By Morgan E. Pietz and Matthew A. Trejo†
The statute of limitations for copyright infringement is three years. 17 U.S.C. § 507.[1] Nevertheless, civil plaintiffs routinely bring copyright claims more than three years after infringement by asserting that they did not “discover” the infringement until a date less than three years prior to filing suit.
During its 2024 term, the U.S. Supreme Court had two opportunities to address whether this should be allowed.[2] In both cases, it declined to decide the issue.
Copyright plaintiffs should toast this outcome for two reasons. First, it leaves in place a status quo in which the Courts of Appeals apply judge-made “injury-discovery” doctrines that are unmoored from the text of the Copyright Act itself, which vary significantly by Circuit, and which serve to effectively extend the statute of limitations for infringement indefinitely. Second, in Warner Chappell, the Court held that if the discovery rule applies to a claim for civil copyright infringement—which the Supreme Court assumed to be true, and expressly declined to decide—then damages should be available beyond three years, thus resolving a circuit split on that issue.
On the bigger issue, however, of whether the discovery rule should apply to civil claims for copyright infringement in the first place, there would appear to be several votes from conservative Supreme Court Justices suggesting that the answer should be ‘no’. Accordingly, it seems likely that defendants will continue to agitate for the Supreme Court to take that issue up again, and this time actually decide it, in a way that is consistent with a long-fermenting strain of conservative jurisprudence, wherein the focus should be on the original meaning of the statute.
(a) The “Injury-Occurrence” Default Rule and the “Injury-Discovery” Exception
Statute of limitations rules are modern, statutory codifications of the ancient equitable maxim that the law does not favor those who sleep on their rights, but rather those who seek to enforce their rights vigilantly.[3] The statute of limitations can be harsh. Plaintiffs who wait too long to sue will see their claims automatically dismissed from court even if the plaintiffs’ claims were righteous and their damages were significant. The general idea behind the rule is one of fairness; if someone who has a claim waits years before filing suit, relevant evidence may disappear, key witnesses may die, move away, or forget the relevant events. Thus, most federal and state statutes providing litigants with a right to sue are governed by rules providing that any claim asserted under the statute must be brought within a certain period of time.
A recurring issue for courts is determining when to start the clock running for purposes of calculating the limitations period for a given statute. Normally, most claims are deemed to “accrue” at the time an injury occurs. This is often called the “injury-occurrence” rule and has traditionally been the default approach. But what if the plaintiff does not find out about the allegedly wrongful conduct at the time it occurs and only learns about the defendant’s actions years later—perhaps many years later? Some federal and state statutes specifically provide for an exception to the usual, “injury-occurrence” approach to claim accrual and allow that a claim will not accrue under a given statute until the plaintiff “discovers” the injury. This is often called the “injury-discovery” rule; it is an exception to the default, “injury-occurrence” rule, which must be pleaded and proven by the plaintiff.
(b) Justices Scalia & Thomas: Injury-Discovery Rule is “Bad Wine of Recent Vintage”
In 2001, in TRW Inc. v. Andrews, 534 U.S. 19, the U.S. Supreme Court addressed the question of whether the injury-occurrence rule or the injury-discovery exception applied to the running of the limitations period under the federal Fair Credit Reporting Act. The Supreme Court unanimously held that the injury-discovery exception did not apply to the FCRA. Id., 534 U.S. at 23.
Notably in TRW, Justice Scalia, in a concurrence joined by Justice Thomas, criticized “The injury-discovery rule applied by the Court of Appeals” as “bad wine of recent vintage.” Quoting a case decided by the Supreme Court in 1997, the Scalia & Thomas concurrence from TRW re-iterated “the standard rule” is that a claim accrues “when the plaintiff has a complete and present cause of action.” Id. at 36; quoting Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U. S. 192, 201 (1997).
Embarking on a history lesson, the Scalia & Thomas TRW concurrence goes on to note that Bay Area Laundry had “quoted approvingly our statement in Clark v. Iowa City, 20 Wall. 583, 589 (1875), that ‘[a]ll statutes of limitation begin to run when the right of action is complete . . . .’ This is unquestionably the traditional rule: Absent other indication, a statute of limitations begins to run at the time the plaintiff ‘has the right to apply to the court for relief . . . .’ 1 H. Wood, Limitation of Actions § 122a, p. 684 (4th ed. 1916). ‘That a person entitled to an action has no knowledge of his right to sue, or of the facts out of which his right arises, does not postpone the period of limitation.’ 2 id., § 276c(1), at 1411.” (emphasis added).
