Supreme Court Allows Copyright Damages Recovery Outside Three-Year Limitations Period—But Questions Regarding Accrual Of Claims Remain

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The U.S. Supreme Court affirmed the Eleventh Circuit's holding in Warner Chappell Music v. Nealy that copyright plaintiffs bringing timely claims of infringement may recover damages for acts ...
United States Intellectual Property
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The U.S. Supreme Court affirmed the Eleventh Circuit's holding in Warner Chappell Music v. Nealy that copyright plaintiffs bringing timely claims of infringement may recover damages for acts occurring outside the three-year statute of limitations. The ruling addresses a longstanding circuit split over whether monetary relief is available even where infringement occurred more than three years prior. However, it does not squarely address the larger question of whether the "discovery rule" always applies in this context, leaving open issues the Court may address in another copyright case on its docket this term.

As discussed in our previous post, the Supreme Court granted certiorari in this case over a song by the rapper Flo Rida on the narrow question of whether a copyright plaintiff can recover damages for acts that allegedly occurred outside of the three-year statute of limitations for copyright claims. The Ninth and Eleventh Circuits had been applying the discovery rule, holding that copyright plaintiffs could recover damages from any point in time, as long as the claims were filed within three years of discovery of the infringement. The Second Circuit, on the other hand, held that a copyright plaintiff cannot recover damages for acts that occurred more than three years prior to the filing of the suit under any circumstances. As we previously reported, at oral argument, a majority of Supreme Court justices seemed skeptical of the Second Circuit's approach.

Justice Kagan penned the majority opinion of the Court, and Justice Gorsuch, joined by Justices Thomas and Alito, wrote a dissenting opinion. In the majority opinion, the Supreme Court did, in fact, reject the Second Circuit's approach. The majority assumed that the discovery rule applied because Warner Chappell never challenged the Eleventh Circuit's use of the discovery rule, and therefore the issue was not fully briefed. The majority then turned to whether damages were time-barred if they were incurred more than three years prior to the filing of the lawsuit, and held that they are not. Justice Kagan wrote: "If any time limit on damages exists, it must come from the Act's remedial sections. But ... [t]here is no time limit on monetary recovery [in those sections]. So a copyright owner possessing a timely claim for infringement is entitled to damages, no matter when the infringement occurred."

The Second Circuit had relied upon an earlier Supreme Court decision, Petrella v. MGM, which we discussed more here. Justice Kagan explained that in Petrella, the plaintiff had longstanding knowledge of the defendant's infringements, so the discovery rule could not be invoked, and there was no way for the plaintiff to bring timely claims for infringements occurring more than three years prior to filing suit. As such, the Court found that the Copyright Act's statute of limitations allowed a plaintiff "to gain retrospective relief running only three years back from" the filing of a suit. "Taken out of context," Kagan wrote, "that line might seem to address the issue here. But that statement merely described how the limitations provision worked in Petrella. The Court did not go beyond the case's facts to say that even if the limitations provision allows a claim for an earlier infringement, the plaintiff may not obtain monetary relief." Here, because the plaintiff's claims were timely under the discovery rule, the majority held that damages accruing more than three years prior were still on the table.

At oral argument, several justices questioned whether the Court should even be reviewing the Warner Chappell case, at least pending the resolution of another case pending before the Court, Hearst Newspapers, LLC v. Martinelli. Unlike Warner Chappell, the Martinelli case directly raises the question of whether the discovery rule applies in copyright cases. In his dissenting opinion, Justice Gorsuch wrote that the question of the discovery rule's application needed to be decided before taking on the question of whether a temporal damages bar applies in copyright infringement cases.

The Warner Chappell decision is being hailed as a victory for copyright owners. Nevertheless, it remains to be seen how the Court will decide the Martinelli case, and whether it will hold that the discovery rule does apply to copyright actions. Based on the majority opinion in Warner Chappell, it is likely that the Court will hold the discovery rule applies generally in these types of cases. However, we will not know for sure until the Court addresses Martinelli later this term.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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