by Dennis Crouch and Timothy Knight
On February 21, 2024, the Supreme Court heard oral arguments in the case of Warner Chappell Music v. Nealy, which deals with a circuit split over the availability of back-damages in copyright infringement cases. Specifically, the Court is examining whether copyright plaintiffs are barred from recovering damages for acts of infringement that occurred more than three years before filing suit, even if the claims are timely under the “discovery rule.” During the arguments, the parties and justices used metaphors of “bad wine vintages” in questioning the pedigree and value of the discovery rule and damages limitation put before them. [Oral Argument Transcript]
The copyright law has a three year statute of limitations for filing suit that begins when the copyright “claim accrued.” Although “accrual” in copyright cases ordinarily occurs with infringement, the judge-made discovery rule allows copyright claims to accrue when the plaintiff discovers, or reasonably should have discovered, the infringement rather than when the infringing act occurred. All circuit courts accept some form of the discovery rule, but they disagree over a second point — whether damages can reach back beyond the three-year statute of limitations period measured from the date of filing. Although the statute does not make any distinction between a right to file an action and a right to back damages, the distinction stems from ambiguous dicta in the Court’s 2014 Petrella v. MGM decision. Although that case focused on laches, the court suggested general allowance for the discovery rule for copyright claims more than three years from filing, but also wrote that Section 507(b) permits “retrospective relief running only three years back from the date the complaint was filed.” This statement led some courts (including the district court here) to conclude that a copyright holder can sue for wrongful actions that were more than three-years distant, but can only collect damages associated with infringing actions within the three year bubble. In this case, the Eleventh Circuit sided with the plaintiff (reversing the district court) in holding that claims for back damages also follow the discovery rule — permitting potential distant claims.
In the certiorari process, the music publishers asked two broader questions that seemed to potentially challenge the discovery rule itself, but the court granted a re-written narrower question that assumed the discovery rule is in place, but questioned whether it also allows damages beyond the three year mark.
Kannon Shanmugam, representing the music publishers who lost before the Eleventh Circuit, began the argument with a statement that the case “presents a straightforward matter of statutory interpretation” under Section 507(b)’s three-year limitations period. He stated that “a plaintiff can obtain damages for acts of infringement only within three years of filing” and that Petrella supports this position. However, the Justices quickly noted that the question presented “assumes the existence of the discovery rule” and does not revisit whether one should exist at all. This prompted pushback from Shanmugam:
I don’t think that this Court when it rephrased the question presented was accepting any particular version of the discovery rule. . . At most, the rephrased question presented assumes the existence of some version of the discovery rule. It does not take sides on the scope of that rule.
The Justices remained skeptical, with Justice Sotomayor asking “isn’t it artificial for you to raise the most important part of your argument in a footnote” rather than directly asking the Court to revisit the discovery rule. She emphasized that Shanmugam was now trying to make arguments that went beyond the scope of the question presented. Justice Gorsuch echoed this, stating “we’re being asked to decide the scope of something that may or may not exist.”
Respondent’s counsel, Joe Earnhardt, also refused to defend the discovery rule’s validity. He argued the question that was granted certiorari “assumes that there is a discovery rule” and claimed all circuits agree one exists (but disagree as to its scope). Justice Gorsuch then wondered: “Why wouldn’t we just take up that question first” regarding the existence of any discovery rule? But Earnhardt maintained doing so was inappropriate since the issue “wasn’t raised below” and has no circuit split.
Overall, the Justices appear to not be willing to rule expressly on the discovery rule question – whether it exists, even while questioning how to decide a “scope” issue if the rule itself is uncertain. Justices floated the possibility of DIGing the case, meaning dismissing it as improvidently granted (DIG). That had also been suggested by respondent. Justice Alito noted, it makes little sense to “talk about the second [question of scope] without resolving the first [its existence].”
