The opinion of the court was delivered by: NEAL P. MCCURN
The moving plaintiffs, together with GMAC, commenced this suit in 1990 seeking a declaration that sections 341 and 342 of the STA ("the disclosure provisions") as applied to them, inter alia, conflict with, and therefore are preempted by, the Federal Copyright Act of 1976.
In addition, plaintiffs sought a judgment permanently enjoining the State from enforcing sections 341 and 342 of the STA against them.
Shortly before the present action was commenced, this court granted summary judgment to the plaintiff in Association of Am. Medical Colleges v. Cuomo, 728 F. Supp. 873 (N.D.N.Y. 1990), reversed, permanent injunction vacated and remanded, 928 F.2d 519 (2d Cir.), cert. denied, 502 U.S. 862, 112 S. Ct. 184, 116 L. Ed. 2d 146 (1991) ("AAMC I"), and permanently enjoined the State from enforcing sections 341 and 342 of the STA against it. At the time that the present action was commenced, an appeal was pending in AAMC I. In light of the status of that case, the State decided to enter into an agreement with regard to the temporary relief sought by the moving plaintiffs rather than risk the entry of a preliminary injunction. Thus, the motion for preliminary injunction was resolved by a stipulation in which it was agreed that during the 1990-1991 test year the moving plaintiffs would continue to disclose their tests in New York at the same rate as they had in the past. In addition, the moving plaintiffs would offer New York residents additional administrations of their tests with the understanding that these additional administrations would not be subject to the STA's disclosure requirements.
The terms of the stipulation were to expire when all appellate proceedings were concluded in AAMC I. The Second Circuit reversed the judgment of this court, vacated the permanent injunction, and remanded the case for further proceedings on March 12, 1991. However, the court enjoined the State from enforcing the STA provisions against AAMC during the pendency of the remand proceedings. Association of Am. Medical Colleges, 928 F.2d 519, 526 (2d Cir.), cert. denied, 502 U.S. 862, 112 S. Ct. 184, 116 L. Ed. 2d 146 (1991) ("AAMC II"). AAMC then applied for a writ of certiorari which the Supreme Court denied on October 7, 1991. Due to the fact that the appellate proceedings in AAMC I extended into the 1991-1992 test year, plaintiffs had a right, under the stipulation, to curtail the disclosure and filing of their test forms in that year. Only GMAC availed itself of that opportunity. While the moving plaintiffs continued to disclose tests at their historic rates, GMAC cut the number of disclosed tests in half, from four tests to two tests.
In November 1991, plaintiffs initiated discussions with the State to extend the stipulation regarding preliminary injunctive relief for a period of one more year. All of the plaintiffs, with the exception of GMAC, were willing to continue to disclose their tests at the same rates as they had done in the 1990-1991 test year. GMAC, on the other hand, was willing to disclose only two of the four tests that it would administer in the 1992-1993 test year. A stipulation extending the original compromise was executed by all of the plaintiffs except GMAC on December 24, 1991, and filed on January 21, 1992. GMAC then filed a motion for preliminary injunction on February 20,1992.
Since GMAC sought exactly the same relief in its 1992 motion as the moving plaintiffs presently seek, it is important to understand what this court did and did not decide in that instance. Like the moving plaintiffs, GMAC asserted that "the only basis for finding that the disclosure requirements of the STA do not constitute infringement must be founded on the fair use doctrine provided for in section 107 of the Copyright Act." See College Entrance Examination Board v. Cuomo, 788 F. Supp. 134, 139 (N.D.N.Y. 1992) (hereinafter referred to as "GMAC Decision"). Unlike the moving plaintiffs, however, GMAC rested its entire argument that the STA's disclosure requirements infringed upon its rights under the Copyright Act upon the fourth fair use factor. Although the court noted that it would discuss the other three factors, it concentrated its discussion, as GMAC had, on the fourth factor to determine whether or not GMAC had met its burden to demonstrate a likelihood of success on the merits of its copyright infringement claim. See id. at 140. After discussing each of the fair use factors, this court concluded that because "factor one favors the State, factor two favors GMAC, and factors three and four favor neither party, . . . GMAC has not demonstrated a likelihood of success on the merits of its copyright infringement claim." Id. at 143.
Although this conclusion precluded a grant of preliminary relief, the court, nonetheless, went on to discuss whether GMAC had demonstrated that it would suffer irreparable injury if such relief were not granted. In this regard, GMAC argued, inter alia, that because it had established a prima facie case of copyright infringement; i.e., that the STA's disclosure requirements did not constitute fair use, it was entitled to a preliminary injunction. The court rejected this contention, however, based upon its previous finding that GMAC had not shown a likelihood of success on the merits of its claim of copyright infringement. Therefore, the court held that GMAC had failed to demonstrate that it would suffer irreparable injury if this court failed to grant its motion. Id. at 144.
