Return of the AmeriKat I: Berne takes a bite out of the US Constitution

The AmeriKat has been otherwise preoccupied over the past several weeks - certain readers will know where and what has been diverting her time - but suffice to say you may soon be hearing a very Merpel-esque opinion about the new court rooms in the Rolls Building. Where the concept of convenience may strike a discord when placed in the same sentence as the Rolls Building, other harmonious pairings lead the way - peanut butter and jelly, Fred and Ginger, the AmeriKat and chai tea lattes. But along with the Rolls Building and convenience, the Berne Convention and the United States, have also had a spot on the disharmonious shelf. However, a new found harmony between the two has been signaled, at least by the US Government, in Golan v Holder. In particular, during oral arguments before the US Supreme Court two weeks ago counsel for the US government stated something that 20 years ago many thought they would never hear a US representative say: "Berne is not a menu in which we get to choose options." (picture, left - the AmeriKat's bi-minute stretch in trying to reach counsel from across the court room desks)

Berne takes a bite out of the US Constitution - or does it?

In 2001, the case of Golan et al v Holder was brought by a collection of plaintiffs, including orchestra conductors, educators, performers, motion picture distributors and publishers against the United States government alleging that Section 514 of the Uruguay Round Agreements Act (URAA)- section 104A and 109 of the Copyright Act - is unconstitutional. Section 514 granted copyright protection to various foreign works that were previously in the public domain in the US. The claimants had relied on artistic works in the public domain and had created works based on foreign works that were restored by virtue of Section 514. For example, one of the claimants, the late Richard Kapp, created a derivative work based on several compositions by Dmitri Shostakovich. Thus, the problem.

Statutory Background

After years of study, the AmeriKat has grown to love the Berne Convention (thank you Dr. Aplin and Dr. Makeen). The US has had a hate-hate relationship with the granddaddy of copyright texts (no, not you, Statute of Anne!) for centuries. Given that during its early history, some of the US's economic success was built upon pirating copyright works, the US avoided joining the Berne Convention until it had to - in 1989. Under Article 18 of Berne, countries must provide copyright protection to pre-existing foreign works even when those works had been previously in the public domain in that country. Did the US's implementing legislation - the Berne Convention Implementation Act of 1988 – implement Article 18? Of course not.

Fast forward to April 1994 when the US signed various trade agreements during the Uruguay Round General Agreement on Tariffs and Trade which included the signing of Trade Related Aspects of Intellectual Property Rights (TRIPs). TRIPs required that all signatories comply with Article 18 of the Berne Convention and so, Congress enacted the URAA and Section 514. Where foreign works were formerly in the public domain because they failed to comply with formalities, lacked subject matter protection or lacked national eligibility, section 514 restored copyright to these works. Section 514 did not restore copyright in foreign works that entered the public domain through expiration of the term of protection.

Section 514 provides certain protections for what are known as reliance parties - parties who exploited foreign works before the copyright was restored and who continue to exploit the works after restoration. In order to enforce a restored copyright against a reliance party, a foreign copyright owner must either file notice with the Copyright Office within 2 years of restoration or serve actual notice on the reliance party. After a 12 months grace period from the notice of restoration, a reliance party is liable for infringing acts. Where a reliance party created a derivative work based on a restored foreign work they may continue to exploit that work for the duration of the restored copyright if the reliance pays the copyright owner "reasonable compensation". Where the parties are unable to agree on reasonable compensation a federal court will determine the amount of compensation.

The Argument

The claimants disputed the constitutionality of the Copyright Term Extension Act and Section 514. At first, the district court in Colorado granted summary judgment to the US government. The claimants appealed, and the Appeals Court for the 10th Circuit concluded that the claimant’s challenge to the Copyright Term Extension Act was foreclosed by the Supreme Court's decision in Eldred v Ashcroft and that Section 514 did not exceed the limitation inherent in the Copyright Clause. The appeals court remanded the case back to the district court to assess whether Section 514 was content-based or content-neutral and to then apply the appropriate level of constitutional scrutiny to the section. The parties agreed that Section 514 is a content-neutral regulation of speech and thus should be subject to intermediate scrutiny. The district court concluded that "to the extent Section 514 suppresses the right of reliance parties to use works they exploited while the works were in the public domain”, Section 514 was unconstitutional. The government then appealed to the US Court of Appeals for the Tenth Circuit (picture, left) arguing that Section 514 does not violate the First Amendment.

