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SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1315
_________________
PAULA PETRELLA, PETITIONER v.
METRO-GOLDWYN-MAYER, INC., et al.
on writ of certiorari to the united states
court of appeals for the ninth circuit
[May 19, 2014]
Justice Ginsburg
delivered the opinion of the Court.
The Copyright Act
provides that “[n]o civil action shall be maintained under
the [Act] unless it is commenced within three years after the claim
accrued.” 17 U. S. C. §507(b). This case presents the
question whether the equitable defense of laches (unreasonable,
prejudicial delay in commencing suit) may bar relief on a copyright
infringement claim brought within §507(b)’s three-year
limitations period. Section 507(b), it is undisputed, bars relief
of any kind for conduct occurring prior to the three-year
limitations period. To the extent that an infringement suit seeks
relief solely for conduct occurring within the limitations period,
however, courts are not at liberty to jettison Congress’
judgment on the timeliness of suit. Laches, we hold, cannot be
invoked to preclude adjudication of a claim for damages brought
within the three-year window. As to equitable relief, in
extraordinary circumstances, laches may bar at the very threshold
the particular relief requested by the plaintiff. And a
plaintiff’s delay can always be brought to bear at the
remedial stage, in determining appropriate injunctive relief, and
in assessing the “profits of the infringer . . .
attributable to the infringement.” §504(b).[
1]
Petitioner Paula
Petrella, in her suit for copyright infringement, sought no relief
for conduct occurring outside §507(b)’s three-year
limitations period. Nevertheless, the courts below held that laches
barred her suit in its en-tirety, without regard to the currency of
the conduct of which Petrella complains. That position, we hold, is
contrary to §507(b) and this Court’s precedent on the
province of laches.
I
The Copyright Act
(Act), 17 U. S. C. §101 et seq., grants
copyright protection to original works of authorship. §102(a).
Four aspects of copyright law bear explanation at the outset.
First, the length of a
copyright term. Under the Act, a copyright “vests initially
in the author or authors of the work,” who may transfer
ownership to a third party. §201. The Act confers on a
copyright owner certain exclusive rights, including the rights to
reproduce and distribute the work and to develop and market
derivative works. §106. Copyrighted works published before
1978—as was the work at issue—are protected for an
initial period of 28 years, which may be—and in this case
was—extended for a renewal period of up to 67 years.
§304(a). From and after January 1, 1978, works are generally
protected from the date of creation until 70 years after the
author’s death. §302(a).
Second, copyright
inheritance. For works copyrighted under the pre-1978 regime in
which an initial period of protection may be followed by a renewal
period, Congress provided that the author’s heirs inherit the
renewal rights. See §304(a)(1)(C)(ii)–(iv). We held in
Stewart v. Abend, 495 U. S. 207 (1990) , that if an author who
has assigned her rights away “dies before the renewal period,
then the assignee may continue to use the original work [to produce
a derivative work] only if the author’s successor transfers
the renewal rights to the assignee.” Id., at 221.[
2]
Third, remedies. The
Act provides a variety of civil remedies for infringement, both
equitable and legal. See §§502–505, described
supra, at 2, n. 1. A court may issue an injunction “on
such terms as it may deem reasonable to prevent or restrain
infringement of a copyright.” §502(a). At the election
of the copyright owner, a court may also award either (1)
“the copyright owner’s actual damages and any
additional profits of the infringer,” §504(a)(1), which
petitioner seeks in the instant case, or (2) statutory damages
within a defined range, §504(c).
Fourth, and most
significant here, the statute of limitations. Until 1957, federal
copyright law did not include a statute of limitations for civil
suits. Federal courts therefore used analogous state statutes of
limitations to determine the timeliness of infringement claims. See
S. Rep. No. 1014, 85th Cong., 1st Sess., 2 (1957) (hereinafter
Senate Report). And they sometimes invoked laches to abridge the
state-law prescription. As explained in Teamsters & Employers
Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F. 3d
877, 881 (CA7 2002): “When Congress fails to enact a statute
of limitations, a [federal] court that borrows a state statute of
limitations but permits it to be abridged by the doctrine of laches
is not invading congressional prerogatives. It is merely filling a
legislative hole.” (internal citation omitted). In 1957,
Congress addressed the matter and filled the hole; it prescribed a
three-year look-back limitations period for all civil claims
arising under the Copyright Act. See Act of Sept. 7, 1957, Pub. L.
