Equity's unstated domain: the role of equity in shaping copyright law.

• Author: Balganesh, Shyamkrishna
• Position: The Constraint of Legal Doctrine

INTRODUCTION I. The "Equity" of the Statute II. The Equity of the Copyright Statute A. Copyright's Substantive Equity 1. Fair Use: Harper & Row 2. Originality: Feist 3. Secondary Liability: Sony and Grokster 4. First Sale: Kirtsaeng 5. Public Performance: Aereo B. Copyright's Adjectival Equity 1. Attorneys' Fees: Fogerty 2. Registration: Reed Elsevier 3. Laches: Petrella CONCLUSION: THE SUPREME COURT AND REALISM IN COPYRIGHT LAW INTRODUCTION

As used today, the term "equity" connotes a variety of related, but nonetheless distinct, ideas. In most contexts, equity refers to the body of rules and doctrines that emerged in parallel with the common law, and which merged with the common law by the late nineteenth century. (1) At a purely conceptual level, some trace the term back to Aristotle's notion of epieikeia, or the process of infusing the law with sufficient flexibility to avoid injustice. (2) Lastly, at a largely practical level, a few treat equity as synonymous with a set of remedies that courts can authorize, all of which are characterized by being "extraordinary" and "discretionary" in form and substance. (3)

While equity is often understood as either a repository of substantive rules and doctrines, or, more generally, as a parallel court system that developed in seventeenth and eighteenth century England with its own set of procedural rules and uniquely discretionary remedies, this understanding is incomplete in one important respect. Equity also represents a distinctive approach to legal reasoning within a primarily statute-centric area of law, involving an increased role for courts in the lawmaking process and a ready recourse to a set of ethical principles that are presumed to be normatively superior to the strict letter of the law. (4) In the traditional common law this use of equity came to be known as the process of "equitable interpretation" (5) or as determining the "equity of the statute." (6) Used in this conception, it authorized courts to extend or restrict the otherwise clear words of a statute to give effect to the statute's "ratio or purpose." (7)

In this Article, we argue that equity, understood in this sense, is deeply influential in the construction and operationalization of copyright doctrine. While copyright law is obviously statutory in origin, the influence of equity on its working is best seen in relation to the role that the federal courts--primarily the U.S. Supreme Court--have had on its shape and direction. In a variety of doctrinal areas, the Supreme Court's copyright jurisprudence reveals a distinct pattern of curbing behavior that, while in strict compliance with the letter of the law, is inconsistent with the values and purposes of the copyright system. The Supreme Court's efforts to align the text of the statute's directives with its perceived goals thus partakes of what the common law characterized as the process of giving effect to the equity of the statute. While premised on the notion of gap filling, the process was routinely directed at curtailing opportunistic behavior on the part of litigants who sought to take advantage of the statute's literal terms, while violating the unstated normative goals of the legislation. A careful examination of Supreme Court decisions on core copyright issues over the last few decades reveals the profound role that the equity of the statute has had on the content of copyright doctrine. In addition, it sheds light on the real and all too often overlooked role that courts play in the creation and construction of both copyright doctrine and the copyright system's underlying goals and values.

To understand why copyright law has maintained such a close rapport with this understanding of equity, it is necessary to understand the symbiotic relationship between copyright law and technology. Very few legal areas are as profoundly affected by technological change as is copyright law. This reality of constant technological change, as well as the development of new business models in the market for informational goods and services, has required copyright law to update the applicability of its core goals and ideals to new situations. The formal content of its statutory directives has routinely proven to be outdated, and legislative reforms have often proven to be an inadequate means of redress. (8) In these myriad situations, the Court has had to step in and use its interpretive powers to protect the normative integrity of our copyright system. In engaging in this process, the Court has effectively determined the equity of the copyright statute's substantive content, despite occasional allusions to Congressional intent. (9) We term this shaping of copyright's core substantive rights by reference to an actual or imputed purpose (or set of goals) for the institution, the process of determining the "substantive equity of the statute."

