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October Term, 2013

May 19, 2014

Today the Supreme Court issued one decision, described below, of interest to the business community.

Copyright Act—Court Rejects Availability of the Equitable Defense of Laches to Bar Adjudication of Copyright Infringement Cases

Petrella v. Metro-Goldwyn-Mayer, Inc., No. 12-1315 (previously described in the October 1, 2013, Docket Report)

Today, in Petrella v. Metro-Goldwyn-Mayer, Inc., the Supreme Court held that the equitable defense of laches is not available to bar adjudication of copyright‑infringement claims filed within the three‑year statutory limitations period. This decision is highly significant for businesses and individuals in the media and entertainment industries, as well as for all defendants who might attempt to assert a laches defense against a claim brought pursuant to a federal statute with an express limitations period.

The federal Copyright Act contains a statute of limitations barring civil actions commenced more than three years after the claim accrued. 17 U.S.C. § 507(b). A claim ordinarily accrues when an infringing act occurs, and each infringing act starts a new limitations period. But some courts of appeal have applied the equitable defense of laches to bar relief when a plaintiff unreasonably delays bringing suit and that delay prejudices the defendant, even when the suit alleges infringing acts occurring only within the three-year period. Other courts have held that the laches defense is unavailable in this situation.

In Petrella, the plaintiff alleged that the defendants had committed copyright infringement through their sale and distribution of the 1980 movie Raging Bull, which the plaintiff claimed was based on works written by her deceased father. The plaintiff had been aware of her potential claims since 1991, but she did not file suit until 2009. In recognition of the statute of limitations, she sought relief solely for infringements occurring during the three years before she filed suit. The district court granted summary judgment in favor of the defendants; it held that although the statute of limitations was satisfied, the doctrine of laches barred all of the plaintiff’s claims because her delay in commencing suit had been unreasonable and prejudicial to the defendants. The Ninth Circuit affirmed.

The Supreme Court reversed in a 6-3 decision written by Justice Ginsburg, holding that laches cannot bar adjudication of claims for infringement brought within the three-year limitations period. The Court concluded that the statute of limitations was sufficient to account for any delay by the plaintiff in bringing suit. Slip Op. at 11-14. The Court noted that it had previously cautioned against invoking laches to bar legal relief, and that it had never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period. Id. at 12-15. The Court distinguished laches from the doctrine of “equitable tolling,” which lengthens the time to commence a civil action under certain circumstances and is interpreted to be a component of every federal statute of limitations; unlike laches, the Court explained, tolling results from an interpretation of such statutes whereas laches is a separate equitable doctrine. Id. at 15-16.

Finally, the Court made clear that although laches cannot be invoked to preclude adjudication of a claim for damages brought within the limitations period, the doctrine may be invoked in certain extraordinary circumstances to curtail the relief awarded. The district court might, for example, take account of the plaintiff’s delay in determining appropriate injunctive relief or assessing profits. The Court directed lower courts to consider whether the defendant had taken acts in reliance on the plaintiff’s delay, the defendant’s knowledge of the plaintiff’s claims, the protection the defendant might have obtained through a declaratory judgment action, the extent to which the defendant’s investment was protected by the separate accrual of each allegedly infringing action, the Court’s authority to order injunctive relief on terms it may deem reasonable, and any other factors.

Justice Breyer, joined by Chief Justice Roberts and Justice Kennedy, dissented. Justice Breyer stated that circumstances warranting application of the laches doctrine in the copyright context were “not difficult to imagine.” Dissent at 2. For instance, Justice Breyer observed that a plaintiff may wait until the death of key witnesses before bringing suit. Id. The plaintiff also might wait until the defendant invests time, effort, and resources into making the derivative product. Id. at 2-3. Justice Breyer found that nothing in the Copyright Act indicates that Congress sought to bar the operation of laches and that the Court’s prior precedents did not limit the availability of the equitable defense to bar claims for legal relief. Id. at 7-12.

Any questions about this case should be directed to Vanessa M. Biondo (+1 212 506 2193) in our New York office or Donald Falk (+1 650 331 2030) in our Palo Alto office.

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