Righthaven LLC v. Newman

Filing 19

MOTION to Dismiss for Lack of Jurisdiction and Lack of Personal Jurisdiction; by Defendant Garry Newman. Responses due by 7/15/2011. (Attachments: # 1 Exhibit A - Copyright Office records re: Work in Question, # 2 Exhibit B - Copy of SAA (Strategic Alliance Agreement) between Righthaven and Stephens Media, LLC, produced in Righthaven v. Democratic Underground, Doc. 79-1 at pp. 6-32, # 3 Exhibit C - Order Unsealing SAA in Righthaven v. Democratic Underground, Doc. 93, # 4 Exhibit D - Order Dismissing Complaint in Righthaven v. Democratic Underground, ___ F.3d ___, 2011 WL 2378186 (D. Nev. June 14, 2011), # 5 Exhibit E - Copy of SAA (Strategic Alliance Agreement) between Righthaven and Stephens Media, LLC, and of May 9, 2011 Clarification, attached to Declaration of Righthaven CEO Steven Gibson, filed in Righthaven v. Hoehn as Doc. 25 thereto, # 6 Exhibit F - Order Dismissing Complaint in Righthaven v. Hoehn, No. 2:11-cv-00050-PMP-RJJ (D. Nev. June 20, 2011), # 7 Exhibit G - Cable News Network, L.P. v. GoSMS.com, Inc., No. 00-Civ-4812 (LMN), 2000 WL 1678039 (S.D.N.Y. Nov. 6, 2000) (unpublished), # 8 Exhibit H - Salomon v. A. Salomon & Co., Ltd., 1897 A.C. 22 (H.L.))(Zralek, Stephen) .

Case 2:10-cv-01356-RLH -GWF Document 79

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Filed 03/09/11 Page 1 of 10

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.

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

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. 2:10-CV-01356-RLH (GWF)

Exhibit B

Case 2:10-cv-01356-RLH -GWF Document 79

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Filed 03/09/11 Page 2 of 10

INTRODUCTION
Defendant / Counterclaimant Democratic Underground LLC and Defendant David Allen

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(collectively “Democratic Underground” or “Defendants”), respectfully submit this Supplemental

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Memorandum to bring to the Court’s attention key evidence just produced in discovery that is

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highly relevant to the three currently pending motions. Specifically, on February 28, 2011,

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Cross-Defendant Stephens Media, LLC produced, belatedly, a copy of the Strategic Alliance

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Agreement between itself and Righthaven, LLC.1 See Declaration of Laurence Pulgram

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(“Pulgram Decl.”), Exhibit A (hereafter, the “Agreement”). This Agreement, never before

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revealed to any Court in this District, on its face purports to be the master agreement that governs

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all the assignments Righthaven has sued upon in this Court.
The terms of the Agreement provide substantial evidence that: (1) Righthaven has been

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conveyed no rights in the work at issue other than the right to sue for infringement, a fact that

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renders the assignment to Righthaven invalid; (2) Stephens Media is the real party in interest,

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engaging Righthaven as its agent to prosecute this action; (3) Stephens Media retains the right to

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sue Democratic Underground under the Agreement, thereby giving rise to a live and genuine

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controversy with Stephens Media; and (4) Righthaven has been granted no rights to exploit the

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work in question, and thus, for the purpose of fair use analysis, can suffer no harm from the use of

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the Excerpt by Democratic Underground.
Defendants request that the Court consider this Agreement as a further basis upon which

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to deny the two Motions to Dismiss filed by Righthaven and Stevens Media, and to grant

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Defendants’ Motion for Summary Judgment on the issue of fair use. Given that this material was

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only recently and belatedly produced, Defendants could not have addressed it in any of the prior

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briefing. See, e.g., United States v. Maris, 2011 WL 468554, at *5 n.5 (D. Nev. Feb. 4, 2011)

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(granting leave to file supplemental materials even after the hearing on a motion for summary

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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.
DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING MOTIONS

1

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 3 of 10

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leave to file supplemental brief in support of motion for summary judgment addressing newly

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discovered evidence); Lumsden v. United States, 2010 WL 2232946, at *1 (E.D. N.C. June 3,

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2010) (granting leave to submit additional newly discovered evidence in support of motion for

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summary judgment).

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In particular, Defendants submit that the Agreement demonstrates a compelling need for

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the Court to adjudicate the issues raised by the Counterclaim as to the sham and unenforceable

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nature of the assignments to Righthaven, as that issue may affect and dispose of hundreds of cases

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now improperly pending in this District.

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10

THE STRATEGIC ALLIANCE AGREEMENT
In Support of its Motion to Dismiss, Stephens Media presented the Court with a purported

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“Copyright Assignment,” in the same form Righthaven has repeatedly presented in this District as
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purportedly creating its right to sue. See Stephens Media’s Motion to Dismiss or Strike (“Dkt.
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38”), Exh. 1. Stephens Media relied on this Copyright Assignment as the sole evidence from
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which it claimed that: (1) “Righthaven, not Stephens Media, holds the exclusive right to seek
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legal redress” for infringement (Dkt. 38. at 6); (2) “Stephens Media would be legally barred
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from [suing]” Democratic Underground, even if it wanted to (id at 7); and (3) there was
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“absolutely no evidence” to support Defendant’s assertion that the assignment was a sham or that
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Righthaven is acting as Stephens Media’s agent. Id.
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In response, Defendants pointed out that the “Copyright Assignment” did not identify any
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actual rights under the Copyright Act assigned to Righthaven. See Defendants’ Memorandum in
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Opposition to Stephens Media LLC’s Motion to Dismiss and Joinder (“Dkt. 46”) at 6. Rather
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the Assignment circularly defined the rights assigned to include “all copyrights requisite to have
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Righthaven recognized as the copyright owner of the Work for purpose of Righthaven being able
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to claim ownership.” Dkt. 38, Exh. 1. Defendants also noted that, by its terms, the “Copyright
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Assignment” provided that it was subject to an undefined “right of reversion” to Stephens Media
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and also referred to unidentified “monetary commitments and commitment to services provided”
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which had not been disclosed to the Court. See Dkt. 46 at 5-6. Defendants advised the Court that
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DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

2

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 4 of 10

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“when produced in discovery, [additional documents would] reveal the actual flow of obligations,

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control, and funding between Righthaven and Stephens Media.” Id.

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The Strategic Alliance Agreement, dated January 18, 2010, now supplies much of the

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missing information. This Agreement provides for a 50/50 split of lawsuit recoveries between

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Stephens Media and Righthaven (less “Costs”). See Agreement, Section 5.2 The Agreement

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further reveals a naked assignment to Righthaven of rights to sue for infringement, without

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conveying any exclusive rights under Section 106 of the Copyright Act to exploit Stephens

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Media’s work. Section 7.2 expressly denies Righthaven any rights other than to pursue

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infringement actions:

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

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Section 7.2. (bold emphasis added); see also Schedule 1 – Definitions (defining “Exploit”). Thus,

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although the “Copyright Assignment” characterized itself as a transfer of “all copyrights requisite

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to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven

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being able to claim ownership as well as the right to seek redress for past, present and further

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infringements of the copyright,” (Dkt. 38, Exh. 1 (emphasis added)), the Strategic Alliance

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Agreement’s specific terms provide that “Righthaven shall have no right or license to Exploit …

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the Stephens Media Assigned Copyrights ” other than to share the proceeds of a Recovery in

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litigation.3 Section 7.2. Indeed, the Agreement specifically says that Stephens Media “shall

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All citations to “Sections” will refer to the Agreement, Pulgram Declaration Exhibit A.

