Petrella v. Metro-Goldwyn-Mayer, Inc./Opinion of Justice Breyer

, with whom and  join, dissenting.

Legal systems contain doctrines that help courts avoid the unfairness that might arise were legal rules to apply strictly to every case no matter how unusual the circumstances. “[T]he nature of the equitable,” Aristotle long ago observed, is “a correction of law where it is defective owing to its universality.” Nicomachean Ethics 99 (D. Ross transl. L. Brown ed. 2009). Laches is one such equitable doctrine. It applies in those extraordinary cases where the plaintiff “unreasonably delays in filing a suit,” National Railroad Passenger Corporation v. Morgan, 536 U. S. 101, 121 (2002), and, as a result, causes “unjust hardship” to the defendant, Chirco v. Crosswinds Communities, Inc., 474 F. 3d 227, 236 (CA6 2007) (emphasis deleted). Its purpose is to avoid “inequity.” Galliher v. Cadwell, 145 U. S. 368, 373 (1892). And, as Learned Hand pointed out, it may well be "“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.” Haas v. Leo Feist, Inc., 234 F. 105, 108 (SDNY 1916)."

Today’s decision disables federal courts from addressing that inequity. I respectfully dissent.

Circumstances warranting the application of laches in the context of copyright claims are not difficult to imagine. The 3-year limitations period under the Copyright Act may seem brief, but it is not. 17 U. S. C. § 507(b). That is because it is a rolling limitations period, which restarts upon each “separate accrual” of a claim. See ante, at 671; 6 W. Patry, Copyright § 20:23, pp. 20–44 to 20–46 (2013). If a defendant reproduces or sells an infringing work on a continuing basis, a plaintiff can sue every 3 years until the copyright term expires—which may be up to 70 years after the author’s death. § 302(a) (works created after January 1, 1978, are protected until 70 years after the author’s death); § 304(a) (works created before January 1, 1978, are protected for 28 years plus a 67-year renewal period). If, for example, a work earns no money for 20 years, but then, after development expenses have been incurred, it earns profits for the next 30, a plaintiff can sue in year 21 and at regular 3-year intervals thereafter. Each time the plaintiff will collect the defendant’s profits earned during the prior three years, unless he settles for a lump sum along the way. The defendant will recoup no more than his outlays and any “elements of profit attributable to factors other than the copyrighted work.” §§§ [sic] 504(a)(1), (b).

A 20-year delay in bringing suit could easily prove inequitable. Suppose, for example, the plaintiff has deliberately waited for the death of witnesses who might prove the existence of understandings about a license to reproduce the copyrighted work, or who might show that the plaintiff’s work was in fact derived from older copyrighted materials that the defendant has licensed. Or, suppose the plaintiff has delayed in bringing suit because he wants to avoid bargaining with the defendant up front over a license. He knows that if he delays legal action, and the defendant invests time, effort, and resources into making the derivative product, the plaintiff will be in a much stronger position to obtain favorable licensing terms through settlement. Or, suppose the plaintiff has waited until he becomes certain that the defendant’s production bet paid off, that the derivative work did and would continue to earn money, and that the plaintiff has a chance of obtaining, say, an 80% share of what is now a 90% pure profit stream. (N. B. The plaintiff’s profits recovery will be reduced by any “deductible expenses” incurred by the defendant in producing the work, and by any “elements of profits attributable to factors other than the copyrighted work,” § 504(b).) Or, suppose that all of these circumstances exist together.

