, whereas the defendants here attributed the article to the LVRJ. Accordingly, the court finds that this factor favors neither party. (D) Effect of the Use Upon the Potential Market

The fourth factor is the effect of the allegedly infringing use upon the potential market for or value of the original, copyrighted work. Campbell, 510 U.S. at 590 (citing 17 U.S.C. 107(4)). The rationale behind the inclusion of this factor is that [f]air use . . . is limited to copying by others which does not materially impair the marketability of the work which is copied. Harper & Row Publishers, 471 U.S. at 56667. The weight given to this factor will depend on the relative strength of the showing on other factors, for example: A challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential market for the copyrighted work. . . . If the intended use is for commercial gain, that likelihood [of market harm] may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated. Napster, 239 F.3d at 1016 (quoting Sony, 464 U.S. at 541). Here, as established under the first-factor

26 analysis, the use is non-commercial; thus, no presumption of harm arises. Additionally, because the 27 work is transformative under the first factor, there is no market substitution . . . and market harm 28
James C. Mahan U.S. District Judge

-6-

2:10-cv-03075-RMG -JDA Date Filed 07/05/1138 Entry Number 57-9 Case 2:10-cv-01322-JCM -LRL Document Filed 04/22/11 Page 7 of 8 of 9 Page

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
James C. Mahan U.S. District Judge

may not be so readily inferred. Perfect 10., 508 F.3d at 1168 (citing 17 U.S.C. 107(4)). Thus, the burden falls on the plaintiff to demonstrate the existence of market harm. The plaintiff has not met its burden. First, the plaintiff has failed to allege that a market exists for its copyright at all, and the court declines to simply presume the existence of a market. See e.g., Field v. Google Inc., 412 F. Supp. 2d 1106, 1121 (D. Nev. 2006) (declining to presume a market exists where the work was offered for free in its entirety). Second, because Righthaven cannot claim the LVRJs market as its own and is not operating as a traditional newspaper, Righthaven has failed to show that there has been any harm to the value of the copyright. Cf. eBay v. MercExchange, LLC, 547 U.S. 388 (2006) (holding that courts should not broadly presume harm when issuing preliminary injunctions in the patent context); see Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) (extending eBay to the copyright context and anchoring the irreparable harm analysis in equitable principles). Accordingly, the fourth fair use factor weighs in favor of a finding of fair use. IV. Conclusion The court finds that the defendants use of the copyrighted article in this case constitutes fair use as a matter of law. The article has been removed from its original context; it is no longer owned by a newspaper; and it has been assigned to a company that uses the copyright exclusively to file infringement lawsuits. Plaintiffs litigation strategy has a chilling effect on potential fair uses of Righthaven-owned articles, diminishes public access to the facts contained therein, and does nothing to advance the Copyright Acts purpose of promoting artistic creation. Accordingly, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that, in the case of Righthaven LLC v. Center For Intercultural Organizing et al. (2:10-cv-01322-JCM -LRL), summary judgment is granted in favor of the defendants; ... ... ...

-7-

2:10-cv-03075-RMG -JDA Date Filed 07/05/1138 Entry Number 57-9 Case 2:10-cv-01322-JCM -LRL Document Filed 04/22/11 Page 8 of 8 of 9 Page 9

1 2 3 4 5

IT IS FURTHER ORDERED that the defendants shall prepare an appropriate judgment for the courts review and signature. DATED April 22, 2011.

UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

James C. Mahan U.S. District Judge

-8-

2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-10

Page 1 of 4

Exhibit I to Defendant Eisers Rule 12(b)(1) Motion

Order to Show Cause by Judge Mahan

2:10-cv-03075-RMG -JDA Date Filed 07/05/11 21Entry Number 57-10 Case 2:10-cv-01575-JCM -PAL Document Filed 04/28/11 PagePage3 of 4 1 of 2

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

James C. Mahan U.S. District Judge

RIGHTHAVEN LLC, Plaintiff, v. PAHRUMP LIFE, et al., Defendants.

2:10-CV-1575 JCM (PAL)

ORDER Presently before the court is defendant Michael Scaccias motion for summary judgment. (Doc. #12). Plaintiff has responded (doc. #17), and the defendant has replied (doc. #18). Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving party, there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996); FED . R. CIV . P. 56(c). The moving party bears the burden of presenting authenticated evidence to demonstrate the absence of any genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); see Orr v. Bank of America, 285 F.3d 764 (9th Cir. 2002) (articulating the standard for authentication of evidence on a motion for summary judgment). Here, the defendant has first failed to present authenticated evidence in support of his motion. Accordingly, the court is unable to conclude as a matter of law that the use at issue constitutes fair use under 17 U.S.C. 107. Second, the defendant has contested Righthavens ownership of the disputed copyright,

2:10-cv-03075-RMG -JDA Date Filed 07/05/11 21Entry Number 57-10 Case 2:10-cv-01575-JCM -PAL Document Filed 04/28/11 PagePage3 of 4 2 of 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
James C. Mahan U.S. District Judge

noting that the plaintiff has not produced a written document evidencing ownership . . . in the copyright in the Article. (Doc. #12 at 7:2527). Although, again, the court cannot grant summary judgment where defendant has not presented authenticated evidence to support defendants claim that [t]he real party in interest appears to be Stevens Media LLC . . . the publisher of the Las Vegas Review-Journal (doc. #12 at 2:1113), the court finds resolution of the issue sufficiently pressing as to warrant immediate consideration. Righthavens ownership of its assigned copyrights has been generally contested in a case before Judge Hunt, Righthaven LLC v. Democratic Underground, LLC et al. In Democratic Underground, the newly unsealed Strategic Alliance Agreement (doc. #79-1 in 2:10-cv-01356-RLH -GWF), governing all purported copyright assignments from Stevens Media to Righthaven, appears to support defendant Scaccias claim that Righthaven does not have standing to sue for copyright infringement. (See doc. #79 in 2:10-cv-01356-RLH -GWF). Specifically, Stevens Media has not assigned to Righthaven one of the 17 U.S.C. 106 exclusive rights in the copyrights Righthaven purports to own, as would be required for Righthaven to validly allege an infringement claim on those copyrights. See Silvers v. Sony Pictures Entmt, Inc., 402 F.3d 881, 884 (9th Cir. 2005) (legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it) (quoting 17 U.S.C. 501(b)). This court believes that the issue should be addressed at the outset of Righthaven litigation, as it goes to the plaintiffs standing to bring a copyright infringement claim at all. Thus, in the interest of judicial economy, the court issues this order to show cause why the case should not be dismissed for plaintiffs lack of beneficial ownership of the copyright, and, therefore, lack of standing to sue. Accordingly, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants motion for summary judgment (doc. #12) is DENIED;

-2-

2:10-cv-03075-RMG -JDA Date Filed 07/05/11 21Entry Number 57-10 Case 2:10-cv-01575-JCM -PAL Document Filed 04/28/11 PagePage3 of 4 3 of 4

1 2 3 4 5 6 7 8 9

IT IS FURTHER ORDERED that the plaintiff show cause, in writing, within ten (10) days of the date of filing of this order why the court should not dismiss the instant case for lack of standing; IT IS FURTHER ORDERED that a show cause hearing is scheduled before District Judge James C. Mahan on May 12, 2011, at 10:30 a.m. in Courtroom 6A. Failure of plaintiff to appear shall result in the imposition of sanctions. DATED April 27, 2011.

UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

James C. Mahan U.S. District Judge

-3-

2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-11

Page 1 of 6

Exhibit J to Defendant Eisers Rule 12(b)(1) Motion

Order to Show Cause by Judge Hicks

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Date Filed 07/05/11

Entry Number 57-11

Page 5 of 6

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Date Filed 07/05/11

Entry Number 57-11

Page 6 of 6

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I I TFEREFORE ORDERED t tt pli ifs c us ,i wrtng, t ntn( 0) TS I ha he antf how a e n ii wihi e 1

9 days oft sor why t cour s d notdi i t above- i hi der he t houl sm ss he captoned cas f l ofs andi es or ack t ng.

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2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-12

Page 1 of 3

Exhibit K to Defendant Eisers Rule 12(b)(1) Motion

District of Colorado Stay Order by Judge Kane

Case 1:11-cv-00222-JLK Document 21 Filed 05/19/11 USDC Colorado Page 1 of 2 2:10-cv-03075-RMG -JDA Date Filed 07/05/11 Entry Number 57-12 Page 2 of 3

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge John L. Kane Civil Action No. 1:11-cv-00222-JLK RIGHTHAVEN LLC, a Nevada Limited Liability Company Plaintiff, v. WILLIAM SUMNER., and DAILYKIX.COM, an entity of unknown nature and origin, Defendants.

ORDER

Plaintiff Righthaven LLC (Righthaven) has filed fifty-seven cases in this district alleging infringement of its copyright interest in a photograph depicting a Transportation Security Administration Agent performing an enhanced pat-down search at Denver International Airport (the Work). The Work was originally published in, and the copyright held by, The Denver Post, but at some point following its original publication on November 18, 2010, an interest in the copyright was transferred to Righthaven. These cases are at various stages. Twenty-one have been voluntarily dismissed; one has been settled and will be voluntarily dismissed on receipt of final payment; three are set for scheduling conferences; motions to dismiss have been filed in seven; twenty-three are awaiting answer; one is stayed incident to a partys bankruptcy filing; and one is set for hearing on a defendants motion for attorney fees. A recent filing in one of the cases has, however, highlighted an issue common to all of the remaining cases namely, whether I have subject matter jurisdiction over Righthavens claims. It is well settled that Federal courts are courts of limited jurisdiction; I may only hear

Case 1:11-cv-00222-JLK Document 21 Filed 05/19/11 USDC Colorado Page 2 of 2 2:10-cv-03075-RMG -JDA Date Filed 07/05/11 Entry Number 57-12 Page 3 of 3

those cases which have been entrusted to me under a jurisdictional grant by Congress. Henry v. Office of Thrift Supervision, 43 F.3d 507, 511 (10th Cir. 1994) (citing Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986) and United States v. Nixon, 418 U.S. 683 (1974)). Although Congress has entrusted federal courts with the statutory authority to entertain a claim of copyright infringement, see 28 U.S.C. 1331, 17 U.S.C. 501, my exercise of jurisdiction must also be constitutionally proper. Because Righthaven is the party seeking to invoke federal jurisdiction, it bears the burden, when jurisdiction is challenged, of establishing it is both statutorily and constitutionally proper as a matter of law. Because there are serious questions as to whether my exercise of subject matter jurisdiction over Righthavens claim of copyright infringement is proper, I think it most prudent to stay the proceedings in all pending cases in this District in which Righthaven is the named Plaintiff. See Landis v. North American Co., 299 U.S. 248, 254 (1936) (the power to stay proceedings is inherent in the power to control the disposition of the causes on [my] docket with economy of time and effort for [my]self, for counsel, and for litigants ). Should I find that I lack subject matter jurisdiction over Righthavens claim of copyright infringement, it is likely that I will be required to dismiss all pending actions. A stay will best conserve the parties and the Courts resources pending resolution of this fundamental inquiry. Accordingly, this case is STAYED pending my resolution of the Motion to Dismiss in Civil Case Number 1:11-cv-00830.

Dated: May 19, 2011

BY THE COURT: /s/ John L. Kane Senior U.S. District Judge

2:10-cv-03075-RMG -JDA

Date Filed 07/05/11

Entry Number 57-13

Page 1 of 11

Exhibit L to Defendant Eisers Rule 12(b)(1) Motion

Righthaven Intervention

2:10-cv-03075-RMG -JDA Date Filed 07/05/11 120 Filed 06/23/11 Page 1 of 2 of 11 Case 2:10-cv-01356-RLH -GWF Document Entry Number 57-13 Page 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

SHAWN A. MANGANO, ESQ. Nevada Bar No. 6730 shawn@manganolaw.com SHAWN A. MANGANO, LTD. 9960 West Cheyenne Avenue, Suite 170 Las Vegas, Nevada 89129-7701 Tel: (702) 304-0432 Fax: (702) 922-3851 Attorney for Righthaven LLC

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

RIGHTHAVEN LLC, a Nevada limited-liability company, Plaintiff, v. DEMOCRATIC UNDERGROUND, LLC, a District of Columbia limited-liability company; and DAVID ALLEN, an individual, Defendants. DEMOCRATIC UNDERGROUND, LLC, a District of Columbia limited-liability company, Counterclaimant, v. RIGHTHAVEN LLC, a Nevada limited-liability company; and STEPHENS MEDIA LLC, a Nevada limited-liability company, Counterdefendants.

Case No.: 2:10-cv-01356-RLH-CWF RIGHTHAVEN LLCS APPLICATION TO INTERVENE AS OF RIGHT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 24(A)(2)

2:10-cv-03075-RMG -JDA Date Filed 07/05/11 120 Filed 06/23/11 Page 2 of 3 of 11 Case 2:10-cv-01356-RLH -GWF Document Entry Number 57-13 Page 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I.

Righthaven LLC (Righthaven) hereby applies to intervene in this action as of right pursuant Federal Rule of Civil Procedure 24(a)(2) (Application). Righthavens Application is based on the below Memorandum of Points and Authorities, the pleadings and papers on file in this action, any permitted oral argument, and any other matter upon which this Court takes notice. A proposed order granting Righthavens Application is submitted concurrently with this filing.

MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Righthaven respectfully submits this Application to intervene as of right pursuant to Rule 24(a)(2). On June 14, 2011, this Court found that Righthaven lacked standing to bring its copyright infringement claim. (Doc. # 116, the Order.) The Courts decision was expressly based upon the jurisdictional facts as they existed at the time the complaint was filednamely the form of copyright assignment and the Strategic Alliance Agreement (SAA) between Stephens Media and Righthaven that was then in existence at the time the complaint was filed. (Order at 8.) Although Righthaven respectfully disagrees with the Courts decision that Righthaven lacked standing under the original SAA, it accepts as the law of the case that Righthaven lacked standing under the complaint as filed. Nevertheless, subsequent to the filing of Righthavens complaint, Righthaven and Stephens Media executed the Clarification and Amendment to Strategic License Agreement (Amendment), which eliminated Stephens Medias rights of reversion and converted its right to use an assigned copyright to a mere non-exclusive license. As explained in detail below, under the Amendment, Righthaven is the assignee and sole owner of the copyrighted work at issue in this case. Thus, intervention as of right is proper. Intervention is particularly warranted here, as Defendants declaratory judgment claim against Stephens Media is still pending because the Court found that Stephens Media still owned the copyrighted Work under the original SAA. (See Order at 14, 16.) Yet, under the Amendment, Stephens Media is now a mere non-exclusive licensee with no ownership rights in the copyright and no standing to sue for infringement. Therefore, Righthaven seeks to intervene as of right in order to protect its ownership interest in the copyright since it is the only party that may presently due so.
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This case cannot be resolved without Righthavens involvement because Righthaven is the only real party-in-interest. As set forth below, Righthaven satisfies the requirements for intervention under Rule 24. Further, intervention will conserve judicial resources and allow for the efficient resolution of all related issues in a single proceeding rather than forcing Righthaven to file a new complaint, needlessly resulting in multiple litigations regarding similar issues. In addition, intervention will not cause undue delay or prejudice to Democratic Underground. For these reasons, Righthaven respectfully requests that its Application for leave to intervene as of right be granted. II. SUMMARY OF RELEVANT FACTS Righthaven filed its complaint for copyright infringement against the defendants on August 10, 2010 (Doc. # 1). Defendants answered the complaint (Doc. # 13) and defendant Democratic Underground asserted a counterclaim for a declaratory judgment of non-infringement against Righthaven and added Stephens Media as a counterclaim -defendant. (Id. at 6-24.) Subsequent to the filing of Righthavens complaint, Righthaven and Stephens Media executed the Amendment, which remedied any previous defect in Stephens Medias copyright assignment to Righthaven, and consequently, remedied any prior defect in Righthavens ownership of the Work or its standing to sue for infringement. (Doc. # 102, Ex. 3.) On June 14, 2011, this Court issued an Order addressing several pending motions, including the issue of whether Righthaven had standing. (Order.) Notwithstanding Righthavens present copyright ownership under the Amendment, the Court held that Righthavens complaint must be dismissed because standing did not exist at the inception of the lawsuit. (Order at 7-8.) The Court did not determine whether Righthaven currently has standing to sue in view of the Amendment (id. at 8 n.1) and dismissed Righthaven entirely from this action (id. at 16). Thus, the only pending claim that remains in this case is Democratic Undergrounds counterclaim for a declaratory judgment of non-infringement against Stephens Media. III. ARGUMENT Pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure, a non-party may apply to intervene in an action as of right. Fed. R. Civ. P. 24(a)(2). The Ninth Circuit applies a four-part test
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to determine if intervention of right is warranted. The applicant must demonstrate that (1) the intervention is timely; (2) the applicant has a significantly protectable interest relating to the property or transaction that is the subject of the action; (3) the disposition of the action may, as a practical matter, impair or impede the applicants ability to protect its interest; and (4) the existing parties may not adequately represent the applicants interest. See Prete v. Bradbury, 438 F.3d 949, 954 (9th Cir. 2006). In evaluating whether Rule 24(a)(2)s requirements are met, [courts] normally follow practical and equitable considerations and construe the Rule broadly in favor of proposed intervenors. Wilderness Soc. v. U.S. Forest Serv., 630 F.3d 1173, 1179 (9th Cir. 2011). A. Righthavens Application Is Timely.

