New Era Publications Intern., ApS v. Henry Holt and Co., Inc.

• Decision Date: 19 April 1989
• Docket Number: Nos. 388,D,421,s. 388
• Citation: 873 F.2d 576
• Parties: , 1989 Copr.L.Dec. P 26,415, 10 U.S.P.Q.2d 1561, 16 Media L. Rep. 1559 NEW ERA PUBLICATIONS INTERNATIONAL, ApS, A Corporation of Denmark, Plaintiff-Appellant, v. HENRY HOLT AND COMPANY, INC., A New York Corporation, Defendant-Appellee. ockets 88-7707, 88-7795.
• Court: U.S. Court of Appeals — Second Circuit

Page 576

873 F.2d 576

57 USLW 2658, 1989 Copr.L.Dec. P 26,415,

10 U.S.P.Q.2d 1561,

16 Media L. Rep. 1559

NEW ERA PUBLICATIONS INTERNATIONAL, ApS, A Corporation of Denmark, Plaintiff-Appellant, v.HENRY HOLT AND COMPANY, INC., A New York CorporationDefendant-Appellee.

Nos. 388, 421, Dockets 88-7707, 88-7795.

United States Court of Appeals Second Circuit.

Argued Sept. 30, 1988.

Decided April 19, 1989.

Michael Lee Hertzberg, New York City(Eric M. Lieberman, Nicholas E. Poser, David B. Goldstein, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York City, of counsel), for plaintiff-appellant.

Robert M. Callagy, New York City(W. Mallory Rintoul, Mark A. Fowler, Satterlee Stephens Burke & Burke, New York City, of counsel), for defendant-appellee.

Before OAKES, MINER and ALTIMARI, Circuit Judges.

MINER, Circuit Judge:

Preface

We re-visit the doctrine of fair use in this action for copyright infringement brought to enjoin publication of the biography of Church of Scientology founder L. Ron Hubbard and to recover damages for the alleged infringement.The biography, written by Russell Miller, who is not a party to the action, is entitled: Bare-Faced Messiah: The True Story of L. Ron Hubbard(hereafter "the book" or "the biography").The plaintiff in the suit, appellant here, is New Era Publications International, ApS ("New Era"), a Danish corporation.It holds by license certain copyrights bequeathed to the Church of Scientology by Hubbard, who died in 1986.The publisher of the book, Henry Holt and Company, Inc.("Holt"), is the defendant in the action and the appellee here.New Era's claim that the extensive reproduction of Hubbard's published and unpublished writings in the biography amounts to infringement of the copyrights it holds is met by Holt's defense that the use of the Hubbard materials is "fair" and therefore not infringing within the meaning of the Copyright Act.The district court concluded that the use of the unpublished material "cannot be held to pass the fair use test" and therefore found "that Bare-Faced Messiah to some degree infringes Hubbard's copyrights in some of his previously unpublished works."New Era Publications International, ApS v. Henry Holt and Co., 695 F.Supp. 1493, 1524-25(S.D.N.Y.1988).For various reasons, however, the district court declined to issue an injunction, but instead relegated New Era to the remedy of damages.We affirm, although we conclude that laches is the sole bar to issuance of an injunction.

I.Procedural History

This action was preceded by lawsuits commenced in 1987 to enjoin publication in England and Canada (each of these suits was dismissed for laches) and in Australia (this suit ultimately was withdrawn).Despite the fact that an attorney representing the Church of Scientology had corresponded with Holt in May of 1986 in an effort to discourage publication of the book, no action to enjoin publication was commenced in the United States until the complaint in this action was filed in the Southern District of New York on May 4, 1988.Immediately after filing the complaint, New Era applied for a temporary restraining order.

Judge Leval, to whom this case was assigned in the district court, initially denied the temporary restraining order for laches, noting the following in a written decision dated May 13, 1988:

Never did the plaintiff take sufficient steps to obtain a copy of the book to determine whether it differed from the books published in England, Australia, and Canada.Never did the plaintiff ask Holt when it would be published.The plaintiff did not take any legal step until May 4[1988] when it sought the temporary restraining order.By that time, as it turned out, the defendant had published the book, having printed and packed 12,000 copies, and having sent out review copies on April 27.With the exception of 3,000 copies that a trucker had failed to collect and which were waiting on the loading dock, the first printing had been shipped beyond the publisher's control.To fill additional orders, Holt had scheduled a second print run for May 6.

New Era Publications International, ApS v. Henry Holt and Co., 684 F.Supp. 808, 809-10(S.D.N.Y.1988).

