Plaintiff in the U.S. Supreme Court’s recent 6-3 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., decided on May 19, 2014, waited 18 years to bring suit.
The majority held that laches cannot be invoked as a bar to pursuing a claim for infringement damages brought within a backward-looking three-year statute of limitations in Section 507(b) of the Copyright Act of 1976. Some of these points have to be explained because the disagreement among the Justices is not the “rolling limitations period.”
Justice Breyer in dissent agreed that the “limitations period … restarts upon each ‘separate accrual’ of a claim,” but faulted the majority for discounting iniquitous claims: “Long delays do not automatically prove inequity, but, depending upon the circumstances, they raise that possibility.”
The dissent’s position is that laches should be available in an appropriate case. The “rolling limitations period” means that an author can reach back for three years of profits so that if she sues in the fourth year after infringement she would be barred from recovering profits from the first year. However, in Petrella the infringement yielded no profits until the fifteenth year so that an earlier lawsuit would have been unjustified by the cost. Why should the author — or in this case the author’s daughter — be barred from recovering damages for waiting until there is evidence of profits that justify the expense of litigating an infringement claim?
To put these points into perspective, the Copyright Act recognizes five separate rights exclusive to the copyright owner (usually the author): to reproduce, to prepare derivative works, to distribute, and to perform and display the work publicly. Each of these rights can be separately granted: reproduction and distribution to a publisher of print and e-books; and to third parties the right to prepare derivative works for public performance or display. Audio rights are usually granted to the publisher along with reproduction and distribution rights.
Depending on the scope of rights granted, the author loses control over exploitation of the work for the duration of the grant, which is generally the term of copyright subject to a reversion right exercisable by the author or heirs. In Petrella the allegedly infringing work is the motion picture Raging Bull based on the life of boxing champion Jake LaMotta, who told his story with Frank Petrella in a screenplay copyrighted in 1963.
Infringement is impermissible copying of an author’s creative work and exploiting it for commercial or personal gain. Plagiarism is infringement that is usually dealt with by shaming the infringer. In some instances, limited copying may be legal as “fair use.” The infringement alleged in Petrella concerns rights beyond those that have been granted or deemed “fair.” The question is, What to do about an infringement and when to act? The tools for vindicating infringement either by shutting it down or receiving compensation are found in Chapter 5 of the Copyright Act, “Copyright Infringement and Remedies.” There are four remedies: injunction against the infringer, impounding and disposing of the infringing work, damages, and profits from the infringement, and costs and attorney’s fees.
These remedies come with the burden of costs, which restrains action against infringement unless there are compensatory reasons or damages likely to be collected. That is why plagiarism is generally remedied with non-legal tools. Shaming is an inexpensive way to have infringements removed. For infringement on the Internet, there is the “takedown” tool of the Digital Millennium Copyright Act, the DMCA, subsec. 512(c) of the Copyright Act, which is a form of self-help. The steps for enforcing this remedy are fairly simple, and there is plenty of online guidance from Good Samaritans. Most importantly, there is self-interest for the service provider to comply with the requirement of the statute, to avoid liability: “The limitations on liability established in this subsection apply to a service provider only if the service provider has designated an agent to receive notifications of claimed infringement.”
The costs of litigating a copyright infringement case are of such magnitude that to justify litigation there should be evidence the infringer is receiving revenue from the exploitation sufficient to justify pursuing the remedy. The statutory remedies are not mutually exclusive. Injunction may be the preferred remedy for a licensee but not the author. It would be inappropriate if the infringement is yielding a revenue stream. While there may be other reasons to act against infringement regardless of cost circumstances may dictate waiting until the benefits outweigh the expense. But waiting may have negative consequences.
Where the right to prepare a derivative work has not been granted or an exclusive license terminated and rights reverted and the underlying work is in copyright the author is protected. An infringing derivative work cannot be exploited without statutory consequences. But does the author have to commence an action immediately or can she wait until there the infringer’s revenue justifies the expense of suing? The question naturally arises because under Section 507(b) of the Copyright Act “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”
There is no dispute among the Justices in Petrella. No one is arguing that an author is forever barred if she does not act within three years after discovering an initial infringement. As already noted the Justices in Petrella are united up to a point. The majority and dissent agree that “[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 of the same work.” The question is the timing of the lawsuit if it is delayed for a substantial time after the claim accrues. It is also incontrovertible that when a defendant commits successive violations, the statute of limitations runs separately from each violation. Each time an infringing work is reproduced or distributed, the infringer commits a new wrong. Each wrong gives rise to a discrete ‘claim’ that ‘accrue[s]’ at the time the wrong occurs.
The majority took a pragmatic view of the plaintiff’s circumstances:
It is hardly incumbent on copyright owners … 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 copyright work, has no effect on the original work or even complements it…. Even if an infringement is harmful, the harm may be too small to justify the cost of litigation (emphasis added).
The rule the Supreme Court announces in Petrella allows a copyright owner to “defer suit until she can estimate whether litigation is worth the candle.” Of course, this rule in no way relieves plaintiff from the burden of proving infringement and the proper measure of damages. However, silence for a substantial period may have negative consequences that will affect the remedies and, if an award of damages, affect the amount.