IP Law Daily Copyright Act’s deposit requirement did not violate Fifth or First Amendments
Monday, July 26, 2021

Copyright Act’s deposit requirement did not violate Fifth or First Amendments

By Pamela C. Maloney, J.D.

An independent book publisher’s claim that the deposit requirement amounted to an unconstitutional taking and was a burden on its free speech rights was rejected.

The Copyright Act’s requirement that two copies of every new work eligible for copyright must be deposited with the Copyright Office did not amount to an unconstitutional taking under the Fifth Amendment because the publisher who objected to the requirement received compensation in the form of copyright protection in exchange for the voluntarily deposit of the works, the federal district court for the District of Columbia ruled. The district court also found that the deposit requirement did not impose a burden so great as to violate the publisher’s free speech rights under the First Amendment (Valancourt Books, LLC v. Perlmutter, July 23, 2021, Jackson, A.).

Valancourt Books, an independent press that publishes "rare, neglected, and out-of-print fiction" and operates a print-on-demand model out of its owner’s home, received a demand letter from the Copyright Acquisition Division of the Copyright Office requesting a copy of all 341 books in the company’s catalog. Valancourt responded, asking the Copyright Office to withdraw its request and offering to sell its books at cost with no markup, claiming that the cost of sending each new title was greater than the value of business obtained from the catalogue control number it had been receiving in return. The Copyright Office refused, maintaining its position that Valancourt was required to deposit any book containing copyrightable material. It also informed Valancourt that the company’s practice of depositing works in exchange for a catalog control number did not meet the requirements of the Act. The Copyright Office updated its demand letter to reduce the total number of requested books from 341 to 240 after a review of the company’s titles showed that a number of the books consisted entirely of reprinted material from the public domain.

In response, Valancourt filed a lawsuit against the U.S. Copyright Office and the U.S. Attorney General, alleging that Section 407 of the Copyright Act, which required that two copies of every new work eligible for copyright must be deposited with the Copyright Office, was an unconstitutional taking of private property in violation of the Fifth Amendment and, furthermore, that it was a burden on freedom of speech in violation of the First Amendment. While the litigation was pending, the Copyright Office notified Valancourt that it could submit the requested copies as well as all future works electronically rather than in print. Before the court were motions for summary judgment filed by both sides.

Jurisdictional issue. As an initial matter, the district court addressed the jurisdictional question of whether the dispute was moot in light of the Copyright Office’s offer to accept electronic versions of the outstanding works and all future works published by Valancourt. According to the company, in order to comply with the alternative means of satisfying the deposit requirement, it would have to spend time and energy, however minimal, to search its electronic records and update the formatting of its materials to meet modern standards. Although the harm faced by Valancourt was less burdensome under the Copyright Office’s concession, it did not render the entire case moot. In addition, because Valancourt rejected the Copyright Office’s offer to accept electronic copies of its works, the dispute was live and, therefore, the district court had jurisdiction over the case.

Fifth Amendment challenge. Citing U.S. Supreme Court precedent and Ninth Circuit authority on the constitutionality of the deposit requirement under the Takings Clause, the district court concluded that the requirement was not an unconstitutional taking, but was a voluntary exchange in return for federal copyright protection. The deposit requirement at issue in this case was similar to the EPA’s requirement that chemical companies disclose health and environmental safety information, including proprietary trade secret information, as a condition of their receipt of a license to market certain products (Rucklehaus v. Monsanto Co., 467 U.S. 986 (1984)). The voluntary exchange at issue in Monsanto gave the chemical companies license to sell chemicals, thus giving them a valuable opportunity that was not otherwise available to them. Similarly, under the Copyright Office deposit requirement, Valancourt voluntarily could exchange of copies of its work for copyright protection, which gave the company the right to include a notice of copyright in its books, thereby deterring potential infringers. As such, this government benefit went beyond mere participation in the market, because publishers could print and sell books without complying with the deposit requirement, and, therefore, the requirement did not constitute a physical taking without just compensation.

