Supreme Court Fixes One Problem with the Copyright Statute of Limitations, But Punts Another — Warner Chappell Music v. Nealy (Guest Blog Post)

By Guest Blogger Tyler Ochoa

Last week, the U.S. Supreme Court held 6-3 that assuming a copyright infringement claim is timely under the discovery rule of accrual, meaning that it was filed within three years of the date “when a plaintiff discovers or should have discovered an infringement,” there is no separate time limit on the amount of damages that a copyright owner may recover for the infringement.  Warner Chappell Music, Inc. v. Nealy, No. 22-1078 (U.S. May 9, 2024).  In so holding, however, the Court declined to resolve the logically antecedent question of whether the discovery rule applies to the three-year copyright statute of limitations, finding “that issue is not properly presented here, because Warner Chappell never challenged the Eleventh Circuit’s use of the discovery rule below.” [Slip op. at 4.]  For that reason, the three dissenters would have dismissed the case as improvidently granted.

The decision is both potentially important and potentially merely a footnote. All of the Courts of Appeals that have addressed the issue have held that the discovery rule applies to the Copyright Act’s three-year statute of limitations. If the Supreme Court upholds the discovery rule for copyright cases, or simply declines to address it, the decision will leave copyright defendants exposed to very large awards for years of infringing conduct (as they have been everywhere but the Second Circuit). But if the three dissenters can persuade two of their colleagues that the discovery rule is incompatible with section 507(b), then damages for all copyright infringement actions would be limited to three years before the date the action is filed, and last week’s decision will be “a dead letter” as far as copyright law is concerned (although it would remain potentially important in other areas of law where the discovery rule is used).

The decision was prompted by a circuit split between the Second Circuit and the Ninth and Eleventh Circuits about the proper interpretation of the Supreme Court’s previous decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 134 S. Ct. 1962 (2014).  I have previously written about the rulings in the Second Circuit and the Ninth Circuit. I am pleased that a majority of the Supreme Court agreed with my criticism of the Second Circuit’s ruling: “The Second Circuit’s contrary view, on top of having no textual support, is essentially self-defeating.” [Slip op. at 6.] I am disappointed, however, that the Supreme Court dodged the more important question: whether the discovery rule applies at all.

If you have read my previous posts, you may skip the next section.  If not, a little background is in order.

Background: Previous Decisions on the Copyright Act’s Statute of Limitations

Section 507 of the Copyright Act provides simply: “No 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). In Petrella, the U.S. Supreme Court explained how the period is calculated:

It is widely recognized that the separate-accrual rule attends the copyright statute of limitations. Under that rule, when a defendant commits successive violations, the statute of limitations runs separately from each violation….

… Thus, when a defendant has engaged (or is alleged to have engaged) in a series of discrete infringing acts, the copyright holder’s suit ordinarily will be timely under § 507(b) with respect to more recent acts of infringement (i.e., acts within the three-year window), but untimely with respect to prior acts of the same or similar kind.

Petrella, 572 U.S. at 671-72 (internal citations and quotes omitted).

In a footnote, however, the Court also acknowledged the existence of a possible exception to the injury rule of accrual: the “discovery rule.” Under the “discovery rule,” the limitations period begins to run when “the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.” Petrella, 572 U.S. at 670 n.4. The rule could not be applied in Petrella, because everyone agreed that the plaintiff knew of the existence of her cause of action at the time that it accrued. Accordingly, the Supreme Court did not rule on the validity of the discovery rule, leaving the question for another day.