Is Section 514 content-neutral or content-based?

Both parties agreed that Section 514 was content-neutral regulation of speech and thus subject to intermediate judicial scrutiny. In determining whether a regulation is content-neutral or content-based, regard is given to the government’s purpose in enacting the regulation. The main question is whether the government has adopted a regulation of speech because of disagreement with the message it conveys.

"If the regulation serves purposes unrelated to the content of expression it is considered neutral, even if it has an incidental effect on some speakers or messages but not others.”

Although the parties agreed that Section 514 is content-neutral, it does not affect a court’s ability to review the position because the court has a special standard of de novo review (as if considering the question for the first time). The Court said that there was no indication that the government adopted Section 514 because of any agreement or disagreement with the message that the regulated speech conveys. The main purpose of Congress in enacting Section 514 was to comply with the US’s international obligations and to protect American authors’ rights aboard. For this reason, the Court agreed that Section 514 is a content-neutral regulation of speech.

Is Section 514 Constitutional?

Content-neutral regulations are subject to an intermediate level of judicial scrutiny because in most cases these types of regulations “pose a less substantial risk of excising certain ideas or viewpoints from the public dialogue.” A content-neutral provision will withstand scrutiny under the First Amendment if it “advances important governmental interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” (Turner Broad Sys Inc v FCC (1997)). Thus, in determining whether Section 514 was constitutional, the Court examined these two aspects under Turner I: (1) whether in enacting Section 514, the Government addressed a substantial and important governmental interest that alleviated a real harm, supported by substantial evidence; and (2) whether Section 514 was narrowly tailored to advance that interest.

1. Governmental Interest

The US Government argued that Section 514 advanced three important governmental interests. First, it complied with international treaties and agreements. Second, it obtained legal protections for American copyright owners abroad. Third, it remedied past inequities of foreign authors who lost or never obtained copyrights in the U.S. The Plaintiffs however, argued that the US Government did not have an important interest in the reallocation of speech interests between American reliance parties and American copyright owners. However, in Eldred v Ashcroft

“The First Amendment securely protects the freedom to make – or decline to make – one’s own speech; it bears less heavily when speakers assert the right to make other people’s speeches.”

Thus, the Court of Appeals held that although the plaintiffs have First Amendment interests, so too do American authors. In securing foreign copyrights, American’s authors economic and expressive interests are preserved and these interests are at least as important or as substantial as other interests that the Supreme Court has found to be important to satisfy intermediate scrutiny.

Not only was there a substantial interest in enacting Section 514, but Section 514 addressed a real harm. The US Government argued that in implementing Section 514 the government was able to protect American copyright’s holders’ interests abroad. The Court, has to accord "substantial deference" to the predictive judgments of Congress when it enacts laws. The Court’s review of the laws, under these deferential standards, is to ensure that “Congress has drawn reasonable inferences based on substantial evidence.” Because it is Congress, not the Court, that is “far better equipped” as an institution “to amass and evaluate the vast amounts of data bearing upon the legislative questions.” (Turner II) This is especially the case in circumstances where judgments regarding foreign affairs are made (Citizens for Peace in Space v City of Colorado Springs (2007)) That is not to say that Congressional judgments regarding foreign affairs are entirely immune from the requirements of the First Amendment (Turner I) just that they are entitled to “substantial deference” (Turner II).