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“Recovery” is defined as “any and all Sums received, transferred to, assigned, conveyed, paid or otherwise obtained
by Stephens Media and/or Righthaven relating to, arising or resulting from (whether directly or indirectly) a
DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

3

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 5 of 10

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retain” these rights, showing that no rights were transferred in the first place. Id. (emphasis

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added).

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In operation, the Agreement also makes clear Righthaven’s role as Stephens Media’s

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agent. Stephens Media may assign copyrights of its choice to Righthaven to search for

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infringement. Sections 3.1; 3.2. Once a copyright is purportedly “assigned” to Righthaven,

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Stephens Media “engages” Righthaven on an exclusive basis to perform searching for copyright

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infringement and pursuit of infringement actions. Section 3.1 - 3.3. Should Righthaven

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ultimately choose not to serve as agent to commence an infringement action on a particular

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assignment, “then Righthaven shall reassign the Assigned Copyright to Stephens Media.”

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Section 3.3. Should Righthaven desire to sue, however, Stephens Media still controls whether

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suit will be brought through its right to send a “Declination Notice,” upon receipt of which

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“Righthaven shall not take any Infringement Action with respect to the particular putative

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infringer set forth in any Declination Notice.” Section 3.3. The bases upon which Stephens

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Media may stop a suit – even after it has “assigned” the purported right to sue – include whenever

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the person targeted “is a present or likely future valued business relationship of Stephens Media

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or otherwise would . . . result in an adverse result to Stephens Media.” Id.

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Even after suit is brought, Stephens Media retains an absolute right of reversion, subject

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only to later reimbursement of Righthaven’s investment in the litigation. Section 8, entitled

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“Stephens Media’s Right of Reversion” states: “Stephens Media shall have the right at any time

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to terminate, in good faith, any Copyright Assignment (the ‘Assignment Termination’) and enjoy

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a right to complete reversion to the ownership of any copyright that is the subject of a Copyright

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Assignment . . . .” Section 8.

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The right of reversion specifically contemplates that Stephens Media may, in such

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instances, continue to prosecute any litigation itself, providing that Stephens Media must, after

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such reversion, pay Righthaven’s costs associated with the “early termination” of the assignment

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“[w]ithin ten (10) days of receipt of any Recovery by Stephens Media” for the alleged

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Disposition, including, without limitation, all Sums paid by way of damages, costs and attorneys fees with respect to
or arising from an Infringement Action.” See Schedule 1 – Definitions.
DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

4

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

Case 2:10-cv-01356-RLH -GWF Document 79

1

Filed 03/09/11 Page 6 of 10

infringement. Section 8.

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Moreover, the Strategic Alliance Agreement also suggests that Stephens Media continues

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to exert direct control over Righthaven’s internal operations. The Agreement recites that it is part

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of an “integrated transaction” that requires that Righthaven proceed under a separate Operating

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Agreement that has been requested by Defendants, though not yet produced. Section 2; Pulgram

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Decl., ¶ 10. The Strategic Alliance Agreement recites that, under the Operating Agreement, one

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of the owners of Righthaven must be a “Stephens Media Affiliate” called SI Content Monitor,

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LLC, which “is presently and shall throughout the Term be Controlled by common owners [with

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Stephens Media] with no material variation in said ownership.” Section 2(a). This further

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suggests that Stephens Media, through the Operating Agreement can also exert direct control over

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Righthaven – though the precise facts await further document production.

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DISCUSSION
I.

THE AGREEMENT 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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the work being sued upon has been transferred to Righthaven without any ambiguity” and
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because “Righthaven, not Stephens Media, is . . . the only party vested with the right to sue . . . .”
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Stephens Media’s Reply in Support of Motion to Dismiss or Strike (“Dkt. 56”) at 4, 10. The
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Strategic Alliance Agreement eviscerates this argument and exposes the plain falsity of these
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assertions. The Agreement shows not only (1) that Stephens Media controlled the choice to
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“assign” rights in this particular News Article (Section 3.1), and then (2) controlled whether the
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News Article would actually be sued upon (Section 3.3), but also, (3) that Stephens Media, to this
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day, has an absolute right to reversion, under which it may continue the lawsuit as it wishes in its
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own name (Section 8). Indeed, Stephens Media even retains the ability to encumber the asset it
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has purportedly assigned with a “security interest, pledge, hypothecation, lien or other
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encumbrance” – behavior consistent only with ownership. See Section 9.3 and Schedule 1 26
Definitions.
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Likewise, the Agreement destroys Stephens Media’s assertion that there is nothing but
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DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

5

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 7 of 10

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“fantasy” behind Defendants assertion that Righthaven acts as Stephens Media’s agent. Dkt. 56

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at 8. The Agreement describes Stephens Media’s “engagement” of Righthaven to bring suit;

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gives Stephens Media the ability to decide, even after “assignment,” whether to sue; gives

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Stephens Media the proceeds after Righthaven receives a 50% commission;4 and allows Stephens

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Media to terminate the agency at any time by exercising its reversion rights. Sections 3.3, 7, 8.

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And the Agreement also describes an Operating Agreement that requires a Stephens Media

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Affiliate with common ownership to participate in operating Righthaven. Section 2.

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In short, the Agreement adds substantial additional evidence to the already extensive
factual allegations showing a live case and controversy against Stephens Media.
II.

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THE AGREEMENT SUBSTANTIATES THE NEED TO RESOLVE THE
COUNTERCLAIM’S ALLEGATIONS THAT THE ASSIGNMENT IS INVALID,
SHAM, AND UNENFORCEABLE.

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The Agreement also further undermines the arguments of both Stephens Media and

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Righthaven that this Court need not decide the Counterclaim’s request for declaration of the

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invalidity and unenforceability of the assignment. As Defendants have already argued, it is

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precisely this sort of counterclaim, seeking resolution of the validity of the right assertedly

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infringed, that the Supreme Court has held must survive a dismissal with prejudice of a claim for

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infringement. Dkt. 46 at 13-14 (citing Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83

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(1993)). This newly-produced evidence underscores the importance of addressing that question

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now.

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On the question of validity, the Counterdefendants have argued that other rulings on

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motions to dismiss Righthaven’s prior lawsuits supposedly “upheld the validity” of the form

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“Copyright Assignment.” See, e.g., Dkt. 56 at 4-5; and Righthaven’s Motion for Voluntary

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Dismissal (“Dkt. 36”) at 20-21. But for each of those rulings (which came on motions to dismiss)

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Righthaven had withheld from the Court the Strategic Alliance Agreement and its definition of

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rights actually conveyed – thereby concealing that “Righthaven shall have no right or license to

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Defendants also note that the litigation proceeds due Stephens Media pursuant to this Agreement provide the
company with a direct, pecuniary interest in the outcome of this case, and therefore Stephens Media should have
been listed in Righthaven’s Certificate of Interested Parties. Dkt. 5.

DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

6

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 8 of 10

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Exploit . . . the Stephens Media Assigned Copyrights” other than to share with Stephens Media

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the “Recovery” from litigation.5 Sections 5 and 7.2. As a result, this is the first case in which any

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Court will have the information necessary to assess the validity of the assignment.

