A recent U.S. Supreme Court ruling involving a classic Hollywood film may have dealt a knockout punch to a commonly used affirmative defense in a much broader range of cases, including patent litigation.
The 6-3 decision in Petrella v. Metro-Goldwyn-Mayer, Inc. held that the defense of laches, in which the defendant alleges an unreasonable and prejudicial delay in commencing suit, could not be asserted against a copyright infringement plaintiff who inherited and subsequently renewed a copyright in the screenplay for the film “Raging Bull,” despite the fact that she filed suit 18 years after obtaining the copyright.
Because the suit was brought within a valid statute of limitations period under federal copyright law, which restarts the limitations period with every act of infringement, the doctrine of laches could not be applied, the court ruled.
But that reasoning could also block the defense of laches in a host of cases involving other statutes with “rolling” statutes of limitations, such as the Patent Act.
“I think it’s the right decision, although I am surprised that it is framed in such absolute terms,” said R. David Hosp, a principal in the Boston and New York offices of Fish & Richardson PC. “It seems that it strips away courts’ ability to apply laches at all in cases where there is a clear statute of limitations.”
During oral arguments in the case, as well as in a footnote in the opinion, the justices expressly pointed out that the Patent Act contains a rolling six-year statute of limitations. Although the U.S. Circuit Court of Appeals for the Federal Circuit has allowed the doctrine of laches to be asserted in patent claims, the Supreme Court ominously noted, “We have not had the occasion to review the Federal Circuit’s position.”
That could soon change.
The ruling “will be extremely influential,” said Jeffrey Simmons, a partner in the Madison office of Foley & Lardner LLP. “It could be interesting to see what happens in patent cases.”
The lawsuit at issue was brought in 2009 by Paula Petrella, whose father Frank Petrella co-wrote a screenplay in 1963 with retired boxer Jake LaMotta about LaMotta’s career. The rights were assigned to MGM to write and create the 1980 film “Raging Bull,” starring Robert DeNiro as LaMotta. MGM also entered into a series of licensing agreements allowing the film to be broadcast on television as well as marketed on home video. MGM has continued to market the film in a number of ways, including releasing a 25th anniversary version on DVD and a Blu-ray version in 2005.
When Frank Petrella died in 1981, the rights in the original screenplay reverted to his heirs. In 1991, Paula Petrella renewed the copyright. Seven years later her attorney contacted MGM asserting her copyright over the original screenplay that served as the basis of the film. The company denied the validity of Petrella’s copyright. In 2009 she filed suit, alleging infringement and seeking damages incurred since 2006, soon after the release of the anniversary edition of the film.
MGM asserted the affirmative defense of laches. A federal District Court granted the company’s motion for summary judgment on that basis, and the 9th Circuit affirmed.
Uniformity vs. fairness
But the Supreme Court reversed, allowing Petrella’s suit to proceed.
Laches, the court held, cannot be applied “to bar in their entirety claims for discreet wrongs occurring within a federally prescribed limitations period.”
“Inviting individual judges to set a time limit other than the one Congress prescribed, we note, would tug against the uniformity Congress sought to achieve” by including statutes of limitations in laws such as the Copyright Act, wrote Justice Ruth Bader Ginsburg for the majority.
Ginsburg noted that the Copyright Act has built-in safeguards, such as limiting damages to a three-year period for each act of infringement, to deter copyright plaintiffs from simply sitting on their rights for decades before swooping in to recoup the benefit realized by another party who has made the work into a profitable enterprise. Also, in cases of deception on the part of the copyright owner, the doctrine of estoppel may apply.
Justice Stephen Breyer, in a dissent joined by Chief Justice John Roberts Jr. and Justice Anthony Kennedy, said the majority’s view incentivizes copyright infringement plaintiffs to wait until someone else has invested time and money to transform a work before filing suit.
The equitable doctrine of laches should be available where appropriate in the interest of fairness, Breyer said.
“Suppose, for example, the plaintiff has deliberately waited for the death of witnesses who might prove the existence of understandings about a license to reproduce the copyrighted work, [or that] plaintiff has delayed in bringing suit because he wants to avoid bargaining with the defendant up front over a license,” Breyer wrote. “He knows that if he delays legal action, and the defendant invests time, effort, and resources into making the derivative product, the plaintiff will be in a much stronger position to obtain favorable licensing terms through settlement. Or, suppose the plaintiff has waited until he becomes certain that the defendant’s production bet paid off, that the derivative work did and would continue to earn money.”
Patent suits pending
Delayed copyright infringement claims such as the one at issue in Petrella are relatively rare, so the effect of the ruling on copyright litigation will likely be minimal, attorneys say.
Byron McMasters, an associate with Duffy & Sweeney LTD in Providence, R.I., noted that only certain types of copyrighted works — such as classic films or music recordings that are reissued — see their value increase years after initial release.
“Your best chance of getting damages for this type of infringement is still generally when the movie or recording first comes out,” he said.
But cases involving aging patent rights — including claims brought by so-called “patent trolls” who obtain old patents for the purpose of filing suit against inventors of new devices for the purpose of forcing settlement — are common.
“That’s the most interesting thing about this case,” said Richard Brophy, an associate in the St. Louis office of Armstrong Teasdale LLP. “It’s clear from reading the Supreme Court’s opinion that they are targeting patent law as well.”
Brophy said that although the use of the laches defense is not necessarily prevalent in patent litigation, “it comes up from time to time” in his practice.
While patent holders traditionally have been counseled to “aggressively enforce your rights” against potential infringers, Brophy said this ruling, if extended to patent claims, could change that dynamic.
“More people may say, ‘Let’s wait and see if it looks like it will be successful, then we’ll sue,’” he said.
As parties begin testing out how lower courts will apply the Supreme Court’s ruling, there could be an increase in litigation involving copyright claims, patents and other areas of the law with rolling statute of limitations periods.
“I think you will see some uptick,” said Simmons. Some defendants “may be a little more afraid of these suits and more willing to settle.”
[follow id=”dcdicta” size=”large” count=”true”]