US High Court Opens Door To More (And Older) Copyright Suits 20/05/2014 by Steven Seidenberg for Intellectual Property Watch 1 Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Steven Seidenberg is a freelance reporter and attorney who has been covering intellectual property developments in the US for more than 20 years. He is based in the greater New York City area and may be reached at email@example.com. Music, movie, and television companies suffered a major defeat on 19 May, when the United States Supreme Court issued its decision in Petrella v. Metro-Goldwyn-Mayer. The ruling will lead to a flood of new copyright infringement suits against these content companies, according to many experts. And content companies may not be the only losers. In its 6-3 ruling [pdf], the Supreme Court held that time is no bar to copyright infringement suits. A copyright owner can wait for decades before bringing suit, even if the passage of time has resulted in the loss of vital evidence. The equitable defense of laches is supposed to prevent such a situation from occurring. Laches applies when a plaintiff unreasonably delays in filing a suit and, as a result, causes unjust hardship to the defendant. Such unjust hardship can occur if the plaintiff’s delay in suing has resulted in the defendant no longer possessing important evidence of non-infringement because key documents have been thrown away, memories have faded, or people with firsthand knowledge of the facts have died. However, the Supreme Court declared in Petrella that laches can never be used as a defense to a copyright infringement claim, because the Copyright Act has its own statutory limit such on claims. Section 507(b) of the Copyright Act mandates that infringement claims must be brought within three years of the infringement’s occurrence. This might seem to require a copyright owner to sue within three years of an infringer commencing his infringements, but that is not the case. Each act of unlawful copying is a separate act of infringement, subject to its own three-year limit. A Piece of Raging Bull In this case, Paula Petrella asserted that MGM’s movie, Raging Bull, infringed a screenplay written in 1963 by her deceased father, Frank Petrella. Before the movie was made, Frank had assigned his copyright to a film production company, which then assigned the copyright to MGM. In 1980, MGM released Raging Bull. The movie about boxing champion Jake LaMotta was wildly successful, both among critics and audiences. MGM thereafter released the movie in a variety of formats, including DVD and Blu-ray. Frank Petrella’s copyright assignment to MGM was stated to be “forever,” but the work was covered by a predecessor to the current US Copyright Act, and under that statute, when it came time for the copyright to be renewed, the renewal rights reverted to the author. Frank died before the time of renewal, so the renewal rights reverted to Paula. She renewed the copyright in 1991, unburdened by any assignment previously made by her father. In 1998, seven years after Paula Petrella had obtained the copyright in her father’s screenplay, she informed MGM that she owned this copyright and asserted that any exploitation of Raging Bull would infringe that copyright. MGM denied any infringement and refused to share any of the movie’s revenues with her. But Paula didn’t sue MGM for infringement until 2009, 18 years after she renewed the copyright. During those 18 years, MGM spent millions of dollars marketing, licensing and creating different editions of the film. And by the time Petrella finally sued – because the movie had again begun generating profits – three key witness died or became unavailable, making it much more difficult for MGM to prove that it did not infringe her copyright. MGM argued that Petrella’s tardiness in suing unjustly impaired MGM’s legal defense, so Petrella’s infringement suit should be barred by laches. The district court and the 9th Circuit Court of Appeals agreed with MGM. The Supreme Court reversed, holding that laches applies only if the legislature has not established a statute of limitations for such suits. Congress did establish such a limit for copyright suits, Section 507(b). So, the court concluded, Petrella could sue for infringements committed up to three years before the suit was filed in 2009 and for any infringements committed after the suit was filed. Après Petrella, le déluge The ruling will create huge problems for movie, TV and film companies, according to many experts. “This will open the floodgates for copyright lawsuits as masses of litigants from the 70s, 80s, and 90s will likely come out of the woodwork to claim that hit songs, movies, TV shows and other creative works still in the marketplace … belong to them, and they want a share of the profits,” said Brad R. Newberg, a partner in the Virginia office of Reed Smith. A steady stream of these lawsuits has already begun, according to Newberg. “Since the news media began covering the Petrella case [in 2009], we have seen an explosion of similar cases, especially in the music industry. The music companies have been hit with a new case almost every week.” He added, “Most copyright infringement cases in the last few years have been these sorts of cases.” Many of the targets of these belated copyright infringement suits will have trouble defending themselves. Key witnesses will be dead or unable to be found. Vital documents will be lost or destroyed. “This is a bad day for Hollywood and the music industry,” said Andrew Baum, a partner in the New York office of Foley & Lardner. It is also a dark day for the next generation of writers, composers and lyricists, according to Newberg. “Petrella will hurt upcoming artists, writers and songwriters, because record companies and movie studios won’t want to buy from some unknown, fearing they might be sued 20-30 years from now. Businesses will want to work much more with people they know, rather than with new people.” Content companies will respond tp the ruling in other ways, too. They will seek stronger insurance policies and better document retention. “They are going to have to paper everything they can and will have to store as much as they can,” Newberg said. Finally, Petrella could have ramifications well beyond copyright litigation and the content industry. This ruling striking down laches in copyright cases could foreshadow a similar change for patent cases. “The court signaled in a footnote that it may be interested in taking up a similar question in the patent context – whether the Federal Circuit has been wrong for the last 20 years in allowing the defense of laches to bar damages claims in patent infringement suits,” said Mark E. Haddad, a partner in Los Angeles office of Sidley Austin. Given the Supreme Court’s reasoning in Petrella and its decade-long trend of regularly overturning Federal Circuit rules, the laches defense in patent litigation may be living on borrowed time. Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Steven Seidenberg may be reached at firstname.lastname@example.org."US High Court Opens Door To More (And Older) Copyright Suits" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.