Copyright Law Blog: Exclusive Rights

Category Archives: Jurisdiction

Merit briefs posted for Reed Elsevier v. Muchnick

Shourin Sen - 27 May 2009 – 8:45 am

Filed under Jurisdiction

The merit briefs for the petitioner and respondent went up on Friday. I’ve also added the merit briefs to the full collection of documents I’m keeping here.

Merit briefs

Also, as a piece of housekeeping, some of you may have heard that the President nominated Judge Sotomayor of the Second Circuit for the Supreme Court. If you’re like me, you’re probably already a little tired of the circus surrounding the confirmation process. At the risk of adding to the melee, I thought it’d be fun to collect some of the Judge’s copyright opinions. So if you have any interest, tomorrow I’ll post Judge Sotomayor’s roughly seventy-five copyright decisions.

Beginning signs of the registration backlog in the courts?

Shourin Sen - 22 May 2009 – 9:00 am

Filed under Jurisdiction, Registration

The Washington Post ran an article on Tuesday detailing the registration backlog at the Copyright Office. Apparently, the Office is struggling with the implementation of its relatively new electronic system, and the processing time for paper registration has tripled from six to 18 months. The Office plans to encourage electronic filing by raising the fees for paper registration from $45 to $65, while holding the fees for electronic registration steady at $35. I hope the tactic ameliorates the situation because there are a few cases popping up that may (or may not) be a sign that the registration backlog is beginning to cause troubles in the courts.

Case in point, Specific Software Solutions, LLC v. Institute of Workcomp Advisors, LLC, 2009 WL 1393331 (M.D. Tenn. 2009).

Specific Software and the Institute of Workcomp Advisors both ran consulting businesses that advised on workers compensation issues. The the two companies had an amicable relationship but then suffered a fallout, eventually leading to the Institute of Workcomp Advisors sending Specific Software Solutions a cease-and-desist alleging infringement of its website. A couple months after the cease-and-desist was received, Specific Software Solutions filed a complaint seeking a declaratory judgment that the Institute of Workcomp Advisor’s copyright was invalid or, in the alternative, a finding of non-infringement.

The problem? Institute of Workcomp Advisors’ copyright registration application wasn’t yet reviewed by the Copyright Office. The Institute filed a motion to dismiss, arguing that the court didn’t have jurisdiction over the claim because its application wasn’t processed. Now, we should pause here for moment to discuss this litigation tactic. One might expect that both parties would want to litigate the copyright issue. A likely explanation for the move is that the Institute of Worcomp Advisors, a North Carolina corporation, wanted to litigate closer to home.

The plaintiff made two arguments in regards to copyright registration: [1] that registration wasn’t required in a declaratory judgment proceeding; and [2] registration should be interpreted to have occurred on filing, not on a determination by the Copyright Office. Judge Aleta A. Trauger rejected both arguments and granted the Institute of Workcomp Advisor’s motion to dismiss. The Court’s analysis of whether registration should be interpreted as occurring on filing, as argued by Nimmer, or after Copyright Office review is interesting:

Plainly, from a statutory interpretation perspective, the defendant has the better of the argument. Sections 411(a), 410(a), and 410(b) all show a clear congressional intent to have the Copyright Office review the materials submitted and pass judgment on their copyrightability before those materials are considered “registered” for purposes of the jurisdictional requirements of Section 411(a). Section 410(d) deals with the “effective date” of a registration, not what it takes for a registration to occur, and multiple provisions of this title clearly demonstrate that registration occurs after a Copyright Office review, not simply by the applicant submitting materials.

That said, numerous courts and the widely cited treatise Nimmer on Copyright, take the opposite view, concluding that the court has jurisdiction over an infringement action following the submission of the fee, deposit, and application. See e.g. Apple Barrel, 730 F.2d at 386; Int’l Kitchen Exhaust Cleaning Assoc. v. Power Washers of N. Am., 81 F.Supp.2d 70, 72 (D.D.C.2000); Iconbazaar, 308 F.Supp.2d at 633-34. Using Section 410(d) as their statutory foundation, the side favoring this “broad,” or “application,” approach argue that “policy considerations” support their position because, “given that the claimant [after application] has done all that it can do, and will ultimately be allowed to proceed regardless of how the Copyright Office treats the application, it makes little sense to create a period of legal limbo in which suit is barred.” (Docket No. 12 at 3, quoting Nimmer on Copyright § 7.16(B)(1)(a)(i)).

Indeed, in Int’l Kitchen, after noting that courts had come out differently on the issue, the court cited Section 410(d) and Nimmer and simply stated that “judicial economy” favored not dismissing the case simply because the plaintiff did not have a registration certificate from the Copyright Office. 81 F.Supp.2d at 72. A similar approach, that is, discounting the language of Sections 410(a), 410(b), and 411(a), focusing on Section 410(d) and arguing that the registration process is of little import because the “owner of the work may bring suit even if his copyright application is denied” is also found in the Iconbazaar case, along with most cases taking this “broad” view. 308 F.Supp.2d at 634.

