It seems the Supreme Court will decide (again) whether a claim for copyright infringement can extend to infringement that occurred more than three years before filing suit. In Warner Chappell Music, Inc. v. Nealy, the Supreme Court will resolve a classic circuit split – the Second Circuit holding that no damages can be obtained for acts of infringement older than three years, and the Ninth and Eleventh Circuits holding that a plaintiff can recover all of its damages if it commences litigation within three years of discovery.
A few years ago, the Supreme Court made some fairly unequivocal statements about the Copyright Act’s statute of limitations. In Petrella v. Metro-Goldwyn-Mayer, Inc., the Court held in stark terms that “a successful plaintiff can gain retrospective relief only three years back from the time of suit. No recovery may be had for infringement in earlier years.” The Court stated that the Copyright Act’s three-year statute of limitations “insulated” an infringer “from liability for earlier infringements of the same work.” The Court’s rationale was that a claim accrues at the time of infringement. Thus, any infringement that occurs earlier was not actionable.
The Court, however muddied this relatively crystalline ruling by stating in a footnote that it was “not pass[ing] on the question” of whether a claim might accrue at the time the plaintiff learns about the infringement under the “discovery rule” that had been adopted by nine Courts of Appeal. The so-called discovery rule was not at issue in Petrella since the plaintiff had known about on-going infringement for years and only sought damages for infringement occurring within the three years before she filed the lawsuit. The issue there was whether plaintiff’s claims were barred by laches; the Court held they were not.
A few years after Petrella, the Second Circuit held in Sohm v. Scholastic Inc. that Petrella was controlling such that, regardless of when the plaintiff discovers the infringement, he or she is barred from recovering damages for infringement that occurred more than three years before filing suit. While a plaintiff would be entitled to pursue a claim for non-monetary relief if the claim were brought within three years of discovery, the plaintiff could obtain no monetary award for earlier infringement.
As it is wont to do, however, the Ninth Circuit disagreed. In Starz Ent. v. MGM Domestic Television Distr., the Ninth Circuit relied on its prior holdings that Section 507(b)’s three-year window only starts to run upon discovery and that any damages that occurred before discovery are not barred. The Court concluded that because the Court in Petrella “passed” on considering the discovery rule and because a three-year look back period would “eviscerate the discovery rule,” the Supreme Court could not have actually meant what it said. Thus, under the rationale in Starz, a plaintiff might discover years of infringement long after it occurred and still recover damages for that infringement.
In Nealy v. Warner Chappell Music, Inc., (the case the Court will review) the Eleventh Circuit followed the Ninth, noting that it could not read [the Supreme Court’s] opinion like [it] would read words in a statute.” Because the Plaintiff in Petrella had not sought damages for infringement that occurred more than three years before commencing suit, the Court in Petrella was not faced with a situation in which a copyright owner is deprived by the limitations period for damages on a claim that would otherwise be timely under the discovery rule.
Of course, given the clear circuit split, Warner Chappell sought and obtained a writ of certiorari. We’ll now see whether the Court really meant it when it said that “a successful plaintiff can gain retrospective relief only three years back from the time of suit” or whether Petrella was actually just a victim of sloppy drafting.