Righthaven LLC v. Vote For The Worst, LLC et al

Filing 17

REPLY to Response to 14 MOTION to Dismiss for Lack of Jurisdiction ; filed by Defendants David J. Della Terza, Nathan E. Palmer, Vote For The Worst, LLC. Defendants' Reply In Support of Defendants' Motion to Dismiss (Attachments: # 1 Declaration of Nathan E. Palmer)(Williams, Nikkya)

Righthaven LLC v. Vote For The Worst, LLC et al

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John L. Krieger (Nevada Bar No. 6023) [e-mail] Nikkya G. Williams (Nevada Bar No. 11484) [e-mail] LEWIS AND ROCA LLP 3993 Howard Hughes Parkway, Suite 600 Las Vegas, Nevada 89169 Telephone: [phone] Facsimile: [phone] Attorneys for Defendants Vote for the Worst, LLC, Nathan E. Palmer, and David J. Della Terza UNITED STATES DISTRICT COURT DISTRICT OF NEVADA RIGHTHAVEN, LLC, a Nevada limitedliability company vs. Plaintiff, Case No.: 2:10-CV-01045-KJD-RJJ DEFENDANTS' REPLY IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS

VOTE FOR THE WORST, LLC, an Utah limited-liability company; NATHAN E. PALMER, an individual; and DAVID J. DELLA TERZA, an individual Defendants. Defendants Vote for the Worst, LLC, Nathan E. Palmer, and David J. Della Terza, by and through their counsel, hereby submit their reply in support of their motion to dismiss. I. Righthaven Lacks Standing to Maintain Its Copyright Infringement Claim Against Defendants. Righthaven fails to demonstrate that it has the requisite standing to prosecute the instant lawsuit. Although Righthaven produced a copy of the assignment ("Assignment") from Stephens Media LLC ("Stephens Media") that purports to grant it all of the rights necessary to sue Defendants as an exhibit to its Opposition, the Assignment is invalid for a number of reasons. (See Doc. 15-1 Ex. 1.) On its face, the Assignment appears to be a valid transfer from Stephens Media to Righthaven of "all copyrights requisite" for Righthaven to have the right to seek redress for infringement of the work. (Id.) However, what "requisite" rights are transferred is never specified -1546470.1

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within the agreement. (Id.) Moreover, Stephens Media retains unknown reversions in those rights, making it impossible to determine just what right Righthaven has to pursue Defendants for copyright infringement. As explained below, the Assignment is ambiguous and, therefore, invalid. Moreover, the wording of the Assignment itself implies nothing less than a champertous agreement, which is invalid under Nevada law. Section 204(a) of the Copyright sets forth the requirements for transferring copyrights, stating "[a] transfer of copyright ownership ... is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." 17 U.S.C. § 204(a). Section 204(a) does not mandate a particular form of transfer document. A writing memorializing the assignment of copyright interests "doesn't have to be the Magna Carta; a one-line pro forma statement will do." Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990). However, even though there is no prescribed form, the terms of any writing purporting to transfer copyright interests, even a oneline pro forma statement, must be clear and unambiguous to be valid. See Playboy Enterprises, Inc. v. Dumas, 831 F. Supp. 295, 308 (S.D.N.Y.1993), aff'd in part and rev'd in part on other grounds, 53 F.3d 549 (2d Cir.1995). Ambiguity in a copyright assignment is resolved in favor of the copyright owner retaining the rights at issue. See Beig v. Hovanian Enters., Inc., 157 F. Supp. 2d 475, 480 (E.D. Pa. 2001) ("any ambiguity concerning the alleged transfer must be interpreted in favor of the original copyright holder in order to satisfy the purpose of Section 204(a).") In other words, ambiguous copyright assignments do not result in the transfer of copyrights--they remain vested in the original owner. As a leading authority on copyright law has stated: While a transfer document need not use the magic word "copyright," the statute nevertheless requires that the transfer document be identified as one which involves some form of "transfer of copyright ownership." This is a defined term and cannot be ignored with a wink and a nudge that we all know what was meant. The essence of that definition for our purposes is that there must be an assignment or license of one of the exclusive rights. Section 204(a) adds the additional requirement that the assignment or license document must specify which rights are being transferred. 2 William F. Patry, Patry on Copyrights § 5:108 (2010) (emphasis added); see also Apparel Bus. Sys., LLC v. Tom James Co., No. 06-1092, 2008 WL 858754, at *14 (E.D. Pa. Mar. 28, 2008) -2546470.1

