Warner Chappell Music, Inc. v. Nealy

U.S. Supreme Court holds that, assuming discovery rule applies to accrual of copyright infringement claims, plaintiffs can recover damages for allegedly infringing acts that occur outside three-year statute of limitations, as long as they file a claim within three years of discovering infringements.

In 1983, Sherman Nealy formed a company that recorded and released several songs, including one titled “Jam the Box.” After Nealy was imprisoned on drug charges, his business partner entered into an agreement with Warner Chappell Music Inc., pursuant to which “Jam the Box” was interpolated into Flo Rida’s hit single “In the Ayer.” 

In 2018, Nealy sued Warner Chappell for copyright infringement based on its allegedly unauthorized licensing of “Jam the Box.” Nealy sought damages for alleged infringements dating back to 2008. In the district court, Warner Chappell accepted that the discovery rule applied to Nealy’s claims, such that his claims were timely if he could not reasonably have discovered the infringements more than three years before he filed suit. Warner Chappell nevertheless moved to dismiss Nealy’s claim to the extent it sought damages stemming from infringements that occurred more than three years before he filed the action. Warner Chappell relied on the Second Circuit’s 2020 decision in Sohm v. Scholastic Inc., which held that, even when claims for old infringements are timely under the discovery rule, monetary relief is limited to the three years preceding the filing of the action. (Read our summary of the Second Circuit’s decision here.) The Second Circuit, in turn, relied on language from the Supreme Court’s 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc. indicating that plaintiffs cannot recover for infringements occurring more than three years before they filed suit. 

The district court agreed with Warner Chappell, holding that Nealy could bring claims for infringing acts that occurred more than three years before he filed suit but that he could not recover any monetary damages for those claims. On certified interlocutory appeal, the Eleventh Circuit reversed, holding that if a copyright infringement claim is otherwise timely, the plaintiff may recover damages based on infringements occurring at any time. (Read our summary of the Eleventh Circuit decision here.) In doing so, the Eleventh Circuit aligned itself with the Ninth Circuit’s 2022 decision in Starz Entertainment v. MGM. (Read our summary of the Ninth Circuit decision here.) 

In granting a petition for a writ of certiorari, the U.S. Supreme Court agreed to decide the question of “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.” 

In an opinion authored by Justice Elena Kagan, the Supreme Court held that, assuming without deciding that the discovery rule is valid and applies to infringement claims under the Copyright Act, the act contains “no time limit on monetary recovery” and so “a copyright owner possessing a timely claim for infringement is entitled to damages, no matter when the infringement occurred.” The Court reasoned that the plain language of the Copyright Act “establishes no separate three-year period for recovering damages.” According to the Court, applying a discovery rule to permit claims to be filed based on old infringements but then barring a plaintiff from recovering any damages for those infringements would be “essentially self-defeating,” as it would eliminate the benefits of a discovery rule. 

The Court also took the opportunity to clarify its 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc. In holding that the equitable defense of laches does not apply to claims under statutes that, like the Copyright Act, contain a statute of limitations provision, the Court stated that copyright plaintiffs can only recover for damages occurring three years before filing suit. It was that statement that led the Second Circuit in Sohm to apply a three-year damages bar. The Supreme Court clarified that Petrella did not establish any such damages bar and that its statement concerning the scope of recovery was limited to the facts of the case, in which the plaintiff did not invoke the discovery rule and only sought damages for infringements occurring within three years of filing suit. 

Justice Neil Gorsuch, writing a dissent that was joined by two other justices, objected to the majority’s assumption that the discovery rule applied to Nealy’s infringement claims. The dissenters would have dismissed Warner Chappell’s petition for review as improvidently granted and stated their view that the discovery rule “almost certainly does not” apply to copyright infringement claims except in cases of “fraud or concealment.” 

The Court may soon have an opportunity to decide whether, and to what extent, the discovery rule applies to copyright infringement claims, as it is currently considering a petition for review in another case—Hearst Newspapers LLC v. Martinelli—that squarely raises that issue.

Summary prepared by Tal Dickstein and Keane Barger