85–313, 71Stat. 633, 17 U. S. C. §115(b) (1958 ed.). The
provision, as already noted, reads: “No civil action shall be
maintained under the provisions of this title unless it is
commenced within three years after the claim accrued.”
§507(b).[
3]
The federal limitations
prescription governing copyright suits serves two purposes: (1) to
render uniform and certain the time within which copyright claims
could be pursued; and (2) to prevent the forum shopping invited by
disparate state limitations periods, which ranged from one to eight
years. Senate Report 2; see H. R. Rep. No. 2419, 84th Cong.,
2d Sess., 2 (1956). To comprehend how the Copyright Act’s
limitations period works, one must understand when a copyright
infringement claim accrues.
A claim ordinarily
accrues “when [a] plaintiff has a complete and present cause
of action.” Bay Area Laundry and Dry Cleaning Pension Trust
Fund v. Ferbar Corp. of Cal., 522 U. S. 192, 201 (1997)
(internal quotation marks omitted). In other words, the limitations
period generally begins to run at the point when “the
plaintiff can file suit and obtain relief.” Ibid. A copyright
claim thus arises or “accrue[s]” when an infringing act
occurs.[
4]
It is widely recognized
that the separate-accrual rule attends the copyright statute of
limitations.[
5] Under that
rule, when a defendant commits successive violations, the statute
of limitations runs separately from each violation. Each time an
infringing work is reproduced or distributed, the infringer commits
a new wrong. Each wrong gives rise to a discrete
“claim” that “accrue[s]” at the time the
wrong occurs.[
6] In short, each
infringing act starts a new limitations period. See Stone v.
Williams, 970 F. 2d 1043, 1049 (CA2 1992) (“Each act of
infringement is a distinct harm giving rise to an independent claim
for relief.”).
Under the Act’s
three-year provision, an infringement is actionable within three
years, and only three years, of its occurrence. And the infringer
is insulated from liability for earlier infringements of the same
work. See 3 M. Nimmer & D. Nimmer, Copyright
§12.05[B][1][b], p. 12–150.4 (2013) (“If
infringement occurred within three years prior to filing, the
action will not be barred even if prior infringements by the same
party as to the same work are barred because they occurred more
than three years previously.”). Thus, when a defendant has
engaged (or is alleged to have engaged) in a series of discrete
infringing acts, the copyright holder’s suit ordinarily will
be timely under §507(b) with respect to more recent acts of
infringement (i.e., acts within the three-year window), but
untimely with respect to prior acts of the same or similar
kind.[
7]
In sum, Congress
provided two controlling time prescriptions: the copyright term,
which endures for decades, and may pass from one generation to
another; and §507(b)’s limitations period, which allows
plaintiffs during that lengthy term to gain retrospective relief
running only three years back from the date the complaint was
filed.
II
A
The allegedly
infringing work in this case is the criti-cally acclaimed motion
picture Raging Bull, based on the life of boxing champion Jake
LaMotta. After retiring from the ring, LaMotta worked with his
longtime friend, Frank Petrella, to tell the story of the
boxer’s career. Their venture resulted in three copyrighted
works: two screenplays, one registered in 1963, the other in 1973,
and a book, registered in 1970. This case centers on the screenplay
registered in 1963. The registration identified Frank Petrella as
sole author, but also stated that the screenplay was written
“in collaboration with” LaMotta. App. 164.
In 1976, Frank Petrella
and LaMotta assigned their rights in the three works, including
renewal rights, to Chartoff-Winkler Productions, Inc. Two years
later, respondent United Artists Corporation, a subsidiary of
respond-ent Metro-Goldwyn-Mayer, Inc. (collectively, MGM), acquired
the motion picture rights to the book and both screenplays, rights
stated by the parties to be “exclusiv[e] and forever,
including all periods of copyright and renewals and extensions
thereof.” Id., at 49. In 1980, MGM released, and registered a
copyright in, the film Raging Bull, directed by Martin Scorcese and
starring Robert De Niro, who won a Best Actor Academy Award for his
portrayal of LaMotta. MGM continues to market the film, and has
converted it into formats unimagined in 1980, including DVD and
Blu-ray.
