CSG Law Alert: Supreme Court Rules that Damages for Copyright Infringement Are Not Tied to Statute of Limitations

On May 9, 2024, the U.S.  Supreme Court resolved a Circuit Split and held that the Copyright Act entitles an owner to obtain monetary relief for any timely infringement claim regardless of when the infringement occurred.

Under the United States Copyright Act, a plaintiff must file suit within three years after a claim accrues. 17 U.S.C. §507(b). But the statute does not define what “accrues” means, and different jurisdictions have adopted differing views as to accrual. The first approach is the traditional rule for a tort cause of action, namely that a claim accrues when the infringing act occurs. Alternatively, the “discovery rule,” currently used by the majority of courts, holds that a copyright infringement claim accrues when the plaintiff discovers (or with due diligence should have discovered) the infringing act. The discovery rule enables diligent plaintiffs to raise claims about old infringements so long as they were discovered within three years of filing suit.  

In 2020, in Sohm v. Scholastic Inc., the Second Circuit held that the statute of limitations in the Copyright Act not only limits when a claim can be brought, but also effectively bars damages recoveries beyond the three years immediately prior to the filing of the complaint. That decision led to a circuit split – with the Ninth and Eleventh Circuits expressly rejecting that approach, with other courts adopting it. Just four years later, in Warner Chappell Music, Inc. v. Nealy et al., (No. 22-1078) the Supreme Court has definitively put that dispute to rest. The Court disagreed with the Second Circuit and found that there is no time bar on recovering damages in a copyright infringement suit, so long as the case was filed within the statute of limitations. In the Court’s view, “the [Second Circuit’s] damages bar makes the discovery rule functionally equivalent to its opposite – an accrual rule, based on the timing of an infringement.”

What does this mean to copyright infringement litigants? Well, for plaintiffs in the Second Circuit, if you did not discover longstanding infringement right away, your potential damages recovery just got bigger. And for defendants in the Second Circuit fighting the same fact pattern, your potential exposure is also much bigger. Generally, this may limit the scope of some forum and venue disputes and perhaps limit forum shopping. In the short term, the incentive for more damages is also likely going to spur an increase in the filing of infringement claims and make it much harder to litigate (and settle) cases with old facts.  

While this decision provides some clarity as to the scope of potential monetary damages for copyright infringements that were not discovered until after they commenced, the Court emphatically declined to rule on when a claim actually accrues or whether the discovery rule approach is valid, holding that the issue was not presented. But, as to the long term, we have some hints from the dissent (supported by three Justices) that the discovery rule may be on the chopping block in the near future. Specifically, Judge Gorsuch’s dissent argues that the Court should have gone one step further and disavowed the discovery rule entirely. In the dissent’s view, the Copyright Act “almost certainly does not tolerate a discovery rule” except in cases of fraud or concealment. Thus, if a case with that specific question comes across the Court’s docket in the near future, it seems we may be in for an even more groundbreaking change to copyright infringement litigationmoving forwardperhaps finally a uniform national standard for determining when a plaintiff’s claim actually accrues.