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How long should one wait to sue an American film studio?

In the United States, dispute timing is not as simple a concept as in Poland. In addition to the regulations called the statute of limitations, there is also the doctrine of laches applied by courts which prevents pursuing claims in the cases where it would cause substantial harm to the defendants.

However, US courts do not always agree in their opinions on the balance between the doctrine of laches and the statute of limitations, and a copyright holder does not necessarily want to sue as soon as they become aware of an infringement.

On one hand, it may be advisable to wait and find out what profits will be generated by, for example, a film that was made in violation of the holder’s copyright, and to what extent the infringement will grow (as well as – consequently – potential compensation). On the other hand, the longer the right holder waits, the greater the risk of the courts applying the doctrine of laches, since during the holder’s delay in bringing the claim, the film studio usually works dynamically, making considerable effort to promote and distribute the film.

One of the most famous copyright lawsuits in recent years where the doctrine of laches was applied was Paula Petrella’s case and the “Raging Bull” script. In May 2017, Royce Mathew, who sued Disney for copyright infringement in relation to the “Pirates of the Caribbean” franchise, joined the group of victims who suffered from waiting too long with their lawsuit.

Petrella v. Metro-Goldwyn-Mayer, Inc.

In 2009, Paula Petrella filed an infringement suit against MGM in relation to materials used when creating the final version of the “Raging Bull” scenario. Her father, Frank Petrella (using the pseudonym Peter Savage), wrote the story of Jake LaMotty in 1963. He died in 1981, before the initial term of his copyright protection expired. Petrella’s copyright to “Raging Bull” was inherited by his daughter.

Despite contacting MGM throughout the 1990s about her potential demands, Paula Petrella waited 18 years after renewing the copyright to bring suit.

She justified the delay for personal reasons and fear of retaliation. However, the court found them undocumented and unconvincing, and pointed to the potential financial reason, which Petrella didn’t mention – in the initial period after the premiere, the film did not earn as much money as after the subsequent distribution. The court further stated it is only justifiable to wait in order to estimate the ratio of the expected compensation to the process costs, and not to determine how much the defendant would earn from the production and distribution of the film.

The case however was not so obvious since in a dissenting opinion Judge William A. Fletcher clearly defined the doctrine of laches as being too severe and hostile to copyright holders, and in the next instance, the Supreme Court issued a more favorable judgment to Paula Petrella, giving her the possibility to claim compensation within the prescribed time limit of 3 years from the time of filing the lawsuit. At the same time, the court excluded the application of the doctrine of laches in order to prevent claiming compensation in the 3-year period provided for in the statute of limitations, and stated that there was nothing inappropriate in waiting to file the lawsuit in order to determine the extent to which the infringement degree would grow.

Royce Mathew v. The Walt Disney Company

On 2 May 2017, the United States Court of Appeals for the Ninth Circuit ruled that Royce Mathew, who claimed that Disney’s “Pirates of the Caribbean” franchise had used excerpts of his works, waited too long in providing notice of rescission with respect to claims resulting from his copyright.

For the first time, Mathew sued the film studio in 2005, but he waived his demands after Disney presented drawings and schemes of a theme park which had been made earlier than his own graphics. At the time of withdrawing from the suit, Mathew signed a mutual release with the film studio, in which he waived further claims. However, the release did not stop him from filing a similar lawsuit a second time. Mathew argued Disney had manipulated the facts when presenting drawings used as evidence and had forced him to sign the release using fraudulent methods.

The court dismissed his request, writing in the justification that Mathew’s delay in providing a notice of his intent to rescind with respect to his claims until he filed another lawsuit prejudiced Disney, who exploited the “Pirates of the Caribbean” franchise in movies, television, on-line streaming, DVDs, video games and otherwise.

The judgment in the Mathew case to some extent reiterated the court’s judgment in the Petrella case, but not unanimously. Judge Richard Clifton was skeptical as to the detriment suffered by Disney. In a dissenting opinion, he doubted that Disney would not have pursued the “Pirates of the Caribbean” franchise if it had known of Mathew’s subsequent intent to try to rescind the release. Judge Clifton further argued that the finding of harm was a matter requiring far-reaching facts and should be proven by Disney.

As for the comparison with the Petrella case, he criticized the interpretation of the judgment that leads to the conclusion substantial prejudice exists whenever a defendant shows it invested money to expand its business or entered into business transactions based on its presumed rights. According to Clifton, the judgment in the Petrella case made clear relatively less evidence is required when proving substantial prejudice exists only in instances of extraordinary delay (18–19 years). In the Royce Mathew case, the delay was less than 4 years – hence it cannot be presumed that Disney must have suffered prejudice so substantial that Mathew’s claim should be dismissed.

The judgments in Petrella and Mathew cases show that even such – as it may seem – a technical issue as the time limit for claiming copyright infringement is not so obvious and requires careful balancing of the economic interests of both parties.

On one hand, we have a stand-alone creator of materials used in producing a potentially profitable work, and on the other – a large film studio threatened with the loss of rights to a creative work that required substantial investment.

As you can see, solving who is right can be influenced not only by the circumstances of the creation of a disputed work itself, but also the actions undertaken at a later time or persistent lack thereof.

#AMERICAN FILMS #COMPANY LAW #film industry #Walt Disney

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