Did the Supreme Court Just Give States License to Pirate Copyrights?

Protecting Copyrights Post Allen

Date: 4/13/2020

By Leon Bass

 

Blackbeard’s infamous pirate ship, Queen Ann’s Revenge, sank in 1718 off the coast of North Carolina. In 1996, its recovery efforts began. Frederick Allen spent almost a decade producing video and photographs of the salvaged ship’s recovery efforts, which he registered with the Library of Congress’ copyright office. As any content creator, Allen expected that his copyrighted work would be protected by the United States Copyright Act, which grants exclusive rights to the author to use — or allow others to use — the content. The state of North Carolina, however, without Allen’s permission, published Allen’s copyrighted work on its website and in a newsletter. Allen sued for copyright infringement in a case that ultimately went to the United States Supreme Court (SCOTUS).

On March 23, 2020, SCOTUS held in Allen v. Cooper that states are immune from copyright infringement lawsuits, blocking Allen from collecting damages from North Carolina for its unauthorized use of his copyrighted videos and photos. The issue, ironically involving Allen’s revenge for the pirating of pirate ship video footage, was not a matter of traditional copyright law but a matter of constitutional law; namely whether an individual can sue a state for copyright infringement without the state’s agreement to be sued. SCOTUS held that one cannot sue a state governmental entity without the state’s consent. Essentially states are immune from copyright infringement damages suits absent their consent. However, the case leaves questions open as to the effect on content owners of states’ use of copyrighted materials without a license, and what content owners can do.

Content Owners Still Have Rights and Enforcement Potential

Presumably, the Allen holding permits states, as well as universities and other state agencies, to use, without a license, copyrighted content such as textbooks, software and e-learning applications, or other education-based resources — all of which are normally capable of copyright protection. Content owners, however, do not have to “walk the plank” just yet.

While states are not generally known for flagrantly engaging in copyright infringement, time will tell whether states will now see Allen as license to openly pirate copyrighted works. In addition, it is possible that Congress will attempt to legislate a different outcome. Until and unless that occurs, despite what may seem to be a grim imposition for content owners, some legal alternatives exist that may help content owners protect themselves despite the Allen decision.

Despite Allen’s moratorium on monetary damages, a state’s use of copyrighted content without license is still technically infringement. Content owners can still likely prevent state officials from continuing to infringe on their copyrights by applying for injunctive relief. For example, one court found that while a governmental entity could not be sued for monetary damages stemming from a copyright violation, sovereign immunity did not bar injunctive relief against state officials. Bassett v. Mashantucket Pequot Museum & Research Ctr., 221 F. Supp. 2d 271 (D. Conn. 2002). In addition, content owners may have certain contractual rights that can be enforced.

Contract Review and Enforcement

License agreements may be an effective way around Allen, especially if they contain immunity waivers. As some states have waived immunity for commercial contract, rights may be enforceable. Moreover, Allen likely does not prevent equitable suits against state officials. Content owners might also offer renewal incentives to secure and maintain a paid agreement.

Immunity Waivers. Content owners should be wary of standard form agreements when dealing with states, as they likely do not contain immunity waivers. Immunity waivers will likely make Allen irrelevant because the state, by waiving their immunity, is consenting to a copyright infringement suit. Content owners should include immunity waivers in agreements with states or state-affiliated institutions. For example, an immunity waiver may state:

To the extent that [State entity/Sovereign Party] may in any jurisdiction, including federal or state courts, claim for itself or any of its bodies, instrumentalities or properties immune from service of process, suit, jurisdiction, execution, discovery relating to any issue of immunity, including copyright, or other legal or judicial process or other remedy, and to the extent that in any such jurisdiction there may be attributed to [State entity/Sovereign Party] or any of its bodies, instrumentalities, or properties such immunity (whether or not claimed), [State entity/Sovereign Party] hereby irrevocably and unconditionally agrees not to claim and hereby irrevocably and unconditionally waives any and all such immunity to the fullest extent now or hereafter permitted by the laws of such jurisdiction, and therefore consents to claims filed against it in any jurisdiction, including state or federal courts.

