SCOTUS: Justices Reject Three-Year Limit on Damages for Copyright Infringement

On May 9, 2024, the United States Supreme Court issued its decision in Warner Chappell Music v. Nealy, holding that a copyright owner may obtain monetary relief for any timely infringement claim, no matter when the infringement occurred—in other words, there is no time limit on damages.

Justice Kagan—writing for the majority and joined by Chief Justice Roberts and Justices Sotomayor, Kavanaugh, Barrett, and Jackson—explained that while a plaintiff must file suit “within three years after the claim accrued,” the Copyright Act establishes no separate time limit on recovering damages. Rather, “[t]he Copyright Act entitles a copyright owner to recover damages for any timely claim.”

Background

The dispute in this case involved several musical works created in the 1980s. In 2018, Respondent Sherman Nealy sued Petitioner Warner Chappell Music for copyright infringement, asserting that although Warner had been exploiting his musical works since 2008, his claims were timely because he had only discovered that Warner was infringing his copyrights in 2016, less than three years before he filed suit. Warner argued that even if Nealy’s claims were timely, he could recover damages only for acts of infringement occurring within three years prior to the date of his complaint. While the district court agreed with Warner, the Eleventh Circuit reversed and rejected the notion of a three-year damages bar on a timely claim.

Click here for our prior discussion of the case’s background and oral argument.

The Majority’s Opinion

The Copyright Act states that a plaintiff bringing a claim for copyright infringement must file suit “within three years after the claim accrued.” 17 U.S.C. § 507(b). The Court noted two potential interpretations of this provision. “[O]ne understanding,” known as the incident of injury rule, is that a copyright claim “accrue[s]” when “an infringing act occurs.” “[A]n alternative view,” known as the discovery rule, provides that a copyright claim accrues when “the plaintiff discovers, or with due diligence should have discovered,” the infringing act.

The Court clarified that the question on which it had granted certiorari was “[w]hether, under the discovery accrual rule applied by the circuit courts,” a copyright plaintiff “can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.” While noting that the question “incorporates an assumption . . . that the discovery rule governs the timeliness of copyright claims,” the Court acknowledged that it has “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.” Because this issue was not encompassed within the grant of certiorari, however, the Court did not address it and instead confined its review to whether a plaintiff with a timely claim under the discovery rule is eligible for damages going back more than three years.

In deciding that question, the Court held that “[t]he text of the Copyright Act answers . . . in favor of copyright plaintiffs.” The Court maintained that while the Copyright Act’s statute of limitations provides a three-year period for filing suit, “that clock is a singular one,” as it does not provide a separate three-year period for recovering damages.  Looking to the Copyright Act’s remedial sections, the Court noted that they likewise do not establish a time limit on monetary recovery.  Accordingly, the Court held that, so long as the suit is timely, the plaintiff may recover damages regardless of when they occurred.

The Dissent

The dissent, authored by Justice Gorsuch and joined by Justices Thomas and Alito, criticized the Court’s majority opinion as sidestepping the question of whether the Copyright Act has “room” for a discovery rule. To them, the “trouble is, the Act almost certainly does not tolerate a discovery rule,” and the discovery rule “thus has no role to play here—or, indeed, in the mine run of copyright cases.” The dissent argued that the impropriety of the discovery rule “promises soon enough to make anything we might say today about the rule’s operational details a dead letter.”

While acknowledging that the majority’s decision to exclude consideration of the discovery rule was understandable, Justice Gorsuch concluded that he would have dismissed the case as improvidently granted and awaited another case “squarely presenting the question whether the Copyright Act authorizes the discovery rule.”

The case is Warner Chappell Music, Inc. v. Nealy, No. 22-1078 (May 9, 2024). Opinion at https://www.supremecourt.gov/opinions/23pdf/22-1078_4gci.pdf.