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U.S. Supreme Court Upholds Statute That Restored Copyrights of Foreign Works Previously in the Public Domain

Thursday, January 26, 2012

Jessica McKinney | Bloomberg Law Golan v. Holder, No. 10-00545, 2012 BL 12206 (U.S. Jan. 18, 2012) In a significant decision with potentially far-reaching effects, the U.S. Supreme Court upheld the constitutionality of Section 514 of the Uruguay Round Agreements Act of 19941 ("URAA"), which restored the copyrights in millions of foreign works that were previously in the public domain in the United States for various reasons. In finding that Section 514 violated neither the First Amendment nor the Copyright Clause of the U.S. Constitution, the Court, in a 6-2 decision authored by Justice Ginsburg,2 held that the public domain is not "a territory that works may never exit."3 The Court's opinion was largely informed by its prior decision in Eldred v. Ashcroft,4 in which it upheld the constitutionality of the Copyright Term Extension Act under both the Copyright Clause and the First Amendment. In determining that Congress had the authority under the Copyright Clause to enact Section 514, the Court found nothing in the Clause's text, historical practice, or its own precedents to compel a contrary conclusion. The Court also determined that Section 514 did not merit heightened First Amendment scrutiny, and in doing so, clarified that the "traditional contours of copyright protection"5 referenced in Eldred only encompass the idea-expression dichotomy and fair use defense, neither of which were disturbed by Section 514. Ultimately, the Court concluded that Congress's reasons for enacting Section 514—namely, (1) to ensure exemplary compliance with the Berne Convention for the Protection of Literary and Artistic Works ("Berne" or "Berne Convention"); (2) to secure greater protection for U.S. authors' copyrights abroad; and (3) to remedy unequal treatment of foreign authors in the U.S.—were "well within the ken of the political branches."6 Justice Breyer filed a dissenting opinion, in which Justice Alito joined. Breyer emphasized that the statute does not encourage the creation of new works and inhibits the dissemination of old works that have already entered the American public domain. As such, Breyer would have found that the Copyright Clause, interpreted in light of First Amendment principles, did not authorize Congress to enact Section 514.

Section 514 of the URAA / Corresponding Provisions in the Copyright Act

The United States implemented Section 514 of the URAA—codified in Sections 104A and 109 of the Copyright Act—to comply with its obligations under Berne, a multilateral treaty (first signed in 1886) that the U.S. joined in 1988.7 Section 514 automatically "restores" the copyrights in certain foreign works that were previously in the public domain in the United States. Foreign works are eligible for restoration if they would have enjoyed copyright protection in the U.S. but for: (1) failure to comply with U.S. statutory formalities; (2) lack of subject matter protection for sound recordings fixed before 1972; or (3) lack of copyright relations between the country of origin and the U.S. at the time of publication.8 A copyright in a restored work subsists for the remainder of the term that the work would have been granted in the U.S. if it had never entered the public domain.9 Section 514 provides certain accommodations for "reliance parties," i.e., persons who relied on the public domain status of foreign works and exploited those works prior to restoration.10 First, in order to enforce rights in a restored copyright, the owner must serve notice of this intention, either by filing a notice with the U.S. Copyright Office within two years of restoration or by directly notifying a reliance party.11 The reliance party may then continue to exploit the work (including selling or otherwise disposing of it) during the 12 month grace period following receipt of notice, but may not make additional copies of the work during this time.12 A reliance party may also continue to exploit a derivative work that is based upon a foreign work during the duration of the restored copyright, so long as the reliance party pays reasonable compensation to the copyright owner.13 If the parties cannot agree on what amount constitutes "reasonable compensation," the rate must be determined by a district court.14

The Underlying Decisions

Petitioners—including orchestra conductors, educators, performers, film archivists, and motion picture distributors who had freely used works that Section 514 removed from the public domain prior to its enactment—filed a lawsuit in 2001 challenging the constitutionality of the law under the Copyright Clause and the First Amendment. The district court initially granted summary judgment to the government as to both claims, but on appeal, the U.S. Court of Appeals for the Tenth Circuit reversed in part. The Tenth Circuit found that although Section 514 fell within Congress's power under the Copyright Clause, Section 514 should be subjected to First Amendment scrutiny because it "altered the traditional contours of copyright protection," specifically, the "bedrock principle of copyright law that works in the public domain remain there."15 The Tenth Circuit remanded the case for the district court to assess the First Amendment claim in light of its decision. On remand, the district court granted summary judgment to the petitioners. The court first determined that Section 514 was a content-neutral restriction on speech that is subject to intermediate judicial scrutiny, and thus should be upheld if "narrowly tailored to serve a significant government interest."16 The court concluded that none of the government's asserted interests—i.e., compliance with Berne, securing greater copyright protection for U.S. authors abroad, or remediating the inequitable treatment of foreign authors in the U.S.—justified the passage of Section 514. The Tenth Circuit reversed, holding that Section 514 survived intermediate scrutiny and, therefore, did not violate the First Amendment. Specifically, the Tenth Circuit found that Section 514 was narrowly tailored to the government's important interest in protecting U.S. authors' copyrights abroad. It also emphasized that Congress is afforded considerable deference when making predictive judgments in the realm of foreign relations and diplomacy.17 Petitioners appealed the ruling to the Supreme Court.18

