US Supreme Court: Federal courts have jurisdiction over copyright infringement cases

US Supreme Court: Federal courts have jurisdiction over copyright infringement cases

Brandon Evenson is a JD candidate at Osgoode Hall Law School.

The United States Supreme Court recently decided the case of Reed Elsevier v. Muchnick, holding that § 411(a) of the Copyright Act is not jurisdictional.  At issue were the rights of freelance authors in their unregistered works.  This case is part of the aftermath from the Supreme Court’s decision in New York Times Co. v. Tasini.

Before publishers had recognized the possibility of digitizing their article archive, their contracts with freelance authors only contemplated and granted licences to publish works in print copies.  Once digitization became a reality, publishers began publishing freelance authors' works electronically and charging users access fees. This was done without the freelance authors’ permission.  Tasini, and a few other freelance authors commenced an action and brought their case all the way up to the Supreme Court alleging copyright infringement. The Supreme Court held in Tasini that the Copyright Act requires specific permission from authors to print works electronically.

After the Tasini decision, a number of class actions were brought by freelance authors against newspapers and magazines. These class actions were eventually consolidated into one. Similar to Canada, US law allows copyrighted works to be registered. The consolidated class contained a small number of authors who had registered their copyright. The vast majority of the class, however, was composed of authors who had not registered their copyright.

For more than three years the freelance authors and publishers negotiated. Finally a settlement class was certified and settlement agreement approved by the District Court despite objections from some freelance authors. Objectors opposed the motion and appealed to the Second Circuit on the ground, inter alia, that the settlement was inadequate and unfair to unregistered copyright holder claimants because they were paid less than registered copyright holders, and singled out for claim reduction if the total of the claims exceeded $18 million.  It was also alleged that the unfair agreement was the direct result of the inadequate representation in negotiations of class members who possessed unregistered copyright. The defendants responded that unregistered copyright holders were adequately represented and treated fairly because their claims were essentially worthless. Unlike the Canadian Copyright Act, the US Copyright Act requires copyright holders to register their work before they can sue for copyright infringement.

The Second Circuit court disposed of the matter Sua Sponte concluding that the District Court lacked jurisdiction to certify the class or approve the settlement. They held that a copyright holder’s failure to comply with section 411(a)’s registration requirement deprives a federal court of jurisdiction to adjudicate his copyright infringement claim.

The Second Circuit court’s decision was appealed to the US Supreme Court. All parties to the settlement disliked the Second Circuit court’s reasoning to such an extent that no side would argue the merits. The Supreme Court appointed an amicus curiae to support the Court of Appeal’s judgment.

The Supreme Court held in no uncertain terms that the "section 411(a) registration requirement is a precondition to filing a claim that does not restrict a federal court’s subject-matter jurisdiction." In arriving at this conclusion, the Court reasoned that jurisdiction is about a court’s power to hear and decide certain classes of cases (subject matter jurisdiction) and classes of persons.  The power of the court to hear and decide an outcome is granted either by statute or constitutionally. There is a difference between the powers of a court and the rights or obligations of the parties.  The difficult task is to decide whether copyright registration specifies a jurisdictional condition (power of a court) or a claim-processing rule (right or obligation of the party).

The Court then engaged in statutory interpretation and a comprehensive review of the case law to support its position that indeed s. 411(a) is a claim-processing rule and not a jurisdictional condition.

Fortunately the Supreme Court was able to correct the Court of Appeals' error in law, yet one wonders how the Second Circuit court could have ever arrived at their conclusion. It was legal philosopher Joseph Raz who said “Government is arbitrary if its actions depart from the reason of the law.” (See Timothy Endicott’s article The Impossibility of the Rule of Law, Oxford University Press, 1999, Vol 19) So too would a court’s decision be arbitrary if it departed from the reasons of the law. The Second Circuit’s decision seems to fly in the face of the rule of law and provides a good example of Raz and Endicott’s characterization of arbitrariness. What purpose would there be in limiting federal courts from deciding cases of copyright infringement when it involves unregistered copyright holders?  Interestingly the registration requirement only applies to US works. Registration is not needed for an infringement action for non-US works, actions involving attribution or integrity issues, or if the registrar initially refused registration.

What is it about registration, specifically for US works, that would suddenly grant a federal court jurisdiction? It is not as though another level of court has jurisdiction over unregistered copyright holders. It may be argued that copyright registration is an important public goal and that there needs to be an incentive to register. Perhaps the Second Circuit court had the specific issue of orphan works in mind and the repercussions on the Google Book Settlement when arriving at their decision. Yet the court did not engage in any purposive analysis of section 411(a) with respect to its legislative history nor try to ascertain inconsistencies with other provisions. For example, if there is no claim to copyright infringement until registration, then a claim can never be time-barred as the statue of limitations would never run (see "Catch 411:" Does Section 411 of the Copyright Act Restrict The Subject Matter Jurisdiction Of Federal Courts Over Copyright Actions? by Emily M. Bass).

While most would agree that the Supreme Court arrived at the correct outcome and foreclosed a number of problems created by the Second Circuit court, it is still disconcerting that the Court completely avoided a policy discussion. It seems like the Court was more interested in making sense out of precedent then justifying their decisions on sound policy reasons specific to copyright.  Perhaps the Supreme Court was also cognizant of the Google Book Settlement and wanted to create certainty in the law to foreclose a similar argument being made in the lower courts. In any case, it means that this 18-year-old saga, beginning with Tasini is almost at an end.