U.S.S.C Hears Oral Argument in Golan v. Holder

By Professor Jay Dougherty

EXECUTIVE SUMMARY:

Recent extensions of copyright have generated much controversy. Some of these controversies have led to important judicial decisions (on the Supreme Court level) concerning Congress' power to legislate in the copyright arena and the interplay between copyright laws and freedom of speech and expression. Most challenges have failed, with the courts signaling a judicial deference to Congress. In the most recent battle, Golan v. Holder, plaintiffs who have relied on the public domain status of certain foreign works challenged a law that restored copyright to those works. Assertions that the restoration exceeded Congressional power were fairly routinely rejected at the lower court levels after the U.S.S.C.'s decision in Eldred v. Ashcroft, 537 U.S. 186 (2003) (affirming the 1998 Term Extension Act), but a claim that restoration violated the First Amendment seemed to have some traction. The Supreme Court accepted cert in Golan, and recently heard oral argument. In Eldred, the Court had said that a law that altered the traditional contours of copyright law would be subject to First Amendment scrutiny, and one 10th Circuit panel in Golan had held that the restoration statute would be subject to such scrutiny. The district court on remand held that the restoration statute failed First Amendment scrutiny, but that decision was reversed by another 10th Circuit panel. One might have expected the oral argument to focus on related unsettled issues, such as the level of scrutiny and requirements for its satisfaction, which would have added clarity and certainty in future disputes regarding the relationship between copyright laws and the First Amendment. Unfortunately, in this author's view, the plaintiffs spent most of the oral argument beating the dead horse of Congress' copyright legislative power and missed an opportunity to persuade the Court on appropriate First Amendment scrutiny. That might have led the Court to find that the restoration statute did not satisfy scrutiny, for example, and that there should have been more protection for reliance parties who had developed businesses utilizing public domain foreign works. It is of course still possible that the Court in its decision will address those issues. The decision, which will determine the U.S. copyright status of thousands of foreign works, will presumably be issued sometime in 2012. Below is a more detailed review of the case and the U.S.S.C. oral argument.

On October 5, 2011, the U.S. Supreme Court heard oral arguments in the most recent case challenging the constitutionality of a provision of the Copyright Act added in 1994 by the Uruguay Rounds Agreement Act (URAA) that restored copyright to certain foreign works that had lost their U.S. copyright through a failure to comply with formalities. That section, §104A, also granted federal copyright to certain foreign sound recordings first fixed before Feb. 15, 1972, and provided for copyright in certain foreign works whose origin is a foreign country whose works are not subject to U.S. copyright, when the U.S. enters into copyright relations with that country.

BACKGROUND:

Members of the Berne Convention are required under Article 18 to protect works of other countries when they become Berne members. New members are supposed to extend that protection to works that existed prior to the treaty relationship, as long as the works' terms would not have expired under the new member's law and the works' terms have not expired in their source country. The U.S. failed to do anything about this when it adhered to the Berne Convention in 1989, but as it saw that some foreign countries were refusing to grant retroactive protection to U.S. works and pushed to bring copyright into the larger world trade system and its enforcement mechanisms through the TRIPs agreement, Congress finally acted to comply with its own international obligations in part by enacting the restoration statute.

Members have flexibility in determining the conditions under which they will accord such retroactive protection. An important issue in according copyright to works previously unprotected is how to balance the interests of the "new" copyright owner with existing interest of persons who have relied on the prior "public domain" status of the works prior to that time. In fact various countries strike that balance in a variety of ways. The U.S. statute gives reliance parties a year to sell-off inventory after they receive notice (or a type of constructive notice) of the restored copyright, and, if the reliance party had created a derivative work prior to the enactment of the URAA (or prior to a country entering into treaty relations with the U.S.), that reliance party may continue to exploit the derivative work thereafter, subject to paying "reasonable compensation."

This statute has been disputed by a group of orchestra conductors, educators, performers, film archivists and motion picture distributors, who relied for years on the free availability of these works in the public domain, which they performed, adapted, restored and distributed without restriction, for many years. Their challenge to the restoration statute is perhaps one aspect of the larger attack against a variety of extensions of copyright protection, one prior part of which resulted in the Supreme Court's decision in Eldred v. Ashcroft, which upheld the constitutionality of the Copyright Term Extension Act. Many similar arguments have been made in the Golan case. To oversimplify somewhat, one challenge is that Congress does not have the power under the Constitution's "copyright clause" to take works out of the public domain (or, in the Eldred case, to keep them from entering the public domain when they previously would have), because it violates the limited times restriction on Congressional copyright power and does not promote the progress of knowledge. Another is that removing works from the public domain violates the First Amendment's freedom of speech clause.

