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In Reed Elsevier Inc. v. Muchnick, No. 08-103, the Supreme Court reversed a Second Circuit holding that federal district courts do not have subject matter jurisdiction to settle a class action copyright infringement action where some absent class members have not registered their copyrights. The case may clear the way for broader use of the class action device in copyright infringement cases, including in the pending and controversial Google Books Settlement.
In the Supreme Court’s 2001 New York Times v. Tasini decision, freelance authors were essentially given the right to re-license their works to publishers for electronic use. That is, electronic publication was not a right included in the original license. New York Times Co. v. Tasini, 533 U.S. 483 (2001). That case allowed the Reed Elsevier class action lawsuit to continue; this case was brought on behalf of freelance authors against large electronic publishers seeking the payment to which they were now clearly entitled. It was settled in 2005, but there were questions about the settlement’s fairness because it provided much greater compensation to authors with registered copyrights than to those who never registered. When the district court held the settlement to be fair and reasonable, that determination was appealed to the Second Circuit Court of Appeals.
Surprisingly, rather than passing on the fairness of the settlement, the Second Circuit held that the district court had no jurisdiction over class members with unregistered copyrights at all. In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116 (2d Cir. 2007). The issue (which the Second Circuit raised sua sponte) arose out of section 411(a) of the Copyright Act, which states: “no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” 17 U.S.C. § 411(a). This section clearly requires individual plaintiffs to register their work before bringing a civil copyright infringement suit. What was not so clear was whether–as the Second Circuit held–it could prevent an aggregate settlement because some class members had unregistered copyrights. The Supreme Court granted cert and, earlier this month, held that it does not.
The opinion rests on a distinction between jurisdictional conditions and claim-processing rules. Essentially, the Court reasons that only unambiguously jurisdictional conditions clearly stated by Congress are in fact conditions to jurisdiction. Because section 411(a) does not clearly state that it is jurisdictional, it is not an unambiguous jurisdictional condition, and the Second Circuit was incorrect to rule that there was no subject matter jurisdiction in the case. This opinion may clear the way for further resolution of aggregate copyright claims by class action settlement.
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