Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 1 of 6
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEVADA
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`RIGHTHAVEN LLC, a Nevada limited-
`liability company,
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`2:10-CV-1762 JCM (PAL)
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`Plaintiff,
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`v.
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`GARRY NEWMAN, et al,,
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`Defendants.
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`ORDER
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`Presently before the court is defendant Gary Newman’s motion to dismiss the amended
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`complaint for lack of jurisdiction. (Doc. #25). The plaintiff has responded (doc. #31), and the
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`defendants have replied (doc. #33).
`I. Background
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`This dispute arises out of the defendants alleged copyright infringement. On or about
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`September 25, 2010, a third party displayed a Las Vegas Review-Journal (“LVRJ”) article (“work”),
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`on the defendants’ website <www.facepunch.com> (“website”). The work described the
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`phenomenon known as the “Vdara death ray” regarding a Las Vegas casino’s architecture. (Amended
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`Complaint, ¶¶ 16-20). On October 6, 2010, the work was allegedly registered with the United States
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`Copyright Office. (Amended Complaint, ¶ 31). Righthaven claims that it purchased the right to the
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`work from Stephens Media, LLC, the owner of the LVRJ, along with the right to sue for all past,
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`present, and future infringements. (Amended Complaint, ¶ 28).
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`James C. Mahan
`U.S. District Judge
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`Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 2 of 6
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`On January 18, 2010, Stephens Media and Righthaven entered into a Strategic Alliance
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`Agreement (“SAA”), which generally governed the relationship between the two parties with regard
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`to the assignment of copyrights originally owned by Stephens Media. (Amended Complaint, ¶ 31).
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`On May 9, 2011, Stephens Media and Righthaven executed an amendment to the SAA (“first
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`amended SAA”), in order to clarify the parties’ intention regarding copyright assignments to
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`Righthaven. (Amended Complaint, ¶ 20). On July 7, 2011, Stephens Media and Righthaven
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`executed a second amendment to the SAA (“second amended SAA”) to further clarify the parties
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`intentions, and to address issues identified in judicial decisions from this district. (Amended
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`Complaint, ¶ 21).
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`Plaintiff filed its original complaint on October 12, 2010. Plaintiff alleges that defendants
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`willfully displayed the work, without authorization. Defendants raise this motion to dismiss for lack
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`of subject matter jurisdiction, specifically asserting that the plaintiff lacked standing to bring the
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`claim at the time the action was filed.
`II. Discussion
`A. Standard of Review
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`To hear a case, a federal court must have subject matter jurisdiction, and the party invoking
`federal jurisdiction bears the burden of establishing jurisdiction. Lujan v. Defenders of Wildlife, 504
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`U.S. 555, 560-561 (1992). The issue of standing is central to establishing subject matter jurisdiction.
`Id. at 560. Pursuant to Rule 12(b)(1), a defendant may seek dismissal of a claim for lack of subject
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`matter jurisdiction. Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its
`entirety, fails to allege facts on its face that are sufficient to establish subject matter jurisdiction. In
`re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 984–85 (9th Cir.
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`2008). Although the defendant is the moving party in a motion to dismiss brought under Rule
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`12(b)(1), the plaintiff is the party invoking the court's jurisdiction. As a result, the plaintiff bears the
`burden of proving that the case is properly in federal court. McCauley v. Ford Motor Co., 264 F.3d
`952, 957 (9th Cir.2001) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189
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`(1936)).
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`James C. Mahan
`U.S. District Judge
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`Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 3 of 6
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`Attacks on jurisdiction pursuant to Rule 12(b)(1) can be either facial, confining the inquiry
`to the allegations in the complaint, or factual, permitting the court to look beyond the complaint. See
`Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir. 2003). In a facial attack “the
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`challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke
`federal jurisdiction.” Safe Air for Everyone v. Myer, 373 F.3d 1035, 1039 (9th Cir.2004). By
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`contrast, “in a factual attack, the challenger disputes the truth of the allegations that, by themselves,
`would otherwise invoke federal jurisdiction.” Id. A factual attack made pursuant to Rule 12(b)(1)
`may be accompanied by extrinsic evidence. Whitehorn v. F.C.C., 235 F.Supp.2d 1092, 1095–96
`(D.Nev. 2002) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989)). Dismissal for
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`lack of subject matter jurisdiction is proper if the complaint, considered in its entirety, fails to allege
`facts that are sufficient to establish subject matter jurisdiction. DRAM Antitrust Litigation, 546 F.3d
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`at 984–85.
