The U.S. Supreme Court (by Joe Ravi via Wikimedia – CC-BY-SA 3.0)
Pirates have been known to pillage and plunder others’ treasures, but these are not actions normally attributed to states of the United States. On its face, pirates and states don’t seems to have anything in common, but given a recent ruling by the Supreme Court of the United States, one may be inclined to think otherwise. In Allen v. Cooper, SCOTUS recently upheld a Fourth Circuit ruling that the Copyright Remedy Clarification Act of 1990 (CRCA) does not validly abrogate state sovereign immunity under the 11th Amendment. In essence, SCOTUS held that since Congress unconstitutionally attempted to take away state sovereign immunity under the CRCA, states could continue to assert sovereign immunity from damages resulting from their infringement of valid copyrights. Although many practitioners are viewing this ruling as a huge win for the states and an equally huge problem for copyright holders, I think there is more buried here than meets the eye.
The background of this case is worth a look. In 1996, Intersal Inc. (a marine salvage company) discovered a shipwreck off the North Carolina coast that was determined to be the Queen Anne’s Revenge, the flagship of notorious pirate Edmund Teach (more commonly known as Blackbeard). Since the ship was located within the state territorial waters of North Carolina, the state of North Carolina contracted with Intersal to conduct recovery operations.
To document the recovery efforts, Intersal hired videographer Frederick Allen, who thereafter recorded videos and took photos of the recovery for more than a decade, registering copyrights in all of his works in the process. When North Carolina published some of Allen’s works on the state’s website, Allen objected, and the parties reached a settlement.
Unfortunately, North Carolina later posted some of his copyrighted videos online as well as some of his photos in a state newsletter without Allen’s permission. When North Carolina refused to admit wrongdoing, Allen filed suit in federal court for copyright infringement.
To make a long story short, North Carolina moved to dismiss the case based on sovereign immunity — “the general rule that federal courts cannot hear suits brought by individuals against non-consenting States.” Allen responded that under the CRCA, Congress revoked the states’ sovereign immunity from lawsuits such as his copyright infringement case. The CRCA provides that a state “shall not be immune, under the Eleventh Amendment [or] any other doctrine of sovereign immunity, from suit in Federal court” for copyright infringement. Although the district court agreed with Allen, the Fourth Circuit disagreed and reversed, holding the CRCA invalid.
In a 9-0 unanimous decision authored by Justice Kagan (with concurring opinions by both Justice Thomas and Justice Breyer joined by Justice Ginsburg), the court stated that:
“[this] court has permitted a federal court to entertain a suit against a non-consenting State on two conditions. First, Congress must have enacted “unequivocal statutory language” abrogating the States’ immunity from the suit….[S]econd, some constitutional provision must allow Congress to have thus encroached on the States’ sovereignty. Not even the most crystalline abrogation can take effect unless it is ‘a valid exercise of constitutional authority.’
Although SCOTUS found that Congress clearly intended that a state (such as North Carolina) could be sued for copyright infringement in the same manner as a private individual, the Court held that that the second prong could not be met and that Congress exceeded its authority under Section 5 of the 14th Amendment because “the statute aims to ‘provide a uniform remedy’ for statutory infringement, rather than to redress or prevent unconstitutional conduct.” As a result, the court affirmed the 4th Circuit’s holding.
As a result of this ruling, many practitioners have expressed concern about states running roughshod over copyright owners’ rights to their works. Here are three takeaways from Allen v. Cooper that should help put such thoughts into perspective:
States Can Be Still Be (Kind Of) Sued For Copyright Infringement. Although the CRCA has been held unconstitutional, states can still be sued for declaratory judgment and injunctive relief (just not for monetary damages). Further, a state may have waived its sovereign immunity under certain circumstances (such as an express contractual waiver or other “clear indication” of submitting to Federal court jurisdiction). Granted, this is not perfect, but it’s something.
States Are Not Flagrantly “Pirating” Copyrighted Works. Believe it or not, states have not been in the habit of flagrantly disregarding third-party intellectual property rights. Although states have been known to interpret the fair use doctrine regarding unlicensed use of copyrighted works, overt, intentional infringement of such works is not the norm. Don’t believe me — before passing the CRCA, Congress asked the then-Register of Copyrights, Ralph Oman, to submit a report on the impact of the 11th Amendment on copyright enforcement. Although the Oman Report cited concern over immediate and irreparable harm based on comments it received, the SCOTUS review of the Oman Report in the present case found very few examples of state infringement. In fact, “Oman acknowledged that state infringement is ‘not widespread’ and ‘the States are not going to get involved in wholesale violation of the copyright laws.’” Again, this is not a guarantee against abuse, but if history is any indication, the present case is not likely going to open the floodgates to willful state copyright infringement.
Third Parties Working With States Can Be Held Liable. Although a state may enjoy sovereign immunity in a specific case, third-party facilitators to such infringement enjoy no such protection. For example, a state may contract with a marketing firm to reproduce specific works for a state tourism flyer — absent contractual considerations to the contrary, the marketing company may be held liable for copyright infringement. Further, this simple fact may induce third-parties to ask for contractual assurances (or even waivers) when dealing with copyrighted works and state entities. Simply put: don’t miss the jungle for the palm trees.
Although Allen v Cooper is not a win for copyright owners by any stretch of the imagination, it is not the end of the world either. We can all agree with SCOTUS that Congress needs to readdress this issue by “linking the scope of its abrogation to the redress or prevention of unconstitutional injuries — and [create] a legislative record to backup that connection” (although I wouldn’t hold my breath on that possibility for very long). Notwithstanding the foregoing, this decision should operate as a wake-up call to copyright owners to be cognizant of potential unlicensed state use of copyrighted works and think creatively when addressing potential copyright infringement. It may take a little more digging, but something tells me it may uncover some gems and be worth the effort in the long run.
Tom Kulik is an Intellectual Property & Information Technology Partner at the Dallas-based law firm of Scheef & Stone, LLP. In private practice for over 20 years, Tom is a sought-after technology lawyer who uses his industry experience as a former computer systems engineer to creatively counsel and help his clients navigate the complexities of law and technology in their business. News outlets reach out to Tom for his insight, and he has been quoted by national media organizations. Get in touch with Tom on Twitter (@LegalIntangibls) or Facebook (www.facebook.com/technologylawyer), or contact him directly at tom.kulik@solidcounsel.com.