The Ninth Circuit, in directly addressing the deposit requirement under the Takings Clause, concluded that Congress had the authority to place conditions on the grant of a statutory benefit and that conditioning copyrights on a contribution to the Library of Congress furthered this overall purpose (Ladd v. Law & Tech Press, 762 F.2d 809 (9th Cir.1985)). The Ninth Circuit also had rejected the theory advanced by Valancourt that since the 1976 revision of the Copyright Act, which specified that the deposit requirement would no longer be a condition of obtaining copyright protection, Supreme Court case law was no longer applicable. The 1976 amendments did not eliminate the deposit requirement, but merely changed the method by which it was enforced, the Ninth Circuit instructed.

The district court further concluded that the 1988 amendment to Sec. 407, which provided that copyright protection attached as soon as a work was published—even in the absence of a notice, as long as the owner was based in the United States—did not render the deposit requirement an unconstitutional taking because the publisher was no longer exercising a choice to exchange a copy of its work for protection. In enacting the 1988 amendment, Congress took pains to specify that the amendment was not a substantive change, but simply the timing of when the deposit requirement would be triggered for works published in the United States. Thus, the deposit requirement remained a modest exchange for the public good in return for the receipt of a private benefit held out to the public.

Furthermore, it was not, as argued by Valancourt, a prerequisite for seeking a copyright. The district court explained that the requirement remained a condition of receipt of the benefit of federal copyright protection. Despite the company’s insistence that it never sought or exercised the protections of copyright ownership, the complaint specifically alleged that despite the presence in the public domain and the age of many of the works it published, the editorial enhancements that Valancourt added to the works, including scholarly introductions and footnotes, were subject to copyright protection. Valancourt could not warn the public that parts of its publications were subject to protection while simultaneously claiming that it should not be bound by the deposit requirement which was triggered by its receipt of that government benefit.

First amendment claim. Arguing that the deposit requirement was a content-based restriction on speech, Valancourt asserted that a strict scrutiny standard should be applied to the issue of whether the requirement violated the First Amendment. The district court rejected this argument, stating that the deposit requirement was not a content-based mandate on its face because all publishers in the United State must comply, regardless of the subject matter, author, or publisher involved. The district court also concluded that the fact that only publishers receiving a demand letter from the Copyright Office could be fined for noncompliance and that the letters were not sent out at random did not transform the deposit requirement into a content-based restriction in practice. Instead, Valancourt’s challenge raised questions about the Copyright Office’s discretionary enforcement of the requirement rather than about the deposit requirement itself. In addition, the challenge did not rise to the level of showing that the Copyright Office’s decisions were based on content as there was nothing in the record to suggest that the Copyright Office had any particular problem with the republication of classic works of literature.

Valancourt argued in the alternative that even if the deposit requirement was content-neutral, it was unconstitutional because it imposed burdens on speech that were "wildly" disproportionate to any benefit derived by the government. The district court again agreed with the Ninth’s Circuit’s decision in Ladd that the deposit requirement did not burden free speech at all. According to the Ninth Circuit, the primary purpose of the Copyright Clause was to promote the arts and sciences for the public good and, therefore, the provision of the Copyright Act which sustained a national library for the public use was necessary and proper. In addition, the deposit requirement was well-tailored to further the public interest in promoting the arts and sciences with a public repository and it imposed an obligation that was not greater than necessary to achieve that public goal.

Valancourt’s claim that the economic burdens on speech imposed the Copyright Act’s requirement that it give away books or pay fines were too burdensome was rejected on the ground that the burden of complying with the deposit requirement was minimal given the Copyright Office’s offer to accept digital copies of the works in question. Although Valancourt had described the effort involved in preparing digital copies, the company was free to choose between devoting the time needed to generate the digital copies at no financial cost, submitting hard copies at a modest cost, or disavowing copyright protection altogether. Given these circumstances, the requirement did not contravene the First Amendment.

The Case is No. 18-1922 (ABJ).

Attorneys: Jeffrey H. Redfern (Attorney at the Institute for Justice) for Valancourt Books, LLC. Daniel Riess, U.S. Department of Justice, for Merrick B. Garland.

Companies: Valancourt Books, LLC

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