Earlier this month, the Supreme Court overturned a Second Circuit decision which held, sua sponte, that the district court lacked jurisdiction under 17 U.S.C. § 411(a) to certify a class asserting copyright infringement claims for both registered and unregistered works.
The underlying facts in Reed Elsevier, Inc. v. Muchnick, No. 08-103, slip. op. (U.S. Mar. 2, 2010) involve freelance writers who filed a class action for copyright infringement against publishers who reproduced their works electronically without first obtaining permission. These facts are similar to those in the New York Times v. Tasini case, in which the Supreme Court made it clear that copyright law does not permit publishers to make electronic reproductions of the works of freelance authors without first obtaining express permission. The difference in the Muchnick case is that the freelance writers consist of both authors of registered copyrights and unregistered copyrights.
Relying on the Tasini decision, the district court pressured the parties to reach a settlement addressing an appropriate royalty for the class plaintiffs. The parties did reach a settlement, which was approved by the district court, but some of the freelance authors who did not hold registered copyrights objected to the terms of the settlement, and so they appealed to the Second Circuit.
Without any prompting by the parties, the Second Circuit held that, pursuant to § 411(a), the district court lacked jurisdiction to certify the class or approve the settlement because the claims included unregistered copyrights. Section 411(a) states that “no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”
Although Section 411(a)’s registration requirement is a precondition to filing a copyright infringement claim, the Supreme Court held that a copyright holder’s failure to comply with that requirement does not restrict a federal court’s subject matter jurisdiction over infringement claims involving unregistered works. According to the Court, a statutory requirement is considered “jurisdictional” only if Congress clearly states that it counts as jurisdictional, and Section 411(a) does not clearly state that its registration requirement is jurisdictional.
As a result of the Court’s ruling, owners of unregistered copyrights are not completely sidelined in the infringement arena. True, they may be precluded from filing an infringement suit on their own; but they are not precluded from joining settlement negotiations or class actions. Indeed, the Court’s decision should revive the possible settlement with $18 million at stake.
3.30.2010
3.29.2010
Fourth Circuit Upholds Abstention, Virginia Trademark Dispute Remains Local
The Court of Appeals for the Fourth Circuit just held, in Riley v. Dozier Internet Law, PC, No. 09-1044 (4th Cir. Mar. 24, 2010) (unpublished), that the United Stated District Court for the Eastern District of Virginia was within its discretion in abstaining from exercising jurisdiction over a Michigan resident’s (Riley) action seeking a declaratory judgment that he was not liable to a Virginia resident (Dozier) for defamation or trademark infringement.
DJ plaintiff Dozier filed suit against DJ defendant Riley in Virginia state court, alleging defamation and “statutory and common law” trademark infringement. (Dozier later argued that he did not bring a claim under the Lanham Act, though he could point to no other statutory basis.) Riley simultaneously sought to remove the Virginia action to federal court, claiming federal question jurisdiction under the Lanham Act, and filed the DJ action in the Eastern District of Virginia. Doubting it had subject matter jurisdiction, the district court remanded the request for removal and dismissed the DJ action stating that, even if it had subject matter jurisdiction, it declined to adjudicate the case under the doctrine of abstention. The district court’s decision regarding removability could not be appealed, see 28 U.S.C. § 1447(d), so Riley appealed dismissal of the DJ action.
In holding that the district court did not abuse its discretion in abstaining from exercising jurisdiction over the DJ action, the Fourth Circuit noted that the Declaratory Judgment Act provides a court with wide discretion in determining whether to adjudicate a case, especially since there was a pending, related state court action. Applying four factors previously set forth in United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493-94 (4th Cir. 1998), the Fourth Circuit found: (1) Virginia has a strong interest in having the issues decided in its courts; (2) the Virginia state court would likely resolve the issues more efficiently than the Eastern District of Virginia; (3) the state and federal proceedings involve overlapping issues of fact and law; and (4) Riley’s federal suit appears to be mere “procedural fencing” – i.e., forum shopping.
In a strong dissent, Circuit Judge Davis criticized the majority’s “rescue mission,” arguing that the district court (1) unquestionably had federal jurisdiction based on the Lanham Act, and (2) failed to exercise its discretion in declining to assert jurisdiction over Riley’s request for declaratory relief on abstention.
Regarding federal jurisdiction, Judge Davis accepted that the court could not review the district court’s erroneous remand of the removed case, but still noted that the “alleged lack of a federal claim was the very basis upon which Dozier prevailed in the district court in persuading the district court to remand the state court action and to dismiss this [DJ] action.”
Regarding abstention, Judge Davis found that the district court’s purported exercise of discretion was a “cursory afterthought,” stated in the alternative and applying the wrong legal standard. Judge Davis stated the majority had to “rummage[] through its treasure chest of abstention doctrines to find a basis on which to affirm the district court,” and found that it substituted its own version of discretion for the district court’s erroneous legal determination.
DJ plaintiff Dozier filed suit against DJ defendant Riley in Virginia state court, alleging defamation and “statutory and common law” trademark infringement. (Dozier later argued that he did not bring a claim under the Lanham Act, though he could point to no other statutory basis.) Riley simultaneously sought to remove the Virginia action to federal court, claiming federal question jurisdiction under the Lanham Act, and filed the DJ action in the Eastern District of Virginia. Doubting it had subject matter jurisdiction, the district court remanded the request for removal and dismissed the DJ action stating that, even if it had subject matter jurisdiction, it declined to adjudicate the case under the doctrine of abstention. The district court’s decision regarding removability could not be appealed, see 28 U.S.C. § 1447(d), so Riley appealed dismissal of the DJ action.
In holding that the district court did not abuse its discretion in abstaining from exercising jurisdiction over the DJ action, the Fourth Circuit noted that the Declaratory Judgment Act provides a court with wide discretion in determining whether to adjudicate a case, especially since there was a pending, related state court action. Applying four factors previously set forth in United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493-94 (4th Cir. 1998), the Fourth Circuit found: (1) Virginia has a strong interest in having the issues decided in its courts; (2) the Virginia state court would likely resolve the issues more efficiently than the Eastern District of Virginia; (3) the state and federal proceedings involve overlapping issues of fact and law; and (4) Riley’s federal suit appears to be mere “procedural fencing” – i.e., forum shopping.
In a strong dissent, Circuit Judge Davis criticized the majority’s “rescue mission,” arguing that the district court (1) unquestionably had federal jurisdiction based on the Lanham Act, and (2) failed to exercise its discretion in declining to assert jurisdiction over Riley’s request for declaratory relief on abstention.
Regarding federal jurisdiction, Judge Davis accepted that the court could not review the district court’s erroneous remand of the removed case, but still noted that the “alleged lack of a federal claim was the very basis upon which Dozier prevailed in the district court in persuading the district court to remand the state court action and to dismiss this [DJ] action.”
Regarding abstention, Judge Davis found that the district court’s purported exercise of discretion was a “cursory afterthought,” stated in the alternative and applying the wrong legal standard. Judge Davis stated the majority had to “rummage[] through its treasure chest of abstention doctrines to find a basis on which to affirm the district court,” and found that it substituted its own version of discretion for the district court’s erroneous legal determination.
3.15.2010
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