Court Considers If Laches Can Bar Copyright Claims Brought Within Statute of Limitations

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By Tamlin H. Bason  

Jan. 21 --The Supreme Court on Jan. 21 heard oral argument in Petrella v. Metro-Goldwyn-Mayer, Inc., No. 12-1315 (U.S., argued Jan. 21, 2014), which involves a copyright dispute over the 1980 Martin Scorsese film “Raging Bull,” a biographical drama featuring Robert DeNiro in the role of Jake LaMotta, a championship boxer in the 1940s and 1950s.

The issue--whether and to what extent laches can bar copyright infringement claims that are brought within the relevant statute of limitations period--has splintered the circuit courts, and the justices appeared to be struggling over various “unique” attributes of copyright law that seem to frustrate the traditional balance between the common law equitable defense and the statute of limitations that was created by Congress.

Screenplay Based on Boxer's Life

LaMotta and Frank Peter Petrella, his long-time friend and collaborator, wrote a total of three works about Lamotta's life and career: a screenplay registered in 1963, a memoir registered in 1970 and a second screenplay registered in 1976.

In 1976, LaMotta and Petrella assigned the rights in the memoir and screenplays to Metro-Goldwyn-Mayer Inc.'s predecessor in interest.

Petrella died in 1981 and in 1991 his daughter, Paula Petrella, secured the renewal rights for the 1963 screenplay. For years the younger Petrella communicated with MGM, asking that the studio cease its exploitation of the film and threatening legal action if the exploitation continued. However, she did not file a lawsuit until 2009.

The U.S. District Court for the Central District of California granted MGM summary judgment, finding that Petrella's claims were barred by the doctrine of laches. The U.S. Court of Appeals for the Ninth Circuit affirmed. 695 F.3d 946, 104 U.S.P.Q.2d 1144 (9th Cir. 2012) (182 PTD, 9/20/12). Under the separate accrual rule, a separate claim accrues each and every time the copyright is infringed. But the Ninth Circuit rejected as irrelevant Petrella's reliance on the separate accrual rule, which she invoked to only seek redress for infringing conduct that took place within three years of the filing of her complaint Since Petrella waited 18 years before filing suit, even claims that accrued between 2006 and 2009 were barred by the doctrine of laches, the Ninth Circuit held.

The Supreme Court granted certiorari on the question:

Whether the nonstatutory 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).  


“This court has never applied laches to constrict a federal statute of limitations.”

 

--Stephanos Bibas, University of Pennsylvania Law School

Circuit Courts 'Intractably Divided.'

In Petrella's petition for certiorari she outlined an “entrenched” circuit split on the issue of whether laches can bar infringement claims that are brought under the statute of limitations. Anchoring one side of that split is the Ninth Circuit, which, according to Judge William A. Fletcher who concurred with the decision below, “is the most hostile to copyright owners of all of the circuits.”

Judge Fletcher noted that the hostility originated inDanjaq LLC v. Sony Corp., 263 F.3d 942, 59 U.S.P.Q.2d 1880 (9th Cir. 2001) (62 PTCJ 435, 9/14/01), when the court held that if a defendant is prejudiced by a plaintiff's unreasonable delay in bringing a copyright infringement action then the claim may be barred by laches, notwithstanding that it may be allowable under the statute of limitations. Notably, Danjaq held that laches can bar both equitable and legal relief.

The Fourth Circuit is on the opposite end of the spectrum, exalting Congress' explicit intent, as evidence in Section 507(b), over the common law doctrine. Indeed, Lyons Partnership LP v. Morris Costumes Inc., 243 F.3d 789, 58 U.S.P.Q.2d 1102 (4th Cir. 2001), held that the “separation of powers” precludes a court from allowing a judicially created doctrine, laches, to bar a claim that falls within the statute of limitations.

The remaining circuit courts that have considered the issue have fallen somewhere in the middle. The Eleventh Circuit, for instance, said that there is a “strong presumption” against allowing laches to bar a timely filed copyright infringement suit. Peter Letterese & Assocs. v. World Institute of Scientology Enters., Intl., 533 F.3d 1287, 87 U.S.P.Q.2d 1563 (11th Cir. 2008) (136 PTD, 7/16/08).