Frank Petrella died in
1981, during the initial terms of the copyrights in the screenplays
and book. As this Court’s decision in Stewart confirmed,
Frank Petrella’s renewal rights reverted to his heirs, who
could renew the copyrights unburdened by any assignment previously
made by the author. See 495 U. S., at 220–221 (relying
on Court’s earlier decision in Miller Music Corp. v. Charles
N. Daniels, Inc., 362 U. S. 373 (1960) ).
Plaintiff below,
petitioner here, Paula Petrella (Petrella) is Frank
Petrella’s daughter. Learning of this Court’s decision
in Stewart, Petrella engaged an attorney who, in 1991, renewed the
copyright in the 1963 screenplay. Because the copyrights in the
1973 screenplay and the 1970 book were not timely renewed, the
infringement claims in this case rest exclusively on the screenplay
registered in 1963. Petrella is now sole owner of the copyright in
that work.[
8]
In 1998, seven years
after filing for renewal of the copyright in the 1963 screenplay,
Petrella’s attorney informed MGM that Petrella had obtained
the copyright to that screenplay. Exploitation of any derivative
work, including Raging Bull, the attorney asserted, infringed on
the copyright now vested in Petrella. During the next two years,
counsel for Petrella and MGM exchanged letters in which MGM denied
the validity of the infringement claims, and Petrella repeatedly
threatened to take legal action.
B
Some nine years
later, on January 6, 2009, Petrella filed a copyright infringement
suit in the United States District Court for the Central District
of California. She alleged that MGM violated and continued to
violate her copyright in the 1963 screenplay by using, producing,
and distributing Raging Bull, a work she described as derivative of
the 1963 screenplay. Petrella’s complaint sought monetary and
injunctive relief. Because the statute of limitations for copyright
claims requires commencement of suit “within three years
after the claim accrued,” §507(b), Petrella sought
relief only for acts of infringement occurring on or after January
6, 2006. No relief, she recognizes, can be awarded for infringing
acts prior to that date.
MGM moved for summary
judgment on several grounds, among them, the equitable doctrine of
laches. Petrella’s 18-year delay, from the 1991 renewal of
the copyright on which she relied, until 2009, when she commenced
suit, MGM maintained, was unreasonable and prejudicial to MGM. See
Memorandum of Points and Authorities in Support of
Defendants’ Motion for Summary Judgment in No. CV
09–0072 (CD Cal.).
The District Court
granted MGM’s motion. See App. to Pet. for Cert.
28a–48a. As to the merits of the infringement claims, the
court found, disputed issues of material fact precluded summary
adjudication. See id., at 34a–42a. Even so, the court held,
laches barred Petrella’s complaint. Id., at 42a–48a.
Petrella had unreasonably delayed suit by not filing until 2009,
the court concluded, and further determined that MGM was prejudiced
by the delay. Id., at 42a–46a. In particular, the court
stated, MGM had shown “expectations-based prejudice,”
because the company had “made significant investments in
exploiting the film”; in addition, the court accepted that
MGM would encounter “evidentiary prejudice,” because
Frank Petrella had died and LaMotta, then aged 88, appeared to have
sustained a loss of memory. Id., at 44a–46a.[
9]
The U. S. Court of
Appeals for the Ninth Circuit affirmed the laches-based dismissal.
695 F. 3d 946 (2012). Under Ninth Circuit precedent, the Court
of Appeals first observed, “[i]f any part of the alleged
wrongful conduct occurred outside of the limitations period, courts
presume that the plaintiff’s claims are barred by
laches.” Id., at 951 (internal quotation marks omitted). The
presumption was applicable here, the court indicated, because
“[t]he statute of limitations for copyright claims in civil
cases is three years,” ibid. (citing §507(b)), and
Petrella was aware of her potential claims many years earlier (as
was MGM), id., at 952. “[T]he true cause of Petrella’s
delay,” the court suggested, “was, as [Petrella]
admits, that ‘the film hadn’t made money’ [in
years she deferred suit].” Id., at 953.[
10] Agreeing with the District Court, the Ninth
Circuit determined that MGM had established expectations-based
prejudice: the company had made a large investment in Raging Bull,
believing it had complete ownership and control of the film. Id.,
at 953–954.[
11]
Judge Fletcher
concurred only because Circuit precedent obliged him to do so. Id.,
at 958. Laches in copyright cases, he observed, is “entirely
a judicial creation,” one notably “in tension with
Congress’ [provision of a three-year limitations
period].” Ibid.