Finally, although not necessary to its decision, this court noted that there were other equitable considerations which mitigated against the court granting GMAC's motion for a preliminary injunction. In this regard, the court stated that "delays in seeking preliminary injunction serve as a ground for denying such relief." GMAC Decision, 788 F. Supp. at 145. The court found that GMAC, as well as the other plaintiffs, had waited ten years before commencing a suit challenging the STA. See id. Moreover, once the suit had been filed, GMAC, by stipulation, voluntarily continued to comply with the disclosure requirements for an additional year and then agreed to disclose two of its four tests for another year before moving for preliminary relief. See id. In addition, the court found that GMAC's argument that it sought preliminary relief to protect future violations of its copyrights was the same argument it could have made at any time during the ten years that the STA had been in effect. See id. Therefore, the court determined that "any alleged harm that GMAC may suffer during the pendency of this action is identical to the harm, if any, that it has endured during the last 10 years each time it has disclosed a test form." GMAC Decision, 788 F. Supp. at 145. Accordingly, the court concluded that "GMAC has failed to demonstrate the need for the preliminary relief it now seeks." Id.
because this constituted a retrenchment on the plaintiffs' part, and because the defendants had (and have) separation-of-powers concerns about entering stipulations that have the practical effect of amending a statute, the defendants last year insisted that the plaintiffs attempt to seek a legislative solution to their problem with New York's disclosure requirements.
Given the State's position, the moving plaintiffs did, in fact, seek a legislative solution to their problems with the STA. A bill was passed by the State Senate at the end of the legislative session in June 1994 which would have provided the moving plaintiffs with the relief they sought with respect to the 1994-1995 test year. The proposed amendment provided, in pertinent part, that in the test year beginning July 1, 1994, the College Board would offer four disclosed administrations of the SAT, the Graduate Record Examinations Board would offer two disclosed administrations of the GRE, and the Test of English as a Foreign Language Policy Council would offer five disclosed administrations of the TOEFL. Unfortunately, given the timing, it was obvious that the State Assembly would not be able to address this amendment before the end of the legislative session. Therefore, the State reluctantly entered into stipulations that permitted the moving plaintiffs to reduce their levels of disclosure in the 1994-1995 test year.
These stipulations will expire on June 30, 1995.
For the test year 1995-1996, the College Board and the Graduate Record Examinations Board seek to retrench their levels of disclosure even further. In this regard, the College Board seeks to reduce its level of compliance with the STA to three disclosed tests in 1995-1996, four disclosed tests in 1996-1997, and, if feasible, five disclosed tests in 1997-1998. In addition, in the 1995-1996 test year, the College Board would like to offer five nondisclosed administrations of the SAT in New York. See Plaintiffs' Memorandum of Law at 9 (citing Dietrich Declaration at P 29). The Graduate Record Examinations Board seeks to reduce its level of compliance to only two disclosed tests in 1995-1996, one disclosed test in 1996-1997, and, an as yet unspecified number thereafter. The Test of English as a Foreign Language Policy Council seeks only to preserve the status quo; i.e., it seeks to maintain the same level of disclosure that it offered between 1980 and 1994 (five tests) while making seven additional nondisclosed test dates available in New York.
The moving plaintiffs contend that "because the State has declined to extend the stipulation for upcoming years, plaintiffs have been forced to file this motion to protect their rights and those of New York test-takers." See Plaintiffs' Memorandum of Law at 8. To the contrary, the State asserts that
it is the plaintiffs' effort to back away from their historic levels of successful compliance with New York's disclosure law, which they maintained between 1980 and 1993 without apparent harm to the validity or reliability of their test instruments, that has made it necessary for them to file this motion. They do not want to "extend" the stipulation; they want an injunction that fundamentally alters it.
See State's Memorandum of Law at 11.
Whatever the reason, the moving plaintiffs have moved for a preliminary injunction enjoining the State from enforcing sections 341 and 342 of the STA against them during the pendency of this litigation.
I. Preliminary Injunction Standard
It is a well-settled rule that "[a] preliminary injunction is an extraordinary remedy that should be granted only upon a clear showing that there is a likelihood of success on the merits and irreparable injury." GMAC Decision, 788 F. Supp. at 138. Under ordinary circumstances, to obtain a preliminary injunction in this circuit, a plaintiff must demonstrate "(1) either a likelihood that [it] will succeed on the merits of [its] claim, or that the merits present serious questions for litigation and the balance of hardships tips decidedly toward the plaintiff; and (2) that without the injunction, [it] will likely suffer irreparable harm before the court can rule upon [its] claim." Fisher-Price, Inc. v. Well-Made Toy Mfg. Corp, 25 F.3d 119, 122 (2d Cir. 1994) (citations omitted) (emphasis in original). Despite this general rule, however, "'where the moving party seeks to stay governmental action taken in the public interest pursuant to a statutory or regulatory scheme, the district court should not grant the injunction unless the moving party establishes, along with irreparable injury, a likelihood that he will succeed on the merits of his claim.'" GMAC Decision, 788 F. Supp. at 139 (quoting Plaza Health Lab., Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989)). Accordingly, the court concludes that the moving plaintiffs are entitled to injunctive relief only if they are able to demonstrate irreparable injury and a likelihood of success on the merits.