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Rather than dismiss the Counterclaim as “unnecessary,” this Court will need to determine

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whether the rights assigned under the Agreement comport with the settled requirement that “only

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owners of an exclusive right in a copyright may sue” for infringement. Silvers v. Sony Pictures

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Entm’t, Inc., 402 F.3d 881, 884 (9th Cir. 2005). In Silvers, the en banc Ninth Circuit held that an

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assigned “right to sue for an accrued claim for infringement is not [one of the] exclusive

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right[s]” in copyright that can provide standing to sue. Such exclusive rights are limited to those

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specified in Section 106 of the Copyright Act, such as the right to copy, distribute, perform, etc.

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See id. at 884. Thus, in Silvers, the author of a work made for hire, who subsequently had been

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granted by her employer (the copyright holder) “all right, title and interest in and to any claims

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and causes of action against [specified infringers],” had no legal or beneficial interest in the

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underlying copyright itself, and thus could not initiate suit, because none of the individual

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exclusive rights under § 106 had been granted to her. See id. at 883. In support of its

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Counterclaim, Democratic Underground asserts that the same rule applies here. The Agreement

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expressly denies Righthaven any rights other than the right to sue on the copyright, with all rights

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to exploit the copyright being retained by Stephens Media. See Section 7.2. Thus, Righthaven’s

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claim has been baseless and Stephens Media has been the real party in interest from the outset.

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The fact that the Agreement applies to all Righthaven assignments from Stephens Media,

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not merely to this News Article, makes the Counterclaim all the more important. Now that the

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Agreement’s terms are finally before the Court, this Court’s determination of the validity of

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Righthaven’s assignment may effectively dispose of hundreds of Righthaven cases.

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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 Righthaven owns none of the exclusive rights specified in Section 106, all of which were
"retained" by Stephens Media.

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DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

7

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

Case 2:10-cv-01356-RLH -GWF Document 79

1

III.

Filed 03/09/11 Page 9 of 10

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THE AGREEMENT SUBSTANTIATES THE OBJECTIVE
UNREASONABLENESS OF PLAINTIFF’S CLAIMS AND THE PROPRIETY OF
AN ATTORNEYS’ FEE AWARD.

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Righthaven argued in its Motion that it should be allowed to voluntarily dismiss without

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paying attorneys’ fees because the “objective reasonableness” of its claims had purportedly been

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validated by the courts’ refusal to dismiss its prior claims for lack of standing. Dkt. 36. at 20-22.

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As just explained, however, those prior rulings resulted from Righthaven’s withholding of the

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Agreement from the Court. With the Agreement now on record, it appears indisputable that

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Righthaven’s assignment of the cause of action is invalid under Silvers, rendering Righthaven’s

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claim objectively unreasonable.

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IV.

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THE AGREEMENT SUBSTANTIATES THE FACT THAT RIGHTHAVEN
FACES NO POSSIBLE MARKET HARM THROUGH DEFENDANTS’ USE
Finally, the Agreement 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 the
Agreement, Righthaven is expressly prohibited from any rights to exploit the work – other than
the supposed right to sue for copyright infringement. Section 7.2. Thus, no use of the work
could have any possible impact on Righthaven (even if the use “should become widespread,” cf.
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984)), because Righthaven
has no rights in the work – other than the illusory “right” to litigate the work for a share of the
recovery. 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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DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

8

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

Case 2:10-cv-01356-RLH -GWF Document 79

Filed 03/09/11 Page 10 of 10

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CONCLUSION
2
3

For these reasons, Defendants respectfully request that the Court consider the Strategic
Alliance Agreement in its adjudication of the three motions now pending before it.

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Dated: March 4, 2011

FENWICK & WEST LLP

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

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

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DEFENDANTS.’ SUPPL. MEMO ADDRESSING RECENTLY
PRODUCED EVIDENCE RELATING TO PENDING
MOTIONS

9

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

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Filed 03/09/11 Page 1 of 22

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.

Case No. 10-01356-RLH (GWF)
DECLARATION OF
LAURENCE F. PULGRAM
IN SUPPORT OF
DEFENDANTS’
SUPPLEMENTAL
MEMORANDUM
ADDRESSING RECENTLY
PRODUCED EVIDENCE
RELATING TO PENDING
MOTIONS

RIGHTHAVEN LLC, a Nevada limited liability company,
and STEPHENS MEDIA LLC, a Nevada limited-liability
company,
Counterdefendants.
PULGRAM DECL. ISO DEFS.’ SUPPL. MEMO
ADDRESSING RECENTLY PRODUCED EVIDENCE
RELATING TO PENDING MOTIONS

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

Case 2:10-cv-01356-RLH -GWF Document 79-1

1

I, Laurence F. Pulgram, declare as follows:

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1.

Filed 03/09/11 Page 2 of 22

I am an attorney licensed to practice law in the state of California and a partner at

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Fenwick & West, LLP. I serve as one of the counsel for Defendant / Cross-Complainant

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Democratic Underground, LLC and Defendant David Allen (hereinafter “Defendants”) in this

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matter.

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2.

I have personal knowledge of the facts stated in this declaration, and if called upon

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to do so, could and would competently testify thereto. I make this declaration in support of

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Defendants’ Supplemental Memorandum Addressing Recently Produced Evidence Relating to

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Pending Motions.

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3.

On December 17, 2010, Defendants served a first set of Requests for Production of

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Documents on Plaintiff / Counterdefendant Righthaven, LLC and Counterdefendant Stephens

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Media, LLC. Responses by both parties were due on January 18, 2011. The due date was ten

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days before Defendants’ due date for their Reply in Support of the Motion for Summary

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Judgment was to be filed.

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4.

Amongst the Requests for Production made to Stephens Media were the following:


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Article to Righthaven”;


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19



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(No. 10) “ALL DOCUMENTS that refer or relate to any ‘right of reversion’
referenced in the JULY 19, 2010 ASSIGNMENT”;



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(No. 11) “ALL DOCUMENTS that refer or relate to any ‘good and valuable
consideration’ referenced in the JULY 19, 2010 ASSIGNMENT”;



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(No. 8) “ALL DOCUMENTS that refer or relate to any ‘monetary
commitments’ referenced in the JULY 19, 2010 ASSIGNMENT”;

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(No. 3) “ALL DOCUMENTS concerning any assignment of rights in the News

(No. 56) “ALL contracts, agreements, investment DOCUMENTS, or other
terms between YOU and Righthaven.”

5.

On January 18, 2011, Stephens Media responded with objections to the Requests

for Production. Stephens Media produced no responsive documents.

28
PULGRAM DECL. ISO DEFS.’ SUPPL. MEMO
ADDRESSING RECENTLY PRODUCED EVIDENCE
RELATING TO PENDING MOTIONS

1

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

Case 2:10-cv-01356-RLH -GWF Document 79-1

1

6.

