Starz, MGM Clash Over SCOTUS Intent in 9th Circuit Copyright Fight

Much of the oral argument in Starz's copyright fight with MGM before the 9th U.S. Circuit Court of Appeals Thursday (docket 21-55379) was about what the Supreme Court said or didn't say in its 2014 Petrella copyright decision. Judge Sandra Ikuta and counsel for MGM disagreed whether, and when, the high court's decision says a copyright claim starts accruing. MGM is appealing a lower court not dismissing some of Starz's copyright claims on MGM licensing content to Starz and subsequently to other content service providers while Starz allegedly had exclusive license.

The late Supreme Court Justice Ruth Bader Ginsburg, a copyright expert, "knew exactly what she was doing" in the Petrella case when her majority decision said the Copyright Act bars damages more than three years before the suit is filed, said Mark Perry of Gibson Dunn, counsel for defendant-appellant MGM. He said that bar doesn't prevent copyright holders from seeking other remedies, such as an injunction. He said the tradeoff SCOTUS adopted in Petrella is a three-year window that's agnostic to the accrual rule, and Petrella deliberately set aside the issue of accrual, avoiding "the knotty issue" altogether.

Starz's copyright claims are timely under the 9th Circuit standard as it has existed for decades, said Wes Earnhardt of Cravath Swaine, representing plaintiff-appellee Starz. He said MGM is asking that different statutes of limitations apply depending on the type of relief sought in the claim. He said numerous appellate courts have adopted a discovery rule to determine when claims accrue and allow damages going back more than three years if the claims are discovered later. He said Petrella, if it intended to undo that, would have explicitly said so.

The decision was clear that each act of infringement is a separate claim, that each claim starts accruing when it is or should have been discovered, and that the copyright holder has three years to bring suit from the day of accrual, said Earnhardt. He said there's no tension between those findings and the 9th Circuit's Polar Bear decision and thus no reason for the 9th to change course. He said the 9th Circuit's 2019 Media Rights Technologies ruling is evidence of that lack of tension, since it cited both Petrella and Polar Bear. "This court has already harmonized" them, he said.

Pressed by Judge Kim McLane Wardlaw about how the 2nd Circuit came to a different conclusion in its 2020 Sohm decision, where it limited monetary damages to those incurred in the three-year window before the suit, Earnhardt said the 2nd Circuit "just got it wrong" and read Petrella out of context. He said that 2nd Circuit decision created the circuit court split, and the 9th's rejecting the three-year bar would have it in line with multiple other circuits that allow damages without reference to a damages bar. Earnhardt said creators depend on copyright protections, and the 9th Circuit has long held that innocent copyright holders shouldn't pay the price if copyright violators are good at hiding the act. Also hearing the case was Judge Bridget Bade.