Can Copyright Damages Reach Back More Than Three Years? US Supreme Court Says Yes

The opinion of the Court was delivered by Justice Kagan and joined by the Chief Justice and Justices Sotomayor, Kavanaugh, Barrett and Jackson. Justice Gorsuch dissented, joined by Justices Thomas and Alito. The Court affirmed the Eleventh Circuit, which had rejected a three-year damages bar on a timely claim.

The background

Under 17 U.S.C. section 507(b), a copyright plaintiff must sue within three years after the claim accrued. Under the discovery rule, a claim accrues when the plaintiff discovers, or with due diligence should have discovered, the infringement, which allows a diligent plaintiff to sue over very old infringements discovered within the three years before suit. The plaintiff in this case relied on that rule to sue over infringements going back ten years. The music publisher accepted, for the purposes of the case, that the discovery rule governed timeliness, but argued that damages should still be limited to the last three years, and the District Court agreed.

What the Court held

The majority found no time limit on monetary recovery in the Act. The limitations provision governs when a suit must be brought, and the remedial provisions in section 504 simply make an infringer liable for statutory damages or for the owner's actual damages and the infringer's profits. The Court also held that its earlier decision in Petrella v. Metro-Goldwyn-Mayer did not establish a three-year damages cap; that case concerned a plaintiff who could not rely on the discovery rule.

The Court assumed, without deciding, that the discovery rule applies to copyright claims, because the case was argued on that basis. Whether the rule is available under the Copyright Act at all remains an open question.

What it means for rights holders and users

Where a court applies the discovery rule, a plaintiff who sues within three years of discovering an infringement may now seek copyright damages for the whole period of infringement, not just the most recent three years. Music publishers, labels, software companies and other users of licensed content may face larger historical exposure in long-running catalogue and licensing disputes. The Court's docket records the judgment affirming the Eleventh Circuit, while the availability of the discovery rule itself is left for another case.

Sources

• Supreme Court of the United States: Warner Chappell Music, Inc. v. Nealy, slip opinion
• Supreme Court of the United States: Docket No. 22-1078