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The Denver Post has been sued for the first time by one of the Righthaven copyright lawsuit defendants.
Attorneys for Dana Eiser, a blogger in Summerville, S.C., and her Tea Party movement group Lowcountry 9/12 sued the Post, its owner MediaNews Group Inc., Righthaven and others Monday in the Court of Common Pleas, a state court in South Carolina. Among other things, the lawsuit alleges barratry, or the improper incitement and prosecution of lawsuits, and unfair trade practices on the part of MediaNews Group and Righthaven.
Eiser was sued in federal court last year in Charleston, S.C., by Righthaven LLC of Las Vegas, which enforces copyrights for the Denver Post and the Las Vegas Review-Journal.
Righthaven has filed 274 copyright infringement lawsuits over material from those newspapers since March 2010, but two have been dismissed on fair use grounds and federal judges in Las Vegas and Denver are now weighing whether Righthaven even has standing to sue .
Righthaven charged in the no-warning lawsuit against Eiser that she posted a Denver Post column on her blog, charges denied by Eiser. The column by Mike Rosen was called "A letter to the Tea Partyers."
Monday’s new lawsuit claims that after the Post actively encouraged users of its website to share its stories and other material, an agent of Eiser’s nonprofit group did just that and posted the column on the Lowcountry 9/12 blog.
But unknown to the agent, the Post had inserted a "Trojan horse" piece of computer code in the downloaded column, the lawsuit charges.
"This is a unique per-customer code generated to allow the Denver Post to associate a particular pasted copy with a specific customer’s IP address for the purpose of identifying defendants for prosecution—and persecution—by Righthaven," the lawsuit says.
This code showed up after the Lowcountry 9/12 agent copied and pasted the column, the suit says.
"The following text was inserted automatically by The Denver Post’s software: 'Read more: Rosen: A letter to the Tea Partyers – The Denver Post,'" the suit says.
"All of this is done without any notice to the Denver Post’s customers," the lawsuit says, charging this is a "breach of the duty of good faith and fair dealing accompanied by a fraudulent act."
"The Denver Post’s software could easily be configured to insert 'Notice: You are violating The Denver Post’s copyright.' Instead, the software tricks unknowing users into believing they have done nothing wrong while simultaneously helping Righthaven sue them later," the suit charges.
Monday’s complaint adds that the unidentified agent for Eiser thought the column could be posted on the nonprofit blog because a notice on the Post’s website says Post material may not be published or redistributed for commercial purposes.
"This notice leads customers of the Denver Post to believe that they may indeed use material for noncommercial purposes," the lawsuit says.
Monday’s lawsuit also accuses Post owner MediaNews Group and Righthaven of barratry in violation of South Carolina law, with barratry being defined as the pursuit of lawsuits – or incitement of lawsuits -- by parties with no actual interest in the relief sought.
"Righthaven’s business model exclusively consists of (1) looking for potential infringements of copyrights held by its clients; (2) purchasing what Righthaven claims to be assignments of potentially infringed copyrights from its client; and (3) filing lawsuits alleging Righthaven’s copyright has been infringed," the suit charges. "Righthaven does not have any interest in the purportedly assigned copyright because Righthaven is not in the business of selling media.
"Righthaven’s business model constitutes barratry in violation of" South Carolina law, the suit alleges.
The suit also accuses the defendants of unfair trade practices, alleging "Righthaven’s business model depends entirely on Righthaven’s commission of barratry and lawsuit syndication in violation of public policy."
"Because barratry is a criminal act in South Carolina and therefore violates public policy, a business whose business model depends entirely on barratry commits unfair trade practices," the suit says.
The suit also accuses Righthaven and its CEO, Las Vegas attorney Steven Gibson, of defamation.
The suit says that in an interview with CNN and Fortune Magazine published Jan. 6, Gibson refered to Righthaven defendants as “the infringement community” that “was caught . . . not obeying the law” and is “a community of thieves.”
"These statements are false and defamatory with respect to plaintiff Eiser," the suit says.
