American Broadcasting Companies vs. Aereo, Inc.

A couple of weeks ago, overshadowed by the Hobby Lobby decision, SCOTUS handed down a copyright decision that may substantially limit the ability of transmitters to transmit copyrighted broadcasts without a license to do so.

In American Broadcasting Cos. v. Aereo, Inc., 573 US ___ (2014), Aereo is a subscription broadcasting service that sold “…to its subscribers a technologically complex service that allows them to watch television programs over the internet at about the same time as the programs are broadcast over the air.” Slip Op. at 1. The technology is detailed in the case, so I do not reproduce it here; suffice it to say that through a complex series of technological events, each Aereo subscriber ends up having his or her own dedicated antenna through which copyrighted content is streamed to one computer only. The US District Court for the Southern District of New York, affirmed by the US Court of Appeals for the Second Circuit, found that this technology does not infringe the rights of the copyright holders of the shows that Aereo streams to its users because, first, Aereo does not “perform” within the meaning of the Copyright Act and, second, even if it does “perform,” it does not do so “publicly” because there is a dedicated antenna connected to only one computer, making the streaming a private showing, thus falling outside the “public” performance requirement of the Act to qualify as infringement.

SCOTUS disagrees. In a 6-3 decision delivered by Justice Breyer (the dissent comprises Justices Scalia, Thomas and Alito; all others concur in the majority opinion), the Court decreed that the 1976 Copyright Act was put in place, in large part, to overturn their decision in Fortnightly Corp v. United Artists Television, Inc., 392 US 390 (1968), which held that community-antenna television falls outside of the scope of the Copyright Act of 1952. Given the clear intent of Congress to make such activities fall very definitely within the scope of the Copyright Act, and given that Aereo’s activity are not substantially different from those of Fortnightly, the Court felt duty-bound to overturn the Court of Appeals for the Second Circuit’s holding that Aereo’s activities do not infringe copyright. SCOTUS holds for the plaintiff in determining whether (a) Aereo “performs” within the meaning of the Act and (b) Aereo performs “publicly” within the meaning of the Act.

There is language in the case that indicates that this case can be read narrowly, but this case puts rebroadcasters on notice: The act of rebroadcasting is a “transmission” within the meaning of the Act, and the viewer and broadcaster “perform publicly” within the meaning of the Act.

I advise my clients that it’s always easiest, best, cheapest to get a license to use the copyrighted works of others. This case just goes to show that this advice is still good.

The oral arguments on both sides are actually interesting for those of us who like copyright matters.

Raging Bull Laches On

The US Supreme Court has issued a decision in the Petrella v. MGM, 572 US ___ (2014).

The equitable doctrine of laches says that if a plaintiff waits too long before bringing a lawsuit, that suit cannot be heard. It’s a common-law version of a statute of limitations. Under a statute of limitations, a case can be forever dismissed because a case was brought too late. Under the equitable doctrine of laches, a case can be forever dismissed because the plaintiff failed to timely bring suit and the defendant was unduly prejudiced by the delay.

In Petrella, the movie Raging Bull (1980) is accused of infringing the copyright in a screenplay written and registered with the US Copyright Office in 1963. Raging Bull is, of course, based on the life of Jake LaMotta. LaMotta had a friend, a writer named Frank Petrella, who co-authored several works on which Raging Bull was based; the copyrights in those works were properly registered in the 1960s and 1970s. While Frank Petrella and his co-author of that screenplay assigned rights and renewal rights to United Artists (now a subsidiary of MGM) in 1979, when Frank died in 1981 (during the first term of the copyright on the Raging Bull screenplay), renewal rights reverted to Frank’s estate under Stewart v. Abend, 495 U.S. 207 (1990), and ultimately to his daughter and heir, Paula Petrella. Paula renewed the copyright in the only one of the three works on which Raging Bull is based in which she could do so, and is now the sole owner of that copyright. In 1998, Ms. Petrella sent notice to MGM that Raging Bull infringes her copyright and threatened suit. In January, 2009, that suit materialized with Ms. Petrella seeking monetary and injunctive relief limited to acts of infringement occurring on or after January 6, 2006 (that is, all acts that occurred within the three-year statute of limitations). MGM promptly answered with the defense of laches, claiming that the delay in filing from 1998 to 2009 was unreasonable and unduly prejudicial. The US District Court for the Central District of California granted the defense and dismissed the case on those grounds. Petrella appealed to the US Court of Appeals for the Ninth Circuit, who affirmed the District Court’s decision. She then appealed to the US Supreme Court, who granted certiorari.