In short, since at least 2001, the originalist wing of the Supreme Court has been expressing antipathy towards reading discovery rule exceptions into federal statutes that don’t specifically provide that claims accrue upon discovery of the injury rather than upon occurrence of the injury.
(c) After TRW, Judge Kaplan Put a Cork in the Discovery Rule for Copyright Infringement Claims
In 2004, Judge Lewis Kaplan of the Southern District of New York considered the question of whether the injury-occurrence rule or the injury-discovery exception should apply to claims for infringement under the Copyright Act. Following TRW, Judge Kaplan looked to the text and structure of the Copyright Act, as well as the legislative history surrounding its adoption, and concluded that Congress did not intend for the statute of limitations to “depend on something as indefinite as when the copyright owner learned of the infringement.” Auscape Int’l v. Nat’l Geographic Soc’y, 409 F. Supp. 2d 235, 244-47 (S.D.N.Y. 2004). Other courts in the Southern District of New York followed this decision,[4] and, for about a decade, most courts within the Second Circuit declined to apply the injury-discovery rule to copyright infringement claims.
However, in 2014, the Second Circuit Court of Appeal weighed in and reached the opposite conclusion; it “agree[d] with [its] sister Circuits that the text and structure of the Copyright Act . . . evince Congress’s intent to employ the discovery rule, not the injury rule.” Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 124 (2d Cir. 2014).
(d) The Supreme Court Went Hazy in Petrella
A month after the Second Circuit addressed the discovery rule in Psihoyos, the Supreme Court decided a closely related issue in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 667 (2014). Petrella involved the equitable defense of laches; the defendant contended that the plaintiff should be precluded from suing because the plaintiff had known about the infringement for over 30 years and had not taken legal action to stop it. The lower courts agreed, but the Supreme Court reversed, concluding that the equitable doctrine of laches could not preclude Petrella from suing for damages on infringements that occurred less than three years prior to filing suit, because those damages were within the three-year statutory limitations period.
Writing for a 6-3 majority in Petrella, Justice Bader-Ginsburg explained copyright infringement claim accrual as follows,
“A claim ordinarily accrues ‘when [a] plaintiff has a complete and present cause of action.’ Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 201, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (internal quotation marks omitted). In other words, the limitations period generally begins to run at the point when ‘the plaintiff can file suit and obtain relief.’ Ibid. A copyright claim thus arises or ‘accrue[s]’ when an infringing act occurs. [fn 4]” (emphasis added).
Petrella, 572 U.S. at 670. The footnote 4 at the end of the foregoing passage stated,
“Although we have not passed on the question, nine Courts of Appeals have adopted, as an alternative to the incident of injury rule, a ‘discovery rule,’ which starts the limitations period when ‘the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.’ William A. Graham Co. v. Haughey, 568 F.3d 425, 433 (C.A.3 2009) (internal quotation marks omitted). See also 6 W. Patry, Copyright § 20:19, p. 20–28 (2013) (hereinafter Patry) (‘The overwhelming majority of courts use discovery accrual in copyright cases.’).”
Id. at fn 4.
In short, the Petrella majority decision recognizes that, in copyright infringement cases, there may be an exception to the “ordinary” or “general” rule that claims accrue when the injury occurs. But it also noted that the Supreme Court had never passed on the issue, and declined to decide whether or not reading an injury-discovery exception into the Copyright Act was valid under the Supreme Court’s TRW framework.
Notably, in Petrella, Chief Justice Roberts and Justice Kennedy joined a dissent by Justice Breyer that quoted an opinion by Learned Hand stating that it may well be “inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success.” Petrella, 572 U.S. 688 (dissent); quoting Haas v. Leo Feist, Inc., 234 F. 105, 108 (S.D.N.Y.1916). Thus, Justice Roberts and the two other dissenting Justices in Petrella objected to disabling federal courts from addressing that kind of “inequity”.