Amongst the Requests for Production made to Righthaven were the following:


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Filed 03/09/11 Page 3 of 22

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(No. 3) “ALL DOCUMENTS concerning any potential or actual assignment of
rights in the NEWS ARTICLE to Righthaven”;



4
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(No. 8) “ALL DOCUMENTS that refer or RELATE TO any ‘monetary
commitments’ referenced in the JULY 19, 2010 ASSIGNMENT”;



6
7

(No. 10) “ALL DOCUMENTS that refer or RELATE TO any ‘right of
reversion’ referenced in the JULY 19, 2010 ASSIGNMENT”;



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9

(No. 11) “ALL DOCUMENTS that refer or RELATE TO any ‘good and
valuable consideration’ referenced in the JULY 19, 2010 ASSIGNMENT”;



10
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(No. 45) “ALL contracts, agreements, investment DOCUMENTS, or other
terms between YOU and Stephens Media.

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7.

Righthaven, for its part, failed to respond or object to any of the Requests for

13

Production by the due date of January 18, 2011. When Righthaven did ultimately respond to the

14

Requests for Production, on January 24, 2011, it produced no responsive documents and has, to

15

this date, still produced no documents.

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8.

On February 28, 2011, after an extended meet and confer process, Stephens

17

Media made its first production of documents, totaling 94 pages, including a document Bates

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numbered SM000078 – SM000094, a true and correct copy of which is attached hereto as Exhibit

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A.

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9.

Defendants are submitting this document to the Court immediately to ensure that

the Court has access to it while considering the pending motions.
10.

Although counsel for Defendants have requested to receive the additional

23

document referred to in Paragraph 2 of Exhibit A, it has not yet been provided by either

24

Righthaven or Stephens Media.

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11.

Stephens Media produced Exhibit A designated “Confidential Attorneys Eyes

26

Only” under the Stipulated Protective Order in this action. Dkt. 65. Defendants do not believe

27

that a filing of Exhibit A, or at least the entirety of Exhibit A, is appropriately withheld from

28

public view under the Stipulated Protective Order or governing law. Accordingly, pursuant to
PULGRAM DECL. ISO DEFS.’ SUPPL. MEMO
ADDRESSING RECENTLY PRODUCED EVIDENCE
RELATING TO PENDING MOTIONS

2

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

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 4 of 22

1

Paragraph 19 of the Stipulated Protective Order, we have requested, in writing, that Stephens

2

Media and Righthaven agree within five days that Exhibit A may be filed not under seal, in whole

3

or in part. In the event that we are able to reach agreement with Stephens Media and Righthaven,

4

it is our intention to file a stipulation as to which portions of Exhibit A, if any, are to remain

5

under seal.

6

12.

7

I declare under penalty of perjury under the laws of the United States that the

foregoing is true and correct. Executed on March 4, 2011, in San Francisco, California.

8
9

/s/ Laurence F. Pulgram
Laurence F. Pulgram
Fenwick & West, LLP

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PULGRAM DECL. ISO DEFS.’ SUPPL. MEMO
ADDRESSING RECENTLY PRODUCED EVIDENCE
RELATING TO PENDING MOTIONS

3

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

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 5 of 22

Exhibit A

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 6 of 22

STRATEGIC ALLIANCE AGREEMENT
This STRATEGIC ALLIANCE AGREEMENT (this "Agreement'') is made and
entered into this 18th day of January, 2010 ("Effective Date") by and between Righthaven LLC, a
Nevada limited-liability company ("Righthav?n") and Stephens Media LLC, a Nevada limited-,
liability company ("Stephens Media").

In consideration of the covenants, representations and warranties set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Righthaven and Stephens Media agree as follows:

1.

Definitions and Interpretations.

1.1.
Certain terms used herein shall have the meaning ascribed to such terms as set
forth in Schedule 1.
1.2.
All of the defined terms as set forth in Schedule 1, if defined in the singular or
present tense, shall also retain such general meaning if used in the plural or past tense, and if
used in the plural or past tense, shall retain the general meaning if used in the singular or present
tense.
1.3.
Section headings are used for convenience only and shall have no interpretive
effect or impact whatsoever.
I
I' '

2.

Integrated Transaction.

I

The Parties hereby covenant that this Agreement is part of an integrated transaction with
the transaction (the "Righthaven Transaction") represented by the formation of Righthaven and
the corresponding Operating Agreement by and amongst Net Sortie Systems, LLC, a Nevada
limited-liability company ("Net Sortie"), Righthaven and the Stephens Media's affiliated
company, SI Content Monitor LLC, an Arkansas limited-liability company (said latter entity
known herein as the "Stephens Media Affiliate" and said Operating Agreement known herein as
the "Operating Agreement"). Stephens Media further covenants, represents and warrants that:
(a) the Stephens Media Affiliate'is presently and shall throughout the Term be Controlled by
common owners, with no material variation in said ownership, (b) the Operating Agreement is'
being executed by the parties to the Operating Agreement simultaneously with the execution by
the Parties of this Agreement; (c) that neither Righthaven nor Net Sortie would enter into the
Righthaven Transaction if not for Stephens Media's execution of this Agreement; and
(d) Righthaven and Net Sortie, as third party beneficiaries, are relying upon Stephens Media's
continued performance of Stephens Media's duties and obligations pursuant to and arising out of
this Agreement as a basis of the consideration for Righthaven's and Net Sortie's respective duties
and obligations pursuant to and arising out of the Operating Agreement.

1

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SM000078

Case 2:10-cv-01356-RLH -GWF Document 79-1

3.

Filed 03/09/11 Page 7 of 22

Exclusive Engagement.

3.1.
Stephens Media shall assign (at the times stated) to Righthaven, pursuant to the
procedures set forth in Section 7: (a) any copyrights owned by Stephens Media that Stephens
Media desires to be the subject of Searching (the "Searching Decision"), with each such
respective assignment to occur within a reasonable time after Stephens Media makes each
respective Searching Decision, (b) any copyrights owned by Stephens Media that Stephens
Media considers (the "Material Risk Conclusion") a material risk ofinfringement (with each
such respective assignment to occur within thirty (30) days after Stephens Media makes each
respective Material Risk Conclusion, and (c) within thirty (30) days of having respective
Infringement Notice, each and every Infringed Copyright that exist during the Term (the
"Assigned Infringed Copyright(s)").
3.2.
During the Term, Righthaven shall use commercially reasonable efforts to engage
in Searching with respect to all Stephens Media Assigned Copyrights.
3.3.
During the Term, Righthaven shall have the right, but not the obligation, to pursue
an Infringement Action of the respective infringements that are the subject of the respective
Infringed Copyrights. Righthaven shall have sixty (60) days after each respective assignment of
each respective Assigned Infringed Copyright to Notify Stephens Media of whether Righthaven
will pursue an Infringement Action of said respective Assigned Infringed Copyright (the
"Remediation Option Notice"). If Righthaven chooses in the Remediation Option Notice to not
pursue an Infringement Action (the "Remediation Declination"), then Righthaven shall reassign
the Assigned Copyright to Stephens Media that is the subject of the Remediation Declination;
provided, however, that Stephens Media shall have the right to reassign any such copyright
pursuant to Section 2.1 upon learning new information concerning the circumstances of
infringement or possible infringement associated with any copyright that is the subject of a
Remediation Declination. If Righthaven chooses in the Remediation Option Notice to pursue an
Infringement Action, then Righthaven shall commence Remediation within the times frames and
pursuant to the procedures set forth in Section 4. Notwithstanding any other provision of this
Agreement, Stephens Media shall have the right to Notify Righthaven, within five (5) Business
Days after receipt of a respective Remediation Option Notice, that Righthaven should not take
any Infringement Action with respect to a particular putative infringer as indicated in any
respective Remediation Option Notice (the "Declination Notice") and upon receipt of a
Declination Notice, Righthaven shall not take any Infringement Action with respect to the
partiCUlar putative infringer set forth in any Declination Notice; provided, however, that Stephens
Media shall only send any Declination Notice on a reasonable basis with the grounds of
reasonability being that a particular putative infringer is a charitable organization, is likely
without fmancial resources, is affiliated with Stephens Media directly or indirectly, is a present or
likely future valued business relationship of Stephens Media or otherwise would be a Person that,
if the subject of an Infringement Action, would result in an adverse result to Stephens Media.
3.4.
While Stephens Media shall reserve the right to undertake litigation in order to
pursue any infringement of any Stephens Media copyright through legal counsel duly licensed in