We granted certiorari
to resolve a conflict among the Circuits on the application of the
equitable defense of laches to copyright infringement claims
brought within the three-year look-back period prescribed by
Congress.[
12] 570 U. S.
___ (2013).
III
We consider first
whether, as the Ninth Circuit held, laches may be invoked as a bar
to Petrella’s pursuit of legal remedies under 17
U. S. C. §504(b). The Ninth Circuit erred, we hold,
in failing to recognize that the copyright statute of limitations,
§507(b), itself takes account of delay. As earlier observed,
see supra, at 5–6, a successful plaintiff can gain
retrospective relief only three years back from the time of suit.
No recovery may be had for infringement in earlier years. Profits
made in those years remain the defendant’s to keep. Brought
to bear here, §507(b) directs that MGM’s returns on its
investment in Raging Bull in years outside the three-year window
(years before 2006) cannot be reached by Petrella. Only by
disregarding that feature of the statute, and the separate-accrual
rule attending §507(b), see supra, at 4–5, could the
Court of Appeals presume that infringing acts occurring before
January 6, 2006 bar all relief, monetary and injunctive, for
infringement occurring on and after that date. See 695 F. 3d,
at 951; supra, at 9–10.[
13]
Moreover, if
infringement within the three-year look-back period is shown, the
Act allows the defendant to prove and offset against profits made
in that period “deductible expenses” incurred in
generating those profits. §504(b). In addition, the defendant
may prove and offset “elements of profit attributable to
factors other than the copyrighted work.” §504(b). The
defendant thus may retain the return on investment shown to be
attributable to its own enterprise, as distinct from the value
created by the infringed work. See Sheldon v. Metro-Goldwyn
Pictures Corp., 309 U. S. 390, 402, 407 (1940) (equitably
apportioning profits to account for independent contributions of
infringing defendant). See also infra, at 19–22 (delay in
commencing suit as a factor in determining contours of relief
appropriately awarded).
Last, but hardly least,
laches is a defense developed by courts of equity; its principal
application was, and remains, to claims of an equitable cast for
which the Legislature has provided no fixed time limitation. See 1
D. Dobbs, Law of Remedies §2.4(4), p. 104 (2d ed. 1993)
(hereinafter Dobbs) (“laches . . . may have
originated in equity because no statute of limitations applied,
. . . suggest[ing] that laches should be limited to cases
in which no statute of limitations applies”). Both before and
after the merger of law and equity in 1938,[
14] this Court has cautioned against invoking
laches to bar legal relief. See Holmberg v. Armbrecht, 327
U. S. 392, 395, 396 (1946) (in actions at law, “[i]f
Congress explicitly puts a limit upon the time for enforcing a
right which it created, there is an end of the matter,” but
“[t]raditionally . . . , statutes of limitation are
not controlling measures of equitable relief”); Merck &
Co. v. Reynolds, 559 U. S. 633, 652 (2010) (quoting, for its
current relevance, statement in United States v. Mack, 295
U. S. 480, 489 (1935) , that “[l]aches within the term
of the statute of limitations is no defense [to an action] at
law”); County of Oneida v. Oneida Indian Nation of N. Y., 470
U. S. 226 , n. 16 (1985) (“[A]pplication of the
equitable defense of laches in an action at law would be novel
indeed.”).[
15]
Because we adhere to
the position that, in face of a statute of limitations enacted by
Congress, laches cannot be invoked to bar legal relief, the dissent
thinks we “plac[e] insufficient weight upon the rules and
practice of modern litigation.” Post, at 12. True, there has
been, since 1938, only “one form of action—the civil
action.” Fed. Rule Civ. Proc. 2. But “the substantive
and remedial principles [applicable] prior to the advent of the
federal rules [have] not changed.” 4 C. Wright & A.
Miller, Federal Practice and Procedure §1043, p. 177 (3d ed.
2002). Holmberg, Merck, and Oneida so illustrate. The dissent
presents multiple citations, see post, at 1, 3–4, 7–8,
10–11, many of them far afield from the issue at hand, others
obscuring what the cited decisions in fact ruled. Compare, e.g.,
post, at 1, 11, with infra, at 20–21 (describing Chirco v.