The Sixth Circuit likewise permits laches as a defense in only “the most compelling of cases,” Chirco v. Crosswinds Communities Inc., 474 F.3d 227, 81 U.S.P.Q.2d 1414 (6th Cir. 2007) (09 PTD, 1/16/07), and the Tenth Circuit allows laches for the “rare case,” Jacobsen v. Deseret Book Co., 287 F.3d 936, 62 U.S.P.Q.2d 1491 (10th Cir. 2002) (91 PTD, 5/10/02).

During oral argument, MGM's attorney, Mark A. Perry of Gibson, Dunn& Crutcher LLP, tried to downplay the circuit split. With respect to copyright cases, laches “has been applied in every circuit except the Fourth, which doesn't get very many copyright cases,” Perry said. He noted that in fact nearly 90 percent of all copyright cases were filed in the Second and Ninth Circuits. Justice Sonia Sotomayor, however, rejected Perry's attempt to paint the Fourth Circuit as the outlier.

With respect to the Second, Sixth, Tenth and Eleventh Circuits, “I thought those circuits announced laches are available, but only in exceptional circumstances,” she said. Moreover, she said that she was not aware of any of circuit courts--apart from the Ninth Circuit--that have actually used laches to bar a copyright infringement claim.

Government, Petrella Decry 'Presumption' of Laches.

Not only is the Ninth Circuit on its own in allowing laches without restriction, but it actually seemed to broaden a defendant's entitlement to relief under the doctrine when it affirmed summary judgment in MGM's favor below. To Petrella's dismay, that broadening was a result of the court's apparent adoption of a standard established in a trademark case.

Quoting Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 997, 79 U.S.P.Q.2d 1545 (9th Cir. 2006) (144 PTD, 7/27/06), a trademark case, the Ninth Circuit said:

“[I]f any part of the alleged wrongful conduct occurred outside of the limitations period, courts presume that the plaintiff's claims are barred by laches.”  

 

In her brief, Petrella lambasted the “conflation of trademark and copyright law.” Echoing her criticism of the Ninth Circuit's decision was the government. In an amicus curiae brief in support of Petrella, the Office of the Solicitor General said that “the court of appeals' invocation and application of that presumption was flawed in several respects.”

For one thing, laches is an affirmative defense, and as such the burden rests on the defendant to establish its entitlement to protection under the doctrine, the government said. By presuming that a timely infringement claim is barred by laches, the Ninth Circuit failed to give weight to congressional intent.

Moreover, the Ninth Circuit's holding means that an initial infringing action will trigger the start of the statute of limitations period, the government said. It said:

Under the court of appeals' rule, if a copyright holder does not bring suit for an infringing act within three years after the infringement first occurs, she has presumptively slept on her rights and can never again seek to enforce her copyright for any further violations committed by the defendant, regardless of how long the copyright's term continues after that point.  

 

Since laches is a common law doctrine, it can be used to bar equitable remedies but not legal remedies, the government said.

Perry was quick to dismiss the criticism leveled at the Ninth Circuit's “presumption” language. “The Ninth Circuit articulated, although we submit, did not apply” the presumption rule below, Perry said during oral argument.

MGM's Brief: Statute Did Not Erode Equitable Doctrines

The Copyright Act, unlike the Lanham Act, contains no language specifically authorizing the use of common law equitable defenses against claims of infringement. But, this silence should in no way be treated as a rejection of those equitable principles, MGM said in its brief. Indeed, although not mentioned, Congress fully intended for courts to apply laches in copyright cases, MGM said.

Accordingly, the district court and the Ninth Circuit did not err in finding Petrella's claims barred by laches, MGM argued. MGM noted that between 1991 and 2009 it spent upwards of $8.5 million to market the film. Those expenditures, MGM argued, constitute prejudice since the investments would not have been made had MGM known that Petrella was going to file an infringement suit. In its brief, MGM said:

Allowing petitioner's claim to go forward would be an invitation for copyright trolls to wait for productive entities, like respondents, to invest enough to make a work profitable before filing suit.  

Separate Accrual, Long Terms Make for 'Unique Statute.'

