Back in March I posted about the deepening Circuit Court split on how far back a plaintiff could look for damages in a copyright infringement action (here).
As you'll recall, the Second Circuit, in a case I litigated with my colleague, Ned Rosenthal, called Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020), had held that the Supreme Court in Petrella v. Metro-Goldwyn Mayer, Inc., 572 U.S. 663 (2014) "explicitly delimited damages to the three years prior to the commencement of a copyright infringement action." Just before my post, the Eleventh Circuit, in Nealy v. Warner Chappell Music, Inc., No. 21-13232, 2023 WL 2230267 (11th Cir. Feb. 27, 2023), had joined the Ninth Circuit in disagreeing with Sohm and finding that there was no limit to how far back a successful copyright plaintiff could look for damages, provided the claim was timely filed.
Nealy was brought by Sherman Nealy and his company, Music Specialist, Inc. Nealy sued in 2018, claiming to have discovered in 2016 (within the three-year statute of limitations under the discovery rule) that certain works in his catalog had been improperly licensed by his co-author, Tony Butler, as far back as 2008. Nealy's delay wasn't entirely without explanation given that he had been serving a 20-year prison sentence for cocaine distribution that started in 1989. The District Court denied defendants' motion for summary judgment, finding that the claim was timely under the discovery rule, but certified to the Eleventh Circuit the question of whether Nealy's claim for damages beyond three years was barred under Petrella. The Eleventh Circuit found that Petrella did not apply, as that case had been decided under the injury rule, but nevertheless reasoned that the Supreme Court could not have intended to create a rule by which damages are unavailable to a plaintiff who otherwise timely files a claim under the discovery rule, because the Petrella decision expressly preserved the question of whether the discovery rule governs the accrual of copyright claims.
Following Nealy, we were left with a circuit split, with the Second Circuit on the side of a three-year lookback for damages (Sohm), and the Ninth (Starz Ent., LLC v. MGM Domestic Television Distribution, LLC, 39 F.4th 1236 (9th Cir. 2020)) and Eleventh Circuits (Nealy) allowing a plaintiff to look back further (and potentially forever). Now, we may get some clarity, as the Supreme Court earlier today granted the cert petition in Nealy certifying the following question: "Whether, under the discovery accrual rule applied by the circuit courts and the Copyright Act's statute of limitations for civil actions, 17 U. S. C. §507(b), a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit."
Given that this dispute was effectively started by the Supreme Court in Petrella (in what some Circuits have suggested is dicta), it's only fitting that the Court will settle the matter and bring us uniformity on the damages lookback. At the moment, litigants in the Second Circuit are potentially left with a far more limited period, while those in the Ninth and Eleventh Circuits are explicitly allowed to reach back further--and litigants are largely in the dark in other jurisdictions. The Supreme Court will settle that question, determining whether the damages period can run separately from the statute of limitations. And, given the comments in Petrella regarding the discovery vs. injury rule, we may even get some clarity with respect to which rule should be applied. Nealy also adds to the growing list of copyright cases that the Supreme Court has taken in recent years--something that was much less common in prior terms. Much to watch!