Crosswinds Communities, Inc., 474 F. 3d 227 (CA6 2007)); post,
at 1, 10–11, with infra, at 15, n. 16 (describing
National Railroad Passenger Corporation v. Morgan, 536 U. S.
101 (2002) ); post, at 8, with infra, at 15, n. 16 (describing
Patterson v. Hewitt, 195 U. S. 309 (1904) ). Yet tellingly,
the dissent has come up with no case in which this Court has
approved the application of laches to bar a claim for damages
brought within the time allowed by a federal statute of
limitations. There is nothing at all “differen[t],” see
post, at 12, about copyright cases in this regard.
IV
We turn now to
MGM’s principal arguments regarding the contemporary scope of
the laches defense, all of them embraced by the dissent.
A
Laches is listed
among affirmative defenses, along with, but discrete from, the
statute of limitations, in Federal Rule of Civil Procedure 8(c).
Accordingly, MGM maintains, the plea is “available
. . . in every civil action” to bar all forms of
relief. Tr. of Oral Arg. 43; see Brief for Respondents 40. To the
Court’s question, could laches apply where there is an
ordinary six-year statute of limitations, MGM’s counsel
responded yes, case-specific circumstances might warrant a ruling
that a suit brought in year five came too late. Tr. of Oral Arg.
52; see id., at 41.
The expansive role for
laches MGM envisions careens away from understandings, past and
present, of the essentially gap-filling, not
legislation-overriding, office of laches. Nothing in this
Court’s precedent suggests a doctrineof such sweep. Quite the
contrary, we have never applied laches to bar in their entirety
claims for discrete wrongs occurring within a federally prescribed
limitations pe-riod.[
16]
Inviting individual judges to set a time limit other than the one
Congress prescribed, we note, would tug against the uniformity
Congress sought to achieve when it enacted §507(b). See supra,
at 3–4.
B
MGM observes that
equitable tolling “is read into every federal statute of
limitation,” Holmberg, 327 U. S., at 397, and asks why
laches should not be treated similarly. See Brief for Respondents
23–26; post, at 7–8. Tolling, which lengthens the time
for commencing a civil action in appropriate
circumstances,[
17] applies
when there is a statute of limitations; it is, in effect, a rule of
interpretation tied to that limit. See Young v. United States, 535
U. S. 43 –50 (2002); Johnson v. Railway Express Agency,
Inc., 421 U. S. 454, 464 (1975) .[
18] Laches, in contrast, originally served as a guide
when no statute of limitations controlled the claim; it can
scarcely be described as a rule for interpreting a statutory
prescription. That is so here, because the statute, §507(b),
makes the starting trigger an infringing act committed three years
back from the commencement of suit, while laches, as conceived by
the Ninth Circuit and advanced by MGM, makes the presumptive
trigger the defendant’s initial infringing act. See 695
F. 3d, at 951; Brief for United States 16.
C
MGM insists that the
defense of laches must be avail-able to prevent a copyright owner
from sitting still, doing nothing, waiting to see what the outcome
of an alleged infringer’s investment will be. See Brief for
Respondents 48. In this case, MGM stresses, “[Petrella]
conceded that she waited to file because ‘the film was deeply
in debt and in the red and would probably never
recoup.’ ” Id., at 47 (quoting from App. 110). The
Ninth Circuit similarly faulted Petrella for waiting to sue until
the film Raging Bull “made money.” 695 F. 3d, at
953 (internal quotation marks omitted). See also post, at 3–6
(deploring plaintiffs who wait to see whether the allegedly
infringing work makes money).
It is hardly incumbent
on copyright owners, however, to challenge each and every
actionable infringement. And there is nothing untoward about
waiting to see whether an infringer’s exploitation undercuts
the value of the copyrighted work, has no effect on the original
work, or even complements it. Fan sites prompted by a book or film,
for example, may benefit the copyright owner. See Wu, Tolerated
Use, 31 Colum. J. L. & Arts 617, 619–620 (2008).
Even if an infringement is harmful, the harm may be too small to
justify the cost of litigation.