Congress Had Authority under the Copyright Clause to Enact Section 514

The Court first addressed petitioners' Copyright Clause argument. The Copyright Clause provides that "Congress shall have Power . . . [t]o promote the Progress of Science . . . by securing for limited Times to Authors . . . the exclusive Right to their . . . Writings."19 While petitioners argued that Congress lacked authority to extend copyright protection to works in the public domain, the Court found that neither the text of the Copyright Clause, historical practice, nor its precedents compelled this conclusion. — Text of the Copyright Clause Petitioners contended that removing works from the public domain "violates the 'limited [t]imes' restriction by turning a fixed and predictable period into one that can be reset or resurrected at any time, even after it expires."20 Citing its decision in Eldred, the Court disagreed. In Eldred, the Court upheld the constitutionality of the Copyright Term Extension Act, which extended the terms of existing copyrights by 20 years, against a Copyright Clause challenge (as well as a First Amendment challenge). In doing so, the Court declined to infer from the "limited Times" language "the command that a time prescription, once set, becomes forever 'fixed' or 'inalterable.'"21 Instead, the Court construed "limited" to mean "confine[d] within certain bounds," "restrain[ed]," or "circumscribed."22 While petitioners attempted to distinguish Eldred by arguing that the foreign works at issue had a term set to zero, and thus that the limited time for protection had already passed, the Court found "scant sense" in this distinction, "for surely a 'limited time' of exclusivity must begin before it may end."23 The Court dismissed petitioners' concern that Congress could theoretically keep extending copyright terms following their expirations, resulting in a system of perpetual copyrights. "In aligning the United States with other nations bound by the Berne Convention, and thereby according equitable treatment to once disfavored foreign authors," the Court stated, "Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights."24 The second textual argument advanced by petitioners concerned the Copyright Clause's mandate that Congress "promote the Progress of Science" by creating a system of copyright protection. Petitioners asserted that because Section 514 of the URAA only affects preexisting works, it provides no incentive to create new works, and thus violates the Copyright Clause. The Court held, however, that the Clause's ends can be attained by either the creation or dissemination of knowledge and learning. While "[t]he provision of incentives for the creation of new works is surely an essential means to advance the spread of knowledge and learning . . . it is not the sole means Congress may use '[t]o promote the Progress of Science.'"25 In support of this conclusion, the Court noted that nothing in the text of the Copyright Clause limits the "Progress of Science" to only incentives for creation. Further, evidence from the founding suggested that inducing dissemination was a permissible way to promote science, and until 1976, federal copyright protection could only be obtained by publishing one's work. "Considered against this backdrop," the Court reasoned, "§ 514 falls comfortably within Congress' authority under the Copyright Clause. Congress rationally could have concluded that adherence to Berne promotes the diffusion of knowledge . . . [as a] well-functioning international copyright system would likely encourage the dissemination of existing and future works."26— Historical Practice Petitioners argued that in Eldred, an "unbroken congressional practice" supported Congress's extension of existing copyright terms, whereas in the instant case, no such practice existed with respect to works in the public domain.27 The Court acknowledged that federal legislation has generally not affected public domain works, but cited a number of instances to the contrary. First and foremost, the Court noted that the Copyright Act of 1790 (the first such federal Act) granted protection to many works previously in the public domain, including maps, previously published books, and works that failed to comply with the relevant state formalities.28 "The First Congress, it thus appears, did not view the public domain as inviolate"—a finding to which the Court ascribed "'very great weight.'"29 The Court also cited various other copyright and patent statutes, including: (1) several private bills (unchallenged in court) that restored copyright protection to works in the public domain; (2) analogous patent bills that were upheld by the courts; and (3) generally applicable legislation that bestowed patent and copyright protection on inventions and works that had lost such protection due to (i) mistake or inadvertence in complying with statutory formalities or (ii) World Wars I and II. While the Court conceded that the wartime statutes and Congress's initial creation of a federal copyright regime were "extraordinary situations," it declined to "second-guess the political choice Congress made between leaving the public domain untouched and embracing Berne unstintingly."30 Petitioners also cited Graham v. John Deere Co. of Kansas City for the proposition that "Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available." 31 The Court explained, however, that this statement was dictum and, in any event, merely "'addressed an invention's very eligibility for patent protection.'"32

