Righthaven LLC v. Hoehn

• Decision Date: 09 May 2013
• Docket Number: 11–16776.,Nos. 11–16751,s. 11–16751
• Parties: RIGHTHAVEN LLC, Plaintiff–Appellant, v. Wayne HOEHN, Defendant–Appellee. Righthaven LLC, Plaintiff–Appellant, v. Thomas A. DiBiase, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

716 F.3d 1166

RIGHTHAVEN LLC, Plaintiff–Appellant,

v.Wayne HOEHN, Defendant–Appellee.

Righthaven LLC, Plaintiff–Appellant,

v.Thomas A. DiBiase, Defendant–Appellee.

Nos. 11–16751, 11–16776.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 5, 2013.

Filed May 9, 2013.

Erik S. Syverson (argued), Miller Barondess, LLP, Los Angeles, CA, and Shawn A. Mangano, Las Vegas, NV, for Plaintiff–Appellant.

Kurt Opsahl (argued) and Corynne McSherry, Electronic Frontier Foundation, San Francisco, CA; Colleen Bal and Caroline E. Wilson, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, for Defendant–Appellee Thomas A. DiBiase.

Marc J. Randazza (argued), J. Malcolm DeVoy IV, and Jason A. Fischer, Randazza Legal Group, Las Vegas, NV, for Defendant–Appellee Wayne Hoehn.

Steven J. Metalitz and J. Matthew Williams, Mitchell Silberberg & Knupp LLP, Washington, D.C., for amici curiae The Association of American Publishers and The Recording Industry Association of America.

Appeal from the United States District Court for the District of Nevada, Philip M. Pro, District Judge, Presiding. D.C. No. 2:11–cv–00050–PMP–RJJ.

Appeal from the United States District Court for the District of Nevada, Roger L. Hunt, Senior District Judge, Presiding. D.C. No. 2:10–cv–01343–RLH–PAL.

Before: DIARMUID F. O'SCANNLAIN, STEPHEN S. TROTT, and RICHARD R. CLIFTON, Circuit Judges.

OPINION

CLIFTON, Circuit Judge:

Abraham Lincoln told a story about a lawyer who tried to establish that a calf had five legs by calling its tail a leg. But the calf had only four legs, Lincoln observed, because calling a tail a leg does not make it so. ¹ Before us is a case about a lawyer who tried to establish that a company owned a copyright by drafting a contract calling the company the copyright owner, even though the company lacked the rights associated with copyright ownership. Heeding Lincoln's wisdom, and the requirements of the Copyright Act, we conclude that merely calling someone a copyright owner does not make it so.

Plaintiff Righthaven LLC filed separate copyright infringement suits against defendants Wayne Hoehn and Thomas DiBiase for posting articles from the Las Vegas Review–Journal online without authorization. The two cases have been consolidated on appeal. In each of the cases, the district court concluded that Righthaven lacked standing to sue for infringement because it was not the owner of any of the exclusive rights in the news articles required for standing under the Copyright Act and our decision in Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881, 890 (9th Cir.2005) (en banc). In Hoehn, the district court also held in the alternative that the defendant was covered by a fair use defense, and it granted summary judgment on that ground.

We agree that Righthaven lacks standing in both cases. Because Righthaven lacks standing, we also conclude that we lack jurisdiction to rule on the merits of the fair use claim. Therefore, we affirm the motions to dismiss in both cases, but vacate the portion of the district court order in Hoehn granting summary judgment on fair use.

I. Background

Plaintiff Righthaven LLC was founded, according to its charter, to identify copyright infringements on behalf of third parties, receive “limited, revocable assignment[s]” of those copyrights, and then sue the infringers. Righthaven filed separate suits against defendants Hoehn and DiBiase for displaying copyrighted Las Vegas Review–Journal articles without authorization on different websites. Hoehn, who frequently commented in discussion boards at MadJackSports.com, had pasted an opinion piece about public pensions into one of his comments on the site. DiBiase, a former Assistant United States Attorney who maintained a blog about murder cases in which the victim's body was never found, reproduced an article about one of these “no body” cases on his blog.

Righthaven was not the original owner of the copyrights in these articles. Stephens Media LLC, the company that owns the Las Vegas Review–Journal, held them at the time defendants posted the articles. After the alleged infringements occurred, but before Righthaven filed these suits, Stephens Media and Righthaven executed a copyright assignment agreement for each article. Each copyright assignment provided that, “subject to [Stephens Media's] rights of reversion,” Stephens Media granted to Righthaven “all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present, and future infringements of the copyright ... in and to the Work.”