Cases that present these kinds of delays are not imaginary. One can easily find examples from the lower courts where plaintiffs have brought claims years after they accrued and where delay-related inequity resulted. See, e. g., Ory v. McDonald, 141 Fed. Appx. 581, 583 (CA9 2005), aff’g 2003 WL 22909286, *1 (CD Cal., Aug. 5, 2003) (claim that a 1960’s1960s [sic] song infringed the “hook or riff” from the 1926 song “Muskrat Ramble,” brought more than 30 years after the song was released); Danjaq LLC v. Sony Corp., 263 F. 3d 942, 952–956 (CA9 2001) (claim that seven James Bond films infringed a copyright to a screenplay, brought 19 to 36 years after the films were released, and where “many of the key figures in the creation of the James Bond movies ha[d] died” and “many of the relevant records [went] missing”); Jackson v. Axton, 25 F. 3d 884, 889 (CA9 1994), overruled on other grounds, Fogerty v. Fantasy, Inc., 510 U. S. 517 (1994) (claim of coauthorship of the song “Joy to the World,” brought 17 years after the plaintiff learned of his claim such that memories faded, the original paper containing the lyrics was lost, the recording studio (with its records) closed, and the defendant had “arranged his business affairs around the Song” for years); Newsome v. Brown, 2005 WL 627639, *8–*9 (SDNY, Mar. 16, 2005) (claim regarding the song “It’s a Man’s World,” brought 40 years after first accrual, where the plaintiff’s memory had faded and a key piece of evidence was destroyed by fire). See also Chirco, 474 F. 3d, at 230–231, 234–236 (claim that condominium design infringed plaintiff’s design, brought only 2.5 years (or so) after claim accrued but after condominium was built, apartments were sold, and 109 families had moved in).

Consider, too, the present case. The petitioner claims the MGM film Raging Bull violated a copyright originally owned by her father, which she inherited and then renewed in 1991. She waited 18 years after renewing the copyright, until 2009, to bring suit. During those 18 years, MGM spent millions of dollars developing different editions of, and marketing, the film. See App. to Pet. for Cert. 13a. MGM also entered into numerous licensing agreements, some of which allowed television networks to broadcast the film through 2015. Id., at 14a. Meanwhile, three key witnesses died or became unavailable, making it more difficult for MGM to prove that it did not infringe the petitioner’s copyright (either because the 1963 screenplay was in fact derived from a different book, the rights to which MGM owned under a nonchallenged license, or because MGM held a license to the screenplay under a 1976 agreement that it signed with Jake LaMotta, who coauthored the screenplay with the petitioner’s father, see id., at 3a, 5a; App. 128–129, 257–258, 266–267). Consequently, I believe the Court of Appeals acted lawfully in dismissing the suit due to laches.

Long delays do not automatically prove inequity, but, depending upon the circumstances, they raise that possibility. Indeed, suppose that the copyright holders in the song cases cited above, or their heirs, facing sudden revivals in demand or eventual deaths of witnesses, had brought their claims 50, or even 60, years after those claims first accrued. Or suppose that the loss of evidence was clearly critical to the defendants’ abilities to prove their cases. The Court holds that insofar as a copyright claim seeks damages, a court cannot ever apply laches, irrespective of the length of the plaintiff’s delay, the amount of the harm that it caused, or the inequity of permitting the action to go forward.

Why should laches not be available in an appropriate case? Consider the reasons the majority offers. First, the majority says that the 3-year “copyright statute of limitations … itself takes account of delay,” and so additional safeguards like laches are not needed. Ante, at 677. I agree that sometimes that is so. But I also fear that sometimes it is not. The majority correctly points out that the limitations period limits the retrospective relief a plaintiff can recover. It imposes a cap equal to the profits earned during the prior three years, in addition to any actual damages sustained during this time. Ibid.; § 504(b). Thus, if the plaintiff waits from, say, 1980 until 2001 to bring suit, she cannot recover profits for the 1980 to 1998 period. But she can recover the defendant’s profits from 1998 through 2001, which might be precisely when net revenues turned positive. And she can sue every three years thereafter until the copyright expires, perhaps in the year 2060. If the plaintiff’s suit involves the type of inequitable circumstances I have described, her ability to recover profits from 1998 to 2001 and until the copyright expires could be just the kind of unfairness that laches is designed to prevent.

Second, the majority points out that the plaintiff can recover only the defendant’s profits less “ ‘deductible expenses’ incurred in generating those profits.” Ante, at 677 (quoting § 504(b)). In other words, the majority takes assurance from the fact that the Act enables the defendant to recoup his outlays in developing or selling the allegedly infringing work. Again, sometimes that fact will prevent inequitable results. But sometimes it will not. A plaintiff’s delay may mean that the defendant has already recovered the majority of his expenses, and what is left is primarily profit. It may mean that the defendant has dedicated decades of his life to producing the work, such that the loss of a future profit stream (even if he can recover past expenses) is tantamount to the loss of any income in later years. And in circumstances such as those described, it could prove inequitable to give the profit to a plaintiff who has unnecessarily delayed in filing an action. Simply put, the “deductible expenses” provision does not protect the defendant from the potential inequity highlighted by Judge Hand nearly 100 years ago in his influential copyright opinion. That is, it does not stop a copyright holder (or his heirs) from “stand[ing] inactive while the proposed infringer spends large sums of money” in a risky venture; appearing on the scene only when the venture has proved a success; and thereby collecting substantially more money than he could have obtained at the outset, had he bargained with the investor over a license and royalty fee. Haas, 234 F., at 108. But cf. id., at 108–109 (plaintiff to receive injunctive relief since one of the defendants was a “deliberate pirate,” but profit award to be potentially reduced in light of laches).