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(assignment of "all Intellectual Property rights necessary for or required for the conduct of [] business ..." held invalid). Thus, because there are no less than six exclusive copyrights that may be assigned, assignments that do not mention which exclusive rights are being assigned have been held ambiguous and invalid under 17 U.S.C. § 204(a).1 For example, in Playboy Enterprises v. Dumas, 53 F.3d 549 (2d Cir.1995), the Second Circuit upheld a district court opinion, in which the following legend on the back of a check was held ambiguous and, therefore, not a valid assignment: "Payee acknowledges payment in full for the assignment to Playboy Enterprises, Inc. of all right, title and interest in and to the following items." Id. at 564. See also Pamfiloff v. Giant Records, 794 F. Supp. 933, 936 (N.D. Cal. 1992) (holding agreement that made no reference to "publishing rights or rights to musical compositions" was not a sufficient writing under Section 204(a)); Home Design Servs., Inc. v. Park Square Enters., Inc., No. 6:02-CV-637-ORL28JGG, 2005 WL 1027370, at *3 (M.D. Fla. May 2, 2005) ("the [transfer] should, at a minimum, make mention of the copyright which is being transferred"). Here, the Assignment fails to specify which exclusive rights it purports to transfer, is ambiguous, and therefore, invalid. More importantly, Stephens Media's reversion rights within the Assignment raise serious questions as to what rights Righthaven actually has in the copyrighted work, and how meaningful those rights are. All of the rights Stephens Media assigns to Righthaven are "subject to the Assignor's rights of reversion," which are not specified anywhere in the Assignment. (Id.) This raises serious questions about what rights Righthaven actually has to sue Defendants and those similarly situated, as it could be paying Stephens Media for the bare right to sue for copyright
Section 106 of the Copyright Act of 1976 identifies six exclusive rights: · The right to reproduce the copyrighted work in copies or phonorecords; · The right to prepare derivative works based upon the copyrighted work; · The right to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; · In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; · In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and · In the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. See 17 U.S.C. § 106.
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infringement, with those rights reverting back to Stephens Media once Righthaven has recovered a settlement or judgment from the affected defendants. In fact, the wording of the purported transfer seems to indicate that the sole purpose of assigning the copyrights is to give Righthaven technical legal standing to pursue infringements on rights that, in all actuality, still belong to Stephens Media. Such arrangements are prohibited as champertous under Nevada law. See Lum v. Stinnett, 488 P.2d 347, 350 (1971) (citing Gruber v. Baker, 23 P. 858, 862 (1890)); Prosky v. Clark, 32 Nev. 441 (Nev. 1910)). The timing and language of the Assignment raises a strong inference that the Assignment is champertous. "Champerty is maintenance with the additional feature of an agreement for the payment of compensation or personal profit from the subject matter of the suit." Lum v. Stinnett, 488 P.2d 347, 350 (1971). "Maintenance exists when a person without interest in a suit

officiously intermeddles therein by assisting either party with money or otherwise to prosecute or defend it." Id. The original article at issue here was first published on April 11, 2010.

Righthaven alleges that the infringing article was posted to Defendants' website on April 12, 2010. On May 25, 2010, after learning of the alleged infringement, Stephens Media assigned "all copyright requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as to seek redress for past, present and future infringements...." (Doc. 15-1 Ex. 1 (emphasis added).) As consideration for this assignment, the Assignment lists "monetary commitments and commitments to services to be provided and/or already provided by Righthaven LLC...." (Id.) The wording of the

Assignment itself implies nothing less than a champertous agreement. Stephens Media agrees to let Righthaven enforce Stephens Media's rights, but without an acceptable attorney-client relationship, and Righthaven agrees to provide services and money in return for prosecuting a lawsuit. Under Nevada law, the Assignment is champertous and is, therefore, invalid. Finally, the presumption of copyright ownership from a copyright registration does not save Righthaven. Although copyright ownership is presumed where there is a certificate of registration, this presumption of ownership is rebuttable. -4546470.1