“This court has never applied laches to constrict a federal statute of limitations,” Petrella's attorney, Stephanos Bibas of the University of Pennsylvania Law School Supreme Court Clinic, said in his first breath during oral argument. It was a point that he would circle back to many times, but some of the justices seemed concerned with how an absolute bar on laches would impact copyright litigation.


“It is absolutely undisputed, I would think, or indisputable at least, that the rule proposed by petitioner would lead to more litigation.”

 

--Mark A. Perry, Gibson, Dunn & Crutcher LLP

For instance, Justice Elena Kagan said:

I would have thought that there was something in the copyright context that cuts against you, and that's that because of this separate accrual rule and the feature of these rolling statutes of limitations combined with very, very lengthy copyrights terms, that essentially [mean] a plaintiff [might] not bring suit for years, decades and time the suit in order to maximize her own gain. That strikes me as something that we don't usually see in statute of limitations cases. I mean, you don't have very many cases where courts have applied laches as against the statute of limitations, but that's because you can't think of many instances in which it would be considered unfair to take the entire statute of limitations to bring a suit.  

 

A similar exchange took place between Justice Stephen G. Breyer and Nicole A. Saharsky, assistant to the Solicitor General, who was urging the court to adopt the government's position that laches can apply even where Congress had legislated a statute of limitations, but only to bar equitable and not legal relief. Saharsky said that the government was aware of no situation where the Supreme Court recognized laches as a defense to a legal remedy.

“That's not surprising, because to show laches, you have to show unreasonable delay plus reliance,” Breyer said. “So normally, it won't be unreasonable within a limitation period, but this is a unique statute. The uniqueness is not in the words, but in the facts. And therefore, the uniqueness is that it's rolling.”

A Cousin or a Twin of Estoppel?

“Why isn't laches just a first cousin of estoppel?” Justice Anthony M. Kennedy asked Saharsky.

She said that one distinguishing characteristic is that laches is historically grounded solely in equity. Thus, she argued that the court should follow those historical guidelines and allow laches to bar equitable but not legal relief.

Though not asked about the relationship between laches and estoppel, Perry nonetheless proffered his opinion. Laches and other equitable doctrines such as estoppel and the tolling of statute of limitations periods “travel together,” he said. “They are not cousins, Justice Kennedy, they are fraternal twins. You don't get one without the other.”

Justices Breyer and Scalia also challenged the notion that courts look to some equitable doctrines but not others. For instance, Breyer noted that the language in tolling and laches sound the same, and he also noted that courts have frequently applied tolling and the discovery rule in order to lengthen a particular statute of limitations.

“Why would we apply those and not apply the shortening ones too?” Breyer asked.

Bibas said that those “timeliness doctrines” were in fact developed to interpret an already existing statute of limitations. You cannot have a tolling or discovery rule without a limitations period to interpret,” Bibas said. Laches on the other hand has never been used in conjunction with the interpretation of a relevant statute of limitations, Bibas said.

“But [tolling and the discovery rule] originated in equity, just as laches did,” Scalia said. What troubles me about this case is this: Did the adoption of the new Rules of Federal Procedure disable courts from bringing over anything else from equity into law?”

Perry echoed Scalia's concern, saying:

This court has never said in the modern era that any of the traditionally equitable defenses, and there are eight of them listed in Rule 8, is not available in an action that historically would have been at law.  

 

'Dearth of Cases' v. Status Quo

Kagan, in an exchange with Perry, offered a possible explanation for why there is scant case law on the issue.

“I think the dearth of cases on this is probably explainable by the fact that people just haven't thought that they had a laches defense when a plaintiff brought a suit within a statute of limitations period,” Kagan said. “If we open this all up, we'll be seeing motions that nobody ever dreamed of before.”

Perry however, posited that the reality is in fact the opposite. A ruling for MGM preserves the status quo where a ruling “announc[ing] for the first time in its history that this equitable doctrine is not available,” would result in a flood of preemptive actions whereby defendants would look to clarify their rights, he said.

“It is absolutely undisputed, I would think, or indisputable at least, that the rule proposed by petitioner would lead to more litigation,” Perry said. “Our rule leads to less.”

 


Text or oral argument available at http://www.supremecourt.gov/oral_arguments/argument_transcripts/12-1315_09m1.pdf.

 

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com