Third, the majority says that “[i]nviting individual judges to set a time limit other than the one Congress prescribed” in the Copyright Act would “tug against the uniformity Congress sought to achieve when it enacted § 507(b).” Ante, at 680–681. But why does the majority believe that part of what Congress intended to “achieve” was the elimination of the equitable defense of laches? As the majority recognizes, Congress enacted a uniform statute of limitations for copyright claims in 1957 so that federal courts, in determining timeliness, no longer had to borrow from state law which varied from place to place. See ante, at 669–670. Nothing in the 1957 Act—or anywhere else in the text of the copyright statute—indicates that Congress also sought to bar the operation of laches. The Copyright Act is silent on the subject. And silence is consistent, not inconsistent, with the application of equitable doctrines.

For one thing, the legislative history for § 507 shows that Congress chose not to “specifically enumerat[e] certain equitable considerations which might be advanced in connection with civil copyright actions” because it understood that “ ‘[f]ederal district courts, generally, recognize these equitable defenses anyway.’ ” S. Rep. No. 1014, 85th Cong., 1st Sess., 2–3 (1957) (quoting the House Judiciary Committee). Courts prior to 1957 had often applied laches in federal copyright cases. See, e. g., Callaghan v. Myers, 128 U. S. 617, 658–659 (1888) (assuming laches was an available defense in a copyright suit); Edwin L. Wiegand Co. v. Harold E. Trent Co., 122 F. 2d 920, 925 (CA3 1941) (applying laches to bar a copyright suit); D. O. Haynes & Co. v. Druggists’ Circular, 32 F. 2d 215, 216–218 (CA2 1929) (same). Congress expected they would continue to do so.

Furthermore, this Court has held that federal courts may “appl[y] equitable doctrines that may toll or limit the time period” for suit when applying a statute of limitations, because a statutory “filing period” is a “requirement” subject to adjustment “ ‘when equity so requires.’ ” Morgan, 536 U. S., at 121–122 (quoting Zipes v. Trans World Airlines, Inc., 455 U. S. 385, 398 (1982); emphasis added). This Court has read laches into statutes of limitations otherwise silent on the topic of equitable doctrines in a multitude of contexts, as have lower courts. See, e. g., Morgan, supra, at 121 (“an employer may raise a laches defense” under Title VII); Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U. S. 192, 205 (1997) (similar, in respect to suits under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA)); Abbott Laboratories v. Gardner, 387 U. S. 136, 155 (1967) (similar, in respect to an action for declaratory and injunctive relief under the Administrative Procedure Act); Patterson v. Hewitt, 195 U. S. 309, 319–320 (1904) (similar, in the case of a property action brought within New Mexico’s statute of limitations); Alsop v. Riker, 155 U. S. 448, 460 (1894) (holding that “independently of the statute of limitations,” the contract action was barred “because of laches”); Teamsters & Employers Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F. 3d 877, 883 (CA7 2002) (laches available “in a suit against an [Employee Retirement Income Security Act of 1974 (ERISA)] plan for benefits”); Hot Wax, Inc. v. Turtle Wax, Inc., 191 F. 3d 813, 822–823 (CA7 1999) (laches available in a Lanham Act suit fled within the limitations period). Unless Congress indicates otherwise, courts normally assume that equitable rules continue to operate alongside limitations periods, and that equity applies both to plaintiffs and to defendants. See Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104, 108 (1991) (“Congress is understood to legislate against a background of common-law adjudicatory principles” and to incorporate them “except when a statutory purpose to the contrary is evident” (internal quotation marks omitted)); Porter v. Warner Holding Co., 328 U. S. 395, 398 (1946) (“Unless otherwise provided by statute, all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction”).

