by Dennis Crouch
Statutes of limitations occupy a peculiar position in our legal system – both shield and sword. While they play a vital role in promoting social stability by preventing stale claims and encouraging prompt resolution of disputes, their rigid application can sometimes feel like permitting theft by other means. When an otherwise valid claim is barred simply because time has passed, the law effectively transforms a wrongful act into a permitted one. The Supreme Court recognized this tension nearly 150 years ago in Wood v. Carpenter, acknowledging that statutes of limitations were both “bane and antidote,” necessary for societal order yet potentially harsh in their operation. 101 U.S. 135 (1879). This fundamental tension is particularly acute in copyright cases where the limitations period is quite short – only three years and where creative works can be exploited for years before their owners discover the infringement.
In RADesign, Inc. v. Michael Grecco Productions, Inc. (No. 24-768), the Supreme Court is being asked to resolve whether a copyright infringement claim “accrues” when the infringement actually occurs (the “injury rule”) or when the copyright holder discovers or reasonably should have discovered the infringement (the “discovery rule”). The Copyright Act provides a three-year statute of limitations for filing suit:
No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.
17 U.S.C. 507(b). The question in the case centers on situations where the copyright holder did not discover the infringement until well after the infringing acts. Although in this case, the delay was only one year, we have seen some cases with courts accepting 10+ years of delay. As discussed below, most courts have implemented some sort of discovery rule, but they split on whether this is a statutory interpretation or instead an equitable exception to the rule.
The dispute before the Court involves photographs taken by Michael Grecco in 2017 of model Amber Rose wearing shoes designed by Ruthie Davis. In August 2017, Davis republished some photos on her website and social media without authorization from the photographer. 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.
The Southern District of New York dismissed the case as time-barred, focusing on Grecco’s sophistication in copyright matters and his history of filing over 130 copyright cases. The district court held that given this expertise, Grecco should have discovered the infringement within three years of its occurrence. The Second Circuit reversed, holding that the discovery rule applies using an objective standard regardless of plaintiff sophistication. Michael Grecco Prods., Inc. v. RADesign, Inc., 112 F.4th 144 (2d Cir. 2024).
Two recent Supreme Court cases are on point, although they do not decide the issue:
- In Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), the Supreme Court stated in dicta that “[a] copyright claim thus arises or ‘accrue[s]’ when an infringing act occurs.” And, the court recognized the statement was dicta — acknowledging in a footnote that it had “not passed on the question” of whether the discovery rule might apply as “an alternative to the incident of injury rule.” Id. at 670 n.4. Petrella did, however have a big impact on copyright cases – holding that the equitable defense of laches cannot be used to bar a copyright infringement claim brought within the three-year statutory period. This ruling removed a significant defense previously available to defendants facing delayed copyright claims.
- More recently, in Warner Chappell Music, Inc. v. Nealy, 601 U.S. 366 (2024), the Court assumed without deciding that the discovery rule still applies, focusing instead on whether the Copyright Act permits damages beyond the three-year statutory period. Justice Gorsuch’s dissent argued that the Court should have addressed the more fundamental question of whether the discovery rule applies at all, suggesting that “the Act almost certainly does not tolerate a discovery rule.”
In a prior post, Tim and I introduced the petition and the general dispute here. See, Dennis Crouch and Tim Knight, Discovery, Injury, and Diligence: Reconciling Subjective and Objective Copyright Limitations Standards Post-Warner Chappell, Patently-O (January 28, 2025).
Today’s post focuses on three new briefs amici filed in support of the petitioners, each presenting unique perspectives on why the Supreme Court should grant certiorari and reject the discovery rule:
- Professor Tyler Ochoa
- NBA Teams Led by the Indiana Pacers
- Law firm of McHale & Slavin
Professor Ochoa’s Amicus Brief: A Deep Dive into the Discovery Rule Controversy
Professor Tyler Ochoa (Santa Clara Law) is a leading copyright law scholar and is very well known for his exacting reading and precise analysis. His amicus brief does an excellent job of tracing the historical development of the discovery rule and explains the theoretical confusion that has led to inconsistent application. The basic starting point for the discovery rule is that courts began adopting it “mostly without analysis” typically “based on cases that assumed fraudulent concealment would equitably toll the statute of limitations.”
The fraudulent concealment doctrine has deep roots in equity. As Ochoa notes, in Bailey v. Glover, 88 U.S. (21 Wall.) 342 (1875), the Supreme Court held that “where the party injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered.” (Citing English cases such as Booth v. Lord Warrington, 4 Brown’s Parliamentary Cases, 163 (1714) (House of Lords held that suit was not barred by statute of limitation at equity because of defendant’s fraud). Bailey’s application in the bankruptcy context was later reaffirmed as a general equitable principal in Holmberg v. Armbrecht, 327 U.S. 392 (1946), this time in the context of a shareholder liability statute of limitations.
In the copyright context, a number of courts have followed the fraudulent concealment model (sometimes referred to as estoppel), including the Third Circuit who explained a few years ago that the discovery rule “cannot be an accrual doctrine” but must instead be “one of those legal precepts that operate to toll the running of the limitations period after a cause of action has accrued.” William A. Graham Co. v. Haughey, 646 F.3d 138, 150 (3d Cir. 2011) (“Graham II”).
