by Dennis Crouch and Tim Knight
The Supreme Court is being asked to decide a case that could have a major impact on copyright law. The case involves photographs taken by Michael Grecco in 2017, but the lawsuit was not filed until 2021. The key question is whether the Copyright Act’s three-year statute of limitations runs from when copyright infringement occurs or from when the copyright holder discovers it. The circuits are currently split on this issue, and the Supreme Court may finally settle the issue that has been brewing for years. (Note that the split overwhelmingly favors the discovery rule but there are differences in how it is applied).
Although we don’t delve into the issues of model-rights here — it is interesting to note that Michael Grecco was the photographer; the model is a famous model Amber Rose (not involved in the lawsuit) and the shoes are designed by famed designer Ruthie Davis, who is also the accused infringer.
Last Term in Warner Chappell Music, Inc. v. Nealy, 601 U.S. 366 (2024), the Supreme Court addressed whether copyright plaintiffs could recover damages from infringement occurring more than three years before filing suit. In Warner, the Court assumed the existence of a discovery rule and focused on whether the Copyright Act permits damages beyond the three-year statutory damages provision. Before the Warner decision, it was possible (in some Circuits) for a copyright owner to bring a timely infringement claim under the discovery rule, but unable to recover damages. The Majority opinion, delivered by Justice Kagan, closed this gap, holding the recovering damages for infringing acts occurring more than three years before the filing of the lawsuit is allowed under the “discovery rule.” But, the Court explicitly declined to address a more fundamental question — whether a copyright lawsuit can even be predicated on infringement that occurred more than three years prior. Now, that precise issue is squarely presented in a new petition for certiorari in RADesign, Inc. v. Michael Grecco Productions, Inc. (24-768).
RADesign v. Grecco (24-768 @2ndCir): Whether #CopyrightLaw claim “accrues” when infringement occurs (injury rule) or when plaintiff discovers infringement (#DiscoveryRule). Challenges existing statute of limitations interpretation. https://tinyurl.com/278szntb
— SCOTUSGate (@scotusgate.bsky.social) January 28, 2025 at 7:55 AM
The key question is whether the Copyright Act’s three-year statute of limitations, 17 U.S.C. § 507(b), runs from when infringement occurs (the “injury rule”) or from when the plaintiff discovers or reasonably should have discovered it (the “discovery rule”). The three-year statutory bar on bringing copyright infringement claims is quite short compared to the length of copyright protection in most cases being life of the author+75 years. Copyright holders prefer the discovery rule, arguing that it is easy for infringement to go effectively undetectable for years; Publishers argue that the injury rule is important to allow for them to clear their accounts.
The case involves photographs that Michael Grecco took of model Amber Rose wearing Ruthie Davis shoes. The photos were taken and published in Inked Magazine in 2017. In August 2017, Davis allegedly republished some photos on her website and Twitter without authorization. Grecco claims he discovered the infringement in February 2021 and filed suit against Davis’ company RADesign in October 2021 – over four years after the alleged infringement began but within a year of his claimed discovery – i.e., when he first learned of the invention.
The Southern District of New York dismissed the case as time-barred, focusing on Grecco’s sophistication in copyright matters. The complaint described how Grecco “spends time and money to actively search for hard-to-detect infringements” and had filed over 130 copyright cases. The district court held that given this expertise, Grecco should have discovered the infringement within three years of its occurrence. Michael Grecco Prods., Inc. v. RADesign, Inc., 678 F. Supp. 3d 405 (S.D.N.Y. 2023). In other words, the district court appears to have applied the discovery rule in a way that includes a subjective reasonableness standard. Here, the court’s approach suggests that more sophisticated copyright holders (like Grecco with his extensive litigation history) have a higher burden in terms of what constitutes reasonable diligence in discovering potential infringement of their works.
The Second Circuit reversed, holding the discovery rule threshold is more expansive using an objective standard that applies regardless of plaintiff sophistication. The court emphasized the discovery rule is not an equitable exception but rather determines when claims accrue in the first place. Michael Grecco Prods., Inc. v. RADesign, Inc., 112 F.4th 144 (2d Cir. 2024). The Second Circuit directly addressed the Supreme Court’s decision in Warner Chappell, noting that (1) the Supreme Court declined to resolve whether the discovery rule applies to copyright claims while (2) acknowledging that “11 circuits at last count” use discovery accrual in copyright cases.
The petition argues the discovery rule contradicts both statutory text and Supreme Court precedent. The Copyright Act requires suits within “three years after the claim accrued.” The petition contends that under cases like Corner Post, Inc. v. Board of Governors of Federal Reserve System, 603 U.S. 799 (2024), a claim “accrues” when the underlying wrong occurs – here, upon infringement. The petition emphasizes that Congress knows how to adopt a discovery rule explicitly when desired but did not do so in the Copyright Act.