The Court today comes to a different conclusion. It reads § 507(b)’s silence as preserving doctrines that lengthen the period for suit when equitable considerations favor the plaintiff (e. g., equitable tolling), but as foreclosing a doctrine that would shorten the period when equity favors the defendant (i. e., laches). See ante, at 681–682, 685. I do not understand the logic of reading a silent statute in this manner.

Fourth, the majority defends its rule by observing that laches was “developed by courts of equity,” and that this Court has “cautioned against invoking laches to bar legal relief” even following the merger of law and equity in 1938. Ante, at 678. The majority refers to three cases that offer support for this proposition, but none is determinative. In the first, Holmberg v. Armbrecht, 327 U. S. 392 (1946), the Court said: "“If Congress explicitly puts a limit upon the time for enforcing a right which it created, there is an end of the matter.

“Traditionally and for good reasons, statutes of limitation are not controlling measures of equitable relief.” Id., at 395–396."

This statement, however, constituted part of the Court’s explanation as to why a federal statute, silent about limitations, should be applied consistently with “historic principles of equity in the enforcement of federally-created equitable rights” rather than with New York’s statute of limitations. Id., at 395. The case had nothing to do with whether laches governs in actions at law. The lawsuit in Holmberg had been brought “in equity,” and the Court remanded for a determination whether the petitioners were “chargeable with laches.” Id., at 393, 397.

The second case the majority cites, Merck & Co. v. Reynolds, 559 U. S. 633 (2010), provides some additional support, but not much. There, the Court cited a 1935 case for the proposition that “ ‘[l]aches within the term of the statute of limitations is no defense at law.’ ” Id., at 652 (quoting United States v. Mack, 295 U. S. 480, 489 (1935)). But Merck concerned a federal securities statute that contained both a 2-year statute of limitations, running from the time of “discovery,” and a 5-year statute of repose, running from the time of a “violation.” 559 U. S., at 638 (citing 28 U. S. C. § 1658(b)). Given that repose statutes set “an outside limit” on suit and are generally “inconsistent with tolling” and similar equitable doctrines, the Court held that the 2-year limitations period at issue was not subject to an “inquiry notice” rule or, by analogy, to laches. Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U. S. 350, 353, 363 (1991) (internal quotation marks omitted); Merck, supra, at 650–652. Merck did not suggest that statutes of limitations are always or normally inconsistent with equitable doctrines when plaintiffs seek damages. It simply found additional support for its conclusion in a case that this Court decided before the merger of law and equity. And here, unlike in Merck, the statute of limitations is not accompanied by a corollary statute of repose.

In the third case, County of Oneida v. Oneida Indian Nation of N. Y., 470 U. S. 226 (1985), the Court said in a footnote that “application of the equitable defense of laches in an action at law would be novel indeed.” Id., at 245, n. 16. This statement was made in light of special policies related to Indian tribes, which the Court went on to discuss in the following sentences. Ibid. In any event, Oneida did not resolve whether laches was available to the defendants, for the lower court had not ruled on the issue. Id., at 244–245.