Besides supervising Righthaven, Gibson is a member of the Las Vegas office of the Detroit law firm Dickinson Wright.
Eiser’s lawsuit also suggests her attorneys believe Righthaven was set up as a limited liability company to protect the deep-pocketed Stephens family — which owns the Review-Journal — from damages resulting from Righthaven’s lawsuits.
"Righthaven’s corporate setup — an LLC owned by two LLCs — appears entirely predicated upon the possibility that it will be subject to large awards, of attorney’s fees or other damages, that it does not intend to pay," the suit asserts as it seeks to pierce the corporate veil and impose personal liability on Righthaven’s owners.
The suit charges Righthaven is "grossly undercapitalized" and seeks a temporary injunction freezing Righthaven’s assets to protect the interest of defendants who may be awarded fees and damages against Righthaven.
To back up this assertion, the lawsuit says, "Many attorneys have ceased their associations with Righthaven for undisclosed reasons, possibly involving pay."
"Righthaven’s shoot-first-ask-questions-later approach will very likely prove financially fatal as defendants, including plaintiff Eiser, begin receiving attorney’s fee awards," the suit alleges. "Righthaven’s barratry business model is marginally profitable with regard to successful cases, i.e. settlements, but is horrendously undercapitalized when liabilities are taken into account."
Monday’s lawsuit also said Righthaven has shifted from using in-house counsel to outside attorneys.
It notes a federal magistrate judge in Las Vegas questioned the fees Righthaven was seeking in a case against Boston cat blogger Allegra Wong.
In another case, attorneys for the Electronic Frontier Foundation representing defendant Thomas DiBiase have argued Righthaven couldn’t demand attorney’s fees in its lawsuits filed by in-house counsel as its attorneys are its owners and there is no attorney-client relationship.
The chief federal judge in Nevada, Roger Hunt, has found merit with that argument
"Plaintiffs submit that it is no coincidence that just as Righthaven realized it would almost certainly be barred from attorney’s fee awards due to all of its lawyers being in-house counsel, Righthaven began focusing on outside counsel to prosecute matters," the suit says.
"Fenno defendants (a law firm in South Carolina) and Righthaven conspired to set up an arrangement where Fenno defendants would perform work as outside counsel that Righthaven had previously done in-house for the sole purpose of enhancing its settlement leverage by demanding attorney’s fee awards that were nominally recoverable," the suit charges.
The suit also seeks a permanent injunction barring certain of the defendants "from engaging in the unfair trade practices of barratry and syndication of lawsuits" in South Carolina.
Also named as a defendant in Monday’s suit was Arkansas-based company SI Content Monitor LLC, an investor in and half owner of Righthaven. Like Review-Journal owner Stephens Media LLC, SI Content Monitor is owned by investors who are part of the family of Little Rock, Ark., investment banking billionaire Warren Stephens.
Other defendants are Righthaven, Gibson, Gibson’s company Net Sortie Systems LLC, which owns the other half of Righthaven; Review-Journal owner Stephens Media, Stephens Media General Counsel Mark Hinueber, former Review-Journal Publisher Sherman Frederick, South Carolina attorney Edward Fenno, Fenno Law Firm and current or former attorneys representing Righthaven: Shawn Mangano, Steven Ganim, Anne Pieroni, John Charles Coons, Joseph Chu and Ikenna-Phillip Odunze.
Requests for comment were left with MediaNews Group, Righthaven and SI Content Monitor. Hinueber, at Stephens Media, said he had no comment. Fenno said, "The lawsuit is groundless as against my firm and me."
Eiser is represented in the litigation by South Carolina attorneys J. Todd Kincannon, Thad Viers and Bill Connor.
Monday’s suit is on top of a counterclaim they’ve already filed against Righthaven in the federal copyright suit, which remains pending.
Eiser’s counterclaim is one of several pending against Righthaven and/or Stephens Media in federal courts in South Carolina, Colorado and Nevada.