On May 19th, the Supreme Court resolved a circuit split in Petrella v. Metro-Goldwyn-Mayer. The Court ruled that the doctrine of laches does not bar copyright infringement suits if the suits are brought within the Copyright Act’s three-year rolling statute of limitations, absent extraordinary circumstances.
In reversing the Ninth Circuit, the Court held that laches serves a gap-filling function and should be applied only in the absence of a limitation period. Because the Copyright Act provides a three-year limitation period, laches does not apply to copyright suits, except in extraordinary circumstances. This was not such a case.
In this case, boxing champion Jake LaMotta and his friend Frank Petrella copyrighted a screenplay in 1963 about LaMotta’s boxing career. An MGM subsidiary later acquired the rights. In 1980, MGM released and copyrighted Raging Bull, a film based off of the screenplay. Petrella died in 1981, and his daughter eventually obtained sole ownership of his copyright. She renewed it in 1991 and, in 1998, informed MGM that its exploitation of Raging Bull infringed on her copyright. In 2009, she sued MGM for infringing acts since 2006 pursuant to the separate-accrual rule, which creates a new limitation period for each infringing act.
MGM argued that the doctrine of laches prevented the suit because the 18-year delay was unreasonable and prejudicial. The District Court and Ninth Circuit agreed with MGM, but the Supreme Court reversed. The Court held that the Ninth Circuit erred in failing to recognize that the Copyright Act’s statute of limitations accounts for the excessive delay problem. The Copyright Act provides a three-year statute of limitations, thus limiting Petrella’s claim to only those infringing acts that have occurred since 2006. The Copyright Act also allows defendants to prove and offset “deductible expenses” and “elements of profit attributable to factors other than the copyrighted work.” Finally, the Court held that the doctrine of laches serves as an equitable defense and should be available only when a statute lacks a limitations period.
The Court rejected a number of MGM’s arguments in support of applying laches. MGM argued that laches should be available in all civil actions to bar all forms of relief, but the Court reasoned that such an interpretation would counter the doctrine’s narrow, gap-filling role. The Court distinguished tolling, which is read into “every federal statute of limitations,” from laches. It reasoned that tolling is tied to the limitations period, but laches serves as a guide in their absence. Responding to MGM’s argument that laches must be used to prevent the copyright holder from waiting until the most opportune time to sue, the Court reasoned that such a requirement would be both impractical and inefficient. Requiring copyright holders to sue under MGM’s proposed requirement would force copyright owners “to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude.” Regarding MGM’s concern that allowing such a delay might cause harm for evidentiary and discovery purposes, the Court reasoned that Congress must have contemplated this delay when allowing renewal rights 28 years after the original copyright. Furthermore, the plaintiff experiences the harm from delay just as much, if not more, than the defendant, because he or she must prove the infringement. The Court also reasoned that estoppel does not apply because it is based on misleading and consequent loss, not delay. Finally, the Court held that the facts of the case did not qualify as an extraordinary enough circumstance to invoke laches protection.
The ruling has invoked mixed reactions, and its impact remains to be seen. The National Law Journal called the opinion a major victory for authors and creators of copyrighted works. Other experts have warned of explosive amounts of litigation from copyright holders digging up old claims and suing pursuant to the separate-accrual rule. For now, this ruling reminds copyright holders and potential infringers that the courts will place a priority on statutory limitations, if they exist.