Analysis of Sup. Ct. <i>Raging Bull</i> Ruling

But copyright litigator Brad Newberg of Reed Smith calls the decision “shocking in its result and ramifications.” He predicts a “flood of lawsuits” as “masses of litigants from the '70s, '80s and '90s will likely come out of the woodwork to claim that hit songs, movies, TV shows and other creative works still in the marketplace in some fashion, belong to them and they want a share of the profits. In many cases, defendants will be completely unaware, with key witnesses deceased or with whereabouts unknown, and key documents and evidence regarding the history of creation of the work destroyed or unavailable.”

Dylan Ruga of Steptoe & Johnson LLP's Los Angeles office, agrees: “Unless the plaintiff previously represented that he or she would not sue, there is very little chance that these cases will be thrown out due to the delay in bringing suit.”

The Copyright Act, Ginsburg wrote in her opinion, accounts for any delays by providing that “no civil action shall be maintained under the [act] unless it is commenced within three years after the claim accrued.” A claim “accrues,” she said, when an infringing act occurs. Each infringing act starts a new limitations period.

“The expansive role for laches MGM envisions careens away from understandings, past and present, of the essentially gap-filling, not legislation-overriding, office of laches,” Ginsburg wrote. “Nothing in this court's precedent suggests a doctrine of such sweep.”

Petrella's 2009 copyright infringement action came 18 years after she renewed her father's copyright in the screenplay that she contends became the basis for the 1980 movie biography of boxer Jake LaMotta. Her father, Frank Petrella, who collaborated with LaMotta on screenplays and a book, died in 1981 and his rights in the works reverted to his daughter.

A federal district court granted 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. The U.S. Court of Appeals for the Ninth Circuit affirmed. The Supreme Court took the Petrella case to resolve a split among the circuit courts over the application of laches in copyright infringement actions.

“Assuming Petrella had a winning case on the merits,” Ginsburg wrote, “the Court of Appeals' ruling on laches would effectively give MGM a cost-free license to exploit Raging Bull throughout the long term of the copyright. The value to MGM of such a free, compulsory license could exceed by far MGM's expenditures on the film.”

Ginsburg rejected MGM's argument, among others made by Mark Perry of Gibson, Dunn & Crutcher, that laches must be available to prevent a copyright owner from doing nothing until he or she sees what the outcome of the alleged infringer's investment will be. MGM had told Petrella for years that Raging Bull was not profitable. “There is nothing untoward about waiting to see whether an infringer's exploitation undercuts the value of the copyrighted work, has no effect on the original work or even complements it,” Ginsburg wrote.

The three-year limitations period, she added, “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.”

If infringement is proved, Ginsburg said, a defendant may offset against profits made during the infringing period those expenses incurred in generating the profits. Additionally, a defendant may retain the return on investment attributable to its own enterprise.

Although laches cannot bar a claim for damages, the majority said, it might ' in extraordinary circumstances ' affect equitable relief, such as injunctions. No such extraordinary circumstances exist in Petrella's case, Ginsburg said.

If a copyright owner intentionally makes misleading representations about why he or she delayed suing and the alleged infringer relied on those misrepresentations, the doctrine of equitable estoppel may bar the copyright owner's claims completely, the majority also held.

The Dissent

Justice Stephen Breyer, joined by Chief Justice John Roberts Jr. and Justice Anthony Kennedy, dissented, saying the Copyright Act is silent on the subject of laches. “And silence is consistent, not inconsistent, with the application of equitable doctrines. “In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, the doctrine permits a court to bring about a fair result,” he wrote.

Petrella counsel Bibas says: “There are plenty of other barriers to authors succeeding on copyright infringement. One of our amici [the California Society of Entertainment Lawyers] did a Ninth Circuit survey that showed no [author's plaintiff] in Hollywood in the last two decades has won an infringement suit. The studios have a lot of other doctrines to use in their defense. Nevertheless, this is important because there are so many barriers to recovery.”

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

Authors and other creators of copyrighted works scored a major victory in May when the U.S. Supreme Court eliminated a significant barrier to recovering damages for copyright infringement. In Petrella v. Metro-Goldwyn-Mayer Inc., 12-1315, a 6-3 majority, led by Justice Ruth Bader Ginsburg, held that the so-called doctrine of laches ' meant to punish unreasonable, prejudicial delay in bringing a suit ' could not bar an infringement claim for damages that was been filed within the three-year limitations period in '507(b) of the U.S. Copyright Act.