The timeliness requirement for intervention is satisfied in light of the fact that Righthaven filed this Application within days after the Courts Order dismissing it from the case and in light of the recently executed Amendment. B. As the Sole Owner of the Copyrighted Work, Righthaven Has a Significant Protectable Interest in the Non-Infringement Declaratory Judgment Claim, and Its Ability to Protect Its Interest Will Necessarily be Impaired by Disposition of the Action.

Because Righthaven is the sole owner of the copyright at issue in Democratic Undergrounds non-infringement declaratory judgment claim, it has a significantly protectable interest which will necessarily be impaired by the Courts decision as to infringement. Thus, Righthaven satisfies the next two requirements for intervention, which entail having a significantly protectable interest which may be impaired by the disposition of the action. Prete, 438 F.3d at 954. These two requirements are interrelated given that a prospective intervenor has a sufficient interest for intervention purposes if it will suffer a practical impairment of its interests as a result of the pending litigation. California ex rel. Lockyer v. United States, 450 F.3d 436, 441 (9th Cir. 2006). Because the Amendment remedied the prior defects in Righthavens copyright ownership under the SAA, Righthaven has a protectable interest in this case. 1. Righthaven is the sole copyright owner and sole party with standing to sue.

Righthaven is the current owner of the copyrighted work and would have standing to bring an action for infringement. 17 U.S.C. 501(b) (The legal or beneficial owner of an exclusive right
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under a copyright is entitled to institute an action for any infringement of that particular right .). A copyright owner need not have been the author or original owner; indeed, copyright law recognizes the transferability of the rights protected by copyright. 17 U.S.C. 101 (A transfer of copyright ownership is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license.) It is also black-letter law that a non-exclusive licensee, such as Stephens Media, lacks standing to sue for infringement. See id.; Silvers v. Sony Pictures Entmt, Inc., 402 F.3d 881, 898 n. 7 (9th Cir. 2005). Pursuant to the Amendment, there can be no question that Righthaven obtained all right, title and interest to said Work such that Righthaven shall be recognized as the copyright owner of the Work, shall have the right to register said Work with the United States Copyright Office, and shall have the right to pursue past, present and future infringements of the copyright in and to the Work. (Doc. # 102, Ex. 3.) As the owner of the copyright, Righthaven has the ability to exploit its exclusive rights as it sees fit. Righthaven may reproduce the copyrighted work, create derivative works, assign the copyright, grant licenses, receive royalty payments and sue for copyright infringement. In short, Righthaven may utilize the entire bundle of exclusive rights that accompany copyright ownership. Nothing in the parties agreements prevents Righthaven from doing so. Righthaven granted a non-exclusive license back to Stephens Media to use the copyrighted work (Doc. # 102, Ex. 3 at 7.2), but that license does not divest Righthaven of its ownership rights. See Silvers, 402 F.3d at 898 n. 7. As the copyright owner, Righthaven has a significant protectable interest in this action. 2. Neither the purpose of the transaction nor Stephens Medias retention of certain rights invalidates the assignment.

Democratic Underground has previously argued that Righthavens assignment is merely a sham because of Righthavens business purpose and the existence of two provisions in the Amendment: a provision giving Stephens Media 30 days written notice prior to exploiting the Infringed Work and a separate provision giving Stephens Media the option to re-purchase the copyright. (Doc. # 102, Ex. 3.) Democratic Underground is wrong.

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1

Parties routinely enter into complex agreements transferring intellectual property rights. It is well-established that these transfers are not invalid simply because the original owner retains some rights. See, e.g., Vittoria N. Am., L.L.C. v. Euro-Asia Imports Inc., 278 F.3d 1076, 1082 (10th Cir. 2001) (holding that a thirty-day reassignment clause does not establish that [the trademark assignment] is a sham) (citing Premier Dental Prods. Co. v. Darby Dental Supply Co., 794 F.2d 850, 855-56 (3d Cir. 1986) ([L]imitations in an otherwise valid assignment agreement do not invalidate it)); Intl Armament Corp. v. Matra Manurhin Intl., Inc., 630 F. Supp. 741, 746 (E.D. Va. 1986) (Plaintiffs ownership of the marks is subject to conditions on its license agreement with Carl Walther, which make that distributorship revocable by Walther for violation of essential clauses. Such limitations on an assignment do not invalidate or make it a sham, however.) Moreover, the Ninth Circuit, more than 40 years ago, rejected the argument that an assignment made solely to facilitate a lawsuit is somehow improper. In Rawlings v. Natl Molasses Co., 394 F.2d 645, 648 (9th Cir. 1968),1 the Ninth Circuit held: Defendants make the further point that the arrangement between plaintiff and [assignor] was accomplished for the sole purpose of permitting plaintiff to bring this action without joining [assignor] as a party plaintiff or defendant. We assume that to be true. Defendants urge that the transaction was a sham. The documents were in fact executed and nothing in the record indicates that as between [assignor] and plaintiff they are either void or voidable. If not, then the purpose underlying their execution is of no concern to the defendants. Thus, the Ninth Circuit long ago rejected the argument that the purpose behind a business transaction or a business itself has any bearing on the issue of standing. Further, courts in numerous patent cases have rejected the argument that an otherwise valid transfer of intellectual property rights made to confer standing is somehow defective, or a sham, because the motivating business purpose is litigation. For example, in a highly analogous case in the patent context, the Federal Circuit held that patent assignments made for the sole purpose of bringing suit are nonetheless valid. SGS-Thomson Microelectronics, Inc. v. Intl Rectifier Corp., 1994 WL Patent cases, such as Rawlings, are highly instructive here. As the Ninth Circuit held in Silvers, courts should interpret the Copyright Act consistently with the requirement of the Patent Act because of the fundamental similarity between the two types of intellectual property rights. 402 F.3d at 888; see also Davis v. Blige, 505 F.3d 90, 104 (2nd Cir. 2007) (Although patent and copyright law function somewhat differently, courts considering one have historically looked to the other for guidance where precedent is lacking . . . . Licenses in patent and copyright function similarly . . . .).
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374529 (Fed. Cir. Jul. 14, 1994). There, the defendant urged the court to ignore the patent assignment between related corporate entities because, like here, the agreement was entered for the purpose of conferring standing to sue for infringement. The defendant also argued sham because the assignment required the plaintiff to assign the patents back at the conclusion of the litigation, a much greater restriction than that present in this case. Id. at *6. The court rejected defendants arguments, ruling that [t]his court and other courts have held that an assignment that explicitly provides for possible transfer back to the assignor is nevertheless effective to give the assignee standing. Id. The court further held that: the district court erred in granting summary judgment on the ground that the assignments of the patents were shams because the sole purpose of the assignment was to facilitate litigation. In so ruling, the trial court ignored the express language in the assignments and in effect created a new requirement, not found in any case law, that a patent assignment must have an independent business purpose. Id. Thus, the Federal Circuit explicitly ruled that the motive or purpose of an assignment is irrelevant to the assignees standing to enforce the exclusive rights conferred and that the assignors ability to re-acquire its rights does not deprive the assignee of its right to bring suit. Id. at *6-7. If the Court were to follow this reasoning, as Silvers holds it should, Righthaven is the sole current owner of the copyright, and not Stephens Media. In yet another case decided by the Federal Circuit, the court held that a grant of patent rights was sufficient to confer standing notwithstanding the fact that the grantor retained several rights relating to the patent. See Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870 (Fed. Cir. 1991). In Vaupel, the grantor retained 1) a veto right on sublicensing by Vaupel; 2) the right to obtain patents on the invention in other countries; 3) a reversionary right to the patent in the event of bankruptcy or termination of production by Vaupel; and 4) a right to receive infringement damages. Id. at 875. Despite the grantors retention of these rights, the court held that none of these reserved rights was so substantial as to reduce the transfer to a mere license or indicate an intent not to transfer all substantial rights. Id. Here, as in Vaupel, the rights retained by Stephens Media do not negate the exclusive rights conferred to Righthaven.

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3.

Resolution of Democratic Undergrounds non-infringement claim may impair Righthavens interest in seeking redress for copyright infringement.

As discussed above, Righthaven is the owner of the Work and has been properly conveyed the right to sue for an accrued infringement claim. Democratic Undergrounds pending declaratory judgment claim seeks a finding of non-infringement of the Work based on the doctrine of fair use. (Doc. # 13 at 24-25.) Entry of such relief would undeniably affect Righthavens ability to protect its interest in the Work. See Arakaki v. Cayetano, 324 F.3d 1078, 1084 (9th Cir. 2003) (The requirement of a significantly protectable interest is generally satisfied when the interest is protectable under some law, and there is a relationship between the legally protected interest and the claims at issue.); Amgen, Inc. v. F. Hoffman-Laroche Ltd., 456 F. Supp .2d 267, 280 n. 11 (D. Mass. 2006) (license in technology sufficient to support intervention as of right in patent infringement action). And if there is a finding of no fair use, Righthaven would not be able to obtain any remedy for Democratic Undergrounds infringement. Either result would be inequitable. Further, the interest element is primarily a practical guide to disposing of lawsuits by involving as many apparently concerned persons as is compatible with efficiency and due process. In re Estate of Ferdinand E. Marcos Human Rights Litig., 536 F.3d 980, 985 (9th Cir. 2008) (internal quotations omitted); California ex rel. Lockyer, 450 F.3d at 442 (Having found that appellants have a significant protectable interest, we have little difficulty concluding that the disposition of this case may, as a practical matter, affect it.); Arakaki, 324 F.3d at 1086 (This Court follows the guidance of Rule 24 advisory committee notes that state that if an absentee would be substantially affected in a practical sense by the determination made in an action, he should, as a general rule, be entitled to intervene.). Thus, Righthavens Application should be granted because allowing Righthaven to intervene makes sense as a practical matter. It would allow Righthaven to bring its infringement claim in this action and avoid any duplicative litigation. C. Stephens Media May Not Adequately Represent Righthavens Interest.

The final requirement to intervene as of right requires the applicant to demonstrate that the existing parties inadequately represent its interest. Prete, 438 F.3d at 954; Arakaki, 324 F.3d at 1083. Generally, the required showing of inadequate representation is minimal. Sagebrush
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Rebellion, Inc. v. Watt, 713 F.2d 525, 528 (9th Cir. 1983). But when an applicant for intervention and an existing party have the same ultimate objective, a presumption of adequacy of representation arises. Arakaki, 324 F.3d at 1086. The presumption of adequate representation may be overcome with a compelling showing. Id. In considering whether an applicant meets the minimal inadequacy of representation requirement under Rule 24(a)(2), courts consider several factors, including whether [a present party] will undoubtedly make all of the intervenors arguments, whether [a present party] is capable of and willing to make such arguments, and whether the intervenor offers a necessary element to the proceedings that would be neglected. Prete, 438 F.3d at 956 (quoting Sagebrush Rebellion, Inc., 713 F.2d at 528). Here, the existing parties would not adequately represent Righthavens interest. Democratic Underground is clearly adverse to Righthavens interest. See Sagebrush Rebellion, Inc., 713 F.2d at 527. Thus, the only party that could potentially represent Righthavens interest is Stephens Media through its defense of Democratic Undergrounds declaratory judgment claim. And although Stephens Media has an interest in seeing that the declaratory judgment claim is refuted, as discussed above, it cannot presently sue for copyright infringement because it holds a non-exclusive license to the Work. As a holder of a non-exclusive license, Stephens Media may seek dismissal of Democratic Undergrounds claim on standing grounds. Further, given Stephens Medias lack of standing to bring an infringement claim, it would not be able to bring a counterclaim against Democratic Underground for infringement, and thus would not be able to recover damages or any other remedy. Given this fact, Stephens Media may not advance the same arguments that Righthaven would bring if it is allowed to intervene.

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IV.

CONCLUSION For the foregoing reasons, Righthaven respectfully requests that the Court grant its request to

intervene as of right in this action pursuant to Rule 24(a)(2). Dated this 23rd day of June, 2011. SHAWN A. MANGANO, LTD. By: /s/ Shawn A. Mangano SHAWN A. MANGANO, ESQ. Nevada Bar No. 6730 shawn@manganolaw.com 9960 West Cheyenne Avenue, Suite 170 Las Vegas, Nevada 89129-7701 Tel: (702) 304-0432 Fax: (702) 922-3851 Attorney for Righthaven LLC

10

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Date Filed 07/05/11

Entry Number 57-14

Page 1 of 15

Exhibit M to Defendant Eisers Rule 12(b)(1) Motion

Righthaven Response to Amici

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SHAWN A. MANGANO, ESQ. Nevada Bar No. 6730 shawn@manganolaw.com SHAWN A. MANGANO, LTD. 9960 West Cheyenne Avenue, Suite 170 Las Vegas, Nevada 89129-7701 Tel: (702) 304-0432 Fax: (702) 922-3851 DALE M. CENDALI, ESQ. (admitted pro hac vice) dale.cendali@kirkland.com KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 Fax: (212) 446-4900 Attorneys for Plaintiff Righthaven LLC

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1

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA RIGHTHAVEN LLC, a Nevada limitedliability company, Plaintiff, vs. PAHRUMP LIFE, an entity of unknown origin and nature; MAREN SCACCIA, an individual; and MICHAEL SCACCIA, an individual, Defendants. Case No.: 2:10-cv-01575-JCM-PAL PLAINTIFF RIGHTHAVEN LLCS OMNIBUS RESPONSE TO THE AMICUS CURIAE BRIEFS OF DEMOCRATIC UNDERGROUND AND PROFESSOR JASON SCHULTZ

Pursuant to the Courts June 17, 2011 Order (Doc. # 41), Righthaven LLC (Righthaven) hereby responds to the Amicus Curiae briefs of Democratic Underground (Doc. # 32) and Professor Jason Schultz (Doc. # 36) (collectively, the amici), which relate to whether Righthaven has standing. The hearing for the Courts April 28, 2011 Order to Show Cause why Righthavens Complaint should not be dismissed for lack of standing (Doc. # 20) is currently set for June 30, 2011, at 10:30 a.m. (Doc. # 38.)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. D. C. I. II.