(e) Discovery Rule Issues Ripened As Courts Disagreed About Three-Year Damages Bar
At present, every Circuit Court of Appeals to have reached the issue has applied the discovery rule in some way, shape, or form in copyright cases. See, e.g., Warren Freedenfeld Assocs., Inc. v. McTigue, 531 F.3d 38, 44–46 (1st Cir. 2008); Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 124 (2d Cir. 2014); William A. Graham Co. v. Haughey, 568 F.3d 425, 433 (3d Cir. 2009); Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 796 (4th Cir. 2001); Daboub v. Gibbons, 42 F.3d 285, 291 (5th Cir. 1995); Roger Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d 383, 390 (6th Cir. 2007); Gaiman v. McFarlane, 360 F.3d 644, 653 (7th Cir. 2004); Comcast v. Multi–Vision Elecs., Inc., 491 F.3d 938, 944 (8th Cir. 2007); Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 705–07 (9th Cir. 2004); Cooper v. NCS Pearson, Inc., 733 F.3d 1013 (10th Cir. 2013); Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325, 1330 (11th Cir.), cert. granted in part, 144 S. Ct. 478, 216 L. Ed. 2d 1313 (2023), and aff’d, 601 U.S. 366 (2024). “While the DC Circuit has yet to address the question, the courts in this district that have applied the statute of limitations in the Copyright Act have also employed the discovery rule.” Oppenheimer v. WL Mag. Grp., LLC, No. CV 20-1451 (ABJ), 2021 WL 6849089, at *3 (D.D.C. 2021). The Federal Circuit also has not had occasion to reach the issue, which could happen in an appeal from a case involving both patent and copyright infringement claims.
One issue that divided the lower courts applying the discovery rule in the wake of Petrella is how far back a plaintiff may collect damages. Compare, e.g., Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) (even when discovery rule dictates claim accrual, three-year lookback period must be used to determine extent of relief available); with Energy Intelligence Grp., Inc. v. Scotia Capital (USA) Inc., 16-cv-617, 2017 WL 432805, at *2 (S.D.N.Y. Jan. 30, 2017) (concluding that Petrella did not establish a time limit on recovery of damages).
Should the plaintiff be limited to obtaining damages that occurred within the three years prior to filing suit? Or, if a plaintiff pleads and proves delayed discovery of the claim, should the plaintiff be entitled to recover damages going back farther than the three-year limitation period?
(f) In Warner Chappell, the Supreme Court Decanted the Issue of Whether the Discovery Rule Applies to Copyright Infringement, But Chose Not to Take it Up
Whether damages should go back beyond three years is the question that the Supreme Court did answer in Warner Chappell. In Warner Chappell, Judge Ruiz of the Southern District of Florida sided with the courts that have adopted a three-year damages bar, but later certified that issue for interlocutory review to the Eleventh Circuit. The Eleventh Circuit ultimately reversed, reasoning that Petrella was not a damages bar. The U.S. Supreme Court affirmed the Eleventh Circuit’s ruling in a 6-3 decision.
Importantly, Justice Kagan’s majority decision for the Court in Warner Chappell begins by expressly avoiding the elephant in the room, i.e., whether the discovery rule applies to copyright claims in the first place. “The Copyright Act’s statute of limitations provides that a copyright owner must bring an infringement claim within three years of its accrual. See 17 U.S.C. § 507(b). In this case, we assume without deciding 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.” Warner Chappell, 601 U.S. 368. The Court then goes on to hold that when a claim is timely under the discovery rule, there is no three-year damages bar.
Justice Gorsuch, joined by Justices Thomas and Alito, dissented in Warner Chappel, and made clear that they do not think the discovery rule should apply to the accrual of infringement claims under the Copyright Act. The dissent explained that the majority,
“discusses how a discovery rule of accrual should operate under the Copyright Act. But in doing so it sidesteps the logically antecedent question whether the Act has room for such a rule. Rather than address that question, the Court takes care to emphasize that its resolution must await a future case. The trouble is, the Act almost certainly does not tolerate a discovery rule. And that fact promises soon enough to make anything we might say today about the rule’s operational details a dead letter.”
Warner Chappell, 601 U.S. at 374 (dissent). The dissent goes on to cite to TRW—the case where Justice Scalia, joined by Justice Thomas, called reading discovery rules into federal statutes “bad wine of recent vintage”—and explain why the discovery rule ought not to be applied in copyright infringement cases. Id. “There is little reason to suppose the Copyright Act’s provisions at issue in this case contemplate any departure from the usual rules,” the plaintiff “has not alleged any fraud or concealment that would entitle him to equitable tolling,” so “the discovery rule thus has no role to play here—or, indeed, in the mine run of copyright cases.” Id. at 375-76.
