On June 3, 2019, the Supreme Court granted certiorari to hear the claim of  filmmaker Frederick Allen and his video production company, Nautilus Productions, LLC that the Fourth Circuit erred when it held that the State of North Carolina is immune from suit for copyright infringement despite the enactment by Congress of the federal Copyright Remedy Clarification Act of 1990, which was intended to abrogate State immunity under the Eleventh Amendment or any other doctrine of sovereign immunity from suit in federal court for a violation of any of the exclusive rights of a copyright owner under the U.S. Copyright Act.

The case began two and a half centuries ago in 1717, when a ship named Queen Anne’s Revenge that had been captured from the French by the pirate Edward Teach, better known as “Blackbeard,” ran aground off the coast of North Carolina and sank. Under State law, the ship became the property of North Carolina. In 1996, the wreck of the Revenge was discovered by a research and salvage firm, Intersal, Inc., which entered into a salvage agreement with North Carolina. Intersal retained Nautilus to document the salvage of the Revenge. As a result, Nautilus accumulated a large archive of video and still images showing the underwater shipwreck and the efforts to recover various artifacts from it. Allen registered the copyrights in his works with the U.S. Copyright Office.

In about 2014, North Carolina began posting five of the videos owned by Allen on the State’s YouTube channel and distributed a newsletter that contained an article about the Revenge featuring one of Allen’s copyrighted still photographs. Allen and Nautilus filed suit in federal court for copyright infringement seeking declaratory and injunctive relief as well as statutory and compensatory damages. The State moved to dismiss on the ground, among others, that the State and its officials were immune from suit. In response, Allen and Nautilus argued that North Carolina’s sovereign immunity was abrogated by the federal Copyright Remedy Clarification Act of 1990.

The District Court rejected North Carolina’s claims of immunity, but on an interlocutory appeal, the Fourth Circuit reversed the District Court holding that Congress did not validly exercise its constitutional power when enacting the Copyright Remedy Clarification Act, and as a result, the Act did not serve to abrogate the immunity of North Carolina, its agencies or officials. The Court held that Congress cannot rely on its enumerated powers in Article I of the Constitution to compel a State to litigate copyright cases in federal court, and that Congress failed to satisfy the requirements for exercising its power under Section 5 of the Fourteenth Amendment to abrogate sovereign immunity.

This case is of particular importance to the entertainment industry as highlighted by the Recording Industry Association of America (“RIAA”) in its Brief as amicus curiae in support of Allen’s petition for writ of certiorari. RIAA is a trade organization whose members are the music labels that create and distribute about 85% of recorded music produced and sold in the United States. The RIAA is interested in making sure that copyright holders can effectively enforce their rights and obtain monetary relief for infringement whether the infringer is a private party or a State government and its officials.

It seemed that when Congress enacted the Copyright Remedy Clarification Act of 1990 (“CRCA”) to abrogate State sovereign immunity for copyright infringement claims, the matter was resolved, but lower federal courts since then have ruled that Congress lacked the power under the Copyright Clause in Article I of the Constitution or under Section 5 of the Fourteenth Amendment to take that step. As the RIAA stated in its Brief, “those rulings have effectively rendered the CRCA a dead letter.” As a result, “States are free to infringe copyrights with impunity, with nothing to deter them from that bad behavior.” Furthermore “such infringement is now accelerating at an alarming rate” particularly because of the nature of the copyrighted works. “Digital piracy of sound recordings and musical works, including by States, can be quick and easy to accomplish and is especially prevalent at the time of initial release” when a work may have its highest earnings potential. A copyright owner’s ability to sue for infringement and to seek damages as well as an injunction is a significant deterrent to such conduct.

For many people working in the entertainment industry, the entire value of the enterprise in which they are engaged lies in their copyrights. Congress attempted to remedy the problem of copyright infringement by States and their officials when it enacted the CRCA. The lower courts have eviscerated the CRCA however by holding that Congress exceeded its powers when it abrogated State sovereign immunity in claims for copyright infringement. The Supreme Court now has the opportunity to clarify whether States can be held to the same standards as private parties when it comes to enforcing the infringement provisions of the Copyright Act.

Frank Morgan wishes to thank Julia Anne McKeachie for her assistance with this article.

If you have any questions about copyright or entertainment law, please contact Frank Morgan, Esq., at 410-783-3524 or fmorgan@agtlawyers.com.