To the court, the recent decisions of other district courts in this circuit are more soundly reasoned and should be followed. Plainly, the courts in Int’l Kitchen and Iconbazaar have correctly recognized that there is something “uneconomic” about dismissing a complaint simply because the plaintiff does not have a certificate of registration, especially when the plaintiff, under Section 411(a), will be allowed to sue even if the Copyright Office denies the registration and refuses to issue the certificate. But, as the courts of this circuit have recognized, it is the role of the courts to “interpret a statute to give effect to each clause, sentence, and word so that none is rendered superfluous or surplusage.” Ripple Junction, 2005 WL 2206220, at * 4 (citing U.S. v. Perry, 360 F.3d 519, 537 (6th Cir.2004)). To read the statute to mean that registration occurs when the applicant files his materials would be to misread and render superfluous numerous provisions of the Copyright Act, perhaps most notably Section 411(a), which provides the procedure for how a lawsuit may still be filed even if registration is refused by the Copyright Office. Id .

A couple of quick comments:

Nimmer’s view that registration should be interpreted as occurring on filing is particularly troublesome in the context of websites. The Court’s comments to the contrary, judicial economy doesn’t favor interpreting registration as occurring on filing in this circumstance. Websites are unique in that they are constantly being amended, and the two parties and the court have to know which version of the site is being litigated to effectively handle the dispute. We saw this issue last week in Facebook v. Power Ventures.

There’s a missing fact from the decision that I find troublesome. The Court in an otherwise thorough factual rundown failed to mention when the Institute of Workcomp Advisors filed its registration. This popped a red flag for me. Was it two months ago? six months ago? 16 months ago? The Court may have omitted this detail to lessen the possibility of being overturned on appeal. The fact that the Court didn’t mention the date would hint that it may be on the higher end of the spectrum.

Breaking News: Every pending copyright case lacks jurisdiction

Shourin Sen - 20 May 2009 – 9:00 am

Filed under Appointments Clause, Jurisdiction

So I promised myself I wouldn’t break out the copyright siren because it’s so, you know, annoying. But this story needs, no, scratch that, it deserves, the siren. Did you realize that under current precedent every pending copyright case lacks jurisdiction? Such is apparently the status of things.

Our story begins in the grand ole’ year of 1991. C+C Music Factory and Color Me Badd topped the charts, the Minnesota Twins were in the World Series, I had the biggest crush on Sarah from second period band, and the Supreme Court issued a feisty little decision in Freytag v. Commissioner of Internal Revenue. In the case, A five Justice majority held that a head of a department, for purposes of the Appointments Clause, must be the head of a “Cabinet-level department[]” that is “limited in number and easily identified.” The Constitution only vests the power to appoint inferior officers in the President, the Courts of Law, and the Heads of Departments. Thus any appointment that wasn’t made by the President, the Courts of Law, or a Cabinet-level like department head, transgresses the Constitution.

Who are the not quite Cabinet-level department heads who still make appointments, transgressing the Supreme Court’s prevailing interpretation of the Appointments Clause? Well, one of them is the Librarian of Congress. Even the most fervent advocate, I think, would be hard-pressed to make the argument that the Library is a Cabinet-level department. The Library isn’t one of those departments like the State Department, the Department of the Interior, or the Commerce Department; the Librarian doesn’t go through an exhaustive confirmation process; he isn’t a political figure; he doesn’t change when administrations change; &c.

So, under current precedent the appointments made by the Librarian of Congress are invalid. If you’ve been following this blog, you may recognize this issue from the Appointments Clause challenge to the Copyright Royalty Board. But really, why stop there? Who else has the Librarian of Congress appointed in violation of the Appointments Clause?

The Register of Copyrights, together with the “subordinate officers and employees of the Copyright Office,” are all appointed by the Librarian of Congress. 17 U.S.C. § 701(a). You know, those people who are in charge of that whole registration thing, as well as a host of other amazing policy work I don’t want to make light of.

