On May 19, 2014, the U.S. Supreme Court in Petrella v. Metro-Goldwyn Mayer, Inc., found that equitable doctrine of laches (unreasonable delay) cannot be invoked for a claim legitimately brought within the 3 year statute of limitations.

This case centers around a 1973 screenplay which told the life story of boxing champion Jake LaMotta.  Although created by both LaMotta and Frank Patrella, Patrella was named as the sole author.  In 1976 Patrella and LaMotta assigned their rights in the work and ultimately MGM created the critically acclaimed motion picture “Raging Bull” which was directed by Martin Scorcese and earned Robert DeNiro an Academy Award for Best Actor.  As the Copyright Act allows, although the rights to the screenplay, including the renewal rights, had been assigned, after Frank Petrella’s death, his renewal rights reverted to his daughter, who could renew the copyrights unburdened by any earlier assignment.  Paula Petrella, Frank’s daughter, properly renewed the copyright in 1991 and in 1998 Petrella’s attorney informed MGM that Petrella was now the copyright owner and any exploitation of any derivative work infringed.  Ultimately, Petrella filed suit 9 years later in 1998.  Importantly, Petrella, despite being aware of the allegedly infringing actions for years, only sought relief for acts of infringement occurring the three years prior to bringing suit (acts occurring on or after January 6, 2006).

In its defense MGM, along with numerous others, asserted laches based on Petrella’s 18 year delay.  The District Court, granted MGM’s Motion for Summary Judgment citing “expectations-based prejudice” and “evidentiary prejudice”.  The 9th Circuit Court of Appeals affirmed.

Justice Ginsberg, for the majority, began by laying out the timing rules for copyright infringement actions.  In 1957 Congress prescribed a 3 year limitations period for all civil claims arising under the Copyright Act.  A claim accrues when an infringing act occurs.  In addition, the separate accrual rule allows, where a defendant commits successive violations, the statute of limitations runs separately for each violation.  This means that each time an infringing work is reproduced or distributed, the infringer commits a new wrong, giving rise to a new claim and a new statute of limitations period.  Justice Ginsberg pointed out that laches is a defense developed by courts of equity for claims which the Legislature has provided no fixed time limitation.  In the face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.  Inviting judges to set a time limit other than the one prescribed by Congress would conflict with the uniformity sought with 507(b).  Here, because Congress had enacted a 3 year statute of limitations, it would be inappropriate to allow a judge created doctrine to trump the will of Congress.  As such, Petrella had a right to bring claims for any act of infringement that occurred the 3 years prior to filing suit.

Additionally, although Petrella admitted to delaying suit because the film was in the “red” and waited until the film was bringing in a profit, the Supreme Court found there is nothing untoward about waiting to see whether an infringer’s exploitation damages the value of the copyrighted work or even complements it.  The separate accrual rule allows a copyright owner to defer suit until she can estimate whether litigation is worth it.  The statute of limitations period limits the recovery of damages for infringing acts occurring in the 3 year look-back period and prospective injunctive relief only.  Should the copyright owner choose to wait then she will miss out on recovering for any infringement that occurs outside the 3 year statute of limitations.

However, the court emphasized that defendants were still allowed to rely on estoppel where a copyright owner engages in intentiaonlly misleading representation concerning the abstention from suit and the alleged infringer detrimentally relies on the copyright owners deception.  Additionally, the court also emphasized that in certain extraordinary circumstances the consequences, a delay in commencing suit may be of a sufficient magnitude to warrant the curtailment of the relief sought.  Such as limiting relief only to monetary damages instead of injunctive relief.

Although the Court reversed the 9th Circuit finding it erred in treating laches as a complete bar to recovery, the Court maintained that on remand, if Petrella was to prevail, the District Court may take into account her delay when considering the appropriate remedies.

This ruling allows for copyright holders to play a waiting game and only sue for infringement when it may be most profitable, so long as a new act of infringement occurs.  It is important to note that if MGM had not continued to exploit the film there would likely be no case of infringement for which Petrella could seek recovery, due to the 3 year statute of limitation.

This holding should also serve to put alleged infringers on notice that claims they once thought to be barred due to laches may still be ripe for suit if there are continuing infringing acts.  Additionally, it will be interesting to see whether this holding will reach to other areas of intellectual property law, such as trademark infringement, where laches is an often asserted defense.

 

 

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