Thursday, December 28, 2006

Congress Dissed, Copyright Owners Shafted Again

On December 21, 2006, the always outstanding Scotus blog posted an interview with David Stras, on the occasion of his insightful article "The Supreme Court's Gatekeepers: The Role of Law Clerks in the Certiorari Process." The interview went over the Court's anorexic plenary docket - over the past 5 or 6 years: the docket is now the lowest in 150 years. This year is far lower yet. Given what I believe to be the irresponsible way the Court has been adjudicating intellectual property cases - issuing purported 9 to 0 opinions, which have their legs cut out from under them by dueling concurring opinions that starkly reveal the Court's inability to muster a majority on the most important issues in the case (e.g. eBay and Grokster), the low docket is a cause to rejoice. I am going to the oral argument on February 21st in the AT&T v. Microsoft case, but cringe at the ultimate result of those deliberations.

Alas, despite the small number of cases taken by the Court, the Rehnquist Court repeatedly went out of its way to invite and take cases that have had a devastating impact on intellectual property owners' ability to collect damages against one particular type of defendant: states and their instrumentalities. If Congress makes it intent crystal clear, over and over again, in unambiguous language while exercising a valid constitutional power, might the courts follow that intent? When the topic is abrogating sovereign immunity, the answer is no. In a shell-game the Supreme Court has been playing since the ascendancy of a conservative majority, the Court tells Congress it didn’t do x and so it failed. Congress then goes back and does x, but the Court says, ah but you didn’t do y. Congress goes back and does y, and the Court says ah, but you didn’t do z. Congress has now seemingly concluded it could run the whole alphabet and it would do no good: the Court simply refuses to permit Congress to do what the Court facetiously acknowledges Congress may constitutionally do. In a deep affront to separation of powers, the Court complains that Congress didn't call enough witness, or didn't enumerate enough examples of states gone wild. How many witnesses are held at a hearing is none of the courts' business: Marbury v. Madison has never looked more like the naked power grab it was.

The latest lower court to get the Court’s signal is a district court in Puerto Rico. In De Romero v. Institute of Puerto Rican Culture, 2006 WL 3735352 (D.P.R. Dec. 15, 2006), the court found Congress indeed failed:

The first question before the Court is whether the Copyright Act, 17 U.S.C. § 101 et seq., as amended, validly abrogates the states' sovereign immunity. The Copyright Act makes any person who violates another's exclusive rights as copyright owner liable for actual or statutory damages. See, 17 U.S.C.A. §§ 501, 504. By virtue of the Copyright Remedy Clarification Act (hereinafter CRCA), PL 101-553 (1990), included among those who risk liability if they engage in the conduct proscribed by the Act are “any State, any instrumentality of a State, and any officer or employee of State or instrumentality of a State acting in his or her official capacity.” 17 U.S.C. § 501(a). Indeed, “[a]ny state, and any such instrumentality, officer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity.” Id.

The language used by Congress leaves little room for argument as to its intention: Congress explicitly extended liability for copyright infringement to the states and its instrumentalities and officers. Because Congress made its intention to abrogate the states' immunity in copyright suits “unmistakably clear”, we turn to the second abrogation inquiry: whether Congress was constitutionally authorized to effect such an abrogation.

Per the discussion above, Congress' authority to abrogate the Eleventh Amendment immunity stems from § 5 of the Fourteenth Amendment. Congress may successfully invoke that authority after identifying conduct by the states that violates the Fourteenth Amendment's substantive provisions and tailoring its remedies to curb that conduct. In applying that standard to the CRCA, we find a host of obstacles. The first problem is evident from the inception of the analysis: the legislative history of the CRCA does not refer to § 5 of the Fourteenth Amendment as the source of authority for abrogating the states' immunity.

