On March 2 the Supreme Court
The cert petition filed last summer by Reed Elsevier et al. does a good job explaining the complex background of this litigation, spreading over the past sixteen years. The core dispute turns on the rights of freelance authors in case their articles are licensed for use in electronic databases such as Lexis/Nexis. The Authors here transferred the copyrights for publication of their articles in paper editions of magazines such as the Time and Newsday. However, those transfers did not specifically mention publication in electronic databases. When the print publishers licensed databases proprietors to incorporate the articles in electronic databases the authors sued for copyright infringement.
The dispute percolated all the way up to the Supreme Court. That ruling (known as NYT v. Tasini) focused on the interpretation of section 201(c) of the Copyright Act. The publishers argued that this provision secured their right to license electronic database by virtue of the original transfer of rights initially covering inclusion in print magazines - even in case the transfer agreement did not specify such right.
The majority in Tasini disagreed. It refused to read into the right of the publishers (the “owner[s] of copyright in the collective work” in the words of section 201(c)) also a permission to license electronic databases based on their statutory privilege to reproduce and distribute the contribution “as part of … any revision of that collective work, and any later collective work in the same series.” At the same time, Tasini commented that “Authors and Publishers may enter into an agreement allowing continued electronic reproduction of the Authors' works.”
On this basis, authors, publishers and database operators entered into lengthy negotiations that culminated in a settlement agreement covering all claims of authors concerning both registered and unregistered contributions. The S.D.N.Y. had certified the class of freelance authors and affirmed the class action agreement as fair, reasonable, and adequate. A number of authors, not satisfied with some aspects of the settlement, appealed. The Second Circuit shocked everyone involved when it invalidated the class action agreement on a formal ground that was not mentioned by any party: The district court lacked subject matter jurisdiction to settle claims over unregistered works, in accordance with section 411(a) Copyright Act. That provision states: “[N]o action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made.”
So we are talking about a “dry” procedural question: Generally speaking, federal courts assume jurisdiction to adjudicate (and precede over settlements of claims) concerning copyrights in works that are registered according to a procedure specified in the law. Can federal courts approve agreements that releases claims related to unregistered works at the time the action has been “instituted”?
The Second Circuit voiced a resounding NO, dashing what the petition describes as ”herculean effort” and “[f]our years of intensive, complex and costly mediation”. This result effectively throws authors, database proprietors, and nearly 40 publishers back to square one.
The Supreme Court agreed to hear the challenge on this ruling, giving those who want to see the agreement affirmed some reasons for optimism. The practical implication of the outcome will be quite substantial for numerous past transfers, no doubt .(Today, virtually all contracts between authors and publishers specifically address the transfer of electronic publishing rights). In addition, I assume that the validity of another giant settlement agreement - the one between Google, authors and publishers concerning the Google Book Project - will be directly affected by the result in Reed Elsevier v. Pogrebin. After all, the S.D.N.Y. has preliminarily approved the Google Books class action settlement, which ostensibly covers also unregistered works (I look at para. 1.16 to the Agreement). I do not see a material difference between the two agreements on the matter of subject matter jurisdictions. In simple words, if the district court did not have jurisdiction to approve a settlement governing unregistered works in the case of electronic databases, who can it have jurisdiction to approve an agreement covering unregistered works available via Google Books?
Then again, the legal question the Supreme Court is about to resolve, despite its critical importance to market actors, remains a technical one. It is not the kind of stuff that makes academics all exited about. It is not going to be a milestone exemplifying the role of the Supreme Court in shaping the evolvement of copyright law in times of crisis. I cannot say whether, and to what degree, this certiorari grant could influence the chances of another pending copyright petition I blogged about here to be heard. That petition concerns anything but technical matters. Ironically, perhaps the magnitude of the issues raised in Cablevision increases the likelihood that they will bounce back unresolved to lower courts to grapple with - at least until the copyright system reaches its breaking point.