Petrella v. Metro-Goldwyn-Mayer, Inc.

Resolving circuit split concerning applicability of laches to copyright claims, U.S. Supreme Court reverses Ninth Circuit ruling that Paula Petrella, daughter of “Raging Bull” co-author Frank Petrella, was barred by laches from suing MGM for copyright infringement of Petrella’s 1963 screenplay, even though she filed suit 18 years after renewing the copyright.

In a 6-3 decision, the U.S. Supreme Court reversed a Ninth Circuit ruling that Paula Petrella, daughter of “Raging Bull” co-author Frank Petrella, was barred by laches from suing Metro-Goldwyn-Mayer, Inc., for copyright infringement of Petrella’s 1963 screenplay. Rather, the Court held that laches cannot be invoked to preclude adjudication of a claim for damages brought within the three-year limitations period of Section 507(b) of the Copyright Act.

The work at issue was the motion picture “Raging Bull,” based on the life of boxing champion Jake LaMotta. In 1963, a screenplay was registered identifying Frank Petrella as the sole author, but also stating that the screenplay was written in collaboration with LaMotta. In 1976, Petrella and LaMotta assigned their rights, including renewal rights, to Chartoff-Winkler Productions, Inc. In 1978, MGM’s predecessor acquired the motion picture rights to two screenplays written by Petrella’s father and a book co-authored by Petrella’s father and LaMotta. Petrella’s father and LaMotta represented and warranted that the book was original and that the screenplays were derivative works. MGM released and registered a copyright in the film in 1980 and continued to market the film, including releases on DVD and Blu-ray. Petrella died in 1981, during the initial term of the screenplay’s copyright. At that point, his renewal rights reverted to his heirs, who could renew the copyright unburdened by any assignment previously made by the author.

Frank Petrella’s daughter, Paula Petrella, renewed the screenplay’s copyright in 1991, and in 1998, her attorney informed MGM that Paula Petrella had obtained the copyright to the screenplay. Although her lawyer exchanged letters, which denied any infringement, with MGM, Paula Petrella did not bring suit until 2009. She alleged that MGM violated and continued to violate her copyright by producing and distributing “Raging Bull,” a work she described as derivative of the 1963 screenplay. Because the statute of limitations for copyright claims requires commencement of suit within three years after the claim accrued, Petrella sought relief only for acts of infringement occurring on or after January 6, 2006, three years prior to the filing of the action.

MGM moved for summary judgment on several grounds, including laches, asserting that Petrella’s 18-year delay, from the 1991 renewal of the copyright until 2009, was unreasonable and prejudicial to MGM. The district court granted MGM’s motion, and the Ninth Circuit affirmed the dismissal based on laches, noting that under Ninth Circuit precedent, if any part of the alleged wrongful conduct occurs outside of the limitations period, courts presume that the plaintiff’s claims are barred by laches. The Supreme Court granted certiorari to resolve a circuit split as to the applicability of laches to copyright infringement claims brought within the three-year period prescribed by Congress.

The Supreme Court reversed, holding that laches cannot be invoked as a bar to Petrella’s pursuit of a claim for damages brought within Section 507(b) of the Copyright Act’s three-year window. When a defendant has allegedly engaged in a series of discrete infringing acts, the plaintiff’s suit ordinarily is timely under Section 507(b) with respect to acts of infringement within the three-year period. According to the Court, the copyright statute of limitations takes account of delay by permitting a plaintiff to gain relief only three years prior to the filing of the suit. Here, if successful, Petrella’s relief would be limited to MGM’s return on its investment beginning in 2006. The Court also commented that laches is a defense developed by courts of equity, and therefore its principal application is to claims of an equitable cast for which Congress has not provided a fixed time limitation.

The Court rejected MGM’s argument that laches should be available as an affirmative defense, irrespective of the statutory limitations period. Unlike tolling, which lengthens the time for commencing a civil action where there is a statute of limitations and is effectively a rule of interpretation tied to that statutory limit, laches is an equitable defense apart from a statutory prescription. The Court also opined that it is not incumbent on copyright owners to challenge each and every actionable infringement. A party may wait to see whether an infringer’s exploitations undercut the value of the copyrighted work, have no effect on that work, or even complement it. However, the Court majority pointed out that the equitable doctrine of estoppel may be available in some circumstances. Estoppel does not undermine the statute of limitations, because estoppel relies on misleading, whether engaged in early on or later in time. When a copyright owner engages in intentionally misleading representations concerning his or her abstention from suit and the alleged infringer detrimentally relies on such deception, estoppel may bar the copyright owner’s claims completely, eliminating all potential remedies.

As to MGM’s argument that the evidence needed or useful to defend against liability would be lost during a copyright owner’s inaction, the Court opined that Congress must have been aware of this possibility when it provided for reversionary renewal rights that an author’s heirs can exercise long after a work has been written and copyrighted. It also reasoned that because a copyright plaintiff bears the burden of proving infringement, any hindrance caused by evidence unavailability is as likely to affect plaintiffs as defendants. Further, the need for extrinsic evidence is reduced by the requirement that both the certificate and original work be on file with the Copyright Office before a copyright owner can sue for infringement.

Finally, the Court held that, while laches cannot be invoked to preclude adjudication of a claim for damages brought within the Copyright Act’s three-year window, a plaintiff’s inaction could affect the available relief. If Petrella ultimately prevails on the merits, in determining the appropriate injunctive relief and assessing profits, the court may take into account Petrella’s delay in commencing suit.

In a dissenting opinion, Justice Breyer opined that the majority’s position was too absolute in barring the laches defense. While the fact that damages are limited to the three-year limitation period prevents some degree of inequity, the dissent imagined circumstances—including this case—in which the defense should be available. Justice Breyer saw “no reason to erase the doctrine from copyright’s lexicon, not even in respect to limitations periods applicable to damages actions.”