Every Court of Appeals to have addressed the issue has held that the discovery rule of accrual applies when the plaintiff reasonably could not have discovered the infringement at the time that it occurred. See Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 124 n.3 (2d Cir. 2014) (collecting cases). Those decisions were consistent with the general trend throughout the latter half of the 20th Century in favor of the discovery rule as a default rule of accrual. “Federal courts … generally apply a discovery accrual rule when a statute is silent on the issue.” Rotella v. Wood, 528 U.S. 549, 555 (2000). Accord Klehr v. A.O. Smith Corp., 521 U.S. 179, 191 (1997), citing Connors v. Hallmark & Son Coal Co., 935 F. 2d 336, 342 (D.C. Cir. 1991) (Ruth Bader Ginsburg, J.) (“the discovery rule is to be applied in all federal question cases in the absence of a contrary directive from Congress.”). More recently, however, the Supreme Court has cautioned that “we have not adopted that position as our own,” TRW, Inc. v. Andrews, 534 U.S. 19, 27 (2001) (Ginsburg, J.); and Justices Scalia and Thomas have criticized the expansive use of the discovery rule as a “bad wine of recent vintage,” id. at 37 (Scalia, J., concurring); Rotkiske v. Klemm, 589 U.S. ___, 140 S. Ct. 355, 360-61 (2019). (Thomas, J.).

In Sohm v. Scholastic, Inc., 959 F.3d 39 (2d Cir. 2020), the Second Circuit purported to reaffirm that “the discovery rule applies for statute of limitations purposes in determining when a copyright infringement claim accrues under the Copyright Act.” 959 F.3d at 50. Nonetheless, it held that in Petrella, “the Supreme Court explicitly delimited damages to the three years prior to the commencement of a copyright infringement action.” Id. at 51. Combining these two holdings, it concluded: “we must apply the discovery rule to determine when a copyright infringement claim accrues, but a three-year lookback period from the time a suit is filed to determine the extent of the relief available.” Id. at 52.

In my blog post about the case, I strongly urged that the Second Circuit ruling was inherently self-contradictory and made no sense: if damages are limited to three years from the date of filing, then there is functionally no difference between the discovery rule of accrual and the default rule that a cause of action accrues, and the statute of limitations begins to run, on the date of the wrongful act. The entire purpose of the discovery rule is to allow a plaintiff to recover damages that occurred more than three years before the date the lawsuit was filed.

Two years later, in Starz Entertainment v. MGM Domestic Television Distribution, LLC, 39 F.4th 1236 (9th Cir. 2022), the Ninth Circuit agreed with my view (and cited my amicus brief), expressly rejecting a three-year limit on recovery of damages in cases in which the discovery rule applies. In my blog post on the case, I praised the decision and predicted “that the Supreme Court will eventually grant a petition … and render a definitive decision regarding the discovery rule.”

The Supreme Court’s opportunity came with the 2023 decision in Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325 (11th Cir. 2023), in which the Eleventh Circuit (ruling on a certified question) agreed with the Ninth Circuit, holding that “a copyright plaintiff may recover retrospective relief for infringement occurring more than three years before the lawsuit’s filing so long as the plaintiff’s claim is timely under the discovery rule.” Id. at 1331. The Supreme Court granted certiorari.

The Facts

The Supreme Court summarized the basic facts with admirable concision:

This dispute had its start in a decades-old, short-lived music venture. In 1983, Sherman Nealy and Tony Butler [aka “Pretty Tony”] formed Music Specialist, Inc. That company recorded and released one album and several singles, including the works at issue. But the collaboration dissolved a few years later. And Nealy soon afterward went to prison for drug-related offenses. He served one prison term from 1989 to 2008, and another from 2012 to 2015.

Meanwhile, Butler (unbeknownst to Nealy) entered into an agreement with Warner Chappell Music, Inc. to license works from the Music Specialist catalog. And Warner Chappell found quite a few takers. One Music Specialist work (“Jam the Box”) was interpolated into Flo Rida’s hit song “In the Ayer,” which sold millions of copies and reached No. 9 on the Billboard chart. Use of that song was in turn licensed to several popular television shows, including “So You Think You Can Dance.” Other Music Specialist songs found their way into recordings by the Black Eyed Peas and Kid Sister.

