Righthaven LLC v. Democratic Underground, LLC et al

Filing 168

MOTION for Summary Judgment on Counterclaim and Memorandum of Points and Authorities In Support Thereof [Redacted] # 167 by Defendants David Allen, Democratic Underground, LLC, Counter Claimant Democratic Underground, LLC. Responses due by 11/17/2011. (Attachments: # 1 Declaration of Kurt Opsahl In Support of Motion for Summary Judgment on Counterclaim, # 2 Exhibit 1, # 3 Exhibit 2, # 4 Exhibit 3, # 5 Exhibit 4, # 6 Exhibit 5, # 7 Exhibit 6, # 8 Exhibit 7, # 9 Exhibit 8, # 10 Exhibit 9 (redacted), # 11 Exhibit 10, # 12 Exhibit 11, # 13 Exhibit 12 (redacted), # 14 Exhibit 13, # 15 Exhibit 14, # 16 Exhibit 15, # 17 Exhibit 16, # 18 Exhibit 17 (redacted), # 19 Proposed Order Granting Democratic Underground's Motion for Summary Judgment)(Johnson, Jennifer)

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1 2 3 4 5 6 7 8 9 10 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LAURENCE F. PULGRAM (CA State Bar No. 115163) (pro hac vice) lpulgram@fenwick.com JENNIFER J. JOHNSON (CA State Bar No. 252897) (pro hac vice) jjjohnson@fenwick.com CLIFFORD C. WEBB (CA State Bar No. 260885) (pro hac vice) cwebb@fenwick.com FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, California 94104 Telephone: (415) 875-2300 Facsimile: (415) 281-1350 KURT OPSAHL (CA State Bar No. 191303) (pro hac vice) kurt@eff.org CORYNNE MCSHERRY (CA State Bar No. 221504) (pro hac vice) corynne@eff.org ELECTRONIC FRONTIER FOUNDATION 454 Shotwell Street San Francisco, California 94110 Telephone: (415) 436-9333 Facsimile: (415) 436-9993 CHAD BOWERS (NV State Bar No. 7283) bowers@lawyer.com CHAD A. BOWERS, LTD 3202 West Charleston Boulevard Las Vegas, Nevada 89102 Telephone: (702) 457-1001 Attorneys for Defendant and Counterclaimant DEMOCRATIC UNDERGROUND, LLC, and Defendant DAVID ALLEN UNITED STATES DISTRICT COURT FOR THE 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. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM Case No. 2:10-cv-01356-RLH (GWF) NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF CASE NO. 2:10-CV-01356-RLH (GWF) TABLE OF CONTENTS 1 Page 2 NOTICE OF MOTION ................................................................................................................... 1  3 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 2  4 INTRODUCTION .......................................................................................................................... 2  5 STATEMENT OF FACTS ............................................................................................................. 4  6 A.  Democratic Underground and David Allen ............................................................ 4  B.  The “Pampango” Post ............................................................................................. 5  C.  The Article’s Origins .............................................................................................. 5  D.  Righthaven Sues Democratic Underground and David Allen ................................ 6  7 8 9 10 LEGAL STANDARD ..................................................................................................................... 7  11 ARGUMENT .................................................................................................................................. 7  MOUNTAIN VIEW I.  ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 THE UNDISPUTED FACTS DEMONSTRATE THAT PLAINTIFF’S CLAIMS WERE MERITLESS FROM THEIR INCEPTION ........................................................... 7  14 A.  Democratic Underground Has Committed No Volitional Act of Infringement ............................................................................................................ 7  B.  The Excerpt is a Non-Infringing Fair Use............................................................. 10  15 16 1.  17 Posting the Excerpt to the DU Website Was Highly Transformative and Minimally Commercial ...................................................................... 10  18 a.  Pampango’s Post is a Non-Commercial Transformative Use ....... 11  19 b.  Democratic Underground’s Repost Would Be A Minimally Commercial Transformative Use .................................................. 12  20 2.  The Highly Factual, Politically Important, and Previously Published Nature of the Article Supports Fair Use.................................................... 12  3.  The Small Amount of the Article Taken Supports a Finding of Fair Use ............................................................................................................ 13  4.  The Lack of Potential or Actual Market Harm Supports Fair Use ........... 15  21 22 23 24 (1)  Pampango’s Use Did Not Harm the Market ......... 15  (2)  Reposting Would Not Harm the Market ............... 18  25 26 5.  27 The Public Interest Is Served By Discussion Boards Like the DU Website...................................................................................................... 21  28 CONCLUSION ............................................................................................................................. 22  MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM i CASE NO. 2:10-CV-01356-RLH (GWF) TABLE OF AUTHORITIES 1 Page(s) 2 CASES 3 Am. Geophysical Union v. Texaco Inc., 60 F.3d 913 (2d Cir. 1994) ...................................................................................................... 11 4 5 6 7 8 9 10 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) .................................................................................................................. 7 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) ......................................................................................................... passim Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) ...................................................................................................... 8 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .................................................................................................................. 7 Consumers Union of U.S., Inc. v. Gen. Signal Corp., 724 F.2d 1044 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984) ................................................................................................................ 13 CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004)................................................................................................. 8, 9 Elvis Presley Enters., Inc. v. Passport Video, 349 F.3d 622 (9th Cir. 2003)................................................................................................... 15 Field v. Google, Inc., 412 F. Supp. 2d 1106 (D. Nev. 2006) ....................................................................................... 8 Fisher v. Dees, 794 F.2d 432 (9th Cir. 1986)................................................................................................... 10 Harper & Row, Publrs. v. Nation Enters., 471 U.S. 539 (1985) ................................................................................................................ 12 Hustler Magazine, Inc. v. Moral Majority, Inc., 796 F.2d 1148 (9th Cir. 1986)................................................................................................. 21 L.A. News Serv. v. CBS Broad., Inc., 305 F.3d 924 (9th Cir. 2002)................................................................................................... 13 Marobie-Fl., Inc. v. Nat'l. Ass'n of Fire Equip. Distribs., 983 F. Supp. 1167 (N.D. Ill. 1997) ........................................................................................... 8 Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574 (1986) .................................................................................................................. 7 Mattel, Inc. v. Walking Mountain Prod., 353 F.3d 792 (9th Cir. 2003)................................................................................................... 22 Maxtone-Graham v. Burtchaell, 803 F.2d 1253 (2d Cir. 1986) .................................................................................................. 