Turning to the core question regarding retrospective damages, Shanmugam argued the time-bar stems directly from the statute of limitations provision that a claim must be brought within three years of accrual. “Our submission is simple. As this Court has said, the standard rule is that ‘accrues’ means at the point when you have a complete and present cause of action.” Plaintiff’s attorney Earnhardt contested this reading. He claimed other parts of the Copyright Act authorize full recovery of damages without any “lookback” restriction, such that imposing one would contradict Congress’s intent. It appears that nothing in the Copyright statute provides any hook for separately treating the damages timing from the general accrual limitation. Justice Sotomayor explained her perspective that “The damages section speaks about damages. The statute of limitations speaks about a time period to file a complaint. You’re automatically tying the two. Tell me how you’re doing it.” Shanmugam argued both that the text demands a three year rule and that the particular damages limitation is derived from the Court’s own prior statements in Petrella. On the other side Earnhardt agreed with the Justices that there is no such connection between the two statutes. This core issue may also help explain the court’s difficulty in sifting through whether they must first answer a question about the discovery rule before analyzing how it applies to damages. Under Shanmugam’s theory, the two are inextricably linked, whereas for Earnheart the statute of limitations is entirely separate and distinct from the copyright damages statute.
Earnhardt insisted Petrella was distinguishable dicta because the plaintiff there “only brought claims for the three-year period” preceding her lawsuit, whereas broader relief would be appropriate if earlier acts were successfully tied to timely claims under the discovery rule. However, Justice Gorsuch noted that Petrella’s language about damages going back “only three years” was seemingly not so limited. Shanmugam argued this was a necessary implication of the prior laches decision — the crux of the decision that laches does not apply to back-damages was the existence of a statute that cuts-off back damages at the three year mark. Shanmugam cautioned that failing limit damages could entrench an overbroad discovery rule that lets plaintiffs reach back indefinitely. During oral arguments, the Court gave little indication of how it might interpret Petrella‘s meaning or perhaps walk-back its language, although Justice Gorsuch sees the case as clearly stating that “you look back three years and no more.”
In the end, the Justices asked few questions about the government’s position that Petrella should not bar damages for timely claims and that the Second Circuit “erred” in Sohm v. Scholastic by holding otherwise based on the Petrella dicta. How the Court maneuvers around Petrella to answer the question remains to be seen when a decision is issued.
The key recurring metaphor during oral arguments was that of “bad wine” in reference to the discovery rule for copyright claims. Justice Gorsuch stated, “we also have a lot of cases in this Court casting doubt on the existence of a discovery rule. We’ve called it wine from a bad vintage or something like that.” See, for example, TRW Inc. v. Andrews, 534 U.S. 19, 37 (2001) (Scalia, J. in dissent writing “The injury-discovery rule applied by the Court of Appeals is bad wine of recent vintage.”); and Rotkiske v. Klemm, 140 S. Ct. 355, 360 (2019) (an “expansive approach to the discovery rule is a bad wine of recent vintage”). Later, Respondent’s counsel argued that the copyright discovery rule is not “bad vintage” because it is inherent to the “accrual” language of the Copyright Act. Of course, the discovery rule is not explicit in the language of the Act, and Gorsuch responded that it “may or may not” be there “some people say that the wine is there.” Sticking to the metaphor, Gorsuch later seemingly referenced the Petrella precedent and subsequent appellate decisions as “not even the old bad wine. It’s something else. It’s a new bad wine.” The “bad wine” metaphor has generally captured skepticism amongst the Justices about a broad discovery rule. After all this back and forth over the vintage, both sides likely needed a smooth evening recovery Merlot. We expect the nine sommeliers to release their opinion by the middle of June 2024.
Night Wiper: “the justices on the left … want to promote the communist revolution we are in the middle of”
What about the invaders from Saturn and their mind control rays? Are we to just sit back and let them harvest all the ivermectin until the jim-jam trees bloom no more?
translation: nothing to see here – pay no attention to that man behind the curtain.
Thanks Toto.
So, MM have you read the twitter files? Or, the recent DC case where Biden’s actions restricting users’ 1A rights on social media platforms as being comparable to 1984?
He embraces 1984 as a “how to” guide.
“have you read the twitter files”
Unlike you, gramps, I have a full and interesting life that doesn’t revolve around cleaning the buttons of wealthy f a s c i s t s, as your so plainly does.
So, MM, you are commenting on topics of which you admit you are ignorant.
It is well more than merely that admission as to 1gn0rance – throw in his ageISM, his false accusation of a political view, and an odd type of elitISM (like HE has this mythological “full and interesting life”) while he shows consistently his cognitive dissonance and inability to control his emotions.
“ you are commenting on topics of which you admit you are ignorant.”
LOL. Not how it works, gramps. You’re the ignorant one here, as everyone knows quite well. You’re ignorant and Billy is the snail who cleans your tank.
Projecting again Malcolm.