The dissent continues that the result reached by the majority “may be understandable” given that “none of the parties before us questioned the application of a discovery rule in proceedings below, but joined issue only over how it should work.” Id. at 376. The dissent would have thus have dismissed Warner Chappell as a case in which certiorari was improvidently granted, which is Supreme Court-speak for when it issues an order, saying, in effect ‘after considering this case further, we now conclude we should not have agreed to hear it.’ Lighting a veritable Bat Singal for future litigants, the dissent teased that the High Court would have to “await[] another [petition for certiorari] squarely presenting the question whether the Copyright Act authorizes the discovery rule.” Id.
(g) In Martinelli, the Supreme Court Allowed the Question of Whether the Copyright Act Should be Read to Include an Injury-Discovery Exception to Age a Little Longer
In Martinelli, the Supreme Court had exactly such a petition before it, but again declined to decide the “question that does matter” to the dissenting justices in Warner Chappell, namely whether the discovery rule ought to apply to copyright infringement cases in the first place.
That question was exactly what the parties asked the Court to decide in Martinelli, with the Defendant-Appellant, Hearst, styling the question presented as “Whether the ‘discovery rule’ applies to the Copyright Act’s statute of limitations for civil claims. 17 U.S.C. 507(b).” However, less than two weeks after the Supreme Court issued its divided opinion in Warner Chappel, it declined certiorari in Martinelli. Martinelli v. Hearst Newspapers, L.L.C., 65 F.4th 231(5th Cir. 2023), cert. denied, No. 23-474, 2024 WL 2262332 (U.S. May 20, 2024).
Notably, those who specialize in reading Supreme Court tea leaves would likely caution against reading too much into the denial of certiorari in Martinelli; there are any number of reasons why the Court might have declined to take up that case.
One potential explanation is indeed substantive; perhaps the Thomas / Alito / Gorsuch wing of the Court (who are following in Justice Scalia’s footsteps on the delayed discovery issue, as with others) did not have the votes. That is, perhaps they were unable to persuade two more Justices over to the view they teased in their Warner Chappell dissent. This is certainly one possible interpretation of events.
However, another equally plausible explanation is that there was some non-substantive issue, or issues, with the Martinelli case that made it a less-than-ideal vehicle in which to decide the issue. Notably, in Martinelli the plaintiff was a photographer represented at both the district court and on all levels of appeal by Craig Sanders, an attorney who is a prolific filer of such lawsuits and who has often been sanctioned by the courts in which he appears. Alternatively, the Supreme Court simply may have had too many other important cases to take up at that time.
The bottom line remains, however, that there appear to be three current conservative Justices (Thomas, Alito, and Gorsuch) who used their dissent in Warner Chappell to express interest in deciding whether the injury-discovery rule should be read into the Copyright Act. Moreover, Chief Justice Roberts joined the dissent in Petrella that would have given lower courts the tools needed to prevent the kind of inequitable situation occasioned by a plaintiff’s lengthy delay in filing suit. Which is not exactly the same thing as the discovery rule question the Court avoided in both Warner Chappell and Martinelli but it is close enough so as to suggest at least the possibility of a fourth vote.
(h) Aftertaste of Warner Chappell and Martinelli; Practical Takeaways
Although the injury-discovery rule in copyright infringement cases remains the law of the land in all 50 states (but maybe not Washington D.C.), the rule itself has its limits.
Under the discovery rule, in a copyright case, a cause of action accrues not only “when one has knowledge of the infringement,” but also when one “is chargeable with such knowledge.” Tech 7 Sys., Inc. v. Vacation Acquisition, Inc., 594 F. Supp. 2d 76, 83 (D.D.C. 2009), citing Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615, 621 (6th Cir. 2004); Roley v. New World Pictures, Ltd., 19 F.3d 479, 481 (9th Cir. 1994).
A plaintiff is “chargeable with such knowledge” if a reasonable person could have discovered the infringement with due diligence. Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 707 (9th Cir. 2004).