`B.
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`Analysis
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`Section 501(b) of the 1976 Copyright Act (“act”) establishes that only the owner or beneficial
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`owner of an exclusive right under a copyright law is entitled, or has standing, to sue for infringement.
`Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 884 (9th Cir. 2005). Although exclusive rights
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`may be transferred and owned separately, Section 106 of the Act defines and limits those exclusive
`rights under copyright law. Id. at 884–85. Accordingly, the assignment of a bare right to sue is
`ineffectual because it is not one of the exclusive rights. Id. Moreover, transfer solely of the right to
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`sue does not confer standing on the assignee because the right to sue is not one of the exclusive
`rights. Id. at 890. One can only obtain a right to sue on a copyright if the party also obtains one of
`the exclusive rights in the copyright. See id.
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`Furthermore, although the act grants exclusive jurisdiction for infringement claims to federal
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`courts, those courts construe copyrights as contracts and turn to the relevant state law to interpret
`them. See Automation By Design v. Raybestos Products Co ., 463 F.3d 749, 753 (7th Cir. 2006). The
`question of the interpretation of the contract is a question of law. See Shelton v. Shelton, 78 P.3d 507,
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`510 (Nev. 2003). A contract is ambiguous if it is reasonably susceptible to more than one
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`Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 4 of 6
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`interpretation. Id. A contract may be ambiguous if the paragraphs in question are reasonably
`susceptible to different constructions or interpretations. See Agric. Aviation Eng'g Co. v. Board of
`Clark County Com'rs, 749 P.2d 710, 712 (Nev. 1990).
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`Righthaven alleges that it has copyright ownership over the work, and the SAA fully confers
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`standing to sue for copyright infringement claims. (Doc. #31). However, the SAA expressly denies
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`Righthaven any right from future assignments other than the bare right to bring and profit from a
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`copyright infringement. This conclusion is clearly demonstrated in Section 7.2 of the SAA:
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`7.2 Despite any such Copyright Assignment, Stephens Media shall
`retain (and is hereby granted by Righthaven ) 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. To the
`extent that Righthaven's maintenance of rights to pursue infringers of
`the Stephens Media Assigned Copyrights in any manner would be
`deemed to diminish Stephens Media's right to Exploit the Stephens
`Media Assigned Copyrights, Righthaven’s hereby grants an exclusive
`license to Stephens Media to the greatest extent permitted by law so
`that Stephens Media shall have unfettered and exclusive ability to
`Exploit the Stephens Media Assigned Copyrights ...
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`(Doc. #25, Exhibit A (bold emphasis added, italicization in original). Under this section, it is clear
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`that Righthaven is prevented from obtaining, having, or otherwise exercising any right other than the
`bare right to sue. Despite Righthaven and Stephens Media’s post hoc explanations of the SAA’s
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`intent or later assignments, the entirety of the SAA was designed to prevent Righthaven from
`becoming “an owner of any exclusive right in the copyright...” Silvers, 402 F.3d at 884 (emphasis
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`in original). Prior to the SAA, Stephens Media owned all the exclusive rights to the work, including
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`the right to sue. The plain language of the parties’ agreement changed nothing save for Righthaven’s
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`claim to have the bare right to sue. This transaction is unenforceable because approving of such a
`transaction would be contrary to the clear precedent set forth in Silver.
