Monday, April 14, 2014

SCOTUS Ruling on Petrella May Have Long-Lasting Effects on Future Copyright Lawsuits

The Supreme Court of the United States has taken on two high-profile intellectual property cases, American Broadcasting Companies, Inc. v. Aereo and Alice Corporation Pty. Ltd. v. CLS Bank International, and a lower profile copyright infringement case concerning the defense of laches, Petrella v. Metro-Goldwyn- Mayer, Inc.. Many attorneys and legal scholars have been focused on these two big technology-based cases- Aereo and Alice Corp.. In Aereo, U.S. broadcast companies,  including NBC, CBS, and FOX, have sued Aereo, a company that distributes TV programming on the Internet, for copyright infringement and the issue raised is whether a company “publicly performs” a copyrighted television program when it transmits the program from individual antennas to paid subscribers over the Internet.  Alice Corp. involves a suit over the validity of registered patents and the Supreme Court will determine whether claims to computer-implemented inventions are patentable. The outcome in Alice Corp., may impact US copyright law which contains protections afforded to software. Such a technological focus drives public intrigue but it is Petrella that is likely to have the lasting legal impact since the Supreme Court will decide the role, if any, of common law principles in cases governed strictly by federal statutes.
Petrella
In Petrella, the daughter of Frank Peter Petrella, co-author of the book turned Oscar-winning movie, Raging Bull, is suing Metro-Goldwyn- Mayer, Inc. (MGM) for copyright infringement. Petrella argues that she became the owner of the screenplays and book, written about boxer Jake LaMotta’s life, after her father passed away and his renewal rights passed to her.  In 1991, Petrella’s attorney filed a renewal application for one of the screenplays. Seven years later, in 1998, Petrella’s attorney wrote to MGM asserting Petrella’s rights in the 1963 screenplay and accused MGM of infringing her copyright in the screenplay and its derivative works, including the movie. Letters regarding who owned the copyrights were exchanged between the parties but then stopped in 2000. MGM continued to promote and distribute Raging Bull. Nine years later, Petrella filed suit alleging copyright infringement and other causes of action against MGM and other co-defendants. The district court granted summary judgment in favor of MGM, holding that Petrella’s claims were barred by the equitable defense of laches which was then affirmed by the Ninth Circuit.
The district and appellate courts found that Petrella’s nineteen year delay in initiating the lawsuit was unreasonable. Laches is an equitable defense that prevents a copyright holder, who is aware of, or should be aware of infringing conduct, from seeking relief due to the copyright holder’s undue delay in filing an action. In order to support a laches defense, a defendant must prove: (1) the plaintiff delayed in bringing the lawsuit; (2) the delay was unreasonable; and (3) the delay resulted in prejudice. Petrella claimed several reasons for her delay, including caring for relatives, fear of retaliation and inability to afford the lawsuit but the Ninth Circuit found these excuses were unreasonable and unsupported by evidence. There are two ways to determine prejudice– expectation prejudice or evidentiary prejudice. MGM argued that both expectation prejudice and evidentiary prejudice applied. It said that expectation prejudice applied because Petrella waited to file suit until significant efforts and money spent by MGM, nearly $8.5 million in the United States alone, promoting Raging Bull including its 25th anniversary edition and evidentiary prejudice applied because Additionally, MGM argued that evidentiary prejudice applied because Petrella waited until most of the witnesses were dead and LaMotta could not recall all the relevant facts. The Court, in accepting MGM’s argument, found that expectation prejudice existed so it concluded that it did not have to consider evidentiary prejudice.
State of Limitations for Copyright Actions
            Under 17 U.S.C. § 507, civil actions involving copyright must be commenced within three years after the claim accrues thus, when there is continuing infringement, like in Petrella, the statute of limitations begins to run after each infringing action. Petrella’s copyright infringement claims are considered timely when looking at the statute of limitations but untimely under the common law defense of laches according to the Ninth Circuit. This friction between the federal statute created by Congress and the common law doctrine of laches created by the courts has caused a split of authority among the circuits.
Circuit Splits
The Supreme Court has taken the case in order to resolve a split among the circuit courts on the availability of a laches defense in copyright cases.
·         The Ninth Circuit allows the laches defense to bar all relief, both legal and equitable when a defendant meets the three elements: (1) the plaintiff delayed in bringing the lawsuit; (2) the delay was unreasonable; and (3) the delay resulted in prejudice. Petrella v. Metro-Goldwyn-Mayer, Inc., 695 F.3d 946 (9th Cir. Cal. 2012).
·         The Fourth Circuit does not recognize a laches defense at all. Lyons P'ship. L.P. v. Morris Costumes, Inc. 243 F.3d 789, 797–98 (4th Cir. 2001).
·         The Second Circuit recognizes the laches defense as a bar to injunctive relief but not to money damages. New Era Publ'ns Int'l v. Henry Holt & Co., 873 F.2d 576, 584–85 (2d Cir. 1989). 
·         The Sixth Circuit only allows the laches defense in “the most compelling of cases.” New Era Publ'ns Int'l v. Henry Holt & Co., 873 F.2d 576, 584–85 (2d Cir. 1989). 
·         The Eleventh Circuit only recognizes laches as a defense in extraordinary circumstances. Peter Letterese & Assocs., Inc. v. World Inst. of Scientology Enters., Int'l, 533 F.3d 1287, 1320 (11th Cir. 2008).
The circuit splits are on a spectrum, with the Fourth Circuit being on one end, not recognizing a laches defense at all, while the Ninth Circuit provides a defense simply by meeting the elements. The other circuits fall within the spectrum limiting the types of damages possible or only allowing such a defense in “extraordinary circumstances” or the “most compelling” cases.
If the Supreme Court agreed with the Fourth Circuit by not recognizing a laches defense at all, it would provide support for the argument that common law created principles cannot be raised in copyright cases where Congress has legislated. On the other hand, if the Supreme Court were to side with the Ninth Circuit, the courts will only increase their active role in determining intellectual property law and policy. It is far more likely, the Court will take an approach somewhere in the middle of the spectrum.
Petrella’s Impact
The Petrella decision is unlikely to be recognized in the short term but its effects may be recognized much more in the years to come when compared to Aereo and Alice Corp.. The issue in Aereo revolves around a relevant form of technology, online streaming of public television. This case is interesting now because we all want to see how our laws adapt to technology but these adaptions are usually short lived because technology is ever-changing. Alice Corp. involves the issue of the scope of patent law with respect to software. This is important to the software industry but ultimately, software will still be protected either under copyright law or under copyright and patent law. Petrella’s issue concerning the defense of laches for copyright infringement is not technologically advanced like the other cases but it clears up a lot of uncertainty throughout the circuit courts and it will most likely discuss and determine the role of common law principles in the realm of federal copyright cases. Regardless of the ultimate decision, Petrella’s opinion (and dicta) will undoubtedly be cited by lawyers for years to come.
           

2 comments:

  1. And why is 304(c)(6)(A) not a defense?

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