Laches: Supreme Court holds that the Equitable Defense of Laches is Not Available to Bar Damages Relief on a Copyright Infringement Claim Brought Within The Statute of Limitations Period.

In a decision issued yesterday on the closely followed case involving rights to the acclaimed Raging Bull movie, the Supreme Court held that laches cannot act as a bar to a copyright plaintiff’s claim for infringement damages brought within the copyright statute’s three-year limitations window (6-3 decision, written by Justice Ginsburg, with a dissent by Justice Breyer in which Chief Judge Roberts and Justice Kennedy joined). The Court also held, however, that in extraordinary circumstances laches may curtail equitable relief, such as destruction of copies of an infringing work. And if a plaintiff prevails on the merits, the plaintiff’s delay in bringing suit can be taken into account in determining appropriate injunctive relief and the amount of the defendant’s profits attributable to the infringement. Accordingly, the Court reversed the Ninth Circuit’s affirmance of dismissal on summary judgment of the plaintiff's claims on the ground of laches where part of the alleged infringement occurred outside of the limitations period.

Also, resolving a wide circuit split, the Court took a middle ground among the views of the Circuit Courts of Appeal on the general applicability of laches to claims of copyright infringement seeking legal and equitable relief.

Background

Paula Petrella (Petrella) owns the copyright for a screenplay for the motion picture Raging Bull, copyrighted in 1963 by her father, Frank Petrella. Petrella renewed the copyright in 1991, becoming its sole owner and, seven years later, advised Metro- Goldwyn-Mayer (MGM) that its use of the screenplay in its film adaptation of Raging Bull violated her copyright and that she intended to sue. Subsequently, in 2009, Petrella filed an infringement suit, seeking monetary and injunctive relief for acts of copyright infringement by MGM occurring on or after January 6, 2006.

MGM moved for summary judgment, arguing that the doctrine of laches barred Petrella’s infringement suit, which sought both damages and equitable relief, in its entirety. The District Court granted MGM’s motion, and the Ninth Circuit affirmed. Petrella v. Metro-Goldwyn-Mayer, Inc., 695F.3d 946 (9th Cir. 2012).

On October 1, 2013, the Supreme Court granted certiorari. Oral argument was held on January 21, 2014.

The Supreme Court’s Ruling

As to Petrella's claim for damages, the Supreme Court held that the Ninth Circuit erred in holding that laches may be invoked as a bar to Petrella’s copyright claim for alleged infringement occurring with the three-year limitations period prescribed by 17 U.S.C. § 507(b). Important to the Court’s reasoning was its belief that Congress had already struck a balance in the copyright arena by enacting in 1957 a three- year “look-back” limitations period where no statute of limitations had existed before (Congress “filled the hole”). Even though a copyright term may last for decades, because an infringement is actionable within only three years of its occurrence, an infringer is insulated from liability for earlier infringements of the same work. Thus, the statute “itself takes account of delay.” Also, a separate- accrual rule applies to copyright infringement, such that each reproduction or sale  of an infringing work gives rise to a discrete “claim” that accrues at that time and starts a new limitations period. The Court ruled that the Ninth Circuit erred by disregarding both the look-back nature of the limitations period and the separate- accrual rule in presuming that Petrella's failure to sue as to infringing acts occurring before January 6, 2006 barred all relief, both legal and equitable, for infringement occurring on or after that date.

The Court rejected MGM’s argument that laches is available in every civil action to bar relief because of the merger of law and equity reflected in the Federal Rules of Civil Procedure. The Supreme Court noted that its own precedent had never applied laches to bar a claim for damages in cases where there was a federally-prescribed statute of limitations, and that neither MGM nor the dissent had identified such a case.

The Court also rejected the argument that it was incumbent on copyright owners to “sue soon, or forever hold your peace.” MGM had argued that laches must be available to prevent copyright owners from sitting on their rights in order to determine whether an allegedly infringing work was profitable. The Court stated: the statute “allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle. She will miss out on damages for periods prior to the three-year look-back, but her right to prospective injunctive relief should, in most cases, remain unaltered.”

As to equitable forms of relief, the Court stated that laches is still available “in extraordinary circumstances” at the outset of litigation, if the requested relief would cause “unjust” hardship on defendant and innocent third parties (e.g., a request to impound infringing copies of a book). Also, a plaintiff’s delay can always be taken into account by the court at the remedial stage of the litigation in determining appropriate injunctive relief and assessing profits. The Court indicated that the  court might, if infringement were shown, allow MGM to continue using Raging Bull upon payment of a reasonable royalty to Petrella.

Finally, the Court noted that the equitable doctrine of estoppel can be used to bar a plaintiff’s claims completely where the plaintiff engages in intentionally misleading representations about abstaining from suit and the defendant detrimentally relies on them.

Anna E. Dwyer