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prima facie case of infringement." Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 F.3d 1140, 1144 (9th Cir. 2003). Here, the Assignment is in question, particularly given its ambiguous terms. As a consequence, it is not afforded the presumption of ownership. The Court should find Righthaven does not have sufficient standing to pursue its claim, and, thus, that there is not subject matter jurisdiction in this case. Righthaven has not established ­ and cannot establish ­ that it is the proper assignee of the relevant copyright and fully and properly entitled to sue Defendants for alleged infringement. Accordingly, the Court should grant Defendants' Motion to Dismiss for lack of subject matter jurisdiction. II. Righthaven Has Not Established That This Court Has Specific Personal Jurisdiction Over Defendants.2 Once a defendant has raised a challenge to personal jurisdiction under Rule 12(b)(2), the Court must satisfy itself that jurisdiction is proper before proceeding to the merits of the case. Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008). Under the "effects test," a plaintiff must show 1) an intentional act 2) expressly aimed at the forum that 3) causes injury the defendant knew would be felt in the forum. See Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010). Although Righthaven accuses Defendants of willful behavior and express aiming allegedly giving rise to specific personal jurisdiction in the District of Nevada, Righthaven is unable to demonstrate that the exercise of jurisdiction would be proper before this Court. A. Defendants' Conduct Is Insufficient to Form the Basis for Personal Jurisdiction.

The main thrust of Righthaven's argument is that Defendants willfully infringed and, therefore, they are subject to personal jurisdiction in Nevada. Righthaven ignores the fact that the allegedly infringing article was not posted by Defendants; it was posted by a third-party from an IP address in India. (Doc. 14.1 ¶ 9.) Nevertheless, Righthaven argues that the Ninth Circuit's decision in Columbia Pictures Television v. Krypton Broadcasting of Birmingham, Inc., 106 F.3d 284 (9th Cir. 1997) is controlling. According to Plaintiff, the Court need not apply any "elemental

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Righthaven did not argue for general personal jurisdiction in its Opposition and has, therefore, conceded that the Court lacks general personal jurisdiction over Defendants.

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or factored" analysis to determine the existence of specific personal jurisdiction. Plaintiff would apparently have the Court disregard the Ninth Circuit's three part test for determining the existence of specific personal jurisdiction. As Plaintiff's argument goes, if willful copyright infringement and the defendant's knowledge of the plaintiff's location in the forum state are alleged, that is all that is required. (See Doc. 15 at 19.) Plaintiff, however, misreads Columbia Pictures. What the Ninth Circuit actually held in Columbia Pictures was that a finding of willful copyright infringement would satisfy one element -- the purposeful availment/direction element -- of the Ninth Circuit's broader, three part, test for the exercise of specific personal jurisdiction. Thus, even under Columbia Pictures, a plaintiff must still allege facts demonstrating the remaining two elements (i.e., that the plaintiff's cause of action arises out of the defendant's forum contacts and that the exercise of personal jurisdiction would be reasonable). See Columbia Pictures, 106 F.3d at 289 ("We use a three part test for analyzing whether the exercise of specific jurisdiction satisfies the requirements of due process: (1) the defendant must purposefully avail himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must arise out of or result from the defendant's forum-related activities; and (3) the exercise of jurisdiction must be reasonable"). 1. Defendants' Conduct Was Not Willful.

The alleged infringement in this case took place in the comments section of a message board. (Doc. 1-1 Ex. 3). The alleged infringement was posted by an individual forum user, with an IP address emanating from India, and buried deep inside a comment thread on one of many discussion boards at <VoteForTheWorst.com> (herein "VFTW"). (Doc. 14-1 ¶ 9.) There was no voluntary act by the defendants at all, let alone one sufficient to confer jurisdiction. Because the Defendants did not post the infringing article to VFTW, their conduct is inimical to Righthaven's claim that they acted willfully. (Doc. 14-1 ¶ 10, Doc. 14-2 ¶ 4.) Furthermore, Defendants were not players in a scheme to facilitate copyright infringement either. Once the alleged infringement was brought to the Defendants' attention, the offending content ­ one-third of a Las Vegas Review-Journal article, posted for commentary purposes ­ was -6546470.1

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taken down almost immediately (despite the strong indications that its posting was fair use), before this lawsuit was filed. (Doc. 14-1 ¶ 11.) This conduct belies Righthaven's allegations of willful copyright infringement, and is inconsistent with a desire to pirate another's content. See N.A.S. Import Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2d Cir. 1992) (holding that the willfulness ­ or lack thereof ­ of a defendant's infringement can be inferred from the defendant's overall conduct). Righthaven has not introduced any additional evidence indicating that VFTW was an actual infringer of its content or any other source's, but only the allegation that infringing content was posted on the forum without allowance for protected fair use. Consequently, VFTW's conduct did not constitute willful infringement and thus willful harm inflicted upon the forum state. 2. Defendants' Conduct Was Not Willfully Blind to Copyright Infringement.