So no big deal, right? A valid copyright registration isn’t important? I mean, it has a pretty stamp and looks all official and stuff, but so what? IT’S ONLY A JURISDICTIONAL REQUIREMENT! To quote the Second Circuit from In Re: Literary Works in Electronic Database Litigation, now set for oral arguments at the Supreme Court:

[T]here is widespread agreement among the circuits that section 411(a) is jurisdictional. See La Resolana Architects, PA v. Clay Realtors Angel Fire, 4 416 F.3d 1195, 1200 (10th Cir. 2005) (“Section 411(a) is the jurisdictional lynchpin to copyright 5 infringement actions[.]”); Positive Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357, 6 365 (5th Cir. 2004) (noting that section 411(a) “supplement[s]” the “broad underlying” 7 jurisdictional grants in 28 U.S.C. §§ 1331, 1338 and acts as an additional “jurisdictional 8 prerequisite”); Xoom, Inc. v. Imageline, Inc., 323 F.3d 279, 283 (4th Cir. 2003) (“Copyright 9 registration is a jurisdictional prerequisite to bringing an action for infringement under the 10 Copyright Act.”); Murray Hill Publ’ns, Inc. v. ABC Commc’ns, Inc., 264 F.3d 622, 630 n.1 (6th 11 Cir. 2001) (noting that while copyright protection exists prior to registration, “[t]he registration 12 requirement under section 411[a] is a jurisdictional prerequisite to the right of the holder to 13 enforce the copyright in federal court”); Brewer-Giorgio v. Producers Video, Inc., 216 F.3d 14 1281, 1285 (11th Cir. 2000) (“It is well settled in this Court that the registration requirement is a 15 jurisdictional prerequisite to an infringement suit.” (internal quotation marks omitted and 16 alterations incorporated)); Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1163 17 (1st Cir. 1994) (describing registration under section 411(a) as a “jurisdictional requirement”).

In the immortal words of Scooby Doo, “Ruh Roh Raggy!” So if the officers at the Copyright Office are unconstitutional appointments, and the registrations issued by the Copyright Office aren’t valid, and valid registrations are a jurisdictional requirement . . . no courts have jurisdiction to hear any copyright cases. (Except for the renegade Seventh Circuit which held that registration is a case processing rule, and not a requirement for jurisdiction. I know what you’re thinking: Judge Posner saves copyright in Illinois, isn’t. that. just. sooooooooo. typical. Though, the Circuit would still have to reject cases if it strictly follows the registration rules. Every pending copyright case lacks jurisdiction. And no one can bring a new case either. The end.

Have a happy Wednesday.

Employment suit against Jon Bon Jovi remanded to state court: State law pleadings containing facts about an undecided federal copyright suit not grounds for removal

Shourin Sen - 11 May 2009 – 9:00 am

Filed under Complete Preemption, Jurisdiction

Krause v. Philadelphia Soul, 2009 WL 1175625 (E.D. Pa.)

Noted civil procedure wonk Judge Michael Baylson issued a decision last Tuesday that provides an interesting Merrell Dow and complete preemption analysis. The plaintiff was an employee for The Philadelphia Soul, an arena football franchise partially owned by Jon Bon Jovi. The plaintiff brought suit for unpaid commissions in the Court of Common Pleas of Philadelphia County under a series of state law claims: breach of contract, quantum meruit, and violation of the Pennsylvania Wage Payment and Collection Law (“WPCL”).

Bon Jovi filed a second suit in federal court which alleged, among other things, copyright infringement. Why didn’t Bon Jovi file the copyright claim as a counterclaim in the state court suit? Presumably Bon Jovi wanted his copyright claim heard in federal court, and its well settled that a counterclaim alleging a federal cause of action is not a basis for a federal court to assert subject matter jurisdiction. Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc. 535 U.S. 826, 8380 (2002). After Bon Jovi filed the federal suit, the plaintiff amended his state court Complaint to include allegations concerning the federal suit:

Under a new facts section titled “Philadelphia Soul and Bon Jovi Retaliate Against Krause,” Plaintiff describes the federal law suit, alleges that the federal suit is “frivolous” and evidence of Defendants’ “bad faith,” and requests attorney’s fees for both prosecuting this case and defending the federal copyright suit. The Amended Complaint does not add any new counts or causes of action, but in the WPCL claim (Count III), Plaintiff added another request for attorneys fees for defending the allegedly frivolous federal law suit.

So what happened next? Bon Jovi removed the state case to federal court, based on the amended complaint. The plaintiff moved for remand.

Bon Jovi argued that removal was proper because the amended complaint required resolution of a substantial federal issue, namely the federal copyright claim, in two ways: [1] as evidence of bad faith in the Wage Payment and Collection Law claim, and [2] as grounds for awarding attorneys’ fees for both prosecuting the state suit and defending the federal suit.

Evidence of bad faith in the WPCL claim

Federal courts have jurisdiction to hear a case if a plaintiff’s well pleaded complaint establishes either that federal law creates the cause of action, or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal law. Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808 (1988). Federal law didn’t create the cause of action in Krause, so the Court’s analysis turned to the question of whether the palintiff’s right to relief depended on a resolution of a substantial question of federal law. Judge Baylson found that the reliance on the federal suit as evidence of the defendants’ bad faith in the state law WPCL claim wasn’t a situation where the federal issue was substantial and disputed, and thus a federal court couldn’t assert jurisdiction.