Before Congress enacted Section 514, it heard testimony addressing the interests of American copyright owners (click here to read HR 4894 and S.2368). In several foreign countries, American works were unprotected – much to the detriment of US interests. The general consensus during the testimonies was that far more US works were unprotected in foreign markets than foreign works protected in the US market, resulting in billions of dollars being lost each year. There was thus substantial evidence, to support Congress’s conclusion that Section 514 would alleviate the harm impacting American authors in foreign markets. In refusing to restore copyrights in foreign works in the public domain, the US was not in compliance with its obligations under the Berne Convention. As such, many of the US’s trading partners, especially those in Europe, made it clear to the US that they considered the US in violation of its obligations under Article 18. The US’s refusal to restore foreign copyright resulted in a tit-for-tat situation – foreign countries were refusing to restore copyrights in US works in the public domain because the US was refusing to do the same in respect of foreign works in the US. Some of the US’s trading partners also indicated that, in protecting US works, they would mirror the protection the US afforded to foreign works; if the US complied with its obligations under Article 18, they would also comply with their obligations under Article 18. It was very clear, that if the US wanted to protect American authors abroad, it had to “man-up” and implement Article 18.

The Plaintiffs argued that although Congress was presented with evidence regarding the need to restore copyrights generally, there was no evidence that Congress need to provide limited protections for reliance parties. They argued that there was nothing to support the contention that enacting stringent measures against reliance parties would impact the behaviour of foreign countries. To support this argument, the Plaintiffs argued that the US recognized that whatever choices the US made in its implementation of the TRIPS agreement would set an example for other countries in deciding how to implement their own legislation. It thus did not automatically follow that setting stringent conditions for reliance parties was condition-precedent for reciprocity of copyright protection. They pointed to the testimony of Eric Smith, speaking on behalf of trade associations during the Joint Hearings, who stated:

“The fact is that what the United States doe sin this area will carry great weight in the international community. If we interpret Article 18 of the TRIPS provision to deny protection or significantly limit is scope, our trading partners – just now considering their own implementing legislation – will feel free to simply mirror our views. If the largest exporter of copyrighted material in the world takes the position that we have no, or only limited, obligations, the United States will have little credibility in convincing particularly the new nations with whom we are just starting copyright relations to give us the expansive protection that we need.”

However, Congress also faced up to the reality that in imposing restoration of copyright protection to foreign authors, they would also have to “ensure that copyright restoration provides reliance users a sufficient opportunity to recoup their investment” (Statement of Senator DeConcini). However, the Plaintiffs argued that notwithstanding Congress’s recognition that they needed to balance interests, including the interests of reliance parties, Congress’s interest in enacting Section 514 was too speculative. The Court of Appeals disagreed and stated that although the court required “substantial evidence” to support the contention that Section 514 would alleviate the harms, “the evidentiary requirement was not as onerous as the plaintiffs would have us impose.” An overly demanding amount of evidence and detail is unreasonable in the legislative context as it’s “constitutionally unwarranted”.

The Plaintiffs also argued that there was some testimony that stated that just because the US implements Article 18 and restores copyright, it did not follow that every trading partner will automatically guarantee reciprocation. Although there was this evidence, the US Court of Appeals for the Tenth Circuit said this was not the only evidence on the record. The bulk of the evidence was that if the US wanted foreign countries to provide strong copyright protection for American authors, it had to do the same for foreign authors. Further, just because there was evidence that copyright restoration may not guarantee reciprocation from foreign countries, it did not follow that Section 514 was automatically unconstitutional. The US Court of Appeals concluded that in

“Considering the deference that Congress is owed, particularly in areas of foreign relations, we conclude that Congress’s judgments were supported by substantial evidence. The testimony before Congress indicated that the United States’ historically lax position on copyright restoration had been an obstacle to the protection that the United States was seeking for its own copyright owners…The United State’s ability to protect American works abroad would be achieved less effectively absent Section 514, and therefore, the government’s interest is genuinely advanced by restoring foreign copyrights with limited protections for reliance parties such as plaintiffs.”

2. Is Section 514 narrowly tailored?

The Court was also tasked to determine whether Section 514 was narrowly tailored to further the government’s interests. As long as Section 514 promotes substantial governmental interests (referred to above) and “does not burden substantially more speech than is necessary to further that interest”, then the government is given the latitude to enact the legislation of it’s choosing (Turner II at 213). Further, the legislation need not be least-restrictive alternative in advancing that interest.

