Lead Opinion
Opinion by Judge FISHER; Concurrence by Judge W. FLETCHER.
OPINION
In 2009, Paula Petrella filed an action for copyright infringement, unjust enrichment and accounting against Metro-Goldwyn-Mayer, Inc.; Metro-Goldwyn-Mayer Studios, Inc.; Metro-Goldwyn-Mayer Home Entertainment, LLC; Metro-Goldwyn-Mayer Home Entertainment Distribution Corporation; United Artists Corporation; and 20th Century Fox Home Entertainment, LLC (“the defendants”). According to Petrella, the defendants infringed her purported interest in a book and two screenplays that together allegedly formed the basis for the 1980 motion picture Raging Bull. The district court granted summary judgment in favor of the defendants, holding that Petrella’s claims are barred by the equitable defense of laches. The district court also denied the defendants’ motions for sanctions and attorney’s fees. We affirm.
Background
After Jake LaMotta (“LaMotta”) retired from boxing, he collaborated with his longtime friend, Frank Peter Petrella (“F. Petrella”), to produce a book and two screenplays (the “1963 screenplay” and the “1973 screenplay”) about LaMotta’s life. Together, these works allegedly became the basis for the movie Raging Bull, released in 1980.
These works were registered with the United States Copyright Office. The 1963 screenplay was registered in 1963, listing F. Petrella as the claimant and sole author. According to the title page, however, it was written “in collaboration with” LaMotta. The book was registered in 1970, listing “Peter Savage” (a pseudonym of F. Petrella), LaMotta and Joseph Carter as co-authors. The 1973 screenplay was registered in 1973, listing F. Petrella as the sole author and stating 1970 as the date of publication. The copyright registration
In a written agreement dated November 19,1976, F. Petrella and LaMotta assigned to Chartoff-Winkler Productions, Inc., “exclusively and forever, including all periods of copyright and renewals and extensions thereof,” all of their respective copyright rights in the book and “in and to those certain screenplays based on [the book] which were written in 1963 and 1973,” save for a reservation of certain rights to the authors of the book. The agreement represented that the book “is original and has not been copied or adapted from any literary, dramatic or other work.” It also represented that “[t]he [F. Petrella] Screenplays are original and have not been copied or adapted from any literary, dramatic or other work other than [the book].”
In about September 1978, United Artists Corporation, a wholly owned subsidiary of Metro-Goldwyn-Mayer Studios, Inc., acquired the motion picture rights to Raging Bull pursuant to a written assignment from Chartoff-Winkler Productions, Inc. United Artists registered a copyright in the film around September 1980. In 1981, during the original 28 year term of the copyrights for the book and the two screenplays, F. Petrella died, and his renewal rights in the works passed to his heirs.
As his daughter, Petrella now alleges she is the sole owner of the F. Petrella interest in the book and the two screenplays. In 1990, she learned of the Supreme Court’s decision in Stewart v. Abend, and engaged an attorney to advise and assist her regarding her renewal rights.
Seven years later, in 1998, Petrella’s attorney contacted the defendants, asserting that Petrella had obtained the rights to the 1963 screenplay and that the exploitation of any derivative work, including Raging Bull, was an infringement of these exclusive rights. Over the course of the next two years, Petrella and the defendants exchanged a series of letters in which she accused the defendants of infringing her copyrights and the defendants insisted they were not, citing two grounds. First, they claimed the 1963 screenplay was a collaboration between F. Petrella and LaMotta, so the defendants retained all necessary rights in the script under their agreement with LaMotta. Second, they denied there was any substantial similarity of protectable elements between the 1963 screenplay and the film. Petrella re
Standard of Review
We review de novo a district court’s grant of summary judgment on a copyright infringement claim. See Ellison v. Robertson,
Whether a plaintiffs conduct constitutes laches in any given circumstance is an issue of fact. See 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.06[B] (2011). The standard of review is subject to dispute. See id. We addressed this standard in Danjaq LLC v. Sony Corp.,
As for the application of the laches defense itself, we have previously noted a seeming intracircuit conflict regarding the appropriate standard of review. See Telink, Inc. v. United States,24 F.3d 42 , 47 & nn. 10-11 (9th Cir.1994) (reviewing for abuse of discretion, but noting an intracircuit conflict between the abuse of discretion and clearly erroneous standards). Leaving aside the fact that this conflict may be more apparent than real, see id. at 47 n. 11; Piper Aircraft Corp. v. Wag-Aero, Inc.,741 F.2d 925 , 940-41 (7th Cir.1984) (Posner, J., concurring), we need not resolve it here, for we conclude that the district court’s ruling on laches must stand regardless whether it is reviewed for abuse of discretion or for clear error.