Proving the federal suit is frivolous, which Plaintiff asserts is only one example of a pattern of overall bad faith, is not a necessary element of the WPCL claim, and thus resolution of the federal issue is not required to determine Plaintiff’s right to relief under the state law claim. In Merrell Dow, the reliance on an alleged violation of a federal law as evidence of a state tort did not establish federal question jurisdiction, even if the state court would be required to assess the validity of that federal violation when considering it as evidence in the state claim. Similarly, although the state court here may need to assess the merits of the federal lawsuit as part of an inquiry into whether that suit was brought in good faith, that consideration of the federal legal issue is insufficient to establish federal jurisdiction where the main issue is the violation of the state law. . . Furthermore, even if the state court will necessarily evaluate the merits of the federal suit, it will not ultimately decide or resolve the federal legal issue-whether the Plaintiff violated any federal copyright laws-as that claim is not before the Court.

Awarding attorneys’ fees for the defense of the federal case

The Court also found that the plaintiff’s request for attorneys’ fees to defend the copyright suit in the WPCL claim didn’t confer federal jurisdiction. The Court noted that remand was appropriate given that the WPCL ostensibly didn’t allow for the relief the plaintiff sought.

Most importantly, the WPCL does not explicitly authorize attorneys’ fees where the plaintiff alleges the defendants brought a wholly separate suit, concerning an entirely different legal issue, in a different court, against the plaintiff for asserting his or her rights under the state statute. At most, the WPCL provides additional relief upon evidence of bad faith, which this Court determine above does not provide an avenue for establishing federal jurisdiction even when a federal issue is used as evidence of such bad faith. Given the need for caution where jurisdiction is uncertain, this Court will not base federal question jurisdiction solely on a request for relief where it is unclear that such relief is even possible under the state statute implicated in the claim.

Complete Preemption

Judge Baylson also briefly addressed whether the doctrine of complete preemption provided a basis for subject matter jurisdiction, even though neither party explicitly briefed the issue.

Moreover, Defendants have not offered any evidence that Congress intended to preempt any of the allegations in the state suit by creating a private right of action within the federal copyright laws at issue in the federal suit. Defendants here have not argued that the federal copyright laws enable a defendant in a copyright suit to assert a claim or defense that the suit was in retaliation for earlier litigation and to obtain relief such as attorneys fees for that reason. Such a retaliation claim, as noted above, is generally brought as a common state law abuse of process claim. Without evidence that such a federal cause of action exists and would preempt any state law retaliation claim, this Court cannot conclude that Congress intended to extend federal jurisdiction under these circumstances. See Franchise Tax Bd., 463 U.S. at 25-26 (holding that where the federal statute did not provide the relief requested by the plaintiff in the state law claim, the complete preemption doctrine does not apply and federal jurisdiction does not exist, despite the necessity of considering the federal statute in the state law claim).

Judge Posner weighs in on Reed Elsevier v. Muchnick

Shourin Sen - 17 April 2009 – 9:00 am

Filed under Jurisdiction, Registration

Brooks-Ngwenya v. Indianapolis Public Schools, 2009 WL 996998 (7th Cir. 2009)

The First Circuit’s decision on webcasting in Tenenbaum wasn’t the only copyright news made yesterday. In what was an otherwise mundane appeal, the Seventh Circuit (Posner, Williams, Tinder) indirectly addressed the Supreme Court’s upcoming oral argument in Reed Elsevier v. Muchnick. The order was written per curium, so I suppose we don’t really know if it was Posner writing. (But it was Posner writing.)

The facts of Brooks-Ngwenya v. Indianapolis Public Schools are rather uneventful. A former classroom assistant brought an action against a school system for, among other things, copyright infringement of an educational program that she created. Brook-Ngwenya’s infringement claim failed because, instead of trying to prove copying of any of her materials, she attempted to show copying of the ideas underlying the teaching program. As the Seventh Circuit wrote, “[i]t is not the idea that is protected, but rather the original expression of the idea.”

The Seventh Circuit, however, also addressed the issue of whether a failure to follow the registration requirements set forth in 17 U.S.C. 411(a) is a prerequisite for subject matter jurisdiction. Brooks-Ngwenya was denied copyright registration by the Register of Copyrights. Having applied for registration and been rejected, Brook-Ngwenya was able to bring suit under 411(a), provide that she notify the Register of Copyrights of the suit, which she failed to do. Notification is required under the statute so that the Register of Copyrights can intervene during the litigation, if she elects to do so.

The issue of whether compliance with the Copyright Act’s registration requirements is a prerequisite for a court to have subject matter jurisdiction over a copyright case is the same issue, albeit in a different context, that is presented in Reed Elsevier v. Muchnick. The Seventh Circuit found that ”federal courts have exclusive jurisdiction of copyright cases, 28 U.S.C. § 1338(a); I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 n. 4 (7th Cir.1996), and section 411(a) simply prescribes the manner in which courts exercise that jurisdiction.”