The moving plaintiffs assert that the STA, as applied to them, is preempted by the Copyright Act. In this regard, they argue that the STA's disclosure provisions infringe upon their rights under the Copyright Act because they do not constitute "fair use" as defined by § 107 of that Act. Both the moving plaintiffs and the State spend most of their time addressing the four factors which courts must consider in determining whether a particular use of copyrighted material is a fair use. They do, however, briefly speak to the preliminary issue of whether the STA is, in fact, preempted by the Copyright Act.
The moving plaintiffs argue that the STA is preempted by the Copyright Act on two grounds. First of all, they assert that the STA "'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress' as set forth in the Copyright Act." See Plaintiffs' Memorandum of Law at 12 (quoting Jones v. Rath Packing Co., 430 U.S. 519, 526, 51 L. Ed. 2d 604, 97 S. Ct. 1305 (1977)) (other citation omitted). Alternatively, they argue that "the Copyright Act creates a comprehensive statute that occupies the field with no room left over for state regulation." See id. at 12-13 (citing Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 91 L. Ed. 1447, 67 S. Ct. 1146 (1947)) (footnote omitted). In contrast, the State contends that the STA is not preempted by the Copyright Act because "the Act is not intended to, and does not, grant rights similar to the exclusive rights granted to copyright owners under the Copyright Act, nor does it authorize others to diminish rights of copyright owners."
State's Memorandum of Law at 34. Instead, the State asserts that the STA "is intended to assure that certain standardized tests given in New York, which happen to be copyrighted, are fair to those who take them, and that their validity is open to public scrutiny."
As this court stated in AAMC I, "the central legal question presented is whether the disclosure requirements of New York's Standardized Testing Act clash with rights conferred upon plaintiff by the Federal Copyright Act of 1976, 17 U.S.C. § 101 et seq., in a manner which compels this court to find the State Act invalid by virtue of the Supremacy Clause of the U.S. Constitution." Id. at 874 (quoted in AAMC II, 928 F.2d at 522). In reviewing this issue, the Second Circuit explained that the Supremacy Clause may compel invalidation of state law in several ways:
"First, Congress may in express terms declare its intention to preclude state regulation in a given area. . . . Second, in the absence of an express declaration, preemption may be implied when the federal law is 'sufficiently comprehensive to make reasonable the inference that Congress "left no room" for supplementing state regulation.' . . . Finally, state law may be preempted 'to the extent that it actually conflicts with a valid federal statute.'"
AAMC II, 928 F.2d at 522 (quoting Darling v. Mobil Oil Corp., 864 F.2d 981, 985-86 (2d Cir. 1989) (citations omitted)).
In the present case, the moving plaintiffs argue that by forcing them to publish copyrighted secure tests, the STA alters the balance struck by Congress between the exclusive rights of copyright owners found in § 106 of the Copyright Act and the exceptions to those exclusive rights found in §§ 107-118 of the same Act. See Plaintiffs' Memorandum of Law at 13. Thus, the moving plaintiffs assert that "unless the forced publication compelled by the [STA] fits within an exception created by Congress -- the fair use doctrine -- the [STA] is necessarily at war with, and preempted by, the Copyright Act." See id. at 14.
The court agrees. There is no dispute that the materials at issue here are within the subject matter of the Copyright Act. Nor is there any dispute that the moving plaintiffs own valid copyrights to these materials. Therefore, barring a statutory exception, § 106 of the Copyright Act confers upon the moving plaintiffs
the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; . . .
17 U.S.C. § 106 (West 1977 & Supp. 1995).
Given the broad disclosure requirements of the STA, the court is left with the inescapable conclusion that the STA interferes with the moving plaintiffs' exclusive ownership rights as set forth in § 106 of the Copyright Act. It does so, for example, by requiring these plaintiffs to disclose their test forms and the individual test questions which, for various reasons, they wish not to disclose. In addition, the STA classifies these disclosed materials as public records and, thereby, subjects them to disclosure to, and reproduction by, the public. Under these circumstances, the court holds, as it has previously, that unless the STA's disclosure requirements constitute fair use, ...