Ochoa on Golan v. Holder and Copyright Restoration

By Tyler Ochoa

[Eric's note: my colleague Tyler Ochoa is an expert on copyright law (among other things), and I've occasionally posted contributions from him before. This time, he weighs in on the Golan decision from Friday.]

The U.S. District Court for the District of Colorado has issued a decision in Golan v. Holder, No. 01-cv-01854 (D. Colo. Apr. 3, 2009), on remand from Golan v. Gonzales, 501 F.3d 1179 (10th Cir. 2007). Two years ago, the Tenth Circuit held that §514 of the Uruguay Round Agreements Act (codified at 17 U.S.C. §104A) “altered the traditional contours of copyright protection” by restoring copyrights in works of foreign origin that were previously in the public domain in the United States, and that the law was therefore subject to First Amendment scrutiny. The Tenth Circuit remanded the case to the District Court to determine whether §514 violated the First Amendment. The District Court has now held that §514 is unconstitutional.

The parties agreed that §514 was a content-neutral regulation of speech, which will be sustained “if it advances important government interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” The parties also agreed that compliance with Article 18 of the Berne Convention, which requires the restoration of foreign copyrights that were in the public domain for reasons other than expiration of the duration of protection, was an important governmental interest. Therefore, the question was whether §514 was “substantially broader than necessary” to serve that interest.

Although Article 18(1) of the Berne Convention requires restoration, Article 18(3) provides that “the respective countries shall determine, each in so far as it is concerned, the conditions of application of this principle.” The court read this provision as giving member nations discretion in how to implement Article 18(1). Thus, in implementing Article18, Congress had “broad latitude … to protect reliance parties,” i.e., parties who relied on the public domain status of the works prior to restoration. The parties disputed, however, whether the provisions for “reliance parties” in 17 U.S.C. §104A were “narrowly tailored” to serve Congress’s interest in implementing Article 18.

Section 104A gives some protection to “reliance parties,” defined as “any person who … with respect to a particular work, engages in acts, before [restoration], which would have violated section 106 if the restored work had been subject to copyright protection, and who, after [restoration], continues to engage in such acts.” (It also covers persons who owned one or more tangible copies of the work before restoration; or any successors, assignees, or licensees.) It allows reliance parties to continue infringing until the copyright owners serves a “notice of intent to enforce” a restored copyright. Once such a notice has been served, the reliance party has one year to dispose of all copies in its possession without liability. Finally, if the reliance party has created a derivative work, it may continue to exploit that derivative work for the duration of the restored copyright, provided it pays “reasonable compensation” to the copyright owner.

The government argued that any such accommodations for reliance parties had to be temporary in nature, and that any permanent accommodations for reliance parties would violate Article 18. The district court, however, disagreed. It pointed to the fact that the government’s own implementation of Article 18 had at least one accommodation for reliance parties — the provision for derivative works — that was permanent in nature, and that other countries had similar provisions. (Moreover, the plaintiffs’ brief points out that the U.K., Australia and New Zealand, all provide substantial protection for reliance parties on a permanent basis.) Therefore, in the District Court’s view, protection for reliance parties did not have to be temporary in nature. Accordingly, it concluded:

In light of the discretion afforded it by Article 18, Section 3, Congress could have complied with the Berne Convention without interfering with a substantial amount of protected speech — for example, by permanently “excepting parties, such as plaintiffs, who have relied upon works in the public domain,” see Golan, 501 F.3d at 1196…. Accordingly — to the extent Section 514 suppresses the right of reliance parties to use works they exploited while the works were in the public domain — Section 514 is “not tied to the Government’s interest” in complying with the Berne Convention…. Section 514 is therefore “substantially broader than necessary to achieve the government’s interest.”

The court considered and rejected two other proffered governmental interests. First, the government argued that if the U.S. limited the rights of reliance parties, other countries would similarly limit the rights of reliance parties (even though they were not obliged to do so under Article 18), therefore providing greater protection to U.S. authors in those countries. The court rejected this argument because the government did not provide any evidence that section 514 would have this effect, and the plaintiffs pointed to testimony in the original legislative history suggesting that such an effect was unlikely. Second, the government argued that section 514 served to correct a historic inequity by which foreign authors were deprived of U.S. copyrights. The court rejected this argument on the ground that “Section 514 extends protections to foreign authors that are not afforded United States authors, even in their own country.”

Of significant importance is the question of what type of relief will be granted. The court concluded that section 514 was overbroad, even though the court and the plaintiffs conceded that some type of retroactivity with broader protection for reliance parties would be constitutional, and that some type of retroactivity is required by the Berne Convention. Overbreadth is a facial challenge to a statute, which means that the ENTIRE statute will be held unconstitutional, unless it can be “saved” by merely striking the offending portion. That does not appear to be the case. Under the district court’s ruling, what offends the Constitution is that Congress has provided only very narrow protection for reliance parties, when it could have provided much broader protection for reliance parties while still complying with Article 18 of Berne. Thus, what is needed to “cure” the Constitutional infirmity is for Congress to enact broader protection for reliance parties. The court cannot simply excise a small portion of the statute while saving the rest. This means that Section 514 is unconstitutional on its face.

