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Righthaven v. Klerks – Fair Use a  “Meritorious Defense”

Jan Klerks raised the defense of fair use after he learned from a newspaper reporter that Righthaven had brought an action against him and was about to obtain a default judgment. Klerks, the complaint alleged, was the registrant of a domain name at which an online forum was hosted; the article in question had been posted by a third party user of the forum. In Righthaven v. Klerks, in an opinion rendered on September 17, 2010, Judge Gloria Navarro agreed that Klerks's fair use defense was "sufficiently meritorious" to warrant reopening the case.

Judge Navarro found that the use of the entire article weighed against a finding of fair use, but concluded that two of the other fair use factors weighed in favor of Klerks. Regarding the purpose and character of the use, Judge Navarro concluded that "it could be found" that the third-party user who posted a complete copy of the news article did so "for the non-commercial purpose of sharing information and not for making a profit for the reader or the site." Regarding the nature of the copyrighted work, the court found that the article was "primarily informational," and, therefore, favored a fair use finding. The court left for future consideration, as a question of fact, what effect the posting of the article had on the market for or value of the copyrighted work.

The Defense of Implied License

Judge Navarro also found that Klerks had made a plausible argument that his use fell under the doctrine of implied license, pointing to the fact that the newspaper publisher "encouraged people to save and share the article with others without restrictions, and permitted users to "right-click" and copy the article from its website." Judge Navarro found that Klerks had made a plausible argument that there was an implied license "especially in light of the established and accepted custom of users freely and openly sharing certain information posted on the Internet."

Righthaven v. Realty One Group – Fair Use as a Matter of Law

Righthaven sued Realty One Group and its agent Michael Nelson, who maintained a blog on which he posted an eight-sentence excerpt from a thirty-sentence Las Vegas Review-Journal article, along with a link to the source. On October 19, in Righthaven v. Realty One Group, Judge Larry Hicks dismissed the action as to Nelson, finding that the his use of the article was fair as a matter of law.

Judge Hicks found that while Nelson's blog was both educational and commercial, its underlying purpose was to promote Nelson's business, thus this factor weighed against a finding of fair use. But the three other fair use factors weighed in favor of Nelson. Judge Hicks found that the article contained both factual news reporting and reporter commentary, and the broker copied only the factual portion of the article, not the commentary. As to the amount used, the court pointed to the fact that only eight out of thirty sentences were used.

In contrast to Judge Navarro, who found that the effect of the use upon the potential market for the work requires fact-finding, Judge Hicks concluded as a matter of law that this factor favored Nelson. He reasoned that because Nelson did not copy the reporter's commentary, "his use does not satisfy a reader's desire to view and read [the entire article including] the author's original commentary and thereby does not dilute the market for the copyrighted work." The court also noted that Nelson had included a link to the source of the article containing the full text.

Although Righthaven ultimately settled with Nelson, the company deliberately suffered the entry of an adverse judgment with respect to Nelson’s employer, Realty One, and filed a notice of appeal to the Ninth Circuit on February 11.

Righthaven v. Democratic Underground – The Copyright Troll Defense

Righthaven v. Democratic Underground is one of the cases in which the EFF has become involved. The defendants are an online political forum and its operator, David Allen. Righthaven seeks to hold them responsible for the posting of an article by a third party user of the forum. In addition to raising fair use and implied license, the EFF’s answer and counterclaim filed in the case challenge every aspect of Righthaven's litigation campaign, describing is as "a particularly abusive instance of a broad and aggressive strategy" by a "sham" plaintiff.

The EFF has focused on Righthaven’s status as an assignee of the rights that it asserts, alleging that it has filed multiple lawsuits, that it is in the business of enforcing copyright rights, and that it does not otherwise exploit the assigned rights. As to Stephens Media, the original copyright owner, the answer and counterclaim details at length various aspects of its online presence, including the fact that, according to the EFF, Stephens Media has not properly filed a proper designation of agent to receive notices of infringement under the DMCA. The legal relevance of these and other assertions going to the conduct of Righthaven and Stevens is left unstated.

The EFF has also raised the implied license defense noted by Judge Navarro in the Klerks case, asserting that the Law Vegas Review-Journal makes its news articles available for copying and downloading "at least 19 different ways," including bookmarking them on social media sites, e-mailing them, and printing physical copies.

EFF v. Righthaven

Following the ruling in the Realty One case in which Judge Hicks found fair use as a matter of law, Righthaven sought to voluntarily dismiss the complaint in the Democratic Underground case, which is factually similar in that it involves a five-sentence excerpt from a 54-sentence article. Stating that it disagreed with the Realty One ruling, Righthaven asserted that it was nevertheless moving to dismiss “in the interest of judicial economy.” The EFF objected, arguing that the action was "meritless from its inception" and should only be dismissed on the condition that the defendants be permitted to apply for an award of attorney fees. The respective motions are pending.