The High Court reversed the decisions below. In a 6-3 decision, the Court decided:

The Ninth Circuit erred, we hold, in failing to recognize that the copyright statute of limitations, §507(b), itself takes account of delay. … [A] successful plaintiff can gain retrospective relief only three years back from the time of suit. No recovery may be hadfor infringement in earlier years. Profits made in those years remain the defendant’s to keep.

Brought to bear here, §507(b) directs that MGM’s returns on its invest­ment in Raging Bull in years outside the three-year win­dow (years before 2006) cannot be reached by Petrella. Only by disregarding that feature of the statute, and the separate-accrual rule attending §507(b), see supra, at 4–5, could the Court of Appeals presume that infringing acts occurring before January 6, 2006 bar all relief, monetary and injunctive, for infringement occurring on and after that date. See 695 F. 3d, at 951; supra, at 9–10.13 Moreover, if infringement within the three-year look-back period is shown, the Act allows the defendant to prove and offset against profits made in that period “deductible expenses” incurred in generating those profits.§504(b). In addition, the defendant may prove and offset “elements of profit attributable to factors other than the copyrighted work.” §504(b). The defendant thus may retain the return on investment shown to be attributable to its own enterprise, as distinct from the value created by the infringed work. See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U. S. 390, 402, 407 (1940) (equitably apportioning profits to account for independent contribu­tions of infringing defendant). See also infra, at 19–22 (delay in commencing suit as a factor in determining contours of relief appropriately awarded).

Last, but hardly least, laches is a defense developed by courts of equity; its principal application was, and re­mains, to claims of an equitable cast for which the Legisla­ture has provided no fixed time limitation. See 1 D. Dobbs, Law of Remedies §2.4(4), p. 104 (2d ed. 1993) (here­inafter Dobbs) (“laches . . . may have originated in equitybecause no statute of limitations applied, . . . suggest[ing] that laches should be limited to cases in which no statute of limitations applies”). Both before and after the merger of law and equity in 1938, this Court has cautioned against invoking laches to bar legal relief. See Holmberg v. Armbrecht, 327 U. S. 392, 395, 396 (1946) (in actions at law, “[i]f Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of thematter,” but “[t]raditionally . . . , statutes of limitation are not controlling measures of equitable relief ”); Merck & Co. v. Reynolds, 559 U. S. 633, 652 (2010) (quoting, for its current relevance, statement in United States v. Mack, 295 U. S. 480, 489 (1935), that “[l]aches within the term of the_statute of limitations is no defense [to an action] at law.”); County of Oneida v. Oneida Indian Nation of N. Y., 470 US 226, 244, n. 16 (1985) (“[A]pplication of the equitable defense of laches in an action at law would be novel indeed.”)

 The holding that laches cannot be used as an equitable defense within the period of the statute of limitations was made by only six of the Justices; the remaining three, who sit at the conservative end of the bench, disagree, stating:

[Laches] applies in those extraordinary cases where the plaintiff “unreasonably delays in filing a suit.” National Railroad Passenger Corporation v. Morgan, 536 US 101, 121 (2002), and, as a result, causes “unjust hardship” to the defendant. Chirco v. Crosswinds Communities, Inc., 474 F.3d 227, 236 (CA6 2007) (emphasis deleted). Its purpose is to avoid “inequity.” Galliher v. Cadwell, 145 US 368, 373 (1892). And, as Learned Hand pointed out, it may well be

“inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success.” Haas v. Leo Feist, Inc., 234 F. 105, 108 (SDNY 1916).

Today’s decision disables federal courts from addressing that inequity.

In this case, I actually agree with the majority’s decision. I agree with Learned Hand’s comment that it’s not nice for a copyright holder to let the proposed infringer take the risk then swoop in to reap the rewards, but that is not what happened here. Raging Bull came out in 1980. MGM invested heavily in the film in the late 1970s and early 1980s. While yes, they still market the film today and they market it based on new technologies, the marketing expense has decreased dramatically because of the film’s popularity, awards status, and fame. Really, all MGM has to do is produce the film on a new technology and sales are virtually guaranteed. Also, Petrella does not seek damages for infringement that may or may not have occurred in the 1980s, 1990s or even the early 2000s; her suit seeks damages only within the confines of the statute of limitations, which I think moots the dissent’s quote of Judge Hand.

We certainly do not want to impose an unneeded inequity on any defendant, but I don’t think this decision does that. The inequity of delay is addressed through the statute of limitations. There is a time-certain period outside of which a defendant cannot be successfully sued. That limitation is placed on the plaintiff by statute. Today’s decision does not allow a plaintiff to sue outside of the statute of limitations, which keeps the delay to a minimum.

Taxing the Internet

The US Supreme Court yesterday (25 January 2010) decided Hemi Group, LLC v. City of New York,, ___ US ___ (2010). (The link goes to the slip opinion of the Court, which is a .pdf).