In 2018, following his second prison stint, Nealy sued Warner Chappell for copyright infringement. Nealy alleged that he held the copyrights to Music Specialist’s songs and that Warner Chappell’s licensing activities infringed his rights. The infringing activity, Nealy claimed, dated back to 2008—so ten years before he brought suit. [Slip op. at 1-2]

At its heart, therefore, this case is a dispute about copyright ownership.  Plaintiffs Nealy and MSI claim to own registered copyrights in eight musical works, either as works made for hire or by assignment; while the defendants rely on licenses from Butler, the composer and performer.  But before the ownership dispute could be fully addressed, the court was asked to determine whether the claims were timely; and if so, whether damages could be recovered for conduct occurring more than three years before the lawsuit was filed.

The Procedural Posture

The procedural posture is particularly important, because the Supreme Court majority relied on it in deciding not to address the discovery rule more broadly. It is, however, only very briefly explained in the majority opinion. What follows is a more thorough explanation.

In the district court, the defendants (Atlantic Records, Warner Chappell Music, and Artist Publishing Group) moved for summary judgment on three grounds: 1) plaintiffs Nealy and MSI could not prove that they owned the copyrights in the eight musical works at issue; 2) at a minimum, Butler was a co-owner of the copyrights who could validly grant a license to the defendants; and 3) plaintiff’s claims were barred by the three-year statute of limitations, because the plaintiffs knew (or should have known) of the alleged infringement more than three years before the action was filed.  Music Specialist, Inc. v. Atlantic Recording Corp., 2021 WL 2905410, at *2 (S.D. Fla. Mar. 8, 2021). In other words, not only did the defendants not object to the use of the discovery rule, but the defendants actively advocated for use of the discovery rule.

The plaintiffs responded by moving for partial summary judgment on the issue of ownership, based on the presumption of validity that attaches to timely copyright registrations. 17 U.S.C. § 410(c). The magistrate judge held that plaintiffs could not prove ownership of four of the songs, because the registration certificates listed the copyright claimant as Music Specialist Publishing [MSP], rather than Music Specialist, Inc. [MSI], and plaintiffs did not submit any admissible evidence that MSP was affiliated with or had transferred the copyrights to MSI. 2021 WL 2905410, at *11-*12.  With respect to the remaining four songs, the magistrate judge held that the presumption of validity had been rebutted, but that the issue of ownership was disputed and could not be resolved on summary judgment. Id. at *13-*16. Finally, the magistrate judge held that summary judgment was improper on the issue of whether the plaintiff’s claims were time-barred. Id. at *16-*19.

On the latter issue, the magistrate judge stated that “[a]s an initial matter, the Court needs to consider whether the case at hand is one of ownership or one of infringement.”  She explained:

Specifically, if the action is one sounding in infringement, the claim accrues each time the infringing work is distributed, and each distribution creates a new wrong and gives rise to a discrete claim which start anew the limitations period. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 671 (2014)…. However, if the matter is one sounding in ownership, the claim only accrues once, at the time the plaintiff learns or should have learned that the defendant was violating his ownership rights. Webster v. Dean Guitars, 955 F.3d 1270, 1276–77 (11th Cir. 2020).

Music Specialist, Inc. v. Atlantic Recording Corp., 2021 WL 2905410, at *17 (S.D. Fla. Mar. 8, 2021) (emphasis added). The magistrate judge agreed that the only contested issue was one of ownership. Id. The defendants then argued that the plaintiffs “knew or reasonably should have known” of the ownership dispute no later than 2008 to 2012, during the period in between his two stints in prison. Had the defendants prevailed, the entire case would have been dismissed; but the magistrate judge held that there was conflicting evidence (a genuine issue of material fact) as to whether and when Nealy and MSI reasonably should have discovered Butler’s agreements with Warner, Artist, and Atlantic. Id.

The district court approved and adopted the magistrate’s recommendation. Nealy v. Atlantic Recording Co., 2021 WL 2280025 (S.D. Fla. June 4, 2021). The Second Circuit had decided Sohm after the magistrate judge’s decision, so the issue of a three-year limit on damages was raised for the first time before the district court. The district judge held: “Although the Eleventh Circuit has not addressed this specific issue, the Court finds — as the Second Circuit held in Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) — that even where the discovery rule dictates the accrual of a copyright infringement claim, a three-year lookback period from the time a suit is filed must be used to determine the extent of the relief available.” Id. at *4 (emphasis added).

