Supreme Court Rules No Time Limit on Damages for Timely Copyright Claims

Today, Justice Kagan, writing for the majority of the Supreme Court, affirmed the Eleventh Circuit in Warner-Chapell Music, Inc. v. Nealy, No. 22-1078. The Court held that the Copyright Act entitles a copyright owner to obtain monetary relief for any timely infringement claim for the entire period of infringement, no matter when the infringement occurred. For purposes of the decision, the Court assumed, without deciding, the applicability of the Discovery Rule to the Copyright Act statute of limitation because the applicability of the Discovery Rule was not challenged below (or included in the question presented to the Court). Plaintiff’s copyright infringement claims were timely because he filed suit within three years of when he discovered, or with due diligence should have discovered, the infringements. The defendant admitted the timeliness of the claims, but argued that damages should be capped at only three years prior to filing suit. The Court rejected defendant’s claim, finding no statutory or other basis to impose a different time limitation on remedies other than the limitation on the timeliness of an infringement claim in the first place.

In so holding, the Court overruled the Second Circuit’s decision and reasoning in Sohm v. Scholastic, Inc., 959 F.3d 39, 51-52 (2d Cir. 2020). The Sohm rule, as it has come to be called, conceded that the Discovery Rule applies in copyright actions allowing a copyright owner to sue for very old infringements if a diligent plaintiff only discovered the older infringements within the past three years, but limited damages to the three years prior to discovery.  In so doing, Sohm sought to create a compromise between the ability to bring a suit base on an old infringement and the ability to recover decades’ worth of damages from an old infringement. The Sohm rule conflicted with other Circuits’ rulings, which held that damages could extend beyond the three years of the statute of limitation.

Though Nealy represents an important decision that resolves a circuit split, the real question that copyright owners and users are waiting to have answered is whether the Discovery Rule should apply at all. In her majority opinion, Justice Kagan notes that “we have never decided whether that assumption is valid—i.e., whether a copyright claim accrues when a plaintiff discovers or should have discovered an infringement, rather than when the infringement happened. See Petrella, 572 U. S., at 670, n. 4. But that issue is not properly presented here, because Warner Chappell never challenged the Eleventh Circuit’s use of the discovery rule below. See supra, at 3; cf. Cutter v. Wilkinson, 544 U. S. 709, 718, n. 7 (2005) (“[W]e are a court of review, not of first view”).”

Justice Gorsuch, joined by Justice Alito and Justice Thomas, dissented. The short dissent did not disagree with the substance of Justice Kagan’s statutory analysis on the question presented, but argued that Nealyshould have been dismissed as certiorari improvidently granted because it makes little sense to “expound on the details of a rule of law that … very likely does not exist.” The dissenters would have preferred to await a case “squarely presenting the question whether the Copyright Act authorizes the discovery rule. Better, in my view, to answer a question that does matter than one that almost certainly does not.” It is unclear whether the dissenters were tipping only their own hands as to they would rule on such a case about the Discovery Rule or whether they were signaling that a majority of the Court would do away with the Discovery Rule.

Fortunately, certiorari for such a case squarely presenting the applicability of the Discovery Rule  has been fully briefed and is awaiting the Court’s attention. Hearst Newspapers, LLC et al. v. Antonio Martinelli, Case No. 23-474.  Copyright plaintiffs and defendants alike eagerly await clarity on this very important question and hope the grants certiorari.