We conclude that the Court of Appeals properly affirmed summary judgment for Columbia on PRE's antitrust counterclaim. Under the objective prong of the sham exception, the Court of Appeals correctly held that sham litigation must constitute the pursuit of claims so baseless that no reasonable litigant could realistically expect to secure favorable relief. See 944 F.2d, at 1529.
The existence of probable cause to institute legal proceedings precludes a finding that an antitrust defendant has engaged in sham litigation. The notion of probable cause, as understood and applied in the common-law tort of wrongful civil proceedings, [FN7] requires the plaintiff to prove that the defendant lacked probable cause to institute an unsuccessful civil lawsuit and that the defendant pressed the action for an improper, malicious purpose. Stewart v. Sonneborn, 98 U.S. 187, 194 (1879); Wyatt v. Cole, 504 U.S. 158, 176 (1992) (REHNQUIST, C.J., dissenting); T. Cooley, Law of Torts. Cf. Wheeler v. Nesbitt, 24 How. 544, 549-550 (1861) (related tort for malicious prosecution of criminal charges). Probable cause to institute civil proceedings requires no more than a "reasonabl[e] belie[f] that there is a chance that [a] claim may be held valid upon adjudication" (internal quotation marks omitted). Hubbard v. Beatty & Hyde, Inc., 343 Mass. 258, 262, 178 N.E.2d 485, 488 (1961); Restatement (Second) of Torts 675, Comment e, pp. 454-455 (1977). Because the absence of probable cause is an essential element of the tort, the existence of probable cause is an absolute defense. See Crescent City Live Stock Co. v. Butcher' Union Slaughter-House Co., 120 U.S. 141, 149 (1887); Wheeler, supra, at 551; Liberty Loan Corp. of Gadden v. Mizell, 410 So.2d 45, 48 (Ala. 1982). Just as evidence of anticompetitive intent cannot affect the objective prong of Noerr's sham exception, a showing of malice alone will neither entitle the wrongful civil proceedings plaintiff to prevail nor permit the factfinder to infer the absence of probable cause. Stewart, supra, at 194; Wheeler, supra, at 551; 2 C. Addison, Law of Torts 1, 853, pp. 67-68 (1876); T. Cooley, supra, at XXXX. When a court has found that an antitrust defendant claiming Noerr immunity had probable cause to sue, that finding compels the conclusion that a reasonable litigant in the defendant's position could realistically expect success on the merits of the challenged lawsuit. Under our decision today, therefore, a proper probable cause determination irrefutably demonstrates that an antitrust plaintiff has not proved the objective prong of the sham exception, and that the defendant is accordingly entitled to Noerr immunity.
When the District Court entered summary judgment for PRE on Columbia's copyright claim in 1986, it was by no means clear whether PRE's videodisc rental activities intruded on Columbia's copyrights. At that time, the Third Circuit and a District Court within the Third Circuit had held that the rental of video cassettes for viewing in on-site, private screening rooms infringed on the copyright owner's right of public performance. Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F.2d 154 (1984); Columbia Pictures Industries, Inc. v. Aveco, Inc., 612 F.Supp. 315 (MD Pa. 1985), aff'd, 800 F.2d 59 (CA3 1986). Although the District Court and the Ninth Circuit distinguished these decisions by reasoning that hotel rooms offered a degree of privacy more akin to the home than to a video rental store, see 228 USPQ, at 746; 866 F.2d at 280-281, copyright scholars criticized both the reasoning and the outcome of the Ninth Circuit's decision, see 1 P. Goldstein, Copyright: Principles, Law and Practice 5.7.2.2, pp. 616-619 (1989); 2 M. Nimmer & D. Nimmer, Nimmer on Copyright 8.14[C]3., pp. 8-168 to 8-173 (1992). The Seventh Circuit expressly "decline[d] to follow" the Ninth Circuit, and adopted instead the Third Circuit's definition of a "public place." Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1020, cert. denied, 502 U.S. 861 (1991). In light of the unsettled condition of the law, Columbia plainly had probable cause to sue.