The petition is bolstered most significantly from the three-justice dissent in Warner Chappell. Justice Gorsuch argued the Court should have dismissed the case as improvidently granted, since the Copyright Act “almost certainly does not tolerate a discovery rule.” Rather than address the subsidiary question of damages under the discovery rule, these Justices would have “awaited another case squarely presenting the question whether the Copyright Act authorizes the discovery rule.” The dissenting Justices emphasized that the text and structure of the Copyright Act provide “little reason to suppose” any departure from the standard injury rule.
Despite the dissenting Justices issue with the discovery rule, as the petition points out, all sister circuits have adopted the discovery rule for copyright infringement. As Timothy Knight has argued in Resolving the Incompatibility of Claim Accrual and Recovery in Copyright Law, 89 MO. L. REV. (2024) there are benefits for maintaining the discovery rule over the injury rule. For example, the added protection beyond three years is aligned with the fundamental principles of the Copyright Act which grants lengthy protection to copyright holders for original works and further copyright holders need not be as vigilant monitoring for infringing activities and can instead focus more time to advancing the sciences.
A current criticism of the discovery rule is that it is predicated on a “know or should have known” standard, which is quite broad. The Court or Congress could adopt a more clear threshold for triggering the discovery rule. On one end of the spectrum, there could be an actual knowledge requirement, where the clock begins only when the copyright owner becomes aware of the infringement activities (perhaps with an understanding that the activities constitute infringement). We think such a rule would go too far. The concern here is not simply about copyright owners who operate with reckless disregard, ignoring or hiding obvious infringement. Rather, it does seem appropriate to place some responsibility on the copyright owner to police their work – some affirmative duty to monitor for infringement. This approach fits with what we previously suggested: “the better approach . . . a discovery rule that allows for the timeline to begin only upon reasonable discovery.” Dennis Crouch & Timothy Knight, Beyond the Limit: The Battle Over Copyright Back-Damages in Warner Chappell Music v. Nealy, Patently-O (Feb. 20, 2024). See also, Dennis Crouch and Timothy Knight, Supreme Court Affirms Availability of Back-Damages Under Copyright Discovery Rule, Patently-O (May 9, 2024).
Timothy Knight argued in his Missouri Law Review article that the discovery rule is analogous to adverse possession in property law, which requires property owners to at least occasionally monitor their property boundaries, lest they lose rights to encroachment. If property owners “sleep on their rights” and fail to act, a trespasser may acquire legal ownership of the trespassed area. A similar structure can apply here with a reasonable discovery rule: a copyright holder who diligently monitors for infringement can be excused from strict time limitations, while one who fails to engage in reasonable monitoring efforts may lose their right to pursue claims for older infringements.
A second property doctrine that we think applies is inquiry notice, which requires purchasers to investigate potential red (or even yellow) flags that might signal problems with a property title. Under this doctrine, if circumstances would make a reasonable person suspicious about potential issues, that person has a duty to investigate further (lest they waive their right to later complain). Just as a prospective home buyer who notices tenants living in the home must inquire about their rights, a copyright holder who encounters clues suggesting possible infringement – such similar works appearing in the market, or social media mentions of their work – may have a duty to investigate further. This approach could help courts determine when the discovery period should begin, not just from actual discovery of infringement, but from when the copyright holder first encountered circumstances that should have prompted investigation – i.e., when the copyright holder reasonably should have discovered the infringement.
These parallels help us understand why copyright holders, like property owners, have some baseline duty to actively protect their rights through reasonable vigilance. The comparison is particularly apt because both scenarios involve balancing the rights holder’s interests against the need for legal certainty and finality.
The tension between objective and subjective approaches to reasonable diligence emerged starkly in the Grecco litigation. The Southern District of New York emphasized the plaintiff’s sophisticated copyright enforcement program and extensive litigation history, suggesting these characteristics raised the bar for what constituted reasonable diligence. The Second Circuit rejected this approach, holding instead that the discovery rule applies uniformly regardless of plaintiff sophistication. The leading rule here for reasonable diligence is that the copyright holder bears the burden of showing that no reasonable copyright owner, similarly situated, should have discovered the infringement before the plaintiff did in fact discover it. Although couched as a reasonable person objective standard, the “similarly situated” focus can – if tightly construed – have the effect of a subjective standard.
In Grecco’s case, this spectrum of interpretation becomes particularly salient. At its broadest, “similarly situated” might simply mean any copyright owner, creating a truly objective standard that asks what a reasonable rights holder would have done to monitor for infringement. A middle-ground approach might narrow the focus to professional photographers, acknowledging that different creative industries face different challenges and opportunities in monitoring their works. At its narrowest, “similarly situated” could mean other sophisticated photographers who, like Grecco, have developed systematic approaches to finding and litigating infringement cases – effectively reintroducing the subjective elements that the Second Circuit sought to avoid. This latter interpretation would mean that Grecco’s own sophistication and demonstrated ability to detect infringement could work against him, setting a higher bar for reasonable diligence based on his proven capabilities. The challenge for courts is determining where along this spectrum to draw the line, balancing the need for uniform standards against the reality that different copyright holders operate in distinctly different contexts.
