This post, from guest author Jonathan Band, first appeared on the Disruptive Competition Project. While the case addresses sovereign immunity with respect to copyright claims, it directly implicates the Florida Prepaid decision which applied sovereign immunity to states who infringe patents. Later cases interpreted Florida Prepaid to bar actions by defendants seeking to invalidate state patents in federal court. Given the large number of lawsuits by state entity patent owners, this represents a serious issue in patent law.
On Tuesday, November 5, 2019, the U.S. Supreme Court heard oral arguments in Allen v. Cooper, a case considering the constitutionality of a statute limiting state sovereign immunity against claims for copyright infringement.
As a general matter, states have immunity from claims for violations of federal law unless they waive their immunity or Congress abrogates that immunity in a constitutionally permissible manner. In 1990, Congress passed the Copyright Remedy Clarification Act (“CRCA”), which sought to abrogate state sovereign immunity from copyright claims. In 1992, Congress passed similar statutes with respect to patent claims and trademark claims. The Supreme Court found the patent and trademark statutes unconstitutional in 1999 in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank and a related case. Thereafter, lower courts have repeatedly found that the CRCA is also unconstitutional, relying on Florida Prepaid.
In this case, Allen, a photographer, alleges that the state of North Carolina infringed his copyright by uploading his photographs onto a state website. The Fourth Circuit dismissed the case, finding that the CRCA was unconstitutional under Florida Prepaid. The Supreme Court granted certiorari. The central issue in the case is whether the CRCA can be sufficiently distinguished from the Patent Remedy Act at issue in Florida Prepaid.
In Florida Prepaid, the Supreme Court found that Congress has the power under section 5 of the Fourteenth Amendment to abrogate state sovereign immunity to prevent a state from depriving a person of property without due process of law. But for such abrogation to succeed, “it must identify conduct transgressing the Fourteenth Amendment’s substantive provisions, and must tailor its legislative scheme to remedying or preventing such conduct.” The Court held that in enacting the Patent Remedy Act, Congress identified no pattern of patent infringement by the states, let alone a pattern of constitutional violations. Indeed, the Act’s sponsors conceded that there was no evidence of widespread violation of patent laws by the states.
Additionally, Congress did not consider the availability of other remedies. In the absence of such consideration, the Court could find no due process violation. Further, a state actor’s negligent acts that caused unintended injury to a person’s property did not deprive that person of property within the meaning of the due process clause. Congress did not focus on intentional or reckless infringement by the states. Instead, the evidence suggested that most state infringement was innocent or at worst negligent.
Because of the scant record of a widespread and persisting deprivation of constitutional rights, the provisions of the Patent Remedy Act were “so out of proportion to a supposed remedial or preventive object that it cannot be understood as responsive to, or designed to prevent unconstitutional behavior.” In particular, the Patent Remedy Act was not limited to nonnegligent infringement or infringement authorized pursuant to state policy, or states with high rates of infringement.
In its briefs, Allen sought to distinguish Florida Prepaid. It stressed that the record for the CRCA was far more robust than that for the Patent Remedy Act. The Copyright Office performed a study finding that infringement by the states was a growing problem. (Ralph Oman, who was the Register of Copyrights at the time the Copyright Office conducted this study, wrote an amicus brief in support of Allen describing the study in detail.) Congress was presented with testimony and other evidence of the harm to copyright owners caused by state sovereign immunity.
Moreover, Allen suggested that the CRCA was a valid exercise of Congressional authority under the Copyright Clause in Article I of the Constitution. The text of the Copyright Clause indicates that the Framers of the Constitution intended for there to be a uniform system of exclusive rights. Congress, accordingly, could prevent states from possessing sovereign immunity under such a system. In other words, the Copyright Clause effects a “plan-of the-convention” waiver of sovereign immunity. Allen indicated that the Court could reach this conclusion without overturning Florida Prepaid. However, both Justices Ginsburg and Breyer dissented from the decision in Florida Prepaid, arguing that “the Constitution vests Congress with plenary authority over patents and copyrights.” Allen’s Article I argument implicitly called for the overturning of Florida Prepaid.
