Opinion ID: 6986474
Heading Depth: 3
Heading Rank: 1

Heading: “Obvious ownership” and copyright infringement

Text: Laches is an equitable time limitation on a party’s right to bring suit. Boone v. Mechanical Specialties Co., 609 F.2d 956, 958 (9th Cir.1979). To obtain a judgment on this affirmative defense, a defendant must prove “both an unreasonable delay by the plaintiff and prejudice to itself.” Couveau v. American Airlines, 218 F.3d 1078, 1083 (9th Cir.2000) (citations omitted); see also Neighbors of Cuddy Mountain v. United States Forest Serv., 137 F.3d 1372, 1381 (9th Cir.1998); Clamp Mfg. Co., Inc. v. Enco Mfg. Co., Inc., 870 F.2d 512, 515 (9th Cir.1989). The critical question in this case concerns the first requirement of laches: unreasonable delay by the plaintiff. Specifically, we must decide the point at which the period of delay begins in a copyright infringement case. We begin our analysis with the general rule for laches: any delay is to be measured from the time that the plaintiff knew or should have known about the potential claim at issue. “An ‘indispensable element of lack of diligence is knowledge, or reason to know, of the legal right, assertion of which is “delayed”.’ ” Portland Audubon Soc’y v. Lujan, 884 F.2d 1233, 1241 (9th Cir.1989) (quoting City of Davis v. Coleman, 521 F.2d 661, 667 (9th Cir.1975)). “There must, of course, have been knowledge on the part of the plaintiff of the existence of the rights, for there can be no laches in failing to assert rights of which a party is wholly ignorant, and whose existence he had no reason to apprehend.” Halstead v. Grinnan, 152 U.S. 412, 417, 14 S.Ct. 641, 38 L.Ed. 495 (1894). See also Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 988 F.2d 1157, 1161 (Fed.Cir.1993) (“When applying the equitable doctrine of laches in order to bar a claim, the period of delay is measured from when the claimant had actual notice of the claim or would have reasonably been expected to inquire about the subject matter.”). In its first summary judgment order, the district court held that Mary Kling’s infringement claim was not barred by the copyright statute of limitation, 17 U.S.C. § 507(b), because the defendants had failed to show that either of the Klings knew or had reason to know about the defendants’ infringement of their alleged copyright before Mary Kling’s August 1994 visit to Blockbuster. The question then arises, if the Klings had no actual or constructive knowledge of any infringement, how could the district court subsequently reject the infringement claim on the ground of laches? The district court relied in its second summary judgment order on this court’s decision in Jackson v. Axton, 25 F.3d 884 (9th Cir.1994). Jackson involved a piano player who had assisted in the initial recording of a song (“Joy to the World”) in 1970 and later contended that he co-wrote the song. Id. at 885-86. In 1975 Hoyt Axton, the holder of the song’s registered copyright, told Jackson he had nothing to do with the writing of the song. Id. at 886. Jackson filed an action to establish his co-authorship in 1992. Id. After holding that laches may be a defense to copyright co-ownership claims, we affirmed summary judgment for Axton on this ground. Id. at 887-89. “Jackson’s claim was brought late,” we held. “He has been able to sue since at least 1975, and possibly since 1971, when he learned that Axton claimed sole ownership of the Song.” Id. at 889. The holding in Jackson involves copyright co-ownership, not infringement, and we emphasized that point. We stated specifically that “laches is not applied here to a ‘future violation.... ’ • This is not an infringement case but one seeking a declaration of co-authorship.” Id. at 888. Overlooking these express statements, the district court rested its analysis on an earlier part of the Jackson decision, the purpose of which was to summarize the parties’ views on the threshold question whether laches applies to copyright co-ownership claims at all. See id. at 886-88. In discussing a district court decision from Florida, Neva, Inc. v. Christian Duplications Int'l Inc., 743 F.Supp. 1533 (M.D.Fla.1990), which the appellant had argued stood for the proposition that lach-es never applied in the co-ownership context, we wrote: In Neva, the plaintiff, the registered copyright owner, sued for infringement and included a claim for a declaration of ownership. Appellees explain that lach-es was not applied to bar the plaintiffs declaration claim because the plaintiff, the obvious owner of the copyright, never needed to prove his ownership prior to bringing the infringement claim. Delay in seeking an unnecessary declaration could not be used to bar a recognized copyright owner’s assertion of his rights. Thus, Appellees conclude, Neva did not hold that laches is unavailable as a defense; Neva held merely that laches was inapplicable in that case. 743 F.Supp. at 1548.... Jackson, 25 F.3d at 887. On the basis of that passage, the district court in the case before us held that a plaintiff who .is not the “obvious owner” of a copyright must promptly sue for declaration of ownership once he learns that another party claims sole ownership of the copyright. Failure to do so, it said, would expose the plaintiff to a laches defense later in either an ownership or infringement case: “[T]he plaintiffs delay in filing a claim for declaration of ownership may bar the plaintiffs subsequent copyright infringement claim.” The district court specifically rejected the plaintiffs argument “that the laches period begins to run from the date the Plaintiff knew or had reason to know she had a claim for copyright infringement.” We decline to adopt the district court’s reasoning. First, the reference in Jackson to the “obvious owner” plaintiff in Neva is not even remotely a holding. It was certainly not intended to set a rule, by negative implication, for the prospective application of the laches doctrine in the wholly different context of copyright infringement suits. Indeed, we expressly stated that the case did not involve the application of laches to an infringement claim. 