Can the laches defense be raised to bar all remedies for copyright claims filed within the three-year statute of limitations prescribed by Congress?
Frank Petrella was the screenwriter behind the critically acclaimed 1980 film Raging Bull. In 1978, United Artists Corporation, a subsidiary of Respondent Metro-Goldwyn-Mayer Studios (“MGM”), acquired the rights to the screenplay. When Frank Petrella died in 1981, the renewal rights passed to his heirs. His daughter, Petitioner Paula Petrella (“Petrella”), renewed the copyright in 1991. Over the next two decades, Petrella and MGM engaged in a series of communications, during which Petrella accused MGM of infringing her copyright. Petrella filed suit in 2009; pursuant to the three-year statute of limitations of the Copyright Act, the suit only involved claims arising from 2006 on. The Ninth Circuit Court of Appeals upheld the district court’s decision to bar Petrella’s copyright claims according to the non-statutory doctrine of laches, an equitable defense that bars claims filed too late. The Supreme Court’s ruling in this case will impact not only how quickly plaintiffs must bring copyright claims, but also the extent to which equitable defenses may apply to an area regulated by Congress.
Questions as Framed for the Court by the Parties
Whether the non statutory defense of laches is available without restriction to bar all remedies for civil copyright claims filed within the three-year statute of limitations prescribed by Congress, 17 U.S.C. § 507(b)?
Jake LaMotta, a retired professional boxer, and his long-time friend Frank Petrella collaborated on a book and two screenplays about LaMotta’s life and boxing career. These works allegedly served as the basis for the movie Raging Bull, released in 1980.
These works were registered with the United States Copyright Office. The first screenplay was registered in 1963, with Frank Petrella listed as the claimant and sole author. The title page indicated, however, that the screenplay was written “in collaboration with” LaMotta. The book was registered in 1970, listing Peter Savage (a pseudonym of Frank Petrella), LaMotta, and Joseph Carter as authors. A second screenplay was registered in 1973, listing Frank Petrella as the only author. The registration documents indicated that the 1973 screenplay was adapted from the book. Notwithstanding the registration dates, the parties do not agree which of the three works was written first.
On November 19, 1976, Frank Petrella and LaMotta assigned the rights to the screenplays and the book to Chartoff-Winkler Productions. The assignment gave all of copyrights in the book and in the 1963 and 1973 screenplays based on the book, with a reservation of certain rights to the authors of the book. The agreement stated that the book was original and that the screenplays were not copied or adapted from any other work other than the book.
In 1978, United Artists, a wholly-owned subsidiary of Metro-Goldwyn-Mayer Studios (“MGM”), acquired the motion picture rights to Raging Bull from Chartoff-Winkler Productions. In 1980, United Artists registered a copyright in the film.
In 1981, during the original twenty-eight-year term of the copyrights for the book and screenplays, Frank Petrella died, and his renewal rights in the works passed to his heirs. Frank Petrella’s daughter, Paula Petrella (“Petrella”) alleges she is the sole owner of her father’s interest in the book and the two screenplays. In 1990, Petrella first learned of the Supreme Court’s decision in Stewart v. Abend and realized that she might have an interest in the works created by her father. In 1991, Petrella filed an application for renewal of the 1963 screenplay.
In 1998, seven years later, Petrella’s attorney asserted to MGM that Petrella had obtained the rights to the 1963 screenplay and that exploitation of any derivative work, including Raging Bull, would be an infringement of Petrella’s rights. For the next two years, Petrella and MGM engaged communications in which Petrella accused MGM of infringing her copyrights. MGM replied, first, that the 1963 screenplay was a collaboration between Frank Petrella and LaMotta, and that MGM lawfully retained all necessary rights under their agreement with LaMotta. Second, MGM denied any “substantial similarity” of protectable elements between the 1963 screenplay and the film Raging Bull. Petrella threatened legal action multiple times, but did not bring suit until nine years later in 2009.
Petrella brought copyright infringement, accounting, and unjust enrichment claims. The U.S. District Court for the Central District of California granted summary judgment in favor of the defendants on all three claims, holding that Petrella’s copyright infringement claim is barred by the doctrine of laches. The Ninth Circuit Court of Appeals affirmed the district court’s decision. The Supreme Court granted certiorari on October 1, 2013.
BARRING SUITS OUTSIDE THE STATUTE OF LIMITATIONS
MGM argues that the laches defense should bar a suit so long as a plaintiff’s unreasonable delay prejudices the defendant, and that Congress did not abrogate the doctrine of laches by enacting a three-year statute of limitations for civil copyright claims. MGM claims laches applies when necessary to counterbalance rolling limitations periods that can otherwise be extended indefinitely. MGM notes that the Court has recognized that laches can bar claims governed by and brought within a statute of limitations. MGM thus urges the Supreme Court to affirm the lower courts’ decisions because of the long delay and the resulting prejudice to MGM.
