Copyright Law - Ninth Circuit: Was Raging Bull Asleep At the Wheel? An Unusual Laches Case

Copyright Infringement, Unjust Enrichment, Laches, Equitable Estoppel, Motion for Summary Judgment, Rule 11 Sanctions, Attorneys Fees

Petrella v. Metro-Goldwyn-Mayer, Inc., 695 F.3d 946 (Ninth Circuit August 29, 2012).  Petrella owns renewal copyright in Raging Bull book and two screenplays.    Her father wrote the book and screenplays and died in 1981.  She filed a renewal application in 1991.  In 1998 her attorney wrote to defendants claiming that Raging Bull was an infringement of her copyright.  An exchange of letters was had, ending in 2000.   Petrella filed this action in 2009.  The district court granted summary judgment on the equitable defense of laches.  The Ninth Circuit affirmed.   The Ninth Circuit opined that laches bars a copyright owner’s claim where a plaintiff, with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.  A defendant must prove (1) the plaintiff delayed in initiating the lawsuit; (2) delay was unreasonable; and (3) the delay resulted in prejudice.   Plaintiff claimed that she had delayed for personal reasons, together with the fact that the film had not made any money.  The Ninth Circuit analyzed two types of prejudice: expectations-based prejudice and evidentiary prejudice.  The Ninth Circuit focused on the many investments that the producers continued to make in Raging Bull during the relevant time period and found that they had been prejudiced caused by Petrella’s delay.  The Ninth Circuit affirmed the district court’s denial of damages.  The opinion provoked a dissent that pointed out that the Ninth Circuit is the jurisdiction most hostile to copyright owners and out of synch with other jurisdictions.   The dissent reasoned that the majority opinion confounds the doctrine of equitable estoppel with laches and misuses the laches doctrine in a manner that is too broad and vague in a manner not intended by Congress.

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Ethics and Copyright Litigation CLE Now Available For Download

Join me for an hour of Ethics CLE by downloading the audio file from West LegalEdcenter website here.  I have designed this course to make Copyright Litigation Handbook come alive and to focus on the ways that practitioners can avoid getting into hot water when starting or defending copyright cases.

Here is the program description from the website:

Ray Dowd, author of West’s acclaimed Copyright Litigation Handbook and a partner in Dunnington Bartholow & Miller LLP in New York City will take us through the ethical pitfalls facing legal practitioners tackling copyright litigation.
Dowd, a seasoned litigator, takes us through a pre-flight litigation checklist designed to avoid the potential of sanctions in copyright cases. When a potential copyright case comes to your office, what are your ethical obligations in advising a potential client? How should clients be advised on the assessment of legal fees before a litigation starts? How may a client’s “innocent” copying lead to large judgments and assessment of attorney’s fees?
Aside from harsh consequences to clients, attorneys may be sanctioned personally in copyright cases. What sort of investigation is necessary to avoid Rule 11 problems before filing a lawsuit and to avoid dismissal of the suit? May sending a cease and desist letter to a foreign jurisdiction subject your client to a declaratory judgment action in an inconvenient forum? What is the "first to file" rule and what are the exceptions?
Copyright litigation has exploded as the world has become digitized. This course will assist you in understanding how to avoid potential minefields.
The New York Law Journal called Dowd’s Copyright Litigation Handbook “an indispensable guide and supplement to the ins and outs of copyright litigation…”.

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Fair Use Fridays: Is Copyright Troll Righthaven Dead?

Righthaven LLC has garnered headlines for suing companies and individuals that use copyrighted content online.   Known as a "copyright troll"  Righthaven pursued many instances of quoting or using copyrighted materials that many considered to be considered "fair use" under copyright's fair use doctrine.

"Fair use" is codified at 17 U.S.C. Section 107 as an exception to copyright infringement, but it is famously ill-defined.

Here is an article from the Las Vegas Sun on a judge ordering Righthaven's copyright assets to be auctioned by a receiver.

Today Vegas Inc reported here that Righthaven will ask the Ninth Circuit Court of Appeals to block the auction.

Here from ALM Corporate Counsel is some detail on one of the over 200 cases filed by Righthaven.  In Righthaven LLC v. Democratic Underground (motion here) Righthaven sued over a five-sentence excerpt of a news article that was posted by a political discussion group.

Here from Techdirt we have coverage of Righthaven appealing to the Ninth Circuit from a ruling that copying of an entire work can be fair use, together with a link here to the brief.

Check out www.righthavenlawsuits.com for more.   Righthaven Victims blog here reports that Righthaven has been required to pay $225,172.15 so far in sanctions.