The EFF is also involved in the representation of the defendants in Righthaven v. Center for Intercultural Organizing, which involves the posting of an entire article by the operator of the CIO site. On the same day that Righthaven filed its motion to dismiss the Democratic Underground case, Judge James Mahan, who is presiding over the CIO case as well, sua sponte ordered a hearing on whether that case should be dismissed on grounds of fair use as well. The parties are now contesting the need for further proceedings, with Righthaven arguing that further fact-finding is needed before the fair use issue is decided and the EFF pressing for an immediate decision. The court has allowed the submission of a amicus brief on the issue of whether further fact-finding is needed to determine the fair use issue, over Righthaven’s objection that the amici, Professor Jason Schultz of Boalt Hall School of Law, is affililiated with the EFF.

The motion in the CIO case is set for hearing before Judge Mahan in March.

The resolution of the motions in the Democratic Underground and CIO cases are likely set the direction of Righthaven litigation in the District of Nevada for the foreseeable future, at least until the Ninth Circuit rules on the appeal filed in the Realty One case.

What’s Missing from the Righthaven Rulings

Regardless of one’s position on the issues raised by the Righthaven litigation, the opinions rendered thus far are unsatisfying and incomplete in their treatment of the fair use and implied license doctrines. That may be understandable in the Klerks case, where the court was determining only whether the fair use defense was meritorious as a threshold matter. Nevertheless, some of the statements in the opinion are troubling in that they express a less than complete view of the jurisprudence on fair use.

For example, the court in Righthaven v. Klerks found that the use of an entire work merely weighs against a finding of fair use. But there is significant authority that use of an entire work weighs heavily against such a finding, even where the purpose of the use is not for profit. An example may be found in Los Angeles Times v. Free Republic, decided in the District of California in 2000, in which the court ruled that the online posting of full-text copies of newspaper articles for the purpose of criticism and comment was not fair use. "There is little transformative about copying the entirety or large portions of a work verbatim," the court in the Free Republic case found, citing numerous opinions.

As evidenced by the Free Republic ruling, fair use determinations are notoriously fact-sensitive and require careful weighing and balancing of the fair use factors, including the over-arching issue of whether the use is tranformative. Yet in the Realty One opinion where fair use was found as a matter of law, there is no discussion of whether the copying of an article excerpt was transformative.

The treatment of the implied license issue in the Klerks case was also truncated by the preliminary nature of the court’s ruling. But it is nevertheless concerning, in that it presents only one aspect of the implied license doctrine, that is, conduct on the part of a copyright owner from which consent to a use may be inferred. The court’s preliminary treatment of the issue suggests that any copyright owner that makes its content available on the Internet is, by that act alone. consenting to the unrestricted copying and dissemination of the work by third parties, in unlimited venues and contexts, including online posting. The court’s sweeping reference to the “established and accepted custom” of information-sharing on the Internet ignores the role of online terms of use in limiting the dissemination and use of works posted online.

Conclusion

There will be more to come from Righthaven, the EFF, and the courts, on the issues of fair use and implied license. But important lessons can be taken from these cases, even at this stage.

Online publishers should consider the argument the EFF is making that allowing users to share content gives rise to a very broad implied license to distribute publications online, and revisit the substance and presentation of their online terms of use. Making clear to users what kinds of sharing is permitted and what is prohibited may guard against a similar argument being made with respect to their content. For example, the Las Vegas Review-Journal’s online terms includes an express license to reproduce the headline and the first paragraph of a story, along with a link back to the source article. The effect of that provision has yet to be addressed.

The simplest lesson is for Web site owners. Those who have been sued by Righthaven as a result of material posted by users of their site could have avoided litigation by adopting DMCA-compliant terms of use and designating a DMCA agent. It costs nothing, it is simple to do, and (assuming all DMCA requirements are met), it is effective protection against copyright infringement lawsuits resulting from third-party posting.

In The Associated Press v. All Headline News Corp., et al., the AP alleged several causes of action arising from the aggregator's alleged unlawful copying and alteration of AP news stories: Violation of the Copyright Act, the copyright management provisions of the DMCA, the Lanham Act and New York common law, i.e., the hot news misappropriation claim. As to the business of All Headline News Corp (AHN), the opinion related the following drawn from the AP's complaint (with citations thereto omitted):

By contrast [to plaintiff AP], defendant AHN does not undertake any original reporting.  It hires “poorly paid individuals” to find news stories on the internet and prepare them for republication under the AHN banner, either rewriting the text or copying the stories in full.  Defendants W. Jeffrey Brown and Danielle George, who oversee AHN’s day-to-day operations, instruct AHN writers to locate breaking news stories and revise them for AHN use. Many of AHN’s stories are based on the original work of the AP, but they are marketed as originating with AHN. Brown and George instructed reporters to remove or alter the identification of the AP as author or copyright holder of the articles.  Once completed, AHN distributes its articles to paying clients – web sites to which AHN markets itself as a news provider.  As noted, the AP characterizes AHN’s conduct as “free riding” on the original reporting of others.