Hemi Group sells cigarettes over the internet. They are based in New Mexico, well outside of the usual jurisdictional reach of New York City and its ordinances.

New York City has a city ordinance putting a surcharge tax of $1.50 per pack on all cigarettes sold within the five boroughs.

New York City likes the $1.50 it gets for every pack of cigarettes sold in the City; that’s a lot of $1.50 payments rolling in, and it produces significant income to the City. They are backed up by federal law: the Jenkins Law 15 U. S. C. §§375-378, requires out-of-state sellers to
submit customer information to the States into which they ship cigarettes, and New York State has agreed to forward that information to the City.

Hemi Group sells its cigarettes over the internet without registering with anybody and they certainly do not disclose their customer list to some City agency. After all, customer lists are commonly acknowledged to be trade secrets, and Hemi’s customers don’t need the City chasing them down to tax them for their packs of cigarettes: why should Hemi divulge just so New York can collect its surcharge?

New York City sued Hemi Group, LLC under RICO to recover the lists to enable them to go after the City residents who bought tax-free cigarettes.

The City’s theory went something like this:

Hemi committed fraud by selling cigarettes to City residents and failing to submit the required customer information to the State. Without the reports from Hemi, the State could not pass on the information to the City. Therefore, some customers who were legally obligated to pay the cigarette tax to the City failed to do so. Because the City did not receive the customer information, it could not determine which customers had failed to pay the tax. Without that information, the City could not pursue those customers for payment. The City thereby was injured in the amount of the portion of back taxes that were never collected.

It turns out that the City chose the wrong statute under which to sue. RICO requires a direct causation link between the deed and the harm. There are just too many layers here, since the Jenkins Act goes through the State. Thus, under RICO, not only must “but-for” causation exist, but also proximate causation must be very proximate, especially when dealing with a case that transcends jurisdictional lines over the internet.

On the surface (and I haven’t had the chance yet to read this case much below the surface), I like this case. RICO is a tough statute that carries some stiff penalties, as well it should: racketeering and corruption are things that, as a society, we’d like to discourage. However, RICO is just a wee bit too much for a firm that simply fails to register with a state before doing business in that state. Heck, if RICO applies every time a business does business across state lines without registering first, many, if not most, small enterprises would be promptly out of business because their owners would be in the federal pen. This is true more than ever with the geographic seamlessness of the internet; people in California can get to the website of a small business here in Schenectady just as easily as can the next door neighbor to the business. Does the internet mean that every small business has to register in every state? This case, on first reading, indicates probably not. Thank goodness.

Supreme Court Justice Sonia Sotomayor gets feisty on big bench debut

Supreme Court Justice Sonia Sotomayor gets feisty on big bench debut.

It’s always fun to watch what the Nine Wise Ones are doing, but if this is “feisty,” the reporter who wrote this piece hasn’t seen many oral arguments before any appellate court, let alone the US Supreme Court.

Justice Sotomayer, the newbie Justice and the first Obama appointee to the High Court, asked a couple of questions. Supreme Court justices do that. So do appeals court judges. Usually they ask more than a couple of questions. There are times when the lawyers arguing the case can’t catch their breaths from the barrage from the bench. Seems to me that Justice Sotomayer sounds pretty restrained, not “feisty.”

But that’s me.

BTW, I’m glad to see that she doesn’t feel obligated to wear the ruffles and fluff around the collar that her two lady predecessors on the Court insist on wearing. Her picture is in a plain black robe, which is what every Supreme Court Justice should wear, regardless of gender.

Welcome to the highest bench, Justice Sotomayer.

For public consumption, Justice Sotomayer’s colleagues on the US Supreme Court bench are:

Chief Justice John G. Roberts, Jr. (Bush II)
Associate  Justice John Paul Stevens (Ford)
Associate Justice Antonin Scalia (Reagan)
Associate Justice Anthony M. Kennedy (Reagan)
Associate Justice Clarence Thomas (Bush I)
Associate Justice Ruth Bader Ginsburg (Clinton)
Associate Justice Stephen G. Breyer (Clinton)
Associate Justice Samuel A. Alito, Jr. (Bush II)

Two Justices have retired in recent memory:

Associate Justice (Ret.) Sandra Day O’Connor (Reagan)
Associate Justice (Ret.) David H. Souter (Bush I)

It’s fun to see how these people stack up politically (yeah, I know, the US Supreme Court is supposed to be free of politics. Ri-i-i-ight.). The appointing president is a good indicator of whether a Justice will swing toward the liberal or the conservative.

