The US Court of Appeals for the 11th Circuit held that federal courts have jurisdiction to hear a declaratory judgment action for injunctive relief involving the Copyright Act even where the defendant does not have a copyright registration. Fastcase, Inc. v. Lawriter, LLC, Case No. 17-14110 (11th Cir. Oct. 29, 2018) (Tjoflat, J).
The 11th Circuit’s opinion extends the Supreme Court of the United States’ 2010 decision in Reed Elsevier v. Muchnickthat the Copyright Act’s § 411(a) registration requirement, which mandates that a plaintiff own a registration for the asserted copyright before filing a lawsuit, “does not restrict a federal court’s subject-matter jurisdiction” (IP Update, Vol. 13, No. 3).
This was a dispute between two legal publication service companies over the right to re-publish the Georgia Regulations. Lawriter has an exclusive contract with the Georgia Secretary of State to publish Georgia Regulations on the Secretary’s website and make them freely available to the public. Fastcase has a contract with the Georgia State Bar to provide a database of Georgia law, including the Georgia Regulations, to the Bar’s members. Fastcase keeps its publication of the Regulations current by pulling updated content from the Secretary’s website multiple times a week.
Lawriter sent Fastcase a letter alleging that Fastcase violated Lawriter’s exclusive rights by pulling the Regulations from the Secretary’s website and providing them as part of a fee-based service. Fastcase then filed a declaratory judgment action in the US District Court for the Northern District of Georgia, seeking a declaration that Lawriter had no enforceable copyright or contract rights in the Regulations. The district court dismissed the case, holding that it had no federal jurisdiction because Lawriter did not own a copyright registration in the Regulations. The district court also found that Fastcase had not met the $75,000 amount-in-controversy minimum for diversity jurisdiction.
Thereafter, Lawriter updated the terms of the Secretary’s website to state that unauthorized re-publication of the Regulations would result in liquidated damages of $20,000 per instance. Fastcase again filed its declaratory judgment action, and the district court dismissed on the same grounds.
The 11th Circuit reversed the dismissal, relying on the Supreme Court’s holding in Reed Elsevier and its own 2017 decision Fourth Estate Pub. Benefit v. Wall-Street.com (IP Update, Vol. 20, No. 6). The Court explained that “§ 411(a) is no longer a jurisdictional bar,” and “while a complaint claiming infringement of an unregistered copyright can be dismissed for failure to state a claim, it cannot be dismissed for lack of jurisdiction.” The Court assumed without analysis that Lawriter’s purported claims against Fastcase would be based in the Copyright Act, or at least preempted by the Copyright Act. Because the Copyright Act was implicated, and because § 411(a) was not a jurisdictional bar, the district court erred in dismissing the declaratory judgment action.
The 11th Circuit also reversed the district court’s finding that Fastcase failed to meet the amount-in-controversy requirement for diversity jurisdiction. The Court explained that the liquidated damages provision meant that Fastcase would be liable for $20,000 each time that it pulled the Regulations from the Secretary’s website, which was multiple times per week: “Because violating these terms as few as four times would subject Fastcase to a threat of liability in excess of $75,000, we conclude that Fastcase’ s potential liability was not too speculative to satisfy the amount-in-controversy requirement.”
Practice Note: A demand letter alleging infringement under the Copyright Act—or even alleging state law claims that would arguably be preempted by the Copyright Act—confers jurisdiction on a federal court to hear the recipient’s declaratory judgment action.