Raging Bull Revisited – Copyright Infringement and the Laches Defense

This column addressed the Ninth Circuit’s decision in the case Petrella v. Metro-Goldwyn-Mayer, Inc., et al., approximately 18 months ago.  The Ninth Circuit held that the equitable defense of laches could be asserted to bar a claim for copyright infringement even if it was filed within the three-year statute of limitations.  As the column pointed out at that time, Justice Fletcher concurred in the opinion only because that it was consistent with prior Ninth Circuit precedent but pointed out that there had been a split among the various circuits as to whether this was a proper result.  Earlier this week, the U.S. Supreme Court considered this circuit split and found that the Ninth Circuit erred in allowing the defense of laches to bar a claim for infringement that was brought within the three year statute of limitations.

A short recap of the facts of the case are as follows:  Jake LaMotta retired from boxing and with his friend, Frank Petrella, worked together to write a book and two screen plays concerning LaMotta’s life.  The works were registered with the U.S. Copyright Office.  One screen play in 1963, a book in 1970 and another screen play in 1973.  In 1976, Frank Petrella and LaMotta assigned their rights in the three works to a production company, which subsequently assigned the motion picture rights to MGM in 1978.   MGM released “Raging Bull” in 1980.

Mr. Petrella passed away in 1981 and his copyright renewal rights passed to his daughter Paula.  (Note: When an author dies prior to the beginning of a copyright renewal period, his successors get his or her renewal rights even if the author previously assigned the rights.)  Ms. Petrella filed a renewal application for the 1963 screen play in 1991.  She later retained an attorney who contacted MGM and others between 1998-2000 to notify them of Ms. Petrella’s copyright interest in the 1963 screen play and claiming that their exploitation of derivative works, including the motion picture Raging Bull, constituted infringement of her rights.  MGM responded by denying that it infringed on any of Ms. Petrella’s rights.  Ms. Petrella then waited almost a decade before filing suit against MGM and others in 2009.  Prior to trial, the district court granted summary judgment in the defendant’s favor on the basis of the doctrine of laches.  This was despite the fact that plaintiff had alleged that MGM had continued to infringe on her rights within the three year statute of limitation set forth in section 17 U.S.C. §507(b).  The Ninth Circuit affirmed the judgment based on laches in 2012 and plaintiff appealed that decision to the U.S. Supreme Court.

In a 6-3 decision, the U.S. Supreme Court decided to overturn the Ninth Circuit’s decision.  Both the majority and dissenting opinions contained a rare mix of both conservative and liberal justices.  Justice Ginsburg, writing for the majority of the court, began by examining four aspects of copyright law to support the Court’s decision.  First, she noted that the Copyright Act grants copyrights to works published before 1978 for an initial period of 28 years which may be extended for a renewal period of up to 67.  She then noted that copyright renewal rights may be inherited by the author’s heirs.  Third, she examined the various remedies available to a plaintiff for copyright infringement, including both equitable and legal relief.  Finally, she observed that it was not until 1957 that Congress enacted a statute of limitations for copyright infringement of three years.  The Court noted that: “The federal limitations prescription governing copyright suits serves two purposes: (1) to render uniform and certain the time within which copyright claims could be pursued; and (2) to prevent the forum shopping invited by disparate state limitation periods, which range from one to eight years.”  She also noted that a plaintiff’s claim for infringement did not accrue until “an infringing act occurs” and that there was also the “separate accrual rule” which provides 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.”

Justice Ginsburg then noted that although plaintiff was alleging infringement on the 1963 screen play, she was seeking relief “only for acts of infringement occurring on or after January 6, 2006,” which was the three year period prior to her filing the complaint.  She ruled that “the Ninth Circuit erred … in failing to recognize that the copyright statute of limitations, section 507(b), itself takes account of delay” in that “no recovery may be had for infringement” that occurred prior to the three year period.  Essentially, “profits made in those years remain the defendants to keep.”   She continued by recognizing that laches was an equitable remedy and that the Court must “adhere to the position that, in face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.”

Justice Ginsburg then turned to each of the arguments raised by MGM and rejected each of them in turn.  MGM’s primary argument was that “the defense of laches 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.”  In this case, plaintiff apparently admitted that she waited to see whether the Raging Bull movie would make any money since it was initially “deeply in debt.”  The Ninth Circuit had accepted this argument and “faulted Petrella for waiting to sue until the film Raging Bull ‘made money’.”  The Supreme Court held, however, that there was nothing wrong “about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on the original work, or even compliments it.”  For instance, the Supreme Court observed that the act of infringement may be so minor that it would not “justify the cost of litigation.”  The Court was concerned that adopting MGM’s position would result in numerous copyright infringement cases being filed “fast to stop seemingly innocuous infringements.”

MGM also argued that the laches helped protect those instances where relevant evidence that would be needed to prosecute or defend the action would be lost by an unwarranted delay in prosecuting the infringement claim.  Justice Ginsburg noted that this danger cut both ways; if plaintiff delayed prosecuting a claim for copyright infringement, certain evidence may be lost that could support such a claim.

The Court finally noted that although the defense of laches may not be available to bar legal remedies in an action brought within the statute of limitations, a defendant had available the defense of estoppel.  The Court noted that “when a copyright owner engages in intentionally misleading representations concerning his abstention from suit, and the alleged infringer detrimentally relies on the copyright owner’s deception, the doctrine of estoppel may bar the copyright owner’s claims completely, eliminating all potential remedies.”

The Court held that because plaintiff had filed her claims within this three year statute of limitations, the Ninth Circuit erred in treating laches as a complete bar to her infringement suit.  The Court noted, however, that to the extent that plaintiff was seeking equitable relief, i.e., the disgorgement of unjust gains and an injunction against future infringement, “the District Court in determining appropriate injunctive relief and assessing profits, may take account of her delay in commencing suit.”  Furthermore, the lower court “should closely examine MGM’s alleged reliance on Petrella’s delay .… [including] MGM’s early knowledge of Petrella’s claims, the protection MGM might have achieved through pursuit of a declaratory judgment action, the extent to which MGM’s investment was protected by the separate – accrual rule, [and] the court’s authority to order injunctive relief.”  Thus, while the Supreme Court held that laches was not a complete bar to plaintiff’s infringement claims, its elements could come into play in determining the proper scope of remedies to be awarded to plaintiff.

Justice Breyer, Chief Justice Roberts and Justice Anthony Kennedy joined in dissenting to the opinion and held that the Ninth Circuit had correctly applied the doctrine of laches.  They began their dissent by a citation to an old decision by Judge Learned Hand, who reasoned that it may well be “inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success.”

The U.S. Supreme Court’s decision brings some clarity to the conflict between various decisions of the Circuit Court of Appeals.  The doctrine of laches will no longer operate as a complete bar to infringement claims brought within the statute of limitations.  However, as the Court noted, elements of laches may bear on the Court’s determination of appropriate relief in such cases.