Congress' intent in passing the CRCA was to make clear that states should be held liable for copyright infringement. It was guided in that exercise by its belief that in order to effect the abrogation, it needed only to express such an intention within the statute. See, S.Rep. No. 101-305 (1990). Perhaps because at the time it passed the CRCA Seminole Tribe and City of Boerne, supra, had not yet been decided by the Supreme Court, Congress appeared to be unconcerned with the fact that its power to abrogate the states' immunity was founded on the Fourteenth Amendment, and that in order to be able to use such power, it had to fashion legislation that was proportionate to and congruent with the Fourteenth Amendment evil that it sought to erradicate.

Congress' failure to ground its legislation on the Fourteenth Amendment, in and of itself, presents problems for the abrogation inquiry. The Supreme Court, albeit in a footnote, has stated that when Congress is explicit about invoking its authority under certain constitutional clauses, the court is precluded from considering whether other clauses, not mentioned by Congress, provide a successful launching pad for the attack on the states' sovereign immunity. See, Florida Prepaid, 527 U.S. at 642, n. 7. See also, Chavez v. Arte Publico Press, 204 F.3d 601, 604 (5th Cir.2000) (stating that Florida Prepaid supports the proposition that a court may not consider whether the abrogation is justified in light of a constitutional ground that Congress did not invoke.) Even ignoring that snag, Congress' intent to abrogate the states' immunity in the CRCA does not prosper.

As Supreme Court precedents dictate we should do, we have turned to the legislative history to ascertain the Fourteenth Amendment evil that Congress sought to remedy, and whether the legislation it passed is tailored to eliminating such evil. As in Florida Prepaid, 527 U.S. 627 (dealing with a purported abrogation in the context of patent suits), the evil here is state infringement of copyrights and the use of Eleventh Amendment immunity to avoid compensating copyright owners for such infringement. Much like what happened with patents and Congress' intent to abrogate the states' immunity as to suits arising out of the infringement thereof, see, Florida Prepaid, supra (holding that the Patent and Plant Variety Protection Remedy Clarification Act did not validly abrogate the states' immunity), the legislative record of the CRCA offers scant evidence of widespread copyright infringement by the states in violation of the Due Process Clause. To be sure, there are accounts of a handful of cases in which states infringed copyrights, and at least in some of those cases the offending states used the Eleventh Amendment to shield themselves from responsibility for their actions. See, S.Rep. No. 101-305 (1990). But along with the six or seven concrete examples of such infringement that Congress could muster, the record also reveals that Congress heard testimony to the effect that the legislation was premature and that there were other measures that it could take in order to attend the problem of copyright infringement by states. See, H.R.Rep. No. 101-282 (1989). At least some of those were rejected due to considerations that are proper within the Article I calculus: for example, concurrent state jurisdiction over copyright suits was rejected because the Copyright Act sought to create a uniform Federal system. Id. See, Florida Prepaid, 527 U.S. at 645 (stating that the need for uniformity in patent law, while undoubtedly important, is a factor that belongs to the Article I calculus and not to the Eleventh/Fourteenth Amendment analysis); Chavez, 204 F.3d at 607 (applying the same reasoning to copyrights). As such, the CRCA's legislative history reveals that Congress had scarcely any evidence of unconstitutional action by the states, that it bypassed alternative remedies that did not entail abrogation of immunity for reasons that are extraneous to the Fourteenth Amendment analysis, and that, with such scant evidence, it passed far ranging legislation that conceivably FN5 covers more ground than is necessary to curb the states' unconstitutional conduct.FN6

