In Nealy v. Warner Chappell Music, Inc., __ F.4th __, 2023 WL 2230267 (11th Cir. Feb. 27, 2023), the Eleventh Circuit joined the fray among its sister circuits by holding damages in a copyright action may be recovered for infringement occurring more than three years before suit is filed.
Nealy involved copyright infringement claims arising from the defendants’ use of musical works based on allegedly invalid copyright licenses that they obtained from third-parties. Because it was undisputed that the gravamen of the dispute was copyright ownership, the Eleventh Circuit’s “discovery rule” applied and dictated that the plaintiff’s claims accrued, and the Copyright Act’s three-year limitations period commenced, when the plaintiff knew, or should have known, that the defendants were violating his ownership rights. After denying summary judgment on statute of limitations grounds, the U.S. District Court for the Southern District of Florida certified for interlocutory appeal the question of whether the Copyright Act’s statute of limitations precludes the recovery of damages for harm occurring more than three years before a plaintiff files suit, even if the suit is timely under the discovery rule. The district court did so because the defendants agreed a plaintiff can file suit for harm occurring more than three years prior, but simultaneously argued a plaintiff cannot recover any damages for that harm based on the U.S. Supreme Court’s decision in Petrella v. MGM, 572 U.S. 663 (2014). The Second Circuit agreed with that position in a 2020 decision, while the Ninth Circuit more recently held that Petrella and the Copyright Act say no such thing.
Enter the Eleventh Circuit. After confirming its discovery rule governs and assuming the timeliness of the plaintiff’s claims, the Eleventh Circuit took the side of the Ninth Circuit by holding a copyright plaintiff may recover retrospective relief for infringement occurring more than three years before filing suit so long as the claim is timely under the discovery rule.
In doing so, the Eleventh Circuit reasoned that the defendants’ argument “begins and ends with Petrella” and relied on snippets from that opinion, which read in context, actually do not cap copyright damages for claims that are timely under the discovery rule. Distinguishing it from the present matter, the Eleventh Circuit found that Petrella actually involved the question of whether the equitable defense of laches can bar relief on an infringement claim brought within the three-year limitations period—not outside of it. And, the Eleventh Circuit noted that the Supreme Court’s comments in Petrella were only made in the context of a claim that was timely under the “injury rule” (where separate claims accrue with each new injury)—not the discovery rule applicable in this case, and which the Supreme Court actually preserved in its opinion. For these reasons, the Eleventh Circuit held the defendants’ reading of Petrella ignored the question presented and improperly conflated the discussion of claim accrual under the injury rule with the availability of damages under the discovery rule.
The Eleventh Circuit also held the Copyright Act does not bar retrospective relief for an otherwise timely claim. First, it found the statute of limitations in 17 U.S.C. § 507 only applies to maintaining an action, not obtaining a remedy. Next, the Eleventh Circuit reasoned the Copyright Act’s damages provisions in 17 U.S.C. § 504 do not limit a plaintiff’s recovery to something less than the harm caused by infringement, which would have been required to overcome the definition of “actual damages” in the Copyright Act. Therefore, the Eleventh Circuit easily found the plain text of the Copyright Act does not support the existence of a separate damages bar for an otherwise timely copyright claim.
The Eleventh Circuit’s decision is significant because it not only provides a potentially expansive damages period to copyright plaintiffs, but it also invites the Supreme Court to resolve the split among three circuits.