Section 514 Does Not Violate the First Amendment

— No Heightened Scrutiny In addressing petitioners' First Amendment argument, the Court relied on, and clarified, what it characterized as its "pathmarking decision" in Eldred.33 The Court noted that in Eldred, it recognized that the "Copyright Clause and the First Amendment were adopted close in time," and that the Framers viewed copyright protection as not only limiting the use of expressive works, but also as supplying an "economic incentive to create and disseminate ideas" through "establishing a marketable right to the use of one's expression."34 The Eldred Court stated that First Amendment scrutiny is unnecessary when Congress "has not altered the traditional contours of copyright protection."35 Significantly, the Court now clarified that the "traditional contours of copyright protection" refer exclusively to the idea-expression dichotomy36 and the fair use defense, 37 which it has described as "built-in First Amendment accommodations" and "speech-protective purposes and safeguards."38 Because Section 514 did not alter the idea-expression dichotomy or the fair use defense, the Court declined to apply a heightened standard of review to the statute. The Court also noted that Congress "adopted measures to ease the transition from a national scheme to an international copyright regime: It deferred the date from which enforcement runs, and it cushioned the impact of restoration on 'reliance parties' who exploited foreign works denied protection before § 514 took effect."39— No First Amendment Violation Petitioners attempted to distinguish Eldred by arguing that they had "vested rights" in the public domain works at issue, and hence greater speech interests at stake, and that Section 514's "unprecedented" intrusion into the public domain lacked "the historical pedigree that supported the term extension at issue in Eldred."40 The Court noted that these arguments depended on the premise that the public domain is inviolable, which it had already rejected. In addition, "nothing in the historical record, congressional practice, or our own jurisprudence warrants exceptional First Amendment solicitude for copyrighted works that were once in the public domain."41 The Court took issue with petitioners' contention that they had "vested rights" in works in the public domain, explaining that "[a]nyone has free access to the public domain, but no one, after the copyright term has expired, acquires ownership rights in the once-protected works."42 The Court also emphasized that neither Eldred nor the instant case involved allegations that Congress violated "a generally applicable First Amendment prohibition," such as "copyright protection that hinges on the author's viewpoint."43 Petitioners argued that the First Amendment safeguards identified by the Court—i.e., the idea-expression dichotomy and the fair use defense—were inadequate speech protections. "Playing a few bars of a Shostakovich symphony," petitioners reasoned, "is no substitute for performing the entire work."44 The Court noted, however, that Section 514 does not completely prohibit public access to the works at issue. "The question here, as in Eldred," the Court explained, "is whether would-be users must pay for their desired use of the author's expression, or else limit their exploitation to 'fair use' of that work. Prokofiev's Peter and the Wolf could once be performed free of charge; after § 514 the right to perform it must be obtained in the marketplace."45 The Court further noted that Congress has often extended copyright protection to once unprotectable subject matter, including foreign works in 1891, dramatic works in 1856, photographs in 1865, motion pictures in 1912, fixed sound recordings in 1972, and architectural works in 1990. "If Congress could grant protection to these works without hazarding heightened First Amendment scrutiny," the Court queried, "then what free speech principle disarms it from protecting works prematurely cast into the public domain for reasons antithetical to the Berne Convention?"46 In response to the dissent's concern over "orphan works"—i.e., older works whose copyright owners are difficult or impossible to locate—the Court observed that the orphan works problem is not confined to the Section 514 context, and in any event, that the problem should be addressed by legislators, not the judiciary. "Our unstinting adherence to Berne may add impetus to calls for the enactment of such legislation. But resistance to Berne's prescriptions surely is not a necessary or proper response to the pervasive question, what should Congress do about orphan works."47 Ultimately, the Court concluded that Congress's reasons for enacting Section 514—namely, (1) to ensure exemplary compliance with Berne; (2) to secure greater protection for U.S. authors' copyrights abroad; and (3) to remedy unequal treatment of foreign authors in the U.S.—were "well within the ken of the political branches," and thus that Section 514 did not violate either the First Amendment or the Copyright Clause.48