TABLE OF CONTENTS Page INTRODUCTION ................................................................................................................... 1 ARGUMENT ........................................................................................................................... 2 A. B. Righthaven Is the Sole Copyright Owner and Sole Party with Standing to Sue. .......................................................................................................................... 2 Neither the Purpose of the Transaction nor Stephens Medias Retention of Certain Rights Invalidates the Assignment. ............................................ 5 Righthavens Status as Assignee and its Standing to Sue for Infringement Are Aligned with Longstanding Principles of Copyright Law. ............................................................................................................................. 7 Dismissing the Case Now Would Needlessly Exalt Form over Substance. .................................................................................................................... 8

CONCLUSION ...................................................................................................................... 10

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TABLE OF AUTHORITIES Page Althin CD Med., Inc., v. W. Suburban Kidney Ctr., S.C., 874 F. Supp. 837 (N.D. Ill. 1994) ..................................................................................................... 4 Bushnell, Inc. v. Brunton Co., 659 F. Supp. 2d 1150 (D. Kan. 2009) ............................................................................................... 9 Davis v. Blige, 505 F.3d 90 (2nd Cir. 2007) .............................................................................................................. 6 Gray v. Preferred Bank, 2010 WL 3895188 (S.D. Cal. Sept. 30, 2010) .................................................................................. 9 Haddad Bros. Inc. v. Little Things Mean A Lot, Inc., 2000 WL 1099866 (S.D.N.Y. Aug. 4, 2000) .................................................................................... 9 Harris v. Amgen, Inc., 573 F.3d 728 (9th Cir. 2009) ........................................................................................................... 10 HT Litig. Trust v. Jess Rae Booth, 2008 WL 5227300 (9th Cir. Dec. 16, 2008) ................................................................................... 10 In re Movie Gallery, Inc., 2010 WL 6618894 (Bkrtcy. E.D. Va. Feb. 25, 2010) ....................................................................... 3 In re Peregrine Entm't, Ltd., 116 B.R. 194 (C.D. Cal. 1990) .......................................................................................................... 3 Intl Armament Corp. v. Matra Manurhin Intl., Inc., 630 F. Supp. 741 (E.D. Va. 1986) ..................................................................................................... 5 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) .......................................................................................................................... 1 Nafal v. Carter, 540 F. Supp. 2d 1128 (C.D. Cal. 2007) ......................................................................................... 4, 7 Northstar Fin. Advisors, Inc. v. Schwab Inv., 2011 WL 1312044 (N.D. Cal. Mar. 2, 2011) .................................................................................... 9 Premier Dental Prods. Co. v. Darby Dental Supply Co., 794 F.2d 850 (3d Cir. 1986) .............................................................................................................. 5 Rawlings v. Natl Molasses Co., 394 F.2d 645 (9th Cir. 1968) ............................................................................................................. 5 SGS-Thomson Microelectronics, Inc. v. Intl Rectifier Corp., 1994 WL 374529 (Fed. Cir. Jul. 14, 1994) ....................................................................................... 6 Silvers v. Sony Pictures Entmt, Inc., 402 F.3d 881 (9th Cir. 2005) ................................................................................................. 3, 4, 6, 7

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Univ. of Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328 (Fed. Cir. 2009) ....................................................................................................... 10 Valmet Paper Mach., Inc. v. Beloit Corp., 868 F. Supp. 1085 (W.D. Wis. 1994) ................................................................................................ 9 Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870 (Fed. Cir. 1991) ........................................................................................................... 7 Vittoria N. Am., L.L.C. v. Euro-Asia Imports Inc., 278 F.3d 1076 (10th Cir. 2001) ......................................................................................................... 5 STATUTES 17 U.S.C. 101 ..................................................................................................................................... 2 17 U.S.C. 501(b) ................................................................................................................................ 2 CONSTITUTIONAL PROVISIONS U.S. CONST. art. I, 8 ........................................................................................................................... 1

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I.

MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Over 200 years ago, the framers of the U.S. Constitution recognized that written works and other forms of artistic expression were deserving of legal protection. U.S. CONST. art. I, 8. These fundamental principles regarding protecting and fostering artistic creation did not disappear simply because artistic works have transitioned from tangible to digital. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 928-929 (2005) (citing the concern that digital distribution of copyrighted material threatens copyright holders as never before). The digital age, however, has allowed infringement to occur on a massive scale. As pointed out by amici, Righthaven was created precisely to stem this tide of unabashed copyright infringement on the Internet brought about by the technological ease of copying. While amici go to great lengths to portray Righthavens business purpose in a negative light, there is nothing wrong with a party focused on protecting intellectual propertyexcept, of course, from the perspective of an infringer. But Righthavens business purpose, whether laudable or not, has nothing to do with the issue the Court must decidewhether Righthaven has standing to maintain this lawsuit. Righthaven undoubtedly owns the copyright under the recently executed Amendment.1 Through that agreement, Righthaven obtained all right, title and interest in the infringed work, and licensed back only a nonexclusive right to exploit the work. No authority cited by amici suggests that such a structure is insufficient to convey standing to pursue pastor futureclaims of infringement simply because the assignee was created to enforce the intellectual property rights it acquired. Indeed, if that were the law, countless non-practicing entities would be deprived of standing to bring patent infringement As set forth in its previous memorandum, Righthaven believes that the original Assignment and SAA between Righthaven and Stephens Media were sufficient to give Righthaven standing to sue. But since this Court issued its Order to Show Cause, another court in this District has held that these agreements failed to effect a copyright assignment to Righthaven. Righthaven LLC v. Democratic Underground, LLC, Doc. # 116, Case. No. 2:10-cv-01356-RLH-GWF (D. Nev.) (Hunt, J.). While Righthaven respectfully disagrees with Judge Hunts decision, it will not burden this Court with those arguments and will instead address its arguments to the Amendment. Another court in this District has also recently held that Righthaven lacks standing, even under the Amendment. Righthaven LLC v. Hoehn, Doc. # 28, Case. No. 2:11-CV-00050-PMP-RJJ (D. Nev.) (Pro, J.). Righthaven disagrees with that decision and intends to appeal. Nonetheless, Righthaven and Stephens Media are considering further amending their agreements in order to prevent other courts from erroneously concluding that Righthaven lacks standing. If and when the parties do so, they will promptly provide the Court with all amended agreements.
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claims. Nor do the contingent rights retained by Stephens Media have any impact on Righthavens ability to bring this suit. It is well-established that limitations or restrictions do not invalidate an otherwise valid assignment. Indeed, Courts of Appeals throughout the country have rejected the very argument that amici make here, i.e., that such limitations suggest a sham. Finally, amicis arguments that the Amendment should not be considered because standing must exist at the time the lawsuit is filed threaten to elevate form over substance at the expense of judicial resources. As explained in detail below, in situations analogous to this one, numerous courts have allowed the plaintiff to continue with the lawsuit after an original defect in standing has been remedied. Here, as in those cases, allowing Righthaven to pursue its claim without having to re-file its complaint promotes efficiency and judicial economy; the result urged by amici does not.2 Because Righthaven now unquestionably owns the copyright at issue, and because any original defect in standing has been cured by the Amendment, Righthaven respectfully requests that the Court not dismiss its complaint.3 II. ARGUMENT A. Righthaven Is the Sole Copyright Owner and Sole Party with Standing to Sue.

It is black-letter law that a copyright owner has standing to bring a claim for infringement. 17 U.S.C. 501(b) (The legal or beneficial owner of an exclusive right under a copyright is entitled to institute an action for any infringement of that particular right .). A copyright owner need not have been the author or original owner; indeed, copyright law recognizes the transferability of the rights protected by copyright. 17 U.S.C. 101 (A transfer of copyright ownership is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in
2

For example, as a result of Judge Hunts decision to dismiss Righthavens complaint despite the fact that it presently has standing, Righthaven must now either intervene in the still-pending action or re-file its complaint in an entirely new action, needlessly wasting the time and resources of both the parties and the court. 3 Righthaven will also move this Court for leave to file an amended complaint in order to remedy any procedural standing defect arising under the original complaint. Righthaven intends to file its motion for leave to amend in the next few days.
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time or place of effect, but not including a nonexclusive license.) It is also black-letter law that a non-exclusive licensee lacks standing to sue for infringement. See id.; Silvers v. Sony Pictures Entmt, Inc., 402 F.3d 881, 898 n. 7 (9th Cir. 2005). Pursuant to the Amendment, there can be no question that Righthaven obtained all right, title and interest to said Work such that Righthaven shall be recognized as the copyright owner of the Work, shall have the right to register said Work with the United States Copyright Office, and shall have the right to pursue past, present and future infringements of the copyright in and to the Work. (Doc. # 26, Ex. 3.) As the owner of the copyright,4 Righthaven has the ability to exploit its exclusive rights as it sees fit. Righthaven may reproduce the copyrighted work, create derivative works, assign the copyright, grant licenses, receive royalty payments and sue for copyright infringement. In short, Righthaven may utilize the entire bundle of exclusive rights that accompany copyright ownership. Nothing in the Assignment, Amendment or Operating Agreement (Doc. # 32-2) prevents Righthaven from doing so. Righthaven granted a non-exclusive license back to Stephens Media to use the copyrighted work (Doc. #26, Ex. 3 at 7.2), but that license does not divest Righthaven of its rights. See Silvers, 402 F.3d at 898 n. 7. Nonetheless, amici argue that this valid assignment somehow failed to convey the rights necessary to bring suit for past infringement. The cases on which they rely, however, are factually distinguishable in all key respects. First, in Silvers, the copyright owner executed an Assignment of Claims and Causes of Action in favor of the plaintiff, retaining ownership of the underlying copyright and assigning to the plaintiff only all right, title and interest in and to any claims and causes of action. 402 F.3d at 883 (emphasis added). The copyright owner in Silvers never purported to assign the underlying work itself, or any rights protected by copyright. Thus in Silvers, the only right, title and interest assigned was the right, title and interest in litigation. That is not the case here. To credit amicis argument, the Court must find that ownership of the infringed work was not actually transferred. No doubt, a creditor of Righthaven would seek to lien its copyrights in the event of a default, and no doubt, if Righthaven were ever to file bankruptcy, a bankruptcy court would recognize those copyrights as assets of the debtor. See, e.g., In re Movie Gallery, Inc., 2010 WL 6618894, at *7 (Bkrtcy. E.D. Va. Feb. 25, 2010); In re Peregrine Entm't, Ltd., 116 B.R. 194, 203 (C.D. Cal. 1990).
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The second case relied on by amici, Nafal v. Carter, 540 F. Supp. 2d 1128 (C.D. Cal. 2007), is similarly inapposite. As a preliminary matter, Nafal was decided under the more narrow 1909 Copyright Act (id. at 1138), which, in contrast to the 1976 Copyright Act, did not allow the bundle of rights protected by copyright to be separable. Silvers, 402 F.3d 881 at 896. Moreover, the plaintiff never alleged that he owned the copyright at issue. Instead he was assigned a purported one-half interest to an exclusive licensees rights but lacked any ability to exercise any rights under the copyright. 540 F. Supp. 2d at 1143. Moreover, in Nafal, the plaintiff was not a party to the original exclusive license agreement with the copyright owner (id. at 1141) and the plaintiff was not actually a co-exclusive licensee because he lacked any of the rights held by the other co-licensee (id. at 1142). Here, by contrast, the original copyright owner, Stephens Media, assigned its entire copyright directly to Righthaven, and Righthaven granted back to Stephens Media only the right to exploit the copyright on a non-exclusive basis. Under these circumstances, the only party to the transaction with any exclusive rights and the only party with standing to sue for copyright infringement is Righthaven. Finally, Democratic Underground also cites Althin CD Med., Inc., v. W. Suburban Kidney Ctr., S.C., another case where standing was denied to a plaintiff that claimed to have standing not as the copyright assignee, but as an exclusive licensee under a chain of prior agreements. 874 F. Supp. 837, 840 (N.D. Ill. 1994). Again, the facts in that case are markedly different from those at issue here. There, the owner-licensor retained the sole right to determine whether or not to bring an infringement action and gave virtually no right to transfer or assign the license agreement. Id. at 843. Thus, the licensee, who then granted a sublicense to the plaintiff, could not have granted exclusive rights. Id. Amicis argument, while devoid of authority, is undeniably clever. As amici well know, the assignment and non-exclusive license back structure at issue here effectively deprives the assignor, Stephens Media, of standing to bring a claim for infringement. If the Court were to endorse amicis argument, it would effectively find that no party has standing to bring suit against the infringer here. While certain amicisuch as accused infringer Democratic Undergroundwould no doubt welcome such a ruling, the result would not only be unprecedented, it would be directly at odds with
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the Constitutionally-based system of granting copyright owners exclusive rights to their works in order to incentivize creativity. B. Neither the Purpose of the Transaction nor Stephens Medias Retention of Certain Rights Invalidates the Assignment.