Narrow tailoring requires that the focus of the regulation (section 514) goes to the source of the evils that the government is seeking to eliminate “without banning or significantly restricting a substantial quantity of speech that does not create the same evils.” That occurs, when “the burden imposed by [a regulation] is congruent to the benefits it affords.” (Turner II). In very limited discussion, the Court of Appeals held that “the burdens imposed on the reliance parties are congruent with the benefits Section 514 afforded American copyright holders.”

The Plaintiffs argued that the US government could have nevertheless complied with the Berne Convention while providing stronger protections to the First Amendment interests of reliance parties. They argued that Article 18 provided considerable discretion that allowed the government to provide greater protection. The Appeals Court dismissed this argument. It held that the US’s interests were not limited to mere compliance with the Berne Convention –its interests were broader in seeking to protect American copyright owners in foreign countries and that included providing copyright protection against reliance parties. The Court held that it was immaterial whether the US government could have complied with the minimal obligations of Berne and could have granted stronger protections to the reliance parties. There was evidence before Congress that there was strong reciprocity standards being applied by its trading partners, so had Congress provided stronger protections to American reliance parties, foreign countries may have provided similarly strong protections to their own reliance parties and in doing so provided less protection to American authors.

The plaintiffs, and the district court, pointed to the United Kingdom’s approach in implementing the Berne Convention. The Court held that there is nothing in case-law that suggests that the constitutionality of Section 514 is undermined by the availability of a arguably less-restrictive model in the UK or otherwise; content-neutral regulation need not be the least restrictive or intrusive means of serving a government interest (Turner II at 54 and Ward v Rock Against Racism (1989) at 798). However, the Court nevertheless examined the UK’s model because the Court did recognize that, although not dispositive, the existence of less-speech-restrictive alternatives may be relevant in determining whether Section 514 is narrowly tailored.

No country has provided full, permanent exemptions for reliance parties. Many have, however, provided limited protections for reliance parties. Under the UK model, a reliance party is allowed to continue making use of the work it had made, or had incurred commitments to make, before the copyright was restored. Copyright owners can, however, “buy back” their rights immediately after the entry into force of the law restoring their copyright. Unless the copyright owner buys out the reliance party, it cannot enforce its copyright against said reliance party. Unlike Section 514, there is no grace period. In both systems, unless the copyright owner does something (“buys out” the reliance party, or services notices on a reliance party/files a notice at the Copyright Office), the copyright owner cannot enforce the copyright against a reliance party. The only difference, the Court of Appeals said, was that in the UK the reliance party receives compensation from the owner, whereas in the US the reliance party has a twelve month grace period to continue exploiting the work. Further, unlike the US, the UK does not provide provision for continued use of derivative works like Section 514 does – this indicated to the Court that the UK model did not seem to be more protective of reliance parties’ freedom of speech. The Court held that:

"Although the United Kingdom model is arguably more protective of reliance parties’ economic interests, we cannot say that it is substantially more protective of reliance parties’ expressive interests.”

In closing, the Court stated that they believed that the Plaintiffs’ challenge to Section 514 reflected little more than a disagreement over the level of protection that reliance parties should receive:

“Congress sought to balance the interests between American copyright holders and American reliance parties. In so doing, Congress crafted a nuanced statute that offered some protections for both of these competing interests. It is not our role to opine on the best method of striking this balance."

The Plaintiffs also cross-motioned arguing that section 514 was unconstitutional on its face because removing works from the public domain was an illegitimate means regardless of the end or the importance of the stated governmental interest. They argued that there had to be a “bright line” drawn around the public domain. The Court of Appeals rejected the cross-motion very curtly. They cited their first decision in the case and stated that under Eldred v Ashcroft it was clear that Congress has expansive powers when it legislates under the Copyright Clause and the courts are not to interfere so long as the exercise of its authority is rational. It was plainly within Congress’s powers to extend copyright works that were in the public domain and there was no legal support advanced by the Plaintiffs that the First Amendment drew such a absolute bright lines around the public domain.