The U.S. Supreme Court yesterday reversed the Second Circuit Court of Appeals and held in Reed Elsevier v. Muchnick that the copyright registration requirements for certain works under Section 411(a) of the Copyright Act of 1976 are not jurisdictional, but rather are preconditions for instituting an infringement action. In reaching the decision, the Court diverged from more than 200 district and appellate court decisions that characterized Section 411(a) as jurisdictional, describing those decisions as "drive-by jurisdictional rulings" with "no precedential effect."
This week's decision in Reed Elsevier came after literally years of litigation and attempts to resolve litigation between freelance authors, publishers, and providers of electronic databases of publications regarding the right of publishers and online databases to reproduce authors' works electronically without first securing express permission to do so. In March 2005, the parties reached a settlement agreement that was intended "'to achieve global peace in the publishing industry.'" In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116, 119 (2d Cir. 2007). Several freelance authors objected to the settlement, but the district court overruled the objections and approved the class action settlement as fair, reasonable, and adequate. When the objectors appealed, the Second Circuit on its own ordered briefing on the question of whether Section 411(a) deprives the federal court of subject-matter jurisdiction over infringement claims involving unregistered works. Significantly, none of the parties or objectors claimed that the court lacked jurisdiction.
Relying on prior Second Circuit decisions that characterized Section 411 as jurisdictional, the Second Circuit determined that the district court lacked jurisdiction to certify a class of claims arising from the use of unregistered works and, as a result, lacked jurisdiction to approve a settlement. The owners and publishers petitioned the Supreme Court for review. Since no party supported the appellate court's position, the Supreme Court appointed a "friend of the court" to defend the appellate decision.
Section 411(a) provides that, except in limited circumstances, "no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title." While some courts initially treated this as a condition for litigation to proceed, over the years district and appellate courts have been increasingly more vigilant in requiring registration before allowing actions to proceed, describing this statute as "jurisdictional."
In reaching its decision, the Supreme Court considered whether Section 411(a) "clearly states" that its registration requirement is "jurisdictional," as required by Arbaugh v. Y&H Corp., 546 U.S. 500 (2006). After reviewing the specific language and legislative history of the statute, the Court concluded that it did not impose a jurisdictional limit, but rather stated a precondition to suit. Among other things, the Court noted that the statute expressly allows adjudication of infringement claims involving unregistered works in three circumstances, namely, where the work is not a U.S. work, where the infringement concerns rights of attribution or integrity, or where the claimant applied for but was refused registration.
The Court specifically declined to express any opinion on the merits of the settlement and also specifically declined to address whether the registration requirement is a mandatory precondition. The Supreme Court reversed the Second Circuit decision and remanded the case for further consideration.
As a result, the Second Circuit may now consider the merits of (and objections to) the global settlement reached by the parties, resolving issues related to the use of freelance authors' unregistered works in publications and online databases. More broadly, the decision also may make it easier for alleged infringers to bring declaratory judgment actions with respect to unregistered works, may make courts more lenient in allowing actions to proceed while an application for registration is pending, and paves the way for future class settlements involving claims arising out of both registered and unregistered works. The decision also has implications beyond copyright claims, as it reaffirms the Supreme Court's ruling in Arbaugh regarding the test for determining whether a statute is jurisdictional, or merely stating a condition for bringing suit.
Perhaps more significantly for copyright owners, the decision is a reminder that the Copyright Act encourages the registration of copyrighted works and rewards those who take the time to register their works, including authors who are not required to register their works as a precondition of bringing suit. For example, under Section 412 of the Copyright Act, with few exceptions, a work must be registered before infringement occurs in order for a copyright owner to be able to claim statutory damages and attorneys' fees, both of which can factor significantly when a copyright owner evaluates the benefits of bringing a claim or the risks in fighting a claim. This is true even for works by foreign authors who are not required to register their works as a precondition for bringing an infringement action.
Given these benefits and the ease of registration using the Copyright Office's online system, owners of all types of copyrighted works should consider registering their works.
If you have any questions or would like more information on any of the issues discussed in the LawFlash, please contact any of the following Morgan Lewis attorneys:
Carla B. Oakley