Jail indoor

The Supreme Court recently handed down a decision in Warner Chappell v. Nealy that some practitioners view as disappointing.  

We wrote about the underlying 11th Circuit case a year ago. Nealy was incarcerated during the time period when some of the songs he had co-produced were infringed. He claimed that because he was deprived of access to media and resources, he did not learn about the infringements until after the statute of limitations had run out.

Plaintiff Nealy argued that in the Eleventh Circuit, where he had filed the case, the court should apply the “discovery rule” to determine that the statute of limitations had not run out. Because of that, the Eleventh Circuit agreed with Nealy that the three-year window of litigation only commenced after Nealy discovered the infringement, and therefore, the lawsuit was timely.

Defendant Warner Chapel instead relied on the Second Circuit’s rule that said, regardless of the Eleventh Circuit’s discovery rule, a plaintiff is only entitled to three years’ worth of damages. 

The Supreme Court recognized that there was a split between the Second and Eleventh Circuits and granted certiorari.

The Court did not determine whether the discovery rule applied because Warner Chappell did not challenge the 11th Circuit’s use of the discovery rule in its brief on appeal. Instead, the justices ruled on the smaller but still important aspect of the case: whether the three-year statute of limitations, regardless of whether it was triggered when the plaintiff discovered the infringement, limited how much earlier damages would be determined. Justice Kagan wrote the 6-3 majority opinion, holding that if a copyright lawsuit is brought in a timely manner, copyright damages are not limited by the three-year period. 

Justice Gorsuch, who felt that the court shouldn’t have even taken this case, dissented. First, he said, the court narrowly limited its opinion and didn’t address whether the discovery rule was beyond the scope of the Copyright Act. Gorsuch said the majority’s opinion didn’t address the greater problem of whether the discovery rule entitles plaintiffs to bring an action so late after the infringement. The majority just assumed that there is a discovery rule.

Before this ruling, a defendant could, as a practical matter, admit to the infringement and point out the lawsuit is not worth much because most of the infringing conduct took place long ago, rather than within the last three years. Previously, there had been an effective cap on the amount a plaintiff could collect. This could seriously increase defendants’ liability exposure.

From my perspective, as someone who represents both plaintiffs and defendants, this is a win for plaintiffs. They can now go much further back in time as long as the complaint was timely. It’s not often that a case with a fact scenario like this comes up — with the plaintiff being in jail during the time of infringement and only bringing the lawsuit after getting out of jail. That seemed to be a plausible reason for not knowing what’s going on in the world. But this ruling might be applied to a much broader set of facts coming to a courtroom near you.

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