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U.S. Supreme Court Grants Certiorari to Decide Damages Period Under Copyright Act

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The U.S. Supreme Court recently granted certiorari to consider whether a copyright plaintiff’s timely claim under the discovery rule is subject to retrospective relief for infringement occurring more than three years before the suit was filed.

Musician Sherman Nealy and his company, Music Specialist Inc. (collectively, “Nealy”), sued Warner Chappell Music, Inc. (“Warner”), for copyright infringement in the Southern District of Florida, alleging that Warner was using Nealy’s musical works based on invalid third-party licenses in violation of 17 U.S.C. § 501. The alleged copyright infringement occurred as early as 2008, but Nealy claimed he did not learn of the alleged copyright violations until 2016. Less than three years later, in December 2018, Nealy filed suit, seeking relief for the infringement dating back to 2008.  

Warner moved for summary judgment on Nealy’s claims, arguing they were barred by the Copyright Act’s three-year statute of limitations. The Eleventh Circuit employs the “discovery rule” for copyright claims: a claim accrues “when the plaintiff discovers, or with due diligence should have discovered,” that the defendant was violating the plaintiff’s rights.

The district court denied summary judgment to Warner on the statute of limitations issue, finding a genuine issue of material fact as to when Nealy’s claims accrued. But the district court further held that Nealy could not obtain retrospective relief for claims prior to the limitations period. The district court then certified to the Eleventh Circuit for interlocutory appellate review the question of “whether the Copyright Act’s statute of limitations . . . precludes a copyright plaintiff from recovering damages for harms occurring more than three years before the plaintiff filed suit, even if the plaintiff’s suit is timely filed under [the Eleventh Circuit’s] discovery rule.”

The Eleventh Circuit reversed and joined the Ninth Circuit in holding that “a copyright plaintiff may recover retrospective relief for infringement occurring more than three years before the lawsuit’s filing so long as the plaintiff’s claim is timely under the discovery rule.” The Eleventh Circuit reasoned that the plain text of the Copyright Act does not support the existence of a separate damages bar for an otherwise timely copyright claim. The Second Circuit has taken the opposite position that a plaintiff’s recovery is limited to damages incurred during the three years prior to filing suit. The U.S. Supreme Court granted Warner’s petition to hear only the question of whether, under the discovery rule and the Copyright Act’s statute of limitations, “a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of the lawsuit.” This is an important case to follow because it will affect a copyright plaintiff’s potential recovery for infringement and the extent of a defendant’s potential liability. The Supreme Court’s decision could also reduce forum shopping because of disparate limitations periods in different Circuits.