The emperor of “disruption theory” is wearing no clothes — A lot of reaction this week to a New Yorker piece by Jill Lepore criticizing some of the core principles guiding Silicon Valley, this is one of the latest. “It’s possible to be critical of the way Silicon Valley is agitating for regulatory reform that is designed to nurture Silicon Valley business models without being ‘anti-technology.’ It’s possible to explore the question of how the current pace of technological innovation is affecting jobs and inequality without being anti-technology. It is possible to be critical of how, in the current moment, technology appears to be serving the interest of the owners of capital at the expense of workers without being anti-technology. It’s even possible to love one’s smartphone and the Internet while at the same time critiquing run-amok ‘change the world’ hype.”

The Walking Dead producer criticises Game of Thrones executive over piracy — “‘When consumers do go [onto pirate websites] they look legitimate,’ she said. ‘They have advertising from well-known brands, and they take credit cards. How would the consumer know the difference between legitimate sites and illegitimate sites? There is a lot the advertising industry, credit card industry and search industry can do to help protect legit content.'”

Congress moves against ad-supported piracy — Writer and director Alec Berg (Seinfeld”, “Curb Your Enthusiasm”, “Silicon Valley.”) applauds recent efforts in Congress to draw more attention to the fact that major brands advertising on sites offering unauthorized creative works. “These major brands can avoid funding illegal activity. They can. The question is: Will they?”

Copyright exhaustion does not apply to digital goods other than software, Hamm Court of Appeal says — Good news for creators, as a court in Germany declined to extend the 2012 UsedSoft decision, which held that the distribution right for software can be exhausted by digital transmission under certain circumstances, to subject matter beyond software — here, audiobooks.

Google ordered by BC court to block websites selling pirated goods: Equustek Solutions Inc. v. Jack — Another positive decision, this one from Canada. As attorney Barry Sookman explains, plaintiffs won a default judgment against a website that was selling counterfeit goods and asked Google to help. “When Google refused to de-index the offending websites from its search results, the plaintiffs brought a motion against Google for interim relief requiring Google to de-index the websites. Over Google’s objections, in Equustek Solutions Inc. v. Jack 2014 BCSC 1063, Madam Justice Fenlon of the British Columbia Supreme Court granted the injunction.”

AJ Rafael Announces Hiatus from Performing [Exclusive Letter] — That didn’t take long. This week, a YouTube artists announced he is retiring, citing the difficulties for creators to sustain a career distributing and promoting their work through the free online video site.

If one supposes that information storage and retrieval systems are not now and are not likely to become commonplace during our lifetime, then we may leave the resolution of the rights of a copyright proprietor in respect of computer usage as a legacy to future generations.

But in doing so, would we not be creating another jukebox exemption, this time one of even greater consequences to the world of private authorship and private commercial publishing?

The hard, inexorable facts are, that information storage and retrieval systems do exist and are increasing numerically as well as in the scope of their uses.

Testimony of Bella L. Linden (American Textbook Publishers Institute), Copyright Law Revision, Hearings Before Subcommittee No. 3 of the Committee on the Judiciary, House of Representatives, Eighty-Ninth Congress, First Session on H.R. 4347, H.R. 5680, H.R. 6831, H.R. 6835, at 1429 (June 30, 1965), available at HathiTrust.

Seriously, What if Music Streaming Doesn’t Work Out? (via CultureCrash) — “Not one of the music streaming companies has made a profit yet, not one. Most are involved in corporate growth quarterly suicide, driven by large sums of VC money, or public pressure to return shareholder value. That’s fine, but that’s no way to nurture a creative company. I wish them all well, but honestly, that doesn’t seem like a good situation for the industry or consumer, maybe the VCs and shareholders, and money managers, but not us.”

Why online tracking is getting creepier — “Tracking people using their real names—often called ‘onboarding’—is a hot trend in Silicon Valley. In 2012, ProPublica documented how political campaigns used onboarding to bombard voters with ads based on their party affiliation and donor history. Since then, Twitter and Facebook have both started offering onboarding services allowing advertisers to find their customers online.”

Lack of Registry is No Excuse for Bad Royalty Accounting to Artists: The Return of the Magic Thingy — From The Trichordist: “This ‘if we just had a good database’ dodge has been a frequent feature of Internet lore for quite a while.”

“My Data Belongs To Me”: Returning Online Control To Consumers — “Data protection has not been successful in guaranteeing against misuse, claims Bruck. He proposes instead a human rights approach to data, where the ‘issue is not protection, but rights, not safeguarding, but property ownership.’ … ‘If you wish to use my data, get my permission. And then make transparent what uses you are taking,’ he said.”

The Illusion of Free Stuff — David Newhoff: “We’re seeing a trend of popular artists take gigs to perform for sponsorships, corporate events, or private parties for wealthy individuals; and this move toward patronage by the elite is a direct response to the fact that we the people are no longer a source of revenue.”

Shannon Hurley: “We Must Respect and Value Songwriters” — Indie songwriter Hurley on the inequities her and other songwriters currently face under the current licensing regime.