25 F.3d at 888. The rule adopted by the district court — requiring that a “non-obvious owner” file a prophyláctic action for a declaration of copyright ownership, as a condition precedent to any subsequent infringement suit over a violation that has not yet occurred, simply because the rights of the “non-obvious owner” are questioned — is not consistent with the general rule for laches. A claim for copyright infringement has two elements: “(1) ownership of the copyright; and (2) infringement — that the defendant copied protected elements of the plaintiffs work.” Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir.2000) (citing Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir.1996)); see also MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 517 (9th Cir.1993) (stating that “plaintiff must prove ownership of a copyright and a ‘copying of protectable expression’ beyond the scope of a license”) (citation omitted). The district court’s rule triggers the laches period for an infringement claim at the time a plaintiff knows or should know about a dispute as to only the first of these two elements, ownership— regardless or whether any actual or impending infringement claim exists at the time. The rule is not equitable: it allows for the defeat of a legal claim even though the plaintiff has not delayed in asserting his rights with regard to that claim, and in fact the claim has not yet arisen. Indeed, the defendants cite no infringement cases — and our research has disclosed none — holding that laches is proper because the plaintiff failed to sue for a declaration of ownership earlier, absent any infringing conduct. To the contrary, in applying the laches doctrine, courts have exclusively focused on plaintiffs’ prior knowledge of actual or impending copyright infringements. See, e.g., Kepner-Tregoe, Inc. v. Executive Dev., Inc., 79 F.Supp.2d 474, 486 (D.N.J.1999) (“The duty to bring an action for copyright infringement does not arise ... until the plaintiff knows of the infringement.”); Peer Int’l Corp. v. Luna Records, Inc., 887 F.Supp. 560, 567 (S.D.N.Y.1995) (discussing “passage of time between plaintiffs’ knowledge of an infringing act and the filing of a suit”); Allen-Myland, Inc. v. International Business Machs. Corp., 746 F.Supp. 520, 550 (E.D.Pa.1990) (measuring “alleged delay” for purposes of laches by date of copyright infringement alleged in counterclaim); see also 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.06, at 12-124.16 (1999) (“[T]he period of delay for the determination of laches measures from the time of the act of infringement that is being sued upon.”); cf. GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1209 (9th Cir.2000) (stating that this court allows laches to bar trademark infringement cases “only where the trademark holder knowingly allowed the infringing mark to be used without objection for a lengthy period of time”) (citation omitted). 3 The district court’s rule for “non-obvious owners” is plainly unworkable. The ownership of intellectual property is frequently a subject of dispute. To require every owner whose right was not “obviously” established to sue for a declaration of ownership whenever a dispute arises or to forfeit his right to seek relief against possible infringements in the future, could engender much needless litigation. The rule would also encourage would-be scavengers to assert meritless claims of ownership in the hope that non-obvious owners would fail to sue and therefore render themselves unable to challenge future infringements. The district court’s rule would dramatically expand the laches doctrine, lead to inefficient results, and undermine the copyright laws’ goal of promoting “stability of title.” See Zuill v. Shanahan, 80 F.3d at 1370. We therefore decline to adopt it. This is not to say that the starting point for laches will always be the same as the starting point for the statute of limitations for copyright infringement. The statute provides that “[n]o civil action shall be maintained ... unless it is commenced within three years after the claim accrued.” 17 U.S.C. § 507(b). Applying this statute, this court has held that a “cause of action for copyright infringement accrues when one has knowledge of a violation or is chargeable with such knowledge.” Roley, 19 F.3d at 481 (citing Wood v. Santa Barbara Chamber of Commerce, Inc., 507 F.Supp. 1128, 1135 (D.Nev.1980)). But while the statute of limitations is triggered only by violations — i.e., actual infringements — the laches period may be triggered when a plaintiff knows or has reason to know about an impending infringement. Judge Learned Hand explained the equitable basis for this distinction: It must be obvious to every one familiar with equitable principles that it is inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploration,. and to intervene only when his speculation has proved a success. Delay under such circumstances allows the owner to speculate without risk with the other’s money; he cannot possibly lose, and he may win. Haas v. Leo Feist, Inc., 234 F. 105, 108 (S.D.N.Y.1916). Thus, a copyright holder would be vulnerable to the laches defense if he had knowledge of a planned infringement more than three years prior to filing his action, even if he complied with the statute of limitations by filing less than three years after the infringement actually began. Knowledge that a defendant sincerely (but erroneously) believed it maintained ownership of the copyright might be relevant to a plaintiffs knowledge that an infringement would likely occur in the future, and it might in some cases obligate the plaintiff to investigate the defendant’s plans regarding the exploitation of that copyright. 4 But knowledge of contested ownership without more is insufficient to run the laches period for future infringement claims, because such knowledge relates to only one of the two elements of the copyright infringement cause of action.