As the Eleventh Circuit explained, “The district court certified the following question for interlocutory appellate review: whether damages in this copyright action are limited to a three-year lookback period as calculated from the date of the filing of the complaint.” Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325, 1328 (11th Cir. 2023). [Note: As a result of the district court’s ruling on the ownership issue, Atlantic Records was dismissed as a party, so Warner Chappell assumed its place in the case caption as the primary defendant.] It also noted that “[t]he parties entered a joint-pretrial stipulation in which they agreed ‘that this case presents an “ownership dispute” within the meaning of the statute of limitations for copyright claims.’” Id. at 1330. And because the facts had yet to be resolved, the court narrowed the issue before it:

The district court applied the discovery rule and concluded that there was a genuine issue of fact about when the plaintiffs knew or should have known about their claims. We will assume for the purposes of answering the district court’s certified question that the district court’s summary judgment ruling on this point was correct. And so, assuming the plaintiffs’ claims are timely under the discovery rule, we turn to the question whether the plaintiffs may recover retrospective relief for infringement that occurred more than three years before they filed this lawsuit.

Id. at 1331. Addressing the narrow issue, the Eleventh Circuit reversed, holding that “when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the lawsuit was filed, the plaintiff may recover damages for that infringement.” Id. at 1328.

Defendants filed a petition for certiorari presenting the following question: “Whether the Copyright Act’s statute of limitations for civil actions, 17 U.S.C. 507(b), precludes retrospective relief for acts that occurred more than three years before the filing of a lawsuit.” Petition at I. The Supreme Court granted the petition, but it limited the Question Presented to more closely focus on the circuit split: “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.” Warner Chappell Music, Inc. v. Nealy, No. 22-1078, 144 S. Ct. 478 (U.S., cert. granted Sept. 29, 2023).

The Arguments

Despite the reframed question, the defendants chose not to defend Sohm directly and instead launched a sustained attack on the discovery rule of accrual itself. This change of strategy is certainly understandable. Sohm was based on the argument that certain statements made by the Supreme Court in Petrella were binding on the lower courts (even though those statements were taken out of context). At the Supreme Court level, however, the language from Petrella was only dicta, rather than binding precedent; and the defendants were no doubt bolstered by Justice Thomas’s criticism of the discovery rule as “a bad wine of recent vintage,” in an opinion joined by eight other justices. See Rotkiske v. Klemm, 589 U.S. ___, 140 S. Ct. 355, 360-61 (2019). The defendants were joined by numerous amici urging the same argument: that the discovery rule of accrual was simply incompatible with the “plain language” of the statute.

I filed an amicus brief with the Supreme Court in support of neither party.  In it, I explained:

As restated by this Court, the Question Presented in this case assumes that the discovery rule of accrual applies…. If that assumption is accepted, the answer is clear: the only purpose of a discovery rule of accrual is to allow the plaintiff to recover damages that occurred more than three years before the lawsuit was filed. However, this Court should start from first principles and reexamine the assumption that the discovery rule of accrual applies, thereby addressing the question left open in Petrella. See Supreme Court Rule 14.1(a) (“The statement of any question presented is deemed to comprise every subsidiary question fairly included therein.”). [Ochoa Amicus at 3]

At oral argument, it quickly became clear that the justices were concerned that the antecedent question had not properly been raised. Justice Thomas asked the first question: “Did the courts, any of the courts below, rule on or pass on the discovery rule, or did they just simply assume the existence of some discovery rule?” [Transcript at 5] After some colloquy, Justice Barrett remarked: “we took it off the table, and your cert petition did not ask us to grant cert on the merits of the discovery rule.” [Transcript at 7] Justice Jackson agreed that “we were taking it off the table” [Transcript at 8], and Justice Sotomayor criticized the defendants for “rais[ing] the most important part of your argument in a footnote to say the Court can reach it if it wants.” [Transcript at 10]  Justice Alito raised the possibility that the Court could dismiss cert. as improvidently granted [Transcript at 17], and that suggestion was echoed by others.

