The U.S. Supreme Court reversed the Ninth Circuit Court of
Appeals and held on Monday in Petrella v. Metro-Goldwyn-Mayer, Inc. that
the defense of laches (unreasonable delay) cannot entirely preclude a copyright
claim when any acts of infringement occur within the Copyright Act’s three-year
statute of limitations. Of the six
circuit courts that had previously considered this issue, four had held that
laches could be so invoked.
Petrella v. MGM
revolved around the screenplay to the movie Raging Bull. In 1963, Frank Petrella and Jake LaMotta (a
boxer on whom the film is based) assigned their rights in the screenplay to Chartoff-Winkler
Productions, Inc. The rights were later
acquired by a subsidiary of MGM.
Although the assignment included the rights to any renewal term, because
Petrella died before the renewal term began, MGM’s renewal rights under the
assignment arguably depended on a grant from Petrella’s heirs.
Petrella’s daughter renewed the copyright in 1991. However, she waited until 1998 before contacting MGM. In letters back and forth between their respective counsel over the next two years, she asserted her rights and MGM denied infringement. Nine years later, in 2009, Petrella filed a copyright infringement action in California. Apparently, Petrella had believed that the movie was making so little money in the previous years, that the cost of a lawsuit would be more than any potential recovery from a copyright infringement lawsuit. MGM moved to dismiss on several grounds, including laches, based on Petrella’s 18-year delay in bringing suit. The district court granted MGM’s motion, and the Ninth Circuit Court of Appeals affirmed.
In a 6-3 decision penned by Justice Ginsburg, the Supreme
Court reversed. The Court’s opinion
centered on the central premise that the Copyright Act applies the separate
accrual rule; namely, each time an infringing work is reproduced or distributed
the infringer commits a new wrong.
Accordingly, each infringing act effectively starts the statute of
limitations period for that act. As stated by the Court “[u]nder the Act’s
three-year provision, an infringement is actionable within three years, and
only three years, of its occurrence. And
the infringer is insulated from liability for earlier infringements.” The Court
stated that “[i]nviting individual judges to set a time limit other than the one
Congress prescribed, we note, would tug against the uniformity Congress sought
to achieve when it enacted [the statute of limitations].”
Though sitting on their rights may not completely bar
potential plaintiffs from bringing a copyright claim, the Court made clear that
waiting could restrict what remedies are available. For example, the Court cited a case where a
building was built using allegedly infringing plans and the plaintiffs did not
assert their rights until much of the building was built. The Court noted that the court there had allowed
a claim to go forward, but stated that under those facts, the plaintiffs’
remedies would be limited and destruction of the building would not be
ordered. Arguably inconsistently
however, the Court stated that the relief sought by Petrella, including an
injunction against future infringement “would not result in the ‘total
destruction’ of the film, or anything close to it.” It is hard to see how an injunction against
future infringement - which would include barring MGM from any future
reproduction or distribution of the film - is not tantamount to destruction, at
least from MGM’s perspective. The Court
did note however that on remand, the lower court in Petrella could “allow MGM
to continue to use Raging Bull upon payment of a reasonable royalty to
Petrella.”
Interestingly, the Court appeared to condone the use of
“equitable tolling” to lengthen the time available for a copyright plaintiff to
bring suit. That doctrine allows judges
to extend the time for bringing suit when a potential plaintiff lacks the
ability to bring suit in a timely fashion, for example, if he or she is
incapacitated or is a minor. The Court
distinguished equitable tolling from laches, noting that tolling is “tied to
[the statute of limitations]” but laches was originally conceived to be used as
a guide instead of the statute of limitations. Aside from the history of these
two doctrines, however, the practical distinction drawn by the Court is not
entirely clear. Equitable tolling
extends the time for suit while laches contracts it, but both are equitable in
nature and can alter the deadline for bringing a claim. Indeed, as Justice Breyer points out in his
dissent, it is hard to understand the logic of “preserving doctrines that
lengthen the period for suit when equitable considerations favor the plaintiff
(e.g., equitable tolling), but . . . foreclosing a doctrine that would shorten
the period when equity favors the defendant (i.e., laches.)”
Another important point to note is that this decision comes
shortly after the Second Circuit joined eight other circuit courts in adopting
the “discovery rule” to control the statute of limitations in copyright
cases. See Psihoyos v. John Wiley & Sons, described in an earlier post here. The discovery rule triggers the
statute of limitations when the plaintiff knew or should have known of the
infringement, as opposed to the injury rule, which starts the clock when the
infringing act occurs. Use of the
discovery rule would seem to undermine the uniformity that the Court sought to
impose in copyright actions by barring the use of laches. Indeed, in dicta the
Court states that “[a] copyright claim . . . arises or ‘accrues’ when an
infringing act occurs.” The
underlying reasoning of that Petrella v. MGM decision, as well as that
dicta, may give lower courts in the nine circuits using the discovery rule
reason to re-evaluate its application.
By Jason Sanders
© 2014 Jason Sanders Law PLLC
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