On May 9, 2024, the Supreme Court decided Warner Chappell Music, Inc. v. Nealy, holding that a copyright owner is entitled to monetary relief for a timely infringement claim, regardless of when the infringement occurred.
As summarized in Dykema’s March 2024 edition of Last Month at the Supreme Court, Sherman Nealy, a music producer, filed a copyright infringement action in 2018 against Warner Chappell Music, Inc. and others. The Copyright Act requires that infringement suits be filed within three years of accrual. Because the alleged infringing activity dated back to 2008, when Nealy was incarcerated, he invoked the discovery rule, which starts the statute of limitations period the first of when a plaintiff learns of or should reasonably learn of the infringement. Warner Chappell did not challenge Nealy’s invocation of the discovery rule, but it did challenge his ability to recover damages for infringement occurring more than three years before the lawsuit because the Copyright Act limits the right to pursue liability claims to three years. The district court agreed with Warner Chappell, but the Eleventh Circuit reversed, holding that when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the suit was filed, the plaintiff may also recover full damages for that infringement. Leaning on the text of the statute, a majority of the Supreme Court agreed.
In a 6-3 decision written by Justice Kagan, the Court, assuming that the discovery rule applies and that Nealy’s suit was timely, held that the Copyright Act entitles a copyright owner to recover damages for any timely claim irrespective of when the infringement occurred. According to the Court, the plain text of the Act specifies a three-year time limit for filing an infringement claim, but it does not specify any time limit for recovering damages or lost profits. Any limitation on damages, as Justice Kagan explained, must come from the statute and none exists in its text.
In dissent, Justice Gorsuch, joined by Justices Thomas and Alito, disagreed with the Court’s decision to assume that Nealy’s claims were valid under the discovery rule. The question presented was whether, under the discovery accrual rule and the Copyright Act’s statute of limitations for civil actions, a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit. Justice Gorsuch took issue with the majority’s avoiding the antecedent question because the Copyright Act does not “tolerate” the discovery rule, and its use has been generally limited to cases of fraud or concealment. Justice Gorsuch recognized that because the discovery rule’s application had not been fully addressed, any statement in the majority’s decision about the rule may soon become a “dead letter” when the Court eventually resolves the validity of the discovery rule.
Takeaways:
- The Supreme Court’s holding means that so long as an infringement claim is timely, there is no separate timeliness bar to recovery of damages.
- As suggested in the dissent, the Supreme Court may address the discovery rule’s application to the Copyright Act raised in a pending cert petition in Hearst Newspaper, L.L.C. et al. v. Antonio Martinelli. If the Court were to reject the discovery rule, then the decision in Nealy would have limited impact.
For more information, please contact Chantel Febus, James Azadian, Cory Webster, Christopher Sakauye, Monika Harris, Puja Valera, or A. Joseph Duffy, IV.