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Oprah Winfrey Wins Copyright Battle Over Chubbiest US President

In Harris v. Winfrey, 2011 WL 1003807 (E.D.P.A. March 18, 2011), a federal district judge dismissed a claim against Oprah Winfrey but denied sanctions under Rule 11 of the Federal Rules of Civil Procedure.   Copy of motion for sanctions here.  The allegation was that Oprah took materials from a book "How America Elects Her Presidents" (I could not find this book on Amazon).   Plaintiff mailed copies of his book to Oprah, trying to get on her show.   A review of the transcript showed that the only question on Oprah's show that had any similarity to the book was a question of who was the heaviest president.  Answer:  William Howard Taft.   From the decision:

Copyright law protects only an author's original expression; historical facts and information in the public domain are not copyrightable. Id. at 547-48 (“[N]o author may copyright facts or ideas.”); see also Video Pipeline, Inc. v. Buena Vista Home Entm't, Inc., 342 F.3d 191, 199 n. 5 (3d Cir.2003) ( “[C]opyright protection does not include facts and ideas, but only their expression.”). There is “thin” copyright protection for an author's choices as to the presentation of factual matter. Feist, 499 U.S. at 348. This protection, however, is limited to the author's original, creative contributions, since copyright “protects only the elements that owe their origin to the compiler-the selection, coordination, and arrangement of facts.” Id. at 359. In Feist, for example, the Supreme Court refused to extend copyright protection to a utility company's aggregation of telephone directory information, holding that neither the “raw data” nor the manner in which it was presented qualified as original. Id. at 361.



The material plaintiffs seek to protect here is not original. Plaintiffs argue that Winfrey infringed Harris's copyright in his booklet by referring to an historical fact, President Taft's weight. (Compl.¶ 21.) Winfrey's use of this fact, even if she learned it from Harris's booklet, does not infringe any copyright Harris may have held. This information is not original to Harris, but rather is a piece of “raw data” that preexisted Harris's booklet and is available from numerous external sources.


Plaintiffs also argue that Oprah infringed the manner in which the facts were presented by copying verbatim the way in which Harris “framed the questions.” (Pls.' Resp. to Defs.' to Mot. Dismiss 5.) While the two versions of Harris's booklet presented to the Court do have some hallmarks of originality, neither contains any material in question format. Thus, the framing to which plaintiffs refer, even if copyrightable, is not implicated in this case.


State law claims of unjust enrichment, conversion and tortious interference were dismissed as preempted.    More on Rule 11 sanctions here.  More on preemption here.

Chubbiest US President - William Howard Taft - Public domain image courtesy Wikimedia Commons

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9th Cir: Bypasses Rule 11 Safe Harbors Whacks Attorney for $258,000

On April 26, 2010 I posted here on the Seventh Circuit hitting an attorney with a $60,000 sanction for litigating a copyright action.  The sanction was based on 28 U.S.C. section 1927 and the court's inherent power.  Notable in that case was that the sophisticated adversary had not made a motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure, nor had the court issued a show cause order pursuant to Rule 11.

Now comes Lahiri v. Universal Music and Video, --- F.3d ----, 2010 WL 2246401 (9th Cir. June 7, 2010).  This time, using 29 U.S.C. section 1927 - and again no Rule 11 motion discernable from the opinion, and the plaintiff's attorney is whacked for $258,206.04.

The facts involve the attorney, supposedly a sophisticated copyright practitioner, who took what the court determined to be a bad faith position based on Indian law of copyright, which governed ownership to the soundtrack of a film.   The court determined that he misrepresented Indian law, that Indian law is written in English, and that there was no need for the attorney to rely on an Indian law expert since Indian law is written in English.

This, like the Seventh Circuit's decision, is terrible precedent.  The Circuit courts are criminalizing the practice of law and depriving attorneys of property without due process of law.  If it took $258,000 in legal fees to prove that the guy was wrong, his error -- or even what the court found to be a misrepresentation -- could not have been so obvious.

If your adversary lies, you bring it to the judge's attention through a Rule 11 motion, which has a 20 day safe harbor.  If the judge thinks the lawyer lied, the judge, following Rule 11 is supposed to order the attorney to show cause under Rule 11 why he ought not be sanctioned.

Now, using 28 U.S.C. section 1927, federal judges are passing the blame for cases that they let languish (here for five years) onto the losing lawyer, criminalizing his actions ex post facto.

§ 1927. Counsel’s liability for excessive costs



Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
 
In the harsh light of the rear view mirror, attorneys on either side of a case get things wrong, make blunders, or misrepresent facts (sometimes good faith mistakes, sometimes bad faith).  That is the nature of litigation practice.   As we all know, practically every attorney in Los Angeles thinks of him/herself as an experienced copyright practitioner.

When federal judges have decided to take out a pen and criminalize the losing attorney for making losing or unreasonable arguments, it is a very dangerous time for our system of justice.  28 USC 1927 talks about vexatiously multiplying the proceedings.  In this case, the guy made one Lanham Act claim and one copyright claim.  The defendant made two summary judgment motions and won, then claimed over $800,000 from the loser.