Righthaven and Stephens Media had previously entered into a Strategic Alliance Agreement (“SAA”), however, that controlled what Righthaven could do with any copyrights assigned to it. After assignment of a copyright, Righthaven was to search for instances of infringement. When Righthaven found an infringement, it could pursue the infringer, but that right was subject to Stephens Media's veto. If Righthaven did not obtain a settlement or initiate litigation, it had to reassign the copyright to Stephens Media. Righthaven was required to split any recovery it received with Stephens Media.

The SAA also placed sharp limits on what Righthaven could do with any assigned copyright. Righthaven had no right to exploit the copyrights or participate in any royalties. Stephens Media retained “an exclusive license” to exploit the copyrights “for any lawful purpose whatsoever,” and to the extent that Righthaven's pursuit of infringement would “in any manner” diminish Stephens Media's right to exploit the assigned copyrights, Righthaven granted a license to Stephens Media “to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability” to exploit its copyrights. Moreover, by providing Righthaven thirty days prior notice, Stephens Media could revert the ownership of any assigned copyright back to itself.

After Righthaven filed suit against Hoehn and DiBiase, each defendant filed a motion to dismiss for lack of standing. Righthaven and Stephens Media subsequently executed a “Clarification and Amendment to Strategic Alliance Agreement.” The agreement purported to clarify that the parties' intent in entering the SAA was to “convey all ownership rights in and to any identified Work to Righthaven through a Copyright Assignment so that Righthaven would be the rightful owner of the identified Work.”

The district court in each case granted defendant's motion to dismiss based on Righthaven's lack of standing. In addition, in the Hoehn case, after granting defendant's motion to dismiss, the district court went on to grant defendant's motion for summary judgment on fair use as an alternative basis of decision. Righthaven timely appealed in both cases.

II. Standing

In each of the decisions below, the district court held that Righthaven lacked standing to sue for copyright infringement. Reviewing de novo, see Preminger v. Peake, 552 F.3d 757, 762 n. 3 (9th Cir.2008), we reach the same conclusion.

Under the Copyright Act, only the “legal or beneficial owner of an exclusive right under a copyright” has standing to sue for infringement of that right. See17 U.S.C. § 501(b); Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881, 890 (9th Cir.2005) (en banc) (holding that, under § 501, only a party with an ownership interest has standing to sue). Section 106 of the Copyright Act lists the “exclusive rights” that can be held. They include the right to reproduce the copyrighted work, to prepare derivative works based on the work, and to distribute copies of the work by selling, renting, leasing, or lending. See17 U.S.C. § 106. Absent from the list of exclusive rights is the right to sue for infringement. Accordingly, we held en banc in Silvers that the assignment of the bare right to sue for infringement, without the transfer of an associated exclusive right, is impermissible under the Copyright Act and does not confer standing to sue. 402 F.3d at 890. That covers Righthaven, for all it was really assigned was a bare right to sue for infringement.

Righthaven contends that it owns one or more “exclusive rights” under the Copyright Act pursuant to the express language of the assignment contracts, which stated that Righthaven received “all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present, and future infringements of the copyright ... in and to the Work.” That some language in the contract described Righthaven as the owner, however, does not itself prove that Righthaven owned any exclusive rights.

When determining whether a contract has transferred exclusive rights, we look not just at the labels parties use but also at the substance and effect of the contract. See Campbell v. Bd. of Trs. of Leland Stanford Junior Univ., 817 F.2d 499, 503–04 (9th Cir.1987). In Campbell, a contract concerning a copyright specifically stated that Stanford, the original owner, remained “the sole and exclusive proprietor” of the copyright. Id. at 503. The district court relied on this language to conclude that no copyright interest had been transferred. Id. at 503–04. We reversed, concluding that even though Stanford “purport[ed] to retain ‘ownership’ of the copyrights ... Stanford clearly transferred part of [its] property interest” to the other party. Id. at 504;see also Nafal v. Carter, 540 F.Supp.2d 1128, 1141–43 (C.D.Cal.2007) (looking at the substance of an assignment contract purporting to give plaintiff ownership and concluding that the plaintiff had been assigned only the right to sue), aff'd,388 Fed.Appx. 721 (9th Cir.2010).

Therefore, that the assignment agreements used language purporting to transfer ownership to Righthaven is not conclusive. We must consider the substance of the...