An $18 million settlement of a copyright infringement suit between Internet publishers and freelance writers is back on track because of a U.S. Supreme Court ruling on Tuesday.
In Reed Elsevier v. Muchnick, the justices, in an 8-0 decision, held that the 2nd U.S. Circuit Court of Appeals was wrong when it ruled in 2008 that the district court lacked jurisdiction to certify the class or the settlement in the litigation. Justice Sonia Sotomayor, a former 2nd Circuit judge, did not participate in the high court case.
The 2005 settlement followed the Supreme Court's decision in 2001 in New York Times Co. v. Tasini, in which the justices held that the federal Copyright Act does not permit publishers to reproduce freelance works electronically without specific permission from the authors. After Tasini, four infringement class actions were consolidated in the Southern District of New York. The district court subsequently certified the class and settlement. Ten authors objected to certification on the grounds that it was unfair.
On appeal, the 2nd Circuit, on its own, raised the issue of whether the district court had jurisdiction over infringement claims involving unregistered copyrights. Section 411(a) of the Copyright Act requires copyright holders to register their works before suing for copyright infringement. The appellate court held that each claim in the class must meet that registration requirement and because there were unregistered works in the class, there was no subject-matter jurisdiction.
The plaintiffs, defendants and objectors successfully petitioned the Supreme Court for review. Because all three parties disagreed with the 2nd Circuit decision, the justices appointed Deborah Jones Merritt of Ohio State University Moritz College of Law to argue in support of the appellate court ruling.
In Tuesday's ruling (pdf), Justice Clarence Thomas, writing for the Court, said Section 411(a) "imposes a precondition to filing a claim that is not clearly labeled jurisdictional, is not located in a jurisdiction-granting provision, and admits of congressionally authorized exceptions."
A copyright holder's failure to comply with the registration requirement, he wrote, does not restrict a federal court's jurisdiction over claims involving unregistered works.
Charles Sims, partner at New York's Proskauer Rose, who argued for reversal of the 2nd Circuit decision, said, "From the day we lost in the 2nd Circuit, I thought we would get cert and win. Unanimous is very sweet."
The case now returns to the appellate court on the merits of the appeal, he said, adding, "There were 20,000 authors and newspapers and databases that were in agreement this was a wonderful settlement. There were 10 objectors and because of those, authors have been waiting and waiting for their money. It's a great example of Jarndyce and Jarndyce" (the long-running case in Charles Dickens' "Bleak House").