Democratic Underground argues at length that Righthavens assignment is merely a sham because of Righthavens business purpose and the existence of two provisions in the Amendment: a 6 provision giving Stephens Media 30 days written notice prior to exploiting the Infringed Work (Doc. 7 #26, Ex. 3 at 7.2) and a separate provision giving Stephens Media the option to re-purchase the 8 copyright (Doc. # 32-1 at 7.). Democratic Underground is wrong. 9 Parties routinely enter into complex agreements transferring intellectual property rights. It is 10 well-established that these transfers are not invalid simply because the original owner retains some 11 rights. See, e.g., Vittoria N. Am., L.L.C. v. Euro-Asia Imports Inc., 278 F.3d 1076, 1082 (10th Cir. 12 2001) (holding that a thirty-day reassignment clause does not establish that [the trademark 13 assignment] is a sham) (citing Premier Dental Prods. Co. v. Darby Dental Supply Co., 794 F.2d 14 850, 855-56 (3d Cir. 1986) ([L]imitations in an otherwise valid assignment do not invalidate it)); 15 Intl Armament Corp. v. Matra Manurhin Intl., Inc., 630 F. Supp. 741, 746 (E.D. Va. 1986) 16 (Plaintiffs ownership of the marks is subject to conditions on its license agreement with Carl 17 Walther, which make that distributorship revocable by Walther for violation of essential clauses. 18 Such limitations on an assignment do not invalidate or make it a sham, however.) 19 Moreover, the Ninth Circuit, more than 40 years ago, rejected the argument that an 20 assignment made solely to facilitate a lawsuit is somehow improper. In Rawlings v. Natl Molasses 21 Co., 394 F.2d 645, 648 (9th Cir. 1968), the Ninth Circuit held: 22 23 24 25 26 27 or a business itself has any bearing on the issue of standing. 28
9

Defendants make the further point that the arrangement between plaintiff and [assignor] was accomplished for the sole purpose of permitting plaintiff to bring this action without joining [assignor] as a party plaintiff or defendant. We assume that to be true. Defendants urge that the transaction was a sham. The documents were in fact executed and nothing in the record indicates that as between [assignor] and plaintiff they are either void or voidable. If not, then the purpose underlying their execution is of no concern to the defendants. Thus, the Ninth Circuit long ago rejected the argument that the purpose behind a business transaction

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Finally, the very case on which amici most heavily rely advises the Court to reject amicis argument. As the Ninth Circuit held in Silvers, courts should interpret the Copyright Act consistently with the requirement of the Patent Act because of the fundamental similarity between the two types of intellectual property rights. 402 F.3d at 888; see also Davis v. Blige, 505 F.3d 90, 104 (2nd Cir. 2007) (Although patent and copyright law function somewhat differently, courts considering one have historically looked to the other for guidance where precedent is lacking . . . . Licenses in patent and copyright function similarly . . . .). Amici pay no heed to that aspect of Silvers and ignore that courts in numerous patent cases have rejected the argument that an otherwise valid transfer of intellectual property rights made to confer standing is somehow defective, or a sham, because the motivating business purpose is litigation. For example, in a highly analogous case in the patent context, the Federal Circuit held that patent assignments made for the sole purpose of bringing suit are nonetheless valid. SGSThomson Microelectronics, Inc. v. Intl Rectifier Corp., 1994 WL 374529 (Fed. Cir. Jul. 14, 1994). There, the defendant urged the court to ignore the patent assignment between related corporate entities because, like here, the agreement was entered for the purpose of conferring standing to sue for infringement. The defendant also argued sham because the assignment required the plaintiff to assign the patents back at the conclusion of the litigation, a much greater restriction than that present in this case. Id. at *6. The court rejected defendants arguments, ruling that [t]his court and other courts have held that an assignment that explicitly provides for possible transfer back to the assignor is nevertheless effective to give the assignee standing. Id. The court further held that: the district court erred in granting summary judgment on the ground that the assignments of the patents were shams because the sole purpose of the assignment was to facilitate litigation. In so ruling, the trial court ignored the express language in the assignments and in effect created a new requirement, not found in any case law, that a patent assignment must have an independent business purpose. Id. Thus, in the very context that Silvers advises courts to consider, the Federal Circuit explicitly ruled that the motive or purpose of an assignment is irrelevant to the assignees standing to enforce the exclusive rights conferred and that the assignors ability to re-acquire its rights does not deprive the assignee of its right to bring suit. Id. at *6-7. If the Court were to follow this reasoning, as Silvers holds it should, amicis arguments must be rejected.
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In yet another case decided by the Federal Circuit, the court held that a grant of patent rights was sufficient to confer standing notwithstanding the fact that the grantor retained several rights relating to the patent. See Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870 (Fed. Cir. 1991). In Vaupel, the grantor retained 1) a veto right on sublicensing by Vaupel; 2) the right to obtain patents on the invention in other countries; 3) a reversionary right to the patent in the event of bankruptcy or termination of production by Vaupel; and 4) a right to receive infringement damages. Id. at 875. Despite the grantors retention of these rights, the court held that none of these reserved rights was so substantial as to reduce the transfer to a mere license or indicate an intent not to transfer all substantial rights. Id. Here, as in Vaupel, the rights retained by Stephens Media do not negate the exclusive rights conferred to Righthaven; thus, Righthaven is the owner of the copyright and has standing to sue for infringement. C. Righthavens Status as Assignee and its Standing to Sue for Infringement Are Aligned with Longstanding Principles of Copyright Law.

It is well-established that in copyright law, as in patent and trademark law, parties other than the original owner-creator may acquire the intellectual property rights and sue for infringement. See, 15 e.g., Nafal, 540 F. Supp. 2d at 1132 (rights to copyrighted work, which was created in 1960, had 16 passed from original owner to heirs by death). Nevertheless, amicus Jason Schultz claims, without 17 citation to any authority, that Congress recognized that if the right to sue could be severed from 18 copyright ownership, the link between enforcement and creativity would be severed, thus negating 19 the benefits copyright is meant to ensure. In other words, Mr. Schultzs argument presupposes that 20 the right to sue inalienably lies with the creator of the work. That presupposition is demonstrably 21 wrong: if the ability to enforce a copyright were limited only to the creator of the work, copyrights 22 would not be assignable at all, let alone assignable as separate pieces of a bundle of exclusive rights, 23 as contemplated by the 1976 Act. See Silvers, 402 F.3d at 886. By revising the Copyright Act to 24 allow for the bundle of exclusive rights to be held by separate parties, Congress recognized the right 25 to separate copyright ownership and its inherent right of enforcement from the creative aspect of the 26 work. Indeed, it is commonplace in the entertainment industry for the original creator of the work to 27 be far-removed from the eventual holder of the copyright. To say that only the original creator has 28
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the ability to sue for enforcement of copyrights would dramatically change the way corporate intellectual property transactions occur on a daily basis. Second, and contrary to Mr. Schultzs contention that Righthaven has no connection to the creative or publishing process, Righthaven was created in order to assist media organizations in pursuing the infringement of copyrighted works. Without the cooperation of these organizations, Righthaven would have no assigned copyrights to enforce. The originators of news stories invest considerable sums paying reporters to investigate and write the news stories, in addition to paying editors, copywriters and the others necessary to publishing a newspaper, only to have their propriety content illegally copied and posted elsewhere. As a result of this copyright infringement, these news organizations are losing revenue, advertisers and readers. Yet, Mr. Schultz does not explain because he cannothow this infringement or its consequences foster creation or further the purposes of the Copyright Act, as opposed to free-riding copiers. Nor does he address the serious adverse effects of online copyright infringement to media organizations whose existence depends upon advertisements and paid subscriptions to their websites. The inconvenient truth behind amicis posturing is that if Internet infringement of content continues to go unchecked, there will be less financial incentive to create content, resulting in less content available to the public. While Mr. Schultz, in his ivory tower of Berkeley, sees fit to cast judgment on Righthavens business model, the fact remains that, in the real world, it is difficult for people to stay in business without a return on their investment. There are legitimate, and legal, ways of acquiring content that provide a fair return to the copyright owner. Unfortunately, we have not yet reached a time where those methods are utilized for most of the content posted online. As the assignee of a valid copyright, Righthaven has the power to exclude others from unauthorized copyinga power wholly consistent with the purposes of the Copyright Act: to foster creativity. D. Dismissing the Case Now Would Needlessly Exalt Form over Substance.

Finally, amicis position that the Court should disregard Righthavens current standing as copyright owner and dismiss the case if it concludes that standing did not exist under the original agreements needlessly expends the parties and the courts resources. Under similar circumstances,
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another district court in this Circuit recognized that requiring a dismissal of the original complaint after a standing defect was cured elevates form over substance. Northstar Fin. Advisors, Inc. v. Schwab Inv., 2011 WL 1312044, at *3-4 (N.D. Cal. Mar. 2, 2011). In Northstar, the Court effectively allowed the plaintiff to file an amended complaint based on a post-filing assignment in order to cure the original defect in standing. Id. (noting that the cases defendants relied upon simply recited the rule that standing is considered at the outset of the litigation but failed to address how a court should treat a post-filing assignment of claim). No doubt there are courts, including some in this District, that will simply dismiss a complaint if standing did not exist at the inception of the lawsuit. Such cases were cited by amici. Nevertheless, there is a clear split of authority on this issue, and many courts have found good reason to come to the opposite conclusion and have allowed a plaintiff to proceed with the lawsuit once a standing defect had been cured. See, e.g., Gray v. Preferred Bank, 2010 WL 3895188, at *3 (S.D. Cal. Sept. 30, 2010) (Because the defect in standing has been cured, the Court declines to dismiss the [Second Amended Complaint] on this basis and proceeds to discuss Plaintiffs claims for relief.); Bushnell, Inc. v. Brunton Co., 659 F. Supp. 2d 1150, 1160-1161 (D. Kan. 2009) (The question remains whether the proposed amended complaint which alleges standing as of now would be sufficient. The Court agrees with Randolph-Rand that forcing plaintiff to file a new suit would be a waste of resources.); Haddad Bros. Inc. v. Little Things Mean A Lot, Inc., 2000 WL 1099866, at *9 (S.D.N.Y. Aug. 4, 2000) (Initial defects in standing are remediable through an amended complaint. Where an amendment cures a standing defect, nothing in the nature of that amendment would prohibit it from relating back to the initial complaint.); Valmet Paper Mach., Inc. v. Beloit Corp., 868 F. Supp. 1085, 1089-1090 (W.D. Wis. 1994) ([A] decision that the written assignment did not cure the standing defect would simply lead plaintiffs to amend the complaint to add the assignor and then dismiss it as an unnecessary party, or simply to reinstate the lawsuit. Either alternative would result in needless delay and needless expenditure of the parties and the courts resources. Thus, holding that the written assignment executed only thirteen days after suit was commenced did not cure plaintiffs standing defect would only exalt form over substance.). Given Righthavens current standing to sue under the Amendment, dismissal of the lawsuit at
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this juncture is unwarranted.5 The parties have already been litigating this action for over one year, and the issue of standing under the Amendment should be resolved on the merits now, without further expenditure of judicial resources. III. CONCLUSION For the foregoing reasons, Righthaven respectfully requests the Court find that Righthaven has standing to maintain this infringement action. Dated this 22nd day of June, 2011 SHAWN A. MANGANO, LTD. By: /s/ Shawn A. Mangano SHAWN A. MANGANO, ESQ. Nevada Bar No. 6730 shawn@manganolaw.com 9960 West Cheyenne Avenue, Suite 170 Las Vegas, Nevada 89129-7701 Tel: (702) 304-0432 Fax: (702) 922-3851 KIRKLAND & ELLIS LLP DALE M. CENDALI, ESQ. (admitted pro hac vice) dale.cendali@kirkland.com 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 Fax: (212) 446-4900 Attorneys for Righthaven LLC

If the Court nonetheless concludes that the lawsuit must be dismissed for lack of standing, such dismissal should be without prejudice. Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009) (Dismissal without leave to amend is improper unless it is clear that the complaint could not be saved by any amendment.); Univ. of Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328, 13321334 (Fed. Cir. 2009) (A dismissal for lack of standing is jurisdictional and is not an adjudication on the merits . . . . The Third Circuit and this court, as well as other regional circuit courts, have repeatedly emphasized that a dismissal for lack of standing should generally be without prejudice, particularly when the defect is curable); HT Litig. Trust v. Jess Rae Booth, 2008 WL 5227300, at *1 (9th Cir. Dec. 16, 2008) (Dismissal with prejudice and without leave to amend is not appropriate unless it is clear, upon de novo review, that the complaint could not be saved by amendment.).
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Exhibit N to Defendant Eisers Rule 12(b)(1) Motion

Arkansas DemocratGazette Story

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Arkansas Democrat-Gazette - August 26, 2010 Firm Holds Websites to the Law
By Toby Manthey
A Las Vegas company, Righthaven LLC, is using a new approach to help news organizations protect their news content - filing lawsuits against website owners who post copyrighted articles without permission. Media companies since the advent of the Internet have worried about others distributing and profiting from content without authorization, whether it be people downloading music or films, or reading entire articles on message boards. Such practices deprive creators and businesses of revenue and recognition by discouraging sales of authorized products, and by sapping advertising revenue by diverting Internet traffic from legitimate websites, such firms say. "There is an ongoing discussion in the United States about how to protect intellectual property that's produced not just by newspapers but by all content producers because the Web has changed the dynamic," said Mark Hinueber, vice president and general counsel for Las Vegasbased Stephens Media, a Righthaven client that owns several Arkansas publications, as well as the Las Vegas Review-Journal. Steve Gibson, Righthaven's chief executive, wouldn't describe how Righthaven's business model works, although he said the company has software, "systems" and other technology that help it identify copyright infringement. Hinueber said he assigns to Righthaven the copyright of a story that has been infringed upon. With ownership of the story, Righthaven files suit. Righthaven typically makes money from settlements, said Gibson, who added that none of the cases have gone to a jury trial so far. Righthaven often has demanded $75,000 of website owners who infringe upon a copyright and for the owner to transfer control of the site to Righthaven, lawsuits show. That's the approach it used in a July 20 suit against thearmedcitizen.com, which features stories of people who have been saved by using guns to defend themselves. Other media also have tried to protect their copyrights on the Internet by suing people who misappropriate content, including people who illegally download music files. The Recording Industry Association of America has sued more than 35,000 people over such violations, the Wall Street Journal has reported. The association has discontinued the lawsuit effort, which it says on its website was to teach fans about the law, the consequences of breaking it and about

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what sites they can legally download music from. The association cites an estimate by the Institute for Policy Innovation, a conservative think tank in Lewisville, Texas, saying music piracy worldwide cost $12.5 billion in economic losses annually and more than 71,000 jobs in the United States. Gibson said the public is beginning to better understand that it can't use other people's content on the Internet without permission. "Even if you give an attribution for it or a link to it, it doesn't mean it's no longer a copyright infringement," Gibson said. Hinueber said "our folks are out there every day with blood, sweat and tears covering stories, and you don't have the right to take somebody else's intellectual property that they worked hard on." He later added: "Some guy in his bathrobe in his basement doesn't get the right to cut and paste our stories." WEHCO Media, which owns the Arkansas Democrat-Gazette, said it also intends to work with Righthaven. Righthaven has filed about 100 lawsuits in federal court in Nevada since March, when it began initiating the suits. Defendants include people and companies outside that state. In a July 13 request for leave to conduct discovery in one of its cases, Righthaven said "the public display" of copyrighted stories has the detrimental effect of diverting valuable Internet traffic away from "the original source of publication." Hinueber said, "We welcome people to take a look at it on our websites, but not to take it and sell Google ads around it." Righthaven touts its service as a way for newspapers to make money and protect their property. In one lawsuit, it cited a Pew Internet and American Life Project report that said three-quarters of news consumers get news "thanks to e-mails or posts on social media sites." Launce Rake, spokesman for the Progressive Leadership Alliance of Nevada, a liberal nonprofit, said his group and others weren't warned before they were sued by Righthaven. "We ... would have appreciated the opportunity to correct any issues that might exist, absent a legal proceeding," Rake said. Gibson has said that sending warning notices to website owners is expensive and not effective. The alliance ultimately reached a confidential settlement with Righthaven, Rake said. A rival of the Las Vegas Review-Journal, the Las Vegas Sun, whose website contains more than 30 stories about Righthaven, wrote that Righthaven has been "widely pounded" in news stories and Internet forums "for suing mom-and-pop-type bloggers, nonprofit groups and special-interest websites." Newspapers in the past have typically requested that stories be removed from a site and replaced with links to a newspaper's site, the Sun noted. The news staff of the Sun competes with the staff of Stephens' Las Vegas Review-Journal even though its print edition is distributed as a package with the Review-Journal as part of a jointoperating agreement, a business structure that allows competing newspapers in a town to share advertising and other business functions. The Sun's print edition is eight pages on weekdays, and

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more stories are posted online than in the print version, said Tom Gorman, the newspaper's senior editor for print. Sherman Frederick, the president of Stephens Media and publisher of the Review-Journal, in a column that ran in the July edition of Editor & Publisher, a trade journal for the newspaper industry, wrote that "it is our primary hope that Righthaven will stop people from stealing our stuff. It is our secondary hope, if Righthaven shows continued success, that it will find other clients looking for a solution to the theft of copyrighted material." Paul Smith, president of WEHCO Newspapers, Inc., said, "It's a pretty serious matter when someone takes your copy, information you've spent a lot of money to produce." He added: "I think you'll find many newspapers that [will] use [Righthaven] and other firms like this to try to stop people from pirating their information." Frederick said the Stephens "grubstaked" - advanced money to - and contracted with Righthaven. Hinueber said the investment in Righthaven was made by a company affiliated with the Stephens family. If Righthaven discovers someone has violated WEHCO's copyright, Smith said, "it would be [WEHCO's] decision whether or not to move forward with it," such as if the newspaper didn't want to pursue a case against a charitable organization. "In most cases, if someone has taken our content and put it up on their website or used it in a print publication without our permission, at this point I would say that there's a very good chance that we would tell [ Righthaven] to go forward with whatever legal action they needed to take to stop this," Smith said. Hinueber said the approach of Righthaven and Stephens is evolving. "We're starting to look at the individual sites a little more closely than when we first started," Hinueber said. "I can tell Righthaven not to sue somebody." So far, he said, he hasn't done that much, "but I have to be cognizant of who the defendant is - if it's a church or a school someplace or some kid and his high school paper. We're getting more sensitive all the time to these issues." Gibson added that he'd like to think there's "a humane side to Righthaven." "We have reached some settlements that are significantly less in dollar amount than some others," Gibson said. "And we take those things into consideration as to how sophisticated they were and how culpable they were." Majorwager.com, Inc., of Canada, a sports-betting site sued by Righthaven for using Stephens Media stories, said in court documents that Righthaven's suit "is arguably frivolous and nothing more than a thinly disguised shakedown." Righthaven wants to "extract a settlement" and knows the expense of defending against the suit will "far outweigh the value of this case," it argued. Majorwager argued in court documents that the stories were posted by a third party. Wired.com, a technology news website, described Righthaven as "borrowing a page from patent trolls." A patent troll is a company or person who buys patents for the purpose of suing others who may be infringing upon it, rather than for using the patent to create a product. Smith said WEHCO would share in whatever settlement Righthaven obtains.

