Sup. Ct. Hears <i>Raging Bull</i> Laches Dispute

The three-year statute of limitations in the act runs separately for each act of infringement. That rolling statute of limitations, combined with very lengthy copyrights, could allow a plaintiff to wait for decades to sue in order to maximize her financial gain, Justice Elena Kagan suggested. “A plaintiff can wait 20 years.” Whether a plaintiff brings suit now or in 20 years, she recovers only for three years under the act, Bibas replied, while the defendant has had 17 years of benefits and profits.

MGM's counsel, Mark Perry of Gibson, Dunn & Crutcher, argued, “This court said over five times that where you have a rolling statute of limitations, laches is a necessary protection for the defendant because the events may move so far away from the underlying facts, which is very true here.”

If the objective is to get a plaintiff to sue early, why is it unreasonable for a plaintiff to wait to see if her copyright is worth anything, if there have been no profits and it would cost her more to sue than she could possibly receive in damages, Justice Ruth Bader Ginsburg asked. Even when there are no profits, Perry replied, works are valuable assets “and the entire economic system benefits from greater clarity and earlier resolution of rights.” Perry said that Petrella is demanding her share of “the gold mine” after his client has taken all of the risk. “She gets to skim the cream,” he said.

“You've gotten a lot of profits in those 18 years and, in fact, at one point when she did reach out to you, you told her, 'Why sue? You're not going to get any money. We're not making any,'” Justice Sonia Sotomayor said. Perry replied that, on a net basis, the film still has never made a profit. He warned that a ruling for Petrella would mean increased litigation because studios and other defendants would have an economic incentive to bring lawsuits to clarify their rights.

But Kagan noted a “dearth” of court decisions in which the doctrine of laches was applied to dismiss a copyright claim. That lack of cases, she said, “is probably explainable because people didn't think they had a laches defense when a plaintiff sued within a statute of limitations. And now, if we open this all up ' grant it in a statutory context in which it makes some sense to give people a laches defense ' if we open this all up, we'll be seeing motions that nobody ever dreamed of before.”

Assistant to the U.S. Solicitor General Nicole Saharsky supported Petrella in part, saying that laches should not be used to dismiss a copyright claim at the outset, but could be available at the end to influence remedies for an infringement. Most circuits either do not accept laches as a defense to a copyright claim or permit it under very limited circumstances.

“A Supreme Court ruling that reverses the Ninth Circuit could open up new avenues for copyright owners to assert their rights and legitimately profit from recycled source material,” said copyright litigator William Kane of Baker-Hostetler, who recently settled a similar case with MGM over the James Bond movie franchise. “On the other hand, if the Ninth Circuit is affirmed, it will bring some confidence to the entertainment industry that as a business is always challenged for investment certainty when launching a new multi-million dollar production.”

Sidebar

Petrella Pre-High'Court Ruling Impact

The Petrella case has impacted the ongoing copyright-assignment termination litigation in the U.S. District Court for the Southern District of California in which Victor Willis, who was lead singer for the Village People, claims he is entitled to recapture 50% of the copyrights in 24 of the group's songs for which he wrote all the new lyrics or translations of pre-existing French lyrics. Scorpio Music (Black Scorpio) S.A. v. Willis, 11cv1557.

Willis argues, in a counterclaim to a declaratory action filed by Scorpio Music, that Village People associate Henri Belolo had no co-authorship role in creating the English lyrics. Scorpio Music moved for summary judgment on Willis's lyrics authorship claim on statute of limitation and laches grounds. In the Ninth Circuit, within which the Southern District of California resides, laches has been accepted as a defense to a co-authorship claim. But in the Willis case, Chief District Judge Barry Ted Moskowitz denied Scorpio Music's motion by noting in part, 'As for Plaintiffs' laches argument, the Court denies the motion without prejudice to refiling after the Supreme Court issues a decision in' Petrella.

'Stan Soocher, Editor-in-Chief

'

Marcia Coyle is Chief Washington Correspondent for The National Law Journal, an ALM sibling publication of Entertainment Law & Finance.

The U.S. Supreme Court in January heard oral arguments on whether a person's unreasonable delay in filing a copyright infringement action can be used to bar that lawsuit. Petrella v. Metro-Goldwyn-Mayer Inc., 12-1315, stems from a dispute over the rights to Raging Bull , the 1980 Martin Scorsese film based on the life of World Middleweight Champion Jake LaMotta.

The issue before the justices is whether the doctrine of laches can be a defense to a copyright claim when the claim is filed within the Copyright Act's three-year statute of limitations. Laches is a “gap filler,” and Congress in the U.S. Copyright Act filled the gap with a clear, bright-line rule: the three-year statute of limitations, Stephanos Bibas of the University of Pennsylvania School of Law argued for Paula Petrella.

