Thursday, June 16, 2011

Can You Sell Your Right to Sue?

Dear Rich: We know somebody who was sued by Righthaven and we read that a Righthaven case was thrown out. Does that mean that all of the cases will get tossed? Can people get their money back if they settled? Chances are good that most of the recent infringement cases filed by Righthaven will get thrown out. The reason: Righthaven claimed that it had been assigned copyrights but it had only been granted the "right to sue."
Backstory. Righthaven is co-owned by an attorney and members of the family that also owns Stephens Media (which owns the LasVegas Review-Journal). According to this website, Righthaven's business model is "finding infringing content online, obtaining the rights to copyrighted content, registering the copyright with the U.S. Copyright Office, and then filing a copyright infringement lawsuit." (That's also a rough description of a copyright troll). Righthaven has filed over 140 lawsuits based on material excerpted from the Las Vegas Review-Journal.
The Big Problem. Righthaven made a deal with Stephens Media whereby they obtained the right to sue over infringed articles. Assigning the "right to sue" won't fly under copyright law (it's technically referred to as the "bare assignment of an accrued cause of action" and according to this case, is impermissible). The judge in the Righthaven case seemed pretty ticked off by the last minute revelations from the so-called "assignment" so you may see sanctions along with an award of attorney fees to the defendant. It's too early to see whether other cases will be dismissed (Righthaven can still appeal this decision), but if we were a betting blog, we'd bet on the defendants in those 140+ cases. As for those who already ponied up a settlement, that's a more challenging call. Setting aside settlements will likely require that the defendants prove that they were fraudulently induced into settlement. Some of the settlers are apparently considering a class action.