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Analysis: Copyright settlement may be in doubt


Justice Stephen G. Breyer made repeated efforts on Wednesday to keep open the chances that an $18 million settlement of a major copyright dispute may yet get a full hearing on its fairness in federal court, but he found little support among other members of the Supreme Court as they pondered the scope of a federal court’s power over copyright lawsuits in Reed Elsevier v. Muchnick (08-103).  The initial impression of the hour-long argument was that the settlement might not survive this test.

At the center of the dispute is a deal that was intended to end a complaint by free-lance authors that articles they wrote for newspapers and periodicals were copied into electronic databases without their consent — and without extra payment.  But lower federal courts found they had no jurisdiction to review the $18 million pact, because some of the authors involved never registered their copyrighted works with the Copyright Office, and thus their claims may have been beyond the court’s power to assess even as part of a settlement.  The case in the Court, filed by publishers and electronic archive firms, turns on whether a federal law requiring a copyright owner to register the work before being allowed into court actually is binding — that is, whether it is a limit on the federal court’s actual jurisdiction to decide.

Much of Wednesday’s argument involved a focused analysis on how to read a statute, without any discussion of the soundness or fairness of the settlement deal itself.  The Justices seemed to waver back and forth between the specific language of the Copyright Act provision, and the underlying public policy goals that Congress may have in mind in making registration a prior condition for suing for infringement.

On either side of that discussion, however, most of the Justices seemed skeptical that a strong enough case had been made to overturn the Second Circuit ruling that it lacked authority in the case.  A strong performance by a law professor specially chosen by the Court to support the Second Circuit’s ruling fueled that skepticism.  A straddling position by the U.S. Solicitor General’s office may have added to that sentiment, too.

Justice Breyer, repeatedly making a pragmatic case for allowing the lower courts to go ahead and decide whether to approve the deal, suggested that Congress could not have intended to set up a system in which copyright claims could not be resolved by settlement because of who was or was not allowed in court.  Why not, he commented, let the courts look at all the factors in a dispute to decide whether settling it was fair to all concerned.  Fairness, he said, was the crucial issue when a lawsuit had been settled.

While Justice John Paul Stevens joined in suggesting that the focus in such a situation should be on fairness, rather than on the issue of jurisdiction or its absence, his and Breyer’s comments and questions were the only indications that the Court might want to decide the case without settling the question of court authority.

Charles S. Sims, a New York lawyer representing the publishers, insisted that his clients were properly in court because many of the free-lance authors had registered their copyrighted works, so they clearly had a right to sue, and thus a right to reach a settlement and get it reviewed in court, even if it took in authors with unregistered works.

Sims conceded, though, that lawyers on his side “were guilty of loose language” in lower courts in using the limited power of the courts — that is, the very issue of authority now in issue — to help justify a part of the settlement that treated the authors with unregistered copyrights less favorably.  It is “not fair,” Sims told Justice Ruth Bader Ginsburg, to say that they had conceded that there was a jurisdictional bar to reviewing the settlement.

Chief Justice John G. Roberts, Jr., was Sims’ most aggressive interrogator, suggesting that the Copyright Act language at issue was closely parallel to that written into other laws that the Supreme Court had determined set limits on jurisdiction, not just on courts’ discretion.

Ginger Anders, an assistant to the U.S. Solicitor General, arguing for the federal government view that the Second Circuit was wrong in viewing the language as jurisdictional in scope, suggested that the register-before-suing language was mandatory and generally could not be waived.  But, Anders suggested, perhaps it was appropriate to allow it to be waived in this particular case.  There was going to be a settlement, she said, so the federal judge was not going to have to decide the merits of the claim of infringement.

Because neither side in the free-lancers’ copyright case was willing to defend the Second Circuit ruling putting the settlement outside of court review, the Court had named Ohio State law professor Deborah Jones Merritt to offer a defense.  She offered a full-scale defense, suggesting that the restriction at issue was jurisdictional but, even if it was not, there was no reason for the Justices to overturn the Second Circuit.

She sought to undercut the arguments of the publishers and database companies by criticizing them for failing to try to locate all of the free-lance authors, to get their permission for electronic re-publication of their works and thus avert the legal dispute that ensued.  University libraries, she said, often have to obtain many more permissions for re-publication than any electronic database in the case ever had to do.  She also said it was a “red herring” for the databases to contend that their electronic archives would be decimated if they could not have the settlement of all of the free-lancers’ infringement claims.  In any event, she said, more advanced technology had overtaken their argument that copyrighted works would be put beyond the public’s access if the settlement did not go forward.