Lessons from the ‘right to be forgotten’ — “I’m surprised at how many technology lawyers in the U.S. are alarmed at this decision. Many seem to believe that it represents a fundamental break in the EU from American models of free speech. But in fact, we in the U.S. have long had to try to balance privacy and free-speech concerns. The Fair Credit Reporting Act, for example, balances credit-reporting agencies’ right to speak about our pasts with our right to ensure that the report is accurate, and also to keep certain things off the report once a certain amount of time has elapsed. The Spanish case [that led to the European Court of Justice’s decision] involved a credit problem that persisted for over 10 years, which is the cut-off for a bankruptcy report to appear on a U.S. credit report.”

Let’s not turn the clock back on internet video — “Unlike with the physical ownership model, you don’t need to plan in advance, take all the content you might want to watch with you when you travel, or worry about forgetting to bring it. Moreover, if you lose or break physical copies of content you own, you will need to pay to replace them. You can’t lose or break Internet content, and if you lose or break your device, many services will reload the content for free.”

Online pirates thrive on legitimate ad dollars — “Content thieves attract visitors with the promise of free downloads and streams of the latest hit movies, TV shows and songs. Then they profit by pulling in advertising from around the Internet, often concealing their illicit activities so advertising brands remain unaware. Pirate websites run ads that are sometimes covered up by other graphics. They automatically launch legitimate-looking websites as pop-up windows that advertisers don’t realize are associated with piracy. At the end of the day, the pirate website operators still receive a check for serving up a number of views and clicks.”

T Bone Burnett’s plea: The piper must be paid — “Music is uniquely durable and, as a result, has for centuries been the medium through which knowledge and insights are passed from generation to generation. Fans can still hear the work of America’s musical pioneers, thanks to online and mobile services. Through downloads and streams and services such as Pandora and Sirius XM Radio, these giants’ recordings continue to captivate and influence young musicians, singers, songwriters and producers. Yet some of these same companies have made the decision to devalue the music of these artists for their own profit by not paying for it.”

Ginsburg on Fair Use & “Permitted but Paid” Use — The esteemed Jane Ginsburg has a new article proposing a middle ground between the currently binary outcomes of fair use. She suggests distinguishing between new distributions and new works, with the latter subject to the traditional fair use analysis and the former subject to “permitted-but-paid” statutory exceptions.

Negotiating Film and Video Content Distribution Agreements in the Digital Age — CDAS attorney Simon Pulman has a helpful guide for filmmakers seeking distribution deals for their works.

Doonesbury — “Don’t be Google.”

The following comes from a decision released by the Tenth Circuit last week. Though the case involves immigration law, the discussion may be of interest to readers of this site.

To summarize, the Department of Homeland Security initiated removal proceedings of Perez-Paredes, a Mexican native living in the US, after he was convicted under a Utah anti-piracy statute. On advice of his counsel, Perez-Paredes agreed to leave the US voluntarily, but later changed his mind and moved to reopen the removal proceedings based on ineffective assistance of counsel. The Immigration Judge denied that request, a decision that was upheld by the Bureau of Immigration Appeals (BIA).

Here, the Tenth Circuit denied a review of the BIA’s decision, holding that Perez-Paredes was not eligible for cancellation of removal. The Circuit explained (some citations removed and emphasis added):

To be eligible for cancellation of removal, the alien must show that he or she is of “good moral character.” 8 U.S.C. § 1229b. An alien who has been convicted of an aggravated felony or a crime involving moral turpitude is not eligible under § 1229b

…The Immigration and Nationality Act provides that any “theft offense (including receipt of stolen property) or burglary offense for which the term of imprisonment [is] at least one year” is an aggravated felony. Additionally, the Act provides that any “offense relating to commercial bribery, counterfeiting, forgery, or trafficking in vehicles the identification numbers of which have been altered for which the term of imprisonment is at least one year” also constitutes an aggravated felony.

Perez-Paredes admits that he was convicted of a third-degree felony under Utah Code Annotated § 13-10-8. That statute prohibits unlawfully failing to disclose the origin of 100 or more recordings that the defendant has—for commercial advantage or financial gain—sold, rented, or lent, offered to sell, offered to rent, or possessed for any of those purposes when the defendant knows the recordings do not properly contain the true name and address of the manufacturer. Perez-Paredes does not dispute that the permissible term of imprisonment for that crime exceeded one year. He does, however, argue that a conviction under § 13-10-8 is neither a theft offense nor an offense relating to counterfeiting.

The terms “theft offense” and “relating to counterfeiting” are not defined in the Immigration and Nationality Act. But the BIA examined the Utah statute of conviction and reasonably concluded it fit within the Act’s prohibited categories.

