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Petrella Knocks Out MGM’s Laches Claim: Supreme Court Gives Raging Bull Heir New Day in Court

· May 19, 2014

Last year I wrote on the question: ‘how long can copyright holders wait to sue?’  The issue animated a case decided by the Supreme Court today, Petrella v. MGM, where the plaintiff had waited 18 years to file her suit.

The quick answer, of course, is that copyright’s statute of limitations (17 U.S.C. 507(b)) is three years.  (A statute of limitations is what it sounds like: it is the part of the law that limits how long a plaintiff has to file a civil lawsuit.  After that time has elapsed, they are out of luck.)  The more complicated answer, at issue in this case, is that a copyright holder can wait a very, very long time, provided the infringement is ongoing.  Petrella inherited the rights to renew her father’s two screenplays and memoir about his friend, champion boxer Jake LaMotta, later adapted into the Academy Award-winning Scorsese/De Niro film Raging Bull, but then didn’t bring suit for nearly two decades.

MGM invoked laches, arguing that Petrella should lose since she unfairly delayed in bringing her claim.  Laches is an equitable doctrine, an ancient rule of fairness.  It represents the idea that plaintiffs shouldn’t be allowed to benefit from their own delay.  It isn’t part of the Copyright Act, but rather a general principle.  Two lower courts sided with MGM’s argument, but the Supreme Court reversed today in a 6-3 decision by Justice Ginsburg.

It is somewhat curious that the Supreme Court comfortably imports some common law principles into copyright, such as doctrines associated with secondary liability, but not others, such as the equitable application of laches here.  Still, the decision is not entirely surprising; it adheres to the plain text of the Copyright Act.  Further, as I previously noted, the fact that MGM had allegedly engaged in some “Hollywood accounting” to hide royalties – perhaps thereby leading Petrella to delay her suit – certainly didn’t help its case.

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.”  (To my knowledge, Supreme Court opinions don’t have a comment section.)

It is an interesting argument to support the point that a shorter “shot clock” on copyright suits would lead to inefficient cases being brought:

“…[T]here is nothing untoward 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 complements it. Fan sites prompted by a book or film, for example, may benefit the copyright owner.”  (citing Tim Wu’s 2008 law review article, Tolerated Use).

Allowing a plaintiff to “defer suit until she can estimate whether litigation is worth the candle”, Justice Ginsburg concludes, is desirable if it means a rights holder need not initiate federal litigation to stop every “innocuous” infringement.  Although no doubt some would argue with the implicit assumption in Ginsburg’s opinion that all fan sites infringe, there is an interesting insight that the actual cost of an infringement may vary over time, and may even at times be positive to the rights holder.

Even if the choice to bring suits is exercised more efficiently, however, that does little to abate some of the concerns voiced by MGM, many of its supporters, and the three Justices in the minority: suits may not be brought decades after the infringement occurs.  This means that suits like Syl Johnson’s against 80s and 90s-era samplers can continue, even though witnesses and records may be lost regarding these quarter-century-old songs.  Similarly, threats of litigation over whether Led Zeppelin’s 1971 Stairway to Heaven infringed another artist’s work may well now become a full-fledged suit.  The dispute over this 43-year-old classic is ably covered by the IPKat today.

Given the basic copyright term is the life of the author + 70 years, it is entirely possible that a suit could be brought a century after publication, so long as the use continues.  Whether this will deter large studios like MGM from investing in producing films, as the studio suggested, is unclear.  The perpetual risk seems far more likely to influence smaller studios and creators, however, who lack the resources to hedge against such business risk.  It will also inhibit technology start-ups for the same reason.  As we’ve covered in the past, copyright infringement is a common response to disruptive innovation, such as in the case of home-recording and DVRs.  We’ve seen software copyright long used by platforms to fend off competitors from inter-operating, and copyright terms are longer than software is old.  The prospect of innovative disruptors being sued for copyright is always present; today’s Petrella decision means that once that risk has accrued, it may never fully dissipate.  This fact will not escape investors and lenders.  In the long run, this legal uncertainty may be a high price to pay for the benefits perceived by today’s majority.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.