Those appointed by conservative presidents:


Those appointed by liberal presidents:


Justice Stevens has been known to decide liberally, as has Justice Kennedy. I don’t know Chief Justice Roberts well enough yet to know how he leans (I suspect he’s a dyed-in-the-wool conservative, though), and Justice Sotomayer is, of course, brand-new (though she seems to be fairly liberal in her views). Justices Scalia, Thomas and Alito are pretty straight-line conservative, and Justices Ginsburg and Breyer are pretty straight-line liberal.

Heaven help Roe v. Wade with this line-up.

In re Bilski again

The US Supreme Court has granted cert on In re Bilski (now styled Bilski v. Doll). The case is now pending before the Nine Wise Ones. Here are the court filings (from the point of view of the USPTO).

Bilski, as you recall, requires that business method patents have some sort of “transformative” characteristic — that is, the invention must somehow transform data or information input into something surprisingly different coming out.

The questions presented to the Court are:

1. “Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

2. “Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

I hope Bilski gets overturned; I don’t like its holding. I REALLY hope Bilski gets overturned.

Small world…

If the YouTube embedded video does not show up, here’s the URL.

The Rule of Six never ceases to amaze me. You know, the one that says that there are only six degrees of separation between every living human being on the planet.

Shortly after I posted the new US Supreme Court nominee mention, I got a FaceBook message from the mother of one of my daughter’s college friends telling me that the Judge Sotomayor’s brother is my friend’s allergist.

I do think an introduction is in order here.

Sotomayor nominated to high court

Sonia Sotomayor nominated to high court — first Hispanic – Yahoo News.

So. US Supreme Court Justice David Souter has a potential successor. A female, brainy, bipartisan appellate judge (who was first appointed to the federal bench by President Bush I and appointed to the federal appellate bench by President Clinton) with lots of judicial experience (this is Good) who has a rip-roaring case of juvenile diabetes (this is not so good).

I like her as a potential Supreme Court Justice (the first Hispanic and the third woman in the history of the Court); she’s careful, not flashy and keeps her views to the case at hand, but I wonder how the rigors of life among the Nine Wise Ones will wear on a fragile system. Well, assuming she’s appointed (and appointment, while likely, ain’t certain; she has her detractors on the Senate Judiciary Committee, who are throwing around phrases like “judicial activist with her own agenda”), we shall see.

Congratulations, Judge Sotomayor. May your decisions be sound for a long time to come.

And thank you, Justice Souter, for waiting to retire until after Mr. Obama was sworn in!!!!!

United States Supreme Court Grants Cert to Decide Significance Of Copyright Registrations

United States Supreme Court Grants Certiorari To Decide Significance Of Copyright Registrations


Of course, if you apply to the Copyright Office for special handling and use the words “ongoing infringement,” they will bring your application to the top of the pile and get the registration, if granted, to you in a few days or weeks rather than a few months.

However, it would be delightful if the Nine Wise Ones decide that filing for copyright registration is sufficient to proceed to litigation under 17 USC 411(a); that would ease the burden on the litigants to either wait for the Copyright Office to operate in due course or pay the extra fees to get them to operate more quickly than due course. It would ease the burden on the Copyright Office to handle “rush” jobs that are waiting at the courthouse door. Of course, the defense bar would disagree with me….

I’ve been known to take my own sweet time with the pre-filing settlement negotiations while I await the Copyright Office’s action in registering a client’s infringed work. That sometimes works better than litigation for all parties, so I’ve never actually found that the Copyright Office has held up anything I desperately wanted to do, especially since the fact of removing the infringing item does not negate the fact of the infringement for which my plaintiff is entitled to remedy.

Sidebar – Finding the Facts of a Case Via Video – Series –

US Supreme Court

Sidebar – Finding the Facts of a Case Via Video – Series –

The US Supreme Court has accepted a YouTube video as a citation in a case.

This must have been tough for the Nine Wise Ones. They are very accustomed to musty old books filled with the pronouncements of dead judges being cited for them. Now, instead, they had a motion picture available to them, as cited evidence, on their computers  — and this motion picture, cited in Scott v. Harris, is apparently being given credence by all but Justice Stevens.

Seeing the action as it happened has the distinct potential to affect how appellate judges work. Right now, they work based on the record made in the lower courts. However, if they can see for themselves the events as the events transpired — hey, they’re only human; the record may be given less deference than it has been given up til now.

That the High Court has seen fit to accept a YouTube video citation may just spark a new era of how citations can be presented in federal court. Yes, the musty old books filled with the dead judges’ pronouncements will remain, as will BlueBook format (the bane of every 1L student), but we seem to be introducing an interesting new element as we slide into the 21st Century if we’re looking at jurisprudence based on YouTube videos.

I’m not sure what I think of this. If the appellate judges are re-trying the case based on the video, I don’t think much of it. If, though, the video is used to show real-world action only as a factor in determining the appellate outcome, I think it’s terrific.