Do website terms trump copyright law?
January 24th, 2023
The US Supreme Court may need to decide whether the US Copyright Act preempts breach of contract claims arising from website terms of services.
In a pending petition for a writ of certiorari, the question presented is
Does the Copyright Act’s preemption clause allow a business to invoke traditional state-law contract remedies to enforce a promise not to copy and use its content?
The petition arose out of the Second Circuit’s decision in the case of ML Genius Holdings LLC v. Google LLC.
As the court described,
Genius is an internet platform on which music fans transcribe song lyrics. Genius allegedly discovered that LyricFind was copying its transcriptions and licensing them to Google, which displayed the copied transcriptions in response to user searches, thereby depriving Genius of web traffic. Genius therefore sued Defendants in New York state court.
Concluding that Genius's claims were preempted by the Copyright Act, the district court dismissed the case for failure to state a claim.
Section 301 of the Copyright Act states:
On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
Preemption under § 301 is called "statutory preemption."
The second prong of the statutory preemption test, which is called the "equivalence" or "general scope" requirement, "looks at the right being asserted (over a work that comes within the 'subject matter of copyright') and requires (for preemption to apply) that the right be 'equivalent to any of the exclusive rights within the general scope of copyright.
But even if a claim otherwise satisfies the general scope requirement, a claim is not preempted if it "include[s] any extra elements that make it qualitatively different from a copyright infringement claim," noted the court, saying
The critical inquiry is whether such extra elements of the state law claim beyond what is required for copyright infringement change the nature of the action so that it is qualitatively different from a copyright infringement claim. … To determine whether a claim is qualitatively different, we look at what the plaintiff seeks to protect, the theories in which the matter is thought to be protected and the rights sought to be enforced….
The court rejected Genius’s argument “for a per se rule that all breach of contract claims are exempt from preemption.”
The Second Circuit joined the Sixth Circuit in its approach to copyright preemption of state contract law claims. However, the Federal Circuit (applying First Circuit law) held that the Copyright Act did not preempt contract law claims in a case where the plaintiff sued a software developer that reverse-engineered software in violation of a shrink-wrap license.