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`Notwithstanding the actual transaction that occurred, Righthaven asserts that the amendment
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`it executed with Stephens Media on May 9, 2011 and the second amendment executed on July 7,
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`Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 5 of 6
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`2011 fix any possible errors in the original SAA that would prevent Righthaven from having
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`standing in this matter. (Doc. #31). However, neither of these amendments create standing because
`“[t]he existence of federal jurisdiction ordinarily depends on the facts as they exist when the
`complaint was filed.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 571 n. 4 (1992) (quoting
`Newman–Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 830 (1989)) (emphasis in Lujan ).
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`Although a court may allow parties to amend defective allegations of jurisdiction, the parties
`are not permitted to amend the facts themselves. Newman–Green, 490 U.S. at 830. For instance, a
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`party who misstates his domicile may amend to correctly state it. This is an amendment of the
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`allegation. However, that party is not permitted to subsequently move in order to change his domicile
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`and amend accordingly. This would be an amendment of the jurisdictional facts, which is not
`allowed. See id. Here, Righthaven and Stephens Media attempt to impermissibly amend the facts to
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`create standing. Therefore, the court shall not consider the amended language of the SAA, but the
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`actual assignment and language of the SAA as it existed at the time the complaint was filed.
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`Further, Righthaven argues that this court must analyze subject matter jurisdiction under the
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`amended complaint, which includes the first and second amended SAAs. For support, Righthaven
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`relies on Rockwell International Corp. v. United States, 549 U.S. 457, 473–74 (2007), which states,
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`“when a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts
`look to the amended complaint to determine jurisdiction.” Moreover, “[T]he term ‘allegations' is not
`limited to the allegations of the original complaint.” Id. at 473 (emphasis added). However, as the
`Fifth Circuit recently noted, Rockwell “did not hold that the original complaint is irrelevant to
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`jurisdiction or that a [plaintiff] need not establish jurisdiction from the moment he first files his
`action.” U.S. ex rel. Jamison v. McKesson Corp., 649 F.3d 322 (5th Cir. 2011). Rockwell did not
`address whether a plaintiff can use an amended complaint to establish jurisdiction where such
`jurisdiction is lacking under the original complaint. Id. Therefore, the amendment process cannot
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` This court does not address whether Righthaven properly filed an amended complaint “as
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`a matter of course” under FRCP 15(a), as we conclude that there is no subject matter jurisdiction
`even if the additional facts alleged in the Amended Complaint are considered.
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`Case 2:10-cv-01762-JCM-PAL Document 35 Filed 10/07/11 Page 6 of 6
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`“be used to create jurisdiction retroactively where it did not previously exist.” Id.
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` Accordingly, Righthaven’s argument that the first and second restated SAAs are basis for
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`standing fails. First, the restated SAAs are not a simple attempt to clarify or supplement the facts
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`pleaded in the complaint with additional facts that were present at the time of filing. Rather, the
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`restated SAAs present a new set of facts with respect to the alleged copyright ownership, which is
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`impermissible because Righthaven may not amend the defects in the jurisdictional facts themselves.
`See Newman–Green, 490 U.S. at 830. Next, the restated SAAs’ terms substantially contradict the
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`original SAA. Again, defects of allegations may be amended, but not defects in the facts themselves.
`See id.
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`In conclusion, Righthaven fails to sufficiently allege an assignment of rights from Stephens
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`Media. The SAA prevents Righthaven from obtaining any of the exclusive rights necessary to
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`maintain standing in a copyright infringement action. Dismissal with prejudice is appropriate,
`because no amendment can save this complaint. See Schmier v. U.S. Court of Appeals for Ninth
`Circuit, 279 F.3d 817, 824 (9th Cir. 2002). Righthaven cannot establish that it had standing at the
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`time it filed its complaint.
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`Accordingly,
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`IT IS HEREBY ORDERED ADJUDGED AND DECREED that defendant Gary Newman’s
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`motion to dismiss (doc. # 25) be, and the same hereby is, GRANTED. The case is dismissed with
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`prejudice.
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`DATED October 7, 2011.
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`UNITED STATES DISTRICT JUDGE
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