Judge Inclined to Order Return of Snopes’ Ad Revenue

SAN DIEGO (CN) – The battle over who owns fact-checking website Snopes.com took an ugly turn at a Friday afternoon court hearing, as attorneys sparred over salaries, intellectual property rights and advertising money which is in limbo.

An ownership spat broke out between Proper Media and Snopes’ parent company Bardav Inc. this spring when Snopes gave Proper Media a 60-day notice of termination of contract. Proper Media provided advertising and web-hosting services for the popular website.

But Proper Media wasn’t just contracted to provide web services for Bardav – its co-founders Christopher Richmond and Drew Schoentrup purchased shares in Bardav from Snopes founder David Mikkelson’s ex-wife in 2016. The two claim their shares amount to a 50 percent stake in the company.

Proper Media sued Bardav and Mikkelson for prohibiting the company from performing per the terms of the contract through the “unlawful jockeying for ownership and control of the fact-checking website Snopes.com.”

The lawsuit was filed in May.

The lawsuit gained national attention in late July, when Snopes launched a GoFundMe campaign to raise money to pay staff, cover operating costs for the website and pay legal fees related to the Proper Media dispute. It claims Snopes has been cut off by Proper Media from all advertising revenue generated due to the legal dispute.

As of Friday afternoon, Snopes had raised $685,000 from more than 24,000 donors, surpassing its $500,000 goal.

Bardav has filed its own countersuit against Proper Media, claiming it breached its contract by failing to pay Snopes its advertising revenue on time and has been “wrongfully withholding money owed to Bardav and effectively holding the Snopes.com website hostage by preventing Bardav from moving the website, advertising and other back-end functions to another service provider.”

Snopes’ top brass sat in on the court hearing Friday before San Diego Superior Court Judge Judith Hayes, including Mikkelson, managing editor Brooke Binkowski and vice president Vincent “Vinny” Green.

Hayes issued a tentative order Thursday indicating she was unlikely to find Mikkelson should be removed as director of the company, as requested in the injunction motion filed by Proper Media. The tentative order also found advertising income being held by Proper Media needed to be released to Bardav.

At the hearing Friday, Proper Media’s attorney Karl Kronenberger argued the judge should order Snopes to release information regarding the company’s bylaws, which he suspects “do not exist.”

“If there are no bylaws, the whole house of cards Bardav has relied on comes falling down,” Kronenberger said.

The attorney argued if Snopes doesn’t have proper documentation that Mikkelson is the website’s director, his client – Proper Media’s Drew Schoentrup – should also be treated as a director since he owns shares in the company.

Kronenberger revealed more than $250,000 in advertising revenue from May and June is owed to Bardav and asked the judge for more direction on how the money should be transferred if she confirms the money is due and owing to Bardav.

The attorney also argued Mikkelson and his current wife – Snopes employee Elyssa Young – should be paid $260,000 maximum and that Mikkelson “is running free rein … he’s running it like a family business which is not appropriate.”

Bardav attorney Paul Tyrell said Kronenberger’s suggestion that Mikkelson isn’t the true director of Snopes is “nonsense,” as he’s been running Snopes since he founded it in 2003.

Tyrell told the judge “maintaining the continuity” of the website was vitally important since Snopes is a “public resource” visited by more than 17.5 million users a month.

He asked the judge to require Proper Media to continue operating the website for 45 days while Snopes works with other web developers to create a new website. Tyrell also asked the judge to order Proper Media to hand over “functioning” themes, templates and content used on the website, saying the ones Proper Media has given them don’t work.

He said Snopes may have to build a new website from scratch, adding that hiring people to build the new website was only possible thanks to the hundreds of thousands raised in Snopes’ crowd-funding campaign.

“We’re thankful to the generosity of the public and the tens of thousands of people who donated to help the website survive,” Tyrell said.

“This should be a smooth, seamless transition with a little cooperation. The public would be served by that.”

Kronenberger argued Proper Media has intellectual property rights to the website plug-ins and platforms sought by Bardav. He said Proper Media invested its own money and staff to “build a highly valuable platform.”

He said if Hayes were to order Proper Media to hand over the web content, it would run “counter to industry standards on intellectual property for web code.”

“The last thing they’d want is for it [the website] to go dark. They view themselves as the saviors of the site and doubled its revenue,” Kronenberger said of his clients. “If Bardav keeps running the website on Proper’s servers, they need to pay according to the contract.”

Hayes did not rule from the bench Friday and asked the attorneys to order transcripts of the hearing so she could review what was said in court before issuing a final order.

None of the attorneys or parties spoke to the media following the court hearing.

 

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