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Is the Copyright-Troll Business Model Undone?

By Mitchell Zimmerman

Mitchell Zimmerman is Of Counsel in the Intellectual Property and Litigation Groups and chair of the Copyright Group of Fenwick & West LLP, a law firm specializing in technology and life sciences matters. His practice focuses on counseling, risk management, litigation and conflict resolution involving intellectual property, copyrights and trademarks in computer software, Internet-based works and traditional forms of authorship. Mr. Zimmerman is a Neutral of the American Arbitration Association (Large Case Technology, Science & Intellectual Property Roster).

As music rights holders have eased up on legal actions against online end users for copyright infringement, a new wave of suits has been brought by agencies that secure rights in works they deem to have been infringed on websites and blogs. And relying on the leverage provided by the Copyright Act’s statutory damages provisions, such so-called copyright “trolls” have often succeeded in extracting nontrivial settlements from individuals and entities, even in situations in which limited or no damages could be established and colorable fair-use issues were present.

One such recent troll, however, has been battered by a week of adverse decisions, rejecting its claimed right to sue, holding that even the reproduction of a news article in its entirety represented fair-use, and threatening the firm with sanctions for “flagrant misrepresentations” to the court. Righthaven LLC v. Democratic Underground, LLC,2011 WL 2378186 (D. Nev. June 14, 2011) (Roger L. Hunt, C.J.); Righthaven LLC v. Hoehn, 2011 WL 2441020 (D. Nev. June 20, 2011) (Philip M. Pro, J.); Righthaven LLC v. DiBiase, Case No. 2:10-cv-01343-RLH-PAL, Order (D. Nev. June 22, 2011) (Roger L. Hunt, C.J.).

In the first case, Righthaven LLC alleged that it took an assignment of the copyrights in an article owned by Stephens Media (publisher of the Las Vegas Review-Journal); registered the ...

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