Beginning with the Supreme Court's famed decision in Harper & Row, where the Court introduced a "good faith" requirement into the statutory fair use analysis in order to hold the defendant liable, (10) the Court has expanded, constricted, and molded the directives of the copyright statute by reference to the institution's primary purposes. The same basic approach, we argue, serves to explain the Court's decisions in the areas of: originality, (11) secondary liability, (12) the first sale doctrine and its applicability to greymarket imports, (13) and, most recently, in the public performance right. (14) In each of these instances the Court's stated objective was to bring the substantive content of copyright doctrine in line with its own conception of copyright's principal values and ideals, recognizing that the text of the law allowed actors to ensure token compliance with the system, while subverting its motivating goals and objectives. An unstated recourse to the "equity of the statute" allowed the Court to shape copyright law to realign its content with its purposes.

Somewhat interestingly, equity's role as an unstated substantive gloss on copyright doctrine is to be contrasted with equity's express influence on the adjectival content of the copyright statute. We see equity playing a more overt role in shaping the copyright statute's procedural and remedial dimensions. In these areas, copyright law is conceived of by the Court as having been built against a set of background principles relating to the interaction between equity and the common law as parallel systems. The Court's copyright jurisprudence in these domains can be seen as balancing this interaction and preserving the traditional virtues of equitable decisionmaking--flexibility, discretion, and remedial equilibration--to allow future courts to give effect to copyright's goals and purposes on a situational basis. (15) This flexibility and discretion are in turn meant to be directed at policing parties' use of the copyright system to ensure that such use conforms to the underlying purposes of the system. Here too, the Court's jurisprudence can be seen as an effort to determine the equity of the statute. We characterize this approach as relating to the "adjectival equity of the statute."

The Supreme Court's jurisprudence relating to the copyright statute's remedial and procedural rules offers a good illustration of this phenomenon. In the areas of awarding a prevailing party reasonable attorneys' fees, (16) understanding the requirement of copyright registration as a prerequisite for a civil action, (17) and most recently relating to the availability of an independent laches defense to infringement, (18) we see the Court rejecting doctrinal formulations aimed at minimizing judicial discretion. When presented with two competing interpretations of the statute, both of which further copyright's purposes in some measure, the Court is seen to prefer the one that would preserve its flexibility for the future: a flexibility that it characterizes as necessary to realize an alignment between copyright's systemic goals and individual litigants' motives.

Equity thus modulates copyright law as both a substantive and adjectival gloss on doctrine. In the former, equity's mechanism is subtle, unstated, and often masked by a recourse to congressional intent; in the latter, it is overt, express, and tied to equity's emphasis on discretion and flexibility. Beyond shedding light on the role of equity in copyright law, the interplay between the two approaches also explains an important and often ignored attribute of copyright law that relates directly to the central theme of this Symposium: the perceived and actual role that courts play in determining the content of copyright doctrine and the goals of the copyright system.

An important caveat is in order here. In describing the Supreme Court's use of the statute's equity to develop copyright law under the copyright statute, we should not be understood as suggesting that the Court's substantive outcomes in the individual cases were "equitable" in the sense of being fair and just, nor indeed that the rule developed by the Court in the case was equitable in that sense. We do not make any such claim. Our concern in this Article is with explaining the process of lawmaking adopted by the Court in its copyright jurisprudence, and its efforts to fit and justify the process and outcome as a matter of copyright law and policy. (19) The ambition of this Article is, therefore, purely explanatory, not normative.

The Article unfolds in three Parts. Part I provides a brief overview of equity and the various ways in which the term has been used in legal thinking. Part II then illustrates the working of equity in copyright law, and differentiates between equity's role as a substantive and adjectival gloss on copyright doctrine. The paper then concludes by relating equity's role in copyright law to the question of how doctrine is created, shaped, and legitimized by courts in the copyright discourse.

1. THE "EQUITY" OF THE STATUTE

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