Section 13-10-8 is a part of Utah’s Unauthorized Recording Practices Act, which is intended to “prevent the piracy of recorded materials.” It is not unreasonable to deem piracy closely related to both counterfeiting and theft. See, e.g., World Copyright Law 2.29 (3d ed. 2007) (identifying piracy as a form of theft); Elizabeth Friedler, Protecting the Innocent—the Need to Adapt Federal Asset Forfeiture Laws to Protect the Interests of Third Parties in Digital Asset Seizures, 32 Cardozo Arts & Ent. L.J. 283, 311 (2013) (“[T]here is no question that law enforcement agencies treat piracy as theft”); D.O.J. News Release 06-657 (Sept. 28, 2006) (“Whether it is referred to as counterfeiting, or piracy, or willful infringement of trademarks and copyrights, it all comes under the less elegant heading of stealing—pure and simple—and we must continue our efforts to stop it” (quoting U.S. Trade Representative Susan Schwab)).

Order and Judgment, Perez-Paredes v. Holder, No. 13-9593 (10th Cir. May 28, 2014).

On May 19, the Supreme Court decided Petrella v. Metro-Goldwyn-MayerDevlin Hartline recently discussed the decision here, and I have previously noted one particular passage relating to the application/registration debate.

But there is another passage in Petrella that has sparked some interest. It appears as Justice Ginsburg is countering arguments against its holding. She says,

MGM insists that the laches defense must be available to prevent a copyright owner from sitting still, doing nothing, waiting to see what the outcome of an alleged infringer’s investment will be. It is hardly incumbent on copyright owners, however, to challenge each and every actionable infringement. And there is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on that work, or even complements it. Fan sites prompted by a book or film, for example, may benefit the copyright owner. Even if an infringement is harmful, the harm may be too small to justify the cost of litigation.

If the rule were, as MGM urges, “sue soon, or forever hold your peace,” copyright owners would have to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude. Section 507(b)’s limitations period, coupled to the separate-accrual rule, allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle.

Several among the copyright skeptic crowd were overjoyed when they read this. Kevin Smith, who serves as Scholarly Communications Officer at Duke University, wrote:

I don’t know that the Court has every [sic] before acknowledge [sic] that infringements might be beneficial to rights holders. Perhaps this is an acknowledgement of the myriad potential for reuse and remix. Certainly the authors of fan fiction should feel buoyed by the remark. From a more technical perspective, it seems to me to further undermine what was once a strongly held belief that whenever infringement was found, harm could be presumed. It seems clear that the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement.

The CCIA’s Matt Schruers wrote:

A more interesting wrinkle is Justice Ginsburg’s explicit embrace of a point that I had previously characterized as “taboo” — that not all infringements impose costs on the rights holder. In fact, when I wrote last year that some infringements have no economic cost, and that other infringements will reallocate wealth instead of destroy it, the site admins had to install a profanity filter for the comment section. Yet today, Justice Ginsburg goes a step further and states that some infringement “may benefit the copyright owner.”

I hate to rain on their parade.

This statement is actually one that should buoy authors and creators. It is perhaps one of the more robust endorsements by the Supreme Court of the conception of copyright as a property right—an endorsement that goes beyond mere semantics, such as when Justice Breyer said “deliberate unlawful copying is no less an unlawful taking of property than garden-variety theft”, or, when the Court was confronted with evidence that deliberately placed mistakes had been copied, that “such indicia is held to indicate a substantial theft of copyright property.”

For it endorses copyright as a right that “trumps utility.” Ginsburg plainly states that uses which undercut a work’s value, have no effect on it, or even complement it are all actionable infringements. This perfectly comports with other forms of property. If you break into my home, that’s trespass. If you break into my home to wash my dishes, that’s still trespass, even if your act may ultimately benefit me.

Though Ginsburg never explicitly references the notion of property here, the thrust of her remarks are made clearer by her reference to the availability of injunctive relief to a copyright owner not once, but twice in this brief section. The injunction, of course, is the quintessential remedy for property rules.

What’s more, Ginsburg implies that tolerating such non-harmful uses does not operate to the prejudice of a copyright holder. Copyright litigants should make note of this when faced with an implied license or fair use defense. (And Smith’s conclusion that “the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement” misreads the passage entirely.)

Why do property rights confer such high standing in our society? That’s a question that can’t be answered in a mere blog post. But perhaps I can offer some general remarks. Assuming private property rights are justly allocated, their recognition protects the dignity and autonomy of individuals. Individuals have an array of equally valid choices about how to exploit their property that others cannot encroach upon. Ignoring respect of that choice invites trouble of all sorts—the harm from infringement of property rights is not necessarily what, if any, damage may be done to the res, but the invasion into the property owner’s sovereignty itself.

This trouble, in my opinion, is aggravated when we start talking about one’s expression. It’s one thing for society to dictate what you should do with land you bought and quite another to dictate what you should do with a book you wrote, or a photo you took, or a song you recorded—none of which, by the way, existed before you created it. These are not only your property but your expression, extensions of your personality. We should be cautious against societal encroachments to something so core to our being. That does not make such rights absolute in all directions; like all forms of property, they must be properly scoped and coexist with doctrines that mediate conflicts with other rights. And, in some cases, must give way to compelling public interests.

But bottom line, it is heartening to see the Supreme Court calmly and without ceremony advance the well-founded conception of copyright as property.

Thanks to Devlin Hartline for feedback during drafting!