There has been a long chain of decisions leading to the Golan case in the U.S.S.C. (this is the third Attorney General to be the named defendant). In the first decision, the District Court of Colorado in 2004 rejected both of the plaintiffs' arguments, finding that the Copyright Clause does not categorically preclude Congress from removing material from the public domain and there is a rational basis for doing so--attempting to promote possible U.S. authors' interests abroad by protecting foreign authors here and complying with the Berne Convention. It also found that there were no First Amendment concerns implicated. The 10th Circuit heard the appeal, and affirmed that the restoration statute did not exceed Congressional power, but that "restoring" works to copyright from the public domain altered the traditional contours of copyright, and therefore, according to the U.S.S.C.'s Eldred decision, should be subjected to First Amendment scrutiny. On remand, the District of Colorado considered whether the statute was content neutral or content based and the appropriate level of scrutiny. It decided that the law was a content neutral regulation of speech, subject to intermediate scrutiny. That requires that it advances an important governmental interest unrelated to the suppression of speech, and that it doesn't burden substantially more speech than necessary to further that interest. The government had asserted three important interests furthered by the restoration statute: (1) compliance with Berne, (2) protecting U.S. authors abroad, and (3) correcting historical inequities in the treatment of foreign authors who have lost copyrights through failure to comply with U.S. formalities. The district court this time around found that complying with Berne is an important government interest, but that the second asserted interest is merely tied to the first (and that there was little support that U.S. granting foreign works stronger protection here would actually benefit U.S. authors abroad) and that there is no important U.S. government interest in protecting foreign authors. As to the First Amendment, the district court this time found that there is an important First Amendment interest in public domain works' use, and that the statute burdened more of that speech than necessary to achieve Congress' goal of compliance with Berne.

On appeal, a different 10th Circuit judge reversed. This time it focused on the asserted interest of protecting American copyright holders' interests abroad, which it found to be substantial. It reasoned that granting stronger protection to foreign authors here (and correspondingly less protection to reliance parties) would further that interest, because the assertion is that foreign countries will reciprocate as to U.S. works restored to copyright abroad. Since that furthers the asserted interest, the statute is not overbroad.

The U.S.S.C. accepted cert on both issues: 1. Does the Progress Clause of the United States Constitution prohibit Congress from taking works out of the Public Domain? 2. Does Section 514 violate the First Amendment of the United States Constitution?

THE ORAL ARGUMENT:

At oral argument, Tony Falzone on behalf of the plaintiffs initially focused on the broader question of whether the Constitutional copyright clause empowers Congress to remove works from the public domain at all. Justice Ginsburg immediately engaged in questioning him on this assertion, asserting that a foreign composer should be able to receive the same term of protection as a domestic one without violating the limited times restriction, and Falzone arguing that a term of zero is a "limited time" and that once it is set, it cannot Constitutionally be revised. Twenty-three pages of Falzone's 27 pages of oral argument transcript reflect argument over this aspect of the case, largely with Justice Ginsburg. Justice Sotomayer challenged the plaintiffs' position that Congress has never removed material from the public domain, noting that the first U.S. federal copyright law did that. Justice Kennedy initiated a discussion about the extent of the plaintiffs' claims as to the inviolate nature of the public domain (he seemed to forget the name of the Court's Eldred decision). Justice Roberts inquired as to how the plaintiffs' argument could apply when Congress elects to protect previously unprotected categories of material, such as it did with "architectural works". Falzone seemed to assert that to the extent applied to existing works, such protection would not be Constitutional because it would not satisfy the "promote the progress of science" limitation. Justices Sotomayer and Roberts engaged in questioning this proposition, seeming to argue that the restoration would give incentives to foreign authors, satisfying at least the minimal "incentive" effect apparently required. For a moment, the discussion seemed to shift to the First Amendment arguments, but quickly returned to the question of whether the statute provided "incentives" and therefore satisfied the "promote progress" requirement, which Justice Breyer seems to doubt (as he argued in his dissent in Eldred as to prior existing works). To this author, the plaintiffs failed to reach their much more supportable argument, that the restoration statute fails to satisfy First Amendment scrutiny.