14 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM ii CASE NO. 2:10-CV-01356-RLH (GWF) 1 New Era Publ’ns Int’l ApS v. Carol Publ’g Group, 904 F.2d 152 (2d Cir. 1990) .................................................................................................... 14 2 3 Nuñez v. Caribbean Int’l News Corp., 235 F.3d 18 (1st Cir. 2000) ..................................................................................................... 10 4 Parker v. Google, Inc., 422 F. Supp. 2d 492 (E.D. Pa. 2006) ........................................................................................ 8 5 6 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).......................................................................................... passim 7 Religious Tech. Ctr. v. Netcom On-line Commnc’n Servs., 907 F. Supp. 1361 (N.D. Cal. 1995) ............................................................................... 8, 9, 11 8 9 Righthaven LLC v. Democratic Underground, LLC, _ F.Supp.2d _, 2011 WL 2378186 (D. Nev. June 14, 2011) ............................................ 3, 5, 6 10 Righthaven LLC v. Hill, No. 1:11-cv-00211 (D. Colo. Apr. 7, 2011), Dkt. 16 ................................................................ 2 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 Righthaven, LLC v. Hoehn, No.: 2:11-CV-00050-PMP-RJJ, 2011 WL 2441020 (D. Nev. June 20, 2011) .................................................................................................... 11, 13 13 14 Righthaven LLC v. Pahrump Life, Case No. 10-cv-01575-JCM (D. Nev. Aug. 12, 2011), Order Dismissing Complaint (Dkt. 67) ............................................................................... 2, 14 15 16 Righthaven LLC v. Realty One Group, Inc., Case. No. 2:10-cv-01036-LRH-PAL, 2010 WL 4115413 (D. Nev. Oct. 19, 2010) .................................................................................................... passim 17 18 Righthaven LLC v. Realty One Group, Inc., Case. No. 2:10-cv-01036-LRH-PAL, Dkt. 12 at 10-11 .......................................................... 14 19 Sega Enters. Ltd. v. Maphia, 948 F. Supp. 923 (N.D. Cal. 1996) ..................................................................................... 9, 11 20 21 Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) .................................................................................................... 11, 14, 21 22 Stewart v. Abend, 495 U.S. 207 (1990) ................................................................................................................ 10 23 24 Sundeman v. Seajay Soc’y, Inc., 142 F.3d 194 (4th Cir. 1998)................................................................................................... 14 25 Twin Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366 (2d Cir. 1993) ............................................................................................ 13, 14 26 27 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM iii CASE NO. 2:10-CV-01356-RLH (GWF) 1 STATUTES 2 17 U.S.C. § 106 ............................................................................................................................... 8 3 17 U.S.C. § 107 ................................................................................................................. 10, 11, 12 4 17 U.S.C. § 107(4) ........................................................................................................................ 15 5 RULES 6 Fed. R. Civ. P. 56(c)(2) ................................................................................................................... 7 7 OTHER AUTHORITIES 8 H.R. Rep. No. 105-551(I), (1998) ................................................................................................... 8 9 H.R. Rep. No. 2222, 60th Cong., 2d Sess. 7 (1909) ..................................................................... 21 10 U.S. CONST. Article I, § 8, cl. 8..................................................................................................... 21 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM iv CASE NO. 2:10-CV-01356-RLH (GWF) 1 2 NOTICE OF MOTION Defendant/Counter-Claimant Democratic Underground, LLC, by and through its attorneys 3 of record, hereby move pursuant to Fed. R. Civ. P. 56 for summary judgment against 4 Counterdefendant Stephens Media, LLC on the counterclaim for a declaration of non- 5 infringement on the grounds that (i) Democratic Underground committed no “volitional act” 6 giving rise to a claim for direct copyright infringement; and (ii) fair use provides a complete 7 defense to infringement. As there are no genuine issues of material fact, Democratic 8 Underground is entitled to summary judgment as a matter of law. 9 This motion is supported by the following Memorandum of Points and Authorities, the 10 pleadings and papers on file, the Declaration of Kurt Opsahl, the Declaration of David Allen 11 (Dkt. 48) filed separately, and any oral argument the Court allows at hearing of the Motion. MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 Dated this 24th day of October, 2011. FENWICK & WEST LLP 13 14 By: 15 16 17 18 /s/ Jennifer J. Johnson JENNIFER J. JOHNSON Fenwick & West LLP 555 California Street, 12th Floor San Francisco, California 94104 Attorneys for Defendant and Counterclaimant DEMOCRATIC UNDERGROUND, LLC, and Defendant DAVID ALLEN 19 20 21 22 23 24 25 26 27 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 1 CASE NO. 2:10-CV-01356-RLH (GWF) 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION As this Court previously recognized, “Righthaven and Stephens Media have attempted to 3 4 create a cottage industry of filing copyright claims, making large claims for damages and then 5 settling claims for pennies on the dollar.”1 Counter-Defendant Stephens Media LLC’s business 6 partner, Righthaven LLC, has filed more than 200 copyright actions in this Court, each case 7 alleging “willful infringement” of a copyright owned by Stephens Media and attempting to 8 extract settlements by threats of statutory damages (up to $150,000), seizures of domain names 9 and attorneys’ fees. For most defendants, it makes no economic sense to invest in litigation.2 10 Regardless of the merits, it is better to pony up a settlement and get on with their work. The 11 settlement proceeds would then be shared with Stephens Media. In this action, Righthaven sued a political discussion forum, Defendant and Counter- MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 Claimant Democratic Underground LLC, and, for added in terrorem effect, its principal, David 14 Allen (collectively “Defendants”), based on a forum participant’s posting of a short, five sentence 15 excerpt of a fifty sentence news article copyrighted by Stephens Media. Much to the Counter- 16 Defendants’ surprise, these Defendants decided to take a different approach: fighting back. As 17 the court is aware, Democratic Underground responded with a counterclaim that joined 18 Righthaven’s affiliate and funder, Stephens Media, LLC, and, as a result of discovery, exposed 19 Righthaven’s lack of ownership of the copyright necessary to pursue its claim. It is now time to resolve the case as to the Counter-Defendant, Stephens Media. As this 20 21 Court has already found, Stephens Media played a substantial role in Righthaven’s business 22 model and lawsuit against Defendants. May 15, 2011 Declaration of Mark Hinueber (Dkt. 105-1) 23 at ¶ 7; see generally May 20, 2010 Letter from Righthaven to Mark A. Hinueber (October 2011 24 Declaration of Kurt Opsahl (“Opsahl Decl.”) at ¶ 3, Ex. 1). Stephens Media threatened the public 25 1 26 27 28 Order on Motion for Reconsideration (Dkt. 94) at 2; see generally, Righthaven LLC v. Pahrump Life, Case No. 10-cv-01575-JCM (D. Nev. Aug. 12, 2011), Order Dismissing Complaint (Dkt. 67) (including findings of fact on background to these lawsuits). 2 As the Colorado District Court recognized, Righthaven’s business plan is “encouraging and exacting settlements from Defendants cowed by the potential costs of litigation and liability.” Righthaven LLC v. Hill, No. 1:11-cv-00211 (D. Colo. Apr. 7, 2011), Dkt. 16. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 2 CASE NO. 2:10-CV-01356-RLH (GWF) 1 that if it republished Stephens Media work, it would “send my little friend Righthaven” to do its 2 bidding. Righthaven LLC v. Democratic Underground, LLC, _ F.Supp.2d _, 2011 WL 2378186, 3 *8 (D. Nev. June 14, 2011); Dkt. 47 ¶ 8, Ex. C. Before this suit, Righthaven told Stephens Media 4 “If you wish for Righthaven to refrain from pursuing infringement actions [regarding the listed 5 work] please advise us without five business days.” Opsahl Decl. ¶ 3, Ex. 1. This Court has 6 acknowledged that by consenting to the suit, on a copyright in which it owned an interest, 7 Stephens Media has threatened and directed litigation against Democratic Underground. 8 Democratic Underground, 2011 WL 2378186, *8. Indeed, Stephens Media “actually did send 9 Righthaven after Democratic Underground.” Id. Thus, as this Court has determined, there is a MOUNTAIN VIEW infringement. Id. Moreover, Democratic Underground desires to repost the work at issue to 12 ATTORNEYS AT LAW live controversy over whether or not the actions described in the Counterclaim amount to 11 F ENWICK & W EST LLP 10 maintain a complete archive, and it should receive a declaration that such a future post will not 13 lead to further threats and litigation at the direction of Stephens Media. Declaration of David 14 Allen (Dkt. 48) (“Allen Decl.”) ¶ 25. 15 As described below, the undisputed facts establish that Democratic Underground did not 16 infringe Stephens Media’s copyright on at least two grounds (among others not briefed here): (i) 17 as the mere host of a discussion forum to which a third party posted an excerpt of an article, 18 Democratic Underground committed no “volitional act” of copying or distribution giving rise to 19 copyright liability; and (ii) in all events, fair use provides a complete defense to the infringement 20 claimed. 21 Accordingly, this Court should enter judgment in favor of Counter-Claimant Democratic 22 Underground against Counter-Defendant Stephens Media and declare that (1) Democratic 23 Underground did not engage in copyright infringement by virtue of the prior posting by a user of 24 the Democratic Underground forum and (2) will not be infringing for the proposed reposting by 25 Democratic Underground itself. 26 27 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 3 CASE NO. 2:10-CV-01356-RLH (GWF) STATEMENT OF FACTS 1 2 A. Democratic Underground and David Allen 3 Democratic Underground maintains a website at www.democraticunderground.com (the 4 “DU Website”) devoted to disseminating and discussing political news and progressive policies. 5 Allen Decl. ¶ 3. Defendant David Allen is the principal of Democratic Underground LLC. Id. ¶ 6 4. The company has two other employees. The DU Website consists primarily of user-generated 7 content in the form of posting by readers in one of various discussion forums (the “DU Forum”). 8 Id. ¶ 5. The DU Website has more than 165,000 registered users who have, since its founding in 9 2001, posted more than 52 million posts to discussion threads addressing items of political and 10 public interest. Id. The DU Website is supported by advertising revenue generated by display of 11 advertising on the site. Id. ¶ 6. MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 While Democratic Underground owns and manages the DU Website, it does not pre- 13 screen posts by contributors. Id. ¶ 7. Once a contributor writes a post, the post gets added 14 through an automated process into a database on the server that hosts the DU Website. Id. When 15 a reader seeks to access the web address of a particular post or DU Forum (such as by clicking a 16 link to that location in a browser), a request is automatically sent to the server. Its software will 17 then automatically retrieve the contents of that post from the database and send them to the reader 18 through the Internet. Id. ¶ 8. Neither Mr. Allen nor the other two employees read every post 19 made by users at the DU Website; in fact, such a task would be impossible as there are an average 20 of 14,000 posts per day. Id. ¶ 9. Democratic Underground does not offer posters any financial 21 incentive for adding content to the site. Id. ¶ 10. 22 Democratic Underground proactively works against copyright infringement by, among 23 other things, advising users to post only short excerpts and to provide a link to the original when 24 posting about a news article. Id. ¶ 11-12; Ex. A. For example, on the forum for “Latest Breaking 25 News,” contributors must identify the source and provide a link to the news article they post 26 about in the form they fill out to make the post. Id. ¶ 12. In addition, Democratic Underground 27 encourages readers to notify moderators if a post contains an entire article by clicking on an 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 4 CASE NO. 2:10-CV-01356-RLH (GWF) 1 “Alert” link that is included on every post. Id. ¶ 13. The moderator will then edit the post to 2 include only a short excerpt or delete the post. Id. of an article (the “Article”) from the Las Vegas Review-Journal (“LVRJ”) entitled “U.S. Senate 6 Race: Tea Party Power Fuels Angle” (the “Excerpt”). See Righthaven’s Complaint (“Compl.”) 7 Dkt. 1, Ex. 3. Pampango is neither an agent nor an employee of Democratic Underground. Allen 8 Decl. ¶ 15. The Excerpt in Pampango’s post reported on the ranking and movement in political 9 polls of candidates in the Republican Senate primary in Nevada. Compl., Ex. 3. On its face, the 10 Excerpt contains content that is primarily informational, factual, or news and that is of concern to 11 persons nationwide interested in the future of the Tea Party or Senate Majority Leader Reid’s 12 MOUNTAIN VIEW On May 13, 2010, a Democratic Underground user named “Pampango” posted a portion 5 ATTORNEYS AT LAW B. 4 F ENWICK & W EST LLP 3 prospects. Id. The entire Article as found at the LVRJ is 50 sentences long; the post by 13 Pampango contained just five of those sentences and a link back to the full article at the LVRJ’s 14 website. Id. Exs. 2, 3. Within 40 minutes, three Democratic Underground users left comments 15 on the post, each of which dealt with the subject matter of the article. Id. Ex. 3. The “Pampango” Post 16 In the 92 days it was posted, Pampango’s post garnered 565 views, less than 6.5 per day, 17 and less than one-thousandth of one-percent (0.001%) of the traffic to the DU Website. Id. ¶ 16. 18 In contrast, on a typical day, the DU Website as a whole serves roughly 700,000 page views to 19 90,000 unique visitors. Id. ¶ 17. During its display, Pampango’s post appeared on pages that, 20 like the rest of the DU Website, contained advertising. However, none of that advertising was 21 sold for display with or targeted by Democratic Underground to go with Pampango’s post; it was 22 simply the same advertising displayed generally throughout the DU Website. Id. ¶ 18. Given the 23 average advertising revenue that the DU Website makes from views of its site, Pampango’s post 24 would not have been connected to any more than $2 in revenue. Id. ¶ 19. 25 C. 26 Stephens Media does not dispute that it was the “author” of the Article as a work made for The Article’s Origins 27 hire. Compl., Ex. 4; see also Answer to Counterclaim at ¶ 4. However, neither Stephens Media 28 nor the LVRJ first registered the copyright; Righthaven did that on July 9, 2010, claiming rights MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 5 CASE NO. 2:10-CV-01356-RLH (GWF) 1 through assignment by “written agreement.” Compl. ¶ 30, Ex. 4. The records reflect two 2 purported assignments, one dated July 8, 2010 and the other dated July 19, 2010.3 Opsahl Decl. 3 ¶¶ 4, 5, Exs. 2, 3. Notwithstanding the purported assignment, the entire Article remains publicly 4 available on the LVRJ website at no cost, with a copyright notice credited to the LVRJ, not 5 Righthaven. Id. ¶ 7; ¶ 6, Ex. 4 (Responses to Request for Admissions (“RFA”) 22, 30). Printed 6 versions of the Article available on the LVRJ website do not contain advertising. Complaint, 7 Exhibit 2 (Dkt. 1-1); Opsahl Decl. ¶ 9, Ex. 5; Answer to Counterclaim (Dkt. 13) ¶ 90. 