It’s a Taking: Copyright Deposit Requirement Violates Fifth Amendment

By on September 7, 2023
Posted In Copyrights

Addressing the issue for the first time, the US Court of Appeals for the District of Columbia found that the Copyright Act of 1976’s requirement to deposit two copies of a work with the Library of Congress within three months of the work’s publication was unconstitutional under the Fifth Amendment’s Takings Clause. Valancourt Books, LLC v. Merrick B. Garland and Shira Perlmutter, Case No. 21-5203 (D.C. Cir. Aug. 29, 2023) (Srinivasan, Henderson, Edwards, JJ.)

Valancourt Books is a small business in Richmond, Virginia, which publishes rare and out-of-print fiction on an on-demand basis (i.e., in response to a specific customer request). Despite never having sought copyright registration for any of its works, Valancourt received a letter in 2018 from the US Copyright Office (CO) demanding a complete copy of 341 books published by Valancourt “for the use or disposition of the Library of Congress.” Failure to comply would subject Valancourt to fines of up to $250 per work plus the total retail price of the copies and an additional $2,500 for repeated failure to comply. Valancourt responded that it could not afford to submit copies of all the requested works, noting that some of the works contained material in the public domain and offering instead to sell copies of the works to the CO at cost. In response, the CO narrowed the list of requested copies to 240 works.

Valancourt sued seeking a declaration that the application of Section 407 of the Copyright Act is unconstitutional under the First and Fifth Amendments and an injunction against its enforcement. The CO offered Valancourt the option to electronically submit the deposits, but Valancourt declined. The parties both moved for summary judgment. After considering whether the CO’s offer to accept electronic copies had mooted the dispute, the district court concluded that the CO’s offer had merely narrowed the dispute to one of electronic deposit copies and granted summary judgment to CO on the constitutional claims. Valancourt appealed.

Valancourt challenged the district court’s grant of summary judgment on Valancourt’s First and Fifth Amendment claims and the district court’s conclusion that the dispute had been limited to one about electronic copies. The DC Circuit agreed, stating that the CO’s “offer did not moot Valancourt’s challenge to the demand for physical copies” because “[a] party’s voluntary cessation of challenged conduct does not moot the challenged [requirement] unless it is ‘absolutely clear’ that the challenged conduct will not recur after the litigation.” Accordingly, the Court considered only the demand for physical (rather than electronic) deposits.

With respect to Valancourt’s constitutional challenges, the DC Circuit concluded that Section 407’s requirement for physical deposit copies violated the Fifth Amendment’s Takings Clause as there was no benefit received by the copyright owner in response to the deposit: “A demand for personal property would not be a taking . . . if it involved a voluntary exchange for a governmental benefit.” In this case, however, no such benefit existed. Pursuant to the Copyright Act, copyright attaches automatically upon fixation of a work in a tangible medium, and there is no longer any copyright loss sanction for failure to deposit. The Court further noted that in 1988, the Copyright Act was amended to comply with the Berne Convention for the Protection of Literary and Artistic Works, which prohibits conditioning copyright on “any formality.” Consequently, Congress removed the requirement to include a copyright notice on published works. As explained by the Court, these “changes to the copyright law untethered the deposit requirement from the benefits of copyright protection, erasing copyright’s status as the product of a voluntary exchange.”

The DC Circuit noted that “perhaps the clearest sign that mandatory deposit is unrelated to retaining copyright” is that the “statute itself declares that the deposit requirement is not a ‘condition[] of copyright protection.’” Rather, copyright is “instant and automatic,” and “mandatory deposit [is not] required to continue retaining copyright and its benefits.”

The CO argued that Section 407 is a voluntary exchange (and thus constitutional under the Fifth Amendment) because “a copyright owner can readily disavow copyright protection and thereby avoid the deposit requirement.” Noting that a “costless option by which to abandon a copyright could be argued to provide copyright owners with a comparable way to avoid having their property unlawfully taken,” the Court did not review such an option because there was no evidence that it existed: “In the end, the only affirmative indication of a costless abandonment option is the government’s statements in this litigation.”

Finding that Section 407’s requirement for physical deposits amounted to an unconstitutional taking under the Fifth Amendment, the DC Circuit did not consider the First Amendment challenge as the scope of relief would be similar. Accordingly, the Court reversed the district court’s judgment of summary judgment for the government and remanded the case with instructions to grant summary judgment for Valancourt.

Practice Note: The DC Circuit noted that its decision was “tied to the particular circumstances,” and suggested that “[i]f there were a simple, seamless, and transparent way to opt out of copyright protection, perhaps mandatory deposit would fall outside the realm of the Takings Clause because any forfeiture of property might arguably be voluntary.” This decision may lead to legislative amendments to the Copyright Act (to provide a legal quid pro quo for the deposit) or changes to CO practices.

Eleanor B. Atkins
Eleanor (Ellie) B. Atkins focuses her practice on trademark, copyright, sweepstakes and promotions, and false advertising matters. Ellie is experienced in client counsel, strategy and legal research, including portfolio management and the selection, clearance, prosecution, registration and enforcement of trademarks. Additionally, she has assisted with district court litigation as well as actions before the Trademark Trial and Appeal Board, including drafting complaints, discovery requests and briefs in support of various motions. Read Ellie Atkins' full bio.