There is also another theory that sits alongside the equitable fraudulent concealment doctrine — that the statutory “accrual” language is properly construed to encompass the discovery rule. That approach is the one taken by the Second Circuit in the present case. In RADesign, the court boldly explained:
In the context of the Copyright Act’s three-year limitations provision, the discovery rule is the rule of accrual, not an equitable tolling or estoppel doctrine. The discovery rule is not an exception to the injury rule that only applies to some infringement claims; it is not a benefit for which only some plaintiffs qualify. Rather, “the discovery rule, not the injury rule” determines, in the first place, when a copyright infringement claim accrues.
Michael Grecco Prods., Inc. v. RADesign, Inc., 112 F.4th 144 (2d Cir. 2024). I called this a bold statement because it disregards the Supreme Court’s statement to the contrary in Petrella and the strong dissenting opinion by Justice Gorsuch in Warner Chappell.
In his brief, Ochoa is clear that the Second Circuit’s approach is incorrect — and the proper interpretation of the statute is that the wrongful act rule (or incident of injury rule) is the default rule of accrual under the Copyright Act. In addition to disregarding these recent cases, Ochoa critiques the Second Circuit missing the statutes plain meaning and historical understanding. Ochoa would reject the discovery rule as a general standard. Instead, he suggests that the discovery rule, if it applies at all, should be treated as an exception under equitable tolling principles rather than as the default rule. And, in particular, Ochoa would tie those principles to fraudulent concealment by the infringer and would reject a “blameless ignorance” doctrine found in some cases.
A majority of circuits apply the discovery rule, and Ochoa also does an excellent job of digging into the individual cases to identify the weak origins of the rules. In particular, Ochoa looks at Stone v. Williams, 970 F.2d 1043 (2d Cir. 1992), and Roley v. New World Pictures, Ltd., 19 F.3d 479 (9th Cir. 1994). These cases have been widely relied upon for their statement that a copyright cause of action accrues based upon “knowledge” of a violation. As he tells it though this was a statement in dicta: “the discovery rule did not affect the outcome in either Stone or Roley. Both cases would have come out exactly the same way under Petrella.” Although Role cites a prior decision as precedent, that case actually applied the wrongful act rule and rejected a claim of fraudulent concealment.
NBA Teams: Commercial Reality and Digital Permanence
Eight NBA teams, led by the Indiana Pacers, filed an amicus brief from the perspective of defendants in copyright litigation over social media posts containing incidental use of music. Their brief makes an urgent practical case against the discovery rule, articulating how it “invites uncertainty and abuse” in the digital age. The teams argue that the combination of two Supreme Court decisions—Petrella v. Metro-Goldwyn-Mayer, Inc. (eliminating laches as a defense) and Warner Chappell Music, Inc. v. Nealy (allowing damages beyond three years)—has “ripped a hole in the statute of limitations into which copyright trolls have marched.”
The teams explain that they are “presently defendants in copyright infringement cases pending in the Southern District of New York in which the discovery rule is being asserted by well-recognized music publishers to justify delays in bringing suit against social media posts that are, in some cases, more than a decade old.” The brief also notes that sophisticated players are segregating the investigative function of looking for infringement (outsourced to technology company) from the rights-holding function (by the copyright owner). This separation allows for delays in “discovery” by the rights holder.
The brief tells the story of a lawsuit against the Pacers who were sued for posting a video clip from 2014 showing a U.S. combat veteran reuniting with his family during a break in a game. The plaintiffs alleged that music playing in the arena could be heard in the background and demanded $35,000 from the team. The clip had been up for 10+ years, but the plaintiffs claimed they did not “discover” the use until recently, allowing them to sue and seek damages for the entire period. Artists Publishing Grp., LLC et al. v. Pacers Basketball, LLC dba Indiana Pacers, S.D.N.Y No. 24-cv-5456 (filed July 18, 2024).
McHale & Slavin’s Amicus Brief: A Procedural and Evidentiary Analysis of Copyright Claim Accrual
McHale & Slavin, P.A., a Florida intellectual property law firm, filed their amicus brief based on their experience handling single-image photography infringement claims based on archived internet posts. The firm’s core argument is that applying the discovery rule effectively eliminates the Copyright Act’s statute of limitations by placing an impossible evidentiary burden on defendants. Under the discovery rule, defendants must prove a negative fact – what the plaintiff knew or should have known – which is information peculiarly within the plaintiff’s control. Instead, they argue for adopting the standard “injury rule” while preserving traditional equitable tolling principles, which would create a more balanced framework: defendants would first need to prove when the infringing act occurred, then plaintiffs would need to establish a basis for equitable tolling if the act was outside the limitations period.
Concluding Thoughts: With the case distributed for the March 7, 2025 Conference, the Supreme Court has an opportunity to bring clarity to area of copyright law. While the amici make compelling arguments about the burdens and potential abuse of an expansive discovery rule, I would urge caution about completely eliminating its application given the Copyright Act’s particularly short three-year statute of limitations. Rather than requiring evidence of fraudulent concealment or other bad acts by infringers, the Court could adopt a middle ground that focuses on whether the copyright holder would have discovered the infringement through reasonable diligence. This approach would preserve the statute of limitations as a meaningful defense while acknowledging the practical challenges copyright holders face in detecting infringement.