States Can Be Pirates: Managing Business Copyright Protections

April 6, 2020 Published Article

The Supreme Court recently ruled that the United States Congress lacked the power to override a state's immunity from copyright infringement claims under the Copyright Remedy Clarification Act ("CRCA"). For businesses, this means that in situations where a contract does not explicitly permit it, a state can infringe on copyright protections with virtually no statutory remedies. So what were the circumstances that drove the Supreme Court to rule this way? What exactly was the Supreme Court's Ruling? What remedies remain against a state?

WHAT HAPPENED?

The facts surrounding this case are fairly simple. In 1996, a marine salvage company discovered the shipwreck of Blackbeard's infamous ship, the Queen Anne's Revenge, which, under both federal and state law, belonged to North Carolina, where she was found. The salvage company then hired the plaintiff, Frederick Allen, a local videographer, to document the operation. Allen created videos and photos of the efforts for over a decade and secured copyright registration to the materials. Following this, North Carolina had published Allen's videos and photographs on their own website without his permission. While there was a settlement of the initial infringement, the State engaged in additional and subsequent acts of infringement.

WHAT DID THE SUPREME COURT RULE?

The Supreme Court's ruling was not completely unsurprising­.

First, to determine if Congress can validly abrogate state immunity, it must use clear, unequivocal language and a constitutional provision must allow for Congress to do so. While there was no argument as to the language used, it was previously established that the "Intellectual Property Clause" in Article I of the Constitution was an insufficient basis for Congress to remove a state’s immunity.

Second, while Section 5 of the Fourteenth Amendment can authorize Congress to strip States of their immunity, it was limited to situations where Congress effectively can show that the removal of immunity was appropriate and proportional to the actions the Congress is trying to prohibit. Essentially, Congress failed to show that state infringement of copyright was ever a wide-spread problem. As such, the removal of state immunity to curtail States from committing copyright infringement was overkill.

WHAT SHOULD A BUSINESS DO?

This does not mean that a State is absolutely immune from copyright or patent lawsuits, just that it is much harder to bring one. If you are engaged in intellectual property relationships with a State, you need to make sure that the State explicitly waives its sovereign immunity by confirming that your contract with the State is clear and unambiguous and provides you with a right to bring suit against the State. Alternatively, a State is not immune to arbitration clauses in contracts.

You can read the opinion here.