2

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SM000079

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 8 of 22

the jurisdiction through which such litigation would be undertaken, Stephens Media hereby
engages Righthaven throughout the Term on an exclusive basis to undertake all activities set
forth in this Section 3, including, without limitation, the engaging in Searching as well as the
pursuit of Infringement Actions. Stephens Media shall not, at any time during the Term, assign
to any other Person that is a Competitor any copyrights owned by Stephens Media. Stephens
Media shall also never Compete with Righthaven at any time during the Term and for a period of
five (5) years after termination of the Term.

4.

Actions to Address Copyright Infringement

Righthaven shall take an Infringement Action against the Infringer in order to effect a
Disposition within one (1) year of the later of (a) the procurement of a copyright registration
covering the Stephens Media Assigned Copyrights or (b) if such registration already exists,
within six (6) months after each respective Remediation Option Notice that gives rise to each
respective requirement of an Infringement Action; provided, however, that if Righthaven elects
to contact Infringer prior to any Infringement Action and achieves a commercially reasonable
Recovery, then Righthaven shall not be required to take an Infringement Action (and such
Recovery shall satisfy Righthaven's duties in this Agreement to pursue an Infringement Action);
provided further, that ifRighthaven discovers Content that provides Righthaven with a goodfaith-based belief that the Infringer is not an infringer of the Stephens Media Assigned
Copyrights, then Righthaven shall have no duties to take any Infringement Action or pursue a
Disposition.

5.

Recovery Distribution.

Within one (1) week after receipt of the Recovery, Righthaven shall pay to Stephens
Media a the percentage of the Recovery provided to Righthaven's most preferred customers from
time to time (which is, as of the Effective Date, fifty percent (50%)) minus Costs advanced or
incurred by Righthaven related to, with respect to or arising out of the preparation for, conduct of
and ultimate resolution of the Infringement Action andlor Disposition.

6.

Infringement Action Costs.

Subject to Section 2, Righthaven shall be responsible for all Costs incurred in an
Infringement Action (the "Infringement Action Costs"); provided, however, that Costs shall not
include the salaries or other compensation to Righthaven employees associated with or arising
out of work performed arising out of or in association with this Agreement.

7.

Assignment of Copyright Content; Stephens Media License.

7.1
Subject to the other terms and provisions of this Agreement and throughout the
Term, Stephens Media shall effect the assignments to Righthaven of copyrights as required by
this Agreement (including, without limitation, within the time periods required by this
Agreement) by executing a particularized assignment with respect to each copyright and each
3

Confidential Attorneys Eyes Only

SM000080

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 9 of 22

consistent with (and in form and substance the same as) the scope of assigmnent as set forth in
the fonn of copyright assigmnent as embodied in Exhibit 1 (each a "Copyright Assigmnent").
Stephens Media shall provide Notice to Righthaven of each copyright (each a "Notified
Copyright") that is required to be the subject of a Copyright Assigmnent (a "Copyright
Assigmnent Notice") by no later than five (5) Business Days prior to the last day upon which
each respective Copyright Assigmnent is required to be executed by Stephens Media as provided
in Section 3.1. Righthaven shall then provide to Stephens Media a conforming Copyright
Assigmnent for Stephens Media to execute with respect to each Notified Copyright within
three (3) Business Days after receipt of the Copyright Assigmnent Notice.
7.2
Despite any such Copyright Assigmnent, Stephens Media shall retain (and is
hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned
Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to
Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media
Assigned Copyrights other than the right to proceeds in association with a Recovery. To the
extent that Righthaven's maintenance of rights to pursue infringers of the Stephens Media
Assigned Copyrights in any manner would be deemed to diminish Stephens Media's right to
Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license
to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have
unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights. Righthaven
shall have no Obligation to protect or enforce any Work of Stephens Media that is not Stephens
Media Assigned Copyrights.
8.

Stephens Media's Right of Reversion.

Stephens Media shall have the right at any time to terminate, in good faith, any Copyright
Assigmnent (the "Assignment Termination") and enjoy a right of complete reversion to the
ownership of any copyright that is the subject of a Copyright Assignment; provided, however,
that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens
Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effecting
termination of such action including, without limitation, all Losses associated with any dismissal
with prejudice. In order to effect the termination of the any Copyright Assignment, Stephens
Media shall be required to provide Righthaven with thirty (30) days prior written notice. Within
thirty (30) days after receipt of termination of the any Copyright Assignment, Righthaven shall
commence documentation to effect reassignment of the Stephens Media Assigned Copyrights to
Stephens Media. Upon any Assignment Termination, Stephens Media shall pay to Righthaven
the Infringement Action Costs that would otherwise work an unjust enrichment benefitting
Stephens Media (but under no circumstances shall Infringement Action Costs be less than the
costs of any application for registrations or registrations of copyrights made and/or procured by
Righthaven for the benefit of Stephens Media), pursuant to or arising out of this Agreement. No
termination of any Copyright Assignment shall impair Righthaven's rights to receive sums
related to, with respect to and/or arising out of any Recovery pursuant to or arising out of this
Agreement (the "Early Termination Amounts"), including, without limitation, a reasonable level
of compensation associated with, with respect to, and arising out of, any and all efforts exerted
4

Confidential Attorneys Eyes Only

SM000081

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 10 of 22

by Righthaven to Search, fmd, investigate, ascertain, pursue, redress, sue or otherwise file a
claim against any Person with respect to, or otherwise address any copyright infringement
benefitting, whether directly or indirectly, copyright holder, pursuant to or arising out of this
Agreement, as well as all other rights to quantum meruit proceeds that any court of competent
jurisdiction would award under such circumstances. Righthaven shall provide Notice Within
thirty (30) days of any Assignment Termination ofRighthaven's calculation of Early Termination
Amounts. Within ten (10) days of receipt of any Recovery by Stephens Media, Stephens Media
shall pay to Righthaven the Early Termination Amounts or provide Notice to Righthaven of any
contest whereby Stephens Media contends that the Early Termination Amounts Notified by
Righthaven to Stephens Media were inaccurate or unjust and to what extent (the "Contested
AmollIit") the Early Termination Amounts were inaccurate or unjust (the "Stephens Media
Contest"). Within ten (10) days after receiving the Stephens Media Contest (the "Contest
Notification Date"), Righthaven shall have the option: (a) to elect to receive from Stephens
Media within ten (10) days of the Contest Notification Date, the Early Termination Amounts
minus the Contested Amount (the "Settled Amount"), or (b) to Notify Stephens Media that
Stephens Media must pay to Righthaven the Settled Amount within ten (10) days of the Contest
Notification Date, and that Righthaven reserves the right to make a claim that Stephens Media
should pay the full Early Termination Amounts. In the event that Righthaven preserves
Righthaven's right to make a Claim pursuant to Section 5(b), the Parties shall mediate the
dispute associated with the Contested Amount (the "Contest Dispute") within sixty (60) days by:
(x) reasonably choosing a mediator or by employing a JAMS mediator through
http://www.jamsadr.com. (y) mediating the Contest Dispute in Las Vegas, Nevada, and
(z) mediating the Contes~ Dispute in good faith (the "Mediation"). In the event that the
Mediation is not effective in resolving the Contest Dispute within. sixty (60) days of the
commencement of the Mediation, Righthaven shall have the right to bring any and all relevant
Claims for recovery of the Contested Amount, and any amounts accrued by Righthaven in the
Mediation, in any court of competent jurisdiction, in addition to all other rights and remedies
available to Righthaven, whether in law or equity.

