Tuesday, March 02, 2010

Supreme Court Reinstates Major Freelancer Copyright Settlement

Posted by Victoria Strauss for Writer Beware 

Today, by unanimous decision, the US Supreme Court overturned a lower court ruling that tossed out a settlement reached in a landmark case involving electronic rights and copyright.

In 1999, the National Writers' Union filed suit against the New York Times and LexisNexis, among others, alleging copyright infringement due to the companies' re-use of printed articles and photographs in electronic databases (New York Times Co. v Tasini et al). The Times and other publishers argued that the right of reproduction and distribution included in collective copyrights gave them the right to digitize content without permission or payment to the authors. The NWU argued that electronic rights were separate and distinct, and that, since their contracts had not included a grant of e-rights, the Times and other publishers had violated their copyrights.

In a 2001 decision, the Supreme Court sided with the NWU. In 2005, the parties (which now included nearly 40 publishers and consolidated several similar suits) reached an $18 million settlement that provided for compensation to the plaintiffs, in exchange for which the plaintiffs agreed to waive any future claims of infringement for works already in the databases. For the purposes of payment, plaintiffs were separated into three groups: Groups A and B, where individual copyrights had been registered (either timely or post-infringement), and Group C--by far the largest--where copyrights had not been registered.

A District Court upheld the settlement. However, ten freelancers appealed the decision to the Second Circuit, on the grounds that compensation for Group C (which was potentially much less than for Groups A and B) was unfair. Ultimately, the settlement was overturned--though not on the basis of the objectors' arguments. Instead, the Second Circuit ruled that, since US copyright law makes copyright registration a pre-requisite to filing infringement actions, federal courts don't have jurisdictional authority over claims involving unregistered copyrights. So the settlement should never have been approved in the first place.

Not wanting to return to the drawing board, the publishers took the case back to the Supreme Court. Today, the Supremes overturned the Second Circuit's decision, ruling that courts do indeed have authority in cases involving unregistered copyrights. According to Justice Clarence Thomas, writing for the majority, "[The] registration requirement is a precondition to filing a claim [of infringement] that does not restrict a federal court's subject-matter jurisdiction."

This is a significant ruling, it seems to me, not only because it allows a gigantic settlement (one of the first ever to address e-rights questions, pre-figuring some of the issues involved in the Google Book Settlement) to go forward, but because of the possible implications for authors and publishers. Although Justice Thomas declined "to address whether [the] registration requirement is a mandatory precondition...that...district courts may or should enforce...by dismissing copyright infringement claims involving unregistered works," it seems possible that there will be implications for the registration provision of copyright law.

US writers are more or less conditioned to believe that copyright registration is universal--but in fact most countries have no official registration process. The Berne Convention, the international source for copyright law, ensures full copyright protection without without requiring any formalities (such as registration) as a prerequisite for bringing an infringement suit. Countries may impose formalities if they wish, but most choose not to.

There's a detailed account of the legal historyof the case at the SCOTUS blog.