We Need to Talk About Aereo: Copyright-Avoiding Business Models, Cloud Storage and a Principled Reading of the “Transmit” Clause — Rebecca Giblin and Jane Ginsburg look at Aereo and the Transmit Clause in detail, presenting two possible interpretations that provide a principled approach that is not technologically determinative.

Your Newfangled Media Algorithms are Bullshit — “I love the idea of a new world of media that exists solely on the Internet. And I really, really want to be part of it. But I also want to pay my rent and feed my cat.”

Oliar, Pattison, & Powell on Copyright Registrations — “Using an original data set containing all 2.3 million registrations from 2008 to 2012, we provide a snapshot of current patterns of registration. We describe who is registering what, where, when, and why. Our main findings include the types of work being registered, how the registrations of individuals and firms differ, when works are being registered relative to their date of creation and date of publication, the age distribution of authors in different creative fields, and the geographic distribution and concentration of registration claimants.”

Bots and ‘Drone Pools': The Deep Bag of Tricks in Video-Ad Fraud — The online ad market is dysfunctional. “Wenda Harris Millard, president and COO of the ad consultancy Medialink, estimates that as much as 25% of online ad revenue is wasted on fraud and piracy. Similarly, a February report from audience-research firm comScore found that 36% of online ad impressions, or views, are generated by nonhumans.”

Cross-posted on the Law Theories blog.

While the distinction between law and equity may seem antiquated to modern ears, the Supreme Court handed down an interesting copyright opinion last week which turned on whether the plaintiff’s claims were legal or equitable in nature. In Petrella v. MGM, the Court held that the affirmative defense of laches, which bars claims where the plaintiff has unreasonably slept on her rights to the prejudice of the defendant, is only available when the claim is equitable in nature—and even then only when the circumstances are extraordinary, which they were not in Petrella’s case.

The facts of the case are fairly straightforward. The plaintiff, Paula Petrella, sued MGM and others in 2009 for copyright infringement, unjust enrichment, and accounting over the movie “Raging Bull.” Petrella’s father authored a book and two screenplays which were the bases for the movie, and he assigned his rights—including his renewal rights—to MGM’s predecessor-in-interest. However, when Petrella’s father died before the commencement of the renewal period, Petrella inherited his renewal rights—the very rights he had previously assigned away—under the Supreme Court’s holding in Stewart v. Abend. Petrella renewed the rights when the original twenty-eight year term was up in 1991.

But it was not until seven years later in 1998 that Petrella contacted MGM to claim that the movie was an infringing derivative work of the rights she had acquired, and it was not until 2009 that Petrella initiated the instant civil action against MGM. The district court granted summary judgment to MGM, holding that all of Petrella’s claims were barred by the doctrine of laches. The Ninth Circuit affirmed, finding that Petrella’s delay from 1991 (when she acquired the rights) to 2009 (when she finally sued MGM) was unreasonable on her part and prejudicial to MGM. The appellate court was not impressed with the fact that Petrella had waited until the movie was profitable before filing suit.

Interestingly, the Ninth Circuit made a point of noting that Petrella’s claims for unjust enrichment and accounting were equitable in nature:

Recovery of an unjust enrichment is an equitable remedy. Seeking an accounting, where the accounting is not provided for by contract, is also an equitable remedy. Because laches is an equitable defense, we agree with the district court that laches also bars Petrella’s unjust enrichment and accounting claims.1

The Ninth Circuit cited a treatise for the proposition that “since an accounting of profits is an equitable remedy, the plaintiff may be refused the remedy upon equitable grounds.”2 Thus, the Court of Appeals indicated that the availability of an equitable defense such as laches turned on the nature of the remedy being sought, and since unjust enrichment and accounting were equitable remedies, laches could bar such claims.

But the Ninth Circuit was not nearly as cautious when it came to Petrella’s copyright infringement claim. Strangely, the appellate court never mentioned exactly which remedy Petrella sought for the infringement. While it was careful to point out that laches applied to the unjust enrichment and accounting claims because those were equitable in nature, the Ninth Circuit carelessly applied laches to the infringement claim without a single word on whether Petrella there sought legal or equitable relief. The circuit panel instead relied on Ninth Circuit precedent providing that “if any part of the alleged wrongful conduct occurred outside of the limitations period, courts presume that the plaintiff’s claims are barred by laches.”3

The Ninth Circuit thus viewed the laches defense as equitable in nature and applicable to any claim for equitable relief—even for equitable claims within the three-year statute of limitations period.4 Additionally, the circuit court thought that laches was applicable to claims for legal remedies, though the rule it invoked had two parts: If all of the allegedly infringing conduct occurred within the three-year statute of limitations period, then laches presumptively did not apply (though it was still available). On the other hand, if some of the allegedly infringing conduct occurred before the three-year statute of limitations period, then laches presumptively did apply. And since Petrella waited almost two decades to sue MGM, the Ninth Circuit applied its presumption that laches barred her copyright infringement claim—even if Petrella was seeking only legal remedies for the infringement.