In sum, there is no reason to believe that the Court meant any of its statements in Holmberg, Merck, or Oneida to announce a general rule about the availability of laches in actions for legal relief, whenever Congress provides a statute of limitations. To the contrary, the Court has said more than once that a defendant could invoke laches in an action for damages (even though no assertion of the defense had actually been made in the case), despite a fixed statute of limitations. See Morgan, 536 U. S., at 116–119, 121–122 (laches available in hostile work environment claims seeking damages under Title VII); Bay Area Laundry, 522 U. S., at 205 (laches available in actions for “withdrawal liability assessment[s]” under the MPPAA). Lower courts have come to similar holdings in a wide array of circumstances—often approving not only of the availability of the laches defense, but of its application to the case at hand. E. g., Cayuga Indian Nation of N. Y. v. Pataki, 413 F. 3d 266, 274–277 (CA2 2005) (laches available in a “possessory land claim” in which the District Court awarded damages, whether “characterized as an action at law or in equity,” and dismissing the action due to laches); Teamsters, 283 F. 3d, at 881–883 (laches available in suits under ERISA for benefits, but not warranted in that case); Hot Wax, 191 F. 3d, at 822–827 (“[T]he application of the doctrine of laches to Hot Wax’s Lanham Act claims [requesting damages] by the district court was proper”); A. C. Aukerman Co. v. ''R. L. Chaides Constr. Co., 960 F. 2d 1020, 1030–1032, 1045–1046 (CA Fed. 1992) (en banc) (laches available in patent suit claiming damages, and remanding for whether the defense was successful); Cornetta v. United States'', 851 F. 2d 1372, 1376–1383 (CA Fed. 1988) (en banc) (same, in suit seeking backpay). Even if we focus only upon federal copyright litigation, four of the six Circuits to have considered the matter have held that laches can bar claims for legal relief. See 695 F. 3d 946, 956 (CA9 2012) (case below, barring all copyright claims due to laches); Peter Letterese & Assocs., Inc. v. ''World Inst. of Scientology Enterprises, Int’l, 533 F. 3d 1287, 1319–1322 (CA11 2008) (laches can bar copyright claims for retrospective damages); Chirco, 474 F. 3d, at 234–236 (“laches can be argued ‘regardless of whether the suit is at law or in equity,’ ” and holding that while the plaintiffs could obtain damages and an injunction, their request for additional equitable relief “smack[ed] of the inequity against which Judge Hand cautioned in Haas and which the judicial system should abhor” (quoting Teamsters, supra, at 881)); Jacobsen v. Deseret Book Co.'', 287 F. 3d 936, 950–951 (CA10 2002) (laches available in “ ‘rare cases,’ ” and failing to draw a distinction in the type of remedy sought). But see New Era Publications Int’l v. Henry Holt & Co., 873 F. 2d 576, 584–585 (CA2 1989) (laches can bar claims for injunctive relief, but not damages, under the Copyright Act); Lyons Partnership, L. P. v. Morris Costumes, Inc., 243 F. 3d 789, 798–799 (CA4 2001) (laches unavailable in copyright cases altogether).

Perhaps more importantly, in permitting laches to apply to copyright claims seeking equitable relief but not to those seeking legal relief, the majority places insufficient weight upon the rules and practice of modern litigation. Since 1938, Congress and the Federal Rules have replaced what would once have been actions “at law” and actions “in equity” with the “civil action.” Fed. Rule Civ. Proc. 2 (“There is one form of action—the civil action”). A federal civil action is subject to both equitable and legal defenses. Fed. Rule Civ. Proc. 8(c)(1) (“In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense, including: … estoppel … laches … [and] statute of limitations”). Accordingly, since 1938, federal courts have frequently allowed defendants to assert what were formerly equitable defenses—including laches—in what were formerly legal actions. See supra, at 697–698 (citing cases). Why should copyright be treated differently? Indeed, the majority concedes that “restitutional remedies” like “profits” (which are often claimed in copyright cases) defy clear classification as “equitable” or “legal.” Ante, at 668, n. 1 (internal quotation marks omitted). Why should lower courts have to make these uneasy and unnatural distinctions?

Fifth, the majority believes it can prevent the inequities that laches seeks to avoid through the use of a different doctrine, namely, equitable estoppel. Ante, at 684–685. I doubt that is so. As the majority recognizes, “the two defenses are differently oriented.” Ante, at 684. The “gravamen” of estoppel is a misleading representation by the plaintiff that the defendant relies on to his detriment. 6 Patry, Copyright § 20:58, at 20–110 to 20–112. The gravamen of laches is the plaintiff’s unreasonable delay, and the consequent prejudice to the defendant. Id., § 20:54, at 20–96. Where due to the passage of time, evidence favorable to the defense has disappeared or the defendant has continued to invest in a derivative work, what misleading representation by the plaintiff is there to estop?

In sum, as the majority says, the doctrine of laches may occupy only a “ ‘little place’ ” in a regime based upon statutes of limitations. Ante, at 685 (quoting 1 D. Dobbs, Law of Remedies § 2.6(1), p. 152 (2d ed. 1993)). But that place is an important one. In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, the doctrine permits a court to bring about a fair result. I see no reason to erase the doctrine from copyright’s lexicon, not even in respect to limitations periods applicable to damages actions.

Consequently, with respect, I dissent.