The Las Vegas copyright-trolling firm Righthaven told a Nevada federal judge Friday it might file for bankruptcy protection, or cease operations altogether.

To prevent that, Righthaven is asking U.S. District Judge Philip Pro to stay his decision requiring Righthaven pay $34,000 in legal fees to an online commenter it wrongly sued for infringement.

Judge Pro ruled in June that a Vietnam Veteran's posting of an entire Las Vegas Review-Journal article was fair use, and ordered opposing legal fees. Righthaven is appealing the order, which it says would leave it insolvent.

"Righthaven faces the very real threat of being forced out of business or being forced to seek protection through bankruptcy (.pdf) if the court does not stay the judgement pending resolution of the company's appeal to the Ninth Circuit," Shawn Mangano, Righthaven's attorney, wrote Judge Pro.

Righthaven's lawsuit, one of about 275, targeted Wayne Hoehn, who posted all 19 paragraphs of November editorial from the Las Vegas Review-Journal, which is owned by Stephens Media. Hoehn posted the article, and its headline, "Public Employee Pensions: We Can’t Afford Them" on medjacksports.com to prompt discussion about the financial affairs of the nation's states. Hoehn was a user of the site, not an employee.

The deadline for Righthaven to pay Hoehn for his legal defense is Wednesday. Prevailing parties in Copyright Act cases are entitled to attorney fees and costs.

Marc Randazza, Hoehn's attorney, says Righthaven should cough up the legal fees.

"Remember, it's not like we sued them," Randazza said in a telephone interivew. "Righthaven figured this guy was some defenseless yahoo, he'd settle up quick and move on. They underestimated him hard. He fought, and now that the judge has ruled, you break it, you buy it."

"Nobody is playing a violin for these guys," Randazza added of Righthaven.

Steve Gibson, Righthaven's chief executive, did not immediately respond for comment.

Righthaven's acknowledgment that it was nearing insolvency came two days after the new chief executive of MediaNews Group, publisher of the Denver Post and 50 other newspapers, told Wired.com it was "a dumb idea" for the nation's second-largest newspaper chain to sign up with Righthaven, and was terminating relations at month's end.

And on Wednesday, Wired reported that Righthaven, founded more than a year ago to monetize print news content through copyright infringement lawsuits, was struggling after several courtroom setbacks, and was ceasing filing new lawsuits pending resolution of the Hoehn case and others. Some of the appeals question Righthaven's legal standing to even bring lawsuits.

Righthaven's only other known client, Stephens Media of Las Vegas, had invested $500,000 into the operation last year.

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