Petrella sued MGM for copyright infringement in 2009 ' 18 years after she had renewed her father's copyright in the screenplay that she contends became the basis for Raging Bull . She sought to recover damages for the three-year period from 2006 to 2009. Her father, Frank Petrella, who had collaborated with LaMotta on screenplays and a book, died in 1981 and his rights in the works reverted to his daughter. The U.S. Court of Appeals for the Ninth Circuit upheld a grant of summary judgment to MGM on the studio's defense of laches after finding that the delay in filing was unreasonable and had prejudiced MGM in terms of its access to witnesses and evidence and its business expectations. Petrella v. Metro-Goldwyn-Mayer Inc., 695 F.3d 946 (9th Cir. 2012).

The three-year statute of limitations in the act runs separately for each act of infringement. That rolling statute of limitations, combined with very lengthy copyrights, could allow a plaintiff to wait for decades to sue in order to maximize her financial gain, Justice Elena Kagan suggested. “A plaintiff can wait 20 years.” Whether a plaintiff brings suit now or in 20 years, she recovers only for three years under the act, Bibas replied, while the defendant has had 17 years of benefits and profits.

MGM's counsel, Mark Perry of Gibson, Dunn & Crutcher, argued, “This court said over five times that where you have a rolling statute of limitations, laches is a necessary protection for the defendant because the events may move so far away from the underlying facts, which is very true here.”

If the objective is to get a plaintiff to sue early, why is it unreasonable for a plaintiff to wait to see if her copyright is worth anything, if there have been no profits and it would cost her more to sue than she could possibly receive in damages, Justice Ruth Bader Ginsburg asked. Even when there are no profits, Perry replied, works are valuable assets “and the entire economic system benefits from greater clarity and earlier resolution of rights.” Perry said that Petrella is demanding her share of “the gold mine” after his client has taken all of the risk. “She gets to skim the cream,” he said.

“You've gotten a lot of profits in those 18 years and, in fact, at one point when she did reach out to you, you told her, 'Why sue? You're not going to get any money. We're not making any,'” Justice Sonia Sotomayor said. Perry replied that, on a net basis, the film still has never made a profit. He warned that a ruling for Petrella would mean increased litigation because studios and other defendants would have an economic incentive to bring lawsuits to clarify their rights.

But Kagan noted a “dearth” of court decisions in which the doctrine of laches was applied to dismiss a copyright claim. That lack of cases, she said, “is probably explainable because people didn't think they had a laches defense when a plaintiff sued within a statute of limitations. And now, if we open this all up ' grant it in a statutory context in which it makes some sense to give people a laches defense ' if we open this all up, we'll be seeing motions that nobody ever dreamed of before.”

Assistant to the U.S. Solicitor General Nicole Saharsky supported Petrella in part, saying that laches should not be used to dismiss a copyright claim at the outset, but could be available at the end to influence remedies for an infringement. Most circuits either do not accept laches as a defense to a copyright claim or permit it under very limited circumstances.

“A Supreme Court ruling that reverses the Ninth Circuit could open up new avenues for copyright owners to assert their rights and legitimately profit from recycled source material,” said copyright litigator William Kane of Baker-Hostetler, who recently settled a similar case with MGM over the James Bond movie franchise. “On the other hand, if the Ninth Circuit is affirmed, it will bring some confidence to the entertainment industry that as a business is always challenged for investment certainty when launching a new multi-million dollar production.”

Sidebar

Petrella Pre-High'Court Ruling Impact

The Petrella case has impacted the ongoing copyright-assignment termination litigation in the U.S. District Court for the Southern District of California in which Victor Willis, who was lead singer for the Village People, claims he is entitled to recapture 50% of the copyrights in 24 of the group's songs for which he wrote all the new lyrics or translations of pre-existing French lyrics. Scorpio Music (Black Scorpio) S.A. v. Willis, 11cv1557.

Willis argues, in a counterclaim to a declaratory action filed by Scorpio Music, that Village People associate Henri Belolo had no co-authorship role in creating the English lyrics. Scorpio Music moved for summary judgment on Willis's lyrics authorship claim on statute of limitation and laches grounds. In the Ninth Circuit, within which the Southern District of California resides, laches has been accepted as a defense to a co-authorship claim. But in the Willis case, Chief District Judge Barry Ted Moskowitz denied Scorpio Music's motion by noting in part, 'As for Plaintiffs' laches argument, the Court denies the motion without prejudice to refiling after the Supreme Court issues a decision in' Petrella.

'Stan Soocher, Editor-in-Chief

'

Marcia Coyle is Chief Washington Correspondent for The National Law Journal, an ALM sibling publication of Entertainment Law & Finance.