9.

Representations, Warranties and Covenants of Stephens Media.

Stephens Media hereby represents, warrants and covenants as of the Effective Date and
throughout the Term:
9.1.
The execution, delivery and performance of this Agreement by Stephens Media
does not and shall not violate any of Stephens Media's organizational documents, any applicable
Law, or any contractual or other obligation of Stephens Media or any order to which Stephens
Media is bound.
9.2.
Stephens Media is the owner of all Stephens Media Assigned Copyrights. The
Stephens Media Assigned Copyrights is free and clear of all liens and Encumbrances. Stephens
Media further represents and warrants that it has the exclusive right to use the Stephens Media
Assigned Copyrights, and has the exclusive right to exclude others from Using the Stephens
Media Assigned Copyrights. Stephens Media further warrants that, as of the Effective Date,

5

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SM000082

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 11 of 22

Stephens Media has no knowledge of any third-party Claim that any aspect of Stephens Media's
present or contemplated business operations infringes or will infringe any rights of any third
party in Stephens Media Assigned Copyrights.
Stephens Media shall not sell, grant any Encumbrance on or in or assign, any of
9.3.
Stephens Media Assigned Copyrights to any third Person during the Term absent prior written
approval of Righthaven; provided, however, that Stephens Media may maintain Encumbrances
on Stephens Media Assigned Copyrights as part of an overall funding securitization whereby all
or substantially all of Stephens Media's assets are Encumbered as part of said funding
securitization and Stephens Media Assigned Copyrights are not singled-out as or part of a
particularized group of Encumbered assets.
9.4.
Stephens Media shall not reduce, adjust, settle or compromise any infringement of
Stephens Media Assigned Copyrights except as approved in writing by Righthaven.
Stephens Media shall instruct Stephens Media's general counsel, currently Mark
9.5
A. Hinueber, Esq. (the "General Counsel"), to undertake the necessary and appropriate efforts to
ensure Stephens Media's functional performance of Stephens Media's obligations pursuant to
and arising from this Agreement. Stephens Media shall further instruct the General Counsel to
instruct, by way of internal electronic mail communications (in form and substance the same as
Exhibit 9.5), to all employees of Stephens Media that have awareness of Stephens Media
Content, within ten (10) Business Days after the Effective Date (the "Content Notice Date") and
on every anniversary of the Content Notice Date thereafter during the Term, of the need to
promptly apprise the General Counsel throughout the Term of any Content that any employee
believes may reasonably be the subject of an unauthorized reproduction or pUblication.
9.5.
Stephens Media shall promptly notify Righthaven of any unauthorized
infringement of Stephens Media Assigned Copyrights that reasonably comes to Stephens
Media's attention.
9.6.
Stephens Media shall cooperate fully and candidly with Righthaven with respect
to the Infringement Action and shall take all commercially reasonable actions necessary in order
to effect the terms and provisions of this Agreement.
9.7.
Stephens Media shall provide all Content in whatsoever Media known, or
available, to Stephens Media that may aid Righthaven in the conduct of an Infringement Action,
including, without limitation, privileged or confidential Content in any and all Media; provided,
however, that nothing in this Section 9.7 shall require any waiver of any protections afforded by
reporter shield laws, including, without limitation, as set forth pursuant to Nevada Revised
Statute Section 49.275, as amended from time to time.
Stephens Media shall execute such authorizations as may be required by third
9.8.
Persons in order to release Content in any Media whatsoever to Righthaven to aid Righthaven in
an Infringement Action.
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9.9.
Righthaven has not made any express or implied warranties or representations that
the Services provided by Righthaven shall result in any particular amount or level of income to
Stephens Media.
9.10. Stephens Media hereby receives notice that Steven A. Gibson ("Gibson") has an
ownership interest in one of the entities that owns Righthaven, Gibson's interest in Righthaven is
therefore a minority interest and that Gibson is also the owner of Gibson Lowry Burris LLP
("Gibson's Participation").
9 .11. Stephens Media hereby waives any conflict of interest associated with and/or
arising out of Gibson's Participation and that Stephens Media is represented by legal counsel in
Nevada familiar with the rules of professional responsibility in Nevada concerning making an
informed waiver of the conflict of interest hereby waived.
9.12. Gibson is in no manner representing Stephens Media in or with respect to the
negotiation, drafting or entering into this Agreement.

10.

Recovery Instrument.

10.1. Any Recovery Instrument shall be written in a manner as to require the
endorsement ofRighthaven to be properly endorsed prior to any distribution.
10.2. Righthaven is hereby authorized to act as attorney-in-fact for Stephens Media and
to endorse any Recovery Instrument in Stephens Media's name for deposit into Righthaven's
bank account for collection and final distribution pursuant to the terms of this Agreement.
Stephens Media shall deliver any Recovery Instrument received by Stephens Media to
Righthavenfor endorsement and deposit into Righthaven's account.
10.3. If Stephens Media uses, disburses, deposits or takes any other action with respect
to any Recovery Instrument in contravention of this Agreement, the Sums with respect to such
Recovery Instrument shall be deemed held in trust to be distributed pursuant to the terms of this
Agreement.
10.4. If Righthaven uses, disburses, deposits or takes any other action with respect to
any Recovery Instrument in contravention of this Agreement, the Sums with respect to such
Recovery Instrument shall be deemed held in trust to be distributed pursuant to the terms of this
Agreement.

11.

Stephens Media's Potential Liability.

Stephens Media understands and acknowledges that Stephens Media and Righthaven may
be liable for an Infringer's attorneys' fees as required by Law in connection with an Infringement
Action. Stephens Media further understands that a lawsuit brought solely to harass or to coerce a

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SM000084

Case 2:10-cv-01356-RLH -GWF Document 79-1

Filed 03/09/11 Page 13 of 22

settlement may result in liability for malicious prosecution or abuse of process. If any Claim
made by an Infringer in an Infringement Action results in Losses, other than Losses described in
Section 8, Righthaven shall be solely liable for such Losses and shall indemnify Stephens Media
from and against any such Losses but only if such Losses do not arise out of a misrepresentation
by Stephens Media or other breach by Stephens Media of a provision of this Agreement.

12.

