The US Supreme Court recently held that the Copyright Act entitles a copyright owner to obtain monetary relief for any timely infringement claim, no matter when the infringement occurred. Warner Chappell Music, Inc. v. Nealy (May 9, 2024). This decision clarifies Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. 663 (2014), and resolves a split in the courts of appeal about whether the Copyright Act’s statute of limitations cuts off only infringement claims or also cuts off damages.

Just as importantly, this decision highlights a controversy about the statute of limitations under the Copyright Act. The Copyright Act has an express statute of limitations: “No civil action shall be maintained . . . unless it is commenced within three years after the claim accrued.” 17 U.S.C.  § 507(b). Some folks think that “the claim accrues” at the point when the plaintiff can file suit and obtain relief — the “incident of injury rule.” Others think “the claim accrues” when the copyright owner discovers, or with due diligence should have discovered, the injury that forms the basis for the claim — the “discovery rule.” The post-Petrella split arose because of the facts in Petrella — the result was the same regardless of which rule applied — and because Justice Ginsberg’s opinion was a bit sloppy (she was 81 at the time, about the same age as President Biden and former President Trump today).

In this new Nealy decision, the 6-3 majority (opinion by Justice Kagan) assumed that the discovery rule applies, but also cautioned, “We have never decided whether that assumption is valid …” Moving to the issue at hand, it was relatively straightforward for Justice Kagan to conclude that the Copyright Act entitles a copyright owner to obtain monetary relief for any timely infringement claim, no matter when the infringement occurred. The Court recognized that if a plaintiff has a timely claim under the discovery rule, the Act’s remedial provisions do not impose any separate time limit on the recovery of damages. Those provisions state, without qualification, that an infringer is liable for either statutory damages or the owner’s actual damages and the infringer’s profits. The Supreme Court explained how the split of courts of appeal arose on the issue post-Petrella, and how the approach rejected by the Court here “on top of having no textual support, is essentially self-defeating.”

One of the songs at issue in the case was Flo Rida’s hit song “In the Ayer” which sold millions of copies and reached No. 9 on the Billboard chart. The song the plaintiff claims to own is Jam the Box. Do these songs sound similar to you?

Dissent

Justice Gorsuch dissented, joined by Justices Thomas and Alito. The discovery rule is incorrect, according to the dissent, and thus any decision that relies on that rule is likely soon to become a “dead letter.” It will take only two more Justices to eliminate the discovery rule, or at least to limit it as suggested by the dissent to “cases of fraud or concealment.”

Comments

Your humble blogger wonders about the impact of the unsavory nature of the plaintiff. It seems that Sherman Nealy might have been a drug dealer who used his illicit income to fund music production. The majority opinion details his two periods of incarceration for drug offenses. It seems that Nealy was a mid-level drug dealer who financed a music business, and the talent was a DJ named Tony Butler. While Nealy was in jail, Butler continued to make music and, more importantly, made money from the music which Nealy’s money funded.

Just as illicit drugs have plagued our country, copyright trolls have plagued our country’s small businesses. A switch to the incident of injury rule probably would help them because in copyright troll cases the alleged infringing acts often are old posts on the web.