Any reasonable copyright owner in Columbia's position could have believed that it had some chance of winning an infringement suit against PRE. Even though it did not survive PRE's motion for summary judgment, Columbia's copyright action was arguably "warranted by existing law," or, at the very least, was based on an objectively "good faith argument for the extension, modification, or reversal of existing law." Fed.Rule Civ.Proc. 11. By the time the Ninth Circuit had reviewed all claims in this litigation, it became apparent that Columbia might have won its copyright suit in either the Third or the Seventh Circuit. Even in the absence of supporting authority, Columbia would have been entitled to press a novel copyright claim as long as a similarly situated reasonable litigant could have perceived some likelihood of success. A court could reasonably conclude that Columbia's infringement action was an objectively plausible effort to enforce rights. Accordingly, we conclude that PRE failed to establish the objective prong of Noerr's sham exception.
Finally, the Court of Appeals properly refused PRE's request for further discovery on the economic circumstances of the underlying copyright litigation. As we have held, PRE could not pierce Columbia's Noerr immunity without proof that Columbia's infringement action was objectively baseless or frivolous. Thus, the District Court had no occasion to inquire whether Columbia's was indifferent to the outcome on the merits of the copyright suit, whether any damages for infringement would be too low to justify Columbia's investment in the suit, or whether Columbia had decided to sue primarily for the benefit of collateral injuries inflicted through the use of legal process. Contra, Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466, 472 (CA7 1982), cert. denied, 461 U.S. 958 (1983). Such matters concern Columbia's economic motivations in bringing suit, which were rendered irrelevant by the objective legal reasonableness of the litigation. The existence of probable cause eliminated any "genuine issue as to any material fact," Fed.Rule Civ.Proc. 56(c), and summary judgment properly issued.
We affirm the judgment of the Court of Appeals.
So ordered.
JUSTICE SOUTER, concurring.
The Court holds today that a person cannot incur antitrust liability merely by bringing a lawsuit, as long as the suit is not "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Ante, at 10. The Court assumes that the District Court and the Court of Appeals were finding this very test satisfied when they concluded that Columbia's suit against PRE for copyright infringement was supported by "probable cause," a standard which, as the Court explains it in this case, requires a "reasonabl[e] belie[f] that there is a chance that [a] claim may be held valid upon adjudication." Ante, at 13 (internal quotation marks omitted). I agree that this term, so defined, is rightly read as expressing the same test that the Court announces today; the expectation of a reasonable litigant can be dubbed a "reasonable belief," and realistic expectation of success on the merits can be paraphrased as "a chance of being held valid upon adjudication."
Having established this identity of meaning, however, the Court proceeds to discuss the particular facts of this case not in terms of its own formulation of objective baselessness, but in terms of "probable cause." Up to a point, this is understandable; the Court of Appeals used the term "probable cause" to represent objective reasonableness, and it seems natural to use the same term when reviewing that court's conclusions. Yet as the Court acknowledges, ante, at 63, since there is no dispute over the facts underlying the suit at issue here, the question whether that suit was objectively baseless is purely one of law, which we are obliged to consider de novo. There is therefore no need to frame the question in the Court of Appeals' terms. Accordingly, I would prefer to put the question in our own terms, and to conclude simply that, on the undisputed facts and the law as it stood when Columbia filed its suit, a reasonable litigant could realistically have expected success on the merits.
My preference stems from a concern that other courts could read today's opinion as transplanting every substantive nuance and procedural quirk of the common law tort of wrongful civil proceedings into federal antitrust law. I do not understand the Court to mean anything of the sort, however, any more than I understand its citation of Rule 11 of the Federal Rules of Civil Procedure, see ante, at 15, to signal the importation of every jot and tittle of the law of attorney sanctions. Rather, I take the Court's use of the term "probable cause" merely as shorthand for a reasonable litigant's realistic expectation of success on the merits, and on that understanding, I join the Court's opinion.