The Supreme Court has granted certiorari to decide whether compliance with the registration requirements is a precondition to the subject-matter jurisdiction of the federal courts. In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116 (2d Cir.2007), cert. granted (U.S. Mar. 2, 2009) (No. 08-103). But however that issue is resolved, the Copyright Office had acted on Brooks-Ngwenya’s application before she filed this lawsuit, and section 411(a) is explicit that an applicant refused registration may still sue for infringement. 17 U.S.C. § 411(a); Gaiman v. McFarlane, 360 F.3d 644, 655 (7th Cir.2004); Torres-Negrón v. J & N Records, LLC, 504 F.3d 151, 160 (1st Cir.2007).

But the applicant must notify the Register of Copyrights. For 17 U.S.C. § 411(a) provides (emphasis added) that

in any case … where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register’s failure to become a party shall not deprive the court of jurisdiction to determine that issue.

The notification requirement is undemanding: the complaint must merely be sent by registered or certified mail to the general counsel of the Copyright Office. Complaints Served on the Register of Copyrights Pursuant to 17 U.S.C. § 411(a), 37 C.F.R. § 205.13. The requirement “merely provides that the Office must be accorded a second opportunity to express its views on the claim’s validity after suit is filed if it has refused to recognize the claim before the suit is filed. Of course, the court is not bound by the views expressed by the Register in a case in which suit is filed despite his refusal to register the claim.” S. Rep. No. 100-352, at 14 n. 2 (1988), 1988 U.S.C.C.A.N. 3706, 3719 n. 2.

There is no evidence that Brooks-Ngwenya gave notice of her suit to the Register of Copyrights. So if serving notice on the Register is a jurisdictional requirement, we must enforce it even if the parties and the district court ignored it. Arizonans for Official English v. Arizona, 520 U.S. 43, 73, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997); United States v. Smith, 438 F.3d 796, 799 (7th Cir.2006). If instead it is simply a case-processing rule, we still must decide whether the district court should have insisted on strict compliance. Korsunskiy v. Gonzales, 461 F.3d 847, 849 (7th Cir.2006).

The Supreme Court has cautioned that “jurisdiction” is a word with “ ‘many, too many, meanings,’ “ Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 90, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (quoting United States v. Vanness, 85 F.3d 661, 663, n. 2 (D.C.Cir.1996)), and admonished litigants and courts alike not to describe every mandatory rule as “jurisdictional.” Kontrick v. Ryan, 540 U.S. 443, 455, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004). “The law is full of rules that are mandatory in the sense that courts must enforce them punctiliously if a litigant insists. Rules are not jurisdictional, however, no matter how unyielding they may be, unless they set limits on the federal courts’ adjudicatory competence.” Farzana K. v. Indiana Department of Education, 473 F.3d 703, 705 (7th Cir.2007).

The federal courts have exclusive jurisdiction of copyright cases, 28 U.S.C. § 1338(a); I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 n. 4 (7th Cir.1996), and section 411(a) simply prescribes the manner in which courts exercise that jurisdiction. Moreover, “the Register’s failure to become a party shall not deprive the court of jurisdiction to determine that issue.” 17 U.S.C. § 411(a). The suit proceeds with or without his participation and therefore the statutory notification provision does not prescribe what class of cases the court may hear.

Even though nonjurisdictional, the notification requirement is a prerequisite to suit. Congress wanted to ensure that the Copyright Office could intervene and defend its refusal to register a work, In re Literary Works, 509 F.3d at 131 (dissenting opinion); S. Rep. No. 100-352, at 14 n. 2, 1988 U.S.C.C.A.N. 3706, 3719 n. 2, as in other statutes that require notification of and an opportunity for intervention in a private suit. Examples are qui tam actions under the

False Claims Act, United States ex rel. Lujan v. Hughes Aircraft Co., 67 F.3d 242, 245 (9th Cir.1995), and a federal employee’s obligation to notify the Equal Employment Opportunity Commission before bring a suit for employment discrimination. Forester v. Chertoff, 500 F.3d 920, 928 (9th Cir.2007). While not “strictly jurisdictional” these requirements are nevertheless “mandatory.” Hallstrom v. Tillamook County, 493 U.S. 20, 31, 110 S.Ct. 304, 107 L.Ed.2d 237 (1989).

But courts enforce mandatory (though nonjurisdictional) rules-even if the parties do not raise them-in a variety of ways. If the failure to follow the statutory procedure has caused irreparable harm, the suit should be dismissed. United States ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 1000 (2d Cir.1995). If not, no sanction may be necessary. United States ex rel. Lujan v. Hughes Aircraft Co., supra, 67 F.3d at 245. Similarly, if the attorney general was not notified of a constitutional challenge to a statute, belated notification might satisfy the requirement of notification. Tonya K. ex rel. Diane K. v. Board of Education, 847 F.2d 1243, 1247 (7th Cir.1988); In re Young, 82 F.3d 1407, 1412 (8th Cir.1996).

