`Raging Bull' Decision Breathes New Life Into Late-Breaking Copyright Suits

On May 19, 2014, the Supreme Court announced its decision in Petrella v. MGM, a copyright case centering on whether laches—an unreasonable delay in bringing suit, causing prejudice to the defendant—bars suits where an act specifies a statute of limitations.  After oral argument before the Court, it looked almost certain that laches would remain available as a shield for defendants.  Justices Scalia and Alito were incredulous at plaintiff’s suggestion that laches could not apply just because it was equitable in nature; that is, a legal principle based in fairness as opposed to having been written into the statute. Justice Kagan asked who in their right mind would produce a movie if they could be sued decades later.  It appeared the only open issues were the requirements of the laches defense and whether it would bar damages, injunctive relief, or both.

However, in a major shock—and an unusual allegiance between the most liberal and conservative Justices (including the above-mentioned Scalia, Alito, and Kagan)—on May 19, the Court announced a 6-3 decision against laches, finding that the defense can never be applied when the act sued under has its own statute of limitations.

The decision breathed new life into the Petrella suit, which concerns the screenplay to the 1980 movie Raging Bull, co-written and sold by Frank Petrella.  When Petrella died, his copyright rights passed to his daughter, who claims that MGM needed her permission to continue to exploit the screenplay.  She initially contacted MGM in the 1990s, but did not bring suit until 2009.  This coincided with a bump-up in Raging Bull DVD sales due to a 25^th anniversary edition.

Under copyright law, every act of infringement is essentially subject to its own statute of limitations, meaning that any of MGM’s sales in the three years prior to 2009 fell within the time limit, and future sales could potentially be stopped.  However, the federal district court entirely barred Petrella’s claim based on laches, finding that she waited unreasonably long to sue and defendants no longer had access to key witnesses and documents. The Ninth Circuit Court of Appeals affirmed.  The Supreme Court’s decision reverses those rulings and sends the case back to the district court.

While it only discussed one, narrow defense, Petrella has far-ranging implications.  In the last few years, there has been an escalation in the filings of cases like Petrella, especially in the music industry.  The digital world allows works to have a far longer shelf life and be re-released in different avenues.  The laches defense had been of particular comfort to defendants in the Ninth Circuit, home of the California federal courts where many entertainment industry cases are filed.  Over the years, laches had been used to bar cases related to the James Bond movies,[1] Three Dog Night’s “Joy to the World,”[2] the popular 1950s song “Gonna Get Along Without You Now,” later used in movies and tv shows,[3] the Vietnam War song, “I Feel Like I'm Fixin' to Die Rag,”[4] and a photograph of Lenny Bruce used on an album.[5]

Now the question becomes whether a window has been opened or a door kicked down.  In the first week after the decision, its rippling affects became evident, even outside of the copyright realm.  For example, in a pending patent case,[6] a district court used laches to bar the plaintiff from seeking any damages incurred prior to the date plaintiff sued.  The plaintiff still won over $30 million at trial for post-filing damages, but, based on Petrella, it is now asking the Federal Circuit to order an additional trial on damages for the six years prior to filing to correspond with the patent statute of limitations.  Meanwhile, Disney has been in a battle for years with Stan Lee Media, Inc. (an entity not supported by or including Stan Lee) over the rights to Spider Man.  SLMI’s claims—which have more of a focus on determining ownership of the works than on infringement—have been barred before, but it is now trying to revive them using Petrella.[7]

The landscape has also changed in ongoing cases where the parties expected laches to be the determinative issue.  A year after writing a more than 50-page opinion in Lego A/S, v. Best-Lock Construction Toys (11-cv-1586 D. Conn.), wherein he denied both parties’ motions for a preliminary injunction regarding the distribution of “minifigures” (think the types of characters featured in the recent Lego Movie) because of the laches doctrine, the judge has now noted that Petrella put his prior opinion on the “ash-heap of discarded district court jurisprudence,” and may have changed the status of that case.

The more typical post-Petrella cases will involve people who thought for decades that their works were stolen, but had decided not to sue, and after time, could not find a lawyer to take the case.  One such claim might involve one of the most famous songs ever.  According to numerous reports, the estate of Randy California, guitarist for 60s band “Spirit,” plans to sue regarding “Stairway to Heaven,” which allegedly took its famous guitar opening from Spirit’s song “Taurus.”  Randy California (who died in 1997) and others knew of the alleged infringement for approximately four decades, but a suit might now be viable.  If the case proceeds, it will do so with the main witness deceased for almost 20 years, many others also missing, and the vast majority of relevant documents destroyed.

All is not lost for copyright defendants affected by Petrella.  The Supreme Court did leave open other potential related defenses, such as “equitable estoppel,” which is most likely to come into play where the plaintiff took certain actions to trick the defendant into believing it would not sue and the defendant relied on that deception.  The Court also suggested that, under limited circumstances, a district court could adjust plaintiff’s final relief based on its delay in filing suit.  However, such a vague instruction is unlikely to give defendants any comfort at this point.

Given the absolute holding of the Court, unlikely to change in the foreseeable future, that laches is now unavailable as a defense in copyright cases—or any other case where the act sued upon has a statute of limitations—companies that use or distribute copyrighted works will need to change the way they do business.

Because any company that uses a work for many years might now be sued decades after the first use, businesses need to have good document retention systems and keep files related to each creative work or artist.  They should paper all aspects of creation and production, including taking notes, making records of meetings, and retaining drafts showing the creative process.  They should require third-parties who provide works to enter into comprehensive indemnification agreements and present any documentation evidencing creation.  Companies will also need to keep contact with former employees in case a witness is necessary later on.  In addition, companies must keep insurance policies up to date and make sure that policies specifically cover old works to avoid arguments over coverage.  Finally, if any claims or threats are received over time, they should be kept in the work’s file even if the claimant takes no action.  That way, the business people twenty years later can undertake a risk/reward analysis before they put resources into marketing a re-release or anniversary edition of a work.

There are limited steps a company can take now to protect itself from the claims about to be filed that stem from 20-50 years ago.  However, given the landscape going forward, the companies that follow the above advice will be in the best position to avoid later rounds of lawsuits based on copyrighted works they have just started to use.