Copyright Trolls – Firm Standing or Stuck Under a Bridge?

I recently came across an entrepreneur who was looking into the Righthaven lawsuits in which the copyright troll, Righthaven, suffered fatal blows to its business model of suing alleged copyright infringers.  Righthaven received the go ahead to sue on behalf of partner newspapers for the alleged copying of the newspapers’ content.  The courts decided against Righthaven on the basis that the company did not have standing to sue.

Question 1

The entrepreneur posed the following question:  does the ability to sue for copyright infringement require owning the copyright itself?  In other words, did newspapers have to sell their copyrights to Righthaven in order for the troll to have the right to sue?

In Silvers v. Sony Pictures Entertainment the court held that an assignee (person receiving rights from the copyright owner) who has no legal or beneficial interest in the copyright cannot sue for infringement.  A copyright owner cannot assign/transfer the bare right to sue under the Copyright Act.

Section 501(b) of the Copyright Act gives standing/ability to sue to owners of exclusive rights in a copyright. These exclusive rights are defined in section 106 of the Act.  Because Silvers did not possess any of these Section 106 exclusive rights, such as the right to reproduce or make derivative works from the copyrighted work, she could not sue. Thus, for Sony to have given her the right to sue, it also would have had to transfer a beneficial/exclusive right.

Question 2

The entrepreneur’s natural next question was why can’t the copyright owner simply hand over a 0.01% share of ownership in the copyright and thereby grant legitimate standing to sue?

In abstract theory, this should work.  But as flexible as modern copyright law is regarding divisibility of copyright ownership (relative to older versions of the act), I doubt an owner could draft an agreement that transfers a section 106 exclusive right without jeopardizing the copyright owner’s absolute control over the copyright.  This is not to say that an agreement couldn’t transfer a percentage of profits derived from the copyright. However, such an agreement would not constitute a transfer of exclusive rights under section 106, and then you’d have lack the standing to sue again.

In the end, the problem with transferring exclusive rights, even if done in a de minimus fashion, is that the transferee could then exploit the copyright in a way that is inconsistent with and/or harmful to the copyright owner.  In the Monty Python case (Gilliam v. ABC), the Monty Python writers suffered such an injury.  Fortunately for Monty Python, the court interpreted their contract very narrowly to find that Monty Python had conferred the right to make a derivative movie off their copyrighted script but reserved final approval.  Therefore, they could prevent exploitation of the movie that was inconsistent with their wishes.

However, the outcome of that case was dependent on contract-specific language and narrow interpretation of that language by the court.  Today, work for hire contracts (in which the creator of a script or software gives up ownership completely to the employer) would take care of the uncertainty.

The demise of Righthaven, thus, is a blow to all copyright trolls that don’t own the copyrights they are trying to monetize in court.

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