The Copyright Act gives a copyright owner certain exclusive rights but what happens when another federal statute grants the same rights to others. When those others engage in conduct authorized by another federal statute may the copyright owner still sue for infringement? International Swaps and Derivatives Assoc. v. Socratek grudgingly said yes after acknowledging the “scant case law” resolving conflicts between federal statutes and the Copyright Act.
The issue in that case was one of first impression: the copyright implications of documents filed with the SEC and available on the website it oversees called the Electronic Data Gathering Analysis and Retrieval system or EDGAR. The facts are as follows.
The plaintiff, International Swaps and Derivatives Association (“ISDA”), is a trade association whose members deal in privately negotiated derivatives. ISDA created and sold blank contract forms called “Master Agreements” that its members use in derivatives transactions. The parties often file these agreements with the SEC where they are posted on EDGAR. Once posted, a provision of the Securities Exchange Act, 17 U.S.C. § 78ll (1) (D), authorizes any member of the public to access, review, download and sell those documents.
Defendant Socratek did just that. It obtained copies of filed agreements and sold them for a profit from its website. When sued for copyright infringement, Socratek claimed the Exchange Act preempted the Copyright Act and immunized its conduct.
Judge Baer in the Southern District of New York was not persuaded, denying defendant’s motion to dismiss. The court gave the Exchange Act provision a narrow reading stating it “describes how the private contractor operating EDGAR should disseminate its filings.” Although the court acknowledged that this Exchange Act’s provision “for copying and distribution may be in some conflict with the Copyright Act, there is little indication at this time that it [the provision] was intended to preempt the rights” of copyright holders.
The court also denied ISDA’s motion for preliminary injunction. Although the court, pre-Salinger, applied a presumption of irreparable harm, the court found that presumption rebutted. Judge Baer stated there was little likelihood of marketplace confusion because the ISDA-created forms “have been in SEC public filings for years and this is the first indication of anxiety about their distribution and reproduction.” The court added it was “hard to see how Socratek’s sale of the same agreements that a person could acquire from EDGAR or Lexis would create any unique and irreparable” harm.
I think Judge Baer reached the right result. The court was understandly reluctant to find that the Exchange Act provision, apparently drafted without co0ncern for its possibly impact on the Copyright Act, preempted that Act. Further, EDGAR’s accessibility to the public should not divest the documents stored there of whatever copyright protection they may have. But Socratek crossed the line when it tried to exploit for private gain these copyrighted works.
Does this decision suggest that attorneys copying and using documents filed on Pacer face any liability? I doubt it. That’s because the use of copyrighted works in litigation is generally protected by fair use.
For more on this decision, see the fine article in Litigation News published by the ABA and written by Robert Rodriguez. It contains quotes from Kim Jessum, Esq. of Philadelphia and me about the case.
A postscript: shortly after Judge Baer issued its decision ISDA dismissed its action with prejudice.