Disclaimer of all Warranties and Representations.
RIGHTHA VEN DISCLAIMS ALL IMPLIED WARRANTIES ANDIOR

REPRESENTATIONS AND MAKES NO WARRANTIES OR REPRESENTATIONS AS TO
ANY PARTICULAR OUTCOME OF ANY INFRINGEMENT ACTION. Righthaven hereby
represents that Righthaven has no knowledge that any Intellectual Property used or owned by
Righthaven infringes the Intellectual Property owned by any third Person.

13.

Remedy.

RIGHTHA VEN SHALL NOT BE HELD LIABLE TO ANY PARTY ON ACCOUNT OF
OR DUE TO BREACH OF TIDS AGREEMENT IN OR FOR ANy AMOUNT THAT
EXCEEDS, IN THE AGGREGATE, THE LESSER OF: (A) ANY STEPHENS MEDIASIDP
FEES RECEIVED BY RIGHTHA VEN FROM STEPHENS MEDIA WITHIN THE PRIOR SIX
(6) MONTHS AND (B) ONE THOUSAND DOLLARS ($1,000) AND RIGHTHAVENSHALL
NOT BE LIABLE TO STEPHENS MEDIA (NOR TO ANY PERSON CLAIMING ANY
RIGHT, TITLE OR INTEREST DERIVED FROM OR AS SUCCESSOR TO THE STEPHENS
MEDIA'S RIGHT, TITLE AND INTEREST) FOR INCIDENTAL, INDIRECT,
CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY KIND INCLUDING, WITHOUT
LIMITATION, LOST REVENUES OR PROFITS, LOSS OF BUSINESS OR LOSS OF
CONTENT ARISING OUT OF TIDS AGREEMENT, IRRESPECTIVE OF WHETHER THE
PARTY HAS ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

14.

Indemnification.

Subject to Section 8, Stephens Media shall indemnify and hold Righthaven harmless from
and against all Losses incurred by Righthaven with respect to or arising out of any Claim brought
by any third Person against Righthaven based upon any act or omission (whether directly or
indirectly) by Stephens Media, including, without limitation, any act or omission stemming from
or arising out of this Agreement.

15.

General Provisions.

15.1. If any provision of this Agreement should be held to be void or unenforceable, in
whole or in part, by a court: of competent jurisdiction, then such court shall correct the defect in a
narrowly tailored manner to approximate the manifest intent of the Parties.

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15.2. Subject to Section 2, this Agreement represents the entire understanding and
agreement by and between Righthaven and Stephens Media.
15.3. This Agreement and any Dispute shall be interpreted and enforced in accordance
with the laws of the State of Nevada without regard to its conflict of law principles.
15.4. The Parties hereby submit to the non-exclusive personal jurisdiction of the state
and federal courts present in Clark County, Nevada with respect to any Dispute.
15.5. The term of this Agreement (the "Term") shall commence on the Effective Date
and shall end upon the termination of the Operating Agreement.

16.

Non-Solicitation.

During the term of this Agreement and for a period of one (1) year subsequent to the
termination date of this Agreement, neither party shall make any attempt to solicit for
employment any current employee of the other party without the prior written consent of such
party.

17.

Notice.

All notices and other communications hereunder shall only be in writing and shall be
given by: (a).e-mail trapsmission to the other party (to be followed promptly by written
confirmation mailed by certified mail as provided below) and deemed delivered upon
transmission when confirnled as aforesaid and provided written confirmation and receipt is
obtained by the sender; (b) facsimile transmission (to be followed promptly by written
confirmation mailed by certified mail as provided below) and deemed delivered upon
transmission when confirmed as aforesaid and provided written confirmation and receipt is
obtained by the sender; (c) overnight courier and deemed delivered one (1) day after dispatch; or
(d) registered or certified mail, return receipt requested and deemed delivered on the earlier of the
date of the signed receipt for same or three (3) days after posting when addressed as follows:

Ifto Righthaven:
Mr. Steven A. Gibson
Manager
Righthaven LLC
7201 West Lake Mead Boulevard, Suite 580
Las Vegas, Nevada 89128
E-mail: [e-mail]

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If to Stephens Media:
Stephens Media LLC
Attn: General Counsel
1111 West Bonanza Road
Las Vegas, Nevada 89106
E-mail: [e-mail]
Facsimile: [phone]
To the extent that no facsimile number is currently provided, a facsimile number will be provided
within five (5) Business Days of obtaining same.
IN WITNESS WHEREOF, each of the undersigned duly execute this Agreement and
represent that each has the authority to legally bind each respective entity.

Righthaven LLC

Stephens Media LLC

~

By:
Name:
Title:
Date:

By:
Name: Steven A. Gibson
Title: Manager
Date: January 18,2010

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SCHEDULE 1 - DEFINITIONS
"Agreement" shall mean this Righthaven Standard Content Protection and Stephens Mediaship
Agreement.
"Assigned Infringed Copynght(s)" shall have the meaning ascribed to such term as set forth in
Section 3.1.
"Assignment Termination" shall have the meaning ascribed to such term as set forth in Section 8.
"Business Days" shall mean any day, Monday through Friday, excepting Saturday and Sunday
and also excepting any day on which federal chartered banks situated in Clark County, Nevada
are generally not open for business.
"Claim" shall mean any demand, cause of action or claim of whatsoever nature.
"Compete" shall mean to engage, anywhere in the known universe, in any of the business of
Righthaven or to offer or provide any of the services or products that Righthaven provides as of
the Effective Date, including, without limitation, those services and/or products as described in
this Agreement, or to have any association, partnership or ownership interest in any Person that
engages in any such conduct.
"Competitor" shall mean any Person who engages in ~y activity that would be within the
meaning of the word Compete; provided, however, no law firm shall be deemed to be any such
Person.
"Content" shall mean all material, information, documents, matter, text, data, graphics,
computer-generated displays and interfaces, images, photographs and works of whatsoever
nature, including, without limitation, all compilations of the foregoing and all results and/or
derivations of the expression of the, foregoing.
"Content Notice Date" shall have the meaning ascribed to such term as set forth in Section 9.5.
"Contest Notification Date" shall have the meaning ascribed to such term as set forth in
Section 8.
"Contest Dispute" shall have the meaning ascribed to such term as set forth in Section 8.
"Contested Amount" shall have the meaning ascribed to such term as set forth in Section 8.

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"Control" shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Person, or the power to veto major policy
decisions of any such Person, whether through the ownership of voting securities, by contract,
or otherwise.
"Copyright Assignment" shall have the meaning ascribed to such term as set forth in Section 7.1.
"Copyright Assignment Notice" shall have the meaning ascribed to such term as set forth in
Section 7.1.
"Costs" shall mean any and every expenditure (at commercially reasonable rates) made on the
part ofRighthaven with respect to an Infringement Action, including, without limitation,
attorneys' fees to local counsel (not employed by Righthaven) prosecuting such action, court
reporter fees, application and registration fees, expert consultant and witness fees, computer
research fees, private investigator fees, process server fees, courier fees, copy charges, long
distance telephone charges, court filing fees, mailing costs, parking fees, expenses incident to
travel by Righthaven representatives related to the Infringement Action, including air (at coach
rates) and ground transport, lodging, and meals, and other disbursements made in connection
with the Infringement Action.
"Declination Notice" shall have the meaning ascribed to such term as set forth in Section 3.3.
"Develop" shall mean develop, conceive, reduce to practice, create, or otherwise arise out of
efforts in any manner whatsoever and through any means whether. now known or hereafter
developed.
.
"Disposition" shall mean the final disposition of an Infringement Action through settlement,
compromise, judgment and/or the execution and delivery of a Recovery Instrument by an
Infringer with respect to, related to or otherwise associated with the Stephens Media Assigned
Copyrights.
"Dispute" shall mean any controversy or other matter with respect to, or arising out of this
Agreement.
"Early Termination Amounts" shall have the meaning ascribed to such term as set forth in
Section 8.
"Effective Date" shall mean the date first entered in this Agreement.
"Encumbrance" shall mean any security interest, pledge, hypothecation, lien or other
encumbrance of whatsoever nature.
"Exhibit" shall mean any document attached hereto denoted as an exhibit, which by reference
made herein shall be deemed incorporated herein by such reference.