In declining to dismiss the hot news misappropriation claim, the court had to clear a few hurdles. First, the court found that after Erie Railroad v. Tompkins in 1938 ("there is no general federal common law"), the federal common law cause of action survived under New York law and second, that the hot news misappropriation claim was not preempted by the federal Copyright Act. On these points, the court had the assistance, or rather the mandate, of the Second Circuit's ruling in National Basketball Association v. Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997) (hot news misappropriation claim remains viable under New York law and is not preempted by copyright). The court found that it saw no basis for ruling otherwise than as indicated by the NBA case.  Finally, in its conflicts of law analysis, the court rejected the argument that Florida law (as urged by the defendant) applied. In doing so the court concluded New York law did not conflict with Florida law even though Florida has no authority recognizing a hot news misappropriation claim.

The court declined to dismiss the AP's claim under the DMCA copyright management provisions, which prohibits the removal or alternation of "copyright management information." 17 U.S.C. §1202. The court rejected the argument that the DMCA provision is limited to alternation of "technological" copyright management information and does not extend to the simple mechanical removal of references to the AP as author or copyright owner of the news stores.

In construing the DMCA, the court relied on a plain language approach and refused to consider the legislative history cited by AHN. Accordingly, the court rejected the contrary analysis adopted by judges in the District of New Jersey and the Central District of California. For example, in IQ Group, Ltd. v. Wiesner Publishing LLC, 409 F. Supp. 2d 587 (D.N.J. 2006) a claim that removal of a copyright owner's logo and a hyperlink to its Web site violated 17 U.S.C. §1202 was rejected as a matter of law. The court in IQ Group acknowledged that the plain language interpretation was "plausible," but concluded that not only would that interpretation blur the lines between copyright law and trademark law, it was inconsistent with focus in the DMCA legislative history on tampering with "automated copyright management systems functioning within a computer network environment."

The court did dismiss the AP's trademark related claims finding in general that those claims were not sufficiently specific.

The ruling in The Associated Press v. All Headlines News Corp. is certainly a big win for the AP, but it does not answer all outstanding questions concerning the use of news reports in the online arena. First, it does not address the use of headlines and lead-ins, also an open issue and the subject of dispute. Second, it is not a ruling on the merits of the AP hot news claims against AHN, although the opinion strongly favors the AP position on the merits. Third, it does not address the more difficult and complex questions concerning the use of news reports by bloggers and others who do not merely excerpt and link to online news reports such as those produced by the AP, but add commentary to them as well. Last year, controversy erupted in the blogosphere when the AP sent a DMCA take-down notice to The Drudge Retort blog, and then indicated that it would disseminate a set of fair use guidelines for bloggers who wished to use its content. No guidelines were forthcoming, however, and the dispute with The Drudge Retort blog was settled without litigation.

Note also that the AP is not the only news organization to make claims or bring suit with respect to online news aggregators.  A lawsuit by Gatehouse Media involving Web site screen scraping and excerpting of news stories on the Boston Globe newspapers Boston.com site was settled last fall. A representative of The New York Times Co., the parent company of the Boston Globe and the defendant in the case, took the position in a post-settlement statement that "the use of headlines and ledes is fair use."
 

This is a ruling that may concern copyright owners seeking to utilize the DMCA takedown provisions to protect their content from unauthorized online exploitation. At the least the opinion imposes an extra step in the preparation of a DMCA takedown notice, at worst it puts copyright owners at peril of guessing wrong as to how a court will view their "consideration" process after the fact.

As the court itself recognized, determinations of fair use are notoriously fact-sensitive and the views of various courts on the merits of such claims are unpredictable. The court's solution to that problem is to state that concerns based on such uncertainty are "overstated" because "there are likely to be few [cases] in which a copyright owner's determination that a particular use is not fair use will meet the requisite standard of subjective bad faith required to prevail in an action for misrepresentation under 17 U.S.C. § 512(f)."

The court's further guidance on the fair use consideration process consists of the following:

Undoubtedly, some evaluations of fair use will be more complicated than others. But in the majority of cases, a consideration of fair use prior to issuing a takedown notice will not be so complicated as to jeopardize a copyright owner’s ability to respond rapidly to potential infringements. The DMCA already requires copyright owners to make an initial review of the potentially infringing material prior to sending a takedown notice; indeed, it would be impossible to meet any of the requirements of Section 512(c) without doing so. A consideration of the applicability of the fair use doctrine simply is part of that initial review. As the Ninth Circuit observed in Rossi, a full investigation to verify the accuracy of a claim of infringement is not required. Rossi, 391 F.3d at 1003-04.

The difficulty of making fair use determinations is demonstrated by the history of the Lenz case itself. Lenz first sought a declaratory judgment that her video consisted "self-evident non-infringing fair use." That Lenz's use was fair was not "self-evident" to the court, which dismissed Lenz's complaint (with leave to amend) on the ground that she had failed to allege why her use was self-evidently fair. Lenz v. Universal Music Corp., No. 07-3783 (N.D. Cal. Apr. 8, 2008).

Although the court's suggestion that few cases will meet the standard of subjective bad faith in consideration of the fair use issue should be some comfort to copyright owners, the opinion leaves open many questions, including the following: how does a copyright owner establish that it "considered" fair use? The opinion does not begin to suggest an answer to that question.