NOTICE AND DISCLAIMER: The contents of this immunity clause are intended to convey a general sample only and not to provide legal advice or opinions and should not be construed as or relied upon for legal advice. An attorney should be contacted for advice on specific legal issues, including without limitation, the use an immunity waiver in a specific agreement or situation, as the above version may not apply in all circumstances.

Enforcement of Existing License Agreements.

 

Even if the agreement does not have immunity language, it may be possible to sue not only for injunctive relief but damages under a contract theory because some states have waived immunity from commercial contract liability. For example, Minnesota, Georgia, Colorado, and Maryland have waived immunity in limited circumstances, and Texas established an administrative procedure for certain breach-of-contract claims. For content owners that use private distributors, it is also possible that the distributor may have liability for downstream infringement by a state entity.

 

Work for Hire Agreements

If an author enters into a work for hire agreement with a state entity, the effect is that the state entity owns the copyright but typically agrees to pay the author a fee. The fee may be a set flat fee, a royalty, or both. The result is that any enforcement action is removed from the purview of a copyright claim and thus may give the author enforcement rights under the agreement. Again, however, an immunity clause should be included in any agreement with the state, including work for hire agreements.

Anti-Piracy Efforts

Given today’s digital age, misappropriation is easier than ever – often accomplished by a click. Content owners should consider options for including anti-piracy protocol in their digital works that prevent others from easily copying and downloading their works, such as digital rights management applications and subscription models. In addition, content owners should always include copyright notices on content and should consider using watermarks, distributing content in password-protected files and hosting files rather than allowing customers to download them (e.g., using streaming or a similar application to distribute the content).

Copyright Registration

As always, copyright registration is crucial, and a content owner should consult legal counsel regarding the best way to protect and renew existing copyright portfolios. Not only does registration create a public record of a copyright claim but also registration provides several key legal advantages:

  1. Registration is necessary to file an infringement suit in court;

  2. Registration establishes prima facie evidence of the validity of the copyright;

  3. Although currently not applicable to state cases, when registration is made prior to infringement or within three months after publication of a work, a copyright owner is eligible for statutory damages, attorneys’ fees and costs. Statutory damages range from $750 to up to $100,000 in some cases, plus attorney’s fees. Without this, a copyright owner is limited to actual damages, which is often small and significantly lower the cost of litigation; and

  4. Registration permits a copyright owner to establish a record with the U.S. Customs and Border Protection for protection against the importation of infringing copies.

Stay Updated

According to the majority in Allen, a “tailored statute can effectively stop States from behaving as copyright pirates. Even while respecting constitutional limits, it can bring digital Blackbeards to justice,” implying that Congress can act to change the effect of Allen. Given the far-reaching negative implications on copyright holders and creators alike, as evidenced by the strong-willed amicus brief by the SMPI and NPPA, among many others, this matter is ripe for congressional review. While state sovereign immunity has been a long-recognized concept as stated in the U.S. Constitution, Congress does not intend to allow states to operate on a “free-for-all” basis in regards to the use of others’ copyright. Nonetheless, the status remains that states cannot be sued for copyright infringement without consent.

Taft Takeaways

Anything that is an original, creative expression that is fixed in a tangible medium is capable of copyright protection-now limited against states. Despite Allen, content owners still have enforcement options, and should consider taking an aggressive approach to maintain their rights, including the following:

  • As always, consult an attorney to file applications for U.S. copyright registration with the U.S. Copyright Office prior to publication of the works;

  • Review and revise contract and license agreement provisions relevant to state entities, including the inclusion of immunity waivers;

  • Enforce existing license agreements against state entities, including third-party vendor/distributors;

  • Consider work for hire agreement terms as a potential workaround for state-specific applications;

  • Review anti-piracy applications related to your copyrighted works — especially digital works published online; and,

  • Keep yourself informed as to future developments as the issue is ripe for congressional review.

If you have any questions, please contact your Taft attorney or a member of our Copyright practice.

Taft associate Kristin Hardy contributed to this bulletin.

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