Danjaq,
We review a district court’s imposition of sanctions for abuse of discretion, and its findings of fact for clear error. See Christian v. Mattel, Inc.,
Discussion
The district court granted summary judgment in favor of the defendants on Petrella’s copyright, accounting and unjust enrichment claims. The court also denied the defendants’ motions for sanctions and attorney’s fees. We affirm.
I. Copyright Infringement
The district court held that Petrella’s copyright infringement claim is barred by the doctrine of laches. We agree. “Laches is an equitable defense that prevents a plaintiff, who with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.” Danjaq,
The underlying elements of a laches defense are factual determinations. A defendant must prove that (1) the plaintiff delayed in initiating the lawsuit; (2) the
1. Delay
“Generally speaking, the relevant delay is the period from when the plaintiff knew (or should have known) of the allegedly infringing conduct, until the initiation of the lawsuit in which the defendant seeks to counterpose the laches defense.” Id. at 952. As the district court found, it is “[ujndisputed [Petrella] was aware of her potential claims (as was MGM) since 1991,” when her attorney filed her renewal application for the 1963. screenplay. She did not file her lawsuit until 18 years later, in January 2009.
2. Reasonableness of the Delay
“In determining reasonableness, courts look to the cause of the delay. Delay has been held permissible, among other reasons, when it is necessitated by the exhaustion of remedies through the administrative process; when it is used to evaluate and prepare a complicated claim; and when its purpose is to determine whether the scope of proposed infringement will justify the cost of litigation.” Id. at 954 (citations and internal quotation marks omitted). In contrast, delay is unreasonable “when its purpose is to capitalize on the value of the alleged infringer’s labor, by determining whether the infringing conduct will be profitable.” Id.
There are two relevant periods of delay in this case. The first was from 1990 (when Petrella learned of the Stewart v. Abend decision and engaged an attorney to advise and assist her regarding her renewal rights in the subject works) to September 1998 (when Petrella’s attorney contacted the defendants concerning their exploitation of the film). Petrella testified that she did not contact the defendants and make them aware of any claims during this eight year period because “the film was deeply in debt and in the red and would probably never recoup” and she “did not know there was a time limit to making such claims.”
The second period of delay began in September 1998, when Petrella’s attorney sent the first of a series of letters to the defendants giving “formal notice” of her claims and threatening litigation. Although the final letter in this series was dated April 5, 2000, Petrella did not file the complaint in this case until January 2009. Petrella contends that she delayed filing the lawsuit until 2009 for several reasons, including (1) her brother’s disability and her mother’s illnesses that over a period of years required her attention and care; (2) her mother’s fear of retaliation from the defendants; and (3) her family’s inability to afford a lawsuit. She argues that these factors, combined with the defendants’ affirmative conduct in telling her the film’s financial position was hopeless, caused the delay.
