The opinion of the court was delivered by: Ricardo M. Urbina, United States District Judge
MEMORANDUM OPINION GRANTING THE DEFENDANTS' MOTION TO DISMISS
This case comes before the court on the defendants' motion to dismiss. The plaintiffs Luck's Music Library, Inc. ("Luck's Music") and Moviecraft, Inc. ("Moviecraft") (collectively, "the plaintiffs") bring suit alleging that Section 514 ("Section 514") of the Uruguay Round Agreements Act ("the URAA"), Pub. L. No. 103-465, amending 17 U.S.C. § 104A, is unconstitutional. Defendants John Ashcroft, Attorney General of the United States, and Marybeth Peters, Register of Copyrights (collectively, "the defendants") move to dismiss the instant case on the ground that the plaintiffs failed to state a claim on which relief can be granted. Because Section 514 does not overstep Congress' power under the Intellectual Property clause of the Constitution ("IP Clause") and does not violate the First Amendment, the court grants the defendants' motion to dismiss.
A. The Uruguay Round Agreements Act
Section 514 implements Article 18 of the Berne Convention for the Protection of Literary and Artistic Works ("the Convention").*fn1 S. REP. NO. 103-412, at 225 (Nov. 22, 1994). The Convention governs the international enforcement of copyright law. S. REP. NO. 100-352, at 2, (May 19, 1988). Since its entry into force in 1886, the Convention requires member countries to afford the same copyright protections to foreign copyright holders that they provide to their own citizens. Convention, Art. 5. The United States ratified the Convention in 1988. 134 CONG. REC. 32018 (Oct. 20, 1988).
Article 18 of the Convention provides that a member country must apply the protections in the Convention to all works that have not yet fallen into the public domain through the expiration of the copyright's term in its origin country.*fn2 Section 514 restores copyright to foreign copyright holders whose works remain protected in their origin country, but entered the public domain in the United States due to the (a) failure of the foreign copyright holder to comply with the United States' copyright formalities, (b) absence of prior subject-matter protection such as sound recordings fixed before 1972, or (c) failure of the United States to recognize copyrights from that country.*fn3 17 U.S.C. § 104A(h)(6).
Section 514, however, allows some latitude for parties who relied on the fact that the foreign works were in the public domain prior to the date of restoration. Id. § 104A(d)(1). Specifically, Section 514 prevents restored copyright holders from enforcing their copyright against another party without providing the party with a notice of intent to enforce the restored copyright. Id. § 104A(d)(2). After receiving a notice of intent to enforce a restored copyright, a party has one year to stop the infringing behavior. Id. Finally, if the party created a derivative work from the restored copyrighted work, that party may continue to exploit the work if it reasonably compensates the restored copyright holder. Id. § 104A(d)(3)(A).
Luck's Music is a family-owned corporation that repackages and sells works already in the public domain. Compl. ¶¶ 28-29. In particular, it sells and rents classical orchestral sheet music to more than 7,000 orchestras ranging from elementary to operatic and to 12,000 individuals worldwide. Id. ¶ 28. Much of Luck's Music's catalog of music consists of music composed and published in countries ineligible for copyright in the United States due to their refusal to provide reciprocal protection. Id. ¶ 30. For example, Russian works published in the former Soviet Union such as Peter and the Wolf and Love and Three Oranges by Prokofiev; Symphony No. 5 and Festive Overture by Shostakovich; Masquerade Suite and Sparticus Ballet by Khatchaturian; Russian Sailor's Dance and Red Poppy Ballet Suite by Glier; The Comedians, Piano Concerto, and Cello Concerto by Kabalevsky; and Soldier's Tales and Symphony of the Winds by Stravinsky remained in the public domain in the United States. Id. ¶¶ 30-31. Works ineligible for copyright composed ten percent of Luck's Music's total inventory and netted average annual sales of $150,000. Id. ¶ 30.
Congress' passage of Section 514 restored copyright to these works. Id. ¶ 31. After the passage of Section 514, Luck's Music received several notices of intent to enforce copyright, demanding that Luck's Music cease and desist from selling 200-300 different works from Russian composers, including Prokofiev, Shostakovich, Khatchaturian, Giler, Kabalevsky, and Stravinsky. Id. During the one-year grace period provided for under section 104A, Luck's Music was unable to sell its entire inventory of Russian works. Id.
Moviecraft is a family-owned business that preserves films dating back to the early 1900s. Id. ¶ 35. It archives various films and works ranging from World's-Fair footage, industrial films, short films, films with historical subjects, newsreels and cartoons to old television features and shows such as Sheena, Queen of the Jungle (1955) and Dupont Cavalcade of America (1956). Id. ¶ 36. Its film archive consists of 40,000 titles and 200,000 film elements such as negatives and reels. Id. To pay for archiving and preserving these works, Moviecraft makes and sells copies of these works for home use as well as derivative works such as documentaries, commercials, and compilations. Id. ¶¶ 37-38.
Moviecraft's current library includes thousands of foreign films in the public domain due to lack of copyright notices. Id. ¶ 39. It obtained and preserved many of these films, expecting to defray its purchase and preservation costs through their sales for derivative works. Id. It also planned to release The Sicilian, a 1963 foreign movie in the public domain, for sale on home video. Id. ¶ 41.
Section 514, however, restored copyrights to many of the foreign works that Moviecraft obtained and restored. Id. ¶ 40. As a result of this copyright restoration, Moviecraft cannot duplicate these films for use in derivative works with assurances that the restored copyright will not be enforced. Id. Accordingly, many of Moviecraft's customers refuse to purchase and use the foreign works. Id. In addition, Moviecraft gave up plans ...