Posts Tagged ‘Steve Gibson’

Is Righthaven CEO Steve Gibson in Denial?

Monday, June 20th, 2011

There’s a remarkable blog post by Jeff Bercovici of Forbes.com – it quotes Righthaven CEO Steve Gibson as saying last week’s defeat in court, which found that Righthaven had no legal basis upon which to sue, “raises an interesting question as to who does have standing.”

Bercovici goes on to quote Gibson as saying, “[I]t is our position that we can reapproach the court [to clarify who, in fact, has the standing to sue].”

Is Gibson in denial? The court said Righthaven was “likely dishonest” multiple times with the court. The order used words like “brazen, “egregious,” “flagrantly false,” and “[possibly] outright deceitful.” The court said previous decisions were “tainted” by Righthaven’s failure to make required disclosures in other cases. Righthaven and Gibson are in serious trouble. Like career-ending, out-of-business type trouble. (It’s not even inconceivable that, depending on what all has transpired, that this is go-to-jail type trouble.)

I suggested to reporter Steve Green of the Las Vegas Sun that the court’s language was “the kind of stuff that, if you are on the wrong side of it, would likely cause all the blood to rush to your stomach.” And I blogged something similar.

But I guess not for Steve Gibson. If he is keeping a stiff upper lip, that’s one thing. But if he seriously thinks it’s a good idea to reapproach the court and ask for clarification on who has standing to sue, then he may be having a slight break with reality. Or maybe this is just a manifestation of the kind of hubris that got him to this point in the first place.

The State Bar of Nevada Should Consider Attorney Misconduct Charges Against Steve Gibson of Righthaven

Thursday, June 16th, 2011

bar in courtroomI believe it is time for the State Bar of Nevada to begin an attorney misconduct investigation of Righthaven CEO Steve Gibson and, perhaps, other lawyers at the center of the Righthaven enterprise.

When I first read about the Righthaven lawsuits, I thought what Righthaven was doing was morally deplorable, but I assumed that Righthaven was on solid legal footing. I believed, as apparently did many judges, that Righthaven had become the legitimate owner of the copyrights upon which it was suing.

Righthaven’s acquisition of those copyrights from Stephens Media – mostly to stories from the Las Vegas Review-Journal – were prerequisites to being able to sue hapless bloggers and other individuals, and then threaten them with $150,000 statutory damage awards for having reposted articles or photos. By doing this, Righthaven got many individuals to settle for a few thousand dollars each, allowing Righthaven to do a volume business of minor shakedowns. The Righthaven business model, while vile, appeared to be perfectly allowable under the law.

But now we know that was not actually true. This week, Judge Roger Hunt of the U.S. District Court for the District of Nevada issued an order [pdf] in the case of Righthaven v. Democratic Underground that paints a withering portrait of plaintiff conduct in the case. We now know the assignments of copyrights by newspaper owner Stephens Media to Righthaven were, in fact, sham transactions. And because of Righthaven’s failure to be candid about the underlying arrangements with Stephens Media, it is now clear, as the court found, that Righthaven made material misrepresentations to the court.

Based on the federal court’s findings, this looks to be egregious attorney misconduct.

The federal court appears to be on the verge of sanctioning Righthaven. But the State Bar of Nevada can go much further. The bar has the ability to subject Gibson and other lawyers at the center of the enterprise to professional discipline, including, if warranted, disbarment.

I very much regret suggesting a misconduct investigation against any attorney, but this situation appears to be one with many real-life victims, and the behavior at issue, based on Judge Hunt’s findings, is wholly incompatible with the ethical standards expected of lawyers.

Consider what has happened: Righthaven lawyers constructed a sham transaction, and then made multiple misrepresentations to courts and third parties in order to hide the sham nature of the transaction. This was done in a bid to get a number of unsophisticated, unrepresented defendants to fork over substantial settlement payments, largely out of fear or because of their financial inability to mount a defense.

The potential to pervert our civil justice system in this way is one of the most important reasons attorneys are required to demonstrate a high moral character as a prerequisite to receiving a license to practice law. Righthaven’s behavior, in my opinion, is incompatible with that standard.

Let’s look at the Nevada Rules of Professional Conduct. Rule 3.3, called “Candor Toward the Tribunal,” states that “A lawyer shall not knowingly … Make a false statement of fact or law to a tribunal … ” Another provision, Rule 8.4, states, “It is professional misconduct for a lawyer to … Engage in conduct involving dishonesty, fraud, deceit or misrepresentation; [or] Engage in conduct that is prejudicial to the administration of justice[.]”

