Supreme Court affirms 100+ Year Period for Copyright Damages

In Warner Chappel Music, Inc., v. Sherman Nealy, [22–1078] (May 9, 2024), the Supreme Court finally clarified copyright’s 3-year statute of limitations (17 U. S. C. §507(b)), holding that a copyright plaintiff who timely brings a copyright infringement claim, can recover damages for the entire period of infringement, and not limited to the three year period before suit was brought.

Sherman Nealy and Tony Butler formed Music Specialist, Inc., which recorded and released one album and several singles, including the works at issue. Nealy went to prision, and Butler (unbeknownst to Nealy) entered into an agreement with Warner Chappell Music, Inc. to license the works. In 2018, following his second prison stint, Nealy sued Warner Chappell for copyright infringement, alleging that held the copyrights to Music Specialist’s songs and that Warner Chappell’s licensing activities (dating back to 2008) infringed his rights.

Warner Chappell argued that damages were limited to the 3-year period before suit was filed. The district court agreed, relying on a decision from the Second Circuit, and held that even when claims for old infringements are timely, monetary relief is “limited” to “the three years prior to the filing” of the action. The Court of Appeals for the Eleventh Circuit reversed, rejecting the notion of a three-year damages bar on a timely claim (assuming for the purposes of answering the certified question that all of Nealy’s claims were “timely under the discovery rule).

The Supreme Court granted certiorari on the question “whether, under the discovery accrual rule applied by the circuit courts,” a copyright plaintiff “can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.” The Supreme Court found the answer in the Copyright Statute:

The text of the Copyright Act answers that question in favor of copyright plaintiffs. The Act’s statute of limitations provides in full: “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.” §507(b) . . . That provision establishes a three-year period for filing suit, beginning to run when a claim accrues—here, we assume, upon its discovery. And that clock is a singular one. The “time-to-sue prescription,” as we have called it, establishes no separate three-year period for recovering damages, this one running from the date of infringement.

    The Supreme Court noted that Second Circuit’s contrary view, on top of having no textual support, was essentially self-defeating. On one hand, the court recognizes a discovery rule, thus enabling some copyright owners to sue for infringing acts occurring more than three years earlier, but 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, a copyright owner could theoretically recover damages for activities extending back 100 years or more given copyrights term of the life of the author plus 70 years (the shorter of 95 years from first publication or 120 years from creation for anonymous work, a pseudonymous work, or a work made for hire). The Supreme Court, to the chagrin of the dissent, expressly did not decide whether the discovery rule (where the limitations period runs from when the copyright discovered the infringement or reasonably should have discovered the infringement) is the correct rule for applying the statute of limitations. The dissent forcefully argued against the Discovery Rule, which coupled with today’s decision, could result in 100+ years of copyright damages as the title of this post suggests, something that a statute of limitations should not allow.