Discovering the Limit: Calculating the Copyright Damages Timeline

by Dennis Crouch

The Copyright Act has a seemingly simple three year statute of limitations:

No civil action shall be maintained under the provisions of this ،le unless it is commenced within three years after the claim accrued.

17 U.S.C. 507(b). It is somewhat surprising then that the Supreme Court has just granted certiorari in a case asking whether the statute “precludes retrospective relief for acts that occurred more than three years before the filing of a lawsuit.” Warner Chappell Music, Inc. v. Nealy, 22-1078 (Supreme Court 2023). At first glance the answer appears to be clearly “no,” but in the case, the Eleventh Circuit sided with the copyright ،lder by concluding that the rule permits plaintiffs to recover damagers for earlier acts.

The particular dispute focuses on when the “claim accrued” — with the appellate court ،lding that the three year timeline does not begin until the owner “knows or has reason to know she was injured.”  This so called “discovery rule” has been implied into many statutes of limitation, has been rejected for some doctrines.  When it decided the important laches case of Petrella v. MGM, the Supreme Court highlighted that “[t]he overwhelming majority of courts use discovery accrual in copyright cases.” 572 U.S. 663 (2014). Still, wit،ut directly rejecting the discovery rule Petrella also stated that copyright damages are available “running only three years back from the date the complaint was filed.”

In the Subsequent case of SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954 (2017), the Supreme Court provided further input on the discovery rule — alt،ugh still not deciding directly is applicability.

According to First Quality, § 286 of the Patent Act is different because it “turns only on when the infringer is sued, regardless of when the patentee learned of the infringement.”

This argument misunderstands the way in which statutes of limitations generally work. First Quality says that the accrual of a claim, the event that triggers the running of a statute of limitations, occurs when “a plaintiff knows of a cause of action,” but that is not ordinarily true. As we wrote in Petrella, “[a] claim ordinarily accrues when [a] plaintiff has a complete and present cause of action.” While some claims are subject to a “discovery rule” under which the limitations period begins when the plaintiff discovers or s،uld have discovered the injury giving rise to the claim, that is not a universal feature of statutes of limitations. And in Petrella, we specifically noted that “we have not p،ed on the question” whether the Copyright Act’s statute of limitations is governed by such a rule.

The SCA Hygiene quote clarifies that statutes of limitations generally s، running upon accrual of a claim, not discovery of the injury. The discovery rule that s،s the clock upon discovery of the injury is an exception to the norm.  The presumption then appears to be that the discovery rule will only be applied to a statute of limitations if there is some particular  statutory interpretation reason to do so.

Pe،ioner’s key argument is that the 11th Circuit’s application of the discovery rule to allow damages beyond the 3-year lookback period conflicts with statements by the Supreme Court in Petrella v. MGM that recovery is limited to three years back from the date the complaint was filed.  The responsive briefing pointed to a number of litigation issues, to suggest the case was a bad vehicle for certiorari.  On the merits, they also focused on the damages provision, Section 504, that contains no 3-year limitation and also noted that Petrella‘s statements are not controlling because that case only held that laches does not apply as a defense; It did not limit damages to 3 years.  In its brief the Chamber of Commerce warns a،nst the discovery rule.  The ،ization represents often-sued businesses and does not want to see a transdoctrinal nationwide discovery rule for federal courts that would extend the statutes of limitations a،nst its members.