If the guy was so wrong, why didn't UMG's counsel Loeb & Loeb make a Rule 11 motion?  If they thought his arguments were frivolous, why did they sit on their hands rather than following Rule 11?   And how did they run up an 800K bill for two summary judgment motions?

In the Copyright Litigation Handbook, I devote much discussion to attorney sanctions: what gets you into trouble, and how to avoid it.   Unfortunately, the situation is getting more dangerous, and no one feels sorry for lawyers.  Put aside your schadenfreude and think hard about what this means for you, your firm, and the quality of justice in America.

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7th Circuit: $60,000 Sanction on Attorney for Bringing A Copyright Action

The United States had the "American Rule" for most of its history.  In recent years, the practice of law has been practically criminalized by judges imposing financial sanctions on attorneys.  Here is a case where sophisticated defense counsel gave repeated "warnings" (rather than making a Rule 11 motion), and then got a judge and a circuit court to sanction the attorney by going around Rule 11, sanctioning the attorney, giving the defendant a windfall.  Here's how:

In Tillman v. Newline Cinema, 2010 WL 1452500 (7th Cir. April 13, 2010), the 7th Circuit affirmed a lower court's decision to sanction both a client and an attorney.  The decision would be rather routine had the court proceeded under Rule 11 of the Federal Rules of Civil Procedure, which provides that a party seeking sanctions must first serve the person against whom sanctions are sought a copy of a motion seeking sanctions, and if the party withdraws the offending pleading, the Rule 11 sanctions motion can't be filed.

The Tillman court didn't rely on Rule 11, it relied on the court's inherent power to impose sanctions:

§ 1927. Counsel’s liability for excessive costs



Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
 
Rule 11 (not discussed by the court at all), provides as follows:
 
Rule 11. Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions

(a) Signature.
Every pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney's name — or by a party personally if the party is unrepresented. The paper must state the signer's address, e-mail address, and telephone number. Unless a rule or statute specifically states otherwise, a pleading need not be verified or accompanied by an affidavit. The court must strike an unsigned paper unless the omission is promptly corrected after being called to the attorney's or party's attention.
(b) Representations to the Court.
By presenting to the court a pleading, written motion, or other paper — whether by signing, filing, submitting, or later advocating it — an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
(c) Sanctions.
(1) In General.
If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.
(2) Motion for Sanctions.
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.
(3) On the Court's Initiative.
On its own, the court may order an attorney, law firm, or party to show cause why conduct specifically described in the order has not violated Rule 11(b).
(4) Nature of a Sanction.
A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.
(5) Limitations on Monetary Sanctions.
The court must not impose a monetary sanction:
(A) against a represented party for violating Rule 11(b)(2); or
(B) on its own, unless it issued the show-cause order under Rule 11(c)(3) before voluntary dismissal or settlement of the claims made by or against the party that is, or whose attorneys are, to be sanctioned.
(6) Requirements for an Order.
An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction.
(d) Inapplicability to Discovery.
This rule does not apply to disclosures and discovery requests, responses, objections, and motions under Rules 26 through 37.

All of us have been frustrated with adversaries making frivolous motions and taking positions unwarranted by the law and the facts.  But the big firms almost never get sanctioned, it always seems to be the little guys.  Rule 11 gives attorneys almost no procedural protections and may create an ethical conflict between attorney and client.   It provides no real due process for an attorney.  Yet for all its weakness, it requires action of an adversary to impose a sanction.   I don't know why the court didn't issue the show-cause order required by Rule 11(c)(3).   Sanctions were imposed for 1. filing a long complaint; 2. filing an improper interlocutory appeal; 3. patently inadequate investigation of a conspiracy claim and 4. filing claims under 42 USC 1983 when there were no state actors.  There is not a law firm in the nation that didn't tack on an extra "in the alternative" claim in a complaint without thinking twice, or add an extra stupid claim that ought not to have been in the complaint - but this is usually thought to be prudent because one can't anticipate all of the facts one might find in discovery.

The Seventh Circuit's decision is a bad one for spirited and healthy advocacy (i.e. the American system).   Every attorney blunders in practically every case - by an act or omission - especially where resources are limited.   Where an attorney is inexperienced or simply makes a huge error - the adversary process permits the adversary to turn it to advantage.  There is no reason to impose criminal-like penalties on top of that.  This attorney may lose his house and his license for conduct that was found by the Seventh Circuit to be neither dishonest nor contumacious.  The courts should not be used to criminalize the practice of law and where Rule 11 sets out a mandatory procedure, the Seventh Circuit should not ignore it.  Sophisticated defense counsel sat on its hands rather than making a Rule 11 motion and should have waived the right to cash in at the poor lawyer's expense.