Supreme Court 6-3 Decision: Timely Copyright Claims Not Subject to 3-Year Damages Limitation

In Warner Chappell Music, Inc. et al. v. Nealy et al. (2024), the U.S. Supreme Court held that music producer Sherman Nealy is not barred from collecting damages arising from copyright infringements associated with singer-songwriter Flo Rida’s hit song “In the Ayer” dating back to the song’s 2008 release. Nealy brought suit in 2018, but claimed he was not aware of the song until 2016 after a period of incarceration from 2012 to 2015. 

Section 507(b) of the Copyright Act states that a plaintiff is required to bring suit “within three years after the claim accrued.” Many jurisdictions, including the Court of Appeals for the Eleventh Circuit, in which this case was brought, apply the discovery rule allowing copyright lawsuits to proceed three years from the plaintiff’s discovery of the infringement, as opposed to when the infringement first occurred. 

The Southern District of Florida applied the discovery rule here to allow Nealy's claim, but ruled that Nealy could collect damages only for the three years prior to his having filed suit in 2018, relying on the Second Circuit's precedent interpreting Section 507(b). The Eleventh Circuit reversed, holding that the Copyright Act did not have a separate damages bar for a timely copyright claim, countering with the Ninth Circuit's precedent.

The Supreme Court granted certiorari to resolve the circuit split on the question as to whether, in applying the discovery rule, a copyright plaintiff can recover damages more than three years before filing suit, i.e., whether Section 507(b) limits damages to the three years before filing suit. The court expressly stated, however, that it has never decided and was not deciding whether the discovery rule applies to the Copyright Act. Thus, a split in the circuits remains as to whether a copyright plaintiff can be barred from filing suit more than three years after the alleged infringement occurred. 

Writing for the majority, Justice Elena Kagan called the Second Circuit’s damages limitation rule “self-defeating” because it takes away the value conferred by the discovery rule by limiting a copyright plaintiff to three years of damages, regardless of how long the infringement went undiscovered. Accordingly, the court held that the Eleventh Circuit was correct and Nealy was entitled to collect damages dating from the song's 2008 release, effectively overruling the Second Circuit.

Justice Neil Gorsuch filed a dissenting opinion, joined by justices Clarence Thomas and Samuel Alito, which loudly signaled the death knell of the discovery rule, despite the issue not being properly before the court. Issuing an advisory opinion that found the Copyright Act does not allow for a discovery rule, the dissent asserted that the majority’s opinion will soon be a “dead letter” once the issue of the existence of a discovery rule is before the court. The dissenting justices asserted that the Copyright Act’s use of “when the claim accrues” means when the infringement first occurs. They reasoned that in the absence of language in the statute to the contrary, the courts can only apply the discovery rule where “fraud or concealment” occurs. And because Nealy did not allege fraud or concealment, and Section 507 of the Copyright Act does not state otherwise, the dissent's view is that Nealy’s claim should be barred as untimely in the first place.

Perhaps even more provocative, the dissent suggests in a passing parenthetical (without any explanation) that perhaps “all” of Nealy’s claims would be barred. For all of Nealy’s claims to be barred, the court would have to both eliminate the discovery rule, and interpret the Copyright Act to bar all claims for copyright infringement brought more than three years after the defendant first infringed the copyright, regardless of whether that defendant was continuing to make infringing copies.

For now, however, this decision establishes that in jurisdictions that allow copyright claims to be brought within three years of the plaintiff's discovery of the infringement, those plaintiffs are entitled to collect damages dating back to the first infringement.