The court explained that it “has never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period. Inviting individual judges to set a time limit other than the one Congress prescribed would tug against the uniformity Congress sought to achieve.” However, the majority also said that in extraordinary circumstances, laches could curtail the amount of relief granted, such as precluding an injunction to stop destruction of an infringing work.
Copyright claims have a three-year statute of limitations, but the claim renews every time another infringement of the owner’s rights occurs. So the statute has the effect of not barring a claim but limiting damages to the past three years. However, under the doctrine of laches, courts have barred suits if the plaintiff unreasonably delayed in initiating a suit. As the Ninth Circuit explained, "Laches is an equitable defense that prevents a plaintiff, who with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights." On the other hand, the court here observed that laches originally served as a guide when no statute of limitations controlled the claim.
In this case writer Frank Petrella collaborated with boxer Jake LaMotta on a book and several screenplays that were the basis for the movie "Raging Bull." In 1976, they assigned the rights to these works to Chartoff-Winkler Productions. United Artists and Metro-Goldwyn-Mayer Inc. later acquired the motion picture rights.
In 1981, Frank Petrella died and his daughter Paula inherited his rights including his right to renew his copyrights. At the time when he created the works, copyright law provided for an initial term of 28 years of protection which could be renewed for an additional term of 28 years. Renewal registration within strict time limits was required to extend the copyright.
For many years, it was not clear if this renewal right could be assigned before the initial term expired and before it had been exercised. In 1990, the Supreme Court in Stewart v. Abend, often referred to as the "Rear Window" case, held that such an assignment was not valid when the author dies prior to the time that his renewal rights vest. This creates a potential problem for the owner of a film based on a copyrighted book still in its initial term. If the right to adapt the book into a film expires, the film owner cannot continue to distribute the film if the renewal rights cannot be secured from the person who succeeds to the author’s renewal rights.
The "Rear Window" decision was modified in 1992 by an amendment to copyright law that limits the aforementioned rule when a claimant to the renewal rights fails to timely apply to register the renewal rights, or if the renewal registration fails to issue. In such cases, a film producer could continue to use the author’s underlying work in the producer’s film, but may not prepare new works, such as a sequel, based on it.
Here, the plaintiff waited 18 years, until 2009, to sue MGM alleging copyright infringement, claiming she had renewed the copyright to her father's work after its initial 28-year term expired in 1991. The defendants claimed she delayed too long and should be barred under the doctrine of laches.
Courts have traditionally weighed the reasons for a delay in deciding whether to apply the doctrine. A delay may be excused when it is required by the exhaustion of remedies through the administrative process, when it is used to appraise and prepare a complicated claim, or when the delay is to assess whether the infringement will justify the cost of bringing suit. On the other hand, a delay is generally not allowed when its purpose is to simply benefit from the delay by allowing the infringer to continue exploiting the work. In this case, both the trial judge and the U.S. Ninth Circuit Court of Appeals rejected the plaintiff’s claim reasoning that she had waited too long to bring suit. However, other circuit courts have rejected the laches defense and allowed copyright cases to proceed as long as the plaintiff’s case has been filed within the statute of limitations.
So, the question presented to the U.S. Supreme Court was whether a statute enacted by Congress setting specific time limits to bring suit should prevail over the equitable doctrine of laches, which is determined by a court based on the facts before it. Although the plaintiff delayed 18 years in bringing her suit, that suit was preceded by a series of letters threatening litigation by her attorneys beginning in 1998. MGM knew of the plaintiff’s claims before it invested millions of dollars in a new edition of the film.
The effect of the majority ruling is that the case will go back to the lower court where the plaintiff can seek damages dating back to 2006, three years before initiating the lawsuit.
The impact on practitioners is that owners who claim their copyrighted work has been infringed will be better able to bring suit even if many years have passed since the initial infringement. Judges will not be able to bar a suit based on such delays if the statute of limitations has not run.
In instances where the plaintiff’s recovery of damages is based on the infringer’s profits, rather than statutory damages, the plaintiff will have more opportunity to wait and see whether there are profits to be recovered before initiating suit. Defense counsel in copyright cases will want to make sure to preserve evidence that might be needed in a suit filed long after the initial infringement but before the statute of limitations has run.
There is nothing in the opinion that limits the doctrine to copyright disputes. The precedent could be applied to expand the rights of plaintiffs in other actions where there is an applicable statute of limitations. Moreover, the Supreme Court has emphasized that laches can be used to limit a plaintiff’s remedies even if it cannot bar a claim. In other words, while laches may not always be a complete defense to an infringement action, it can affect remedies. So it could be used to deny injunctive relief to a plaintiff unreasonably delays bringing suit. As the court explained the doctrine is “essentially gap-filling, not legislation-overriding.”
The decision can be read at: http://www.supremecourt.gov/opinions/13pdf/12-1315_ook3.pdf