Righthaven LLC v. Democratic Underground, LLC et al

Filing 77

Supplemental MEMORANDUM filed by Defendants David Allen, Democratic Underground, LLC, Counter Claimant Democratic Underground, LLC re 72 MOTION for Leave to File DEFENDANTS SUPPLEMENTAL MEMORANDUM ADDRESSING RECENTLY PRODUCED EVIDENCE RELATING TO PENDING MOTIONS, AND SUPPORTING DECLARATION OF LAURENCE PULGRAM --. (Attachments: # 1 Affidavit --Pulgram Declaration suppporting said Supplemental Memorandum)(Pulgram, Laurence)

Righthaven LLC v. Democratic Underground, LLC et al

Doc. 77

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LAURENCE F. PULGRAM (CA State Bar No. 115163) (pro hac vice) [e-mail] CLIFFORD C. WEBB (CA State Bar No. 260885) (pro hac vice) [e-mail] FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, California 94104 Telephone: [phone] Facsimile: [phone] KURT OPSAHL (CA State Bar No. 191303) (pro hac vice) [e-mail] CORYNNE MCSHERRY (CA State Bar No. 221504) (pro hac vice) [e-mail] ELECTRONIC FRONTIER FOUNDATION 454 Shotwell Street San Francisco, California 94110 Telephone: [phone] Facsimile: [phone] CHAD BOWERS (NV State Bar No. 7283) [e-mail] CHAD A. BOWERS, LTD 3202 West Charleston Boulevard Las Vegas, Nevada 89102 Telephone: [phone] 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.
DEFENDANTS.' SUPPL. MEMO ADDRESSING RECENTLY PRODUCED EVIDENCE RELATING TO PENDING MOTIONS

Case No. 10-01356-RLH (GWF) DEFENDANTS' SUPPLEMENTAL MEMORANDUM ADDRESSING RECENTLY PRODUCED EVIDENCE RELATING TO PENDING MOTIONS

CASE NO. 2:10-CV-01356-RLH (GWF)

Dockets.Justia.com

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ("Pulgram Decl."), Exhibit A

INTRODUCTION Defendant / Counterclaimant Democratic Underground LLC and Defendant David Allen (collectively "Democratic Underground" or "Defendants"), respectfully submit this Supplemental Memorandum to bring to the Court's attention key evidence just produced in discovery that is highly relevant to the three currently pending motions. Specifically, on February 28, 2011, Cross-Defendant Stephens Media, LLC produced, belatedly, a copy of
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See Declaration of Laurence Pulgram , never before

revealed to any Court in this District, on its face purports to . provide substantial evidence that:

. Defendants request that the Court consider as a further basis upon which

to deny the two Motions to Dismiss filed by Righthaven and Stevens Media, and to grant Defendants' Motion for Summary Judgment on the issue of fair use. Given that this material was only recently and belatedly produced, Defendants could not have addressed it in any of the prior briefing. See, e.g., United States v. Maris, 2011 WL 468554, at *5 n.5 (D. Nev. Feb. 4, 2011) (granting leave to file supplemental materials even after the hearing on a motion for summary judgment); Mitchel v. Holder, 2010 WL 816761, at *1 n.1 (N.D. Cal. Mar. 9, 2010) (granting
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Stephens Media's responses to Defendants' First Requests For Production of Documents were due on January 18, 2011, ten days before Defendants' Reply in Support of their Cross-Motion. By failing to produce this evidence until February 28, Stephens Media precluded its earlier submission. For its part, Righthaven has still not produced this, or any other, document.

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leave to file supplemental brief in support of motion for summary judgment addressing newly discovered evidence); Lumsden v. United States, 2010 WL 2232946, at *1 (E.D. N.C. June 3, 2010) (granting leave to submit additional newly discovered evidence in support of motion for summary judgment). In particular, Defendants submit that demonstrates a compelling need for

the Court to adjudicate the issues raised by the Counterclaim as to , as that issue may affect and dispose of hundreds of cases now improperly pending in this District.

In Support of its Motion to Dismiss, Stephens Media presented the Court with a purported 11 "Copyright Assignment," in the same form Righthaven has repeatedly presented in this District as 12 purportedly creating its right to sue. See Stephens Media's Motion to Dismiss or Strike ("Dkt. 13 38"), Exh. 1. Stephens Media relied on this Copyright Assignment as the sole evidence from 14 which it claimed that: (1) "Righthaven, not Stephens Media, holds the exclusive right to seek 15 legal redress" for infringement (Dkt. 38. at 6); (2) "Stephens Media would be legally barred 16 from [suing]" Democratic Underground, even if it wanted to (id at 7); and (3) there was 17 "absolutely no evidence" to support Defendant's assertion that the assignment was a sham or that 18 Righthaven is acting as Stephens Media's agent. Id. 19 In response, Defendants pointed out that the "Copyright Assignment" did not identify any 20 actual rights under the Copyright Act assigned to Righthaven. See Defendants' Memorandum in 21 Opposition to Stephens Media LLC's Motion to Dismiss and Joinder ("Dkt. 46") at 6. Rather 22 the Assignment circularly defined the rights assigned to include "all copyrights requisite to have 23 Righthaven recognized as the copyright owner of the Work for purpose of Righthaven being able 24 to claim ownership." Dkt. 38, Exh. 1. Defendants also noted that, by its terms, the "Copyright 25 Assignment" provided that it was subject to an undefined "right of reversion" to Stephens Media 26 and also referred to unidentified "monetary commitments and commitment to services provided" 27 which had not been disclosed to the Court. See Dkt. 46 at 5-6. Defendants advised the Court that 28
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"when produced in discovery, [additional documents would] reveal the actual flow of obligations, control, and funding between Righthaven and Stephens Media." Id.