While this discussion of law vs. equity may sound archaic and overly formalistic, there is one area of constitutional law where the distinction plays a major role, namely, with the right to a jury trial. The Seventh Amendment to the U.S. Constitution provides:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved . . . .5

Whether there is a constitutional right to a jury trial turns on whether the claim constitutes a “suit[] at common law.” The Supreme Court has interpreted this to mean that there is a Seventh Amendment right to a jury trial when the claim is one that would have been an action at law instituted in a court of law—as opposed to a suit in equity brought before a court of equity—back in 1791.6 For modern causes of action that did not exist in 1791, the Court looks at what would have been an analogous claim at the time and characterizes it accordingly. If the claim is legal in nature, then it qualifies as a “suit[] at common law” and there is a constitutional right to a jury trial. Equitable claims, by contrast, carry no constitutional right to a jury trial, and they are instead heard only by a judge.

In Feltner v. Columbia Pictures, the Supreme Court looked at whether the Seventh Amendment provides a constitutional right to a jury trial on the issue of statutory damages for copyright infringement.7 The Ninth Circuit below had characterized statutory damages as equitable in nature, thus providing no constitutional right to a jury trial. The Supreme Court disagreed, noting that “suits at common law” under the Seventh Amendment included both judge-made and statutory causes of action:

The Seventh Amendment thus applies not only to common-law causes of action, but also to actions brought to enforce statutory rights that are analogous to common-law causes of action ordinarily decided in English law courts in the late 18th century, as opposed to those customarily heard by courts of equity or admiralty.8

The Supreme Court employed a two-pronged analysis to determine whether statutory damages were legal or equitable in nature:

To determine whether a statutory action is more analogous to cases tried in courts of law than to suits tried in courts of equity or admiralty, we examine both the nature of the statutory action and the remedy sought.9

In the Supreme Court’s opinion, “close analogues” to claims for statutory damages existed before the Seventh Amendment was adopted in both common law and statutory causes of action for “monetary damages” that “were tried in courts of law, and thus before juries.”10 The “general rule” was that “monetary relief is legal,” the Court noted, “and an award of statutory damages may serve purposes traditionally associated with legal relief, such as compensation and punishment.”11 Since statutory damages were analogous to actions at law for actual damages in the late eighteenth century—actions that would have been tried before a jury in a court of law—the Supreme Court held that statutory damages were legal in nature. This in turn meant that there was a constitutional right to a jury trial on the issue of statutory damages under the Seventh Amendment.

The remedies for copyright infringement available under the Copyright Act are codified in Sections 502 – 505, all subject to the three-year statute of limitations found in Section 507(b).12 Claims for damages and profits fall under Section 504. The copyright owner can elect either “actual damages suffered by him or her” and “any profits of the infringer” under Section 504(b), or “an award of statutory damages” within the given range under Section 504(c). While damages and profits are lumped together in Section 504, it should be noted that the two remedies are quite different in nature. Damages are compensatory, meaning they compensate the plaintiff’s loss and make her whole. Profits, on the other hand, are restitutionary, meaning they disgorge the defendant’s gain under the principle of unjust enrichment.13 Claims for damages are legal in nature, while claims for profits are equitable.

I think much of the modern confusion about the law-equity divide comes from the fact that courts of law and courts of equity were merged over seventy-five years ago. As the Federal Rules of Civil Procedure now declare: “There is one form of action—the civil action.”14 Gone are the procedural differences between an action at law and a suit in equity. A plaintiff seeking both legal and equitable remedies can file a single civil action for both types of claims. But while the procedural differences between law and equity have been abrogated, the substantive differences remain.15 These substantive differences include whether there is a constitutional right to a jury trial on a given claim, and, as the Supreme Court reiterated in Petrella, whether an equitable defense such as laches is available to bar a claim for legal or equitable relief brought within the statute of limitations. The law-equity divide is very much alive in copyright law.

The Supreme Court came down 6-3 in favor of Petrella, with Justice Ginsburg writing for the majority and Justice Breyer in dissent. The Court held that the applicability of laches to claims brought within the statute of limitations turns on whether the remedy sought is legal or equitable in nature:

Section 507(b), it is undisputed, bars relief of any kind for conduct occurring prior to the three-year limitations period. To the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period, however, courts are not at liberty to jettison Congress’ judgment on the timeliness of suit. Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window. As to equitable relief, in extraordinary circumstances, laches may bar at the very threshold the particular relief requested by the plaintiff.16

This paragraph needs a bit of unpacking. First, the Supreme Court pointed out that the statute of limitations bars all claims—whether for legal or equitable relief—for infringing conduct that occurred more than three years before the claim accrued. But what happened within the three-year limitations period was a bit more complicated. The Court said that because Congress had spoken on the issue of timeliness in enacting the statute of limitations, the judiciary could not “jettison Congress’ judgment.” This was implicitly based on the separation of powers—but that respect for the judgment of Congress only went so far. The Court said that laches could not trump the statute of limitations—but only when the remedy sought was legal in nature. When the plaintiff sought an equitable remedy, laches could be invoked to trump the statute of limitations—but only in “extraordinary circumstances.”

