Reed Elsevier v. Muchnick: Copyright Registration is Not a Jurisdictional Requirement

Last week, the Supreme Court issued its highly-anticipated decision in Reed Elsevier v. Muchnick. The decision arose out of a class action settlement between publishers and authors following the Supreme Court’s holding affirming copyright infringement in New York Times, Co. v. Tasini. The Southern District of New York certified the settlement, but the Second Circuit reversed, holding that pursuant to §411(a) of the Copyright Act, the Court lacked subject-matter jurisdiction to approve the settlement because the settlement covered both registered and unregistered works. The Supreme Court reversed, holding that the registration requirement of §411(a) was a claim processing rule and not a jurisdictional requirement. It left open, however, the question of how strictly §411(a) should be applied.

The Second Circuit Decision

During proceedings before the Second Circuit in Reed Elsevier, the court sua sponte asked the parties to brief the issue of whether §411(a) was a jurisdictional requirement. In response, all parties filed briefs asserting that the district court had subject-matter jurisdiction to approve the settlement. The Second Circuit ruled that the district court lacked the subject-matter jurisdiction necessary to certify the settlement because some of the works at issue were unregistered. Certiorari was granted to resolve the question of whether §411(a) restricts the subject-matter jurisdiction of federal courts. Because no party’s brief supported the Second Circuit’s holding that the court lacked subject-matter jurisdiction, the Supreme Court assigned an amicus to draft the brief in support of the Second Circuit’s holding.

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Thunderstorms on the Horizon for Cloud Computing

With the U.S. economy still reeling from the aftershock of what is now known as the “Great Recession,” companies large and small are evaluating cloud computing as a means of reducing IT costs. The National Institute of Standards and Technologies (“NIST”) and the Cloud Security Alliance have defined cloud computing as a model for on-demand network access to a shared pool of computing resources over the internet, namely software applications, data servers, networks and other services. Just as businesses and consumers now pay for gas, electricity and other utilities, cloud enthusiasts predict that the cloud will be sold on demand as a pure IT service.

The Silver Lining

Industry groups like ISACA recognize the silver lining in the cloud. For example, there are potential cost savings in the economies of scale that are achievable in a shared computing environment. The cloud also allows companies to scale without any major software or hardware investment. Thus, cloud users are able to deploy new services more rapidly than they could in a traditional IT model. Cloud computing also can accommodate changing business requirements in a flexible and scalable format. By relocating IT services to the cloud, moreover, companies are freed to focus on their core businesses, improve processes, innovate and increase productivity. In short, the promise of cloud computing is compelling – convert IT private networks to an on-demand, pay-as-you-go IT utility service that produces substantial savings for users.

Storm Clouds Gathering

While the benefits of the cloud are clear, the recent security breaches reported by Google highlight just some of the attendant risks. Google notified users that it inadvertently shared private Document and Spreadsheet materials with contacts that were never granted access to them. In response to cloud computing risks, The Electronic Privacy Information Center, an industry watchdog, has filed an FTC complaint to investigate the privacy and security measures of Gmail, Google Docs and Google’s other “cloud computing” services. Even John Chambers, Cisco Systems’ Chairman and CEO, has conceded that the computing industry’s move to an on-demand IT service on the Internet was “a security nightmare.” And, Microsoft now has joined the bandwagon and called on U.S. legislators to enact a “Cloud Computing Advancement Act.”

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