8 As with other articles on its website, the LVRJ encouraged—and still encourages—users 9 to save and share the Article of which Pampango posted the Excerpt. Opsahl Decl. ¶ 8. In fact, 10 the LVRJ encourages users to share articles on at least 18 different third-party Internet resources 11 or to email, save, or print the article at no cost. Id. MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 D. 13 Once Mr. Allen learned of this lawsuit, he had no choice but to hire attorneys to defend Righthaven Sues Democratic Underground and David Allen 14 himself and Democratic Underground. Allen Decl. ¶ 26. Unwilling to be bullied into a 15 settlement of a baseless claim, he spent $3,600 on an attorney before finding pro bono counsel at 16 the Electronic Frontier Foundation and its cooperating law firms. Id. ¶ 27. Democratic 17 Underground filed a Counterclaim naming Stephens Media, as well as Righthaven, as Counter- 18 Defendants, based on the former’s creation of, direction of, control of, financial interest in, and 19 collusion with the latter to pursue meritless claims of infringement. This Court denied Stephens 20 Media’s motion to dismiss the counterclaim, recognizing that the Counter-Defendants’ Strategic 21 Alliance Agreement (“SAA”) retained all exclusive rights to the Article in Stephens Media. 22 Democratic Underground, 2011 WL 2378186 (discussing SAA Dkt. 79-1 Ex. A)4. Righthaven 23 3 24 25 26 27 28 As this Court has determined, these assignments failed to transfer any of the exclusive rights in the Article necessary for Righthaven to maintain its lawsuit. Democratic Underground, 2011 WL 2378186. 4 Neither Stephens Media’s subsequent May 9, 2011 “clarification” (Clarification and Amendment to SAA (Declaration of Mark A. Hinueber (Dkt. 101), Ex. 3) at 1), nor its July 7, 2011 “restatement” of that agreement changed this. See Amended and Restated SAA (Dkt. 1341). Indeed, Righthaven’s own Operating Agreement (Dkt. 107-2) deprived it of the types of rights purportedly transferred to it. See Dkt. 107 (Reply in Support of Supplemental Memo.) at 45. Similarly, Stephens Media expressly claimed to retain the rights it purported to assign away to Righthaven in its license agreements with various third parties. See Opsahl Decl. ¶ 16, Ex. 12; MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 6 CASE NO. 2:10-CV-01356-RLH (GWF) 1 has been dismissed from this lawsuit entirely, and its motion to intervene denied, inter alia, on the 2 grounds that Stephens Media will fully protect its interests. 3 LEGAL STANDARD A court may grant summary judgment when the submissions in the record “show that 4 sufficient evidence in favor of the non-moving party to allow a jury to return a verdict in its favor. 8 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The burden is on the non-moving 9 party to designate specific facts showing a genuine issue for trial. See Celotex Corp. v. Catrett, 10 477 U.S. 317, 322 (1986). However, a mere “scintilla” of evidence will not suffice to meet that 11 burden. Anderson, 477 U.S. at 252. Nor is it enough for the non-moving party to show that there 12 MOUNTAIN VIEW matter of law.” Fed. R. Civ. P. 56(c)(2). A “genuine issue” of material fact means that there is 7 ATTORNEYS AT LAW there is no genuine issue as to any material fact and that the movant is entitled to judgment as a 6 F ENWICK & W EST LLP 5 is some “metaphysical doubt as to the material facts,” provided that any inferences from the 13 underlying facts are viewed in the light most favorable to the non-moving party. Matsushita Elec. 14 Indus. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). 15 16 17 18 19 ARGUMENT I. THE UNDISPUTED FACTS DEMONSTRATE THAT PLAINTIFF’S CLAIMS WERE MERITLESS FROM THEIR INCEPTION A. Democratic Underground Has Committed No Volitional Act of Infringement Democratic Underground is entitled to a declaration that it did not infringe Stephens 20 Media’s copyright by virtue of Pampango’s post. Under the Copyright Act, direct liability only 21 attaches, if at all, to the party who controls the decision to copy—in the case of an online forum, 22 the user who uploaded the material.5 An online forum host like Democratic Underground, whose 23 24 25 26 27 28 Dkt. 140 (Declaration of Clifford Webb) ¶¶ 3-5, Exs. 2, 4-6 (ProQuest and Lexis-Nexis licenses agreements, submitted under seal, and ShareThis Publisher Terms of Service and copy of the Article showing use of ShareThis). Stephens Media is and always was the real party in interest, creating and controlling Righthaven merely as a vehicle to bring lawsuits on its behalf. See Dkt. 47 (December 7, 2010 Declaration of Kurt Opsahl) ¶¶ 7, 13-15, Exs. B, H-J (demonstrating Stephens Media’s control over Righthaven) and ¶¶ 9-11, Ex. D-F (demonstrating Stephens Media’s significant ownership interest and control over Righthaven). 5 As explained in Part II.B. below, no liability attaches to Pampango because he engaged in a fair use of the Article. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 7 CASE NO. 2:10-CV-01356-RLH (GWF) 1 role is limited to hosting the material, cannot be liable for direct infringement as a matter of law. 2 This Court addressed the volitional act requirement in Field v. Google, Inc., 412 F. Supp. 3 2d 1106 (D. Nev. 2006), in which the plaintiff alleged that Google directly infringed when it 4 showed users copies of material that were “cached” on its computers—i.e., stored automatically 5 for ease of delivery to those searching for those materials. See id. at 1115. The Hon. Robert 6 Jones disagreed, holding that a “plaintiff must also show volitional conduct on the part of the 7 defendant in order to support a finding of direct copyright infringement.” Id.; accord Parker v. 8 Google, Inc., 422 F. Supp. 2d 492 (E.D. Pa. 2006). This Court’s decision relied upon Religious 9 Tech. Ctr. v. Netcom On-line Commnc’n Servs., 907 F. Supp. 1361 (N.D. Cal. 1995), one of the 10 seminal and most important cases addressing online service provider copyright liability. In Netcom, an Internet service provider was accused of direct copyright infringement 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 based on a customer’s posting of material to the service provider’s servers. See id. at 1367-68. 13 The court rejected the direct infringement claim, holding that it requires “some element of 14 volition or causation which is lacking where a defendant’s system is merely used to create a copy 15 by a third party.” Id. at 1370. Volitional control over the copying is necessary because any other 16 “theory would create many separate acts of infringement and carried to its natural extreme, would 17 lead to unreasonable liability” through the mere operation of the Internet. Id. at 1369. 18 While the volitional act requirement is tremendously important to the Internet, it is not a 19 new rule. The Copyright Act has always required volition–as embodied within its protection of 20 the exclusive right “to do” one of the actions reserved for copyright owners in 17 U.S.C. § 106. 21 Netcom simply interpreted § 106 for the digital age and has been widely followed.6 The Fourth Circuit’s holding in CoStar is particularly instructive. CoStar was a real estate 22 23 listing service that took photos of commercial real estate offered by its customers. LoopNet 24 6 25 26 27 28 See CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004) (concluding “that Netcom made a particularly rational interpretation of § 106 when it concluded that a person had to engage in volitional conduct—specifically, the act constituting infringement—to become a direct infringer.”); Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 131 (2d Cir. 2008) (agreeing with CoStar that Netcom was “particularly rational”); Marobie-Fl., Inc. v. Nat'l. Ass'n of Fire Equip. Distribs., 983 F. Supp. 1167, 1176-79 (N.D. Ill. 1997) (following Netcom); H.R. Rep. No. 105-551(I), at 11 (1998) (Congress describes Netcom as the “leading and most thoughtful judicial decision to date” in the subject of Internet liability). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 8 CASE NO. 2:10-CV-01356-RLH (GWF) 1 provided an online hosting service for real estate listings. Some of CoStar’s customers also 2 wanted listings on LoopNet, and uploaded CoStar’s copyrighted photographs for display on the 3 LoopNet website. See CoStar Group, Inc., 373 F.3d at 546-47. CoStar sued for direct 4 infringement. Following Netcom, the Fourth Circuit held that “[b]ecause LoopNet, as an Internet 5 service provider, is simply the owner and manager of a system used by others who are violating 6 CoStar’s copyrights and is not an actual duplicator itself, it is not directly liable for copyright 7 infringement.” Id. at 546. 