Justice Ginsburg, writing for the majority, offered a bit of history on the interplay between laches and the statute of limitations. It was not until 1957 that Congress enacted a statute of limitations for civil actions under the Copyright Act.17 Before then, the federal courts would turn to state statutes of limitations for timeliness determinations. Laches could be invoked to trump those state timeliness statutes because doing so was “merely filling a legislative hole,” “not invading congressional prerogatives.”18 But that’s not the case anymore, as Justice Ginsburg noted, since “Congress addressed the matter and filled the hole” when it added the statute of limitations to the Copyright Act.19

Justice Ginsburg observed that the “principal application” of laches was “to claims of an equitable cast for which the Legislature ha[d] provided no fixed time limitation,” and historically statutes of limitations did not apply to “measures of equitable relief.”20 According to the Supreme Court, this tradition of only applying laches to equitable claims survives in modern times. But note the work that laches does today: The statute of limitations in Section 507(b) still bars all claims for equitable relief for infringing acts more than three years old, but within that three-year period, laches can be invoked to bar all equitable claims. Thus, even though Congress, in enacting the statute of limitations, had also explicitly “filled the hole” with respect to the timeliness of equitable claims, the Supreme Court sees no problem with courts invoking laches to bar claims that are equitable in nature.

The Supreme Court’s reasoning was fairly nuanced—yet, to a degree, it was also nonsensical. The Court held that laches cannot be invoked to bar claims for legal relief because Congress had enacted a statute of limitations for all legal claims. Applying laches to legal claims would invade “congressional prerogatives,” that is, implicate separation of powers concerns. But then the Court also held that laches can be invoked to bar claims for equitable relief, despite the fact that Congress had also enacted a statute of limitations for such equitable claims. And this application of laches, the Court must have thought, did not impermissibly invade “congressional prerogatives.” The judiciary seized that power before the merger of law and equity, and apparently it’s not letting go of it now.

Applying its rule to the facts of Petrella, the Supreme Court held that “the courts below erred in treating laches as a complete bar to Petrella’s copyright infringement suit” because the “action was commenced within the bounds of § 507(b), the Act’s time-to-sue prescription, and d[id] not present extraordinary circumstances” that would merit invoking laches to bar the equitable claims. The Court went on to say that even though Petrella’s delay was not extraordinary, such that it should knock out her equitable claims at the outset, it nevertheless could be relevant at the remedial stage—but only for the equitable claims. Thus, even though Petrella’s delay for almost two decades could not bar her claims for equitable remedies as a threshold matter, those remedies, if awarded, could be negatively adjusted on account of her delay.

Follow me on Twitter: @devlinhartline

Footnotes

  1. Petrella v. Metro-Goldwyn-Mayer, Inc., 695 F.3d 946, 956 (9th Cir. 2012) (internal citations omitted). []
  2. Id. (internal citations and quotations omitted). []
  3. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 997 (9th Cir. 2006). []
  4. Though the Supreme Court reversed the Ninth Circuit’s application of laches to Petrella’s equitable claims under the particular facts of the case, the Court ultimately agreed with the Ninth Circuit on the general availability of laches to bar equitable claims within the three-year statute of limitations period. []
  5. U.S. Const. amend. VII. []
  6. See, e.g., Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564-65 (1990). []
  7. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998). []
  8. Id. at 348 (internal citations and quotations omitted). []
  9. Id. (internal citations omitted). []
  10. Id. at 348-49. []
  11. Id. at 352 (internal citations omitted). []
  12. 17 U.S.C.A. § 507(b) (West 2014) (“No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”). []
  13. See, e.g., Colleen P. Murphy, Misclassifying Monetary Restitution, 55 SMU L. Rev. 1577, 1585-86 (2002). []
  14. Fed. R. Civ. P. 2 (West 2014). []
  15. See, e.g., Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 382 n.26 (1949) (“Notwithstanding the fusion of law and equity by the Rules of Civil Procedure, the substantive principles of Courts of Chancery remain unaffected.”). []
  16. Petrella v. Metro-Goldwyn-Mayer, Inc., No. 12-1315, 2014 WL 2011574 at *4 (U.S. May 19, 2014). []
  17. See Pub. L. 85-313, 71 Stat. 633 (September 7, 1957) (amending Section 115(b) to read “No civil action shall be maintained under the provisions of this title unless the same is commenced within three years after the claim accrued.”). []
  18. Petrella, 2014 WL 2011574 at *5 (internal citations and quotations omitted). []
  19. Id. []
  20. Id. at *9 (internal citations and quotations omitted). []

Strong copyright law supports journalism and informed communities — Caroline Little writes about the fundamental importance of journalism to democracy and how aggregators undermine the ability to gather and analyze news. “Newspapers’ concern in this area is not the personal use of newspaper-generated content but rather its use by businesses that benefit financially through the unlicensed monetization of that content. By taking newspaper content without paying for it, these companies undercut the fundamental economic model that supports journalism that is so important to our communities.”