In fact, what the legislative history shows is that more than consternation over actual or imminent copyright infringement by states in violation of the Due Process clause, Congress was moved by its conclusion “that it would be anomalous and unjustified for State ··· institutions to be exempt from certain remedies, while private institutions are not.” Id. Although the basic wisdom of that premise is self-evident, under City of Boerne, supra, and its progeny, it is not enough to effect a valid abrogation of the states' sovereign immunity. As such, we hold that the CRCA did not abrogate the states' (and its officers' and instrumentalities') Eleventh Amendment immunity. In so doing, we join the other courts that, post- Seminole Tribe, have faced this issue. See, Chavez, 204 F.3d 601 (analyzing the CRCA and its legislative history in light of the congruence and proportionality test, and concluding that it did not validly abrogate the states' immunity); Rodríguez v. Texas Com'n on the Arts, 199 F.3d 279 (5th Cir.2000) (concluding that CRCA did not validly abrogate the states' sovereign immunity); Salerno v. City Univ. of New York, 191 F.Supp.2d 352 (S.D.N.Y.2001) (dismissing copyright claims against arms of the state because they are immune from such suits); Jensen v. New York State Martin Luther King, Jr. Institute for Nonviolence, 13 F.Supp.2d 306, 311 (N.D.N.Y.1998) (stating that because “the copyright legislation was authorized by Article I and not the Fourteenth Amendment, Congress is without authority to abrogate state sovereign immunity for copyright cases”); Rainey v.. Wayne State University, 26 F.Supp.2d 973, 976 (E.D.Mich.1998) (“There is no question that the Eleventh Amendment bars plaintiff's federal copyright infringement claim and state law claims against WSU for monetary damages, as these claims would require payments from the State's coffers”); Hairston v. North Carolina Agric. & Technical State Univ., 2005 WL 2136923 (M.D.N.C.2005) (unpublished) (CRCA not a valid abrogation of states' immunity).FN7 But see, Florida Prepaid, 527 U.S. at 658, n. 9 (Stevens, J., dissenting) (suggesting that the CRCA would be able to withstand the congruence and proportionality test as set forth by the majority).


Anonymous said...

The Supreme Court's 14th Amendment, sec. 5 jurisprudence is vulnerable to the criticism that it invites the courts to second-guess Congress' findings of unconstitutional State conduct that warrant abrogation of sovereign immunity. However, the district court in this case is on pretty firm ground.

The invocation of sec. 5 of the 14th Amendment is more than just a loophole that Congress has to jump through. It signifies that Congress is acting to remedy a violation of due process or equal protection, rather than acting pursuant to the IP clause or commerce clause of Article I, which powers are both constrained by the 11th Amendment. The 14th Amendment gives Congress limited authority to abrogate sovereign immunity to enforce enforce the rights to equal protection and due process that we fought the Civil War over -- not to swing open the doors of the federal courthouse to every claim or cause of action that might be brought against a state.

The legislative record in support of abrogating sovereign immunity for state violations of the Copyright Act is not just sparse -- it's void. The court acknowledges "a handful of cases in which states infringed copyrights, and [in] at least in some of those cases the offending states used the Eleventh Amendment to shield themselves from responsibility for their actions." That record multiplied a hundred-fold would not support a finding that states are denying due process (nor, more obviously, equal protection). Copyright infringement by itself is not a violation of due process. The fact that states can escape liability for copyright infringement is not a violation of due process -- otherwise every instance of sovereign immunity would violate the due process clause. The failure of states to waive sovereign immunity is not a violation of due process absent a finding that injunctive relief alone (which remains available under the 11th Amendment) is not all the process that is due.

If Congress could authorize suits against the State for every claim of copyright infringement arising out of the breach of a license agreement, then it could authorize federal court jurisdiction over every plain-vanilla breach of contract claim or tort claim that might survive a 12(b)(6) motion. In fact, Congress' authority to abrogate state immunity for copyright infringement claims is even more troublesome than its authority to authorize suit for an ordinary breach of contract. The ostensible violation of the 14th Amendment is the deprivation of property without due process. The property right in question -- a copyright -- is a creation of federal law. When a state breaches a procurement contract by failing to pay for the police cars that it ordered from GM, there is a clear deprivation of property (and ordinarily a waiver of immunity that allows GM to sue for payment); but when a state is charged with copyright infringement, there is a deprivation of property, rather than a tort claim (for which the state may or may not have waived immunity), only by virtue of the federal law that creates a "property right" in original works of authorship. Sec. 5 authorizes Congress to remedy substantive violations of the 14th Amendment -- not to create them by manufacturing property rights.