8 9 Accordingly, the fact that Democratic Underground operates the DU Website, upon which a third party posted allegedly infringing material, does not state a claim for direct copyright MOUNTAIN VIEW of volition, the undisputed facts show that Democratic Underground did not engage in any 12 ATTORNEYS AT LAW infringement. Although the burden of proof for a copyright claim includes the essential element 11 F ENWICK & W EST LLP 10 volitional act to display the Excerpt. Allen Decl. ¶¶ 5-9; 21. Moreover, as soon as Democratic 13 Underground learned of a potential infringement claim, it removed the Excerpt. Id. ¶¶ 23-24. 14 Likewise, to the extent that Stephens Media adopts Righthaven’s assertions that 15 Democratic Underground can be held liable because of its alleged general knowledge that some 16 postings contain infringing material (Compl. ¶ 19), or because of “willful blindness” to 17 infringement (Id. ¶ 23), these will not suffice. As CoStar cogently explains, even constructive 18 knowledge that some DU Website users may be using the forum to engage in copyright 19 infringement would be insufficient to state a direct liability claim. CoStar, 373 F.3d at 549; see 20 also Sega Enters. Ltd. v. Maphia, 948 F. Supp. 923, 934 (N.D. Cal. 1996) (no direct liability even 21 where defendant operating website knew some infringing games were uploaded and solicited 22 others to upload games). Indeed, in CoStar, the user-uploaded photos were reviewed by LoopNet 23 employees before posting, and CoStar had informed LoopNet of its claims for copyright 24 infringement long before filing suit, yet, this was still insufficient. Democratic Underground, by 25 contrast, does not pre-review posts, and neither Righthaven nor Stephens Media notified the 26 forum prior to the lawsuit. Allen Decl. ¶ 9. 27 28 For this reason alone, the Court should grant summary judgment declaring that Democratic Underground did not infringe by virtue of a user posting the Excerpt. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 9 CASE NO. 2:10-CV-01356-RLH (GWF) 1 B. The Excerpt is a Non-Infringing Fair Use 2 The undisputed facts independently establish that posting the Excerpt to the DU Website 3 constitutes fair use, and, therefore, is “not an infringement of copyright.” 17 U.S.C. § 107. 4 The fair use doctrine “creates a limited privilege in those other than the owner of a 5 copyright to use the copyrighted material in a reasonable manner without the owner’s consent.” 6 Fisher v. Dees, 794 F.2d 432, 435 (9th Cir. 1986). It permits and requires courts “to avoid rigid 7 application of the copyright statute when, on occasion, it would stifle the very creativity which 8 that law is designed to foster.” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994) 9 (quoting Stewart v. Abend, 495 U.S. 207, 236 (1990)). 17 U.S.C. § 107 lays out four non- 10 exclusive factors that a court must consider in assessing whether a use is fair. See, e.g., Perfect 11 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1163 (9th Cir. 2007). MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 A declaration of fair use is sought here for both (i) the past posting and (ii) Democratic 13 Underground’s future reposting. While similar, these present two distinct factual scenarios. For 14 the past posting, the Court must consider whether Pampango engaged in a fair use by posting the 15 Excerpt. For the future posting, the Court must consider whether Democratic Underground 16 would engage in a fair use for reposting the Excerpt. Based on the undisputed facts, each of the 17 four fair use factors strongly supports a finding of fair use in each scenario. 18 1. Posting the Excerpt to the DU Website Was Highly Transformative and Minimally Commercial 19 20 In assessing the first factor, the “purpose the character of a use,” courts evaluate the extent 21 to which the use “transforms” the original work, (Campbell, 510 U.S. at 579), that is, whether the 22 use “does not ‘merely supersede the objects of the original creation’ but rather ‘adds something 23 new, with a further purpose or different character.’” Perfect 10, 508 F. 3d at 1164 (quoting 24 Campbell, 510 U.S. at 579). As the Ninth Circuit recognized in Perfect 10, where the use is made 25 to “serve a different purpose,” that use can be “highly transformative.” Id. at 1165, 1168 (exact 26 replicas of images, reduced in size to thumbnails, found transformative); see also Nuñez v. 27 Caribbean Int’l News Corp., 235 F.3d 18 (1st Cir. 2000) (modeling photo taken for portfolio 28 purpose was transformed into news when published in newspaper). Criticism and comment are MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 10 CASE NO. 2:10-CV-01356-RLH (GWF) 1 recognized as canonical examples of a transformative use (Campbell, 510 U.S. at 579); indeed, 2 Section 107 expressly calls out protections for uses “such as criticism, comment [and] news 3 reporting . . . .” 17 U.S.C. § 107. The use made of the Excerpt on the DU Website is a classic example of a transformative 4 5 use. Like the defendant in Righthaven, LLC v. Hoehn, No.: 2:11-CV-00050-PMP-RJJ, 2011 WL 6 2441020 (D. Nev. June 20, 2011), Pampango “posted the Work as part of an online discussion.” 7 Id. at *9. In posting an excerpt on a political forum, Pampango invited critical analysis and 8 commentary—a core purpose of the fair use doctrine. Other users of the forum responded to this 9 post by posting their own comments, consistent with the purpose of the DU Website of fostering MOUNTAIN VIEW increasingly exists online, the ability to include excerpts of news to prompt discussion is of 12 ATTORNEYS AT LAW criticism and debate. Compl., Ex. 3; Allen Decl. ¶ 3. In a world where the public forum 11 F ENWICK & W EST LLP 10 singular importance.7 The first factor may also consider “whether the original was copied in good faith to 13 14 benefit the public or primarily for the commercial interests of the infringer.” Am. Geophysical 15 Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir. 1994). Here, the nature of Pampango’s post and 16 Democratic Underground’s proposed repost are analyzed slightly differently. 17 a. Pampango’s Post is a Non-Commercial Transformative Use For purposes of the May 12, 2010 posting of the Excerpt that previously occurred, it is 18 19 Pampango’s use that is relevant, and that was wholly non-commercial.8 Democratic 20 Underground provides posters, like Pampango, no financial benefit or payment for their posting 21 22 23 24 25 26 27 28 7 The importance of public commentary also demonstrates the “public interest” in the use at issue—another factor the Court should consider in determining fair use. See, e.g., Perfect 10, 508 F.3d at 1166, supra. 8 As noted above, Democratic Underground cannot be directly liable for Pampango’s post. Even if secondary liability were asserted, however, the proper focus for analysis of fair use would be the use made by the person who could be a potential direct infringer, here, the poster Pampango. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) (analyzing whether end user’s time shift was a fair use to determine secondary liability). This does not mean however that courts do not also recognize the possibility of an independent fair use defense for potential indirect infringers. See Netcom, 907 F. Supp. at 1378 (fair use analysis based on Netcom’s actions); Sega Enters., 948 F. Supp. at 934 (citing Netcom for proposition that service provider has independent fair use rights). