Kwan v. Schlein, No. 09-5205-cv (2nd Cir. Jan. 25, 2011)
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The Court of Appeals for the Second Circuit affirmed the District Court for the Southern District of New York, which denied summary judgment on plaintiff’s claim for copyright infringement because it was time-barred, and granted defendants’ motion for summary judgment to dismiss the claims. [Editorial note: the Second Circuit opinion incorrectly records that the district court granted appellant’s motion for summary judgment]. The circuit court also affirmed the district court’s order to dismiss defendants’ counterclaims without prejudice.
The Second Circuit held that where there is a genuine dispute regarding plaintiff’s ownership of copyright and the statute of limitations has run, plaintiff cannot then claim copyright infringement. In so holding, the court noted that whereas an infringement action may be commenced within three years of any infringing act, an action based on an ownership claim must be commenced within three years of the point in time plaintiff became aware of the dispute in ownership. A disputed claim to ownership cannot be repackaged as an infringement claim – the statute of limitations runs on the underlying issue.
The case involves a dispute between Shirley Y. Kwan, plaintiff-appellant, and the defendants-appellees Alan M. Schlein and the Business Resources Bureau, Inc. (“BRB”). In 1998, Schlein began writing a book for BRB and hired Kwan as his editor. In return for her services, Schlein agreed that she would receive a small percentage of the book’s royalties. Then, when the cover for the book was being drafted, Kwan wanted to be listed as an author because she felt that she had “‘[e]ssentially . . . ghost-written th[e] book.’” But her request was ignored and in the end she was only listed as the book’s editor. Then for the next several years, Kwan received royalties from sales of the first two editions of the book. However, in 2002, when BRB published the third edition of the book, it stopped paying Kwan her royalties. BRB stated that Kwan did not receive royalties because the book had been “completely rewritten.”
Subsequently, Kwan filed suit on January 14, 2005 claiming copyright infringement. She also filed a copyright registration for the book, claiming to be co-author (which she later revised to sole author). The district court granted summary judgment in favor of BRB. On appeal, the circuit court reasoned that under the Copyright Act, civil actions must be brought within three years of the time plaintiff was or reasonably should have been aware that a claim had accrued. Because Kwan became aware of the authorship dispute in 1998, the statute of limitations had already run. Additionally, in Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991), the Supreme Court held that a plaintiff must establish ownership of a valid copyright before maintaining an action for infringement.
The court also briefly considered whether defendant’s counterclaims against Kwan were properly dismissed without prejudice, finding that because defendant could not renew its claims against plaintiff independent of plaintiff bringing further action, and because dismissal would not result in legal prejudice to plaintiff, the district court acted within its authority by dismissing the counterclaims.
This case clarifies the Copyright Act’s rules regarding the difference between the statute of limitations for an infringement claim and an ownership claim. Additionally, it helps clarify the copyright interests of parties involved in producing a written work other than the primary author.