If the rule were, as
MGM urges, “sue soon, or forever hold your peace,”
copyright owners would have to mount a federal case fast to stop
seemingly innocuous infringements, lest those infringements
eventually grow in magnitude. Section 507(b)’s three-year
limitations period, however, coupled to the separate-accrual rule,
see supra, at3–6, avoids such litigation profusion. It allows
a copyright owner to defer suit until she can estimate whether
litigation is worth the candle. She will miss out on damages for
periods prior to the three-year look-back, but her right to
prospective injunctive relief should, in most cases, remain
unaltered.[
19]
D
MGM points to the
danger that evidence needed or useful to defend against liability
will be lost during a copyright owner’s inaction. Brief for
Respondents 37–38; see post, at 2–4.[
20] Recall, however, that Congress provided
for reversionary renewal rights exercisable by an author’s
heirs, rights that can be exercised, at the earliest for pre-1978
copyrights, 28 years after a work was written and copyrighted. See,
supra, at 2–3. At that time, the author, and perhaps other
witnesses to the creation of the work, will be dead. See supra, at
7. Congress must have been aware that the passage of time and the
author’s death could cause a loss or dilution of evidence.
Congress chose, nonetheless, to give the author’s family
“a second chance to obtain fair remuneration.” Stewart,
495 U. S., at 220.
Moreover, a copyright
plaintiff bears the burden of proving infringement. See 3 W. Patry,
Copyright §9.4, p. 9–18 (2013) (hereinafter Patry)
(“As in other civil litigation, a copyright owner bears the
burden of establishing a prima facie case.”). But cf. post,
at 4 (overlooking plain-tiff’s burden to show infringement
and the absence of any burden upon the defendant “to prove
that it did not infringe”). Any hindrance caused by the
unavailability of evidence, therefore, is at least as likely to
affect plaintiffs as it is to disadvantage defendants. That is so
in cases of the kind Petrella is pursuing, for a deceased author
most probably would have supported his heir’s claim.
The registration
mechanism, we further note, reduces the need for extrinsic
evidence. Although registration is “permissive,” both
the certificate and the original work must be on file with the
Copyright Office before a copyright owner can sue for infringement.
§§408(b), 411(a). Key evidence in the litigation, then,
will be the certificate, the original work, and the allegedly
infringing work. And the adjudication will often turn on the
factfinder’s direct comparison of the original and the
infringing works, i.e., on the factfinder’s “good eyes
and common sense” in comparing the two works’
“total concept and overall feel.” Peter F. Gaito
Architecture, LLC v. Simone Development Corp., 602 F. 3d 57,
66 (CA2 2010) (internal quotation marks omitted).
E
Finally, when a
copyright owner engages in intention-ally misleading
representations concerning his abstention from suit, and the
alleged infringer detrimentally relies on the copyright
owner’s deception, the doctrine of estoppel may bar the
copyright owner’s claims completely, eliminating all
potential remedies. See 6 Patry §20:58, at 20–110 to
20–112.[
21] The test
for estoppel is more exacting than the test for laches, and the two
defenses are differently oriented. The gravamen of estoppel, a
defense long recognized as available in actions at law, see Wehrman
v. Conklin, 155 U. S. 314, 327 (1894) , is misleading and
consequent loss, see 6 Patry §20:58, at 20–110 to
20–112. Delay may be involved, but is not an element of the
defense. For laches, timeliness is the essential element. In
contrast to laches, urged by MGM entirely to override the statute
of limitations Congress prescribed, estoppel does not undermine
Congress’ prescription, for it rests on misleading, whether
engaged in early on, or later in time.
Stating that the Ninth
Circuit “ha[d] taken a wrong turn in its formulation and
application of laches in copyright cases,” Judge Fletcher
called for fresh consideration of the issue. 695 F. 3d, at
959. “A recognition of the distinction between . . . estoppel
and laches,” he suggested, “would be a good place to
start.” Ibid. We agree.
V
The courts below
summarily disposed of Petrella’s case based on laches,
preventing adjudication of any of her claims on the merits and
foreclosing the possibility of any form of relief. That
disposition, we have explained, was erroneous. Congress’ time
provisions secured to authors a copyright term of long duration,
and a right to sue for infringement occurring no more than three
years back from the time of suit. That regime leaves “little
place” for a doctrine that would further limit the timeliness
of a copyright owner’s suit. See 1 Dobbs §2.6(1), at
152. In extraordinary circumstances, however, the consequences of a
delay in commencing suit may be of sufficient magnitude to warrant,
at the very outset of the litigation, curtailment of the relief
equitably awardable.
Chirco v. Crosswinds
Communities, Inc., 474 F. 3d 227 (CA6 2007), is illustrative.
