Amazon film unit can’t escape Starz copyright claims
The streaming company can bring a suit that alleges infringement and breach of contract | Dispute centres on $70m exclusivity licence | Movies include “Bill & Ted’s Excellent Adventure”.
The US Court of Appeals for the Ninth Circuit has concluded that streaming company Starz was not too late in bringing copyright infringement claims against MGM Studios in a dispute over a licensing agreement.
According to the Ninth Circuit, which issued the opinion yesterday, July 14, Starz can pursue damages for numerous instances of alleged infringement that occurred years before the case began.
In 2013, Starz entered into a licensing agreement (a “library agreement”) with MGM, paying $70 million in exchange for the exclusive right to exhibit 585 movies and 176 television series episodes.
However, in the summer of 2019, Starz put MGM on notice for violating the terms of their exclusive library agreements. A Starz employee had noticed that Amazon Prime was streaming “Bill & Ted’s Excellent Adventure” when it should have been exclusive to Starz, the company claimed.
Then, one year later in May 2020, Starz sued MGM at a California federal court for copyright infringement and breach of contract, claiming that MGM had infringed 340 titles.
While MGM didn’t dispute the infringement suit, it blamed its breach on“error[s]” made by its human-operated rights-tracking database that led to overlapping “collisions” of exclusivity.
MGM also alleged that Starz should have noticed the infringement and filed its suit much earlier because the statute of limitations for copyright infringement is three years and the licences for 127 of the 340 titles expired by March 2017.
Generally, a copyright claim accrues when the infringement occurs. However, under the ‘discovery rule’, a claim can accrue when the copyright owner becomes aware of the infringement.
According to MGM, the US Supreme Court in the 2014 case of Petrella v Metro-Goldwyn-Mayer imposed a "strict bar" to infringement damages from more than three years before a lawsuit is filed.
However, the California court rejected MGM’s arguments, finding that Petrella left the discovery rule unaffected. MGM appealed against the decision to the Ninth Circuit.
Affirming the lower court’s ruling, the Ninth Circuit held that a copyright owner can recover damages for all infringing acts that “occurred before they knew or reasonably should have known of the infringing incidents”, with the three-year limitations period running from the date the claim accrued.
Quoting the case of Polar Bear Productions v Timex Corp, the decision said that adopting a damages bar would mean that “a copyright plaintiff who, through no fault of its own, discovers an act of infringement more than three years after the infringement occurred would be out of luck. Such a harsh rule would distort the tenor of the statute.”
Judge Kim Wardlaw, on behalf of the court, said that it would make “little sense” to bar recovery of damages beyond the three years before the suit was filed where the copyright owner didn’t delay but filed within three years of discovery.
“This is particularly true in a case such as this where the alleged infringer knows of and controls the infringing acts and the copyright holder has little means of discovering those acts,” said Wardlaw.
Wardlaw added: “This would incentivise violation of the copyright holder’s exclusive rights, not protect those rights, which is the purpose of the Copyright Act itself. As amici argue, with the constant evolution of technology, copyright infringement is now ‘easier to commit, harder to detect, and tougher to litigate’."
Amazon acquired MGM Studios for $8.45 billion in May 2021.
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