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Supreme Court rules laches cannot be evoked in Raging Bull case



Michael Loney, New York


The US Supreme Court has reversed a Ninth Circuit ruling that laches can be evoked in the case Petrella v Metro-Goldwyn-Mayer (MGM). Its 6-3 decision could encourage more copyright lawsuits over decades-old works of art

In a majority decision written by Justice Ruth Bader Ginsburg, the Supreme Court said that laches cannot be invoked as a bar to Paula Petrella’s pursuit of a claim for damages brought within a three-year window.

Ginsburg wrote that "the copyright statute of limitations itself takes account of delay" by allowing a plaintiff to only gain retrospective relief three years back from the time of the suit. In addition, she said a defendant is able to offset against profits in that period the expenses incurred in generating those profits.

The dispute is over the copyright on the Martin Scorsese-directed film Raging Bull, for which Robert De Niro won an Oscar for his portrayal of boxer Jake LaMotta. Frank Petrella had written a screenplay with LaMotta that was copyrighted in 1963. In 1976, the pair assigned their rights and renewal rights, which were acquired by MGM subsidiary United Artists Corporation. Raging Bull was released in 1980 and MGM continues to market the film today.

Frank Petrella died in 1981 and his renewal rights reverted to his daughter, Paula Petrella, who renewed the copyright in 1991. In 1998 she told MGM it was violating her copyright and threatened to sue. In January 2009 she filed an infringement suit, asking for monetary and injunctive relief for acts of infringement from 2006 on.

MGM moved for summary judgment, invoking the doctrine of laches. It argued that Petrella’s 18-year delay in filing suit was unreasonable and prejudicial to MGM. This motion was granted in district court and the Ninth Circuit affirmed.

Laches: "gap-filling, not legislation-overriding"

Ginsburg said that MGM’s principal argument about the contemporary scope of the laches defence is unavailing. MGM urged that the plea should be available in every civil action.

"There is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on that work, or even complements it" – Justice Ruth Bader Ginsburg

"The expansive role for laches MGM envisions careens away from understandings, past and present, of the essentially gap-filling, not legislation-overriding, office of laches. Nothing in this Court’s precedent suggests a doctrine of such sweep. Quite the contrary, we have never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period."

MGM’s argument that laches defence must be available to prevent a copyright owner from waiting to see how big the outcome of an alleged infringer’s investment will be was also shot down. "It is hardly incumbent on copyright owners, however, to challenge each and every actionable infringement. And there is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on that work, or even complements it. Fan sites prompted by a book or film, for example, may benefit the copyright owner," wrote Ginsburg.

MGM’s concerns that the evidence that is needed to defend against a liability will be lost during a long period of time before being sued also did not persuade Ginsburg, who said Congress must have been aware of this issue when providing for reversionary renewals rights that an author’s heirs can exercise long after the work was copyrighted.

Ginsburg was joined in the opinion by Justices Antonin Scalia, Clarence Thomas, Samuel Alito, Sonia Sotomayor and Elena Kagan.



"No reason to erase the doctrine"

Dissenting the opinion were Justices Stephen Breyer, John Roberts and Anthony Kennedy.

Writing the dissent, Breyer said laches applied in cases where a plaintiff unreasonably delays in filing a suit and causes unjust hardship to the defendant. He said it may be inequitable for owners of a copyright with full notice of an infringement to stand inactive while the proposed infringer spends money in its exploitation. "Today’s decision disables federal courts from addressing that inequity. I respectfully dissent," he wrote.

"In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, the doctrine permits a court to bring about a fair result" – Justice Stephen Breyer

Breyer noted that during the 18 years Petrella waited after renewing copyright MGM spent millions of dollars developing different editions of, and marketing, the film as well as entering into numerous licensing agreements to broadcast the film on television. MGM held a licence to the screenplay under a 1976 agreement with LaMotta. "Consequently, I believe the Court of Appeals acted lawfully in dismissing the suit due to laches," wrote Breyer.

He said long delays do not automatically prove inequity but they raise that possibility. Responding to the majority’s view that the three-year copyright statute of limitations takes account of the delay thus removing the need for laches, Breyer said: "I agree that sometimes that is so. But I also fear that sometimes it is not."

Breyer also argued against the notion that a plaintiff can recover only the defendant’s profits once the expenses incurred have been deducted. He wrote this does not stop a copyright holder from standing inactive while the infringer spends large sums of money in a risky venture, "appearing on the scene only when the venture has proved a success; and thereby collecting substantially more money than he could have obtained at the outset, had he bargained with the investor over a licence and royalty fee."

Concluding, he wrote: "In sum, as the majority says, the doctrine of laches may occupy only a 'little place’ in a regime based upon statutes of limitations… But that place is an important one. In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, the doctrine permits a court to bring about a fair result. I see no reason to erase the doctrine from copyright’s lexicon, not even with respect to limitations periods applicable to damages actions."



"Open the floodgates"

The Supreme Court’s reversal could have large ramifications. Brad Newberg, partner at Reed Smith who previously wrote an article for Managing IP arguing for laches to be allowed as a copyright defence, called it one of the biggest copyright cases ever in terms of practical applications.

"This decision is not only shocking in its result and ramifications, but it is also surprising, because at oral argument, it seemed fairly clear that the Justices were going to decide with MGM" – Brad Newberg, partner at Reed Smith

"This will open the floodgates for copyright lawsuits going forward as masses of litigants from the '70s, '80s, and '90s will likely come out of the woodwork to claim that hit songs, movies, TV shows and other creative works still in the marketplace in some fashion, belong to them and they want a share of the profits," he said in a statement. "In many cases, defendants will be completely unaware with key witnesses deceased or with whereabouts unknown, and key documents and evidence regarding the history of creation of the work destroyed or unavailable."

Newberg pointed out that the majority opinion recognized this when the defining the laches defense as an "unreasonable, prejudicial delay in commencing suit." He said the decision means that even when the plaintiff has been unreasonable in its delay and that delay has greatly harmed the defendant’s ability to defend itself, the laches defense still will not be available.

"This decision is not only shocking in its result and ramifications, but it is also surprising, because at oral argument, it seemed fairly clear that the Justices were going to decide with MGM, and allow the laches defense to exist to bar copyright claims in various circumstances," he said.


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