Assuming the ruling will be appealed, I can foresee two significant issues. One issue is whether the court properly interpreted the Berne Convention. The leading commentary on Berne agrees with the government’s position that Article 18 of Berne requires that provisions for reliance parties are transitional in nature and should be temporary, although it acknowledges a possible exception for cases where the reliance party has created a derivative work. 1 Ricketson & Ginsburg, International Copyright and Neighboring Rights, §6.123 (2d ed. 2005). On the other hand, if the plaintiff is correct that the U.K. and other Commonwealth countries have permanent protection for any type of prior use by reliance parties, the court may be reluctant to conclude that those countries are not in compliance with the Berne Convention.

The second significant issue will be whether the statute should be invalidated on its face as overbroad, or whether it should be invalidated only as applied. If the statute is invalidated on its face, that would allow these plaintiffs to use ANY work of foreign origin that is in the public domain, whether or not they had relied on its public domain status. Indeed, unless and until Congress acted to fix the statute, even non-reliance parties could use works of foreign origin in the public domain. If the statute is invalidated only as applied, that would allow these plaintiffs to use only those works that they were in fact using prior to the restoration, which would be a much narrower decision. In either case, because collateral estoppel does not apply to the government, a decision by the Tenth Circuit would be binding only on the parties and others within the Tenth Circuit; it would not be binding outside the Tenth Circuit. Parties in other circuits could still sued (or prosecuted) for infringing works of foreign origin that were in the public domain prior to restoration.

If the ruling is upheld by the Tenth Circuit, what would happen then? Congress would almost surely try to enact some version of copyright restoration again. Remember, the plaintiffs conceded that Article 18 of the Berne Convention requires some type of restoration. The plaintiff’s brief states: “Congress was … plainly justified in believing that unless it enacted legislation to comply with Article 18, other nations would not adequately protect American copyrighted works.” The court’s ruling provides a path to compliance: Congress may restore copyrights in works of foreign origin, so long as it provides broader protection for reliance parties. Thus, any statute that ultimately emerges from Congress would probably allow for continued use of such restored works only by reliance parties, and not by the public generally. Accordingly, the definition of reliance party is very important. Are the plaintiffs reliance parties because they utilized particular works of foreign origin in the public domain, or because they generally utilized such works? A statute that protects only preexisting uses of specific works still provides very limited protection to reliance parties. There also would be the question of whether a new statute would apply only to parties that relied on the public domain status of a work before its INITIAL restoration (on January 1, 1996), or whether a new statute would also have to protect parties that relied on the public domain status of a work after that date, but before the effective date of the new legislation. If Congress is required to start anew, a party who is considering utilizing a work of foreign origin that is in the public domain for failure to comply with formalities might be well advised to begin using such a work right away, in order to ensure its continued right to use such a work after the next restoration.

The ruling also sets up a possible action against the U.S. under the dispute resolution mechanism of the World Trade Organization. Any country that thinks the U.S. is not complying with Article 18 of the Berne Convention could initiate proceedings against the U.S. under the TRIPS Agreement. If the WTO panel held that the U.S. was not in compliance with Article 18, we would once again be branded hypocrites on the world stage, and the WTO could authorize other countries to retaliate by imposing trade sanctions against the U.S. Such a ruling could also create a serious dilemma for the Tenth Circuit: the district court held that compliance with Article 18 still allowed the U.S. to provide substantially greater protection to reliance parties; but if the WTO holds that the U.S. is not in compliance with Article 18, would the Tenth Circuit defer to the WTO’s interpretation of Article 18, or would it interpret Article 18 de novo?

All in all, despite its limitations, this ruling is a significant victory for the plaintiffs and for the public domain. The court does not hold that Congress cannot restore copyrights in works of foreign origin; it only holds that this particular attempt to restore copyrights was unconstitutional, because it burdened substantially more speech than was necessary to comply with Article 18 of the Berne Convention. If the ruling is upheld on appeal, Congress will almost certainly try again; and any statute that results is likely to provide significant protection only to reliance parties, and not to others who might wish to begin utilizing public domain works in this category after restoration. However, on the plus side, the ruling demonstrates that Congress cannot restore copyrights willy-nilly; instead, it needs a substantial justification for doing so. That portion of the ruling is likely to survive appeal, making it less likely that Congress will attempt to revive long-dormant domestic copyrights, and more likely that Congress will limit any future restoration efforts to the minimum required by the Berne Convention.