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Smith said he knew of no previous instances in which the company had sued someone for posting a story online. Many violations in the past went unnoticed by the company, he said. "That's part of the appeal of this," Smith said. "They've got ways to track this." Gibson said Righthaven is "as much a technology company as anything," because it offers a solution for "systematically identifying" possible copyright infringement. He declined to say how the company does that, other than to say it is "proprietary technology" and that there are systems and software that do so. Hinueber said Stephens provides Righthaven with a feed of locally produced copy, and Righthaven scours the Web for infringements. So far, Gibson said, the company is profitable, but he wouldn't say what the size of any of its settlements have been. "We're not engaging in settlements in a manner that will mean that we can't continue to do what we're doing," Gibson said. Copyright law allows for the "fair use" of some copyrighted content, but that's limited to purposes such as news reporting, teaching and criticism. Factors used to judge whether the use is "fair" include the amount of content used and whether the use is for nonprofit or commercial purposes. Hinueber said, "We have a little statement that says: `We love links.' If you want to post a headline and the first paragraph and a link to our story, we're happy with that. You'll never hear from us. And if you want to take a paragraph or two from one of our stories and want to comment on it and criticize it, fine. ... That's fair use." Hinueber acknowledged that by suing people who like and post their stories, newspapers could anger their fans. But often, he said, "these websites are not in your marketplace. They're not really your fans. They're coming in on a one-time or two-time basis and taking the stories to relate to whatever it is they're selling Google ads around."

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Exhibit O to Defendant Eisers Rule 12(b)(1) Motion

New York Times Story

Buying Copyrights, Then Patrolling the Web for Infringement - NYTimes.com 2:10-cv-03075-RMG -JDA Date Filed 07/05/11 Entry Number 57-16

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May 2, 2011

Enforcing Copyrights Online, for a Profit

By DAN FROSCH

DENVER When Brian Hill, a 20-year-old blogger from North Carolina, posted on his Web site last December a photograph of an airport security officer conducting a pat-down, a legal battle was the last thing he imagined. A month later, Mr. Hill received an e-mail from a reporter for The Las Vegas Sun who was looking into a Nevada company that files copyright lawsuits for newspapers. The e-mail informed Mr. Hill that he was one of those that the company, Righthaven, was suing. Though the airport photo had gone viral before Mr. Hill plucked it off the Web, it belonged to The Denver Post, where it first appeared on Nov. 18. Mr. Hill took down the photo. He was too late. A summons was delivered to his house. The lawsuit sought statutory damages. It did not name a figure, but accused Mr. Hill of willful infringement, and under federal copyright law up to $150,000 can be awarded in such cases. I was shocked, Mr. Hill said. I thought maybe it was a joke or something to scare me. I didnt know the picture was copyrighted. Over the last year, as newspapers continue to grapple with how to protect their online content, Righthaven has filed more than 200 similar federal lawsuits in Colorado and Nevada over material posted without permission from The Denver Post or The Las Vegas Review-Journal. The company has business relationships with both newspapers. Like much of the industry, the papers see the appropriation of their work without permission as akin to theft and harmful to their business, and are frustrated by unsuccessful efforts to stem the common practice, whether its by a one-man operation like Mr. Hills, or an established one like Matt Drudges.

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Sara Glines, a vice president for the MediaNews Group, which owns The Denver Post, wrote in an e-mail that the pat-down photo had been used on more than 300 Web sites with no credit to The Post or the photographer. We have invested heavily in creating quality content in our markets, Ms. Glines wrote. To allow others who have not shared in that investment to reap the benefit ultimately hurts our ability to continue to fund that investment at the same level. Mark Hinueber, general counsel for Stephens Media, owner of The Review-Journal, echoed Ms. Gliness concerns, saying that cutting and pasting articles steals the potential audience for our editorial material and traffic to our Web sites. Some critics, however, contend that Righthavens tactics are draconian, and that the company hopes to extract swift settlements before it is clear that there is a violation of federal copyright law. Typically, the suits have been filed without warning. Righthaven rarely sends out notices telling Web sites to take down material that does not belong to them before seeking damages and demanding forfeiture of the Web domain name. Defendants in these cases run the gamut. They have included the white supremacist David Duke, the Democratic Party of Nevada and Mr. Drudge. But little known Web sites, nonprofit groups and so-called mom-and-pop bloggers people who blog as a hobby are not exempt from Righthavens legal actions. According to some Internet legal experts who have been watching the cases with growing interest, the way it works is simple: Righthaven finds newspaper material that has been republished on the Web usually an article, excerpts or a photograph and obtains the copyrights. Then, the company sues. Whether the defendant credits the original author or removes the material after being sued matters little. None of the cases have gone to trial yet, and many have been settled out of court. In two instances, judges have ruled against Righthaven in pretrial motions. According to The Las Vegas Sun, which has tracked the cases, the only two publicly disclosed settlements were for $2,185 and $5,000. In describing his companys approach, Steve Gibson, Righthavens chief executive, said that there has been voluminous, almost incalculable infringement since the advent of the Internet and that years of warning people to take down copyrighted content had not worked. Newspapers, he said, needed a new way to address the problem of people appropriating their material without permission.

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Eric Goldman, director of the high-tech law institute at the Santa Clara University School of Law, said reposting published material online could qualify as fair use if it didnt diminish the market value of the original. Other critics of the suits contend that reposting material for the purposes of discussion does not constitute infringement. Many of the defendants are ill-informed about copyright law, Mr. Goldman said. Theyre not trying to compete with a newspaper. They just dont know the rules. Mr. Goldman informally advised a company that was sued by Righthaven and settled out of court. In an amicus brief filed on behalf of the Media Bloggers Association regarding a Righthaven suit in Nevada, Marc J. Randazza, a lawyer specializing in First Amendment issues, accused the company of acquiring copyrights for the sole purpose of going after defendants who could not afford legal help. Nobody can seriously believe that Righthaven, which publishes nothing anywhere, has acquired the full ownership of the articles it sues upon, wrote Mr. Randazza, whose legal group recently filed motions to dismiss two other Righthaven cases, accusing the company of making fraudulent copyright claims. Mr. Gibson denies that unwitting bloggers are a particular target and points to lawsuits like the one against Mr. Drudge. Righthaven accused Mr. Drudge of posting the airport pat-down photo on his Drudge Report Web site without permission. The suit was settled out of court, Mr. Gibson said.The harm of viewer diversion has been achieved whether it is being shown on Momandpop.com or Chicagotribune.com, he said. If the accusation were true that we were just a purely greedy operation not advancing the interests of copyright law, then we wouldnt be addressing viewer diversion. Ms. Glines said that MediaNews reviewed every violation and only approved actions against sites that carried advertising and were not charities. Rachel Bjorklund wishes she had been sent a simple e-mail rather than slapped with a lawsuit. A stay-at-home mother in Oregon, Ms. Bjorklund was sued by Righthaven in March after she posted the airport pat-down photo on her blog, thoughtsfromaconservativemom.com. My reaction was, Why didnt you just contact me and ask me to take it down? That would have been no problem, said Ms. Bjorklund, who plans to challenge the suit.

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Mr. Hill, who suffers from autism and diabetes and lives on disability checks with his mother, said at that at one point Righthaven had offered to settle for $6,000, but he refused. A Colorado lawyer, David Kerr, has been defending him pro bono. A federal judge presiding over the case criticized Righthaven last month for using the courts to settle with defendants scared of the potential cost of litigation. Shortly after, Righthaven moved to voluntarily drop the suit, saying it had not been aware of Mr. Hills health problems. But Righthaven also stated in court filings that a dismissal did not exonerate others it was suing and warned Mr. Hill against continuing to use copyrighted material. Mr. Hill recently decided to revive his Web site, uswgo.com, where he posts links to various political articles and his own musings, which he had taken down after being sued. On the site, there is a notice explaining Mr. Hills belief that material posted there, even without permission, constitutes fair use. This time, though, Mr. Hill said hes steering clear of any image or story that could cause him trouble with Righthaven.

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Exhibit P to Defendant Eisers Rule 12(b)(1) Motion

Wired.com Story

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Newspaper Chains New Business Plan: Copyright Suits

By David Kravets July 22, 2010 | 3:29 pm | Categories: The Courts, intellectual property

Steve Gibson has a plan to save the media worlds financial crisis and its not the iPad. Borrowing a page from patent trolls, the CEO of fledgling Las Vegas-based Righthaven has begun buying out the copyrights to newspaper content for the sole purpose of suing blogs and websites that re-post those articles without permission. And he says hes making money. We believe its the best solution out there, Gibson says. Media companies assets are very much their copyrights. These companies need to understand and appreciate that those assets have value more than merely the present advertising revenues.

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Righthaven CEO Steve Gibson is embarking on a copyright trolling litigation campaign Gibsons vision is to monetize news content on the backend, by scouring the internet for infringing copies of his clients articles, then suing and relying on the harsh penalties in the Copyright Act up to $150,000 for a single infringement to compel quick settlements. Since Righthavens formation in March, the company has filed at least 80 federal lawsuits against website operators and individual bloggers whove re-posted articles from the Las Vegas Review-Journal, his first client. Now hes talking expansion. The Review-Journals publisher, Stephens Media in Las Vegas, runs over 70 other newspapers in nine states, and Gibson says he already has an agreement to expand his practice to cover those properties. (Stephens Media declined comment, and referred inquiries to Gibson.) Hundreds of lawsuits, he says, are already in the works by years end. We perceive there to be millions, if not billions, of infringements out there, he says. Righthavens lawsuits come on the heels of similar campaigns targeting music and movie infringers. The Recording Industry Association of America sued about 20,000 thousand file sharers over five years, before recently winding down its campaign. And a coalition of independent film producers called the U.S. Copyright Group was formed this year, already unleashing as many as 20,000 federal lawsuits against BitTorrent users accused of unlawfully sharing movies. The RIAAs lawsuits werent a money maker, though the record labels spent $64 million in legal costs, and recovered only $1.3 million in damages and settlements. The independent film producers say they nonetheless expect to turn a profit from their lawsuits. People are settling with us, says Thomas Dunlap, the head lawyer of the Copyright Groups litigation. The out-of-court settlements, the number of which he declined to divulge, are ranging in value from $1,500 to $3,500 about the price it would cost defendants to retain a lawyer. The RIAAs settlements, which it collected in nearly every case, were for roughly the same amounts. But experts say that settling the Righthaven cases, many of which target bloggers or aggregation sites, might not be as easy. The RIAA lawsuits often accused peer-to-peer users of sharing dozens of music files, meaning the risk of going to trial was financially huge for the defendants. The same is true of the BitTorrent lawsuits. The movie file sharers are accused of leeching and seeding bits of movie files, contributing to the widespread and unauthorized distribution of independent movies such as Hurt Locker, Cry of the Wolf and others. But each of the Righthaven suits charge one, or a handful, of infringements. Defendants might be less willing to settle a lawsuit stemming from their posting of a single news article, despite the Copyright Acts whopping damages. Youd have to go after a lot of people for a relatively small amount of money, says Jonathan Band, a Washington, D.C. copyright lawyer. That is a riskier proposition. Gibson claims Righthaven has already settled several lawsuits, the bulk of which are being chronicled by the Las Vegas Sun, for undisclosed sums. One defendant who is ready to settle is Fred Bouzek, a Virginia man who runs bikernews.net, a user-generated site about hardcore biker news. He was sued last week on allegations the site ran a Las Vegas Review-Journal story about police going under cover with the Hells Angels. Even if he had grounds to fight the case, he says it would be cheaper to settle. The only choice I have is to try to raise money and offer a settlement, he says.
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Bill Irvine of Phoenix says he is fighting infringement allegations targeting AboveTopSecret.com, the site he controls under The Above Network. The site is accused of infringing a Review-Journal article on the Gulf of Mexico oil spill. The site is a user-generated discussion on conspiracies, UFOs, paranormal, secret societies, political scandals, new world order, terrorism, and dozens of related topics and gets about 5 million hits monthly, Irvine says. Righthaven, he says, should have sent him a takedown notice under the Digital Millennium Copyright Act, because the article was posted by a user, not the site itself.
In this case, we feel this suit does not have merit, he says. We are confident we will have success challenging it.

Gibson says hes just getting started. Righthaven has other media clients that he wont name until the lawsuits start rolling out, he says. Frankly, I think were having tremendous success at a number of levels, Gibson says. We file new complaints every day. See Also: Copyright Lawsuits Plummet in Aftermath of RIAA Campaign Verizon Terminating Copyright Infringers Internet Access Happy Anniversary Pirates: 20000 Copyright Lawsuits and Counting Court to Consider Breaking Up Mass BitTorrent Lawsuits Lawsuit Dropped; Claimed That Copyright-Filtering Violates Copyright Judge Sides With RIAA in Sham Litigation Class Action File Sharing Lawsuits at a Crossroads LimeWire Crushed in RIAA Infringement Lawsuit David Kravets is the founder of TheYellowDailyNews.com. Technologist. Political scientist. Humorist. Dad of two boys. Reporter since manual typewriter days. ((There is no truth.)) Follow @dmkravets on Twitter. Tags: copyright, DMCA, media, RIAA, Righthaven Post Comment | Permalink
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Exhibit Q to Defendant Eisers Rule 12(b)(1) Motion

Rosen Freelance Column

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opinion

Rosen: Social Security's insolvency

By Mike Rosen Posted: 04/14/2011 01:00:00 AM MDT

assets" but merely "claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the government's ability to pay benefits." The Social Security Administration used to put out a little booklet called "Your Social Security." In the 1977 edition, it was explained this way: "The basic idea of social security is a simple one: During working years employees, their employers, and self employed people pay social security contributions which are pooled into special trust funds. When earnings stop or are reduced because the worker retires, becomes disabled, or dies, monthly cash benefits are paid to replace part of the earnings the family has lost." The 1985 edition let the cat out of the bag. Compare the subtle wording changes: "The basic idea of Social Security is simple: During working years, employees, their employers, and self-employed people pay Social Security taxes." Notice that the word "contributions" become "taxes" and "trust funds" is deleted.