The decision's immediate effect will give Paula Petrella, daughter of the author of the screenplay for the Academy Award-winning film, Raging Bull, her day in court to press her 2009 infringement action against Metro-Goldwyn-Mayer.

“This is her father's legacy, his life work,” says Petrella's high court counsel, Stephanos Bibas, director of the Supreme Court clinic at the University of Pennsylvania Law School. “For her case, the court makes clear that never is laches going to bar damages. She can recover for infringement since 2006, and if they continue infringing, she can collect going forward.”

But copyright litigator Brad Newberg of Reed Smith calls the decision “shocking in its result and ramifications.” He predicts a “flood of lawsuits” as “masses of litigants from the '70s, '80s and '90s will likely come out of the woodwork to claim that hit songs, movies, TV shows and other creative works still in the marketplace in some fashion, belong to them and they want a share of the profits. In many cases, defendants will be completely unaware, with key witnesses deceased or with whereabouts unknown, and key documents and evidence regarding the history of creation of the work destroyed or unavailable.”

Dylan Ruga of Steptoe & Johnson LLP's Los Angeles office, agrees: “Unless the plaintiff previously represented that he or she would not sue, there is very little chance that these cases will be thrown out due to the delay in bringing suit.”

The Copyright Act, Ginsburg wrote in her opinion, accounts for any delays by providing that “no civil action shall be maintained under the [act] unless it is commenced within three years after the claim accrued.” A claim “accrues,” she said, when an infringing act occurs. Each infringing act starts a new limitations period.

“The expansive role for laches MGM envisions careens away from understandings, past and present, of the essentially gap-filling, not legislation-overriding, office of laches,” Ginsburg wrote. “Nothing in this court's precedent suggests a doctrine of such sweep.”

Petrella's 2009 copyright infringement action came 18 years after she renewed her father's copyright in the screenplay that she contends became the basis for the 1980 movie biography of boxer Jake LaMotta. Her father, Frank Petrella, who collaborated with LaMotta on screenplays and a book, died in 1981 and his rights in the works reverted to his daughter.

A federal district court granted 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. The U.S. Court of Appeals for the Ninth Circuit affirmed. The Supreme Court took the Petrella case to resolve a split among the circuit courts over the application of laches in copyright infringement actions.

“Assuming Petrella had a winning case on the merits,” Ginsburg wrote, “the Court of Appeals' ruling on laches would effectively give MGM a cost-free license to exploit Raging Bull throughout the long term of the copyright. The value to MGM of such a free, compulsory license could exceed by far MGM's expenditures on the film.”

Ginsburg rejected MGM's argument, among others made by Mark Perry of Gibson, Dunn & Crutcher, that laches must be available to prevent a copyright owner from doing nothing until he or she sees what the outcome of the alleged infringer's investment will be. MGM had told Petrella for years that Raging Bull was not profitable. “There is nothing untoward about waiting to see whether an infringer's exploitation undercuts the value of the copyrighted work, has no effect on the original work or even complements it,” Ginsburg wrote.

The three-year limitations period, she added, “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.”

If infringement is proved, Ginsburg said, a defendant may offset against profits made during the infringing period those expenses incurred in generating the profits. Additionally, a defendant may retain the return on investment attributable to its own enterprise.

Although laches cannot bar a claim for damages, the majority said, it might ' in extraordinary circumstances ' affect equitable relief, such as injunctions. No such extraordinary circumstances exist in Petrella's case, Ginsburg said.

If a copyright owner intentionally makes misleading representations about why he or she delayed suing and the alleged infringer relied on those misrepresentations, the doctrine of equitable estoppel may bar the copyright owner's claims completely, the majority also held.

The Dissent

Justice Stephen Breyer, joined by Chief Justice John Roberts Jr. and Justice Anthony Kennedy, dissented, saying the Copyright Act is silent on the subject of laches. “And silence is consistent, not inconsistent, with the application of equitable doctrines. “In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, the doctrine permits a court to bring about a fair result,” he wrote.

Petrella counsel Bibas says: “There are plenty of other barriers to authors succeeding on copyright infringement. One of our amici [the California Society of Entertainment Lawyers] did a Ninth Circuit survey that showed no [author's plaintiff] in Hollywood in the last two decades has won an infringement suit. The studios have a lot of other doctrines to use in their defense. Nevertheless, this is important because there are so many barriers to recovery.”

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