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"Exploit" shall mean to use, make, sell, or otherwise exploit in any manner whatsoever (through
any means now known or hereafter Developed).
"General Counsel" shall have the meaning ascribed to such term as set forth in Section 9.5.
"Gibson" shall have the meaning ascribed to such term as set forth in Section 9.10.
"Gibson's Participation" shall have the meaning ascribed to such term as set forth in
Section 9.12.
"Infringement Actions Costs" shall have the meaning ascribed to such term as set forth in
Section 6.
"Intellectual Property" shall mean all foreign, federal, state and common law trademarks, service
marks, patents, copyrights, trade secrets, universal resource locators, domain names, trade
dress, mask works, know how, show how, proprietary information and other intangible asset, as
well as all applications for registration or issuance and registrations and issuances relating
thereto and arising there from.
"Infringed Copyright" shall mean any Stephens Media Content that Stephens Media either has
actual notice is being infringed on a copyright basis or has a bon a fide belief is the subject of
infringement on a copyright basis.
"Infringement Action" shall mean an action commenced in a United States federal district court
against one or more Infringers related to, arising from, or concerning the validity, enforcement,
preservation or enforcement of Stephens Media Assigned Copyrights brought by Righthaven
regardless of whether this Agreement is terminated or any rights or licenses pursuant to or
arising from this Agreement are terminated.
"Infringement Action Costs" shall have the meaning ascribed to such term as set forth in
Section 3.
"Infringer" shall mean a Person presently infringing, or hereafter infringing Stephens Media
Assigned Copyrights.
"Losses" shall mean any and all costs, expenses, fees (including, without limitation, attorneys',
accountants', investigators', witnesses' and professionals' fees), charges, expenditures,
liabilities, damages and other losses of whatsoever nature.
"Material Risk Conclusion" shall have the meaning ascribed to such term as set forth in
Section 3.1.
"Mediation" shall have the meaning ascribed to such term as set forth in Section 8.
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"Net Sortie" shall mean Net Sortie Systems, LLC, a Nevada limited-liability company.
"Notice" shall mean to provide notice pursuant to Section 17.
"Notify" shall mean to give Notice.
"Notified Copyright" shall have the meaning ascribed to such term as set forth in Section 7.1.
"Operating Agreement" shall have the meaning ascribed to such term as set forth in Section 2.
"Parties" shall mean both Righthaven and Stephens Media.
"Party" shall mean either Righthaven or Stephens Media.
"Person" shall mean any natural person, corporation, limited liability company, limited
partnership, partnership, trust, association, organization or other entity of whatsoever nature.
"Recovery" shall mean any and all Sums received, transferred to, assigned, conveyed, paid or
otherwise obtained by Stephens Media andlor Righthaven relating to, arising or resulting from
(whether directly or indirectly) a Disposition, including, without limitation, all Sums paid by
way of damages, costs and attorneys fees with respect to or arising from an Infringement
Action.
"Recovery Instrument" shall mean any instrument or any other Content in any Media which
evidences a right, title or interest in and to the Sums with respect to, related to or arising out of
the Recovery.
"Remediation Declination" shall have the meaning ascribed to such term as set forth in
Section 3.3.
"Remediation Option Notice" shall have the meaning ascribed to such term as set forth in
Section 3.3.

"Righthaven" shall mean Righthaven LLC, a Nevada limited~liability company.
"Righthaven Transaction" shall have the meaning ascribed to such term as set forth in Section 2.
"Schedule" shall mean an enumerated schedule all of which shall be deemed attached hereto and
incorporated herein by way of the specific reference or references made in this Agreement.
"Searching" shall mean to employ the then available technology and means in Righthaven's
possession to find the occurrence(s) of relevant copyright infringement.

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"Searching Decision" shall have the meaning ascribed to such term as set forth in Section 3.1.
"Section" shall be deemed a reference to an enumerated provision of this Agreement. Section
headings are used for convenience only and shall have no interpretive effect or impact
whatsoever.
"Settled Amount" shall have the meaning ascribed to such term as set forth in Section 8.
"Stephens Media" shall mean Stephens Media LLC, a Nevada limited-liability company.
"Stephens Media Affiliate" shall have the meaning ascribed to such term as set forth in
Section 2.
"Stephens Media Assigned Copyrights" shall mean each copyright assigned by Stephens Media
to Righthaven pursuant to Section 7.
"Stephens Media Contest" shall have the meaning ascribed to such term as set forth in Section 8.
"Sums" shall mean all monies, sums, consideration, receivables, asset and other things (whether
tangible or intangible) of value of whatsoever nature as well as all proceeds of any and/or all of
the foregoing.
"Term" shall have the meaning ascribed to such term as set forth in Section 15,5.
"Work" shall have the meaning defined in the U.S. Copyright Act of 1976, as amended.

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Filed 03/09/11 Page 21 of 22

EXHIBITl

COPYRIGHT ASSIGNMENT

This Copyright Assignment (the "Assigrunent") is made effective as of
_ _ _ _ _ _ _ (the "Effective Date") by Stephens Media LLC, a Nevada limited-liability
company ("Stephens Media"),
In consideration of monetary commitments and commitments to services to be provided
and/or already provided by Righthaven LLC, a Nevada limited-liability company, ("Righthaven")
to Stephens Media and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Stephens Media hereby transfers, vests and assigns the work
depicted in Exhibit A, attached hereto and incorporated herein by this reference (the "Work"), to
Righthaven, subject to Stephens Media's rights of reversion, all copyrights requisite to have
Righthaven recognized as the copyright owner of the Work for purposes ofRighthaven being
able to claim ownership as well as the right to pursue past, present and future infringements of
the copyright in and to the Work.

IN WITNESS WHEREOF, Stephens Media hereby executes this Assignment on this
_._dayof
,20_,
STEPHENS MEDIA LLC

By: _______________________________
Name:
Title:

--------------------------

-------------------

STATE OF _ _ _ _ _ _ _)

COUNTY OF

)

Subscribed and sworn to before me this ____ day of ________________-', 2010.

Notary Public
My Commission Expires: _ _ _ _ _ _ _ _ _ _ _ __
SEAL

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·

Filed 03/09/11 Page 22 of 22

~

EXHIBIT 9.5

DUE DILIGENCE NOTICE
"As Stephens Media has decided to reinvigorate the company's efforts to protect the company's
valued copyrights, we ask you to immediately report to the Office of General Counsel via e-mail
any suspected or known unauthorized reproduction or publication of any Stephens Media story,
photograph or other content of any nature by any person or entity at any time."

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