Winston Churchill's famous description of the Soviet Union "It is a riddle wrapped in a mystery inside an enigma" also applies to our federal budget. Take Social Security while you still can. Jack Lew, President Obama's budget director, has proclaimed the program solvent with its trust fund in the black until 2037. Nonsense. The "trust fund" is essentially a bookkeeping entry. Since 1937, when Social Security receipts from your payroll taxes began pouring into the Treasury Department's coffers, all the money has been spent on everything the federal government provides, from guns to butter. Left in its place were IOUs, non-negotiable Treasury bonds, backed by the full faith and credit of the United States for whatever that may soon be worth. These IOUs are counted as part of the $14 trillion gross federal debt. Ironically, the annual surplus of Social Security receipts over payouts has made each year's overall federal deficit look smaller. But keep in mind, that money wasn't saved, it was spent. From a cash flow perspective, Social Security has always been a pay-as-you go system, an intergenerational transfer of income. In its official fiscal year 2000 budget, the Clinton administration told it like it is, explaining that government trust funds aren't "real economic

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The booklet goes on: "This money is used only to pay benefits and to pay administrative costs of the program. Then, when today's workers' earnings stop or are reduced because of r etirement, death, or disability, benefits will be paid to them from taxes paid by people in covered work and self-employment at that time." Aha! Now it's an intergenerational transfer of income. Another myth is that Social Security doesn't contribute to the deficit. Of course it does. Once again, this is bookkeeping sleight-of-hand. Social Security taxes suck up a large share of our nation's finite tax capacity. Social Security spending accounts for one-fifth of the federal budget. Federal receipts from all sources are fungible (they lose their unique identity once delivered to the Treasury) and every dollar spent on anything is part of total spending. When that total exceeds revenues, we have a deficit. But what of the reported $60 billion surplus in this year's Social Security account? Another bookkeeping illusion. It includes $116 billion of interest on the so-called trust fund, a $2.5 t rillion pile of phantom Treasury IOUs. Since the feds are already running a $1.6 trillion deficit this year, they don't have that $116 billion, so they'll just add a few more IOUs to the stack. Subtract that funny-money interest payment, and Social Security would show a $56 billion deficit in 2011, to say nothing of its long-term unfunded liability, variously estimated at between $10 trillion and $18 trillion. This is solvency? Freelance columnist Mike Rosen's radio show airs weekdays from 9 a.m. to noon on 850-KOA.

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Denver Westword Story about Rosen Plagiarism

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Update below: This week, a tipster informed yours truly (and Colorado Pols) that KOA talk show host Mike Rosen had basically copied a 2008 column he wrote for the Rocky Mountain News and republished it in December as a Denver Post piece. Rather than simply running side-by-side excerpts, we shared the info with Rosen to get his take. His response in a nutshell? Yeah, I did it, and so what? The similarities between "The 'Trickle-Down' Myth," published in the November 28, 2008 Rocky, and "'Trickle Down' a Democratic Epithet," are so striking that they don't leave much room for deniability. Here's a segment from the Rocky item: Defaming supply-side economics contemptuously as "trickle-down" has been a Democratic standby for years, with one notable exception. After John F. Kennedy was elected president in 1960, he persuaded Congress to reduce the confiscatory top marginal tax rate, then 90 percent, down to a mere 70 percent. In a speech to the Economic Club of New York in 1962, JFK explained: "In short, it is a paradoxical truth that tax rates are too high today and tax revenues too low -- and the soundest way to raise revenues in the long run is to cut tax rates now." Under the Kennedy tax-rate cuts, as predicted, revenues grew. Twenty years later, when tax rates were cut even more under Ronald Reagan, federal tax revenues again soared with the "rich" paying an increasingly greater share of the income tax burden. Since it was now a Republican initiating this policy, Democrats branded it "Reaganomics" and mocked it as half-baked, "trickle-down" economics.
Mike Rosen.

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And here's its equivalent in the Post offering: A rare exception was Democratic President John F. Kennedy, who persuaded Congress to cut income tax rates across the board, including the top rate, then more than 90 percent, down to a mere 70 percent. In a speech to the Economic Club of New York in 1962, JFK explained: "In short, it is a paradoxical truth that tax rates are too high today and tax revenues too low -- and the soundest way to raise revenues in the long run is to cut tax rates now." Under the Kennedy tax-rate cuts, as predicted, revenues grew. Twenty years later, when tax rates were cut even more under Ronald Reagan, federal tax revenues again soared with the "rich" paying an increasingly greater share of the

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income tax burden. Since it was now a Republican initiating this policy, Democrats branded it "Reaganomics" and mocked it as half-baked, "trickle-down" economics.

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The tipster pointed out that Rosen had taken this tack at least once before via two Rocky columns, the 2004 salvo "Party Still Trumps Person," which I could no longer find online (I tracked it down using the Nexis data base), and 2008's "Party Trumps Person." But Rosen traded Ted Kennedy for Charles Schumer from the first election cycle to the second. Here's a snippet from 2004: Now, let's say you're a registered Republican voter who clearly prefers the Republican philosophy of governance. And you're a good-natured, well-intentioned person who happens to like an individual Democrat, a Senate candidate, who's somewhat conservative. You decide to cross party lines and vote for him. As it turns out, he wins, beating a Republican and giving the Democrats a one-vote majority, 51-49, in the U.S. Senate. Congratulations! You just got Ted Kennedy, Patrick Leahy, Dianne Feinstein and Hillary Clinton as key committee chairs, and a guarantee that your Republican legislative agenda will be stymied.

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And here's how the segment looked in 2008: Let's say you're a registered Republican who prefers that party's philosophy of governance. And you're a fair-minded, well-intentioned person who happens to like a certain moderately conservative Democrat running for U.S. Senate. So you decide to cross party lines and vote for him. As it turns out, he wins, giving Democrats a one-vote majority, 51-49. Congratulations! You just got Charles Schumer, Patrick Leahy, Diane Feinstein and Hillary Clinton as key committee chairs and a guarantee that your Republican legislative agenda will be stymied. When contacted about the columns, Rosen responded via e-mail with this: "So what? I've been writing columns for 30 years. What's his point, that I'm plagiarizing myself? No need to reinvent the wheel when the same issues resurface. Presumably, some new readers haven't read all my past columns. As William F. Buckley, Jr. once said, 'Repetition is the price of mastery.' I'm flattered that your 'tipster' follows me so closely. Sounds like someone who disagrees with my views wanting to be a nuisance." In a subsequent exchange, Rosen wrote more specifically about the columns in question. About the first pair, he notes that "when I've discussed this on the air, I've said as long as the left continues to misrepresent supply-side economics as 'trickle down,' I'll keep rewriting this column." Regarding party trumping politics, he adds, "I write this at least every four years when there's a presidential election and discuss it frequently on air. It's a new concept to many people. I labor to explain this to conservatives who might waste their vote on third-party candidates and help Democrats get elected, as Naderites helped Bush beat Gore in 2000." Based on this last comment, readers can look forward to seeing the "trump" column again next year. Until then, there's a certain irony in the fact that the first copyright-infringement lawsuit filed by Nevada's Righthaven LLC on behalf of the Post charged a South Carolina blogger for republishing a Rosen column without permission. What does the Post braintrust think about all this? I will be sending a link to this report to editor Greg Moore. When he or another Post representative gets back to us, we'll update. Update, 10:33 a.m.: Just received a statement from Denver Post editorial page editor Dan Haley about this topic. He writes: We expect all columns published in our section to be original work and I recently told Mike this. While it's true that you can't plagiarize yourself, and it's easy to simply lift paragraphs from your previous work as a way to provide background or supporting information, I expect writers to let readers know when they're doing that. More from our Media archive: "Brian Hill: Hobby blogger sued by MediaNews & Righthaven is 20, chronically ill, autistic."

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Denver Post, Mike Rosen, plagiarizing yourself, Rocky Mountain News

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Exhibit S to Defendant Eisers Rule 12(b)(1) Motion

Rocky Mountain News Shutdown

Rocky Mountain News to close, publish final edition Friday : rockymount...

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Rocky Mountain News to close, publish final edition Friday

By Lynn DeBruin, Lisa Ryckman Originally published 12:01 p.m., February 26, 2009 Updated 10:08 p.m., February 26, 2009 The Rocky Mountain News publishes its last paper tomorrow. Rich Boehne, chief executive officer of Rocky-owner Scripps, broke the news to the staff at noon today, ending nearly three months of speculation over the paper's future. "People are in grief," Editor John Temple said a noon news conference. But he was intent on making sure the Rocky's final edition, which would include a 52-page wraparound section, was as special as the paper itself. "This is our last shot at this," Temple said at a second afternoon gathering at the newsroom. "This morning (someone) said it's like playing music at your own funeral. It's an opportunity to make really sweet sounds or blow it. I'd like to go out really proud." Boehne told staffers that the Rocky was the victim of a terrible economy and an upheaval in the newspaper industry. "Denver can't support two newspapers any longer," Boehne told staffers, some of whom cried at the news. "It's certainly not good news for you, and it's certainly not good news for Denver." Tensions were higher at the second staff meeting, held to update additional employees who couldnt attend the hastily called noon press conference. Several employees wanted to know about severance packages, or even if they could buy at discount their computers. Others were critical of Scripps for not seeking wage concessions first or going online only. But Mark Contreras, vice president of newspapers for Scripps, said the math simply didn't work. "If you cut both newsrooms in half, fired half the people in each newsroom, you'd be down to where other market newsrooms are today. And they're struggling," he said. As for online revenues, he said if they were to grow 40 percent a year for the next five years, they still would be equal to the cost of one newsroom today. "We're sick that we're here," Contreras said. "We want you to know it's not your fault. There's no paper in Scripps that we hold dearer."

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But Boehne said Scripps intended to keep its other media, both print and in broadcast, running. "Scripps has been around for 130 years. We intend to be around another 130 years," Boehne said. "If you can't make hard decisions, you won't make it." After Friday, the Denver Post will be the only newspaper in town. Asked if pubilsher Dean Singleton now walks away with the whole pie, Boehne was blunt. "He walks away with an unprofitable paper, $130 million in debt and revenues that are down 15-20 percent every year," Boehne said. Asked if Singleton would have to pay for the presses now, Boehne added, "We had to kill a newspaper. He can pay for the presses." Reaction came from across the nation and around the block. "The Rocky Mountain News has chronicled the storied, and at times tumultuous, history of Colorado for nearly 150 years. I am deeply saddened by this news, and my heart goes out to all the talented men and women at the Rocky," U.S. Sen. Michael Bennet said in a statement. "I am grateful for their hard work and dedication to not only their profession, but the people of Colorado as well." At the Statehouse, Rep. Joe Rice (D-Littleton), said the paper would be missed. "The Rocky Mountain News has been a valued institution in Denver," he said. "It's a sad, sad day." Long-time Denver real estate agent Edie Marks called the Rocky a voice of reason, moderation and common sense. "I think that it was the fairest newspaper, the most diverse, and am important part of my daily life," she said. "I'm going to miss it tremendously." On Dec. 4, Boehne announced that Scripps was looking for a buyer for the Rocky and its 50 percent interest in the Denver Newspaper Agency, the company that handles business matters for the papers. The move came because of financial losses in Denver, including $16 million in 2008. "This moment is nothing like any experience any of us have had," Boehne said. "The industry is in serious, serious trouble." Temple said he was optimistic about the future of journalism but added that newspapers would be "radically different" in the future. He said he had no plans for his own future, although Boehne said Temple has a job with Scripps if he wants it. Boehne said there was an out-of-state nibble from only one potential buyer, who withdrew after realizing that it would cost as much as $100 million "just to stay in the game." He said they were in talks with that potential buyer as recently as a couple of weeks ago. The sale of a newspaper brings out all sorts of colorful characters, Boehne said. "You get calls from pay phones at parks." Since then, Scripps said it has been working with Post owner MediaNews Group to come up with a plan to
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leave Colorado. It also shares 50-50 ownership with MediaNews of the Boulder Daily Camera and a handful of other smaller papers in the state. The Rocky has been in a joint operating agreement with The Denver Post since 2001. The arrangement approved by the U.S. Justice Department allowed the papers to share all business services, from advertising to printing, to preserve two editorial voices in the community. Since then, Scripps said it has been working with Post owner MediaNews Group to come up with a plan to leave Colorado. It also shares 50-50 ownership with MediaNews of the Boulder Daily Camera and a handful of other smaller papers in the state. Boehne said that the Post's traditional format and established Sunday edition made it more economically viable. "In this environment, where there's so little room to take economic risk, I really feel the best chance for survival belongs to the broadsheet," he said. The closure of the Rocky will mean Denver will have just one major newspaper, like the vast majority of American cities today. "I certainly feel that all of (us) did what we could to make this paper successful, and I want to thank you for that," Temple told the staff. "To me, this is the very sad end of a beautiful thing." Scripps said it will now offer for sale the masthead, archives and Web site of the Rocky, separate from its interest in the newspaper agency. Today's announcement comes as metropolitan newspapers and major newspaper companies find themselves reeling, with plummeting advertising revenues and dramatically diminished share prices. Just this week, Hearst, owner of the San Francisco Chronicle, announced that unless it was able to make immediate and steep expense cuts it would put the paper up for sale and possibly close it. Two other papers in JOAs, one in Seattle and the other in Tucson, are facing closure in coming weeks. The Rocky was founded in 1859 by William Byers, one of the most influential figures in Colorado history. Scripps bought the paper in 1926 and immediately began a newspaper war with The Post. That fight ebbed and flowed over the course of the rest of the 20th century, culminating in penny-a-day subscriptions in the late '90s. Perhaps the most critical step for the Rocky occurred in 1942, when then-Editor Jack Foster saved it by adopting the tabloid style it has been known for ever since. Readers loved the change, and circulation took off. In the past decade, the Rocky has won four Pulitzer Prizes, more than all but a handful of American papers. Its sports section was named one of the 10 best in the nation this week. Its business section was cited by the Society of American Business Editors and Writers as one of the best in the country last year. And its photo staff is regularly listed among the best in the nation when the top 10 photo newspapers are judged. Staffers were told to come in Friday to collect personal effects. "I could say stupid things like 'I know how you feel.' I don't," Boehne said. "We are just deeply sorry. I hope you will accept that." Rocky Mountain News

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Exhibit T to Defendant Eisers Rule 12(b)(1) Motion

Rosen Rocky Mountain News Column

ROSEN: Educrats vs. common sense : Columns & Blogs : The Rocky Mou...

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ROSEN: Educrats vs. common sense

By Mike Rosen, Rocky Mountain News (Contact)
Published February 20, 2009 at 12:05 a.m.

