Source: https://www.ipmvs.com/filewrapper/supreme-court-registration-requirement-of-411-a-not-jurisdictional-for-copyright-claims
Timestamp: 2019-04-26 09:36:48+00:00

Document:
Today the Supreme Court decided Reed Elsevier, Inc. v. Muchnick, a case regarding whether the registration requirement of 17 U.S.C. § 411(a) is jurisdictional or a claim processing rule. The Court held the requirement to be nonjurisdictional.
The case involves a class action for copyright infringement by freelance journalists based on republication of works in electronic databases that originally appeared in, for example, newspapers. Some members of the class had copyright registrations, some did not. Nevertheless, the district court certified the class and approved the proposed settlement agreement. The Second Circuit sua sponte raised the issue of jurisdiction, and eventually held the district court lacked jurisdiction to enter an order regarding the unregistered copyrights by virtue of § 411(a).
The Supreme Court disagreed, and held the registration requirement of § 411(a) did not prevent a court from entering an order affecting unregistered copyrights. Specifically, the Court held there was nothing in the statute that indicated Congress intended the requirement to be jurisdictional. Notably, the Court observed § 411(a) did not "clearly state" that its requirement was jurisdictional, and also explicitly permits claims involving unregistered works in certain circumstances. This was inconsistent with a jurisdictional requirement, and therefore the district court had jurisdiction to approve the settlement agreement even though it adjudicated claims for unregistered copyrights.
The Court left the question as to whether district courts should sua sponte dismiss copyright cases where the Plaintiff is asserting an unregistered copyright for another day.
The case involves a consolidation of four previous class actions stemming from freelance writers who contracted with publishers regarding print media, but retained the copyrights. The works were eventually published online and were also indexed and stored by electronic database services. The writers brought suit for violation of their copyright as 1) the original publishers did not contract for the electronic publication rights, and 2) the licenses obtained from the publishers by the database services were not valid as the publishers did not have the right to grant them.
The cases were stayed pending the result in Tasini; after that opinion was published, the parties began mediation. At mediation, the defendant's argued that there was no jurisdiction as 17 U.S.C. § 411(a) states that "no action for infringement of the copyright in any United States work shall be instituted until registration of the copyright claim has been made in accordance with this title."
Notwithstanding the jurisdictional issue, the parties reached a settlement agreement that split the claimants into three groups. Category A consisted of the claimants that had registered their works before any infringement; these claimants were entitled to a flat fee. Category B consisted of claimants that had registered their works after infringement, but before the suit was filed; these claimants were entitled to the greater of a flat fee or a percentage of the original price of the work. Category C consisted of claimants that had either registered their works after the suit was filed or had not registered their works at all; this class was entitled to either a flat fee or a percentage of the original price of the work with the amount available to this category adjusted (potentially to zero) dependent on the availability of funds.
The settlement was presented to the court for class certification and settlement approval. While objections to the proposed settlement were filed by various Category C plaintiffs, the court approved the settlement. The objectors appealed. On appeal, The Category C claimants then appealed claiming that the settlement was inadequate and unfair because "they were paid little and singled out for reduction if the total claims exceeded $18 million." The defendants responded that the Category C claimants "were adequately represented and treated fairly because their claims were essentially worthless" due to the fact that they had not registered their copyrights. The Second Circuit raised the jurisdictional issue sua sponte, and vacated and remanded after finding that the court lacked jurisdiction to certify the class and approve the settlement.
At the Second Circuit, the panel majority first determined that the district court did not have jurisdiction over the claims for the unregistered works by holding that § 411(a)'s requirement of registration was jurisdictional. The majority first determined that the precedent of the circuit precluded a holding otherwise as the Second Circuit, as well as several other circuits, had previously upheld dismissals for lack of subject matter jurisdiction for failure to meet § 411(a). Second, the majority determined that Eberhart did not cast doubt on this precedent as Eberhart dealt with "a time limit for moving in a case that undoubtedly already falls within the district majority's subject matter jurisdiction" while "section 411(a) creates a statutory condition precedent to the suit itself." Given these considerations, the majority held that there was no subject matter jurisdiction over the claims.
The court then considered whether or not every member of the class had to meet the jurisdictional requirement. The majority noted that Rule 23 does not alter the subject matter jurisdiction of the district court. For example, in previous cases, all members of a class have been held to be required to meet Article III requirements, the amount-in-controversy requirement for diversity cases (until there was Congressional action to the contrary), and, if applicable, have exhausted their administrative remedies. Based on these cases, the court held that the registration requirement had to be met by every member of the class for there to be subject matter jurisdiction.
Finally, the court considered whether supplemental jurisdiction could cure the jurisdictional defects. The court noted that 28 U.S.C. § 1367(a) "excepts from its reach those cases in which another federal statute denies jurisdiction." Finding that § 411(a) denied federal courts jurisdiction over claims involving unregistered copyrights, the court concluded that there was no basis for jurisdiction and the class certification and settlement approval was therefore improper, as the district court lacked subject matter jurisdiction.
The dissent argued there was subject matter jurisdiction. The dissent would have held that § 411(a) is merely a "claim processing" requirement. In considering the statutory language, the dissent noted that § 411(a) does not speak in jurisdictional terms, as it was not a rights-creating statute but was merely an enforcement mechanism. Turning to the legislative history, the dissent noted that the House Report on the bill explicitly stated that "registration is not a condition of copyright protection." Then the court noted that there are multiple jurisdictionally recognized exceptions to § 411(a) including that "courts routinely permit plaintiffs to file suit before applying for a copyright or while the Copyright Office is considering their application," which was inconsistent with the rule that "the jurisdiction of the court depends upon the state of things at the time of the action brought." Finally, the dissent noted that the explicit exception of foreign works showed flexibility inconsistent with § 411(a) being a jurisdictional statute.
The Supreme Court granted certiorari on March 2, 2009 limited to the jurisdictional issue, and the Court held oral argument on October 7, 2009.

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