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 11 CASE NO. 2:10-CV-01356-RLH (GWF) 1 of material to the forum. Allen Decl. ¶ 10. Given the highly transformative, non-commercial 2 nature of Pampango’s posting, the first factor strongly favors finding that post to be fair use. 3 b. 4 Democratic Underground’s Repost Would Be A Minimally Commercial Transformative Use Democratic Underground wishes to repost the Excerpt—still consisting of only five 5 over a year. Allen Decl. ¶ 25. This proposed use is fundamentally transformative of the original 9 use by Stephens Media, which was to inform the public of the mid-primary poll results for the 10 2010 Republican Senate race. The primary and subsequent general election are now long since 11 over. Anyone viewing the repost will necessarily be interested only in the transformative use of 12 MOUNTAIN VIEW forum and so that its users may see for themselves the post that their forum has been litigating for 8 ATTORNEYS AT LAW sentences from the 50 sentence article—both to preserve the historical record of its discussion 7 F ENWICK & W EST LLP 6 preserving the record of public discourse at that time. 13 Democratic Underground will make no special effort to commercially exploit the Excerpt; 14 while a trivial amount of revenue might be generated, it stems from the simple fact that all forums 15 on the website contain advertising.9 As the Supreme Court and Ninth Circuit have recognized, 16 any potential commercial character fades in significance where a highly transformative use is 17 involved. Campbell, 510 U.S. at 579; Perfect 10, 508 F. 3d at 1164. Thus, the first factor favors 18 Democratic Underground’s reposting. 19 2. 20 The Highly Factual, Politically Important, and Previously Published Nature of the Article Supports Fair Use In assessing the second factor, the “nature of the work” used, “[t]he law generally 21 22 recognizes a greater need to disseminate factual works than works of fiction or fantasy.” 23 Harper & Row, Publrs. v. Nation Enters., 471 U.S. 539, 563 (1985) (also noting greater fair use 24 9 25 26 27 28 At most the DU Website generated approximately $2 connected to the original post. Allen Decl. ¶ 20. This in no way undermines the first factor’s strong support of fair use. See, e.g., Campbell, 510 U.S. at 584 (“If . . . commerciality carried a presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed” in 17 U.S.C. § 107). Realty One likewise followed this rule in holding that a real estate sales blog with a mixed commercial and educational character was entitled to a finding of fair use as a matter of law. See Righthaven LLC v. Realty One Group, Inc., Case. No. 2:10-cv-01036-LRH-PAL, 2010 WL 4115413, at *4-5 (D. Nev. Oct. 19, 2010). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 12 CASE NO. 2:10-CV-01356-RLH (GWF) 1 rights for works of a published nature). Accordingly, where the work copied is largely composed 2 of factual material, a finding of fair use is more likely. See, e.g., L.A. News Serv. v. CBS Broad., 3 Inc., 305 F.3d 924 (9th Cir. 2002) (republication of a video depicting a news report was a fair use 4 because it was informational rather than creative). It was these firmly established principles that 5 led Judge Hicks to conclude in the Realty One case that a similar excerpt of a largely factual news 6 report in the LVRJ constituted fair use. See Realty One, 2010 WL 4115413 at *2; c.f. Hoehn, 7 2011 WL 2441020, at *9 (finding an editorial published by the LVRJ “contains a significant 8 informational element, [so that] the scope of fair use is greater than it would be for a creative 9 work, but likely less than it would for a purely informational work.”). MOUNTAIN VIEW Nevada Senate Republican Primary. Compl. Ex. 3. Much as in Realty One, the five sentences 12 ATTORNEYS AT LAW Here, too, the Excerpt posted was highly factual: an account of poll results in the 2010 11 F ENWICK & W EST LLP 10 actually copied from the article represent little more than purely factual reporting. Id. Moreover, 13 in the present case, the nature of the Excerpt also involved core issues of political discourse, 14 which deserve the greatest fair use protection. The scope of the fair use doctrine is wider when, 15 as here, the use relates to issues of public concern. Consumers Union of U.S., Inc. v. Gen. Signal 16 Corp., 724 F.2d 1044 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984). 17 18 19 20 The second factor favors Democratic Underground. 3. The Small Amount of the Article Taken Supports a Finding of Fair Use The third factor asks “whether the amount and substantiality of the portion used in relation 21 to the copyrighted work as a whole . . . are reasonable in relation to the purpose of the copying.” 22 Campbell, 510 U.S. at 586. Courts recognize that some amount of copying is necessary in order 23 to identify “the subject matter of a writing . . . before any useful comment may be made about 24 it.” Twin Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1375 (2d Cir. 1993). 25 Here, the amount of the work copied was minimal: five sentences of a 50-sentence article, 26 or 10%. Compare Cmpl., Ex. 3 to Ex. 2. Moreover, rather than copying the whole article, the 27 post provided a link to the full article at the LVRJ site. Compl. Ex. 3. This amount of copying 28 was indisputably reasonable for the purpose of engendering discussion. Copying a small portion MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 13 CASE NO. 2:10-CV-01356-RLH (GWF) 1 of the story was important to allow others to understand and comment with adequate context. 2 Without this factual background, commentary would be essentially meaningless. See Twin Peaks 3 Prods., Inc., 996 F.2d at 1375. Numerous cases have upheld findings of fair use based on copying of similarly small 4 5 excerpts. See, e.g., New Era Publ’ns Int’l ApS v. Carol Publ’g Group, 904 F.2d 152, 158-159 (2d 6 Cir. 1990) (excerpts of between 5%-8% of works found fair use, especially where portions taken 7 were merely the initial sections of the work that “set the tone for the sections they precede.”); 8 Sundeman v. Seajay Soc’y, Inc., 142 F.3d 194, 206 (4th Cir. 1998) (copying approximately 6% of 9 work and paraphrasing substantially more was found to be fair use for purposes of criticism MOUNTAIN VIEW work.”); Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1263 (2d Cir. 1986) (excerpts of 4.3% 12 ATTORNEYS AT LAW noting further that “criticism of a book will require the critic to quote and paraphrase from the 11 F ENWICK & W EST LLP 10 of book considered fair use); see also Sony Corp., 464 U.S. at 449-50 (copying even 100% of a 13 work can still constitute fair use). In Realty One, Judge Hicks concluded that this factor favored a 14 blogger who had copied the first eight sentences of a 30-sentence LVRJ article, or 26%. See 15 Realty One, 2010 WL 4115413, at *3. Of course, that was a far greater percentage than the 10% 16 of the Article that Pampango posted. What is more, even former plaintiff Righthaven acknowledged that copying and 17 18 distributing proportionally greater excerpts than the one at issues here would be fair use.10 And, 19 Stephens Media has implicitly acknowledged the same. In the wake of this Court’s June 14, 2011 20 ruling, Stephens Media published a column by former CEO Sherman Frederick suggesting that 21 readers should look at three posts by GametimeIP blogger Patrick Anderson. Sherman Frederick, 22 Content protection -- Night of the unthinking commentator, Las Vegas Review-Journal (Jun 18, 23 2011), Opsahl Decl. ¶ 11, Ex. 7; Opsahl Decl. at ¶ 6, Ex. 4 (Responses to RFAs 56, 57). 24 Frederick’s column links to the three posts, and then copies, verbatim, from each—five sentences 25 26 27 28 10 In opposition to the motion to dismiss in Realty One, Righthaven asserted that had the copying been limited to the first two paragraphs of the article it would likely have constituted a fair use. See Righthaven LLC v. Realty One Group, Inc., Case. No. 2:10-cv-01036-LRH-PAL, Dkt. 12 at 10-11. In that case, the first two paragraphs contained three sentences of the 28 sentence article, more than the 10% copied here. See id. Dkt. 1, Exs. 2, 3. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 14 CASE NO. 2:10-CV-01356-RLH (GWF) 1 from the first article, three from the second, and ten sentences from the third. The quotes were 2 not initially denoted as such, and virtually every word after “Article 1, which in part points out:” 3 is copied. Mr. Frederick did not have Mr. Anderson’s permission. Patrick Anderson, Three 4 Copyright Assets Available For Purchase From Gametime IP, GametimeIP.com (Jun. 23, 2011), 5 Opsahl Decl. ¶ 12, Ex. 8. Thus, Mr. Frederick (and his publisher, Stephens Media) copied a 6 larger excerpt from Mr. Anderson than the Excerpt at issue in this lawsuit, presumably because 7 they thought the use was fair. The third factor favors Democratic Underground. 