Supreme Court Wrestles With Consequences for Piracy by State Governments

North Carolina tells the high court that the 11th Amendment provides a shield to claims it took a filmmaker's copyrighted images.
North Carolina

On Tuesday, the U.S. Supreme Court wrestled with the question of whether it could — and should — do anything in the face of state governments infringing the copyrights of authors.

The case is Allen v. Cooper, a dispute with a remarkably captivating background and an equally wonky legal exploration.

The genesis of this dispute dates all the way back to 1717, when the pirate known as Blackbeard ran his impressive flagship, Queen Anne's Revenge, aground at Beaufort, North Carolina. Flash forward to the 1990s, when a research firm discovered the shipwreck and retained Frederick Allen and his production company to document the salvage efforts. Allen's company took video and still images and registered these works with the U.S. Copyright Office.

In 2013, North Carolina's Department of Natural and Cultural Resources posted a few of Allen's images of the shipwreck on its website. North Carolina then came to a settlement agreement with Allen, paying him $15,000 for the infringements, but after taking the images down, the DNCR then posted five short videos and one photograph from the recovery expedition. Allen filed suit. Afterwards, North Carolina state lawmakers passed §121-25(b) — dubbed "Blackbeard's Law" — which treats all photographs, video recordings and other documentary materials of a derelict vessel or shipwreck or its contents as "public record."

Now, here's where it gets wonky.

In the face of Allen's copyright infringement suit, North Carolina asserted sovereign immunity under the 11th Amendment to the U.S. Constitution. Congress can abrogate such immunity, but it must do so under enumerated powers. In the early 1990s, Congress attempted to do just that with a series of laws that allowed citizens to sue states for infringing copyrights, trademarks and patents. But in 1999, in Florida Prepaid v. College Savings Bank, the Supreme Court held that Congress couldn't justify its attempt to force states into federal court for patent infringement under Article I of the Constitution. That left Section 5 of the 14th Amendment — the ability of Congress to make states comply with civil rights guarantees like equal protection and due process — but overall, there has been a sense that when it comes to pursuing state government, citizens can't recover damages for intellectual property infringement in federal court.

After Allen suffered a loss at the Fourth Circuit Court of Appeals, he turned to the Supreme Court for a re-examination and leaned on a 2006 high court decision, Central Virginia Community College v. Katz, which allowed Congress to abrogate state sovereign immunity in at least certain instances pursuant to its Article I power to regulate bankruptcies. 

And with that background comes Tuesday's hearing.

Right away, the justices wrestled with stare decisis, the principle that the court shouldn't upset precedent. Ruth Bader Ginsburg, Elena Kagan, Samuel Alito and Brett Kavanaugh asked similar questions amounting to whether Allen essentially wanted the Supreme Court to overrule Florida Prepaid.

Quinn Emanuel attorney Derek Schaffer took the view that Katz had already undermined the position that Congress couldn't abrogate sovereign immunity under its Article I powers — and that intellectual property was unique in being so clearly articulated in the U.S. Constitution.

The justices seemed dubious.

Nevertheless, there was also a moral component to Tuesday's hearing. Notably the justices wrestled with whether they should move to bless Congress' attempt to curb copyright infringement by states.

Alito pointed out that the Copyright Remedy Clarification Act — Congress' 1990 attempt at abrogation — occurred after the Register of Copyrights conducted a study of whether piracy by state governments was really a problem. 

"You tell us in your brief that when Congress enacted the CRCA it had 16 examples over the previous decade of reported state infringement in 13 states," said Alito. "Is that enough to identify a serious constitutional problem?"

Alito and Kagan both seemed unimpressed by the small number even upon Schaffer's nod to how the Motion Picture Association of American once identified how states were showing copyrighted movies to prisoners without a license. Justice Stephen Breyer questioned if there was indeed a problem, why hadn't states begun rampantly infringing patents after Florida Prepaid? Schaffer alluded to a situation in California (see Dow Jones' amicus brief), but that left a few of the justices scratching their heads.

When Ryan Park, attorney for North Carolina governor Roy Cooper, began articulating his position for why the Supreme Court should affirm the Fourth Circuit, Breyer flipped around his question.

He began hypothesizing about a state curing its budget shortfall by illegally streaming Marvel movies (coincidentally or not, the same hypothetical conjured by this reporter).

"What the state decides to do with its own website, charging $5 or something, is to run Rocky, Marvel, whatever, Spider-Man, and perhaps Groundhog Day, all right," says Breyer. "Several billion dollars flows into the treasury. Okay? Now, if you win, why won't that happen?"

When Park responded that the victim (here it would be Disney) could always go to court to at least get an injunction, Breyer didn't think this belated remedy would suffice. "We ran [the movie on our website] yesterday," said Breyer. "You can have your injunction. Do you see my point?"

Kavanaugh picked up Breyer's point that copyright infringement could be "rampant" with a ruling in favor of North Carolina and wondered with how that squared with copyright being an exclusive right under law. Justice Sonia Sotomayor added that she found Blackbeard's Law  — the state's attempt to free itself from copyright liability by putting Allen's work into the public domain — to be "extremely troubling."

Park wanted to focus the high court justices on sometimes extraordinary penalties for copyright infringement. He mentioned the $675,000 punishment of a Boston University college student found liable for infringing songs as well as the $1.9 million fine (later overturned) against a women in Minnesota. Park argued for proportionality and stability. "The important understanding that the founders had is that when you sue a sovereign, on the opposite side of the judgment are the people and the people's money," said the attorney.

But Kagan later questioned, "Once Congress has decided that we think that there are loads of constitutional violations going on, why doesn't the state have to pay what every other actor would have to pay when it engages in those constitutional violations? Why isn't that almost sort of, by definition, proportional?"

Added Ginsburg, "States can hold copyrights. They can be copyright holders. And they can sue anybody in the world for infringement. There's something unseemly about a state saying, yes, we can hold copyrights and we can hold infringers to account to us, but we can infringe to our heart's content and be immune from any compensatory damages."

Correction: The article originally credited  Matt Sawchak as arguing for North Carolina. He was lead counsel on the briefs, but Park was responsible for oral arguments.