These explanations are unsupported by evidence other than Petrella’s own declaration, and in any event, they are insufficient
3. Prejudice
Laches also requires a showing that a defendant was prejudiced by the plaintiffs unreasonable delay. In evaluating this element, “[i]f only a short period of time has elapsed since the accrual of the claim, the magnitude of the prejudice required before the suit should be barred is great, whereas if the delay is lengthy, prejudice is more likely to have occurred and less proof of prejudice will be required.” Miller,
The two primary forms of prejudice in the laches context are expectations-based prejudice, which exists where a defendant “took actions or suffered consequences that it would not have, had the plaintiff brought suit promptly;” and evidentiary prejudice, which exists where there are “such things as lost, stale, or degraded evidence, or witnesses whose memories have faded or who have died.” Danjaq,
A defendant establishes expectations-based prejudice if it shows that “during the delay, it invested money to expand its business or entered into business transactions based on [its] presumed rights.” Miller,,
The defendants have established such prejudice here. Edward J. Slizewski, Senior Vice President for Participations & Residuals for Metro-Goldwyn-Mayer Studios, Inc., stated that, since Petrella learned of the allegedly infringing conduct in 1991, the defendants “distributed the Film on a continuous basis in the United States and abroad, and ... expended substantial financial and other resources as a part of this effort,” including “costs relating to marketing, advertising, distributing and otherwise promoting the Film in various media.”
For instance, in 2004 and 2005, the defendants “spent approximately $3 million to create, promote and distribute a 25th Anniversary Edition of the Film that was released in 2005.” In 2008 and 2009, they “incurred more than $100,000 in costs to convert Raging Bull to the Blu-Ray format, and to promote, market and distribute the Film in that medium.” Slizewski explained that “[t]hese activities and expenditures were made based on the understanding and belief that the [defendants] have complete ownership and control of the Film.... Had Ms. Petrella filed suit in 1991 (or 1998), the [defendants] would have had an opportunity to litigate this claim prior to making these various and significant investments in the Film. Because no such suit was filed prior to 2009, the [defendants] were deprived of this opportunity.”
In addition to these investments, Slizewski stated that the defendants had, since 1991, “entered into numerous agreements to license the Film, including various agreements in which television networks ... are authorized to broadcast the Film through 2015. License agreements relating to future distribution also have been entered into (prior to the institution of this lawsuit) and provide for the Film to be distributed through defendant Twentieth Century Fox Home Entertainment LLC.” Slizewski further testified:
[T]he company has made commitments for a number of years through I think 2015 here in the United States for this particular picture and continues to, on a regular continuous basis, invest money into this title and to invest the overall sales effort in this title, everyone from television sales staff, frankly to the participation staff where I work in the company are dedicating some amount of their time to the continued distribution, and all the back office support related to this particular title, and frankly, to keeping this title out in the marketplace, out in the DVD marketplace, out in the television marketplace.
Nonetheless, Petrella argues that there is a triable issue because the defendants earned a substantial profit as a result of the delay and, she alleges, would not have done anything different, or been in any better position, had the suit been filed sooner. We disagree. In Jackson v. Axton,
In Spring 2001, after Tucson Electric publicly announced a plan to construct two additional coal-fired units, Grand Canyon trust, a non-profit environmental organization, became interested in the validity of the 1977 permit for the first time. See id. After conducting an investigation and concluding that the permit was invalid, Grand Canyon brought a citizen enforcement action under the Clean Air Act. See id. The district court granted summary judgment, concluding Grand Canyon’s suit was barred by laches. See id. at 987-88. The court found expectations-based prejudice because, if it granted the relief Grand Canyon sought, Tucson Electric would be required to replace the originally installed equipment, which could cost up to $300 million. See id. at 988. We reversed:
We do not see how this delay prejudiced Tucson Electric. Rather, it appears that Grand Canyon’s delay worked to the benefit of Tucson Electric because it allowed Tucson Electric the opportunity to recover some or all of its investment in [the units] before this suit was filed. By contrast, if Grand Canyon had brought this action immediately after construction on each [u]nit was completed, and had the court held that Tucson Electric was required to replace the equipment it had just installed, Tucson Electric’s loss would have been total. The original [u]nits would not have operated for a single day, and Tucson Electric would not have had the opportunity to recover any part of its immense investment. But in actual fact, Grand Canyon’s delay allowed Tucson Electric to operate [the two units] for many years before having to replace them. Indeed, the longer the delay in bringing the suit, the greater the benefit — not the detriment — to Tucson Electric.
