Reed Elsevier v. Muchnick, No. 08–103 (U.S. Mar. 2, 2010)
In a unanimous 8-0 decision, the United States Supreme Court overturned a Second Circuit Court of Appeals decision which held that the district court lacked jurisdiction to certify either the class or the settlement in a case involving holders of unregistered copyrights. The Court of Appeals for the Second Circuit had held in a sua sponte decision that a copyright holder's failure to comply with § 411(a)'s registration requirement deprives a federal court of subject-matter jurisdiction to adjudicate his copyright infringement claim. The Supreme Court disagreed.
Justice Sotomayor did not take part in the decision, perhaps because she was a member of the Second Circuit Court that decided not to rehear the case en banc. The Supreme Court decision revived a possible $18 million settlement between freelance writers, publishers and electronic database owners, involving payment to freelance writers for online use of their work -- even when some writers have not registered their copyright.
The New York Times and TechDirt both provide overviews of the decision. The Legal Information Institute at the Cornell University Law School provides a detailed analysis of the issues underlying this case.
Subject to certain exceptions, the Copyright Act requires copyright holders to register their works before suing for copyright infringement. However the Supreme Court held that a copyright holder's failure to comply with the registration requirement does not restrict a federal court's jurisdiction over claims involving unregistered works. In so holding, the court reasoned that a statutory requirement should only be interpreted as jurisdictional if Congress "clearly states" that it is jurisdictional. To that effect, Justice Clarence Thomas, writing for the Court, said § 411(a) "imposes a precondition to filing a claim that is not clearly labeled jurisdictional, is not located in a jurisdiction-granting provision, and admits of congressionally authorized exceptions."
This lawsuit follows the 2001 New York Times Company v. Tasini Supreme Court ruling in which the Court held that the federal Copyright Act does not permit publishers to reproduce freelance works electronically without specific permission from the authors. As a direct result, most publishers now require freelance writers to sign contracts granting both print and online rights.
Likewise, the present case arose when a group of freelance writers filed a class action lawsuit against a group of publishers alleging copyright infringement for electronically reproducing their works without permission. In the wake of Tasini, the parties were urged by the court to settle through negotiations that would determine royalties for works written under the old contractual arrangements. The parties eventually reached a settlement with the district court's approval. However, some writers holding unregistered copyrights felt that their interests were inadequately addressed by the royalty framework proposed by the settlement. These plaintiffs objected to the settlement and appealed to the Second Circuit, which unexpectedly ruled that the federal court lacked subject-matter jurisdiction over the case.
In overturning the Second Circuit, the Supreme Court reaffirms the test set out in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), to determine whether or not a statutory requirement is a jurisdictional requirement. By looking at the text of § 411(a), the court finds that copyright registration is not a jurisdictional requirement because it was not “clearly state[d]” as such by Congress.
This ruling has many implications for copyright law in the 21st century. While holders of unregistered copyrights might still have difficulty bringing infringement lawsuits by themselves, this case shows that they can still participate in settlement and class action lawsuits like the one at hand. In responding to the Supreme Court’s opinion, Irvin Muchnick writes that the decision “keeps alive the dream of a reasonable royalty system for re-use of copyrighted works in new media. This, in turn, would empower independent creators – who currently lie prostrate before big publishers – and enhance the diversity and vitality of American culture.”