Stephens Media, the Las Vegas–based media chain, is fighting to keep its latest business model alive: copyright-trolling.

After standing on the sidelines while professional content-troll Righthaven fights in court, the newspaper company that seeded the venture joined the fray late Tuesday, telling a federal judge who questioned the business model’s latest iteration that the litigation factory is not a “sham.”

Stephens Media invested $500,000 a year ago in an upstart called Righthaven and authorized the venture to sue bloggers and websites for infringement of Las Vegas Review-Journal articles. But Stephens Media, which owns the Las Vegas Review-Journal and a host of other outlets, is running into a judicial brick wall, and it has nothing to do with the copyright allegations lodged in more than 200 suits in Nevada and dozens elsewhere.

Stephens Media told Chief U.S. District Judge Roger Hunt of Nevada that it revised the business arrangement, and ceded its content to Righthaven to cure any standing issues.

But the problem with the latest, revised model is that Stephens Media wants to have its cake and it eat too.

The media outlet, which did not respond Wednesday for comment, is seeking essentially risk-free dividends on the back of the Copyright Act, which allows for damages of up to $150,000 an infringement. Righthaven and its chief executive, Steve Gibson, would assume the litigation risks and costs, and Stephens media would get a 50 percent cut from any settlements or verdicts.

Sounds like a cash cow, in theory anyway.

But Stephens Media didn’t foresee the legal train wreck that seemingly has stopped Righthaven’s trolling in its path.

The roadblock is that several judges have recently cried foul on the business model, ruling Righthaven has no legal standing to bring the cases. That’s because Stephens Media kept ownership of the copyrights in the articles, which meant Righthaven had no right to sue over the work.

Now Righthaven and Stephens Media have reworked their agreement — a contract or “assignment” that Gibson, and now Stephens Media, say grants Righthaven standing to sue.

“Such limitations on an assignment do not invalidate or make it a sham,” (.pdf) Stephens Media attorney Colby Williams told Judge Hunt in a court filing.

Yet under the latest plan, Stephens Media still does not give up its copyright — meaning it wants to reap the benefits of risk-free payouts while continuing to retain ownership of the works in question.

Under the latest terms, which a different Nevada federal judge last week ruled did not give Righthaven standing, Stephens Media assigns its copyrights to Righthaven, but with a number of caveats. Under the deal, Righthaven is required to give Stephens Media 30 days’ notice if it plans to capitalize on those works for any other purpose than bringing an infringement action. And Stephens Media reserves the right to re-acquire for $10 any copyright it had ceded to Righthaven.

In effect, the arrangement prevents “Righthaven from ever exploiting or reproducing the work,” U.S. District Judge Philip Pro of Nevada ruled in dismissing a Righthaven case last week.

But Stephens Media isn’t giving up. It is demanding Judge Hunt bless the latest strategy, in an ongoing case against the Democratic Underground blog.

Hunt, without examining the latest Righthaven-Stephens Media agreement, ruled two weeks ago that the companies were attempting to “manufacture” standing and dismissed Righthaven’s lawsuit against the Democratic Underground, which was targeted for posting four paragraphs from a 34-paragraph story published by the Review-Journal.

Kurt Opsahl, the EFF attorney representing the Democratic Underground, said in a telephone interview that the latest iteration “doesn’t solve the problem. It does not give the clear ownership that Righthaven and Stephens Media are asserting.”

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Illustration: Electronic Frontier Foundation