In the panoply of difficult legal questions, you'd think "What is the statute of limitations for a copyright infringement claim?" would be a pretty simple one. Not so, and a developing Circuit Court split over how far back a plaintiff can recover damages in infringement actions--which deepened with an 11th Circuit decision earlier this week--has only caused more confusion.
First, a little background. The Copyright Act is clear that "[n]o civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.” 17 U.S.C. § 507(b). What is less clear is when that three-year statute of limitations begins to run. There are two approaches. First, the injury rule, where an infringement claim accrues (and the statute of limitations begins to run) when the infringement occurs. Second, the discovery rule, where the claim accrues when the copyright owner knows, or should have known, about the infringement.
Every Circuit Court to opine on the issue has opted for the discovery rule, eschewing a simple and predictable rule for one that is anything but--and allowing plaintiffs in some cases to recover damages going back decades. Is that the right reading? Let's take a look at the Third Circuit's analysis in William A. Graham Co. v. Haughey--the case in which it adopted the discovery rule. There, the Third Circuit relied heavily on the fact that the civil statute of limitations in the Copyright Act is quite different than the criminal one, which reads: "Except as expressly provided otherwise in this title, no criminal proceeding shall be maintained under the provisions of this title unless it is commenced within 5 years after the cause of action arose." 17 U.S.C. § 507(a). The Third Circuit noted that the Supreme Court had interpreted similar language to enact an injury rule. However, the Copyright Act's civil statute of limitations doesn't contain this same language. It instead requires that a claim be "commenced within three years after [it] accrued." The Haughey court noted that the Supreme Court has previously found language like this to enact a discovery rule. Is that the correct interpretation? It's unclear. Supreme Court precedent also suggests that, where it is unclear what the proper interpretation of a statute of limitations should be, the injury rule should win out. See Rotkiske v. Klemm, 589 U.S. __ (2019). In other words, rather than have District and Circuit courts weigh different Supreme Court decisions, the Court may need to weigh in more directly.
But, the Supreme Court has not yet done so. Instead, in Petrella v. Metro-Goldwyn Mayer, Inc., 572 U.S. 663 (2014), the Court acknowledged that most Circuits have adopted the discovery rule, but indicated that it was not passing on the question. And then, it threw in a further complication! Petrella was a suit over Raging Bull. Although the screenplay was written in 1963 and the movie premiered in 1980, the daughter of the screenplay's author waited until 2009 to sue over certain distributions of the film. The Court, opining primarily on whether the suit was barred by laches, noted that laches did not apply because the Copyright Act already accounted for timeliness given that "an infringement is actionable within three years, and only three years of its occurrence." Then it went on to note that "under the Copyright Act, “a successful plaintiff can gain retrospective relief only three years back from the time of suit,” and “[n]o recovery may be had for infringement in earlier years.”
Some District Courts interpreted this language in Petrella as limiting damages in a copyright infringement action to the three years before filing. See, e.g., Papazian v. Sony Music Entm’t, No. 16-CV-07911 (RJS), 2017 WL 4339662, at *6 (S.D.N.Y. Sept. 28, 2017). Others found that "under no reasonable reading of Petrella could the opinion be interpreted to establish a time limit on the recovery of damages separate and apart from the statute of limitations." See Energy Intelligence Grp., Inc. v. Scotia Capital (USA) Inc., No. 16 Civ. 00617, 2017 WL 432805 (S.D.N.Y. Jan. 30, 2017). And, more recently, the Circuit Courts have been similarly divided.
The first Circuit Court to take up the issue was the Second Circuit in Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020), a case I litigated with my colleague, Ned Rosenthal. Sohm involved infringement claims by a photographer going back to 1995. The Second Circuit, in a decision written by Judge Sullivan, who had previously authored the opinion in Papazian when he was a District Court judge, held that "[d]espite not passing on the propriety of the discovery rule in Petrella, the Supreme Court explicitly delimited damages to the three years prior to the commencement of a copyright infringement action. Accordingly, we reverse the district court’s contrary determination." The result of Sohm is that, in the Second Circuit at least, the statute of limitations and damages period run separately, meaning that a claim may be timely under the discovery rule, but not eligible for damages.
But last summer, the Ninth Circuit swung the other way. Starz Ent., LLC v. MGM Domestic Television Distribution, LLC, 39 F.4th 1236 (9th Cir. 2020), involved "library agreements" by which MGM had granted exclusive licenses to Starz for certain of its properties. A Starz employee later discovered that some of those movies--beginning with a true classic, Bill and Ted's Excellent Adventure--were available on other streaming sites. MGM moved to dismiss, arguing that Petrella barred Starz from recovering damages more than three years before filing. The Ninth Circuit disagreed. It rejected Sohm, holding that "[a]pplying a separate damages bar based on a three-year 'lookback period' that is 'explicitly dissociated' from the Copyright Act's statute of limitations in 507(b) would eviscerate the discovery rule." Following Starz, in the Ninth Circuit, so long as a plaintiff brings suit within three years of discovering infringing acts, he or she may seek damages regardless of when those acts occurred.
And now, the Eleventh Circuit has weighed in also coming out against Sohm. In Nealy v. Warner Chappell Music, Inc., No. 21-13232, 2023 WL 2230267 (11th Cir. Feb. 27, 2023), plaintiff, who owned copyrights in music, but had been in and out of jail since the 1980s, sued in 2018 for infringements starting as early as 2008. The Eleventh Circuit cabined Petrella only to its facts, which were that the Raging Bull heir had never denied that she was aware of her claims more than three years prior and was not seeking damages for that period. While acknowledging the Circuit split, the Eleventh joined the Ninth in finding that there was no limitation on damages.
Where does that leave us? For now, no matter what statute of limitations applies, how far a copyright infringement plaintiff can reach back for damages may depend on the court she finds herself in. In the Ninth and Eleventh Circuits, plaintiffs can reach back decades to recover damages, provided they didn't reasonably discover the infringement more than three years before filing. Within the Second Circuit, damages are limited to three years, which can feel difficult to square with the continued application of the discovery rule in that Circuit and all others that have opined on the topic. Not only does this leave us without a clear rule on the statute of limitations, but could encourage forum shopping for plaintiffs who want to reach back further. Ultimately, this one seems to be up to the Supreme Court to settle--and, given their penchant for taking copyright cases recently (Fourth Estate, Google, Unicolors and Warhol in just the last few years!), maybe we'll get our answer--and we might even get some bonus clarity on whether the injury or discovery rule applies.