Has the Supreme Court Delivered a Knock-Out Blow to the Entertainment Industry?

And so the sparring will go another round. On May 19th the United States Supreme Court delivered its decision on Patrella v Metro-Goldwyn-Mayer, allowing Paula Petrella to pursue her copyright infringement claim against MGM Studios despite her decision to wait 18 years to file suit. As a result, the Supreme Court has essentially informed the entertainment industry that studios and producers may be looking over their shoulders for years to come, potentially being hit with copyright claims decades after a work is released.

The Background to the Battle

According to the decision, Frank Petrella co-wrote a screenplay about boxer Jake LaMotta in 1963. When Frank Petrella passed away, renewal rights reverted to his heirs. Consequently, his daughter Paula renewed the copyright in 1991. However, LaMotta’s life had been put on film in 1980 in Martin Scorsese’s Oscar-winning movie Raging Bull. In 1998 Petrella advised MGM that Raging Bull infringed her copyright, but did not sue until January 6, 2009. MGM argued in response that the equitable doctrine of laches prevented Petrella from seeing through her lawsuit as her 18 year delay in filing the claim was unreasonable and prejudicial. The District Court and Ninth Circuit Court of Appeals agreed with MGM, but as we see here, the Supreme Court did not.

The Majority’s Strike

Justice Ginsburg delivered the opinion of the Court, noting that 17 USC §507(b) of the Copyright Act provides that “[n]o civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued.” The Court found that the equitable defence of laches could not be invoked to preclude an action brought within a federally prescribed limitation period. Therefore, since Petrella was not seeking relief for conduct that occurred outside the limitation period, and was only addressing acts of infringement occurring on or after January 6, 2009, the lower courts’ decisions to bar her suit on the basis of laches were overturned. Justice Ginsburg did, however, acknowledge that the doctrine and a plaintiff’s delay in filing suit could still play a role in regards to equitable relief and when considering what an appropriate remedy may be.

The most powerful blow to the entertainment industry however was Justice Ginsburg’s declaration that Petrella’s decision to hold off on suing MGM until the film made money was not a wrongdoing.  Justice Ginsburg argued that “there 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.” According to Justice Ginsburg, the limitation period allows a copyright owner to “defer suit until she can estimate whether litigation is worth the candle.” Essentially, knowing that your copyright has been infringed but waiting to see if the infringing work is profitable is not a reason to be barred from pursuing a claim – no matter how many years ago the infringement occurred.

The Dissenters Enter the Ring

For the dissenting judges, Justice Ginsburg’s decision “disables federal courts” from dealing with the unfairness that can arise in the “unjust hardship” created on a party by another that “unreasonably delays [filing] a suit.” Such hardships could include situations where a claim is made for a film released so far in the past that witnesses and evidence that could be crucial to a defendant’s ability to prove their case are no longer around.

In my opinion, the dissent’s discussion of section 17 USC §504(b), which is recognized by the majority as a tool to ensure fairness in awarding damages, was very convincing.  §504(b) only allows a plaintiff to recover profits attributed to the infringement in question, and only those profits less “deductible expenses incurred in generating those profits.” However, the dissent rightly notes that fairness is not guaranteed. A plaintiff’s purposeful delay could mean that by the time a claim is filed the defendant may have recovered the majority of his or her expenses. Thus, a defendant that has devoted years to producing a work can lose their future profit stream to the plaintiff who waited in the shadows for the work to move out of the red, the plaintiff who will make more now than they would have had royalties and a licence been negotiated at the onset.

The Aftermath

Petrella is not just a bold statement about the doctrine of laches, but also greatly impacts the entertainment industry as it functions today. Movie studios, for example, will always be wondering if the film they put out twenty years ago may be subject to a lawsuit tomorrow. This may not be a bad thing however. According to lawyer William Kane: “Now [studios] are going to have to be more vigilant, search their titles more, communicate more with copyright holders.” Copyright holders in turn will have to be more aware of the practices of studios, looking out for revivals of past forgotten works. The expectation for both sides of the copyright battle to do their due diligence in the creation of future works is in my opinion a happy consequence.

It is not yet clear how the decision may impact pending copyright infringement concerns for works already in existence. Commentators have discussed what the ruling might mean for the current infringement claim against  Led Zepplin relating to their song “Stairway to Heaven”, and whether Stan Lee Media Inc. may be able to assert ownership over Marvel characters – a claim that has been dismissed in the past as “time-barred”. Lawyer Dylan Ruga believes that, “We can expect a flood of new lawsuits based on purported infringement of films, television programs, music and other copyrighted materials that were created decades ago but are still exploited today.” A statement all so true in this era of revivals and re-releases (exactly how many Spidermans have there been?)

Concluding Thoughts

I think it is a positive consequence of the ruling that both large studios and individual creators alike will now have an increased level of accountability when it comes to being aware of each other’s actions when releasing new works.  However, with no way to shut out old claims, organizations may find themselves digging through files in an attic in order to defend against lawsuits for works possibly released before the company’s lawyers were born. In a way, there will be no sense of finality or completeness in the entertainment industry if creative works are forever vulnerable to lawsuit. What’s immortalized through film or script or song will essentially also live forever in the eyes of the law.

Jaimie Franks is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.