In its argument, the government initiated discussion about whether the prior law had set the term for foreign works at "zero". Justice Alito immediately asked whether Congress could grant copyright to works whose term had expired (an issue not required to be addressed in Eldred). Donald Verrilli, the Solicitor General, seemed to argue that it could, but that there were "limits," such as that only "authors" can be accorded protection, which led to problems for him, as the Justice Alito pointed out that the restoration statute can give copyright to works when the author is long dead. Verrilli then argued trade policy: that Congress was motivated by a desire to commit to international standards under Berne, and protect U.S. copyright owners against infringement abroad. Justice Scalia said he did not find that an "appealing argument"--a treaty cannot expand the Constitutional powers granted Congress. Justice Breyer (who dissented in Eldred and in the past has argued for minimal copyright protections) engaged Verrilli in an argument as to whether Congress could give copyright protection where it would not elicit production of works, saying that here, "there is no benefit given to anything at all that is not already created." Justice Roberts then shifted to the First Amendment issues, stating "there is something at least at an intuitive level appealing about Mr. Falzone's First Amendment argument" (presumably the ones in the Briefs, since oral argument had essentially not reached that discussion). Verrilli argued that the government had removed material from the public domain in the past by adding new subject matter to copyright protection, and if that triggers First Amendment scrutiny, then any exercise of copyright power would do so. He argued that the only laws that would "alter the traditional contours of copyright," which the Court in Eldred had said would trigger scrutiny, would be a law extinguishing fair use or providing exclusive rights in ideas. Justice Kennedy took issue with that proposition, attempting to refocus the discussion on the level of scrutiny. Verrilli claimed that the law would satisfy "intermediate scrutiny" (which the lower courts had found to be the appropriate level of scrutiny), but again asserted that intermediate scrutiny should not apply, unless a law "alters the traditional contours of copyright," which in his view would be limited to the extreme cases described previously. Justice Roberts then questioned whether this law would satisfy even "rational basis" scrutiny, where the government interest is "vanishingly small" and the law limits free speech rights. Justice Breyer mentioned that millions of works could be affected and use prohibited, but Justice Ginsburg jumped into the discussion to point out that only works as to which notice of intent to enforce is given. Verrilli then diverted the discussion back to the historical question as to whether Congress can ever restore copyright to works in the public domain, arguing that history shows that it can and has--a claim that the Court seemed to favor during the plaintiffs' argument. Justice Alito asked if that only showed that Congress could do so "when there is an enormous interest...the establishment of the uniform copyright system at the beginning of the country." The Court then allowed General Verrilli to speak uninterrupted for the remaining four pages of his argument about other examples purporting to support the claim that the Court should defer to the legislature, including its judgment in how to "make a transition into full participation in an international system."

In his rebuttal argument, Mr. Falzone said he had four points to make, including that granting copyright where Congress has previously "set the term at zero" violates the "limited times" restriction, and that the statute cannot "promote progress." Justice Ginsburg again challenged him on these points. Finally, Falzone attempted to make his First Amendment argument, stating that the burden imposed is "remarkable." Justice Ginsburg asserted that all of that "rides on accepting your argument that zero is a limited time." Falzone claimed that the First Amendment argument is independent of the "zero term" claim, arguing with Justice Ginsburg as to whether or not the statute was required by Berne or TRIPs. He concluded with a statement that seems to attempt to draw upon some Justices' reluctance to allow U.S. rights to be limited because of foreign law, saying "If the government can get around First Amendment limits by signing a treaty...then the First Amendment is defined only by the perceptions, the complaints and frankly the imagination of foreign countries. That can't be the way it works."

It was disappointing to see that most of the oral argument focused on an issue seemingly resolved by the Court in the Eldred decision (although admittedly the restoration statute goes beyond the CTEA in granting copyright to works in which there was no protection in the U.S. prior to the statute). This strikes me as an argument the plaintiffs will lose, assuming the Court persists in its deference to Congress where there is some minimal "rational basis" for a statute. The last three lower court decisions had focused almost exclusively on the First Amendment problems with the statute, and one would have expected the plaintiffs to energetically argued that the asserted interest--that foreign countries might someday give more protection to U.S. authors if the U.S. gives their authors strong protection here--is far too remote to justify depriving reliance parties of their First Amendment rights to use public domain speech. Instead, the argument seemed to be cabined almost entirely to a broad claim that Congress can never grant copyright to works not previously protected, which strikes this author as more than was necessary to win this case, and not likely to be endorsed by the Court. It will be exciting to see the outcome, and in particular whether the Court endorses the government's claim for an extremely narrow articulation of what type of law would "alter the traditional contours of copyright protection." If the Court does not accept that characterization, one hopes for some explanation of the relevant level of First Amendment scrutiny should apply, how strong the evidence supporting the purported government interest must be, and how narrowly a law must be tailored when works are "removed" from the public domain. And perhaps we will receive some clarification of the relative importance of trade policy concerns in determining domestic intellectual property rights. If one had to guess based on the oral argument, it seems possible that Justice Breyer would want to reverse, based on the lack of incentives to create, that Justice Scalia might be moved to reverse based on his position that an international treaty does not justify limiting U.S. rights, Justice Roberts focusing on the possible overbreadth of the statute and Justice Alito finding that Congress alters the traditional contours of copyright when it removes material from the public domain and possibly applying a more demanding First Amendment scrutiny when that occurs. Of course, ultimately, the Court remains inscrutable on these points and we will await the final judgment.