Sunday, December 31, 2006

Copyright - Removal, Remand, Preemption and Second-Filed Actions (Ch 4,5, 7, 9)

In bringing a litigation related to copyright ownership, the question arises: what court do I belong in? Many practitioners comfortable with litigating in a local state court will likely seek to avoid federal questions and assert a state-law based claim in state court. Defendants, quickly spotting the copyright issue and seeking the benefits of federal law, both substantive and procedural, will want to get the case into federal court.

How does one get a case bounced from state court to federal court? The procedure is called removal. Read sections 1441 through 1453 of 28 U.S.C. and come right back to this post and you'll understand the basic process. Removal involves a defendant filing simultaneously very simple notices with the federal and state courts notifying the courts that you have moved the case. No court permission necessary, no motion, no application. I have described the circumstances under which removal is appropriate and provided forms in Chapter 9 of the Copyright Litigation Handbook (West 2006) titled "Removal from State Court and Preemption". Once you've made the filings, the state court judge has no power over the case, but any preliminary injunctive relief entered by the state court judge prior to removal will remain in place.

Let's say you are the plaintiff who filed the state court action. You believe that removal was improper. Your remedy is to make a motion to the federal judge who is now assigned to the case (the Clerk of the Court makes the assignment of a federal judge upon recieving the Notice of Removal). Your motion seeks a remand (that is, send it back to state court).

In most cases (not involving copyright), you can only remove a case to federal court if a federal question appears on the face of the complaint filed in state court. A defendant who has federal defenses is generally stuck in state court. Copyright is different. Most Circuit courts have explicitly adopted the "complete preemption test" based on 17 U.S.C. 301(a) (which provides that federal copyright law preempts state law). Essentially, even if the state court complaint doesn't have a copyright claim, the federal court, on the remand motion, will analyze in a two part test (1) whether the work is within the subject matter of copyright and (2) whether the rights granted under state law are equivalent to exclusive rights granted to a copyright owner.

Professor Patry's blog (No Pound of Copyright 12/27/2006) brought to my attention a Fifth Circuit case Pritchett v. Pound, --- F.3d ---, 2006 WL 3704859 (C.A. 5 (Tex.)) 12/18/2006. Professor Patry discusses the difficulties involved in determining accrual of statutes of limitations and takes issue with the 5th Circuit's analysis. When does a copyright ownership claim accrue? When does an infringement claim accrue? I discuss these issues at Chapter 4 of the Copyright Litigation Handbook.

But what I found interesting, mystifying and inspirational about the Pritchett case is that a plaintiff first went to state court seeking an accounting and royalties from sales of a book which plaintiff's deceased husband allegedly co-authored. Defendant sought and successfully obtained a remand based on the representation that "there was no ownership dispute and therefore no federal question". So the defendant was apparently stuck in state court. Apparently, the defendant simply ignored the remand and filed a second federal action seeking a declaratory judgment that defendant owned the copyrights. The original plaintiff (now the defendant) counterclaimed for an accounting. The "second-filed action plaintiff" won summary judgment on the declaratory judgment, which the 5th Circuit affirmed. Wow!

Practice Insight. The Pritchett case provides support for the proposition that one can simply ignore a remand and file a second declaratory judgment action in federal court. I discuss Cease and Desist Letters and Declaratory Judgment Actions in Chapter 5 of the Copyright Litigation Handbook. Second-filed actions usually arise where a would-be plaintiff is hit with a declaratory judgment action after an ill-advised cease and desist letter was sent to an inconvenient jurisdiction. Filing a second action under the Pritchett circumstances is a very bold move that paid off, perhaps because the record below (which I have not examined) was very sparse and the "second-action defendant" acquiesced by asserting counterclaims rather than moving for sanctions under Rule 11 of the Federal Rules of Civil Procedure.

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