Id. at 988-89.
In short, Tucson Electric benefitted because the delay gave it time to recoup its already completed investment. That is not the case here. Rather, over the full 18 year period of Petrella’s delay, the defendants invested financial and other resources in marketing, advertising, distributing and promoting the film, totaling $8.5 million domestically. They continued to make business decisions and enter into contracts relying upon their belief that they were the rightful owners of the right to exploit Raging Bull. To the extent they should be proved wrong in their legal assumption through this litigation, the anticipated profits from these investments and licensing agreements — the expectation of which underlay their business decision making — would wind up in Petrella’s pocket. That is the essence of expectations-based prejudice. The district court was
In the copyright context, the most-repeated justification for the doctrine [of laches] was penned by Judge Learned Hand: “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 exploitation, 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).
Danjaq,
Accordingly, we hold that Petrella’s copyright infringement claim is barred by laches. We therefore do not reach the merits of the copyright infringement claim itself.
II. Unjust Enrichment and Accounting
Petrella also sued for unjust enrichment and accounting, arguing that if the defendants were co-owners rather than infringers of the book, they would have had an ongoing duty to account to and pay Petrella for any monies derived through the exploitation of the book and its derivatives. See Oddo v. Ries,
Recovery of an unjust enrichment is an equitable remedy. See McKesson HBOC, Inc. v. New York State Common Ret. Fund, Inc.,
III. Sanctions and Attorney’s Fees
The defendants contend they are entitled to sanctions under Rule 11 and attorney’s fees for Petrella’s alleged unjustified filing and prosecution of this action, and ask that we remand for the dis
1. Rule 11 Sanctions
Federal Rule of Civil Procedure 11 provides for the imposition of sanctions when a filing is frivolous, legally unreasonable, without factual foundation or brought for an improper purpose. See Simpson v. Lear Astronics Corp.,
The district court cited White v. General Motors Corp., Inc.,
2. Attorney’s Fees Under 17 U.S.C. § 505
Under the Copyright Act, a district court has discretion to award attorney’s fees to the prevailing party. See 17 U.S.C. § 505; see also Fogerty v. Fantasy, Inc.,
In denying attorney’s fees, the district court evaluated several of these factors. The court denied the motion because it had “not grant[ed] summary judgment based on a lack of evidence of infringement, but solely on the ground that Plaintiffs claims were barred by laches.” The court also concluded that an award of attorney’s fees in this case “would have a deterrent effect upon other copyright owners in Abend situations who have valid claims,” and “[s]uch a result would not ‘further the policies of the Copyright Act.’ ” Because we agree that Petrella’s attempt to distinguish Danjaq both legally and factually was not unreasonable, and there is no evidence of improper motive, the district court did not abuse its discretion by denying attorney’s fees.
Conclusion
We hold that Petrella’s copyright, unjust enrichment and accounting claims are barred by laches, and we therefore affirm the district court’s grant of summary judgment in favor of the defendants. We also hold that the district court did not abuse its discretion by denying the defendants’ motions for sanctions and attorney’s fees. The parties shall bear their own costs on appeal.
AFFIRMED.
Notes
. Stewart v. Abend,
. Petrella appeals the district court’s rulings on the defendants' evidentiary objections to the declarations of Petrella, her expert and her attorney. We hold that the district court did not abuse its discretion by finding that “[m]uch of [the expert’s] Declaration lack[ed] foundation and [was] irrelevant” and that the attorney's declaration lacked foundation. With respect to the district court's rulings on Petrella’s declaration, even were we to admit the excluded evidence, laches would still apply. We therefore affirm the district court's evidentiary rulings. See Coursen v. A.H. Robins Co., Inc.,
. Petrella objected to Slizewski's declaration, arguing that it contradicted his deposition testimony. The district court did not abuse its discretion in overruling the objection.
