SCOTUS rejects 3-year limit on copyright damages but leaves time-accrual issue undetermined
The Supreme Court said it chose not to decide on accrual “because the issue was not properly presented in the case.”
BY EILEEN McDERMOTT
All Eye on Washington stories initially appeared at IPWatchdog.com.
The U.S. Supreme Court recently rejected a three-year time limit on copyright damages but did not address when time begins accruing.
SCOTUS’ ruling came in its May 9 decision on Warner Chappell Music v. Nealy, a case that asks whether a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.
Justices ruled, 6-3, that “the Copyright Act entitles a copyright owner to recover damages for any timely claim,” with no limit preventing recovery for infringement that happened beyond three years. But as for when a claim for infringement “accrues,” the court said it “assumes without deciding” that accrual occurs upon discovery of the infringement.
The case stems from a U.S. Court of Appeals for the 11th Circuit decision in February 2023, which held that the discovery accrual rule allows plaintiffs to collect retrospective relief for infringements occurring outside of the Copyright Act’s three-year limit against civil actions for infringement claims.
More than a dozen amici weighed in, including the U.S. solicitor general, who participated in the February oral arguments. The solicitor general backed Nealy and urged the court to affirm the circuit’s interpretation of the high court’s ruling in Petrella v. Metro-Goldwyn-Mayer (2013) over competing interpretations in the Second Circuit.
Petrella, at the heart of the circuit split on the discovery accrual rule, focused on the application of equitable laches to claims filed within the Copyright Act’s statute of limitations. Since Petrella, circuit courts have been left to interpret whether Petrella’s holding requires strict adherence to the three-year limitation on recovery in cases where the discovery accrual rule applies.
The Supreme Court explained that its decision in Petrella does not support a three-year damages cap:
“There, the Court noted that the Copyright Act’s statute of limitations allows plaintiffs “to gain retrospective relief running only three years back from” the filing of a suit. … Taken out of context, that line might seem to address the issue here.
“But that statement merely described how the limitations provision worked in Petrella, where the plaintiff had long known of the defendant’s infringing conduct and so could not avail herself of the discovery rule to sue for infringing acts more than three years old. The Court did not go beyond the case’s facts to say that even if the limitations provision allows a claim for an earlier infringement, the plaintiff may not obtain monetary relief.”
The court added that it chose not to decide “whether a copyright claim accrues when a plaintiff discovers or should have discovered an infringement, rather than when the infringement happened” because the issue was not properly presented in the case, since Warner Chappell did not challenge the 11th Circuit’s use of the discovery rule.
Knobbe Martens partner Jeff Van Hoosear called the decision “a victory for copyright owners, and in particular individuals and small entities that own copyrights.”
IP Watchdog founder and CEO Gene Quinn was quick to weigh in:
“The Supreme Court does it once again, with a clear-as-mud ruling that evades the most important question.
“It seems that what we know is that the Copyright Act requires a copyright infringement claim to be brought within three years. Three years from when? Uncertain and unanswered.
“The court also characteristically criticizes lower courts for literally reading and applying its own prior decision in Petrella.
“As far as I can tell, this opinion answers nothing.”