8 9 4. The Lack of Potential or Actual Market Harm Supports Fair Use The fourth factor is the potential effect of the use on the market for the work. 17 U.S.C. 10 MOUNTAIN VIEW ATTORNEYS AT LAW § 107(4). The focus of this factor is the extent to which the use at issue could stand as a realistic 12 F ENWICK & W EST LLP 11 market substitute for the original work (see Perfect 10, 508 F.3d at 1168), and whether it can 13 supplant the demand for the original. See Campbell, 510 U.S. at 598. 14 (1) Pampango’s Use Did Not Harm the Market To date, Stephens Media has provided no facts establishing any harm to any market for 15 16 the Article by virtue of Pampango’s posting of a small, incomplete excerpt and a link back to the 17 full Article. There is no evidence that the Excerpt substituted for the full Article, or that a single 18 viewer of the Excerpt otherwise would have, but instead did not, view the Article on the LVRJ 19 webpage. This utter lack of evidence of harm is significant, because as a highly transformative use, 20 21 Pampango’s posting of the Excerpt cannot be presumed to cause any market harm. Campbell, 22 510 U.S. at 591 (“No ‘presumption’ or inference of market harm . . . is applicable to a case 23 involving something beyond mere duplication for commercial purposes.”);11 Elvis Presley 24 Enters., Inc. v. Passport Video, 349 F.3d 622, 631 (9th Cir. 2003) (“The more transformative the 25 new work, the less likely the new work’s use of copyrighted materials will affect the market for 26 the materials.”). 27 11 28 Moreover, even assuming a focus on DU as opposed to the poster, the small amount of revenue attributable to the use warrants no presumption of any market harm. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 15 CASE NO. 2:10-CV-01356-RLH (GWF) Nor, under the circumstances here, is any market harm remotely likely. The practice of 1 2 posting small portions of articles to blogs for comment—even assuming that practice to be 3 widespread—poses no genuine threat of market harm to the original articles, especially where, as 4 here, the incomplete excerpt links back to the full original. Compl. Ex. 2; Opsahl Decl. ¶ 6, Ex. 4 5 (Responses to RFAs 39, 40). Like the use of thumbnails images in Perfect 10, the use of 10% of 6 the Article does not supplant the original. See Perfect 10, 508 F.3d at 1168. Instead, by 7 providing an Excerpt along with a link to the original Article on the LVRJ website, the posting 8 encourages users to view the original, augmenting the market rather than supplanting it. See 9 Compl. Ex. 3. Moreover, the link to the original can enhance the original’s ranking in online 10 search engines, indirectly increasing the market for the original.12 This much is all but acknowledged by Stephens Media’s undisputed policy for the LVRJ 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 website, which encourages users to share articles on at least 18 different third-party Internet 13 resources and to email, save, or print the article. Opsahl Decl. ¶ 8. In fact, when a user chooses 14 the “Print This” option, the LVRJ site opens a new window reproducing the text of the full article 15 to be duplicated without advertising. Id. ¶ 9, Ex. 5; Answer to Counterclaim at ¶ 90. These 16 practices undermine any suggestion that publicizing short teaser excerpts and disseminating links 17 to the original over the Internet somehow diminishes any market for the Article. Moreover, in this specific case, the Excerpt could not substitute for the original because it 18 19 does not contain the heart of the work, including the actual poll numbers at issue. Not 20 surprisingly, Judge Hicks ruled, as a matter of law on the pleadings, that an excerpt of a 21 significantly larger portion of a LVRJ article on a similar blog could not “satisfy a reader’s desire 22 to view and read the article in its entirety” and, when published with a link to the original article, 23 constituted fair use. See Realty One, 2010 WL 4115413, at *2. 24 Given this lack of substitutability—and the lack of any reason to believe that any potential 25 viewer of the Article failed to do so as a result of seeing the Excerpt—there is no evidence of any 26 12 27 28 See, e.g., Eric Goldman, Search Engine Bias and the Demise of Search Engine Utopianism, 8 Yale J. L. & Tech. 188 (Spring 2006) (discussing search engine’s use of “popularity metrics” in their algorithms which increase the ranking of websites based on the number and popularity of other websites linking to them). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 16 CASE NO. 2:10-CV-01356-RLH (GWF) 1 harm to advertising revenue. In fact, Stephens Media does not sell ads or even maintain records 2 of advertising receipts for individual articles. Opsahl Decl. ¶ 14, Ex. 10 (Response to 3 Interrogatory 4). Accordingly, any assertions about actual advertising revenues for the Article 4 would be sheer speculation at best. But even assuming, arguendo, that a potential view of the Article on the LVRJ was lost 5 either the Section of the website (i.e. Sports, Business, Lifestyles) or for the run of the site. 9 Stephens Media’s advertising rate chart (Opsahl Decl. ¶ 15, Ex. 11) at SM000049. Rates vary, 10 with a CPM (cost per thousand)13 between $8 (for non-profits) to $17.50 (for geo-targeted ads). 11 The online “advertising average cost is $12 cpm.” Id. at SM000048. In this case, the Article was 12 MOUNTAIN VIEW lost advertising revenues would be inconsequential. Stephens Media’s online ads are sold by 8 ATTORNEYS AT LAW due to the presence of the Excerpt, the undisputed facts demonstrate that any potential harm from 7 F ENWICK & W EST LLP 6 displayed with four online banner ads.14 Article (Id. ¶ 10, Ex. 6). Thus, the average revenue per 13 viewer would be, at most, five cents: 4 x $0.012 = $0.048. Only 565 visitors viewed the Excerpt on the DU Website, virtually all of them in the days 14 15 immediately after its posting. Allen Decl. ¶ 16. While there is no evidence that a single one of 16 the viewers of this progressive discussion forum would otherwise have been new viewers of the 17 Article on lvrj.com, even assuming that every viewer would have been, the total revenues at stake 18 was only $0.048 x 565 = $27.12. For the same reason, there is no basis to claim that Stephens Media stands to lose 19 20 licensing revenue based on the Excerpt at the DU Website. Stephens Media includes its entire 21 catalog of news articles in a variety of licensing deals with “various databases, such as NewsBank 22 and Lexis Nexis.” Opsahl Decl. ¶ 14, Ex. 10 (Response to Interrogatory 11), see also Stephens 23 Media license agreements (Opsahl Decl. Exs. 12-17). There is no evidence to suggest that the appearance of a 24 25 13 26 27 28 Stephens Media defines CPM as the “cost per thousand site impressions or page views” Opsahl Decl. ¶ 15, Ex. 11 at SM000048, see generally http://en.wikipedia.org/wiki/Cost_per_impression. 14 One Leaderboard ad, one Large Square ad, and two Skyscraper ads. See Opsahl Decl. ¶ 15, Ex. 11 at SM000049 (defining sizes of ads). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 17 CASE NO. 2:10-CV-01356-RLH (GWF) 1 short Excerpt on the DU Website somehow would have affected the value of the LVRJ’s content 2 to these licensees. is the BurrellesLuce 3 4 agreement. BurrellesLuce agreement, Opsahl Decl. ¶ 16, Ex. 12. BurrellesLuce is a clipping 5 service that provides copies of news articles to public relations agencies and in-house departments 6 of companies. See generally BurrellesLuce, Company - About Us, 7 http://www.burrellesluce.com/company/about_us; see also Under this agreement. BurrellesLuce agrees to pay 8 9 Stephens Media 10 MOUNTAIN VIEW ATTORNEYS AT LAW Id. at SM000058.15 Stephens Media has provided no evidence that any lesser funds were paid it 12 F ENWICK & W EST LLP 11 under these terms for circulation of the Article, nor any reason to believe that Pampango’s posting 13 of a short Excerpt somehow could have caused the actual Article not to have been clipped and 14 circulated. Again, all logic suggests that any increased notoriety of the Article by virtue of the 15 Excerpt appearing on the DU Website would have enhanced the likelihood of circulation and 16 therefore payment by BurrelsLuce. Nonetheless, in order to quantify the theoretical maximum 17 harm, assuming, arguendo that all 565 viewers of the Excerpt on the DU Website would 18 otherwise have paid the royalty set by the BurrellesLuce license for the entire article, the revenue 19 would have been less than In sum, while there is no evidence of a single lost viewer of the Article on the DU 20 21 Website, even if there were, the revenues in play would be only $0.05 22 harm vastly outweighed by the benefits of the transformative use of the Excerpt to spur public 23 discussion. 