Sovereign immunity is more than a constitutional nicety. Immunity is an essential attribute of state sovereignty. Without immunity, federal courts would have the capacity to bankrupt states, to impose liability on state taxpayers, to command state revenue-raising measures, and to direct state appropriations. It is not an exaggeration to say that the 11th Amendment protects the states from extinction at the hands of the federal courts. You can point to cases like U.S. v. Morrison, and make a good argument that the Court oversteps its authority (and competence) when it engages in "de novo" review of the record supporting XIV Amend., sec. 5, legislation; but unless you want to overturn Marbury v. Madison, only the courts can decide whether or not legislation allowing suits in federal court against the States is necessary and narrowly drawn to remedy a violation of the 14th Amendment.

John Noble

William Patry said...

John, thanks for your very thoughtful and detailed post. Of course, the hoops that Congress allegedly has to jump through are hoops that the Court itself created, so it is circular to say Congress has somehow failed to act properly; acting properly in this instance is an artificial construct imposed by the Court.

I also don't think many would deny that the Court keeps changing the manner in which the hoops have to be circumnavigated, and always retrospectively: that is, Congress passes legislation abrogating state sovereign immunity according to the then-current Supreme Court guidelines; the legislation is challenged (in the Rehnquist era because the Court repeatedly invited litigants to do so)and voila, the Court announces new guidelines which the legislation in question manages not to satisfy.

A few other points: the 1990 legislation was very carefully drafted in consultation with experts on sovereign immunity, including former Supreme Court clerks, and other academics who had written on the subject. There were hearings, there was testimony. I find it outrageous that the Court - or or any court would second guess the record Congress legislated on; this wasn't a quicky deal; it was open, public, protracted, bispartisan, and based on real eaxmples.

The other problem, the one about opening the federal courts, is that for copyright infringement, there is no state court available. There is, moreover, as Congressman Carlos Moorhead (a very conservative Republican) stated at the 1990 hearing, an unfairness that the University of Southern California (a private school) can sue UCLA for money damages for infringement, but not the other way around.

For me, I would deny states all copyright ownership, unless legislation is passed at the state level waiving sovereign immuinity.And if I still worked on the Hill, I would argue for passing the same legislation over and over again, and further perhaps, given the anorexic docket, for cutting the Court's staff down by eliminating law clerks. With a docket at pre-civil War times when there were no law clerks, it might be healthy to return to the staffing of those days.

Anonymous said...

I assume you mean that UCLA can sue USC, but not vice-versa, and I would agree that UCLA should be deemed to have waived its immunity from copyright infringement liability if it invokes the jurisdiction of the federal court to enforce its own copyrights. More generally, though, I have a hard time seeing copyright infringement as a deprivation of property without due process, especially since the property right is a creation of federal law, and more especially since the "deprivation" can be remedied by injunctive relief, which is not foreclosed by the 11th Amendment, and even by a suit for damages against the officers of the State who perpetrated the infringement.

The issue is whether the federal government, by its courts, should be able to levy money judgments against state governments, and everything else that entails, including, specifically, seizures of state property to satisfy those judgments. I realize that we've come a long way from the federalism envisioned by the Founding Fathers, but there was a time when the Supreme Court's acceptance of jurisdiction over a suit brought by a citizen of one State against another State (Chisolm v. Georgia, 1793), provoked such alarm that the very next meeting of Congress produced the 11th Amendment (the first after the Bill of Rights), which was overwhelming approved by both houses, and ratified within one year. The national crisis that occasioned the adoption of the 14th Amendment justified the abrogation of State immunity to guaranty equal protection and due process to all of the citizens of the United States, but it wasn't meant to vanquish sovereign immunity.

