Second Circuit: Copyright Class Action Settlement Fails - Unregistered Copyrights Not Adequately Represented

The Tasini v. New York Times drama has been going on for many, many years. The issue: freelancers wrote articles for the New York Times and other publications. When technology permitted the articles to be put into searchable electronic databases, could the publishers do this without seeking permission from the copyright holder? The U.S. Supreme Court's 2001 decision in Tasini taught us that doing so without getting the copyright owner's permission was copyright infringement. So in the decade that followed, we had Reed Elsevier v Muchnick in which the US Supreme Court decided that 17 USC 411 (the requirement that a copyright be registered before a federal claim for copyright infringement may be filed) was not jurisdictional.

Now following remand from the Supreme Court's decision in Muchnick, we have In re Literary Works in Electronic Databases Copyright Litigation (2d Cir. August 17, 2011) - a decision deciding a matter that was originally argued on March 7, 2007.

The decision is embedded below.   In it the Second Circuit rejects the district court's certification of a class action for settlement purposes because the holders of unregistered copyrights were not adequately represented.  Holders of unregistered copyrights were classed as "Category C".

Category A -  Holders of copyrights registered in time to qualify for statutory damages.  To be paid $1,500 for first 15 works written for any one publisher, $1,200 for the second fifteen works for that publisher, and $875 for all works written for that publisher after the first 30.

Category B - The greater of $150 or 12.5% of the original price of the work.

Category C,  The greater of $5 or 10% of the original price of the work with sliding scale for works over $249  ($25- $60).

The settlement capped the publishers' total exposure at $18 million.  Key to the Second Circuit's reasoning was that only Category C would be reduced if the global settlement exceeded $18 million.

This decision is an important one in interpreting Rule 23 of the Federal Rules of Civil Procedure, which governs certification of class actions and requires that each class or subclass be adequately represented.

Judge Straub wrote a 16 page dissent in favor of class certification.


In Re Literary Database Litigation

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