“A plaintiff can be charged with inquiry notice, sufficient to start the limitations clock, once he possesses information fairly suggesting some reason to investigate whether he may have suffered an injury at the hands of a putative infringer.” Warren Freedenfeld Assocs., Inc. v. McTigue, 531 F.3d 38, 44–45 (1st Cir. 2008).
At the pleadings stage, defendants can potentially get a case dismissed on statute of limitations grounds if they can point to an allegation in the complaint, exhibit thereto, or something judicially noticeable, that would establish that the plaintiff was on inquiry notice of a need to investigate the state of their copyright more than three years prior to filing suit. “A court may dismiss a copyright infringement claim on statute of limitations grounds at the pleadings stage where ‘it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff’s claims are barred as a matter of law.’” PK Music Performance, Inc. v. Timberlake, No. 16-CV-1215 (VSB), 2018 WL 4759737, at *7 (S.D.N.Y. Sept. 30, 2018) (citing Sewell v. Bernardin, 795 F.3d 337, 339 (2d Cir. 2015).)
If there is no such allegation in the complaint that can be argued gives rise to inquiry notice more than three years prior to filing suit, defendants can still develop this defense in discovery and potentially set up a motion for summary judgment on the issue of statute of limitations. Despite the potential for factual disputes about whether notice of a claim was “chargeable” to a plaintiff within the limitations period, summary judgment on this issue is possible in an appropriate case. E.g., Bridgeport Music, supra, 376 F.3d at 622 (affirming grant of summary judgment for defendant on statute of limitations grounds).
Finally, defendants confronted with a plaintiff who appears to be trying to use the discovery rule to disguise a lack of diligence in addressing infringement may want to craft their motions and verdict forms with an eye on appealing the issue to the U.S. Supreme Court. This is especially relevant in copyright infringement cases filed in the D.C. Circuit (which has not reached the issue, although federal district courts in the D.C. District have applied it), or which also include patent infringement claims (such that an appeal would go to the Federal Circuit).
At present, there is no circuit split, which is a key factor in whether the U.S. Supreme Court grants certiorari to decide an issue. However, there do seem to be at least three, and possibly four votes on the current U.S. Supreme Court in favor of pouring out the injury-discovery rule that Justice Scalia called “bad wine of recent vintage,” when it comes to infringement claims under the Copyright Act. See Warner Chappell, 601 U.S. at 374 (dissent); Petrella, 572 U.S. 688 (dissent). Accordingly, this issue will have to lay down in the cellar a little longer, until an appropriate case airs it out.
†Morgan E. Pietz is a founding partner of Pietz & Shahriari, LLP whose practice focuses on intellectual property litigation. His bio is available here.
Matthew A. Trejo is a senior attorney at Pietz & Shahriari, LLP whose practice focuses on intellectual property litigation. His bio is available here.
Endnotes:
[1] “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”
[2] Warner Chappell Music, Inc. v. Nealy, 601 U.S. 366 (May 9, 2024) (“Warner Chappell”); Martinelli v. Hearst Newspapers, L.L.C., 65 F.4th 231 (5th Cir. 2023), cert. denied, No. 23-474, 2024 WL 2262332 (U.S. May 20, 2024) (“Martinelli”).
[3] This maxim comes from the Latin: vigilantibus non dormientibus subvenit lex.
[4] TufAmerica, Inc. v. Diamond, 968 F. Supp. 2d 588, 608 (S.D.N.Y. 2013); Muench Photography, Inc. v. Houghton Mifflin Harcourt Publ’g Co., 2013 WL 4464002, at *6 (S.D.N.Y. Aug. 21, 2013); Urbont v. Sony Music Ent. Corp., 863 F. Supp. 2d 279, 282 (S.D.N.Y. 2012); Bill Diodato Photography LLC v. Avon Prods., Inc., 2012 WL 3240428, at *3 (S.D.N.Y. Aug. 7, 2012); Harris v. Simon & Schuster, Inc., 646 F. Supp. 2d 622, 630 (S.D.N.Y. 2009); Broadvision Inc. v. Gen. Elec. Co., 2009 WL 1392059, at *6 (S.D.N.Y. May 5, 2009); but see Psihoyos v. John Wiley & Sons, Inc., 2011 WL 4916299, at *5 (S.D.N.Y. Oct. 14, 2011).