Text size 17 Comments Email Print

The recent gun "crisis" at Cherokee Trail High School is a textbook case in mindless bureaucracy trampling common sense. Marie Morrow - a well-behaved, self-motivated, responsible, morally upright, model student - was instantly suspended for 10 days and threatened with expulsion for a misunderstanding that could and should have been resolved by reasonable administrators (pardon the oxymoron) in 10 minutes. Embarrassed, in the face of outraged public reaction, the Cherry Creek School District has backed down, withdrawn its threatened expulsion and reduced Marie's sentence to time served. But there's much to be learned from this incident. Marie is the commander of the Douglas County Young Marines Drill Team. She and her fellow leathernecks-in-waiting have been practicing several times a week after school for the last six months in preparation for a national competition at the U.S. Air Force Academy in April. Marie, a senior, hopes to enroll in the U.S. Merchant Marine Academy upon graduation. Is this an exemplary youngster or what? Her crime was having fake drill-team wooden practice rifles in the back of her SUV in the school parking lot. Another student saw them and reported it to school authorities. So far so good. That's the appropriate response. They could have been actual weapons. But, of course, they weren't. And when school administrators determined that, they could have defused the situation by counseling Marie to make other arrangements for storing or transporting the dummy rifles in the future. Unfortunately, that's not the way educrats think or act. Instead of considering the spirit of the law on which their school district's policy was based, they reflexively took refuge behind the letter of it and came down on Marie like the Spanish Inquisition. It's perfectly understandable that in the wake of the Columbine tragedy, lawmakers and school administrators became acutely sensitive to the danger of weapons in schools and their environs. But that's no excuse for knee-jerk absolutism, blind to rational distinctions. In fact, there was ample wiggle room for school administrators had they chosen to use it. The district's policy covers "Discretionary suspension or expulsion for weapons in accordance with state law." (It would seem that the use of the word "discretionary" implies that administrators have some choice in these matters.) It reads: "As used in this policy, 'weapon' means any object which is generally used for nonviolent or nondangerous purposes, but which can be considered a weapon under this policy as a result of its use or intended or threatened use" [italics mine]. Aha! Obviously Marie didn't use these fake rifles as a weapon, nor did she intend or threaten to. No harm, no foul. Case closed. Who would have complained? Dealing with it this way would have required the application of common sense and discretionary judgment, coupled with a small dose of courage. These are not qualities typically found in school administrators or the school district lawyers who advise them. Discretionary judgment, then, becomes something to be avoided at all costs. Making decisions like this can expose educrats to risk. Consequently, district policy becomes a shield, something to hide behind, rather than a reasonable guide. This has produced these so-called "zero tolerance" policies, mindless of extenuating circumstances, nuances or shades of gray resulting in preposterously severe penalties for minor transgressions or innocent misunderstandings. Marie's treatment was just the latest example. Sen. Kevin Lundberg, R-Berthoud, has sensibly proposed that state law in this area be revised, "to put some common-sense language into the statue where school districts don't have their hands tied when everyone agrees it should have some flexibility." That no doubt makes eminent sense to most people. The obstacle Lundberg will encounter is that, unfortunately, not "everyone agrees." There are too many hidebound school board members, educrats and teachers' union lobbyists who prefer to have their hands tied, and legislators all too willing to accommodate them. Mike Rosen's radio show airs weekdays from 9 a.m. to noon on 850 KOA. He can be reached by e-mail at mikerosen@850koa.com.

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Exhibit U to Defendant Eisers Rule 12(b)(1) Motion

Rosen Real Clear Politics Column

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November 25, 2005 Another Nutty Professor

By Mike Rosen

It's not just the University of Colorado at Boulder that harbors wacko, America-hating lefties. Behold, the sequel: "Son of Churchill." At Warren County Community College in rural New Jersey, John Peter Daly, an adjunct English professor, went off the deep end last week in an outrageous e-mail to a student. The student was Rebecca Beach, a freshman and member of a the local chapter of Young Americans for Freedom (YAF), a respectable, mainstream national conservative student organization created in 1960 with assistance from William F. Buckley Jr. and other leaders of the intellectual conservative movement. (Disclosure: I've been a guest speaker in years past at YAF's annual student seminar at American University in Washington, D.C.) Rebecca's crime was to invite Lt. Col. Scott Rudder, a decorated Iraq war hero, to appear on campus on Nov. 17 to discuss with students America's accomplishments in Iraq. She compounded this felony by advertising the event via e-mail and by posting fliers around campus contrasting the number of people killed under communist regimes to those freed from communism by Ronald Reagan and worldwide freedom movements. So you know where Daly sits before you hear where he stands, you should be aware that he's a member of the Marxist Worker's World Party; a regular correspondent to their newspaper, Workers World; a gay activist; and an unsuccessful candidate for Congress in California of the Peace and Freedom Party (self-described as a "socialist and feminist political party" calling for "collective ownership" of industry and "an unconditional end to U.S. military intervention in the affairs of other nations"). None of this is illegal, of course, but it gives you a picture of an angry, self-disenfranchised outcast from mainstream society. That mentality comes through in these highlights from his e-mail to Beach: I am asking my students to boycott your event. I am also going to ask others to boycott it. Your " literature and signs in the entrance lobby look like fascist propaganda and is \[sic] extremely offensive. \[Daly is a professor of English!] Your main poster " ommunism killed 100,000,000 is C not only untrue, but ignores the fact that capitalism has killed many more and the evidence for that can be seen in the daily newspapers . . . thanks to the students of WCCC and other poor and working class people who are recruited to fight and die for Exxon and other corporations who are earning megaprofits from their imperialist plunders . . . I will continue to expose your right-wing anti-people politics until groups like yours won't dare show their face on a college campus. Real freedom will come when soldiers in Iraq turn their guns on their superiors and fight for just causes and for people's needs." 1. Aleksander Solzhenitsyn has eloquently testified, with first-hand knowledge, to 100 million murdered under communism. 2. What standing does Daly have to inflict his obtuse politics on his students and urge them to boycott Rudder's talk? He's not even teaching political science; it's a freakin' English class! 3. Typical of radical leftist brownshirts, his notion of diversity of ideas in higher education is to drive conservative groups off campus. And he has the gall to direct the term "fascist" at others! What would he say if a conservative professor wanted to drive leftist groups off campus?

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4. Daly isn't merely disagreeing with our foreign policy in Iraq; he's advocating that American soldiers murder their sergeants and officers! Typical of pusillanimous administrators, the college has posted a statement on its Web site diplomatically divorcing itself from Daly's comments, but invoking its support of the First Amendment, adding that it's reviewing this as a personnel issue. The First Amendment protects Daly's speech, repugnant as it is, from prosecution at the hands of government. As an employee, he's not immune from disciplinary action for his abusive behavior toward a student. Ironically, it's the free speech of conservative students at the college that's under assault here. Beach says Daly has created a hostile learning environment and has called for Warren President William Austin to require intolerant leftists, like Daly, to attend mandatory seminars on free speech, sensitivity and respect for differing opinions. I'd say Beach is being far too lenient. Daly has exposed himself as a bigot and a hysterical seditionist. His intolerance is an affront to the basic tenet of collegiality to which institutions of higher learning claim to adhere. He has disqualified himself as a responsible steward of impressionable young minds. His words are to intellectual discourse as a cesspool is to the Seven Seas. And he doesn't even have tenure. If the Warren County Community College administration has any decency, self-respect and backbone, they'll throw the bum out.
Mike Rosen's radio show airs daily from 9 a.m. to noon on 850 KOA. Send To a Friend http://www.realclearpolitics.com/Commentary/com-11_25_05_MR.html

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Exhibit V to Defendant Eisers Rule 12(b)(1) Motion

Righthaven Website

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S.C. Supreme Court Original Jurisdiction Petition

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2:10-cv-03075-RMG -JDA Date Filed 07/05/11 116 Filed 06/14/11 Page 1 of44 of 63 Case 2:10-cv-01356-RLH -GWF Document Entry Number 57-24 Page 16

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AO 72 (Rev. 8/82)

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA ***

RIGHTHAVEN LLC, a Nevada limited-liability ) company, ) ) Plaintiff, ) ) vs. ) ) DEMOCRATIC UNDERGROUND, LLC, a ) District of Columbia limited-liability company; ) and DAVID ALLEN, an individual, ) ) Defendants. ) _______________________________________) ) DEMOCRATIC UNDERGROUND, LLC, a ) District of Columbia limited-liability company, ) ) Counterclaimant, ) ) vs. ) ) RIGHTHAVEN, LLC, a Nevada limited) liability company; and STEPHENS MEDIA ) LLC, a Nevada limited-liability company, ) ) Counterdefendants. ) _______________________________________) / / 1 Case No.: 2:10-cv-01356-RLH-GWF ORDER (Motion for Voluntary Dismissal with Prejudice#36; Motion to Dismiss or Strike#38; Motion for Summary Judgment#45)

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AO 72 (Rev. 8/82)

Before the Court is Plaintiff/Counterdefendant Righthaven LLCs Motion for Voluntary Dismissal with Prejudice (#36, filed Aug. 10, 2010). The Court has also considered Defendant/Counterclaimant Democratic Underground, LLC and David Allens (collectively Democratic Underground) Opposition (#44, filed Dec. 7, 2010), and Righthavens Reply (#57, filed Jan. 7, 2011). Also before the Court is Counterdefendant Stephens Media LLCs Motion to Dismiss or Strike (#38, filed Nov. 17, 2010). The Court has also considered the Democratic Undergrounds Opposition (#46, filed Dec. 7, 2010), and Stephens Medias Reply (#56, filed Jan. 7, 2011). Also before the Court is Democratic Undergrounds Motion for Summary Judgment (#45, filed Dec. 7, 2010). The Court has also considered Righthavens Opposition (#58, filed Jan. 8, 2011), and Democratic Undergrounds Reply (#62, filed Jan. 28, 2011). Finally, the Court allowed and ordered supplemental briefing relevant to the three motions under consideration because of important evidence that only came to light after these motions were fully briefed. Accordingly, the Court has considered Democratic Undergrounds Supplemental Memorandum Addressing Recently Produced Evidence (#79, filed Mar. 9, 2011), Stephens Medias Response (#99, filed May 9, 2011), Righthavens Response (#100, filed May 9, 2011), and Democratic Undergrounds Replies (##107 and 108, filed May 20, 2011). BACKGROUND This dispute arises out of Democratic Undergrounds allegedly copyright infringing conduct. About May 13, 2010, a Democratic Underground user posted a comment on Democratic Undergrounds website which included a portion of a Las Vegas Review-Journal (LVRJ) article about Nevada politics, particularly about the Tea Party effect on Sharon Angles senatorial campaign (the Work). The posting included a link to the full article and the LVRJs website. As such, Democratic Underground displayed this selection from the article on its website and Righthaven claims that this infringed on the copyright. 2

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AO 72 (Rev. 8/82)

Righthaven claims that after the Work was posted on Democratic Undergrounds website, it purchased the copyright to the Work from Stephens Media, the owner of the LVRJ, along with the right to sue for past infringement. (Dkt. #102, Decl. of Steve Gibson, Ex. 1, Copyright Assignment (hereinafter referred to as the Assignment).) Righthaven then registered the copyright with the United States Copyright office. Thereafter, Righthaven sued Democratic Underground alleging copyright infringement. Democratic Underground, in turn, filed a counterclaim for a declaratory judgment of non-infringement against both Righthaven and Stephens Media, which was not originally a party to this case. Righthaven has since filed a motion for voluntary dismissal with prejudice due to an adverse fair use ruling by the Honorable Larry R. Hicks, United States District Judge for this district (Righthaven is appealing that decision), Stephens Media has filed a motion to dismiss or strike the counterclaim and a partial joinder to Righthavens motion, and Democratic Underground has filed a motion for summary judgment on Righthavens claim. After these motions were fully briefed, Stephens Media disclosed to Democratic Underground the Strategic Alliance Agreement (SAA) between Stephens Media and Righthaven. The SAA defines their relationship and governs all future copyright assignments between them (including the assignment at issue here). (Dkt. #79, Supplemental Mem. Ex. 1, SAA, dated Jan. 18, 2010.) After learning the details of this agreement, Democratic Underground sought leave to file a supplemental memorandum addressing this newly discovered evidence and its effect on the outstanding motions. The Court allowed the supplemental briefing as it too considered the SAA highly relevant to Righthavens standing in this and a multitude of other pending Righthaven cases. After considering the supplemental brief and for the reasons discussed below, the Court dismisses Righthaven for lack of standing and, therefore, denies both Righthavens motion and Democratic Undergrounds motion as moot. The Court also denies Stephens Medias motion. / 3

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AO 72 (Rev. 8/82)

DISCUSSION I. Righthavens Standing to Assert Copyright Claims As stated above, before the Court are two motions to dismiss and a motion for summary judgment. However, the Court must first address the supplemental briefing addressing the SAA and the question of Righthavens standing to pursue this copyright infringement claim. The Court will then address the outstanding motions. A. Background - The Strategic Alliance Agreement Months prior to purportedly assigning the Work to Righthaven, Stephens Media and Righthaven signed a Strategic Alliance Agreement governing future copyright assignments between them. (Dkt. #79, Ex. 1, SAA, dated Jan. 18, 2010.) The SAA details the relationship between Righthaven and Stephens Media, explains the rights and responsibilities of each party, and limits and defines future copyright assignments between them. (See generally, id.) As such, it limits and explains the intent behind the Assignment, which was executed in July 2010. Critically, the SAA expressly denies Righthaven any rights from future assignments (including the Assignment of the Work) other than the bare right to bring and profit from copyright infringement actions. This conclusion is clearly expressed in Section 7.2 of the SAA: 7.2 Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Righthaven's maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Media's right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights. . . . / 4

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(Id., Section 7.2 (bold emphasis added, italicization in original)). The plain and simple effect of this section was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights. Even Righthavens right to sue is not absolute. The SAA gives Stephens Media the right to prevent Righthaven from suing an alleged copyright infringer for various specific reasons, including that the lawsuit might result in an adverse result to Stephens Media. (Id., Section 3.3.) Other sections also give Stephens Media a right to reversion and other rights which, collectively, destroy Righthavens supposed rights in the Work. (See generally, id.) Now that the SAA has shed light upon Righthavens true interest in the copyright to the Work, Democratic Underground asserts that Righthaven lacks standing to maintain this lawsuit. B. Legal Standard Pursuant to Section 501(b) of the 1976 Copyright Act, 17 U.S.C. 101, et. seq., (the Act) only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement. Silvers v. Sony Pictures Entm't Inc., 402 F.3d 881, 884 (9th Cir. 2005) (en banc). In so holding, the Ninth Circuit followed the Second Circuits decision in Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir. 1982), superseded by rule and statute on other grounds. See also, ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (citing Eden Toys, the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.) Section 106 of the Act defines and limits the exclusive rights under copyright law. Id. at 88485. While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights. Id. Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee. Id. at 890. One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright. See id. Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment. See generally, id. 5

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C.