JUSTICE STEVENS, with whom JUSTICE O'CONNOR joins, concurring in the
judgment.
While I agree with the Court's disposition of this case and with its holding that "an objectively reasonable effort to litigate cannot be sham regardless of subjective intent," ante, at 7, I write separately to disassociate myself from some of the unnecessarily broad dicta in the Court's opinion. Specifically, I disagree with the Court's equation of "objectively baseless" with the answer to the question whether any "reasonable litigant could realistically expect success on the merits." [FN1] There might well be lawsuits that fit the latter definition but can be shown to be objectively unreasonable, and thus shams. It might not be objectively reasonable to bring a lawsuit just because some form of success on the merits -- no matter how insignificant -- could be expected. [FN2] With that possibility in mind, the Court should avoid an unnecessarily broad holding that it might regret when confronted with a more complicated case.
[FN2] The Court's recent decision in Farrar v. Hobby, 506 U.S. 103 (1992) makes me wonder whether "10 years of litigation and two trips to the Court of Appeals" to recover "one dollar from one defendant," id. at 116, (O'CONNOR, J., concurring), would qualify as a reasonable expectation of "favorable relief" under today's opinion.
The case before us today is in the latter, obviously legitimate, category. There was no unethical or other improper use of the judicial system; instead, respondents invoked the federal court's jurisdiction to determine whether they could lawfully restrain competition with petitioners. The relief they sought in their original action, if granted, would have had the anticompetitive consequences authorized by federal copyright law. Given that the original copyright infringement action was objectively reasonable - and the District Court, the Court of Appeals, and this Court all agree that it was - neither the respondents' own measure of their chances of success nor an alleged goal of harming petitioners provides a sufficient basis for treating it as a sham. We may presume that every litigant intends harm to his adversary; moreover, uncertainty about the possible resolution of unsettled questions of law is characteristic of the adversary process. Access to the courts is far too precious a right for us to infer wrongdoing from nothing more than using the judicial process to seek a competitive advantage in a doubtful case. Thus, the Court's disposition of this case is unquestionably correct.
I am persuaded, however, that all, or virtually all, of the Courts of Appeals that have reviewed similar claims (involving a single action seeking to enforce a property right) would have reached the same conclusion. To an unnecessary degree, therefore, the Court has set up a straw man to justify its elaboration of a two-part test describing all potential shams. Of the
10 cases cited by the Court as evidence of widespread confusion about the scope of the "sham" exception to the doctrine of Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and Mine Workers v. Pennington, 381 U.S. 657 (1965), see ante, at 5, n. 3, 5 share three important characteristics with this case: The alleged injury to competition was defined by the prayer for relief in the antitrust defendant's original action; there was no unethical conduct or collateral harm "external to the litigation or to the result reached in the litigation"; [FN3] and there had been no series of repetitive claims. Each of those courts concluded, as this Court does today, that allegations of subjective anticompetitive motivation do not make an otherwise reasonable lawsuit a sham. [FN4]
[FN4] See McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552 (CA11 1992) (unsuccessful action to enjoin alleged violations of Alabama's Motor Fuel Marketing Act not a sham); Hydro-Tech Corp. v. Sundstrand Corp., 673 F.2d 1171 (CA10 1982) (unsuccessful action alleging misappropriation of trade secrets not a sham); Eden Hannon & Co. v. Sumitomo Trust & Banking Co., 914 F.2d 556 (CA4 1990) (successful action imposing constructive trust on profits derived from breach of nondisclosure agreement not a sham); Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F.2d 154 (CA3 1984) (successful copyright infringement not a sham); South Dakota v. Kansas City Southern Industries, Inc., 880 F.2d 40 (CA8 1989) (successful action to enjoin breach of contract not a sham, the court was careful to point out, however, that success does not "categorically preclude a finding of sham." Id., at 54, n. 30).