Supreme Court Addresses Jurisdiction Over Unregistered Copyright Claims In Class Action

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.