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In a week where SOPA and PIPA Congressional Bills were the subject of intense lobbying by content providers and content distributors about foreign copyright infringement and internet freedom, the Supreme Court in Golan v. Holder upheld Congressional authority under §514 of the Uruguay Rounds Agreement Act (URRA)[1] to retroactively expand copyright protection over foreign works already in the public domain. In a bit of irony, the U.S. did not enforce copyright protection of foreign works under foreign law, because the U.S. until 1989 did not adhere to the 1886 Berne Convention[2]. In fact, at the time the Constitution was written and thereafter, U.S. publishers disregarded copyright protections afforded under foreign law, because U.S. publishers did not have the commercial clout of British publishers.[3] The Copyright Clause under the Constitution[4] did not ameliorate this and reflects business reality of IP enforcement according to national self-interest. Ostensibly a reason for Congress acceding to Berne and thereby permitting “restoration” of copyright protection for foreign works that never had U.S. copyright protection, was an admixture of fear of retaliation and a belief that it would aid foreign enforcement of U.S. copyrights. In this light Golan v. Holder might be a result of poor lobbying, or being careful about what you hope for.                                                                                            

The intent of SOPA and PIPA is to protect U.S. copyrighted works from foreign internet piracy and copyright infringement, but content distributors and content providers are indirectly fighting a battle over open source and closed source business models. This is likely to be revisited later this year when international consideration will be given to ICANN’s monopoly over domain names. China, India and other countries want government control through an international organization rather than indirectly through the U.S.

Under URRA an infringement “occurrence” will come after 1994 when it was enacted, not before. URRA only affords U.S. copyright protection for the remainder of the “restored work’s”[5] copyrighted period under subject foreign law[6]. URRA does not restart the full copyright period. Copyright protection is usually for 70 years after the author’s life, so for written material this is mostly a Twentieth Century problem, and relatively more of a performance than a publishing issue. U.S. publication of foreign work is a market segment and less mass market. The Fair Use defense also will justify usage removing more exposure. Given the effective date of URRA, CGL coverage will be avoided, except for advertising injury under later forms. In the absence of effected industry solutions, coverage will be sought under Media Liability, Publishing Liability and other tailored projects, with administrative expense[7] and claims expense being the principal concern, once a Wrongful Act has been alleged.

From an “occurrence” standpoint URRA provides a transition period. The party that made use of the foreign work while in the U.S. public domain before Golan (“Reliance Party”) may continue to exploit the restored work in the manner that it did before restoration, without violating URRA until:

1. The owner of the right has given notice of intent to enforce either to the U.S. Copyright Office within 2 years of restoration, or directly to the Reliance Party[8]; and

2. One year has expired from the date of such notice[9].

A “derivative work” based on the restored work which was created before URRA may indefinitely continue to exploit the work after paying “reasonable compensation” to be set by a U.S. District Court judge if the parties cannot agree[10]. Wrongful Act will likely start upon notice, absent other facts to the contrary.

URRA provides immunity from breach of warranty or right of exclusive use if such warranty, promise, or guarantee was made before January 1, 1995 and the breach is by virtue of restoration under URRA. There is a timing disconnect between the transition period which is based upon notice and a one year deferral and the warranty immunity which is not operative pre-notice or during the deferral period. This can create a distinct occurrence and liability.

The take-away for insurers and insureds in the media, entertainment, publishing and education sectors who have used foreign works in the U.S. believing them to be in the public domain and exempt from copyright infringement, is to check their licenses; contracts with related representations, warranties or guarantees; and insurance coverage, starting in 1995.  Insurers should revisit their policy coverage and exclusion language related to copyright infringement and definitions related to expense, Occurrence and Wrongful Act. They may wish to refine what these to limit or broaden coverage to reflect their intent. Allocation amongst years and clash if multiple copyright owners, may also be a subject for focus.




[1] 17 U.S.C. §104A

[2]  The Berne Convention for the Protection of Literary and Artistic Works is the principal international accord protecting copyrighted works and has 164 member states acceding to its minimum terms.Congress implemented Berne through URRA in 1994 after being prodded through the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) to implement the first 21 Articles of the Berne Convention or face WTO enforcement through tariffs or retaliation. Congress had already given limited “restoration” to Canadian and Mexican films under NAFTA.  

[3]  As majority of the Court footnoted in its Opinion, “This free- riding according to Senator Jonathan Chase, champion of the 1891 Act, made the United States the ‘Barbary Coast of literature’ and its people ‘the buccaneers of books’. S. Rep. No. 622, 50th Cong. , 1st Sess. ,p.2 (1988).”

[4] The Constitution’s Copyright and Patent Clause, Art. I,§ 8, cl.8 reads “To promote the Progress of Science and useful Arts, by securing for limited Time to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” In Eldred v. Ascroft, 537 U.S. 186 (2003), Justice Ginsberg writing for the majority as she did in Golan upheld Congressional  20 year extension of the copyright period, holding that “limited Time” under the Copyright Clause was not a Constitutional fixed temporal period. Golan like Eldred gives deference to Congress and recognizes the historical precedent in the Copyright Act of 1790 and subsequent unchallenged private Bills, in retroactively affording copyright protection to works in the public domain. The majority in Golan also did not believe that the promotion of “Progress” was a specific condition in the Clause applicable to each work, but to works in general, through in this instance, the adherence to an international Convention. Recognizing the closed source business model, the majority quotes Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 558 (1985) for the proposition that “copyright supplies the economic incentive to create and disseminate ideas.”

[5] Restored Work is a term of art in URRA and must apply for there to be a basis for liability. See §104A(h)(6). A work is considered to be restored  for the purpose of URRA, either on January 1, 1996 if it is protected under the copyright law of a nation that at January 1, 1996 adhered to the Berne Convention or was a member of the WTO,  or at subsequent date of such adherence or proclamation or to the WIPO treaties. See §104A(h)(1),(2).

[6] Subject foreign law is determined under the definition of “source country”. Generally, it can be where first published or where there are significant contacts. See §104A(h)(8).

[7] Administrative expenses incurred prior to the notice of intent to enforce, will likely be self-insured economic expenses. These could be considerable, particularly for individual works, referred to as “orphan works”. Some Berne members have enacted orphan work laws which like §77 of Canada’s Copyright Act authorizes its Copyright Board to license use of orphan works by persons, after reasonable effort, have been unable to locate the copyright owner. Golan might now provide impetus for such legislation in the U.S.

[8] §104A(c),(d)(2)(A)(i) and (B)(i).

[9] §104A(d)(2)(A)(ii).

[10] §104A(d)(3).