Think Twice When Licensing Copyrighted Works to States – Sovereign Immunity Applies

Ballard Spahr LLP

Ballard Spahr LLP

The Supreme Court held in Allen v. Cooper that legislation enacted by Congress revoking the sovereign immunity of states for acts of copyright infringement is unconstitutional. The Supreme Court reasoned that Article 1 of the Constitution did not empower Congress to enact legislation that would deprive a state of its sovereign immunity for copyright claims. The Court further reasoned that the Fourteenth Amendment did not support the legislation in question because the Act was not congruent or proportional to the harm that it was designed to prevent, namely, a state’s infringement of an individual’s copyright rights. Thus, a state may properly invoke its sovereign immunity to preclude copyright infringement actions against it.

In 1718, the Queen Anne’s Revenge, the flagship of famed pirate Edward “Blackbeard” Teach, ran aground and eventually sank approximately one mile off the shoreline of Beaufort, North Carolina. The shipwreck was discovered in 1996. The State of North Carolina, which owned the wreckage pursuant to federal law, engaged a third-party to recover the remains of the Queen Anne’s Revenge. The third-party salvage company, in turn, contracted with Frederick Allen, a local videographer, to document its recovery efforts. Over the next decade, Allen created numerous videos and photographs of the recovery effort and obtained copyright registrations for each of these works. Allen v. Cooper arises from the State of North Carolina’s unauthorized reproduction and distribution of Allen’s copyrighted works.

Congressional authority to grant and regulate patents and copyrights is undisputed. Section 8, Clause 8 of the United States Constitution (granting Congress the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”). However, the related question whether Congress can extend liability for infringement of those rights against a state is disputed. The central question before the Court was whether Congress, through its enactment of the Copyright Remedy Clarification Act of 1990 (“CRCA”), could abrogate the sovereign immunity granted to the states in the Eleventh Amendment by using its powers under Article 1 or the Fourteenth Amendment.

The district court in North Carolina denied the State’s motion to dismiss the complaint on the ground of sovereign immunity because the CRCA explicitly provided that a state “shall not be immune, under the Eleventh Amendment [or] any other doctrine of sovereign immunity” for copyright infringement. 17 U.S.C. §511(a). The Fourth Circuit Court of Appeals, however, reversed the district court’s opinion and held that the CRCA was unconstitutional based on the Supreme Court’s finding that a similar provision in the Patent and Plant Variety Protection Clarification Act exceeded Congress’ Article 1 power.

The Supreme Court agreed with the Fourth Circuit that its decision in Florida Prepaid Secondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999) was determinative. There, the Supreme Court re-affirmed its prior holding in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996) that Congress cannot lawfully use its Article 1 powers to override a state’s Eleventh Amendment sovereign immunity. As a result, the Court held that Congressional enactment of the Patent and Plant Variety Protection Clarification Act under Article 1 was unconstitutional to the extent it purported to remove a state’s sovereign immunity from claims of patent infringement. Given the substantially similar abrogation language in both the CRCA and the Patent and Plant Variety Protection Clarification Act, the Supreme Court held that the CRCA likewise exceeded Congress’s constitutional powers.

The Supreme Court also rejected Allen’s claim that North Carolina’s publication of his copyrighted works constituted an unlawful taking in violation of the Fourteenth Amendment, which prohibits a state from depriving a person of “life, liberty, or property without due process of law.” Unlike Article 1, the Fourteenth Amendment granted Congress broad powers to abrogate sovereign immunity where necessary to enforce the limitations on state action set forth in the Amendment. Though copyrights are property and a state’s infringement of such right is a taking, the Supreme Court rejected Allen’s Fourteenth Amendment argument. The Court explained that while Congress may enact legislation to protect Fourteenth Amendment rights, such power is not without its own limitations. Specifically, Congress’s use of its Fourteenth Amendment power must be both congruent and proportional to the state-inflicted harm that it seeks to prevent. Here, the CRCA failed to satisfy either prong.

First, the CRCA abrogated a state’s sovereign immunity for all acts of copyright infringement, regardless of whether the infringement was intentional or negligent. The Supreme Court held that the law was incongruent to the harm it sought to prevent—a taking of property without due process of law—because a purely negligent state act does not constitute an unconstitutional deprivation of property. Second, the Supreme Court held that the CRCA was not proportional to the harm because of the paucity of evidence that state infringement of copyrights was so pervasive as to justify the complete abrogation of sovereign immunity for copyright infringement suits.

The irony that the case originates from one of the most notorious pirate ships in history was not lost on the Court. The Court acknowledged that copyright infringement—the taking of one’s property without permission—is itself “a modern form of piracy.” Nevertheless, the Supreme Court held that a state could not be sued in federal court for copyright infringement absent its consent. As Justice Breyer wrote in his concurrence, the established precedent of the Court holds that “Congress’ power under the Intellectual Property clause cannot support a federal law providing that, when proven to have pirated intellectual property, States must pay for what they have plundered.” The Queen Anne may have just completed her final act of revenge.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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