Why Firms Should Assume Judges Will Throw Out Confidential Commercial Rights And How To Prepare

Public interest is a powerful thing. As with the Prop 8 case and the broadcast of its appellate arguments, litigation knows no confidentiality anymore. Now, private property disputes have become, well, less than private.  

Copyright and intellectual property lawsuits can last decades. The facility with which photos, text, or video can be shared over the Internet has only increased intellectual property infractions. So, copyright litigation factories, such as the Las Vegas-based Righthaven company, have begun to capitalize on this growing legal market. Righthaven, like many other groups of its kind, buys rights to copyrights they know to be infringed and then sues the violators in question. For the most part, in the name of expediency, these suits settle outside of court.  

Righthaven has been following this prescription for the past year, suing hundreds of bloggers for reposting pictures and stories initially published by the Las Vegas Review-Journal, which is owned by Stephens Media. Righthaven claims ownership for these photos and stories, alleging the newspaper transferred “exclusive right” to them, which has led to at least a dozen cash settlements in various thousand-dollar amounts.

This week, however, attorneys at the Electronic Frontier Foundation (EFF), on behalf of the Democratic Underground, announced Righthaven’s claims to the copyright are, actually, counterfeit. EFF has now countersued Righthaven. EFF asserts that Righthaven had no legal foundation to bring a case against the Democratic Underground and is seeking damages. So how did this information finally come to light? By the most basic document in the case: the contract.  

The internal agreement between Righthaven and Stephens Media was unsealed by U.S. District Judge Roger Hunt, who presides over Righthaven’s case against the Democratic Underground. The contract clearly states that each party possesses a fifty percent share in settlements or verdicts. But, only Stephens Media retains “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.”

Both Righthaven and Stephens Media wished to maintain the confidentiality of its internal agreement. However, Judge Hunt ruled, “Because these cases have generated a great deal of public interest, particularly in the media and on the internet, that there is a right of the public to this information which overrides any claimed confidential commercial rights.”  

There are two fundamental, but key lessons for firms from today’s news about copyright infringement. First, there’s a trend on the part of U.S. District judges to unseal confidential records in the name of “public interest.” As such, take measures to prepare your cases and clients for similar action. Have your client draft a statement or press release for investors if you suspect these (once) private, internal documents will have an adverse affect on business or stock prices.  

Second, read all pertinent contracts letter-by-letter. It’s almost unbelievable how often the parties involved in a transaction and their lawyers ignore the fine (or not-so-fine) print of internal agreements. Before any person or party signs their name, double-check that all terms are defined, be sure you understand the language of the document, and definitely make changes if there’s ever doubt.                                                                   

 

-WB  

Read more about the case here.

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One response to “Why Firms Should Assume Judges Will Throw Out Confidential Commercial Rights And How To Prepare

  1. Pingback: Apple Not Green, But You Can Be |

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