Analysis 1. Contract Construction

Righthaven argues that the SAAs provisions, which necessarily include Section 7.2, do not alter the unambiguous language of the Assignment or limit the rights it obtained from Stephens Media in the Assignment. This conclusion is flagrantly falseto the point that the claim is disingenuous, if not outright deceitful. The entirety of the SAA was designed to prevent Righthaven from becoming an owner of any exclusive right in the copyright. . . ., Silvers, 402 F.3d at 886 (emphasis in original), regardless of Righthaven and Stephens Medias post hoc, explanations of the SAAs intent or later assignments, (see generally Dkt. #101, Decl. of Mark A. Hineuber; Dkt. #102, Decl. of Steven A. Gibson). Prior to the Assignment, Stephens Media possessed all of the exclusive rights to the Work and, therefore, the right to sue. Because the SAA limited the language of the Assignment, the Assignment changed nothing save for Righthavens claim to have the right to sue. The companies current attempt to reinterpret the plain language of their agreement changes nothing. In reality, Righthaven actually left the transaction with nothing more than a fabrication since a copyright owner cannot assign a bare right to sue after Silvers. To approve of such a transaction would require the Court to disregard the clear intent of the transaction and the clear precedent set forth by the en banc Ninth Circuit in Silvers. 2. Stephens Media and Righthavens Intent

Righthaven contends that the Court should construe the SAA to grant Righthaven whatever rights are necessary for it to have standing in a copyright infringement action. First, Righthaven argues that the Court should construe the contract in this manner because in situations where a contract is ambiguous, the Court should look to the parties intent. Sheehan & Sheehan v. Nelson Malley and Co., 117 P.3d 219, 22324 (Nev. 2005). Accordingly, Righthaven argues that the plain intent of the SAA is to give Righthaven all rights necessary to bring a copyright infringement action. The Court, however, disagrees with Righthavens premise because the SAA is not ambiguous. Righthaven and Stephens Media went to great lengths in the SAA to be sure 6

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that Righthaven did not obtain any rights other than the bare right to sue. Thus, the Court finds that the plain language of the SAA conveys the intent to deprive Righthaven of any right, save for the right to sue alleged infringers and profit from such lawsuits. As such, the SAA is not ambiguous and the Court shall not read any ambiguity into it. Second, Righthaven argues that Section 15.1 of the SAA gives the Court authority to correct any provision of the SAA that is deemed void or unenforceable to approximate the manifest intent of the parties. The problem is that this argument requires a provision of the SAA to be void or unenforceable. However, Righthavens problem is not that any provision of the SAA is void or unenforceable but that the SAA simply does not grant Righthaven any of the exclusive rights defined in Section 106 of the Act required for standing. Therefore, the SAA is not void or unenforceable, it merely prevents Righthaven from obtaining standing to sue from the Assignment. Accordingly, the Court need not and shall not amend or reinterpret the SAA to suit Righthavens current desires. 3. Righthaven and Stephens Medias Amendment to the SAA

Notwithstanding the actual transaction that occurred, Righthaven argues that the amendment it executed with Stephens Media on May 9, 2011, the day that they filed their response to the supplemental memorandum validates or fixes any possible errors in the original SAA that would prevent Righthaven from having standing in this matter. (Dkt. #102, Gibson Decl. Ex. 3, Clarification and Amendment to SAA.) However, this amendment cannot create standing because [t]he existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed. Lujan v. Defenders of Wildlife, 504 U.S. 555, 571 n.4 (1992) (quoting Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989)) (emphasis in Lujan). Although a court may allow parties to amend defective allegations of jurisdiction, it may not allow the parties to amend the facts themselves. Newman-Green, 490 U.S. at 830. As an example, a party who misstates his domicile may amend to correctly state it. This is an amendment of the allegation. However, that party is not permitted to subsequently move in order to change his 7

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domicile and amend accordingly. This would be an amendment of the jurisdictional facts, which is not allowed. See id. Here, Righthaven and Stephens Media attempt to impermissibly amend the facts to manufacture standing. Therefore, the Court shall not consider the amended language of the SAA, but the actual transaction that took place as of the time the complaint was filed.1 Regardless of this legal principle, Righthaven argues that courts routinely allow parties to a copyright transfer to subsequently clarify or amend their agreements in order to express their original intent to grant the assignee the right to sue for infringement. Righthavens assertion is not entirely wrong, but the cases Righthaven cites in support of its proposition are all distinguishable as they deal with matters significantly different than those presently before the Court. For instance, Righthaven cites multiple cases where courts allowed an oral assignment made prior to initiation of a lawsuit to be confirmed in writing after the initiation of the lawsuit. See Billy-Bob Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 591 (7th Cir. 2003) (allowing an oral assignment to be confirmed in a later writing).2 These cases are all distinguishable in that the assignor and assignee in these cases had agreements to transfer the necessary, exclusive rights prior to the initiation of a lawsuit. The only thing lacking was the written document necessary for a court to recognize the transfer. In each of these cases, the courts merely gave effect to what the parties had actually done, i.e. recognized rights already actually transferred. Here, Righthaven does not ask the Court to recognize an oral transfer with a late made written memorandum of the deal, but to fundamentally rewrite the agreement between Righthaven and Stephens Media to grant Righthaven rights that it never actually received.

The Court does not determine whether or not the amended SAA would transfer sufficient rights to Righthaven for it to have standing in suits filed after amendment as the Court need not make that determination to rule on these motions. Nonetheless, the Court expresses doubt that these seemingly cosmetic adjustments change the nature and practical effect of the SAA. See also, Imperial Residential Design, Inc. v. Palms Dev. Group, Inc., 70 F.3d 96, 99 (11th Cir. 1995) ([A] copyright owners later execution of a writing which confirms an earlier oral agreement validates the transfer ab initio.); Arthur Rutenberg Homes, Inc. v. Drew Homes, Inc., 29 F.3d 1529, 1532 (11th Cir. 1994); Sabroso Publg, Inc. v. Caiman Records Am., Inc., 141 F. Supp. 2d 224, 228 (D.P.R. 2001).
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Righthaven cites three other district court cases from other circuits which deal with matters other than oral assignments later ratified by written agreements. First is a district court case, Intimo Inc. v. Briefly Stated, Inc., 948 F. Supp. 315 (S.D.N.Y. 1996), wherein the court allowed the parties to the assignment agreement to amend the agreement to include the right to sue for pre-assignment copyright violations. Notably, the plaintiff in that case would have maintained standing as not all claims were based on pre-assignment copyright violations. Id. at 31819. Nonetheless, the Intimo court allowed amendment to correct what it found was merely an oversight on the part of the parties because the agreement was silent on pre-assignment copyright violations despite the parties intent to transfer the right to sue on those violations. Here, Righthaven and Stephens Media may have wanted Righthaven to be able to sue, but the SAA was anything but silent in making sure that Stephens Media retained complete control over the Work rather than actually effectuate the necessary transfer of rights. The entirety of the SAA is concerned with making sure that Righthaven did not obtain any rights other than the right to sue. This careful exclusion of rights made even that transfer ineffectual under Silvers. The other two cases are also distinguishable. The second case, Infodek, Inc. v. Meredith-Webb Printing Co., Inc., 830 F. Supp. 614 (N.D. Ga. 1993), is based on facts largely similar to Intimo and the same analysis distinguishes it from the present case. The third is an unreported district court case, Gondinger Silver Art Co., Ltd. v. Intl Silver Co., No. 95 CIV. 9199, 1995 WL 702357 (S.D.N.Y. Nov. 28, 1995), that dealt with a later assignment because there was a dispute as to whether the relevant work was a work made for hire or whether the plaintiff was a coauthor of the work. The Gondinger court did not expressly determine the issue, finding that it was irrelevant as there was another basis for standing. Id. at *45. In sum, not one of the cases cited by Righthaven persuade, much less require, the Court to find standing based on Righthaven and Stephens Medias Amended SAA. / / 9

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4.

Democratic Undergrounds Standing to Challenge the SAA

Righthaven also contends that Democratic Underground lacks standing to challenge the validity of the SAA. However, Democratic Underground does not actually attack the SAAs validity, Democratic Underground only contends that the SAA prevented the Assignment from transferring the rights Righthaven and Stephens Media currently argue the Assignment transferred. In essence, Democratic Underground simply argues that, under the SAA, the Assignment only transferred one particular right, which failed to have the effect Righthaven wishes it had. Democratic Underground does not contest the SAAs validity or argue that it should be undone in any way. Further, the Sylvers court necessarily allowed the defendant to challenge whether the necessary rights were transferred from the rights holder to the plaintiff in that action. Otherwise the Ninth Circuit would not have been able address the plaintiffs lack of standing in Silvers and hold that a mere right to sue is insufficient to bring a copyright infringement action. 5. Prior Rulings within this District

Finally, Righthaven contends that multiple courts within this district have already determined that Righthaven has standing to bring claims for past infringement under the Silver standard based on the plain language of the copyright assignment. At best, this argument is disingenuous. As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Medias pecuniary interests. As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthavens and Stephens Medias current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Medias right to proceeds from these lawsuits. (Dkt. #79, Ex. 1, SAA Section 5 (granting Stephens Media a fifty percent interest in any recovery, minus costs).) / 10

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Since those orders were tainted by Righthavens failure to disclose the SAA and Stephens Medias true interest, those decisions are not persuasive and do not support standing here. D. Righthaven Lacks Standing to Bring this Action Because the SAA prevents Righthaven from obtaining any of the exclusive rights necessary to maintain standing in a copyright infringement action, the Court finds that Righthaven lacks standing in this case. Accordingly, the Court dismisses Righthaven from this case. However, Righthaven requests that upon such a finding, the Court grant it leave to join Stephens Media as a plaintiff to cure the jurisdictional defect. Adding Stephens Media, however, would not cure the jurisdictional defect as to Righthaven. Eden Toys, 697 F.2d at 32 n.3 (While [Federal Rule of Civil Procedure] 17(a) ordinarily permits the real party in interest to ratify a suit brought by another party, the Copyright Law is quite specific in stating that only the owner of an exclusive right under a copyright may bring suit. (internal citations and quotations omitted).) Also, as Stephens Media has already been brought into this suit as a counter-defendant to a declaratory judgment claim, the Court finds it unnecessary to join Stephens Media as a plaintiff. If Stephens Media wishes to assert claims against Democratic Underground, it may do so separately. II. Righthavens Motion and Democratic Undergrounds Motion are Both Moot Because the Court has dismissed Righthaven for lack of standing, the Court denies both Righthavens motion for voluntary dismissal with prejudice and Democratic Undergrounds motion for summary judgment on Righthavens claim as moot. Since Righthaven has been dismissed, its complaint is also dismissed. This, of course, does not affect Democratic Undergrounds right to bring a motion for attorney fees under the Act. Also, the counterclaim against Stephens Media remains and so the Court now turns its attention to Stephens Medias motion. / / / 11

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III.

Stephens Medias Motion to Dismiss or Strike A. Legal Standard 1. Motion to Dismiss Standard

In this action, as in all actions before a federal court, the necessary and constitutional predicate for any decision is a determination that the court has jurisdictionthat is the powerto adjudicate the dispute. Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998). The purpose of a complaint is two-fold: to give the defendant fair notice of the basis for the courts jurisdiction and of the factual basis of the claim. See Fed. R. Civ. P. 8; Skaff v. Meridien North Am. Beverly Hills, LLC., 506 F.3d 832, 843 (9th Cir. 2007). Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face that are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 98485 (9th Cir. 2008). Although the defendant is the moving party in a motion to dismiss brought under Rule 12(b)(1), the plaintiff is the party invoking the courts jurisdiction. As a result, the plaintiff bears the burden of proving that the case is properly in federal court. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). Attacks on jurisdiction pursuant to Rule 12(b)(1) can be either facial, confining the inquiry to the allegations in the complaint, or factual, permitting the court to look beyond the complaint. See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. Safe Air for Everyone v. Myer, 373 F.3d 1035, 1039 (9th Cir. 2004). A factual attack made pursuant to Rule 12(b)(1) may be accompanied by extrinsic evidence. Whitethorn v. F.C.C., 235 F. Supp. 12

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2d 1092, 109596 (D. Nev. 2002) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). Dismissal for lack of subject matter jurisdiction is appropriate if the complaint, considered in its entirety, fails to allege facts that are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 98485 (9th Cir. 2008). 2. Motion to Strike Standard

Under Rule 12(f) a court may strike from a pleading any redundant, immaterial, impertinent, or scandalous matter. Matter is immaterial if it has no bearing on the controversy before the court. In re 2TheMart.com, Inc Sec. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000). Allegations are impertinent if they are not responsive to the issues that arise in the action and that are admissible as evidence. Id. Scandalous matter is that which casts a cruelly derogatory light on a party or other person. Id. A court need not wait for a motion from the parties; it may act on its own to strike matter from a pleading. Fed. R. Civ. P. 12(f)(1). B. Analysis Stephens Medias motion essentially relies on two separate arguments for its position that there is no justiciable case or controversy: (1) that Stephens Media assigned all of the rights in and to the Work to Righthaven, thus negating the possibility of any case or controversy between Stephens Media and Democratic Underground, and (2) that Democratic Undergrounds counterclaim will necessarily be adjudicated by a decision on the original complaint and, therefore, should be stricken. The Court dispelled Stephens Medias first argument in the analysis above. Stephens Media expressly avoided transferring the exclusive rights to the Work to Righthaven by neutering future assignments in the SAA. As to Stephens Medias second argument, setting aside the fact that Stephens Media was never a party to Righthavens complaint, that argument is now moot as the Court has dismissed Righthavens complaint. Since the complaint has been dismissed, the issues raised by the counterclaim can only be adjudicated by litigating the counterclaim, not the now defunct complaint. 13

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1.

Justiciable Case or Controversy

Stephens Medias principle contention for why there is no justiciable case or controversy between Stephens Media and Democratic Underground relied on the Assignment of rights to Righthaven. Though the Court has refuted this particular argument, the Court will, nonetheless, quickly address the case or controversy requirement for a declaratory judgment action as it still pertains to this case. The Supreme Court has held that declaratory judgment claims must arise from disputes that are definite and concrete, touching the legal relations of parties having adverse legal interests, . . . real and substantial, and beget specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118, 127 (2007). Nonetheless, a party need not bet the farm and always actually engage in planned conduct that would result in threatened legal action before bringing a declaratory judgment suit. Id. at 13334. Contrary to its assertions in its moving papers, Stephens Media has threatened Democratic Underground with litigation because, according to the SAA, Stephens Media approved or consented to suit against Democratic Underground. (Dkt. #79, Ex. 1, SAA Section 3.3.) Additionally, Stephens Medias then CEO, Sherman Frederick, generally threatened potential defendants that he would send his little friend called Righthaven after them. (Dkt. #13, Answer and Countercl. 33.) Here, Stephens Media actually did send Righthaven after Democratic Underground. Further, Democratic Underground desires to re-post the allegedly infringing material to maintain a full archive of prior posts on its website. This could result in new copyright infringement litigation against Democratic Underground if the Court does not declare that the post did not infringe the copyright in the first instance. This threat of suit is sufficiently real and substantial that an actual case and controversy exists between these parties and warrants a declaratory judgment suit. Accordingly, and because the Court dismissed Righthaven and its complaint, the Court denies Stephens Medias motion. 14

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IV.

Order to Show Cause As shown in the preceding pages, the Court believes that Righthaven has made

multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthavens failure to disclose Stephens Media as an interested party in Righthavens Certificate of Interested Parties. (Dkt. #5.) Rule 7.1-1 of the Local Rules of Practice for the District of Nevada requires parties to disclose all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case. This Local Rule requires greater disclosure than Federal Rule 7.1, which only requires non-governmental corporate parties to disclose parent corporations or corporations owning more than 10% of the partys stock. Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isnt sure what would. 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. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court. / / / / / / / / 15

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CONCLUSION Accordingly, and for good cause appearing, IT IS HEREBY ORDERED that Righthaven is dismissed from this case for lack of standing. As such, Righthavens complaint is dismissed in its entirety. IT IS FURTHER ORDERED that Righthavens Motion for Voluntary Dismissal with Prejudice (#36) is DENIED as moot. IT IS FURTHER ORDERED that Stephens Medias Motion to Dismiss or Strike (#38) is DENIED. IT IS FURTHER ORDERED that the Democratic Undergrounds Motion for Summary Judgment (#45) is DENIED as moot. IT IS FURTHER ORDERED that Righthaven show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned. Dated: June 14, 2011.

____________________________________ ROGER L. HUNT Chief United States District Judge

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