Supreme Court Says Failure to Defend Copyright Not Completely Fatal to Infringement Claims

Last week, the Supreme Court issued its opinion in Petrella v. Metro-Goldwyn-Mayer, Inc. (MGM), in a majority opinion held that the doctrine of laches could not operate to bar a claim for copyright infringement that occurred within the Copyright Act’s statute of limitation of three years. As a bit of legal background, the doctrine of laches is an equitable defense, in which a party argues that the opposing party has made an unreasonable delay in pursuing its right or claim in a way that prejudiced the party raising the laches defense — as a result of the delay, things have changed to such extent that it would not longer be just to grant the opposing party’s claim, and should therefore be barred. Laches, being an equitable defense, is typically only raised against claims for equitable relief (such as an injunction), as opposed to claims for legal relief (such as money damages). In 1967, Frank Petrella, author of the screenplay on which the movie Raging Bull was based, assigned the screenplay to a production company that ultimately assigned the motion picture rights to MGM. Under copyright law, pre-1978 works had a copyright term of 28 years that could be renewed up to 67 years. Furthermore, upon death of the author, renewal rights would revert to his or her heirs. Frank Petrella died in 1981, causing renewal rights in the screenplay to revert to his sole heir, Paula Petrella, regardless of various assignments of the screenplay. Paula Petrella did renew the copyright in 1991, and became the sole owner of the copyright at that point. In 2009, Paula Petrella brought suit against MGM for copyright infringement based on MGM’s continued exploitation of the movie based on her father’s work. As the statute of limitations for copyright infringement is three years, Petrella only sought damages for the three years prior to her suit, as well as injunctive relief to prevent future use of the work. The district court and Ninth Circuit dismissed the claims on the basis of the doctrine of laches, despite her action not being barred by the statute of limitations, given that Petrella waited nearly 30 years after Frank Petrella’s death and 20 years after renewal of the copyright to bring suit. The Supreme Court overturned the district court’s and Ninth Circuit’s rulings, holding that laches cannot bar legal relief where Congress has enacted a statute of limitations, noting that laches is primarily an equitable defense against claims in equity for which there is no time limitation. However, the Court did leave the door open just a crack when it further held that laches might be applicable in copyright infringement claims for equitable relief where “the consequences of a delay in commencing suit may be of sufficient magnitude to warrant, at the very outset of the litigation, curtailment of the relief equitably awardable.” The lesson for entrepreneurs to take away from Petrella is that just because a copyright holder hasn’t decided to defend its copyright (even for a period of decades) doesn’t mean that they won’t or can’t sue for damages, even if you have already invested time and resources in reliance on that non-action. (Of course, if a copyright holder does some affirmative action to cause you to rely on the holder’s failure to bring suit, you may be entitled to use the separate defense of estoppel). So if you want to use copyrighted material, always obtain the copyright holder’s permission, even if others have been infringing on the work with no sign of protest for years.

Leave a Reply

Your email address will not be published. Required fields are marked *