The film and television industry is a nationwide network of small businesses — An infographic of the involvement of small businesses in the film industry in honor of National Small Business Week (which was actually last week). According to the chart, 85% of the 108,000 businesses comprising the industry employ fewer than 10 people.

“A Personal Hit on Me” — A (short) video from PBS Frontline about a journalist who discovers that the NSA was piggybacking off one of Google’s tracking cookies, highlighting the dangers of commercial monitoring. Google’s response was to try to discredit the journalist.

A fair deal for authors — “Like us all, authors have to put food on the table and pay bills. However, in an increasingly digitized market and amid expectations, in some quarters, that all content should be free, it is a struggle for many authors to support themselves and to finance their creative endeavors. The official launch of the International Authors Forum (IAF), a new organization representing authors (writers and visual artists) globally, took place at WIPO in December 2013.”

YouTube Threat To Indies Over New ServiceThe Quietus reports, “Website allegedly moving to block labels’ videos unless they sign up to new streaming service”; or, Google wants to break the internet. More on this dispute and Google’s strong-arm tactics at Billboard.

There’s no such thing as used digital media — Great piece from David Newhoff, who writes, “This notion of ‘used’ digital media is just one way in which technological opportunists can be disingenuous when it comes offering up what sound like market-based theories. They want the luxury of cherry picking from both the past and the present as suits their purposes. In reality, though, these ideas don’t come from particularly innovative technologists, but rather from standard-issue middlemen looking to exploit a consumer-serving limitation on copyrights to siphon value from creators and line their own pockets.”

On Monday, the Supreme Court released its decision in Petrella v. Metro-Goldwyn-Mayer, Inc. The issue there was whether the equitable doctrine of laches could ever bar infringement claims that are brought within the Copyright Act’s statute of limitations period. The Court held that it could not.

But in doing so, did the Court inadvertently weigh in on an unrelated issue, one that is currently the subject of one the widest circuit splits in copyright law?

Application and Registration Approaches

Under US copyright law, works are protected as soon as they are created. However, the law does provide for a voluntary registration mechanism that confers a number of benefits. For example, registration is a prerequisite to filing an infringement lawsuit. Section 411(a) provides that, “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”

Circuits are split on whether Section 411(a) requires a registration to have been processed by the US Copyright Office before a copyright holder can bring suit or whether the requirement is satisfied as soon as the Office receives the application.

The Tenth1 and Eleventh Circuits2 take the first view, the “registration” approach. The Fifth,3 Seventh,4 and Ninth Circuits5 embrace the second, the “application” approach.

The issue remains unresolved in other Circuit Courts. Just this past March, the First Circuit had an opportunity to adopt an approach but declined, as there was no evidence the plaintiff had submitted an application at all, making the question moot.6 While some observers have said the Eighth Circuit has taken the application approach, it does not seem to have definitively ruled on the issue.7

District courts within the Second Circuit are split,8 as are courts in the Fourth.9 (Just last week, a District Court in Virginia took the application approach.)10

The three major copyright treatises, by the way, follow the same pattern as the courts, with Patry in favor of the registration approach, Nimmer favoring the application approach, and Goldstein taking no position.

Which Approach?

The strongest support for the registration approach comes from the plain text of the statute. Section 411(a) says no action for infringement shall be instituted “until registration” has been made, and other provisions in the Copyright Act detail a set of steps involved in the registration process beyond the receipt of the application.

In adopting the registration approach, the Tenth Circuit noted an additional problem under the application approach: “shifting legal entitlements.” “If, for example, an applicant could obtain the advantage of the presumption that the copyright is valid upon application, see 17 U.S.C. § 408(c), but then, after examination the Register of Copyrights determined the material is not copyrightable, the presumption of validity would swing back and forth.”11

Courts adopting the application approach also find support in the statutory language. They point to the ambiguity in Section 408, which says copyright owners “may obtain registration of the copyright claim by delivering to the Copyright Office the deposit specified by this section, together with the application and fee,” as supportive of either approach. In addition, Section 410(d) could also be read in support of either approach since it provides that the effective date of a registration is the date the application is received by the Copyright Office.

Courts have also found other reasons to support the application approach. Section 411(a) allows the institution of an action for infringement even if the Copyright Office refuses an application. The act of delivering an application, then, is all that is necessary on the part of the copyright owner to be able to file a lawsuit, which makes the actual processing of the application a mere formality—one that serves little function since, as noted above, the effective date of a registration is the date the application is delivered. Requiring strict adherence to this formality, as the registration approach does, incurs real costs—copyright applications currently can take at least 3-5 months to process. A copyright owner will suffer unnecessary damages if infringement continues to occur while she waits for her registration certificate, and may lose the ability to sue if she is toward the end of the statute of limitations period.

Did Petrella Adopt the Registration Approach?

Given the wide disagreement in the Circuits and the persuasive arguments on both sides, it is somewhat surprising that the Supreme Court would touch on this issue.