Courts evaluating reasonable diligence should consider several key factors. First, the nature of the copyrighted work often dictates appropriate monitoring strategies. For instance, widely distributed photographs might require different monitoring approaches than architectural plans or software code. See Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093 (7th Cir. 2017) (discussing monitoring expectations in architectural copyright cases). Second, technological capabilities and industry practices provide important context for what constitutes reasonable monitoring efforts. The ubiquity of digital monitoring tools may also raise baseline expectations (and potentially lower the costs) for reasonable diligence.
One additional factor that we’ll discuss here is that of proportionality. A proportionality principle in copyright discovery rule analysis would mirror the evolution seen in the Federal Rules of Civil Procedure’s evidentiary disclosure obligations. See. Fed. R. Civ. Pro. 26. Unfortunately we have confusing terms here because “discovery” is used in two entirely different contexts. The RADesign case focuses on when copyright holders discover infringement more than three years after the infringing acts took place; but Rule 26 discovery is focused on the pretrial exchange of evidence between parties – what we’ll call “evidentiary disclosure.”
In 2015, Rule 26(b)(1) was amended to make proportionality an explicit requirement, mandating that evidentiary disclosure be “proportional to the needs of the case, considering the importance of the issues at stake…, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the [evidentiary disclosure] in resolving the issues, and whether the burden or expense of the proposed [evidentiary disclosure] outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). This amendment codified the common-sense notion that the scope of evidentiary disclosure obligations should scale with the significance of the case and potential recovery. Similarly, in copyright law, when a rights holder seeks substantial statutory damages or claims significant harm from infringement, courts should expect correspondingly robust monitoring efforts before allowing the SOL discovery rule to toll the statute of limitations beyond the standard three-year period from the infringing act.
This proportionality framework would be particularly relevant in cases involving claims for maximum statutory damages under 17 U.S.C. § 504(c)(2). When a copyright holder seeks enhanced damages of $150,000 per work for willful infringement – without needing to prove actual damages – they should face heightened expectations for their pre-suit diligence in monitoring for and discovering infringement. This balancing would help prevent copyright holders from claiming both that the infringement was too difficult to discover within the standard limitations period while simultaneously arguing that the infringement was so obvious and willful as to warrant maximum statutory damages.
To be clear, at this point, we are not proposing a proportionality framework but rather noting that it should be considered. The approach has some major detractions, particularly in how it might undermine the discovery rule’s core purpose of protecting copyright holders who lack sophisticated monitoring capabilities. Moreover, as demonstrated in cases like Michael Grecco Prods., Inc. v. RADesign, Inc., 112 F.4th 144 (2d Cir. 2024), sophisticated copyright holders already tend to implement robust monitoring systems for valuable works prone to infringement, suggesting that market forces already naturally create an implicit proportionality system without need for further judicial intervention.
This is an interesting case that the Court should seriously consider. And, given three Justices already called for addressing this issue in Warner Chappell, the petition has a strong chance of being granted. Michael Grecco’s response is due February 18, 2025.
RADesign, Inc. and Ruthie Davis are represented by Zack Tripp along with hais Weil Gotshal team of Jacob Altik and Robert Niles-Weed. Emily Kirsch, Paul Niehaus and Craig Tarasoff of Kirsch & Niehaus represented Davis at the 2nd Circuit and are also on the brief. At the 2nd Circuit, Grecco was represented by Bruce Bellingham from Spector Gadon.
At the appellate court, American Society of Media Photographers led a group of photographer associations in filing a brief supporting Grecco. The brief argued that the district court’s restrictive interpretation of the discovery rule for copyright infringement would severely harm photographers’ ability to protect their works. The brief focuses on explaining the technical challenges photographers face in detecting online infringement of their works, noting that there are an estimated 750 billion images online with 3.2 billion more uploaded daily. The amici detail how reverse image search technology, while helpful, has significant limitations – no search engine indexes the entire internet, algorithms miss modified images, and many popular social media platforms actively block indexing. These technical constraints mean that even photographers who diligently search for infringement may not discover unauthorized uses until years after they occur.
The brief’s core argument is that the district court’s ruling creates a perverse outcome by punishing photographers who actively try to protect their copyrights. By holding that Grecco’s “sophistication” in copyright enforcement meant he should have discovered the infringement earlier, the court effectively imposed a higher burden on rights holders who invest in monitoring for infringement. The amici emphasize that this undermines photographers’ already precarious economic position (noting the median annual income is only $40,170) and conflicts with copyright law’s fundamental purpose of protecting creators’ ability to earn from their work. They argue for a more practical standard that would evaluate the statute of limitations based on when search efforts actually located specific infringements, rather than assuming sophisticated rights holders should have discovered all unauthorized uses within three years regardless of technological limitations.