On May 19, the US Supreme Court issued the long-awaited decision in Petrella v. Metro-Goldwyn-Mayer Inc., gutting the laches defense for copyright infringement claims brought within the three-year statute of limitations prescribed under 17 U.S.C. §507(b). The ruling has far-reaching effects for both rights holders and accused infringers—particularly in the entertainment industry—because now laches almost never will bar belated claims so long as at least one act of infringement occurred within three years before the lawsuit is filed.
In a 6-3 vote, the Justices overturned the Ninth Circuit’s ruling that the heir to the screenwriter of the 1980 film classic “Raging Bull,” brought more than forty-five years after the screenplay was written and almost thirty years since the theatrical release of the film, could not recover for copyright infringement because she had been unreasonably delayed in bringing suit.
Although the plaintiff sought only damages for acts of infringement occurring from 2006 onward due to the three year statute of limitations for copyright infringement claims set forth in 17 U.S.C. §507(b), the trial court granted summary judgment dismissing the suit based on the laches defense, and the Ninth Circuit affirmed.1 Laches generally requires the party asserting the defense to show that the plaintiff’s unreasonable delay in bringing suit caused it to suffer prejudice. The Ninth Circuit had concluded that the plaintiff had unreasonably delayed by not filing suit until 2009 and that the delay had prejudiced defendants in terms of their commercial expectations and their access to evidence.2
The Supreme Court’s ruling resolves an important circuit split concerning the application of laches to infringement claims that are timely under §507(b) but otherwise well after the release of a work. Although §507(b) provides that copyright actions must be commenced within three years of a claim’s accrual, certain jurisdictions such as the Ninth Circuit, permitted the equitable defense of laches to bar even those claims relating to infringing acts occurring within the limitations period. Meanwhile, some circuits actually forbade any application of the laches defense or limited the remedies to which it could apply.3 Other circuits simply disfavored the defense and limited it to exceptional circumstances.4
Copyright law utilizes a “separate-accrual” rule for its statute of limitations and, as the Supreme Court explained, “each time an infringing work is reproduced or distributed, the infringer commits a new wrong.”5 Under this rule, “the infringer is insulated from liability for earlier infringements of the same work.”6 However, it also means that copyright owners can bring infringement claims at any time so long as there has been at least one act of infringement within the past three years, making purported infringers vulnerable to claims long after the initial successes of a work. Laches, therefore, traditionally was available as a complete defense where the plaintiff had slept on his or her rights to the detriment of the defendant.
In Petrella, however, the Supreme Court reasoned that the Copyright Act adequately accounts for unreasonable delay by permitting a successful plaintiff to gain retrospective relief only three years back from the time of suit and by allowing defendants to offset their profits earned during that period with costs and expenses incurred in generating those profits. Because copyright plaintiffs typically cannot reach profits achieved more than three years before the lawsuit is filed, the Court reasoned that damages already are limited for late-brought claims.
Additionally, the Court explained that it has never permitted laches to bar claims for wrongs occurring within a federally prescribed limitations period and doing so here, by allowing judges to circumvent the Copyright Act’s limitations provisions by applying laches to bar timely claims, would “tug against the uniformity Congress sought to achieve in enacting §507(b).”7
For these reasons, the Court held that laches cannot limit the legal remedies for claims brought within the three year limitations period even when prior acts of infringement, such as the initial release of an album or film, occurred decades ago. In practice, this means that distributors of copyrighted works, such as film studios and record labels, must be prepared to defend claims from purported copyright owners at any time after a work is released. In fact, Petrella already has been cited by Stan Lee Media, Inc. in support of its argument that its delay in filing suit over the rights to Spider-Man should not result in a dismissal of the claim.8 The popularity of the Internet and the resulting newfound accessibility to older works already has resulted in a significant uptick of lawsuits against musicians and film studios, many of which were brought decades after the initial release of the work at issue.
Justice Breyer’s dissent, which was joined by Chief Justice Roberts and Justice Kennedy, concentrated on three primary points. First, he argued that laches should be preserved to combat the inequities originally discussed by Learned Hand in Haas v. Leo Feist, Inc., 234 F. 105, 108 (S.D.N.Y). A copyright owner therefore should not be able to stand by idly for many years when the copyright is worthless, only to file a lawsuit seeking damages when the defendant’s efforts finally pay off.
Second, the dissent pointed to the fact that the Copyright Act is silent on laches and contended that the majority illogically “rea[d] 507(b)’s silence as preserving doctrines that lengthen the period for suit when equitable considerations favor the plaintiff (e.g., equitable tolling), but as foreclosing a doctrine that would shorten the period when equity favors the defendant (i.e., laches).”9
Finally, although laches is an equitable remedy, the dissent argued that there was no reason to forbid its application to actions for legal relief. Justice Breyer noted that the cases cited by the majority did not announce such a general rule and, citing several cases to the contrary, proclaimed that “in permitting laches to apply to copyright claims seeking equitable relief but not to those seeking legal relief, the majority places insufficient weight upon the rules and practice of modern litigation.”10
The decision undoubtedly is a boon for plaintiffs because it all but eliminates laches as a defense available to accused infringers. No matter how long a work has been commercially available, a claim for copyright infringement premised on recent infringements will be permitted to proceed unless the plaintiff previously represented that a lawsuit would not be filed. Without the concern of laches, there is nothing to prevent copyright owners from waiting to bring suit until their works become more profitable as a result of the defendant’s efforts. Indeed, that was what happened in Petrella, where the plaintiff waited for “Raging Bull” to move out of debt and become more commercially successful before bringing the infringement suit.