It also became clear at oral argument that neither party was advocating the adoption of Sohm, as such. Defendant’s counsel argued:

[W]e would submit that a proper understanding of the discovery rule is to limit it to cases of fraud. So the way that this legal regime should work … is acts of infringement more than three years earlier [are] ordinarily not actionable. Under the ordinary operation of the discovery rule, they are actionable [only] if you have fraud or concealment or one of the other traditionally recognized equity-based exceptions. [Transcript at 29]

And counsel for the United States observed:

Petitioners don’t much defend the Second Circuit’s damages rule, perhaps because it lacks a textual basis. Instead, they’re really asking the Court to answer a different question, whether the discovery accrual rule applies to copyright claims at all or at least to the claims here. [Transcript at 52]

Nonetheless, the United States urged the court to decide the narrower question:

[W]e do have strong views on two questions. One, the damages rule applied by the Second Circuit is wrong. There’s no textual basis for it. They misread this Court’s decision in Petrella. This Court could clarify that and do good in providing uniform administration of copyright law.

But the second thing that we have a strong view on is that you shouldn’t do what Petitioner is asking you to do and go outside the reformulated question presented and address the question of accrual on a one-sided presentation from Petitioners’ counsel. [Transcript at 55-56]

The Decision

Ultimately, the majority refused to broaden the Question Presented:

[The Question Presented] incorporates an assumption: that the discovery rule governs the timeliness of copyright claims. We have never decided whether that assumption is valid. … But that issue is not properly presented here, because Warner Chappell never challenged the Eleventh Circuit’s use of the discovery rule below. We therefore confined our review to that disputed remedial issue, excluding consideration of the discovery rule and asking only whether a plaintiff with a timely claim under the rule can get damages going back more than three years. [Slip op. at 4-5]

In a footnote, the majority also criticized Warner Chappell’s strategic about-face:

Disregarding the limit in the reformulated question, Warner Chappell’s briefing in this Court focuses almost entirely on the discovery rule itself. That choice is especially surprising given that Warner Chappell’s own petition for certiorari raised the broader discovery-rule issue only in a footnote, which acknowledged that the issue was not raised below and is not the subject of a Circuit split. But even supposing Warner Chappell’s petition had urged us to opine on the discovery rule, our reformulation of the question presented should have put an end to such arguments. [Slip op. at 5 n.1]

Addressing the merits, the Court made it clear that it was not answering the antecedent question:

In this case, we assume without deciding that a claim is timely … if brought within three years of when the plaintiff discovered an infringement, no matter when the infringement happened. We then consider whether a claim satisfying that rule is subject to another time-based limit—this one, preventing the recovery of damages for any infringement that occurred more than three years before a lawsuit’s filing. We hold that no such limit on damages exists. The Copyright Act entitles a copyright owner to recover damages for any timely claim. [Slip op. at 1]

The Court explained:

The Second Circuit’s contrary view, on top of having no textual support, is essentially self-defeating. With one hand, that court recognizes a discovery rule, thus enabling some copyright owners to sue for infringing acts occurring more than three years earlier. And with the other hand, the court takes away the value in what it has conferred, by preventing the recovery of damages for those older infringements…. [Thus], the damages bar makes the discovery rule functionally equivalent to its opposite number—an accrual rule based on the timing of an infringement. As noted above, we do not resolve today which of those two rules should govern a copyright claim’s timeliness. But we reject applying a judicially invented damages limit to convert one of them into the other. [Slip op. at 6]

The Court also explained that the statements in Petrella that were relied on in Sohm were taken out of context. Petrella expressly did not decide whether the discovery rule applied, because it was clear that the plaintiff in Petrella was aware of the existence of her claim at the outset. [Slip op. at 6-7.]

