A federal appeals court yesterday threw out a hard-fought agreement between publishers and freelance writers to pay the writers for electronic reproduction of their work.
In a 2-to-1 decision, an appellate panel ruled that the courts had no jurisdiction over the copyright dispute and that a lower court erred in accepting the writers' lawsuit and approving the settlement.
People on both sides of the dispute said it was unclear what would happen next - whether the decision would be appealed, a new suit filed, or a new agreement negotiated.
"The decision is an outrage, and I hope it's appealable to the Supreme Court," said Gerard Colby, president of the National Writers Union, and a plaintiff.
In 2001, the United States Supreme Court ruled that digital reproduction of newspaper, magazine and other articles without the writers' permission violated their copyrights. Publishers removed such articles from their digital archives and began requiring freelancers to explicitly cede electronic rights to their work.
But that did not resolve claims for monetary damages for the earlier violations. In Federal District Court in Manhattan, Judge George B. Daniels allowed a class-action suit by writers and their organizations; without that crucial step, each writer determined to win payment would have had to sue individually.
The suit named major publishers and archive services, including the Thomson Corporation, The New York Times Company, Dow Jones & Company, the LexisNexis unit of the Reed Elsevier Group and the Tribune Company.
After years of negotiation, the companies and the writers reached a settlement in March, 2005, which the judge approved. It provided for mostly modest payments to freelancers, and capped the publishers' payout at $18 million.
But yesterday, the United States Court of Appeals for the Second Circuit in Manhattan voided the settlement.
In his decision, Judge Chester J. Straub wrote that federal copyright law allows claims for damages only by writers who have registered their work with the United States Copyright Office. The vast majority of freelancers did not register, so he said the courts had no jurisdiction over their disputes, and the case should not have been approved as a class-action suit.
He noted that the defendants had themselves made similar arguments before settling and stated that they settled the case out of "the desire to achieve global peace in the publishing industry."
The settlement had recognized the gap in standing, providing higher payments for writers who had registered their work with the copyright office. Judge Ralph K. Winter joined in the majority.
In a dissenting opinion, Chief Judge John M. Walker argued that the registration requirement was a malleable procedural rule for processing a legal claim, not a strict limit on the court's jurisdiction.
