Delaying Bull: The Supreme Court Hears The Raging Bull Copyright Laches Case

deNiroOn January 21, 2014, oral arguments were held in the Supreme Court case of Petrella v. Metro-Goldwyn-Mayer, Inc., which concerned the copyright to the story underlying the film Raging Bull.  We previously discussed this case at some length, but to make a long story short: There is a three-year statute of limitations for copyright infringement. However, because of the “rolling” nature of copyright claims, a new three-year period begins to run each time an infringing copy is made. In other words, if you have been making copies of my work for 20 years, the three-year limitations period doesn’t prevent me from suing after 20 years, but it does mean I can recover only for the last three-years worth of infringement.

Paula Petrella did just that, waiting 20 years to sue Raging Bull’s distributors, including MGM, and seeking to collect MGM’s profits starting three years before her complaint. However, Petrella’s claim was nevertheless barred, not by the statute of limitations, but by the equitable doctrine of laches. The 9th Circuit held that Petrella unreasonably delayed enforcement of her rights and that this delay caused unfair prejudice (because in the meantime MGM had made substantial investments in the film under the assumption that no suit was forthcoming). Therefore, Petrella forfeited her entitlement to both injunctive and monetary relief.

On appeal, it is up to the Supreme Court to decide whether and to what extent the doctrine of laches is still available as a defense in copyright actions. In the briefs to the court and at oral argument, the following issues were among the most prominent:

Are laches and the statute of limitations mutually exclusive?

Petrella argues that the doctrine of laches and the statute of limitations are mutually exclusive remedies for unreasonably late lawsuits. Laches is a useful judicial doctrine when no statute of limitations exists, but once Congress sets a limitations period, the continued existence of laches creates separation of powers concerns and therefore can no longer apply. MGM counters that many courts have allowed both doctrines to apply side by side, in part because laches is not merely about the lapse of time, but about the dilatory behavior of the plaintiff and prejudice to the defendant.

What did Congress intend?

Petrella argues that the Copyright Act contains an unambiguous three-year statute of limitations, but makes no mention of  the doctrine of laches. MGM responds that laches is nevertheless available because the courts’ inherent equitable powers are assumed to survive the implementation of a statute unless explicitly abrogated by Congress.

At oral argument, Justices Scalia and Alito both challenged Petrella’s reading of the statutory language.   Copyright Act provides that “no civil action” shall be brought “unless it is commenced within three years.”  However, it does not guarantee that a civil action may be brought within three years.  Thus, according to the justices, application of laches would not frustrate the statutory language.

Does the rolling limitations period make this a special case?

Petrella insists that allowing the laches defense would undermine the “rolling” nature of copyright law period by cutting off claims that Congress clearly felt should go forward. But MGM argues that the existence of a rolling limitations period is precisely why laches is needed in the copyright context. Justices Scalia and Kagan, echoing MGM’s argument, suggested that without laches as an equitable counterbalance, a plaintiff could abuse the rolling limitations period by letting the defendant invest its own money to promote a work and then suing only if the defendant’s investment resulted in a profit.   Justice Ginsberg challenged this assumption, arguing that there may be many instances in which it would be entirely reasonable to delay filing a copyright claim, for example when there is so little money at stake that it would cost more to sue than the plaintiff could possibly recover. But Justice Breyer stepped in and responded that, in such cases, a judge could decide that the delay was not “unreasonable.” Therefore, the defense of laches would still apply; it just wouldn’t succeed.

How come we can lengthen the limitations period but not shorten it?

One question frequently posed by critics of Petrella’s position, and voiced by Justice Breyer at oral argument, is that since courts allow statutes of limitations to be equitably tolled (i.e., extended) when justice requires, why can’t they be equitably contracted by laches when justice requires?  Petrella’s response, that equitable tolling is distinguishable because unlike laches it is “read into every federal statute of limitation,” did not appear to satisfy the justices.

Does laches also bar damages or just injunctions?

Petrella argues that laches is entirely unavailable in copyright cases, and cannot be invoked to bar either injunctive relief or damages.  Otherwise, the statutory right to exclude others would be a chimera. MGM, on the other hand, urges that laches should be able to bar both damages and injunctive relief, especially in cases like this one where the plaintiff’s theory of damages — recovery of the defendant’s profits — is simply a statutory recasting of the traditional equitable remedy of disgorgement. The United States, in an amicus brief submitted by the Solicitor General, takes the middle road and argues that because laches is an equitable doctrine, it can bar injunctive relief but not damages.

Justice Sotomayor appeared to support the compromise position espoused by the United States, because she feared that foreclosing damages altogether would in effect allow a defendant to take over a plaintiff’s copyright. But Justice Breyer disagreed and asserted that unless laches barred damages, repeated “rolling” damages actions would have the same effect as an injunction, because “no one in his right mind would go and continue to produce this movie when every penny is going to have to go to the copyright owner . . Because every three years they face a lawsuit.”

You call that a flood?  Now this is a flood!

Finally, no Supreme Court argument would be complete if at least one side didn’t warn that failure to adopt its position would lead to a “flood of litigation.”  Petrella argues that, if the defense of laches is allowed in copyright actions, a “flood” potential plaintiffs will sue prematurely in order to avoid losing the ability to enforce their copyrights. MGM’s response is that laches has been available in copyright cases since the 19th century and has not yet resulted in this “flood of litigation.”  On the contrary, MGM argues, if the court suddenly eliminates the laches defense, potential defendants will have the economic incentive to flood the courts with declaratory judgment actions against potential plaintiffs before investing in new projects.

Numerous additional amici also contributed to the discussion, including the Authors Guild, Inc., the New England Legal Foundation and the Motion Picture Association of America. All the briefs are available on the SCOTUS blog.