Raging Bull: The Supreme Court Knocks-Out Laches Defense For All Copyright Cases

Last May, the Supreme Court issued the Petrella v. MGM decision, a copyright case concerning the 1980 Martin Scorsese film, “Raging Bull,” documenting the boxing career of Jake Lamotta.

The issues in the case stem, in part, from how copyright duration applies to works created before 1978. The copyright act protects works copyrighted before 1978 for an initial period of 28 years, followed by a renewal period of up to 67 years.[1] When an author dies before the renewal period, the author’s heirs inherit the renewal rights. Under this circumstance, anyone who has received a grant or transfer of a copyright can only continue to use the author’s original work with a grant or transfer from the heir(s).

In this case, MGM released the movie Raging Bull using a screenplay published and copyrighted in 1963, written by Frank Petrella. Although Mr. Petrella assigned all of his rights and renewal rights in the screenplay, he died in 1981 during the initial copyright term, reverting his renewal rights to his heirs. In 1991, Mr. Petrella’s daughter, Ms. Petrella renewed the copyright becoming its sole owner. However, it took Ms. Petrella seven years to advise MGM that exploiting Raging Bull violated her copyright, and that she would sue if they continued to do so. Further, Ms. Petrella waited an additional nine years to file suit.

MGM argued that Ms. Petrella’s claims should be barred by the doctrine of laches, asserting that she unreasonably delayed the pursuit of the claim in a way that prejudiced MGM. The film did not make any money up until that point, and admittedly, Ms. Petrella waited until 2009, when she knew the film was finally making a profit, to sue. The district court and appellate court sided with MGM and dismissed her complaint, holding that it was barred by the doctrine of laches. The Supreme Court subsequently granted certiorari.

Laches Cannot Bar Copyright Claim For Damages

The Supreme Court reversed the lower court’s ruling, holding that the copyright act’s 3-year statute of limitations already takes into account the issue of delay.

Section 507 of the copyright act states that “[n]o civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”[2] The Court put forth that this statute of limitations demonstrates congressional intent to dictate the amount of time where a plaintiff may sue for copyright infringement, and that the lower courts use of laches undermines this congressional intent. The court stated, “[t]o the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period . . . courts are not at liberty to jettison Congress’ judgment on the timeliness of suit.”[3]

In contrast, the Court foundthat when Congress fails to enact a statute of limitations, then a federal court that borrows a state statute of limitations and abridges it through the doctrine of laches, is not acting contrary to congressional intent, but merely filling a “legislative hole.” In the context of copyright, Congress addressed that matter when it proscribed a three-year statute of limitations.[4]

MGM’s Laches Arguments

MGM brought forth several arguments in an attempt to convince the court that applying the doctrine of laches was an appropriate remedy. However, in each instance, the Court firmly held that the 3-year statute of limitations settled the issue.

Though MGM’s infringement had been ongoing for 18 years from the date Ms. Petrella acquired copyright ownership, the statute of limitations runs separately for each violation. Each “wrong” done by a defendant gives rise to a distinct claim, each subject to the statute of limitations. Thus, when a defendant has engaged in a series of ongoing infringing acts, the copyright holder’s suit is considered timely under § 507(b) with respect to those acts committed within the past three years, and untimely with respect to acts committed before.[5]

The Plea Is Available In Every Action

Though MGM maintained that laches is potentially available for every civil action, the Court held that the purpose of laches is gap filling, not legislative overriding. Here, the Court pointed out that it has never applied laches to bar claims in their entirety where the wrongs occurred within the federally proscribed limitation period. Thus, allowing judges to set a time limit, other than the one prescribed by Congress, would work against the uniformity Congress sought to achieve by enacting those limitations.[6]

Jack
JACK HOLCOMB
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Equitable Tolling Is Read Into Every Statute Of Limitation; Laches Should Be Treated Similarly

MGM observed in their briefs that equitable tolling is read into every statute of limitations, and posed the question of why laches should be treated differently. Here, the Court distinguished between the two, pointing out that tolling is a rule of interpretation, and that it applies only when there is a statute of limitations, lengthening the time for commencing a civil action in certain circumstances. Laches, on the other hand, could hardly be described as a rule for interpreting a statutory prescription, originally serving as a guide when there was no controlling statute of limitations.[7]

Laches Must Be Available To Prevent Copyright Owners From Sitting Still, Doing Nothing, And Waiting To See The Outcome Of An Infringer’s Investment

The Court noted that Ms. Petrella conceded she had waited until the film was out of “the red” to file suit, but stated, “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.” Further stating, that even if infringement is harmful, the harm may be too small and cost of litigation too high to justify filing suit. Moreover, if the rule were as MGM urges, copyright owners would be required to sue for seemingly harmless infringements, just in case they eventually grow into something substantial. The Court stated that the current 3-year statute of limitations avoids such litigation profusion, allowing the copyright owner to defer suit until he or she can determine whether litigation is justified.[8]

Estoppel May Be Used Where A Defendant Is Misled

Though laches may not be used to bar a defendant’s claim for damages in a copyright case, this does not mean that no equitable remedies are available. The Court stated that estoppel, unlike laches, does not undermine Congressional intent. In the case of intentionally misleading representations concerning a copyright owner’s abstention from a suit, and where the infringer detrimentally relied on the copyright owners deception, the doctrine of estoppel may bar the owner’s claims completely.[9]

Laches May, In Extraordinary Circumstances, Bar Equitable Relief

Though laches may not be used to bar damages, the Court stated that in extraordinary circumstances, some cases of delay in commencing an action might bar a plaintiff from certain equitable relief. For example, the Court cited Chirco v. Crosswinds Communities, Inc., where the defendants used the plaintiff’s copyrighted architectural design to plan and build a housing development.In that case, the plaintiffs had been long aware of the infringing use, but took no steps to stop the development until more than 168 units had been built, of which 109 were actually occupied. Though the suit was filed within the 3-year statute of limitations, the plaintiffs would not be entitled to a mandate ordering the destruction of the housing project. This was due to their failure to take readily available measures to stop the project and the unjust hardship the relief would work on the defendants and innocent occupants.[11]

Conclusion

It is as important as ever for lawyers and industry professionals to perform their due diligence in taking preemptive steps to avoid costly litigation. Now that it is clear that the doctrine of laches cannot protect a defendant in a copyright suit for damages, being wary of infringement and mindful of instances where a grant or license may revert back to an author’s heir has become ever more important. Overall, the Supreme Court’s decision deals jabs and hooks to both copyright owners and potential infringers. On the one hand, copyright owners no longer have to worry about infringing parties hiding behind the doctrine of laches. While on the other hand, potentially infringing parties do not have to fret a suit for damages reaching back into an unlimited distant past.


 

[1] Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1968 (2014)

[2] USC 17 § 507(b)

[3] Petrella at 1967

[4] Id.

[5]Id. at 1969

[6] Id. at 1975

[7] Id.

[8] Id. at 1976

[9] Id. at 1977

[10]  Chirco v. Crosswinds Cmtys., Inc., 474 F.3d 227 (6th Cir. Mich. 2007)

[11]Petrella at 1966