The district court should have insisted on Brooks-Ngwenya’s compliance with the requirement that she notify the Copyright Office about her lawsuit. Otherwise the Register would have no opportunity to choose to defend the decision to deny registration. But the point is now academic, because the Register did weigh in during the litigation, not by intervening but by granting Brooks-Ngwenya’s renewed application. Copyright Catalog, http:// cocatalog.loc.gov. We are free to recognize that fact even though the district court was incorrectly persuaded by IPS that it could not. Island Software & Computer Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 261 (2d Cir.2005) (concluding that court may take judicial notice of registry). The purpose of the notification requirement having been fulfilled, we can proceed to the merits.

Scranton newspapers denied motion for remand to state court because of complete preemption

Shourin Sen - 16 March 2009 – 8:45 am

Filed under Jurisdiction, Misappropriation, Preemption

On March 6, Judge A. Richard Caputo of the federal district court in Scranton, Pennsylvania issued a decision that addressed complete preemption (which is different than the preemption set forth in 17 U.S.C. 301). The Scranton Times and the Times Partner published newspapers in Scranton, Pennsylvania. Wilkes-Barre Publishing Company published a daily newspaper in Wilkes-Barre, Pennsylvania.

Wilkes-Barre began publication of a “Scranton Edition” of it’s daily newspaper which contained obituaries. The Scranton Times and Times Partner alleged that, for a period of five days, Wilkes-Barre copied obituaries from their newspapers and/or websites.

The Scranton Times and the Times Partner filed a complaint in the Court of Common Pleas of Lackawanna County stating claims for misappropriation, unfair competition, conversion, fraud, breach of contract, tortious interference with existing business relations, and unjust enrichment. Wilkes-Barre removed the case to the federal district court in Scranton.

Complete preemption

The Scranton Times and the Times Partner filed a motion to remand the case to the Pennsylvania Court of Common Pleas on the grounds that the federal court didn’t have jurisdiction because the Plaintiffs didn’t bring any federal claims. The Court rejected this argument on the doctrine of complete preemption:

“A state claim which is ‘really one of federal law’ may be removed to federal court because ‘it is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint.’ ” “The Supreme Court has held that a state cause of action is ‘really’ a federal cause of action which may be removed to federal court if the “federal cause of action completely preempts … the state cause of action.” Goepel v. National Postal Mail Handlers Union, 36 F.3d 306, 310 (3d Cir.1994) (quoting Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 24 (1983)). [some citation omitted]

The Court found that while the Plaintiffs’ claims made no mention of federal copyright law, they “may not defeat removal by omitting to plead necessary federal questions” in their complaint. The Court then determined that the state law claims for misappropriation, unfair competition, tortuous interference with business relations and unjust enrichment were completely preempted by the Copyright Act. Thus, the Court found that it had subject matter jurisdiction over the four claims.

The Court further found that it had supplemental jurisdiction over the state law claims of conversion, fraud and breach of contract that weren’t completely preempted.

Misappropriation

The Scranton Times and the Times Partner brought a claim for misappropriation under INS v. AP. Judge Caputo “agree[d] with” the Second Circuit’s holding in National Basketball Association v. Motorola, Inc.,105 F.3d 841 (2d Cir.1997) that “only a narrow ‘hot news’ misappropriation claim survives preemption for actions concerning material within the realm of copyright.” Thus, the Court turned to the extra elements that allow a misappropriation claim “styled on” AP v. INS to survive preemption:

(i) the time-sensitive value of factual information,

(ii) the free-riding by a defendant, and

(iii) the threat to the very existence of the product or service provided by the plaintiff.”

The Court found that Scranton Times and the Times Partner satisfied the (i) time sensitive element because the time and place of funeral services are time sensitive. The Court further found that the allegations made in the complaint that the Wilkes-Barr Publishing Company copied the death notices found in Plaintiffs’ publications into its own newspaper-satisfied the (ii) “free-riding” element.

In regards to the (iii) threat to the very existence of the product or service, the Court found that Plaintiffs’ hadn’t alleged that the use of their obituaries for five days threatened the existence of their publications:

The Court acknowledges that these statements certainly allege that the Defendant caused Plaintiffs some actual loss during the five (5) day period of alleged plagiarism activity, along with speculative future losses in terms of goodwill, customer loyalty, and business relationships. The Court does not, however, find that Plaintiffs have alleged that Defendant’s activities have threatened the existence of their publications or has compromised or provided reduced incentive for Plaintiffs to continue collecting obituaries and printing them for public distribution.

Documents

The Scranton Times, L.P. et al v. Wilkes-Barre Publishing Company, 08 cv 02135 ARC, 2009 WL 585502 (M.D. Pa. March 15, 2009)

Supreme Court grants cert in Reed Elsevier, et al., v. Muchnick, et al.

