Wall Street Journal Publisher Tells Supreme Court of Being Victimized by California

Thanks to sovereign immunity, Dow Jones adds that when the state's huge pension fund infringed thousands of articles, it was left "emasculated."
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On Tuesday, Rupert Murdoch's Dow Jones & Company shared a tale of woe with the Supreme Court as the justices prepare to resolve whether state governments have sovereign immunity from copyright claims.

"Dow Jones was a principal victim of what must stand as the most egregious exemplar of copyright infringement by a state," the company's lawyers wrote in an amicus brief in Frederick L. Allen, et al. v. Roy A. Cooper, III, Governor of North Carolina, et al.

In June 2017, a blogger published a story how CalPERS, the California state agency that administers the nation's largest pension fund, was reproducing articles in full from The Wall Street Journal and other publications. The articles were disseminated in a daily news alert and maintained on an internal site apparently accessible to the public. According to Dow Jones, which says it never authorized this, there were approximately 9,000 WSJ articles on the site stretching over nearly a decade's worth of time.

The story caught the attention of various publishers including The New York Times and the Los Angeles Times, who would later settle copyright infringement claims against CalPERS for about $150,000.

As for Dow Jones, the publisher obtained a $3.4 million settlement, but the amicus brief reveals more details about what happened and its dissatisfaction with the result. The company's lawyers say the scope of the infringement would ordinarily have resulted in penalty "exceeding eight figures," but CalPERS "asserted that sovereign immunity wholly exempted it from any liability to Dow Jones for the infringement in which it engaged."

"Dow Jones was left with a severely emasculated claim against CalPERS, ultimately securing a low-seven-figure settlement," continues the amicus brief (read here), adding elsewhere, "The economic value of the Dow Jones copyrighted content misappropriated by the State of California is enormous."

With a strong sense of aggrievement, Dow Jones is now standing behind Rick Allen's Nautilus Productions, which is pursuing North Carolina and its Department of Natural and Cultural Resources for posting online footage of the remains of notorious pirate Blackbeard's flagship, Queen Anne's Revenge, which ran aground at Beaufort in 1718.

Allen's case, which was granted review in June and is set for oral argument on Nov. 5, tests the interplay of various constitutional amendments as well as the powers of Congress. The Eleventh Amendment to the U.S. Constitution prohibits federal courts from entertaining citizen suits against a state, so in 1990, Congress attempted to abrogate state immunity by passing the Copyright Remedy Clarification Act. However, by the end of the 1990s in a case involving Congress' similar attempt to abrogate state immunity for patent infringement, the high court rejected the argument that Congress had properly exercised its powers under the Fourteenth Amendment to enforce due process guarantees and held that such a law curtailing state immunity couldn't be justified under Article I of the Constitution. Since then, however, there's been more legal developments and the changing composition of the Supreme Court has treaded towards a more conservative reading of constitutional law. 

With this context, many outside parties are now weighing in on the case. On Tuesday came a flurry of amicus briefs in support of Allen's position. Besides Dow Jones, the Chamber of Commerce, the American Society of Media Photographers and the Recording Industry Association of America were among those who took the position that under the Fourteenth Amendment, Congress could indeed strip away the ability of states to escape monetary penalties for copyright infringement. The RIAA tells the high court that musicians' rights are implicated and that state infringement of copyrights has reached "unprecedented levels."

Perhaps the most provocative brief has little to do with entertainment or media — at least directly. Instead, this brief recounts some unexpected fallout from Obamacare.

As Oracle's own horror story goes, the company agreed to develop software for Oregon as the state launched a healthcare exchange.

"To avoid uncertainty about Oracle’s ability to enforce its copyrights in the software it provided, Oracle negotiated a clear Eleventh Amendment immunity waiver in its contracts with both the state and a public corporation called 'Cover Oregon' that the state created to manage the project," states Oracle's amicus brief (read here).

The waiver wasn't enough to deter a fight.

"During a botched rollout marked by cost overruns, pervasive mismanagement, and ultimate abandonment of the project altogether, Oregon withheld millions of dollars in payments owed to Oracle, while continuing to use Oracle’s proprietary software," continues the brief. "Then, when Oracle filed a copyright suit to recover for the state’s infringement, Oregon disavowed its immunity waiver. It argued, among other things, that the language was not a clear waiver and, even if it was, the Assistant Attorney General who signed the contracts had no authority to waive immunity despite his signature representing the contrary."

Oracle's suit was eventually settled.