Justice Gorsuch, writing for himself and Justices Thomas and Alito, would have dismissed the case as improvidently granted, precisely because the antecedent question was not properly before the Court:

In one sense, the Court’s decision to pass over this complication may be understandable. After all, none of the parties before us questioned the application of a discovery rule in proceedings below, but joined issue only over how it should work. And the Court may, as it does, resolve the parties’ dispute while leaving for another day the antecedent question whether a discovery rule exists under the Act.

But if that is a permissible course, it does not strike me as the most sensible one. Nothing requires us to play along with these particular parties and expound on the details of a rule of law that they may assume but very likely does not exist. Respectfully, rather than devote our time to this case, I would have dismissed it as improvidently granted and awaited another squarely presenting the question whether the Copyright Act authorizes the discovery rule. Better, in my view, to answer a question that does matter than one that almost certainly does not. [Diss. op. at 2-3]

Implications of the Decision

The Court’s opinion in Warner Chappell is mercifully short, and it corrects the Second Circuit’s aberrant opinion in Sohm while leaving the pre-Sohm understanding of the Copyright Act’s statute of limitations and the discovery rule intact. It is an admirable exercise in judicial restraint, from a Court that has been far too willing to reach out and decide questions that have not squarely been presented.

On reflection, the problem was not simply that the question had not properly been raised below; the problem was the strategic change of position by Warner Chappell. In the lower courts, Warner Chappell not only assumed that discovery rule applied; it argued in favor of the discovery rule, in the hope that it could make the entire case go away, based on the view of several lower courts that when an infringement claim is based on a claim of copyright ownership, the claim accrues only once and is forever barred if not raised within three years of discovery. Having made that argument (and lost), it would have been fundamentally unfair to allow Warner Chappell to make the exact opposite argument on appeal: that the discovery rule of accrual does not apply at all. No one mentioned the words “judicial estoppel,” but it seems that the principle would have been applicable here.

Nonetheless, it is clear that at least three justices believe that the discovery rule should not be applied to the Copyright Act’s statute of limitations; and by declining to answer that question, the Court all but assures several more months (at least) of uncertainty that could have been avoided by deciding the question. If the Court had only been concerned with the appearance of regular order, rather than with the strategic change of position, it would have been preferable for the Court to hold the case over for reargument next term, perhaps consolidating it with a pending case that squarely presents the question: “Whether the ‘discovery rule’ applies to the Copyright Act’s statute of limitations for civil claims.” Hearst Newspapers, LLC v. Martinelli, No. 23-474 (U.S. petition for cert. filed Nov. 2, 2023), at i.

The more important (and interesting) question is whether the Court will grant certiorari in Martinelli.  The case was distributed for conference on February 16, but it was not acted upon. The case has now been re-distributed for conference on May 16. There are three clear votes in favor of granting certiorari: Justices Thomas, Alito, and Gorsuch. It only takes four votes to grant, and it is hard to imagine that a fourth vote cannot be found among the three remaining conservative justices: Roberts, Kavanaugh, and Barrett. If none of them vote to grant certiorari, it will be a clear signal that a majority of the Court simply does not want to disturb the status quo where there is no circuit split. Nonetheless, some lower court justices are already raising the question, so it is likely only a matter of time before one of those Courts of Appeals grants a petition for rehearing en banc and creates a circuit split. It would be better for the Court to address the question now and remove all doubt, rather than letting it linger.