Shourin Sen - 3 March 2009 – 8:45 am

Filed under Jurisdiction, Settlement

The Supreme Court granted cert in Reed Elsevier v. Muchnick yesterday. Here’s a quick rundown on the case.

New York Times Co. v. Tasini:

Our story begins about a decade ago. In New York Times Co. v. Tasini, six freelance authors brought a copyright infringement suit against a group of publishers including the New York Times, Newsday, Time and LexisNexis. The freelancers were hired as independent contractors to write articles for the news outlets. The publishers licensed the articles to electronic databases such as LexisNexis.

17 U.S.C. 201(c) states the following:

“In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.”

The freelancers claimed that, under 201(c), they only licensed their works for use as a contribution in newspapers and not in electronic databases. In 2001, the Supreme Court agreed, finding that if the publishers wanted to include the articles in electronic databases they needed to have had obtained specific authorization to do so.

Negotiations and settlement:

Following the ruling in Tasini, the National Writers Union brought a consolidated copyright class action against a group of forty publishers. The sides engaged in four years of negotiations before reaching an industry-wide settlement. The settlement divided the authors into three groups:

Category A: copyrights that were registered prior to any infringement;
Category B: copyrights that were registered after the infringing reproduction but before December 31, 2002;
Category C: copyrights registered after December 31, 2002 or not registered at all.

The settlement agreement then allocated damages per group:

Category A claimants received a flat fee;
Category B claimants received the greater of either a flat fee or a percentage of the original price of the work;
Category C claimants also received the greater of either a flat fee or a percentage of the original price of the work. However, if the cost of all claims (plus the cost of notice, administration, and attorney’s fees) exceeded $18.5 million, then the amount paid to Category C claimants was reduced – potentially to zero.

The District Court approved the settlement under Rule 23.

The Second Circuit:

Objectors from Class C appealed the approval of the settlement on the grounds that it was inadequate and unfair to Category C claimants and that the disparate treatment of Category C claimants illustrated that named plaintiffs, who each possess at least some registered copyrights, did not adequately represent those absent class members who possess only unregistered copyrights. The Second Circuit raised the issue of jurisdiction sua sponte: whether the S.D.N.Y. lacked subject matter jurisdiction to approve any settlement that includes a release of copyright claims for unregistered works.

17 U.S.C. 411(a) states in part:

[N]o action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title [17 U.S.C. Sects. 101 et seq.] [emphasis added]

The Defendants of the settlement argued that for federal question jurisdiction to arise under the Copyright Act, only one of the classes needed to have members who had registered. Judges Ralph K. Winter, Jr. & Chester J. Straub rejected this argument and found that each claim in a certified class must be registered for federal question jurisdiction to arise under 411(a).

Judges Winter & Straub further held that the text of 411(a) precluded the use of supplemental jurisdiction to grant jurisdiction to Class C. Thus, the Second Circuit vacated the order approving the settlement.

Judge John M. Walker, Jr. dissented on the grounds that since “Congress passed § 411(a) to facilitate the enforcement of copyrights, . . . compliance with § 411(a) is a mandatory prerequisite to the accrual of a cause of action for damages, but not a prerequisite to the possession of constitutional standing.” Judge Walker found that the suit fell “within the ambit of . . . Denney v. Deutsche Bank A.G., 443 F.3d 253 (2d Cir. 2006), that not all members of a settlement-only class must possess a valid cause of action under the applicable law at the time of settlement.”

The cert petition:

The Defendants of the settlement argued for certiorari on three grounds:

Broad releases are often necessary to achieve complex settlements; the power to settle cases necessarily entails the power to approve releases of claims beyond the approving court’s jurisdiction;
There is tension between the Second Circuit’s decision and the Supreme Court’s expectation in Tasini that “[t]he parties (Authors and Publishers) may enter into an agreement allowing continued electronic reproduction of the Authors” works”;
The settlement provides a strong public benefit.

Documents:

11th Cir.: Rooker-Feldman doctrine allows for federal review if action is filed when a state appeal is still pending

Shourin Sen - 19 February 2009 – 8:45 am

Filed under Jurisdiction

How about some fed courts to go with your morning coffee? The 11th Circuit addressed a couple of interesting procedural issues in a copyright suit yesterday.

Background

Nicholson filed a copyright infringement suit against Shafe in federal court. The N.D. Ga. granted summary judgment for Shafe on the grounds that the work at issue was a joint work, thus barring an infringement action — an individual can’t infringe their own copyright.

Nicholson then filed a state law claim for an accounting arguing that, as is customary for joint authors, she was entitled to 50% of the profits that arose from the joint work. Why file in state court? See Jay Dratler, Licensing of Intellectual Property:

State law governs the accounting for and sharing of profits, whether or not there is an agreement. Therefore, in the absence of diversity of citizenship or a federal claim from which an action for apportionment can pend, a claim for a share of a co-owner’s profits must be brought in state court. The reason is that the legal theory underlying an accounting is constructive trust or restitution under state law. Accordingly, an action for apportionment of profits has no basis for federal jurisdiction by itself.