Justices Breyer and Alito Dissent

In a dissenting opinion joined by Justice Alito, Justice Breyer argued that Congress lacked the authority under the Copyright Clause to enact Section 514. Breyer contrasted the philosophies underlying the copyright regimes of the United States and Europe. While Europe generally adheres to a "natural rights" view, Breyer explained, the U.S. has long embraced a utilitarian view, which "understands copyright's grants of limited monopoly privileges to authors as private benefits that are conferred for a public reason—to elicit new creation."49 Breyer noted that Section 514 "does not encourage anyone to produce a single new work."50 Instead, Section 514 bestows monetary rewards only on owners of old works—works that have already been created and already are in the American public domain. At the same time, the statute inhibits the dissemination of those works, foreign works published abroad after 1923, of which there are many millions, including films, works of art, innumerable photographs, and, of course, books—books that (in the absence of the statute) would assume their rightful places in computer-accessible databases, spreading knowledge throughout the world.51 Breyer provided two examples of how Section 514 restricts dissemination of the affected works, which he characterized as speech-related harms. First, restored copyright holders may now charge license fees for works that were once free to use, fees which may prove to be prohibitive. Second, the statute imposes administrative costs in determining whether a work is subject to a restored copyright, locating the restored copyright holder, and negotiating a license fee. While Breyer acknowledged that Congress attempted to ease these costs for reliance parties, he noted that the statute does not address the problem with respect to orphan works, of which there are millions. According to Breyer, "[u]nusually high administrative costs threaten to limit severely the distribution and use of those works—works which, despite their characteristic lack of economic value, can prove culturally invaluable."52 Breyer conceded that copyright regimes ordinarily result in dissemination-restricting harms, which, if problematic, should usually be resolved via legislation. However, he framed the question in the instant case as "whether the Copyright Clause permits Congress seriously to exacerbate such a problem by taking works out of the public domain without a countervailing benefit"—a question which Breyer deemed appropriate for judicial resolution.53 Breyer also concluded that the aforementioned harms "at least show the presence of a First Amendment interest."54 Finally, Breyer disagreed with various aspects of the majority's opinion. Among other things, Breyer argued that: (1) congressional practice "consists of a virtually unbroken string of legislation preventing the withdrawal of works from the public domain";55 (2) the majority's conclusion that the "Progress of Science" may be promoted via dissemination was misplaced insofar as copyright ordinarily "restricts dissemination of a work once produced compared to a competitive market";56 and (3) while the U.S. may have an interest in complying with Berne, it "obtained the benefits of Berne for many years despite its failure to enact a statute implementing Article 18" and made no effort to negotiate exceptions, authorized by Article 18(3), with respect to restored works or to implement Article 18 in a manner less harmful to the public domain.57

Has the Supreme Court Eviscerated the Public Domain?

The Supreme Court's decision in Golan affects millions of foreign works that were previously in the public domain in the United States, including works by Russian composers such as Sergei Prokofiev, Igor Stravinsky, and Dmitri Shostakovich; paintings by Pablo Picasso; films by Alfred Hitchcock; and writings by authors such as George Orwell, J.R.R. Tolkien, C.S. Lewis, and Virginia Woolf. While all of these works, and countless more, could once be used freely by anyone in the public, they are now subject to the regime set forth in Section 514. If restored copyright owners decide to enforce their rights pursuant to the statute, many individuals and organizations, especially ones with limited resources, may be unable to afford licenses to use the works—a result which may ultimately impede the spread of knowledge and learning. While the Court's ruling ascribes especial importance to the U.S. complying with its international treaty obligations, and can be tempered somewhat by this backdrop, the decision does not bode well for the public domain. The Court's proclamation that neither the First Amendment nor the Copyright Clause "makes the public domain, in any and all cases, a territory that works may never exit" is a troubling statement that invites future legislative abuse. While the Court gives short shrift to petitioners' argument that perpetual copyright protection could result as a logical conclusion of this principle, the idea is not so far-fetched. Perhaps a perpetual copyright regime is the extreme result, and hence unlikely, but further copyright extensions could ensue (begging the question of how far the "limited Times" language of the Copyright Clause can be stretched), or works could again be removed from the public domain for some other reason that the Court deems a rational exercise of Congress's authority. The possibilities are endless. And with heightened First Amendment review of copyright statutes increasingly unlikely in light of the Court's clarification of the "traditional contours of copyright protection," further erosion of the public domain, and the corresponding detrimental effects to the public, could seemingly be accomplished by Congress easily enough, if it so desires, in the wake of Golan. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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