AAP on the Hill / Issues: Copyright

June 17, 2003

State Sovereign Immunity & Copyright
Book Publishers Seek Restoration of Equitable Treatment Under Law

As the result of a series of controversial 5-4 decisions by the U.S. Supreme Court in 1999, State entities that infringe the rights of intellectual property (“IP”) owners under federal statutory law may now assert a right of sovereign immunity under the Eleventh Amendment to avoid the injured party’s claims for monetary damages in federal court.

This radical departure from prior U.S. law, unfairly permitting State entities to fully protect their own statutory IP rights from infringement while escaping any meaningful liability for violating the same statutory IP rights of others, poses a serious economic threat to all non-State IP rights holders. This includes authors, as well as book and journal publishers, whose entire business enterprise hinges on their ability to enforce and protect the copyrights in works they create or acquire from others for publication.
 
Following Congressional hearings that highlighted the unfairness and risk that this extraordinary change in the legal landscape poses to copyright and other IP owners, key members of the House and Senate have proposed “waiver” legislation which attempts – within the limited authority left to Congress under the Supreme Court’s constitutional rulings – to restore equal treatment in the application of federal statutory IP law to State entities and other persons.  However, such remedial legislation has been opposed by State officials who are unwilling to consider even a limited waiver of the sovereign immunity right pronounced by the Court.
 
The Association of American Publishers (“AAP”), which is the national trade association for our nation’s book and journal publishers, is calling upon State officials to work with Congress and our industry to ensure that authors and publishers can once again find fair treatment under federal law with respect to the infringement of their IP rights by State entities.  The matter potentially has serious international, as well as domestic, economic consequences for authors and publishers, as well as other IP rights holders.
 
For nearly two centuries after the enactment of the first U.S. copyright law in 1790, it was generally assumed that State entities, like all other persons who claimed the legal benefits and protections of copyright ownership under the federal statutory scheme, were also fully subject to that law’s penalties and remedies when they infringed the rights of other copyright owners. Among the applicable remedies for infringement provided in the statute was the right of a copyright owner to sue an infringer in federal court for damages and injunctive relief. 
 
After a federal court decision challenged this assumption, Congress in 1990 enacted the Copyright Remedies Clarification Act to explicitly provide that State entities, which have no greater entitlement to copyright protection than other persons under federal law, would also be treated no differently than other persons under the copyright statutes when they infringed the rights of others. Two years later, Congress enacted similar legislation for patent and trademark infringements.
 
The constitutional propriety of subjecting States and their entities to damage actions in federal court for infringement of statutory rights established under federal IP laws stood without controversy until 1996 when a bitterly-divided Supreme Court began overturning its own established Eleventh Amendment precedents in a series of decisions culminating in the 1999 Florida Prepaid cases that radically changed the rules regarding Congressional power to abrogate state sovereign immunity with respect to damages remedies for violations of rights secured under federal constitutional and statutory law.
 
AAP believes that the basic concepts of the legislation proposed to redress this matter in the House (H.R.2344) and Senate (S.1191) are both fair and necessary to the economic well-being of book publishing and other IP-based industries that are so critical to the well-being of the U.S. economy. We urge State officials to note the following points in considering our request for his assistance on this matter of serious concern to book publishers and other copyright -based industries:

• State entities have no greater entitlement to copyright protection under federal law than other persons, and it is manifestly unfair for them to fully claim all of the beneficial rights provided by federal copyright statutes – including the full panoply of statutory remedies for infringement – while asserting sovereign immunity to deny the full benefits of those same rights and remedies to others.
• State entities had no record of unusual exposure to frivolous or other abusive copyright litigation during the lengthy period in which they were first assumed and, later, explicitly made to be subject to damage remedies under the copyright and other federal IP statutes. But, without the availability of damages liability in federal court, copyright and other IP owners are left with limited and inadequate federal and state remedies to deter and redress even the most blatant and harmful infringements by State entities. 
• Without the availability of damages liability against State entities, there will be greatly diminished deterrence against infringement by such entities, as some – particularly among public libraries and educational institutions – will have greatly diminished incentive to participate in marketplace licensing transactions and to ensure that their use of copyrighted works otherwise adheres to statutory limitations, including those provided in special provisions established for their benefit under copyright law.
• The Internet and other digital technology developments raise the stakes of infringement by such State entities by greatly enhancing the risk that the marketplace for certain copyrighted works can be harmed or eliminated through widespread unauthorized reproduction, distribution or display of such works. For publishers, this risk is particularly acute with respect to the kind of online activities that can occur through Internet access and the use of other digital networks at some State libraries and educational institutions.
• To the extent that some State educational institutions are competing   with commercial and not-for-profit publishers that are not State entities in the marketplace for “distance education” and other instructional materials and literary works, the ability to assert sovereign immunity to escape potential damages liability for infringement creates unfair competitive advantages that can distort the marketplace.
• Ongoing efforts by the U.S. Government to support U.S.-based copyright industries in securing the agreement of foreign governments to provide optimal levels of copyright protection in the global marketplace will undoubtedly suffer – and the U.S. may even be subject to actions for WTO TRIPS violations – as a result of the elimination of copyright damages remedies against State entities through the assertion of State sovereign immunity.

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For more information contact:

Allan Adler
Ph: 202-220-4544
Email: adler@publishers.org