North Carolina’s Arguments
In response, North Carolina argued that the CRCA was not a valid exercise of Congress’s authority under the Fourteenth Amendment because there was an absence of compelling evidence of intentional infringement. Indeed, the Copyright Office report conceded that any infringement by states was often unintentional. Moreover, even though copyright owners could not sue states for damages, they could sue state employees for injunctive relief under In Re Young. Thus, they did have a remedy against state actors. Furthermore, the CRCA did not contain the limitations suggested by Florida Prepaid, such as applying only to intentional infringement. In short, the CRCA was not narrowly tailored to address intentional infringement for which there was no remedy. North Carolina also reiterated the Fourth Circuit’s point that Congress did not specifically invoke its powers under the Fourteenth Amendment.
With respect to Article I, North Carolina noted that Florida Prepaid explicitly found that Congress may not abrogate state sovereign immunity pursuant to its Article I powers; hence the CRCA could not be sustained under the Copyright Clause. Moreover, North Carolina cited the long history of dual federal-state regulation of copyrights to refute Allen’s “plan-of-the-convention” waiver argument.
SIIA and Oracle Amicus Briefs
The Software and Information Industry Association (“SIIA”) filed an amicus brief in support of Allen. SIIA claimed that after Florida Prepaid, “the amount of reported state infringements increased substantially.” SIIA and its members have not pursued copyright infringement actions in the twenty years since Florida Prepaid, but “given the ease and scale at which copyright infringement was and is committed in the digital environment, Amicus is quite sure that the reported infringements represented just a fraction of existing intentional infringement.” SIIA noted that due to sovereign immunity, states compete in the intellectual property marketplace under two different sets of rules: “they may take full advantage of their own intellectual property rights, earning millions in revenue from those protections, while refusing any consequences when they deprive other authors and innovators of their constitutionally protected rights.”
SIIA conceded that negligent acts of infringement by states do not constitute due process violations. However, because Allen’s complaint alleged that North Carolina deliberately infringed his copyright, SIIA argued that the Court could find the CRCA constitutional as applied to this case.
In its brief, Oracle stated that its experience in supplying software to state governments has “exposed the enormous threat to innovation posed by eliminating remedies for state government copyright infringement.” State sovereign immunity has forced companies like Oracle to seek immunity waivers in their licensing agreements with state entities. According to Oracle, this alternative “is illusory in practice.” Oracle provided a detailed description of a dispute it had with the state of Oregon concerning software to operate the state’s health insurance exchange. Oracle negotiated a sovereign immunity waiver in its licensing agreement with the state. After what Oracle called a “botched rollout,” Oregon withheld millions of dollars in payments owed to Oracle while continuing to use Oracle software. Oracle sued for copyright infringement, and the state disavowed the immunity waiver. The state legislature also dissolved the public corporation with which Oracle had contracted. The federal court dismissed the copyright claims due to the unconstitutionality of the CRCA.
The spirited oral argument did not indicate clearly which way the Court was leaning. Allen’s counsel quickly conceded that if the Court adopted Allen’s Article I argument, Florida Prepaid would directly or indirectly be overturned, meaning that states could be sued for patent infringement. The Justices appeared reluctant to follow that path, especially if they could rely on the Fourteenth Amendment instead.
Justices Alito and Kagan questioned the adequacy of the evidence of widespread copyright infringement when Congress adopted the CRCA. Florida Prepaid found the eight instances of patent infringement considered by Congress to be insufficient. Here, the Copyright Office study had identified sixteen instances of copyright infringement by state entities. So are sixteen infringements by 50 states enough to constitute a widespread pattern of constitutional harm, while eight are not?
Several Justices pursued the “constitutional as applied” argument raised by amici such as SIIA. North Carolina’s counsel stressed that the appropriate test in that event should be willfulness, not merely deliberate copying, because much copying is permitted by doctrines such as fair use.
Justice Breyer posed a hypothetical of the state of California establishing a film streaming service, and suggested that injunctive relief would be an insufficient remedy. (To the contrary, injunctive relief would succeed in shutting down such a service.) Chief Justice Roberts also thought that the qualified immunity received by state government officials indicated that suing state officers individually was not a sufficient remedy.
Justice Ginsburg suggested that it was “unseemly” that state government received the benefit of copyright protection for their works, but could not be sued for damages for the use of others’ works. In closing, North Carolina’s counsel described the dangers of subjecting states to statutory damages for copyright infringement, referencing the amicus brief filed by library associations concerning the chilling effect abrogation would have on digital preservation of library and archival collections.
Ultimately, this case is more about constitutional law than copyright law. But how the Court decides the case will have an impact on how state actors interact with the copyright system.