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 25^th 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 (9^th 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.

           

BLURRED LINES:  SOMEWHERE BETWEEN FOGERTY V. FANTASY AND HARRISONGS V. BRIGHT TUNES 

The recent declaratory judgment lawsuit filed by Robin Thicke, Pharrell, and Clifford Harris, Jr. (collectively “Plaintiffs”) raises the question about how much “inspiration” does it take to be copyright infringement.    The Plaintiff are seeking declaratory judgment that their song “Blurred Lines” does not infringe on the song “Sexy Ways” by the Funkadelics (owned by Bridgeport Music, Inc.) nor “Got To Give It Up” by Marvin Gaye (owned by heirs of Marvin Gaye) (collectively “Defendants”).  See Complaint – Central District of California – 13CV6004(JAK)(AGRx).

Such infringement lawsuits over popular music are not uncommon.     In this particular instance, the Plaintiffs admit they were “inspired” by the Marvin Gaye song.   See http://www.nytimes.com/2013/08/17/business/media/songwriters-sue-to-defend-a-summer-hit.html?partner=rss&emc=rss&_r=0.   Pharrell also acknowledged Marvin Gaye’s influence.  See http://articles.washingtonpost.com/2013-09-13/national/42019651_1_pharrell-marvin-gaye-thursday-night.

In the Fogerty v. Fantasy case, Fantasy Records sued John Fogerty who was a former member of the band, Credence Clearwater Revival.   Fantasy claimed that Fogerty’s song “The Old Man Down the Road” infringed on the CCR song “Run Through The Jungle” owned by Fantasy.  That case was decided by a jury but clearly the lyrics were different and while there was a similar ‘swamp rock’ sound, the composition was not the same.  In that case the jury found no infringement by Fogerty.  (Like many other copyright infringement decisions involving famous songs, the Fogerty lawsuit has an interesting backstory.  See http://www.theguardian.com/culture/2000/jul/11/artsfeatures3.

The Plaintiffs are likely to rely on a similar argument in the Blurred Lines case.   They will argue that “Sexy Ways” and “Got To Give It Up” may have similar feel or thematic sound but the Defendants do not have a right to a genre of music.  This is likely to fit well with the arguments in Fogerty and the “swamp rock” style of music. 

George Clinton of The Funkadelics tweeted that he does not believe that “Sexy Ways” is similar to “Blurred Lines.”  See http://www.hollywoodreporter.com/thr-esq/robin-thicke-sues-protect-blurred-607492.

On the other hand, there is the case of George Harrison’s song “My Sweet Lord” infringing The Chiffon’s hit song “He’s So Fine” which was owned by Bright Tunes.  In that case, the Court found that the ubiquitous “He’s So Fine” was subconsciously copied given the similar nature of the works.  (The Harrison case also has a fascinating background.  See http://todaynewsgazette.com/george-harrison-my-sweet-lord-lawsuit/.)

Do you think that “Blurred Lines” infringes “Sexy Ways” or “Got To Give It Up?”

Builder Beware: Copyright Infringement for Architectural Designs

An often overlooked function of the Copyright Act is the protection it provides for architectural works.  Recently, however, the Eastern District of New York was called upon to decide a copyright infringement claim involving architectural designs for residential homes.  Axelrod & Cerveny v. T. & S. Builders Inc., 2013 U.S. Dist. LEXIS 63206 (E.D.N.Y. May 2, 2013).  In that case, Plaintiffs owned valid copyrights in an architectural design entitled “Georgetown II,” as well as the derivative work referred to as “Home Design 2434.”  Plaintiffs alleged Defendants infringed by designing, marketing, constructing and selling four homes which Defendants referred to as the “Franklin” model. 

Defendants distributed sales brochures which included a copy of the cover of Plaintiffs’ sales brochure, depicting the exterior of the Georgetown II model.  Another of Defendant’s brochures for the Franklin model contained an exact copy of the floor plan for the Georgetown II.  Yet another of Defendants’ brochures contained a copy of the floor plan for the Georgetown II with only minor variations, such as differing placement of the bathroom on the first floor and the number of walk in closets on the second floor.  In several instances, Defendant’s brochures did not even bother to remove the “Georgetown II” designations on its Franklin brochures.  Although Plaintiffs had their own sales brochures for the Georgetown II, these brochures were not copyrighted. 

With respect to the homes themselves, the contracts for sale for three of the four homes in question included the two-page floor plan for the Georgetown II, copied directly from Plaintiffs’ brochure.  Defendants claimed that as constructed, the four homes in question exhibited more than 35 modifications from the original Georgetown II floor plan as a result of customizations, and that therefore all of the homes were substantially different from each other. 

In deciding whether to grant Plaintiffs’ motion for partial summary judgment the court grappled with two issues:  1) Whether or not Defendants’ copying of the exterior of the Georgetown II infringed on Plaintiffs’ copyright if there were substantial modifications to the interior of Defendants’ Franklin model, and 2) whether the use of the Georgetown II brochure in Defendants’ brochure is an infringement.

The court examined the precedent of district court outside the Second Circuit to determine that infringement can be established based upon copying of the floor plans, the exterior or both.   The Court analyzed the substantial similarity by evaluating the “total concept and feel” of the works under the ordinary observer test.  The plans or structures do not have to be exact but merely show that a substantial part was copied.  Thus, for an architectural work it is what’s on the inside or what’s on the outside that counts; it need not be both for the “total concept and feel.”  The Court granted summary judgment to Plaintiffs for exterior copying by Defendants.

