Supreme Court Invalidates Statute: States Cannot Be Sued For Copyright Infringement Damages . . . For Now

Piracy has long been a problem in America, although modern day pirates of intellectual property bear little resemblance to their old-school counterparts sailing along the Caribbean and the American coast. Yet in a ruling on Monday, March 23, the Supreme Court tied together the legacies of those two very different types of pirates: modern-day state governments and none other than Blackbeard himself.

This bizarre pairing centers around a little-known statute called the Copyright Remedy Clarification Act of 1990 (the “CRCA”). Congress intended for the CRCA to serve as a weapon for copyright owners to hold state actors liable for copyright infringement as private infringers are held liable, including for monetary damages in federal court. The Supreme Court concluded this week that the statute is invalid. In discarding the CRCA, however, the Court laid out a seaworthy map—or at least the constitutional law equivalent—for how Congress could validly eliminate, i.e., “abrogate,” States’ sovereign immunity from such liability and combat state piracy in the future.

The Case

In 1996, videographer Frederick Allen took on the task of documenting on video the salvage of one of the world’s most famous pirate ships, Blackbeard’s flagship, the Queen Anne’s Revenge. When Allen learned that the State of North Carolina—off whose coast the Revenge had run aground nearly 300 years earlier—had begun uploading his footage to state websites without his permission, he filed a copyright infringement lawsuit in federal court seeking damages and other relief against the State.

Principles of sovereign immunity generally prohibit private suits in federal court for damages against States. Instead, copyright owners typically must focus on seeking an injunction against further infringement, damages from any state employees who have acted outside of their official capacities, or other relief created by State statutes (if any). Nevertheless, Allen initially saw success on his claims in federal court by arguing that enactment of the CRCA in 1990 had abrogated North Carolina’s sovereign immunity defense, even as to his claim for damages. Allen’s fortunes were reversed on appeal, however, ultimately leading to the Supreme Court taking up the case.

Before the Supreme Court, Allen advanced two arguments, both of which the Court rejected.

First, Allen argued that Congress had the authority to abrogate North Carolina’s sovereign immunity through the CRCA under the Intellectual Property Clause of the Constitution. That provision, found in Article I, § 8, cl. 8 of the U.S. Constitution, grants Congress the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Allen contended that, under that plenary power over patents and copyrights, Congress is vested with authority to hold all copyright infringers, whether public or private, to the same standards of infringement liability, including by holding public infringers liable for monetary damages. The Supreme Court disagreed. The Court relied on Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U. S. 627 (1999), in which it had rejected a similar attempt by Congress to abrogate state sovereign immunity in patent infringement cases. The Court explained its prior ruling was clear: Article I does not—with one exception limited to the bankruptcy context—authorize Congress to abrogate State sovereign immunity.

Second, Allen argued that Congress had the power to abrogate North Carolina’s sovereign immunity through the CRCA because Section 5 of the Fourteenth Amendment grants Congress the “power to enforce, by appropriate legislation,” the Constitution’s prohibition against a State “depriv[ing] any person of life, liberty, or property, without due process of law.” Copyright infringement by a State, Allen asserted, constitutes deprivation of an individual’s intellectual property without due process. The Court recognized that such a due process denial could occur, but it concluded that the CRCA was not valid under Section 5 of the Fourteenth Amendment because that statute was not supported by an adequate record of such deprivation. The Court explained that “[t]here must be a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end.” The Court found that, at the time the CRCA was passed, the record before Congress did not identify a pattern of unconstitutional copyright infringement by States to support the removal of all sovereign immunity protections for States.

Looking Ahead

Although the Court rejected the argument that the CRCA validly abrogated state sovereign immunity, the Court emphasized that its ruling “need not prevent Congress from passing a valid copyright abrogation law in the future,” so long as such a law reflected an appropriate “congruence and proportionality” between the extent of state unconstitutional conduct to be addressed and the scope of state sovereign immunity to be eliminated.

In charting such a course, Congress would do well to keep in mind several points of navigation; Congress should:

1. Clearly declare its intent to abrogate sovereign immunity under Section 5 of the Fourteenth Amendment.
2. Develop a “materially stronger” legislative record of documented instances of copyright infringement by States. One good starting point for Congress would be the briefing in Allen v. Cooper, which includes hundreds of examples of state copyright infringements—examples which the Court declined to consider because they were not before Congress when it passed the CRCA.
3. Emphasize any instances of state infringement that amount to unconstitutional takings. This includes instances where States have infringed copyrights knowingly or recklessly.
4. Develop a substantial legislative record concerning the extent to which States fail to provide meaningful recourse under state law against state infringement, such as through the absence of robust unjust enrichment laws to adequately compensate copyright owners for monetary losses.
5. Limit the abrogation of sovereign immunity in proportion to the extent of state infringement. Unless Congress identifies a widespread infringement by numerous States, it could limit the abrogation of sovereign immunity to instances where a State has acted intentionally or with a reckless disregard for the rights of authors

With the map now before it, will Congress take up the Court’s challenge, in the words of Justice Kagan, to “bring digital Blackbeards to justice”?

Covington & Burling LLP submitted an amicus brief in support of the petitioner, Frederick Allen. If you have any questions concerning the material discussed in this client alert, please contact the following members of our Copyright and Trademark Litigation and Appellate and Supreme Court practices.