Petrella claims that 17 U.S.C. § 507(b) specifies a three-year period for bringing copyright infringement suits and that the suit should therefore not be barred by laches. Petrella further argues that precluding laches would best serve the Copyright Act’s goals of bringing clarity and predictability to the area of copyright law. In addition, Petrella argues that allowing a defense of laches would actually spur more litigation, as plaintiffs might bring suit out of concerns about being barred before the limitations period.
Writing in support of neither party, the American Intellectual Property Law Association (“AIPLA”) argues that the Ninth Circuit ruling violated 17 U.S.C. § 507(b) and that due regard for the statute, the legislature, and copyright policy goals require that laches should not bar damages as a legal remedy for infringing acts committed within the limitations period. AIPLA claims that actual and statutory damages provided under the Copyright Act are both legal remedies, and that it is therefore inappropriate to apply laches, which evolved as an equitable alternative to the statute of limitations. Since a statute of limitations and laches have the same goal, AIPLA argues that there is no need to have both available. Additionally, AIPLA notes that uniformity among copyright law is essential to avoid forum shopping, and that other circuits have declined to apply laches to bar a copyright infringement claim that otherwise meets the statute of limitations requirement. AIPLA also asserts that allowing a defense of laches might force copyright owners to prematurely enter litigation to avoid the risk their claims may be barred.
ADDITIONAL DEFENSES TO COMBAT COPYRIGHT TROLLS
Writing in support of neither party, Professor Robin Feldman urges the Court to consider the recent spike in frivolous lawsuits by “copyright trolls.” Feldman argues that legislative safeguards and other equitable defenses are not adequate, and that laches is necessary to the continued functioning of the intellectual property system. In short, Feldman argues that laches is a defense that should be available because it prevents the magnification of rights and prevents intellectual property rights holders from asserting claims for returns far beyond the value of the rights they hold.
THE “SEPARATE-ACCRUAL” RULE
Professors Douglas Laycock, Mark Gergen, and Doug Rendleman (“professors”) do not agree with either party to the case, and argue for the “separate-accrual rule.” This rule would allow plaintiffs to recover for infringements within the limitations period, but not for continuing harm from prior infringement. The professors note that it would be unfair to allow a plaintiff to withhold suit until the intellectual property proves profitable, then to usurp the defendant’s profits; laches should bar a suit in such a case. The professors argue, on the other hand, that the Court should not use laches to leave Petrella entirely without a remedy, and therefore, assuming Petrella meets all the requirements, legal remedies up to the three-year statutory limit should be available, as should an injunction on MGM’s activity going forward. Crucially, the professors disagree with Petrella’s claim that eBay Inc. v. MercExchange, LLC should control as the standard for injunctive relief in copyright infringement claims. In fact, they warn the Court that eBay has an unclear holding and created many potential misstatements of the law. As such, they assert that the Court should clarify the eBay holding, as lower courts have read it to discard many equitable solutions, and it has already had consequences in the lower courts that the Court did not intend.
MGM maintains that the district court correctly used laches to bar Petrella’s claims, which she filed nearly two decades after first learning of the alleged infringement. Petrella argues that the equitable defense of laches is inappropriate to apply to copyright relief governed by a statute of limitations.
TIMELINESS OF THE ACTION
Petrella claims that she filed her suit within the three-year statute of limitations of the Copyright Act and that her claim is therefore timely. She argues that the statute of limitations begins to run only when the claim accrues, that is, once a plaintiff could file suit. Moreover, according to Petrella, the standard rule is that a statute of limitations begins to run separately after each successive violation that gives rise to a cause of action. Petrella insists that the text of the Copyright Act supports applying this rule to copyright claims. Petrella therefore argues that her 2009 suit fell within the statute of limitations for claims that had accrued since 2006.
MGM notes that Petrella filed suit almost two decades after the initial alleged infringement. According to MGM, Petrella waited to see if the film would become profitable. MGM argues that in the intervening time, it invested much of its resources to promote the film, expecting to reap the profits of that investment. Moreover, MGM argues that the delay has made it difficult for MGM to prepare relevant evidence. MGM therefore maintains that Petrella’s delay resulted in both expectations-based and evidentiary prejudice. This, MGM contends, justifies allowing it to assert the equitable defense of laches.