The state trial court concluded that the federal ruling that the work at issue was a joint work was dicta. The state court allowed the matter of what ownership rights Nicholson had in the publication and what if any compensation she was due go to a jury. The jury returned a verdict in favor of Shafe, finding that Nicholson was fully compensated for her work and had no ownership rights. The Georgia State Appellate Court affirmed, holding that collateral estoppel didn’t apply because the federal finding on the joint work wasn’t essential to the outcome.

However, while the appeal to the Georgia state appellate court was pending, Nicholson had filed a “Complaint for Declaratory Judgment” in the N.D. Ga. alleging two causes of action: (1) declaratory judgment to establish that the Appellants and the Appellees were “equal co-owners of the subject work” and that the Appellants were entitled to an accounting; and (2) declaratory judgment to determine the applicability of federal preemption of copyright accounting matters.

The N.D. of Ga. dismissed the action sua sponte based on lack of jurisdiction, applying the Rooker-Feldman doctrine, and ordered sanctions for costs and attorneys’ fees.

The Rooker-Feldman doctrine

The Rooker-Feldman doctrine, speaking in broad terms, bars federal district courts from reviewing state court decisions. As the 11th Circuit explained:

Underlying the analysis in Rooker and Feldman is the interpretation of two federal statutes: 28 U.S.C. § 1331 and 28 U.S.C. § 1257. First, section 1331 provides that federal district courts “shall have original jurisdiction of all civil actions arising” under federal law, not appellate jurisdiction. 28 U.S.C. § 1331. Second, section 1257 provides for Supreme Court review of state court judgments. . . 28 U.S.C. § 1257(a). Taken together, the Rooker-Feldman doctrine draws a “negative inference” from section 1257: “because Congress only provided for review of state court judgments by the Supreme Court, Congress therefore intended to preclude lower federal courts from exercising such review.”

The Northern District of Georgia decision based on Amos

The N.D. GA. found that Nicholson was barred from proceeding in federal court by using a four-factor test from Amos v. Glynn County Bd. of Tax Assessors, 347 F.3d 1249, 1266 n.11 (11th Cir.2003).

The 11th Circuit rejection of Amos

Judges Wilson, Cox and Fawsett reversed, calling into question the continued viability of the Amos test. Wrote Judge Wilson:

Rather than apply Amos, we adhere to the language in Exxon Mobil, delineating the boundaries of the Rooker-Feldman doctrine: “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil, 544 U.S. at 284. Because the Appellants commenced the federal district court action before the end of state proceedings in Georgia, we find that the Rooker-Feldman doctrine does not apply here.

Was the state court proceeding at its end?

Lastly, the 11th Circuit addressed the issue of whether the state proceeding in Georgia was already at its end: i.e. “whether the entry of judgment on a jury verdict in a state trial court pending appeal marks the end of state proceedings for purposes of the Rooker-Feldman doctrine.” The 11th Circuit looked for “guidance” to Federacion de Maestros de Puerto Rico v. Junta de Relaciones del Trabajo de Puerto Rico, 410 F.3d 17, 21 (1st Cir.2005), although it refrained from explicitly adopting the 1st Circuit test.

In Federacio, the First Circuit found that state proceedings have “ended” in three situations:

(1) “When the highest state court in which review is available has affirmed the judgment below and nothing is left to be resolved”;
(2) “If the state action has reached a point where neither party seeks further action”; (“If a lower state court issues a judgment and the losing party allows the time for appeal to expire, then the state proceedings have ended”); and,
(3) “if the state court proceedings have finally resolved all the federal questions in the litigation, but state law or purely factual questions (whether great or small) remain to be litigated.”

The 11th Circuit found that the second situation in Federacion implies that a state proceeding has not ended when a state court loser seeks “further action,” such as an appeal. Thus, the 11th Circuit found that the federal action for an accounting was not barred by the state action, and likewise dismissed the District Court’s order for attorneys’ fees and costs.

In conclusion, we agree with our sister circuits (the First, Eighth and Tenth Circuits) and hold that state proceedings have not ended for purposes of Rooker-Feldman when an appeal from the state court judgment remains pending at the time the plaintiff commences the federal court action that complains of injuries caused by the state court judgment and invites review and rejection of that judgment. At the time of the filing of this action, the state proceeding in the Georgia courts had not ended but remained pending on appeal and therefore Rooker-Feldman did not divest the United States District Court for the Northern District of Georgia of jurisdiction.

Documents:

Jeanette C. Nicholson, PH.D. v. James C. Shafe, 07-02724 CV-BBM, 2009 WL 385579 (11th Cir. Feb 18, 2009).