Those rules appear to have been violated in substantial ways. Consider the following quote from this week’s order from pages 10 and 11, discussing the Strategic Alliance Agreement (“SAA”), between Righthaven and Stephens Media:

As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Media’s pecuniary interests. As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthaven’s and Stephens Media’s current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Media’s right to proceeds from these lawsuits. (Dkt. #79, Ex. 1, SAA Section 5 (granting Stephens Media a fifty percent interest in any recovery, minus costs).) … [T]hose orders were tainted by Righthaven’s failure to disclose the SAA and Stephens Media’s true interest …

And on page 15 of the order:

As shown in the preceding pages, the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthaven’s failure to disclose Stephens Media as an interested party in Righthaven’s Certificate of Interested Parties. … Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District.

Based on these findings, it appears that Rule 3.3 was violated multiple times by one or more attorneys on the Righthaven side. Moreover, again, based on Judge Hunt’s findings, Rule 8.4 was violated in a very significant way in the Democratic Underground case. Of course, Rule 8.4 was likely additionally violated in many other Righthaven cases as well, if not all of them.

I don’t know that Gibson or other attorneys committed misconduct. That is up to the State Bar of Nevada to determine. I certainly can say at this point that there is strong reason to believe serious misconduct has occurred, and it’s more than enough for an investigation. Gibson and others should, of course, have the opportunity to defend and explain themselves. But the matter should, at least, be taken seriously by the bar. That is especially the case where many people have been hurt and public confidence in the legal profession may justifiably be undermined if nothing is done.

Righthaven Goes Down Hard: A Look at the Democratic Underground Decision

Thursday, June 16th, 2011

Cartoonish rendering of the word "KA-POW!"This week copyright thugster and blogger-suer-extraordinaire Righthaven was dealt a stunning defeat in court. (Court’s written order [pdf])

It is a total victory for defendant Democratic Underground, but the ruling’s importance goes far beyond that. Unless overturned on appeal, it clearly signals the end of Righthaven’s current business model. The order also signals that even with restructuring, Righthaven might not have a viable enterprise going forward.

Things were going kind of bad for Righthaven up to this point. But now they’ve gotten suddenly disastrous. Why? Now there’s a newly revealed document – one obtained through the diligent efforts of the Electronic Frontier Foundation – that shows the relationship between troll-for-hire Righthaven and newspaper owner Stephens Media. That document is their overarching contract, the Strategic Alliance Agreement (“SAA”). Once you learn about it, you can see why they wanted so badly to keep it secret.

Righthaven, in suing bloggers for reposting stories or portions of stories from the Las Vegas Review-Journal, had represented that Stephens Media had assigned to it the copyright being sued over in any given case. But now, having scrutinized the SAA, the federal court in the Democratic Underground case has concluded that the copyright was never validly assigned.

And misrepresenting facts to a court is a very, very bad thing to do.

Why wasn’t the copyright validly assigned? It turns out that Stephens Media executed a form assigning the copyright, but, pursuant to the SAA, Stephens Media retained all exclusive rights with regard to that copyright except the right to sue. And a copyright assignment is not valid unless an exclusive right is transferred as well. So, for instance, Righthaven was not conferred the exclusive right to reproduce the article. (And that’s sort of what copyright is all about.)

It would be like transferring title to an automobile to someone but having a contract in place that says they can’t drive it, sit in it, lend it someone else, or even keep it in their garage. In other words, it’s a sham transaction.

I’ve looked at the order, issued by Judge Roger Hunt of the U.S. District Court in Nevada, and I found it to be very thorough and carefully reasoned. The really remarkable thing about the ruling, however, was its tone, which, while not intemperate, was certainly unusual in the staid world of judicial writing.

Look at this from page 6:

Righthaven argues that the SAA’s provisions, which necessarily include Section 7.2, do not alter the unambiguous language of the Assignment or limit the rights it obtained from Stephens Media in the Assignment. This conclusion is flagrantly false — to the point that the claim is disingenuous, if not outright deceitful.

I’ll bet Righthaven maven Steve Gibson felt the blood rush to his stomach when he read this. This is strong language for a federal court.

Also important in this order, the court signals that Righthaven is unlikely to be able to fix its business model’s legal problems with some minor adjustments. The court writes on page 8, in a footnote:

The Court does not determine whether or not the amended SAA would transfer sufficient rights to Righthaven for it to have standing in suits filed after amendment as the Court need not make that determination to rule on these motions. Nonetheless, the Court expresses doubt that these seemingly cosmetic adjustments change the nature and practical effect of the SAA.

It may be that the only things that would fix the business structure so that Righthaven could keep on suing people as it has been would be things that either Stephens Media wouldn’t be willing to agree to. And if that’s true, Righthaven’s through.