In that case, the defendants were alleged to have used without
permission, in planning and building a housing development, the
plaintiffs’ copyrighted architectural design. Long aware of
the defendants’ project, the plaintiffs took no steps to halt
the housing development until more than 168 units were built, 109
of which were occupied. Id., at 230. Although the action was filed
within §507(b)’s three-year statute of limitations, the
District Court granted summary judgment to the defendants,
dismissing the entire case on grounds of laches. The trial
court’s rejection of the entire suit could not stand, the
Court of Appeals explained, for it was not within the
Judiciary’s ken to debate the wisdom of §507(b)’s
three-year look-back prescription. Id., at 235. Nevertheless, the
Court of Appeals affirmed the District Court’s judgment to
this extent: The plaintiffs, even if they might succeed in proving
infringement of their copyrighted design, would not be entitled to
an order mandating destruction of the housing project. That relief
would be inequit-able, the Sixth Circuit held, for two reasons: the
plaintiffs knew of the defendants’ construction plans before
the de-fendants broke ground, yet failed to take readily available
measures to stop the project; and the requested relief would
“work an unjust hardship” upon the defendants and
innocent third parties. Id., at 236. See also New Era Publications
Int’l v. Henry Holt & Co., 873 F. 2d 576,
584–585 (CA2 1989) (despite awareness since 1986 that book
containing allegedly infringing material would be published in the
United States, copyright owner did not seek a restraining order
until 1988, after the book had been printed, packed, and shipped;
as injunctive relief “would [have] result[ed] in the total
destruction of the work,” the court “relegat[ed
plaintiff] to its damages remedy”).
In sum, the courts
below erred in treating laches as a complete bar to
Petrella’s copyright infringement suit. The action was
commenced within the bounds of §507(b), the Act’s
time-to-sue prescription, and does not present extraordinary
circumstances of the kind involved in Chirco and New Era. Petrella
notified MGM of her copyright claims before MGM invested millions
of dollars in creating a new edition of Raging Bull. And the
equitable relief Petrella seeks—e.g., disgorgement of unjust
gains and an injunction against future infringement—would not
result in “total destruction” of the film, or anything
close to it. See New Era, 873 F. 2d, at 584. MGM released
Raging Bull more than three decades ago and has marketed it
continuously since then. Allowing Petrella’s suit to go
forward will put at risk only a fraction of the income MGM has
earned during that period and will work no unjust hardship on
innocent third parties, such as consumers who have purchased copies
of Raging Bull. Cf. Chirco, 474 F. 3d, at 235–236
(destruction remedy would have ousted families from recently
purchased homes). The circumstances here may or may not (we need
not decide) warrant limiting relief at the remedial stage, but they
are not sufficiently extraordinary to justify threshold
dismissal.
Should Petrella
ultimately prevail on the merits, the District Court, in
determining appropriate injunctive relief and assessing profits,
may take account of her delay in commencing suit. See supra, at
1–2, 11–12. In doing so, however, that court should
closely examine MGM’s alleged reliance on Petrella’s
delay.[
22] This examination
should take account of MGM’s early knowledge of
Petrella’s claims, the protection MGM might have achieved
through pursuit of a declaratory judgment action, the extent to
which MGM’s investment was protected by the separate-accrual
rule, the court’s authority to order injunctive relief
“on such terms as it may deem reasonable,”
§502(a), and any other considerations that would justify
adjusting injunctive relief or profits. See Haas v. Leo Feist,
Inc., 234 F. 105, 107–108 (SDNY 1916) (adjudicating
copyright infringement suit on the merits and decreeing injunctive
relief, but observing that, in awarding profits, account may be
taken of copyright owner’s inaction until infringer had spent
large sums exploiting the work at issue). See also Tr. of Oral Arg.
23 (Government observation that, in fashioning equitable remedies,
court has considerable leeway; it could, for example, allow MGM to
continue using Raging Bull as a derivative work upon payment of a
reasonable royalty to Petrella). Whatever adjustments may be in
order in awarding injunctive relief, and in accounting for
MGM’s gains and profits, on the facts thus far presented,
there is no evident basis for immunizing MGM’s present and
future uses of the copyrighted work, free from any obligation to
pay royalties.
* * *
For the reasons
stated, the judgment of the United States Court of Appeals for the
Ninth Circuit is reversed, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.