THE USE OF LACHES IN COPYRIGHT CLAIMS
Petrella argues that the separation of powers prevents the judiciary from applying laches in this case. According to Petrella, Congress must have the exclusive power to formulate policies through the legislative process. This power is especially important here, according to Petrella, since the Constitution expressly grants Congress the authority to regulate copyright. Petrella adds that Congress is in a better position than the judiciary to assess the technological and political stakes involved in copyright policy. Thus Petrella argues that the judicial use of laches is a redundant restraint on lawsuits that violates Congress’ sole ability to impose limits on copyright claims.
MGM responds that, since the Judiciary Act of 1789, federal courts have had inherent equitable powers. MGM points out that the United States did not inherit a civil law system, but rather the English common law tradition, where courts can apply equity. MGM argues that laches is among the affirmative defenses, collected in Rule 8, that can bar a suit even when filed within the statute of limitations. MGM notes that Petrella’s separation-of-powers theory would allow the existence of a statute of limitations to undermine the judiciary’s ability to protect against prejudice.
In copyright claims like this one, MGM points out, a rolling statute of limitations allows a plaintiff to delay bringing an action as long as the defendant continues to infringe. MGM argues that, in cases like this, where defendants may endure lengthy, prejudicial delays, laches has an important role to play. The use of laches, in MGM’s view, is necessary to curtail abuse of copyright lawsuits, especially in cases where claims may accrue indefinitely.
Petrella responds that Congress must have recognized the evidentiary concerns that would arise in giving reversionary rights to an author’s heirs. Nevertheless, Petrella insists that Congress subordinated those concerns to the rights of heirs. Petrella also points out that plaintiffs still have the burden of proof in copyright cases. Petrella also maintains that Congress did not intend for laches to apply to copyright cases. Petrella emphasizes that Congress expressly authorized laches as a defense in other intellectual property statutes, but not in the Copyright Act. Additionally, Petrella claims the legislative history of the Copyright Act reveals only a willingness to prolong, not to contract, the limitations period.
MGM counters that refraining from mentioning the use of laches does not imply an intent to prohibit it. Rather, according to MGM, principles of equity, including laches, are background principles underlying all statutes of limitations. If Congress wished to abrogate an equitable doctrine like laches, MGM claims that Congress would have expressly stated so—which it did not.
THE USE OF LACHES TO PREVENT LEGAL AND INJUNCTIVE RELIEF
Petrella claims that laches cannot be used to prevent relief at law. Petrella points out that this case concerns a copyright claim arising from an act of Congress and seeking statutory damages; laches, meanwhile, is an equitable defense, and is inapplicable to relief at law. Moreover, Petrella argues that the use of equity is inappropriate here since Congress already accounted for infringers’ interests in determining the statutory damages.
MGM responds by explaining that, in 1938, equity and law were merged in the federal system. Since then, according to MGM, there has been only one type of action—the civil action—where laches applies to cases seeking either equitable or legal remedies. Moreover, in MGM’s view, the relief Petrella seeks, not for losses but for gains derived from infringement, actually follows equitable principles.
Petrella argues that laches also cannot be used to prevent injunctive relief. To allow it to do so, Petrella claims, would effectively forbid injunctive relief, since this would essentially prevent plaintiff with delayed claims from preventing future injury. Because infringers could not be prevented from continuing to infringe, according to Petrella, this would effectively grant them a free, permanent, compulsory license. Thus, even if she were to hold the copyright and enjoin other parties from infringing it, Petrella claims MGM would be able to infringe freely until the end of the copyright term. Petrella further contends that the proper test for injunctive relief is the four-factor test enunciated in eBay v. MercExchange, LLC, that is, that a plaintiff must demonstrate (1) irreparable harm; (2) inadequacy of remedies at law; (3) balance of hardships between parties; and (4) public interest. Allowing laches, according to Petrella, would undermine this test.
MGM responds that courts retain the discretionary power to allow a defense of laches against injunctive requests. MGM argues that it is untrue that copyright holders may always receive injunctive relief, and maintains that courts have discretion to give or to withhold equitable remedies. MGM adds that the injunction Petrella seeks is an equitable remedy; she ought not be surprised if the court allows an equitable defense.
After Petrella filed suit for claims arising within the Copyright Act’s three-year statute of limitations, the Ninth Circuit held that the equitable doctrine of laches barred her claims since the initial infringement had occurred almost two decades earlier. Petrella maintains that the use of laches is inappropriate where Congress has clearly set forth a limitations period in the statute. MGM responds that laches should apply where a plaintiff has unfairly delayed bringing a claim. The Supreme Court’s ruling in this will affect how quickly plaintiffs must bring copyright claims, as well as how equitable defenses may apply in an area governed by federal statute.