As an alternative argument to willful conduct, Righthaven argues that the Defendants acted with "willful blindness" to the alleged copyright infringement occurring on their website. Though Righthaven did not supply any precedent to define what constitutes "willful blindness," this conduct has been addressed before on the national stage. In Microsoft Corp. v. Rechanik, 249 Fed. Appx. 476, 479 (7th Cir. 2007), "willful blindness" was described as "ostrich-like," involving the intentional avoidance of knowledge regarding shipments from unauthorized suppliers of Microsoft products, refusing to inquire as to the products' authenticity, and refusing to examine the products to determine whether they were counterfeit. The court in Jalbert v. Grautski addressed the physical equivalent of this very case, finding that the defendant was not liable for infringement on a willful blindness theory when his conduct amounted to failing to notice an employee was using his workplace for piracy and copyright infringement by misappropriating content. 554 F. Supp. 2d 57, 72 (D. Mass. 2008). Liability fell onto the employee ­ not the employer. Id. This case resembles Jalbert and should lead to the same conclusion against finding infringement. Deep into one of VFTW's many forums, an unknown user with an overseas IP address posted the allegedly infringing article. Once Defendants became aware of the excerpts and link back to the original article, they removed them, before this lawsuit was even filed. This -7546470.1

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was not done on a playground of infringement provided by VFTW, but like the workplace in Jalbert, a forum that did not actively or negligently promote copyright infringement. (See Supplemental Declaration of Nathan E. Palmer, ¶¶ 2-5.) Plaintiff's numerous, unsupported

allegations that Defendants do not proactively handle copyright infringement is wholly belied by the fact that Defendants removed the allegedly infringing content before Plaintiff filed its lawsuit. As such, there is no basis on which Righthaven's willful blindness theory of infringement can be supported, and personal jurisdiction on this premise would be improper. 3. Defendants Did Not Expressly Aim any Conduct at Nevada.

The Ninth Circuit has made it clear that "something more than mere foreseeability [is required] in order to justify the assertion of personal jurisdiction." Brayton, 606 F.3d at 1129. Rather, to satisfy the express aiming prong of the effects test, a plaintiff must show that the intentional act committed by the defendants was explicitly targeted at the forum. See generally Brayton, 606 F.3d at 1129; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 806 (9th Cir. 2004; and Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006). Righthaven argues, circularly, that the Defendants knew the infringing content originated from Nevada and that the harm from infringement would be felt there because the material originated from the Las Vegas Review-Journal. As noted, this is impossible because the Defendants did not post the allegedly infringing content, (Doc. 14-1 ¶ 9) and did not know a priori it was excerpted from the Las Vegas Review-Journal. Similarly, the absence of this knowledge makes it impossible for the Defendants to know that any harm from infringement would be felt in Nevada. There is no specific direction of VFTW's content generally to Nevada nor any way to direct its effects to the state. VTFW has no physical contact with Nevada, does not direct its site to the state, and appears identical when accessed anywhere in the world. (Doc. 14-1 ¶ 5-7.) In fact, zero viewers of the page containing the allegedly infringing content hailed from Nevada. (Doc.14 ¶ 9.) Not only was there no direction of VFTW's content or the harm of infringement into Nevada, not a single Nevada resident viewed it. /// -8546470.1

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B.

The Exercise of Personal Jurisdiction Would Be Unreasonable.

Even if this Court could exercise personal jurisdiction over Defendants, doing would be reasonable. Where there is a compelling case that other considerations makes exercising

jurisdiction unreasonable, courts in this Circuit will decline to exercise personal jurisdiction over a defendant. Core-Vent Corp. v. Nobel Indust., 11 F.3d 1482, 1487-88 (9th Cir. 1993). The factors governing this inquiry are set forth in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985): 1) the burden on the defendant of defending in the forum; 2) the forum state's interest in adjudicating the dispute; 3) the plaintiff's interest in obtaining convenient, effective relief; 4) the court's interest in obtaining the most efficient resolution of the controversy; and 5) the states' shared interest of furthering fundamental substantive social policies. Contrary to Righthaven's arguments, these factors support the Court declining to exercise jurisdiction over the Defendants in the aggregate; individually, they are all favorable, or at least neutral, to the Defendants. No individual factor weighs in Righthaven's favor, nor does the weight of the aggregate factors. Defendants' burdens in litigating the claims in this case, as residents of Illinois and Utah, with the majority of their operations in Illinois, are significantly higher than Plaintiff's, a Nevada limited liability company operating in Nevada. Although Plaintiff's entire business centers around litigation in the District of Nevada to enforce copyrights, Defendants run a website as a side interest, lack Plaintiff's level of sophistication, and, having already incurred significant financial burden in this case, would continue to pay substantial costs related to this litigation if it were to continue before this Court. Righthaven may claim an interest in litigating this matter in Nevada, but it is clear that Righthaven is merely an arm of an Arkansas-based company, and a champertous enterprise between that Arkansas company and its "grubstaked" copyright-trolling operation. See Sherman Frederick, Copyright Theft: We're Not Taking It Anymore, Las Vegas Review Journal (May 28, -9546470.1