Thus, although the "Copyright Assignment" characterized itself as a transfer of "all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present and further infringements of the copyright," (Dkt. 38, Exh. 1 (emphasis added)),

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 the work being sued upon has been transferred to Righthaven without any ambiguity" and 16 because "Righthaven, not Stephens Media, is . . . the only party vested with the right to sue . . . ." 17 Stephens Media's Reply in Support of Motion to Dismiss or Strike ("Dkt. 56") at 4, 10. 18 eviscerates this argument and exposes the plain falsity of these 19 assertions. 20 21 22 23 24 25 26 27 28
DEFENDANTS.' SUPPL. MEMO ADDRESSING RECENTLY PRODUCED EVIDENCE RELATING TO PENDING MOTIONS

Moreover,

also suggests

that has been requested by Defendants, though not yet produced. Decl., ¶ 10.

Pulgram

­ though the precise facts await further document production. DISCUSSION I. SUBSTANTIATES DEMOCRATIC UNDERGROUND'S STANDING TO SUE STEPHENS MEDIA AS REAL PARTY IN INTEREST. Stephens Media has argued that it is an improper party because, "[c]omplete ownership of

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In short,

adds substantial additional evidence to the already extensive

factual allegations showing a live case and controversy against Stephens Media. II. SUBSTANTIATES THE NEED TO RESOLVE THE COUNTERCLAIM'S ALLEGATIONS THAT THE ASSIGNMENT IS INVALID, SHAM, AND UNENFORCEABLE. also further undermines the arguments of both Stephens Media and Righthaven that this Court need not decide the Counterclaim's request for declaration of the invalidity and unenforceability of the assignment. As Defendants have already argued, it is precisely this sort of counterclaim, seeking resolution of the validity of the right assertedly infringed, that the Supreme Court has held must survive a dismissal with prejudice of a claim for infringement. Dkt. 46 at 13-14 (citing Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83 (1993)). This newly-produced evidence underscores the importance of addressing that question now. On the question of validity, the Counterdefendants have argued that other rulings on motions to dismiss Righthaven's prior lawsuits supposedly "upheld the validity" of the form "Copyright Assignment." See, e.g., Dkt. 56 at 4-5; and Righthaven's Motion for Voluntary Dismissal ("Dkt. 36") at 20-21. But for each of those rulings (which came on motions to dismiss) Righthaven had withheld from the Court

Defendants also note that Stephens Media should have been listed in Righthaven's Certificate of Interested Parties. Dkt. 5.

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As a result, this is the first case in which any Court will have Rather than dismiss the Counterclaim as "unnecessary," this Court will need to determine whether the settled requirement that "only

owners of an exclusive right in a copyright may sue" for infringement. Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 884 (9th Cir. 2005). In Silvers, the en banc Ninth Circuit held that an assigned "right to sue for an accrued claim for infringement is not [one of the] exclusive right[s]" in copyright that can provide standing to sue. Such exclusive rights are limited to those specified in Section 106 of the Copyright Act, such as the right to copy, distribute, perform, etc. See id. at 884. Thus, in Silvers, the author of a work made for hire, who subsequently had been granted by her employer (the copyright holder) "all right, title and interest in and to any claims and causes of action against [specified infringers]," had no legal or beneficial interest in the underlying copyright itself, and thus could not initiate suit, because none of the individual exclusive rights under § 106 had been granted to her. See id. at 883. In support of its Counterclaim, Democratic Underground asserts that the same rule applies here.

, makes the Counterclaim all the more important.

may effectively dispose of hundreds of Righthaven cases.

For example, in Righthaven LLC v. Dr. Shezad Malik Law Firm P.C., (D. Nev.) 2:10-cv-0636-RLH-RJJ (cited in RH's motion (Dkt. 36) at 21), Righthaven incorrectly stated that"[i]n the present action, there is no division of copyright ownership as was the case in Silvers; Righthaven is the owner of both the exclusive rights in and to the Work and the owner of all accrued causes of action." 2:10-cv-0636, Dkt. 11 at 13: 2-3 and Dkt. 13 at 12:24-26. This is incorrect because

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III.

SUBSTANTIATES THE OBJECTIVE UNREASONABLENESS OF PLAINTIFF'S CLAIMS AND THE PROPRIETY OF AN ATTORNEYS' FEE AWARD. Righthaven argued in its Motion that it should be allowed to voluntarily dismiss without

paying attorneys' fees because the "objective reasonableness" of its claims had purportedly been validated by the courts' refusal to dismiss its prior claims for lack of standing. Dkt. 36. at 20-22. As just explained, however, those prior rulings resulted from Righthaven's withholding from the Court. With now on record, , rendering Righthaven's claim objectively unreasonable. IV. Finally, further substantiates the impossibility of harm to Righthaven's

market for the work, as relevant to the fourth factor of the fair use analysis. Under

. See generally Defendants' Reply Memorandum in Support of Cross Motion for Summary Judgment ("Dkt. 62") at 13-14 (discussing lack of market harm). /// /// /// /// /// /// /// ///
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1 CONCLUSION 2 3 4 5 Dated: March 4, 2011 6 7 By: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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For these reasons, Defendants respectfully request that the Court consider in its adjudication of the three motions now pending before it.

FENWICK & WEST LLP

/s/ Laurence F. Pulgram LAURENCE F. PULGRAM, ESQ

Attorneys for Defendant and Counterclaimant DEMOCRATIC UNDERGROUND, LLC, and Defendant DAVID ALLEN

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