Court: The Supreme Court of the United States
Citation: 144 S. Ct. 1135 (2024)
Date of Judgement: May 9, 2024
Judges: Chief Justice Roberts and Justices Sotomayor, Kavanaugh, Barrett, Jackson, Gorsuch, Thomas, and Alito.
Facts
In 1983, Sherman Nealy (“Nealy”) and Tony Butler ("Butler") formed Music Specialist, Inc. They recorded and released one album and several singles. But the collaboration dissolved a few years later and Nealy went to prison for drug-related offenses between 1989 to 2008, and from 2012 to 2015.
Butler without Nealy's knowledge agreed with Warner Chappell Music, Inc. ("Warner") to license works from the Music Specialist catalog. In 2018, following his second prison stint, Nealy sued Warner for copyright infringement.
Nealy alleged that he held the copyrights to Music Specialist's songs and that Warner's licensing activities infringed his rights. The infringing activity, Nealy claimed, dated back to 2008—so ten years before he brought suit. Nealy sought damages and profits for the alleged misconduct, under the U.S. Copyright Act.
Procedural History
On December 28, 2018, Plaintiffs filed a complaint at the United States District Court, S.D. Florida. The District Court held that Plaintiffs’ damages are limited to the period commencing on December 28, 2015.
Further, the District Court certified for interlocutory appeal the legal question of whether, under the Copyright Act, plaintiffs' damages were limited to the three years preceding their complaint's filing.
The United States Court of Appeals, Eleventh Circuit on February 27, 2023, reversed the decision of the district court and held that a plaintiff with a timely claim under the discovery rule may obtain retrospective relief for an infringement even if it occurred more than three years before the lawsuit's filing.
On September 2023, the U.S. Supreme Court granted certiorari and finally decided the issues on May 9, 2024.
Issue
Can a copyright plaintiff recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit?
Laws Involved
17 U.S.C.A. § 507 (b) of the U.S. Copyright Act
Limitations on actions:
(b) Civil Actions. No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.
Analysis
The Supreme Court observed that according to § 507(b) of the Copyright Act, a plaintiff must file a suit for copyright infringement within three years after the claim accrues. However, the courts have interpreted this provision under two different rules. According to the first rule, i.e. the injury rule, a copyright claim accrues when an infringing act occurs. But under the second rule, i.e. the discovery rule, a claim accrues when the plaintiff discovers, or with due diligence should have discovered, the infringing act.
In the instant case, the Supreme Court did not decide whether the injury rule or discovery rule applied but confined their review to whether under the discovery rule, a plaintiff with a timely claim can get damages going back more than three years.
The Supreme Court held that under the Copyright Act's remedial sections, there is no separate three-year period for recovering damages and the Act’s provisions “do not aid a long-ago infringer.” Accordingly, the Court held that “a copyright owner possessing a timely claim for infringement is entitled to damages, no matter when the infringement occurred.”
Further, the Supreme Court abrogated the decision of the United States Court of Appeals, Second Circuit in Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) which held that “a plaintiff's recovery is limited to damages incurred during the three years before filing suit.” The Supreme Court clarified that it never decided in favour of that proposition and the second circuit misinterpreted the U.S. Supreme Court's decision in Petrella (where the plaintiff had long known of the defendant's infringing conduct, did not act upon it and hence could not avail herself of the discovery rule) to support a three-year damages cap.
Accordingly, since Niely invoked the discovery rule to bring claims for infringing acts occurring more than three years before he filed suit, his claims were timely, and he may obtain damages for them.
Conclusion
The Supreme Court in a 6-3 decision held that a plaintiff with a timely infringement claim under the discovery rule is entitled to damages regardless of when the infringement occurred.
This decision may apply in very limited circumstances as the Supreme Court did not decide on when the injury rule applies or the discover rule applies. However, only when the discovery rule applies and there is concern regarding obtaining damages, the proposition laid down in this case will be applicable.