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2010)3. Furthermore, Righthaven is desperately (albeit unsuccessfully) attempting to find other newspapers that are willing to join in its bizarre campaign. See David Kravets, Second Newspaper Chain Joins Copyright Trolling Operation.4 Righthaven fancies itself a potentially national

corporation, yet seems to become provincial when it comes to inconveniencing and bullying smaller and less-funded defendants, who have engaged in de minimis offenses, if they are offenses at all. This Court's interest in resolving the dispute is not as significant as Righthaven claims: none of the Defendants reside in Nevada, none of the complained of activity occurred there, and there is no evidence that the injury, if any, was felt within the forum state. Thus, Nevada's courts have minimal interest in hearing this case. Plaintiff could just as easily obtain relief from the Federal Courts in Illinois. The relief rendered by those courts would be just as effective as that which could be granted by this Court. As Plaintiff does not have a constitutional right to a convenient or speedy trial in a civil matter, there is no reason why this dispute must be heard in the District of Nevada, as opposed to another federal court ­ especially when this dispute resolves around federal copyright laws, which will be enforced identically across all forums. This Court lacks personal jurisdiction over Defendants for the reasons stated above, and thus could most efficiently resolve this controversy by dismissing the case. Assuming arguendo that the Court does have personal jurisdiction over the Defendants, the most efficient resolution of this case would still be realized in the federal courts in Illinois, where the Defendants can be found. As Plaintiff is better-capitalized and more familiar with legal proceedings than Defendants, it would be less of a burden for Plaintiff to pursue its claims in foreign courts than for Defendants to litigate in the District of Nevada, where they have no contacts. Whether this is achieved by dismissal for lack of personal jurisdiction or transferring the case, there is no outcome prioritizing this Court's interest in efficiently resolving this litigation that involves allowing the case to proceed to trial.
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available at http://www.lvrj.com/blogs/sherm/Copyright_theft_Were_not_taking_it_anymore.html?ref=164 (last accessed Sept. 9, 2010) 4 http://www.wired.com/threatlevel/ 2010/08/copyright-troll-expanding/ (Aug. 30, 2010).

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The shared interests of the states involved in this case ­ Nevada and Illinois ­ and all states, more broadly, are undermined by this case and will be further damaged if it continues. The primary purpose of this suit, and effect, to date, has been to silence Defendants, limit their participation in speech the Plaintiff finds harmful, and ensnare them in protracted, costly litigation. III. CONCLUSION Righthaven has failed to show why its suit should be maintained before this Court and in the District of Nevada. There are serious doubts as to Righthaven's standing to pursue its claim. Even if the issue of Righthaven's standing is not resolved, it has failed to demonstrate that this Court has personal jurisdiction over Defendants, or that exercising such jurisdiction would be reasonable. For the reasons specified above, the Court should grant Defendants' Motion to Dismiss DATED this 13th day of September, 2010.

By:

/s/ Nikkya G. Williams John L. Krieger (Nevada Bar No. 6023) Nikkya G. Williams (Nevada Bar No. 11484) LEWIS AND ROCA LLP 3993 Howard Hughes Parkway Suite 600 Las Vegas, Nevada 89169 Attorneys for Defendants Vote for the Worst, LLC, Nathan E. Palmer, and David J. Della Terza

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CERTIFICATE OF SERVICE Pursuant to Federal Rule of Civil Procedure 5(b), I hereby certify that I am an employee of Lewis and Roca LLP and that on this 13th day of September, 2010, I caused the document entitled: DEFENDANTS' REPLY IN SUPPORT OF DEFENDANTS' MOTION TO DISMISS to be served as follows: [ ] by depositing same for mailing in the United States Mail, in a sealed envelope addressed to Steven A. Gibson, Esq., Righthaven, LLC, 9960 West Cheyenne Avenue, Suite 210, Las Vegas, Nevada, 89129-7701, upon which first class postage was fully prepaid; and/or Pursuant to Fed. R. Civ. P. 5(b)(2)(D), to be sent via facsimile as indicated; and/or to be hand-delivered; by the Court's CM/ECF system. /s/ Nikkya G. Williams Nikkya G. Williams

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