Prof. Rodney A. Smolla, Duke University School of Law
July 29, 2014
The Supreme Court in Petrella v. Metro-Goldwyn-Mayer, Inc.1 interpreted the ancient equitable doctrine of “laches” as applied to a copyright holder’s delay in enforcing remedies under the Copyright Act. The laches doctrine operates to bar claims that might otherwise be brought when the claimant engages in unreasonable delay in seeking enforcement of a legal right, to the detriment of a defendant. In Petrella, the delay was considerable. The Supreme Court nonetheless refused to invoke laches to bar a copyright holder’s claim, mainly because, the Court reasoned, the Copyright Act itself has built-in provisions that largely account for such delays.
The case centered on the movie “Raging Bull,” a film based on the life of boxing champion Jake LaMotta, directed by Martin Scorcese and starring Robert Di Niro, who won the Academy Award for Best Actor for his portrayal of LaMotta. LaMotta, after his retirement from boxing, worked with his long-time friend, Frank Petrella, to tell the story of LaMotta’s colorful career. The collaboration produced two screenplays and a book. One of the screenplays was registered in 1963, and that screenplay was the center of the litigation controversy.
Petrella and LaMotta assigned their rights to their works to a production company, and through various intermediary transactions the rights ultimately came to reside with United Artists Corporation, a subsidiary of MGM. Frank Petrella died in 1981, and his daughter Paula Petrella became heir to his rights. As provided by the Copyright Act, Paula Petrella could renew the copyrights unburdened by any assignment previously made by the author, and indeed, Paula Petrella is now the sole owner of the 1963 screenplay. Paula Petrella, however, delayed in seeking to enforce her rights. She waited seven years before even notifying MGM of her claim, and nine years before filing suit. Were her delays enough to bar her claim?
No, and yes. If it were a boxing match, Petrella would have won on points, but just barely, with no decisive knockout. The Supreme Court, in an opinion by Justice Ginsburg, refused to invoke the laches doctrine to bar Petrella’s claim entirely.
The Copyright Act has a three-year statute of limitations.2 That limit is deceiving, however, because it is a “rolling” limitations provision, which starts anew with each new accrual of a claim. In effect, a plaintiff can sue every three years until a copyright expires. The Supreme Court reasoned that Petrella brought her claim within the three-year limitations window provided under the Act, and that was good enough. She could gain relief, however, only for the period within that three-year window, counting back from when she filed her suit in 2009. This limitation of her remedies to the three-year window, the Court reasoned, took into account the delay. Petrella, the Court held, could thus not reach MGM’s returns on its investment in “Raging Bull” in the years before 2006, outside the three-year window.
If this looked like a clean win for Petrella, however, read the fine print. At the end of its opinion, the Court emphasized that MGM was entitled to offset against profits made in that period expenses incurred in generating those profits. So too, MGM could retain the return on investment shown to be attributable to its own enterprise, as distinct from the value created by the underlying infringed work. The case was remanded to the lower courts with those instructions.3
Justice Breyer, joined by Chief Justice Roberts and Justice Kennedy, dissented. Laches, Justice Breyer argued, was an important equitable tool designed to prevent injustice. Waxing philosophical, he quoted Aristotle’s Nicomachean Ethics for the proposition that “[T]he nature of the equitable is a correction of law where it is defective owing to its universality.”4 If technically the law gave Paula Petrella the right to sue within the three-year window, he said, then the doctrine of laches, he argued, ought to be hale enough to cure the defect.
How Petrella’s claim will ultimately fare once the case is remanded will now likely be a boxing battle of box-office accountants, as the parties seek to sort out what money MGM made off “Raging Bull” during the recovery window in formats such as DVD or Blu-ray, and then subtract from those sums the portions attributed to MGM’s expenses and, more profoundly, its own creativity. The re-match could well be a long bout.