A week later, on May 20, 1988, after New Era agreed to post an undertaking to indemnify Holt for any "unrecoverable expenses" incurred by Holt during the period of delay, Judge Leval granted a temporary restraining order restraining distribution of the second printing of the book.According to a Stipulation signed by the parties on May 31, 1988 and approved by Judge Leval on June 3, 1988, "unrecoverable expenses" include "a pro rata share of the overhead, with respect to the 10,000 book second printing and any books from the first printing returned to Holt, as a result of the Temporary Restraining Order issued by the Court on May 20, 1988 and incurred with respect to the advance payment to the author, and for advertising and publicity."

Thereafter, the parties proceeded with an expedited trial on submissions of evidence pertaining to the permanent injunction question.Judge Leval's opinion and order denying the injunction was issued on August 9, 1988(amended on August 16, 1988) and, on August 11, 1988, a partial judgment was entered "dismissing plaintiff's complaint only insofar as the complaint seeks entry of a permanent injunction."The judgment recites that trial of the damages issue will not be conducted in the near future; that Holt would be "irreparably harmed" if required to await a final judgment dispositive of all claims; that Holt is entitled to a final judgment denying a permanent injunction; and that "there is no just reason for delaying entry of such judgment."SeeFed.R.Civ.P. 54(b).

Also entered in the district court on August 11, 1988 was an order vacating the temporary restraining order but staying the vacatur for three weeks to maintain the status quo ante pending an application for expedited appeal.On August 30, 1988, this Court granted New Era's motion for an expedited appeal and continued the stay until oral argument.Following oral argument, on September 30, 1988, the stay was continued pending the decision of this Court.

II.The Book

The publisher summarizes the contents of the book in a blurb printed on the book's jacket:

Bare-Faced Messiah, the biography of L. Ron Hubbard, makes for extraordinary reading.From his early days as a penniless author of "pulp" science fiction stories to his mysterious end, Hubbard was often in the news, usually at odds with society, frequently in trouble with the law.Born in 1911, the son of a struggling Nebraska businessman, he led a wandering, wildly romantic youth in which his dreams and his realities often became confused.

While writing for the pulps in the 1930s he claimed to have made a discovery of such philosophical and psychological importance that it would change the world.From that discovery evolved the "science" of Dianetics which prospered briefly and then foundered in a sea of debt and writs.In 1952 Hubbard founded a far more ambitious program, Scientology, a new religion which claimed to give its adepts the ability to overcome all diseases of the mind and body....

For nearly ten years he sailed the oceans as the commodore of his own private navy, served by nymphet messengers in hot pants who dressed and undressed him and were trained like robots to relay orders in his tone of voice.

* * *

His last years were as peripatetic and unsettled as his youth, and far more paranoid.In 1980, fearing arrest, he disappeared and was never seen again.He died in January 1986 under circumstances as mysterious as his enigmatic life itself.

The tone of the book is set in the author's Introduction:

For more than thirty years, the Church of Scientology has vigorously promoted an image of its founder, L. Ron Hubbard, as a romantic adventurer and philosopher whose early life fortuitously prepared him, in the manner of Jesus Christ, for his declared mission to save the world.The glorification of 'Ron', superman and saviour, required a cavalier disregard for facts: thus it is that almost every biography of Hubbard published by the church is interwoven with lies, half-truths and ludicrous embellishments.The wondrous irony of this deception is that the true story of L. Ron Hubbard is much more bizarre, much more improbable, than any of the lies.

The author purports to contrast factual and fictional accounts of Hubbard's life in almost every chapter of the book, drawing upon information gleaned from numerous sources: newspaper stories and other published accounts; personal interviews; letters; memoranda; records of various court proceedings; materials obtained under the Freedom of Information Act from United States government agencies; publications of the Church of Scientology; and Hubbard's own writings, published and unpublished.Hubbard was a prolific writer, and the biography contains liberal quotations from his work, particularly from his unpublished early diaries and journals.

The book proceeds in conventional chronological order, commencing in Chapter 1("A Dubious Prodigy") with accounts of Hubbard's ancestry and early childhood.The accounts presented by Hubbard are portrayed as exaggerated and untrue.For example, the book contradicts Hubbard's claims that he was descended from a French Count on his mother's side; that he grew up on an immense cattle ranch owned by his grandfather in Montana; and that he became a blood brother of the Pikuni Indians before he was ten years of age.

In Chapter 2("Whither did he Wander?"), the book refutes Church of Scientology publication descriptions of Hubbard's teenage travels, said to have been financed by a wealthy grandfather: up and down the coast of China several times and to Tibet (where Hubbard lived with bandits who accepted him into their way of life); in western Manchuria (where he demonstrated his horsemanship to ruling warlords); to an unnamed island in the...