. We reject Petrella’s argument that the district court erred by ignoring evidence of the defendants’ willful infringement. The laches defense cannot apply when the infringement "occurs with knowledge that the defendant’s conduct constitutes copyright infringement.” Danjaq,
Concurrence Opinion
concurring:
I concur in Judge Fisher’s opinion, which faithfully applies our circuit’s law of laches in copyright cases. But I do so only because we are compelled to follow our opinion in Danjaq LLC v. Sony Corp.,
There is a severe circuit split on the availability of a laches defense in copyright cases. In the Fourth Circuit, there is no laches at all. If a copyright suit is brought within the statute of limitations, it may go forward. Lyons P’ship. L.P. v. Morris Costumes, Inc.
Our circuit is the most hostile to copyright owners of all the circuits. In the Ninth Circuit, laches can bar all relief, both legal and equitable, when “(1) the plaintiff delayed in initiating the lawsuit; (2) the delay was unreasonable; and (3) the delay resulted in prejudice.” Maj. Op. at 951-52 (citing Danjaq,
There is nothing in the copyright statute or its history to indicate that laches is a proper defense to a suit brought under the Act. The Copyright Act of 1909 (“1909 Act”) did not contain a statute of limitations. Pub.L. No. 60-349, 35 Stat. 1075. Federal courts applying the 1909 Act used state statutes that provided various limitations periods, and Congress eventually became dissatisfied with the resulting problem of forum shopping by plaintiffs. S.Rep. No. 85-1014, reprinted in 1957 U.S.C.C.A.N. 1961, 1961. In 1957, Congress amended the 1909 Act to provide a three-year statute of limitations. Act of September 7, 1957, Pub.L. No. 85-313, 71 Stat. 633. The accompanying Senate Report noted that the adoption of a federal limitations period would extinguish equitable defenses such as laches. S.Rep. No. 85-1014, reprinted in 1957 U.S.C.C.A.N. 1961, 1963 (“[CJourts generally do not permit the intervention of equitable defenses or estoppel where there is a [statute of] limitation on the right” (quoting H. Rep. No. 85-150)). The Copyright Act of 1976 (“1976 Act”) replaced the 1909 Act. The 1976 Act re-enacted the three-year limitations period for civil copyright claims using language identical to the 1957 amendment. Pub.L. No. 94-553, § 507(b), 90 Stat. 2541, 2586. Laches in copyright cases is thus entirely a judicial creation. And it is a creation that is in tension with Congress’ intent.
Modern courts seeking to justify the application of laches in copyright cases typically quote from Judge Learned Hand’s opinion in Haas v. Leo Feist, Inc.,
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 exploitation, and to intervene only when his speculation has proved a success. Delay under such*959 circumstances allows the owner to speculate without risk with the other’s money; he cannot possibly lose, and he may win. If the defendant be a deliberate pirate, this consideration might be irrelevant ...; but it is no answer to such inequitable conduct, if the defendant Feist is innocent, to say that its innocence alone will not protect it. It is not its innocence, but the plaintiffs availing himself of that innocence to build up a success at no risk of his own, which a court of equity should regard.
See, e.g., Maj. Op. at 956 (quoting from this passage); Danjaq,
The elements of an equitable estoppel defense have been variously stated. We wrote in a copyright infringement case:
Four elements must be present to establish the defense of estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe that it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former’s conduct to his injury.
Hampton v. Paramount Pictures Corp.,
Under federal law, ... a party can be estopped from pursuing a claim where: (1) the party makes a misrepresentation of fact to another party with reason to believe that the other party will rely on it; (2) the other party relies on the misrepresentation to his detriment.
Marvel Characters, Inc. v. Simon,
The elements of a laches defense are less demanding. In our circuit, laches in copyright cases does not require actual knowledge by the copyright owner of the defendant’s infringement. It requires only that the owner “should have known” of the infringement. See Kling v. Hallmark Cards Inc.,
Our circuit has taken a wrong turn in its formulation and application of laches in copyright cases. We should revisit our case law to provide appropriate protection to innocent copyright owners who have brought infringement suits within the statute of limitations. A recognition of the distinction between equitable estoppel and laches would be a good place to start.