William Patry said...

John, I don't see why a property right created by federal law is somehow a lower species of propert than one created say by state common law. Nor do I see how infringement by a state without payment is not a violation of due process: an injunction may stop a state from infringing in the future, but that hardly compensates a copyright owner for present or past harm. As a policy matter, I don't understand why states should be so privileged. States can protect their treasuries simply by obeying the law.

Anonymous said...

I don't see why a property right created by federal law is somehow a lower species of propert than one created say by state common law.

Chavez v. Arte Publico Press addresses the issue:

"A separate problem besets the contention that a copyright infringement claim is property protected by the Due Process Clause; the claim proves too much. If it rests on the uniqueness of the property interest created by federal law, which is the source of Chavez's copyright, then it is a direct end-run *511 around Seminole's holding that Article I powers may not be employed to avoid the Eleventh Amendment's limit on the federal judicial power. Congress could easily legislate "property" interests and then attempt to subject states to suit in federal court for the violation of such interests. This end-run is just as possible under a liberal interpretation of the Due Process Clause of the Fourteenth Amendment as it was under theories of Article I rejected by the Court in Seminole. As the Third Circuit stated in a related context:
If a state's conduct impacting on a business always implicated the Fourteenth Amendment, Congress would have almost unrestricted power to subject states to suit through the exercise of its abrogation power. Congress could pass any law that tangentially affected the ability of businesses to operate and then create causes of action against the states in federal court if they infringed on those federally created rights. This result would be unacceptable and would conflict directly with the strict limits on Congress's powers to abrogate a state's Eleventh Amendment immunity."

Nor do I see how infringement by a state without payment is not a violation of due process: an injunction may stop a state from infringing in the future, but that hardly compensates a copyright owner for present or past harm.

"...nor shall any State deprive any person of life, liberty, or property, without due process of law." The property of which a copyright holder is "deprived" by infringement is the set of exclusive rights under sec. 106, which is fully restored by injunctive relief. The right to recover damages for infringement is a legislative grant -- a remedy for the violation of a property right, but not a property right itself. If you conceive of a claim or cause of action as a property right, then the 14th Amendment guaranty swallows sovereign immunity altogether. The claim for damages for infringement is indistinguishable from the claim for damages for any ordinary breach of contract, or negligence claim.

As a policy matter, I don't understand why states should be so privileged.

A couple of points: First, the 11th Amendment establishes the policy -- immunizing States from liability for damages in federal court. Sovereign immunity isn't designed to allow States to break the law with impunity -- only to shield them from judgments rendered by the courts of a supposedly co-equal sovereign.

Second, States are not immune from state court judgments, and until Congress preempted state laws under sec. 301, the copyright holder could have recovered in state court.

Third, until 1960, the federal government was also immune from liability for copyright infringement. The federal government waived immunity, partly out of concern that immunity exposed its agents and employees, acting on its behalf, to indivdual liability. Except where States have waived immunity, their employees who commit copyright infringement can be sued, but if they are acting within the scope of their employment, and in good faith, they will likely be defended and indemnified by their employer. It may be wise for States to follow the lead of the federal government and waive immunity, but the federal government can't do it for them (or to them), unless the refusal of the States to accept responsibility for infringement by their employees amounts to a denial of due process in violation of the 14th Amendment, which seems like a stretch.

States can protect their treasuries simply by obeying the law.

You say that as though we weren't talking about protecting your wallet, and mine, from the consequences of unlawful conduct by State employees. You may be willing to compensate copyright holders for infringement by State employees on a wholesale basis, but I'm inclined to let the Attorney General decide on a case by case basis whether or not the taxpayers should assume responsibility for an employee's malfeasance.

I've enjoyed the discussion, but I don't want to wear out your patience. I promise to let you have the last word if you want to reply.

John Noble

William Patry said...

John, I am very happy for you to have the last word