Love how you double down when busted.
Moody v. Netchoice, OT but the Supreme Court heard oral arguments today.
Common carriers or we can sue for defamation is my position.
link to youtube.com
Please Pardon Potential re(P)eat…
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February 26, 2024 at 3:04 pm
Was 47 USC 230 mentioned?
In the unlikely event of increased liability for their content [if they know it is untruthful], guess which social media or internet blog cites would be most likely to get hit with successful defamation suits? [Note the 3 that already have been.]
The issue is not being objective in the removal of content and then not having liability for the content you haven’t removed.
The issue is that you’re a toxic ignorant dinosaur, gramps, and your kind won’t survive in a modern civil society much longer without government power stepping in to protect your “alternate reality” from decimation by actual reality.
Turn yourself off already, you miserable knob of entitlement on steroids.
Please Pardon Potential re(P)eat…
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February 27, 2024 at 7:49 am
Malcolm – your version of “civil” is anything but.
Maybe you should recheck the history on that Sprint Left thing of yours (hint: your elitist type will NOT be tolerated if your ‘utopia’ arrives).
MM, you sound like a communist. Identify politics replacing class politics. What I advocate for is our Constitution and capitalism with social welfare support. You want a socialist totalitarianism society run by elites. You should read about the Red Guard and the current state of China. I do feel sorry for you in that you have been indoctrinated and are incapable of understanding rational arguments. The Woke mind virus is real.
“identity politics”
LOL
As opposed to the “propaganda inhaling persecuted white geezer politics” which is oh so pure and objective and had nothing to do with “identity”.
white?
There you go again…
Night Writer,
“The issue is not being objective in the removal of content and then not having liability for the content you haven’t removed.”
That’s exactly why I asked about 47 USC 230 – the source of that “not having liability.”
Anyone who has dug around a bit in 47 USC 230 recognizes that when editorial controls ON CONTENT (to shape a desired narrative) are employed, that the protections of Section 230 SHOULD BE forfeit.
(not to mention Obama’s repeal of an anti-propaganda law)…
IDK anon.
I think what it comes down to is with Section 230 that it becomes government action. The government is then limiting your 1A rights. It is a little different as the right being removed from you is to sue for defamation.
It is pretty clear that Section 230 is unconstitutional in conjunction with subjective content moderation. But I listened to the arguments and I wasn’t too hopeful. Thomas seemed to get. But it really feels like this is a political issue and the justices on the left want censorship and want to promote the communist revolution we are in the middle of, which is what I’ve been saying for some years now.
I guess the best way to think about it is the government is granting super 1A rights to social media platforms. But it is definitely government action. I wonder may other parts of the Constitution aren’t implicated like the equal protections. You no longer have equal protections as you can’t sue for defamation.
I wonder if Matt Taibbi will be called as a witness (one review I read this morning prognosticates that the Supremes will kick this back ‘downstairs’).
To Paul’s “or internet blog cites“…
ANY editor shaping narratives should be paying attention.
For those that didn’t hear, a small US company managed to land an unmanned lander on the moon. First lunar landing in 50 years for US and also a private company first I believe.
Extra extra read all about it, on my captive FB page.
land….
on its side.
:-O
I predict DIG on this one
Even more precisely: DIG on this one, and granting cert. in Hearst Newspapers v. Martinelli–both on Monday Feb. 26. Hearst squarely raises the issue of whether the discovery rule applies in copyright cases.
Hearst docket is here:
link to supremecourt.gov
No DIG today (as Mr. Snyder and I predicted), so I’m not sure if there will be one in the future. Maybe, but it’s less likely. Also, no cert. grant in Hearst v. Martinelli, the case is just hanging out on the docket.
So perhaps the Court will reach the merits in Warner Chappell, and then grant, vacate, and remand in Hearst in view of the Warner Chappell merits decision.
Pour me another.
How I sometimes feel given the lack of engagement on the solid points that I have provided YEAR AFTER YEAR AFTER YEAR.
(yes, that’s a jab at my friend Wt, specifically, as anything that he happens not to agree with me on, find him ALSO not engaging on the points that I present, while those with which we do agree on – being most all of patent law – well, that goes unnoticed.
Another issue not mentioned here with going back so many years with discovery for allegedly undetected copyright infringements. The well known reduction in the memory reliability and thus disfavored credibility of witness testimony as to events that many years ago.
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