24 (2) each—a level of Reposting Would Not Harm the Market Likewise, there is no evidence that Stephens Media would lose any future revenue, even if 25 26 27 15 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 18 CASE NO. 2:10-CV-01356-RLH (GWF) contest the 2010 election for the United States Senator for Nevada. Compl. Ex. 2 (Dkt. 1-1). In 4 the run-up to the primary, there were at least 12 polls, at least four of which were conducted after 5 the Article was published. The results of all of these polls are compiled and available in the 6 public record. See Wikipedia, United States Senate Election in Nevada, 2010.16 On June 8, 2010, 7 Sharron Angle won the primary, and subsequently lost the general election to the incumbent 8 Senator Harry Reid on November 2, 2010. Id. Today, almost a year after the general election, it 9 is unlikely that whatever protectable expression might be imbedded in this factual news piece 10 about a mid-primary poll result would be of interest to current readers. At most, the fact of the 11 results might be of historical interest (e.g., for a study of the Tea Party movement or Angle’s 12 MOUNTAIN VIEW conducted May 10-11, 2010, regarding the June 8, 2010 Republican primary for the right to 3 ATTORNEYS AT LAW Democratic Underground reposts the Excerpt. The Article concerns a Mason-Dixon poll 2 F ENWICK & W EST LLP 1 political career). But that factual information is both freely available elsewhere (see, e.g., id.) and 13 uncopyrightable. The lack of a continuing market is born out by the graph Stephens Media produced, which 14 15 shows number of page views over time. 16 17 18 19 20 21 Opsahl Decl. ¶ 13, Ex. 9 at SM000003. 22 23 Id. The most recent user comment on 24 25 26 27 28 16 Available at https://secure.wikimedia.org/wikipedia/en/wiki/United_States_Senate_election_in_Nevada,_2010 #Polling_2 (last visited Oct. 17, 2011). MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 19 CASE NO. 2:10-CV-01356-RLH (GWF) 1 the article is dated May 20, 2010.17 Opsahl Decl. ¶ 10, Ex. 6. 2 Assuming there were a chance individual who might want to view the Article for its own 3 sake going forward—for example, to see how the LVRJ covered the election—there is no factual 4 basis to believe that reposting the Excerpt at the DU Website would substitute for a visit to the 5 LVRJ site. See Realty One, 2010 WL 4115413 at *2. A person interested in the historical context 6 of the Article would hardly find a review of 10% of it on the DU Website to be adequate. Nor is there any realistic possibility of any harm in the form of lost revenue from paid 7 8 archives. Although the LVRJ has a paid archive, the Article is now and has always been available 9 for free on the LVRJ website. Opsahl Decl. ¶ 6, Ex. 4 (Responses to RFAs 22, 30). Thus, the 10 posting of the Excerpt did not, and will not, deprive Stephens Media of any fees for use, since it 11 has been charging none. The lack of value is further confirmed by Stephens Media’s multiple amendments to its MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 agreements with Righthaven. On May 9, 2011, Stephens Media signed a document that purported 14 to require “payment in the amount of One Dollar and Zero Cents ($1.00) per year to Righthaven 15 as a license or royalty for each Stephens Media Assigned Copyright.” Clarification and 16 Amendment to SAA (Declaration of Mark A. Hinueber (Dkt. 101), Ex. 3) at 1. By this measure, 17 with the Article’s entire value placed at $1 for a full year of all possible uses by Stephens Media, 18 any injury from a small excerpt being published with a link would be trivial. However, even this 19 nominal fee proved to be too much. On July 7, 2011, Stephens Media and Righthaven signed 20 another purported amendment, which removed the nominal $1 per year license fee, recognizing 21 that there was no market value for the work other than the proceeds of litigation (which the 22 parties agreed to share). See Amended and Restated SAA (Dkt. 134-1). *** 23 24 25 26 27 28 17 At least some of the subsequent page views were a result of this lawsuit. For example, 147 page views appear to come from eff.org, resulting from links on the website of DU’s counsel, and 73 views from lasvegassun.com, which has extensively covered the Righthaven lawsuits. Opsahl Decl. ¶ 13,Ex. 9 at SM000004. MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 20 CASE NO. 2:10-CV-01356-RLH (GWF) 1 Accordingly, Stephens Media was not harmed by Pampango’s posting, and will suffer no 2 cognizable market harm for the work if Democratic Underground is allowed to repost the Article. 3 The fourth factor, like all of the others, favors Democratic Underground. 4 5. 5 6 The Public Interest Is Served By Discussion Boards Like the DU Website Finally, the fair use analysis must consider the public interest and the purposes of 10, 508 F.3d at 1166 (citations omitted). The central purpose of copyright, of course, is “[t]o 10 promote the Progress of Science and use Arts,” U.S. CONST. art. I, §8, cl. 8, and to serve “‘the 11 welfare of the public.’” Sony Corp., 464 U.S. at 429 n.10 (quoting H.R. Rep. No. 2222, 60th 12 MOUNTAIN VIEW which a use promotes the purposes of copyright and serves the interests of the public.” Perfect 9 ATTORNEYS AT LAW copyright law. The “Supreme Court … has … directed [courts] to be mindful of the extent to 8 F ENWICK & W EST LLP 7 Cong., 2d Sess. 7 (1909)). Indeed, the doctrine of fair use was developed to provide a “means of 13 balancing the need to provide individuals with sufficient incentives to create public works with 14 the public’s interest in the dissemination of information.” Hustler Magazine, Inc. v. Moral 15 Majority, Inc., 796 F.2d 1148, 1151 (9th Cir. 1986). 16 The DU Website is dedicated to serving the public’s interest in the dissemination and 17 discussion of information. It provides a forum for commentary and criticism about political 18 issues (Allen Decl. ¶ 3), which is precisely what Pampango’s post of the Excerpt stimulated. 19 Thus, the public service Democratic Underground provides in facilitating the sharing of political 20 and factual information on important matters of the day favors fair use. Likewise, reposting the 21 article to preserve the historical record and illustrate the subject of this litigation serves the public 22 interest in fostering discussion and debate over copyright policy and Stephens Media’s use of 23 Righthaven. 24 25 * ** Given that every factor points to a finding of fair use, the Court should grant summary 26 judgment of a declaration of non-infringement to Democratic Underground. Moreover, even if 27 one could find that any single factor was neutral or weighed slightly against fair use, the 28 overwhelming balance of factors would still require a finding of fair use given the minimal MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 21 CASE NO. 2:10-CV-01356-RLH (GWF) 1 amount of the Article used here, and the minimal even theoretical market harm, if any. See 2 Mattel, Inc. v. Walking Mountain Prod., 353 F.3d 792, 800 (9th Cir. 2003) (fair use is a mixed 3 question of fact and law and where the material facts are not in dispute summary judgment is 4 appropriate). 5 6 CONCLUSION For all of these reasons, Democratic Underground respectfully requests that the Court 7 grant summary judgment in its favor on its Counterclaim. 8 Dated: October 24, 2011 FENWICK & WEST LLP 9 10 By: 11 MOUNTAIN VIEW ATTORNEYS AT LAW F ENWICK & W EST LLP 12 13 14 /s/ Jennifer J. Johnson JENNIFER J. JOHNSON Fenwick & West LLP 555 California Street, Suite 1200 San Francisco, CA 94104 Telephone: (415) 875-2300 Facsimile: (415) 281-1350 lpulgram@fenwick.com Attorneys for Defendant and Counterclaimant DEMOCRATIC UNDERGROUND, LLC, and Defendant DAVID ALLEN 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION FOR SUMMARY JUDGMENT ON COUNTERCLAIM 22 CASE NO. 2:10-CV-01356-RLH (GWF)

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