Supreme Court Extends Damages Period in Copyright Cases Warner Chappell v. Nealy

Authors: Nicole M. Jantzi, Paul M. Schoenhard, Jason S. Kanterman, Gina S. Boone

On May 9, 2024, the Supreme Court issued its latest copyright decision, holding that a plaintiff's right to recover damages for copyright infringement is not limited to the three-year period before an infringement suit is filed. See Warner Chappell Music, Inc. v. Nealy, No. 22-1078 (May 9, 2024).

The dispute arose when Nealy learned, upon his release from prison, that Warner Chappell Music had used his copyrighted works while he was incarcerated (purportedly under a license granted by an employee of Nealy's company, Music Specialist). Within three years of his discovery, but many years after his copyrights had allegedly been infringed, Nealy filed a copyright infringement lawsuit in the Southern District of Florida.

The district court held that Nealy's right to recover for past damages was limited to the three-year period prior to his complaint. The Eleventh Circuit disagreed, 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." Amazingly, neither court addressed whether the discovery rule actually applies to the Copyright Act's three-year statute of limitations, which provides that any claim for damages must be brought "within three years after the claim accrued." On review, the Supreme Court was asked to resolve the issue of whether a party can recover damages for acts occurring more than three years before the filing of a lawsuit.

Writing for a 6-3 majority, Justice Kagan chastised Warner Chappell for arguing that the discovery rule cannot be used to delay when an infringement claim "accrue[s]" for purposes of the Copyright Act's statute of limitations, emphasizing repeatedly that the question presented related only to the period for which damages could be recovered. "[W]e assume without deciding," Justice Kagan explained, "that a claim is timely under that provision if brought within three years of when the plaintiff discovered an infringement, no matter when the infringement happened." And based on that assumption, Justice Kagan concluded that if Nealy's claims are timely, he may recover damages for them.

Justice Gorsuch, joined by Justices Thomas and Alito, dissented. Justice Gorsuch expressed frustration with answering a question based on an assumption: "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." And Justice Gorsuch previewed how he would likely rule when the Court is ultimately asked to address the applicability of the discovery rule head-on. "[T]he Act almost certainly does not tolerate a discovery rule."

Ultimately, the Court's decision in Warner Chappell may well be, as Justice Gorsuch suggests in dissent, a "dead letter." And far from clarifying a question that has remained open for the decade since Petrella, the Court's assumption that a discovery rule applies to the Copyright Act's statute of limitations creates further uncertainty.

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