Prof. Ochoa’s Commentary

In my previous blog posts, I advocated in favor of the discovery rule. On further reflection, however, I have reconsidered my position. Here are the six points that I made in my amicus brief in the Warner Chappell case:

1. The plain language of Section 507(b) does not answer the question presented or whether the discovery rule applies. Compare, for example, the sparse language of 17 U.S.C. § 507(b) (“within three years after the claim accrued”) with the much clearer language of the Patent Act’s six-year statute of limitations, 35 U.S.C. § 286 (“Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.”).
2. The legislative history suggests, but does not compel, the conclusion that Congress intended and assumed a wrongful act rule of accrual. Without going into detail here, allow me to recommend Judge Kaplan’s scholarly opinion in Auscape Int’l v. National Geographic Society, 409 F. Supp. 2d 235, 244-47 (S.D.N.Y. 2007), in which he reviews the legislative history and concludes that Congress intended (or at least assumed) that a wrongful act rule of accrual would apply. In later rejecting Judge Kaplan’s conclusions in Auscape, the Second Circuit did not grapple with the testimony that he cited or the inferences he drew from it. See Psihoyos, 748 F.3d at 124 & n.4.
3. Cases involving disputes as to ownership are adequately resolved by a wrongful act rule, so they need not be treated differently from ordinary infringement actions. Currently, courts allow a plaintiff to recover damages that occurred within three years before the action was filed, even if the plaintiff knew about a continuing infringement for many years (as in Petrella). But when disputes concerning copyright ownership are involved, courts hold that the action is barred in its entirety when not brought within three years of its discovery. As Judge Murphy of the Sixth Circuit wrote: “Our test treats a party’s authorship or ownership as a ‘claim’ even though it is merely one element of a claim for copyright infringement (between a copyright owner and a third-party infringer) or an equitable distribution of royalties (between co-owners).” Garza v. Everly, 59 F.4th 876, 885 (6th Cir. 2020) (Murphy, J., concurring) (citations omitted). If the Court rejects the discovery rule for ordinary infringement claims, it should reject it for ownership claims as well. A purported copyright owner should get at least one chance to test his ownership claim in court, even if they don’t sue at the earliest possible opportunity. The current rule essentially reinstates the laches-based argument that was expressly rejected in Petrella, but only in a subset of claims. I see no good justification for treating some infringement claims differently just because ownership is the primary contested issue.
4. If the discovery rule applies, it permits recovery of damages for infringements that occurred more than three years before suit was filed. The Supreme Court agreed with this position in Warner Chappell.
5. The Second Circuit’s opinion in Sohm effectively eliminates the discovery rule while purporting to preserve it. The Supreme Court agreed with this position in Warner Chappell.
6. If an exception for fraudulent concealment exists, that is not the same as adopting a discovery rule of accrual generally, and it would not apply to this case. The Supreme Court has held that unless a statute of limitations is jurisdictional, it is subject to a rebuttable presumption that equitable tolling applies. See, e.g., Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 95-96 (1990). Those cases, however, “stand[a] for the proposition that equity tolls the statute of limitations in cases of fraud or concealment; it does not establish a general presumption applicable across all contexts.” TRW, Inc. v. Andrews, 534 U.S. at 27 (Ginsburg, J.). In Warner Chappell, Nealy alleged justifiable ignorance because he was in prison between 1989 and 2008, and again from 2012 to 2015. There was no allegation that the defendants had concealed any of the facts or any of their allegedly infringing activities from the plaintiffs, much less that they did so by fraudulent means.

Conclusion

The Supreme Court’s opinion in Warner Chappell is a welcome correction to the aberrant opinion in Sohm that disrupted the status quo with respect to the Copyright Act’s statute of limitations. And for good reasons, the Court dodged the more important question of whether the discovery rule applies to the Copyright Act’s statute of limitations at all. But that question needs to be addressed, and it would be better for all litigants if the Court granted certiorari in Hearst Newspaper v. Martinelli and decided it as soon as possible.

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UPDATE: On Monday, May 20, the Supreme Court denied the petition for certiorari in Hearst Newspapers, LLC v. Martinelli, No. 23-474.  Combined with the 6-3 vote in Warner Chappell v. Nealy, it is now clear that a majority of the Court does not wish to review the use of the discovery rule in copyright cases unless and until a circuit split develops. (The dissenting opinion in Warner Chappell effectively also serves as an implicit dissent from the denial of certiorari in Martinelli.)