By: Sarah Benjamin

The Copyright Act establishes a three year statute of limitations.[1] However, courts are split on how to decipher when exactly the timeframe for a claimant to bring a claim stops.[2]  The discovery rule, which many courts apply, begins the tolling of the clock at the time the plaintiff knew or should have known about the violation.[3] Earlier this year the Eleventh Circuit allowed a plaintiff to bring a copyright infringement claim because the plaintiff timely filed their claim, despite the copyright violation occurring more than three years prior to filing the lawsuit.[4] In Nealy v. Warner Chappell Music, Inc., Nealy claimed that while he was in prison, three publishers illegally obtained licenses to use his music, despite having suspended his business in 1989 when he began his prison sentence.[5] Nealy claims he was not nor should not have been aware of the alleged infringement of his music until he was released from his second prison sentence in 2016 because that was when he was informed of litigation surrounding ownership rights for his music.[6] The Eleventh Circuit chose to review the issue of the statutory limitation de novo and found that the discovery rule applies.[7] However, the Second Circuit in Sohm v. Scholastic Inc. found that there was a more limited time frame for bringing a claim and only a three year look back period for finding damages.[8]

Both courts relied on and interpreted the holding from Petrella v. Metro-Goldwyn-Mayer, Inc. [9] Part of the reasoning in Petrella states specifically that there is good reason for a copyright owner to delay bringing litigation until there is evidence and support for a lawsuit.[10] Therefore, while it is argued that the discovery rule should not be followed because it is against the purpose of the statute of limitations of the Copyright Act, Petrella asserts that there is a dual rule for both a three-year limitation period and a separate-accrual rule “which avoids … litigation confusion.”[11]The Eleventh Circuit affirms this principle in its decision by emphasizing that “because the statute of limitations already protects defendants from stale claims, the Court held that it was unnecessary to apply the equitable doctrine of laches.”[12] While the Second Circuit finds that ruling to mean that there is a three-year lookback period, it is likely that the Supreme Court will attempt as it did in Petrella to find a middle ground on the discovery rule.[13] Therefore, it is likely that the Supreme Court would not entirely overthrow the discovery rule.

The Supreme Court has granted certiorari in Nealy v. Warner Chappell Music, Inc after the Eleventh Circuit ruled in favor of the discovery rule.[14] Either way the Supreme Court rules, there will be significant impacts as claimants who would not reasonably have been aware of a violation when it occurred may no longer be able to bring their claims or alternatively, could render the Copyright Act’s limitation useless.[15] Specifically, the outcomes for claimants are significantly different depending on the timing.[16] In applying the opposing rule to Starz Entertainment, LLC v. MGM Domestic Television Distribution, LLC, 126 of the 340 works that were at issue would not have succeeded due to the timing rule.[17] However, in denying the discovery rule, some believe that “seasoned litigators” would no longer have an excuse for not more diligently monitoring whether their copyrightable work has been infringed.[18] Further, there is potential that the rule not only applies to copyright law and the court can rule to extend the application of the discovery rule. [19]

[1] U.S. Code, 17 U.S.C. § 507 (“No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”)

[2] Compare Starz Entertainment, LLC v. MGM Domestic Television Distr., 39 F.4 1236 (9th Cir. 2022); see with Sohm v. Scholastic Inc 959 F.3d 39, 52 (2d Cir. 2020); see alsoPetrella v. MGM, 572 U.S. 663 (2014).

[3]  Supreme Court to Weigh In on Damages Period For Copyright Cases, Covington (Sept. 29, 2023), https://www.cov.com/en/news-and-insights/insights/2023/09/supreme-court-to-weigh-in-on-damages-period-for-copyright-cases.

[4] Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325, 1331 (11th Cir. 2023).

[5] Nealy, 60 F.4th at 1328.

[6] See id. at 1329.

[7] Id. at 330 (“a copyright ownership claim accrues, and therefore the limitations period starts, “when the plaintiff learns, or should as a reasonable person have learned, that the defendant was violating his ownership rights” (quoting Webster v. Dean Guitars, 955 F.3d 1270, 1276 (11th Cir. 2020)).

[8] 959 F.3d 39, 52 (2d Cir. 2020) (“”§ 507(b)’s limitations period . . . allows plaintiffs . . . to gain retrospective relief running only three years back from the date the complaint was filed (quoting Petrella v. MGM, 572 U.S. 663 (2014).

[9] 572 U. S. 663, 670 (2014) (stating “No civil action shall be maintained under the provisions of this  title unless it is commenced within three years after the claim accrued.” § 507(b)”)

[10] Id. at 682.

[11] Id.

[12] Nealy, 60 F.4th at 1332.

[13] Kyle Jahner, Justice Take on All-or-Nothing ‘Discovery Rule’ Copyright Case (hereinafter ‘Justic Take on All-or-Nothing’), Bloomberg Law, (Oct. 5, 2023, 5:04 AM), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/XCUKICMC000000?#jcite.

[14] Supreme Court to Weigh In on Damages Period For Copyright Cases, Covington (Sept. 29, 2023), https://www.cov.com/en/news-and-insights/insights/2023/09/supreme-court-to-weigh-in-on-damages-period-for-copyright-cases.

[15] Kyle Jahner, Hearst Asks to Join Supreme Court Copyright Discovery Rule Fight, Bloomberg Law (Nov. 7, 2023, 4:05 PM), https://www.bloomberglaw.com/product/blaw/bloomberglawnews/ip-law/X6MTM7A8000000?bc=W1siU2VhcmNoICYgQnJvd3NlIiwiaHR0cHM6Ly93d3cuYmxvb21iZXJnbGF3LmNvbS9wcm9kdWN0L2JsYXcvc2VhcmNoL3Jlc3VsdHMvNTFhNTNlNDZhYmNhZjMzMThjNzk1MTAyMDI4MmY4MTgiXV0–26daf44a32f3d7cc41a68fc28c25f5efef39e76c&bna_news_filter=ip-law&criteria_id=51a53e46abcaf3318c7951020282f818.

[16] Supreme Court to Weigh In on Damages Period For Copyright Cases, supra note 3.

[17] Id.

[18] See Aaron Moss, Court Grounds Copyright Frequent Flyer Over Statute of Limitations, CopyrightLately (Apr. 17, 2023), https://copyrightlately.com/copyright-frequent-flyer-statute-of-limitations-discovery-rule/.

[19] Justice Take on All-or-Nothing, supra note 13.