During a discussion rebutting the argument that there is a danger in losing evidence if a copyright owner remains inactive, the Court notes that the registration mechanism reduces the need for extrinsic evidence, saying, “Although registration is ‘permissive,’ both the certificate and the original work must be on file with the Copyright Office before a copyright owner can sue for infringement.” The reference to a registration certificate being on file with the Copyright Office before a copyright owner can sue strongly suggests the Supreme Court has taken the registration approach. But this is hardly an endorsement of the registration approach. There is no indication that the Court intended to weigh in on the issue, not even a footnote pointing out the Circuit split on the issue.

More importantly, the issue of which approach is correct was not in front of the Court, and its point here was not part of its holding, making it most likely dicta. Even then, given the almost off-handedness of the statement, combined with a lack of any discussion about the different approaches, it is not likely any courts will find this statement particularly persuasive.

Still, this is an issue worth noting by practitioners and copyright owners and underscores the importance of timely copyright registration for creators.

H/T to Leslie Burns for first spotting this issue. 

Footnotes

  1. La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1202-07 (10th Cir. 2005), abrogated on other grounds by Reed Elsevier, 559 U.S. 154. []
  2. M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488-89 (11th Cir. 1990), abrogated on other grounds by Reed Elsevier, 559 U.S. 154. []
  3. Apple Barrel Prods., Inc. v. Beard, 730 F.2d 384, 386-87 (5th Cir. 1984). []
  4. Chi. Bd. of Educ. v. Substance, Inc., 354 F.3d 624, 631 (7th Cir. 2003). []
  5. Cosmetic Ideas, Inc. v. IAC/Interactivecorp., 606 F.3d 612, 615-21 (9th Cir. 2010). []
  6. Aliciea v. Machete Music, No. 12-1548 (1st Cir. Mar. 7, 2014). []
  7. See Tri-Marketing v. Mainstream Marketing Services, Civ. No. 09-13 (DWF/RLE), 2009 U.S. Dist. LEXIS 42694 (D. Minn. May 19, 2009), which held that while the Eighth Circuit appeared to have adopted the application approach in Action Tapes, Inc. v. Mattson, 462 F. 3d 1010 (8th Cir. 2006), the Circuit was not presented with the precise issue of “whether complying with copyright application requirements satisfies the jurisdictional requirements under § 411(a),” thus leaving the question of which approach is correct unresolved. []
  8. Compare Well-Made Toy Mfg. Corp. v. Goffa Intern. Corp., 210 F.Supp.2d 147, 157 (E.D.N.Y.2002) (application approach) to Demetriades v. Kaufmann, 680 F.Supp. 658, 661 (S.D.N.Y.1988) (registration approach). []
  9. See Mays & Associates, Inc. v. Euler, 370 F.Supp.2d 362, 367-370 (D. Md. 2005) for discussion. []
  10. Caner v. Autry, No. 6:14-cv-00004, 2014 U.S. Dist. LEXIS 66508, (W.D. Va. May 14, 2014). []
  11. 416 F.3d at 1205. []

EFF’s Misleading Criticism is a Wasted Opportunity to Contribute to the Discussion on How to Reduce Online Piracy — “In its quest to vehemently condemn creative attempts to address piracy, EFF not only makes unfounded and misleading criticisms. EFF also misses the opportunity to make constructive, collaborative suggestions to reduce piracy – a goal we all agree on.”

A Bitcoin for Digital Art — Many dismiss bitcoin and other digital currencies as a sham or a fad. But the technology underlying the currency may have broad applications, including applications for visual and other creators, that are only now being explored. A thought-provoking piece that looks at some of those potential applications.

Refresher Q&A on Oracle v. Google after appellate ruling: this copyright case is NOT about $1 billion — FOSS Patents takes a look at some of the details from last week’s important Federal Circuit decision holding Google liable for infringing Oracle’s Java platform.

Is it really a tech bubble, or is it something else? — “We live in crazy times — that is true — and things have gotten crazier, but it still doesn’t feel like the turn of the century. Last week, another former colleague from Red Herring brought up the topic and wondered how different things are now versus the 1999-2000 madness. And then he answered the question himself: 1999 had a gold rush mentality, a sense of broader mania. This time around you see more of a gross entitlement; and that’s what is different about the Bay Area.”

Mapping The International Availability of Entertainment Services — Cool maps, bro.

The joy of telling people how much money you make — Indie musician Nicole Dieker shares her experience with providing her fans with information about how much she makes through her music career. She observes, for example, that “One of the subtle assumptions of independent musicianry is the idea that once you go full-time, you somehow make a full-time income as a musician.”

Menell on Copyright’s “Making Available” Right — Legal Theory Blog points to Peter Menell’s latest, which responds to recent rebuttals of his earlier work that showed the legislative history of the 1976 Act supported the idea that US Copyright law provides for a general right of “making available.”

Google, don’t be secretive — “Now that these little garage businesses are some of the biggest companies in the world, it’s a whole lot harder for them to exhibit the qualities that once made them the darlings of the culture and counterculture alike. Yes, digital companies are being held to a higher standard than companies of previous generations. But this is largely because we all understand that they are building the infrastructure in which our economics, culture and perhaps even a whole lot of human consciousness will take place.”

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