The Court also granted summary judgment for Plaintiffs based upon Defendants’ copying of the floor plans from Plaintiffs’ Georgetown II brochure.    While recognizing that there was no copyright registration for the Plaintiffs’ brochure, the court found that the brochure did state that the floor plans themselves were copyrighted and cited a list of cases where the copyright protection in the floor plans extended to unregistered sales brochures.  The Court distinguished between the final construction and the brochures stating, “…[d]efendants have failed to explain why purported modifications made to the designs during the homes’ construction absolve defendants of liability for improperly using plaintiffs’ copyrighted floor plans in the sales contracts…” and brochures.   

Ray Charles Foundation told to "Hit the Road Jack."

In The Ray Charles Foundation v. Robinson (C.D. Cal. 12-cv-2725), the court takes an interesting side-step around what will undoubtedly be the hottest copyright issue in the very near future – termination.  The musician Ray Charles composed and recorded numerous musical works which were copyrighted.  From the facts listed in the case, it is an open question about whether the works were works made for hire with Atlantic (sound recording) and Progressive (composition).    Charles negotiated new terms (including royalties) for these works with the record companies.

Prior to Charles’s death, he made an agreement with his 12 children which stated:

My father, Ray Charles Robinson, has told me that he will set up an irrevocable trust for my benefit, to be funded with $500,000.  This gift is my entire inheritance from him and I understand that I will not inherit anything further under my father’s estate plan and that I am waiving any right to make a claim against his estate. 

Upon his death, the rights in his works were left to The Ray Charles Foundation.  In 2010, seven of Charles’s children served copyright termination notices on parties who had interests in Charles’s works, including Progressive. 

The Ray Charles Foundation sued the children claiming a breach of contract and seeking declaratory judgment on a variety of grounds.  The Foundation alleged that Charles’s works were works made for hire and thus not subject to the termination provisions of the Copyright Act.  17 U.S.C. Section 203 (thus maintaining the Foundation’s continued royalties). 

However, the Court was unsympathetic to The Foundation’s claims.  First, it found that the termination notices are not claims against the Charles estate.  The estate was closed in 2006, 4 years before the termination notices were served in 2010.  Second, the Foundation’s claim that Charles’s works were works made for hire would mean that the works were never in the estate anyway.  Third, even if the works were not works made for hire, the Court cannot interpret Charles’s agreement with his children as limiting a termination right under the Copyright Act.  The termination rights are unalienable notwithstanding any agreement to the contrary.  17 U.S.C. Section 304(c)(5).   The Court finds that the language would be an agreement to the contrary and is not able to prevent the right to terminate.  The Court goes on to award attorney’s fees to the Defendant under California’s Anti-SLAPP statute. 

The Court does not stop there.  It found that The Foundation does not even have standing to bring the lawsuit.  The Foundation is not the owner of Charles’s works if they are a work made for hire. (Progressive and/or Atlantic would be.)  The Court further found that The Foundation is not within the zone of interests protected by the statute invoked in the lawsuit.  The statutes (Sections 203 and 304) provide for authors, statutory heirs owning a termination interest, and grantees of transferees and their successors as those within the zone of interests.

While beneficial owners may have the right to sue for infringement under Section 501(b), no similar provision exists under Section 203 or 304 for the right to terminate.  Thus, the Court also rejects The Foundation’s claim that they have standing as a beneficial owner.  Finally, the Court rejects The Foundation’s third-party standing argument because it cannot show a close relationship with Progressive or its successors-in-interest. 

Arbitron sues Cleveland television station

Plaintiff Arbitron is an audience measurement firm which provides ratings information for such media as radio and television.  Plaintiff prepares different reports for different media markets including Cleveland, Ohio.    Arbitron licenses its reports to its customers and owns copyright registrations in its Cleveland Radio Market Reports.    Defendant WKYC is a television station in Cleveland.  Plaintiff alleges that part of WKYC’s promotional media kit presentation to potential advertisers included a list of demographic ratings from Arbitron reports.  (In one of the footnotes in the media kit – WKYC lists the Arbitron Reports as its source for the information.)  Arbitron alleges that WKYC is not a licensee of Arbitron.  The list containing the information from the reports is alleged to have been distributed in over 40 media kits.

Defendant has not yet answered. 

Prince Georges County Public School system considers making student's works the property of the Board of Education

A proposal under consideration by Prince Georges County would make a student's works for the public schools in Prince Georges County the property of the Board of Education, even if done on the student's own time and with use of their own materials.  The law does not work that way. 

While a work made for hire may apply to the teachers and educators employed by the County public school system, students are not employees of the public school system. 

It is possible that the county could obtain rights to a student's work through a license or assignment.  However, the better question, would be why would any student agree to such an arrangement? 

http://www.washingtonpost.com/local/education/prince-georges-considers-copyright-policy-that-takes-ownership-of-students-work/2013/02/02/dc592dea-6b08-11e2-ada3-d86a4806d5ee_story_1.html

The lack of understanding of copyright law is alarming.  But on another level beyond the complexities of the law, there is a moral problem with the county's proposal.  What possible reason would the county school system have to believe they own the rights to a student's work?