Alexa Paladino
Last week, SCOTUS agreed to review an appeal involving record labels, music publishing groups, producers, and a hit song by Flo Rida. Unfortunately, this copyright battle is not over apple bottom jeans or boots with the fur – it’s all about the discovery rule and the “three-year window” in which plaintiffs can purportedly sue for copyright infringement.
In 2018, plaintiffs Sherman Nealy and Music Specialist, Inc. (MSI) filed suit for copyright infringement against Warner Chappell Music, Artist Publishing Group, and Atlantic Recording Corporation.[1] At the core of a complicated factual dispute, Nealy alleged that the rights for songs that he and MSI owned were improperly transferred to defendants by third parties while Nealy was in prison from 1989 to 2008.[2] In particular, in 2008, Atlantic obtained a license to interpolate one of the works at issue, “Jam the Box,” into Flo Rida’s timeless song “In the Ayer” (recall: “Oh hot damn, this is my jam, keep me partying ’til the AM”).[3] While Nealy was out of prison, litigation ensued over some of the musical works, but Nealy was not a named party and contends that he did not learn of the legal dispute at this time.[4] Nealy then served another prison sentence from 2012–2015, and he alleges that it was not until January of 2016 that an MSI associate finally informed him of the litigation and the alleged transfer of rights to these particular defendants.[5] Almost three years after this conversation—but more than ten years after the alleged infringement began—Nealy filed suit. How far back can a court potentially reach to grant Nealy relief?
The issue at hand concerns whether the Copyright Act’s statute of limitations for civil actions—17 U.S.C. § 507(b)—precludes retrospective relief for acts that occurred more than three years before the filing of a lawsuit.[6] This question has divided appeals courts and carries widespread implications for the scope of remedies available to plaintiffs and liability exposure for defendants.
In Nealy, the Eleventh Circuit reversed the district court to find that “a copyright plaintiff may recover retrospective relief for infringement occurring more than three years before the lawsuit’s filing so long as the plaintiff’s claim is timely under the discovery rule.”[7] The Ninth Circuit has taken a similar view to the Eleventh, contending that 507(b) is not about a damages bar and that holding otherwise would render retrospective relief under the discovery rule effectively eviscerated.[8] The discovery rule “starts the limitations period when the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.”[9]
Petitioners point to the Second Circuit, which has held that financial recovery is strictly limited to three years before the filing of suit, arguing that the Copyright Act itself caps relief and takes account of delay by explicitly providing that three-year lookback period.[10]
What is at stake here? At present, inconsistent limitations periods across the country encourage forum shopping by plaintiffs, which is precisely what the Congress sought to avoid with provision 507(b)—one of its stated purposes was to “render uniform and certain the time within copyright claims could be pursued.”[11] As noted in amici briefs for the certiorari petition, forum shopping leads to “real and harmful effects . . . by yielding different outcomes based merely on a happenstance of geography.”[12] The SCOTUS decision should effectively put this issue to rest.
However, the side that the justices choose will have practical consequences. Petitioner-defendants argue that effectively extending the limitations period will “incentivize litigation that would not otherwise be brought” and increase “uncertainty and expense” for defendants, allowing plaintiffs to recover retrospective damages for uses of copyrighted works from many years ago—requiring many-years-old evidence that may be murky or unavailable due to the passage of time.[13] According to petitioners, this would chill dealmaking in the industry and encourage early claim settlement regardless of wrongdoing.[14]
However, Nealy’s side contends that 507(b) addresses the timeliness of claim filing, not remedies or damages, and that the Copyright Act’s damages provision itself contains no temporal limitation.[15] Adopting petitioners’ interpretation, they argue, will gut plaintiffs’ capacities to recover retrospective relief despite filing timely claims, benefiting infringers at the expense of copyright owners.[16] If plaintiffs can bring and win a suit under the discovery rule, yet they cannot receive monetary damages for the older infringements, this begs the question: are plaintiffs left with a right but not a remedy? SCOTUS will decide.
[1] Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325, 1328 (11th Cir. 2023).
[2] Id.
[3] Id.; see also Atlantic Records, Flo Rida - In The Ayer (feat. Will.i.am) [Official Video], YouTube (June 14, 2008), https://www.youtube.com/watch?v=-DsyZdeFjug [https://perma.cc/6JBD-3K8H] [https://web.archive.org/web/20231006234053/https://www.youtube.com/watch?v=-DsyZdeFjug].
[4] Nealy, 60 F.4th at 1329.
[5] Id.
[6] Petition for a Writ of Certiorari at 1, Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325 (11th Cir. 2023) (No. 22-1078); 17 U.S.C. § 507(b) (“No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”).
[7] Nealy, 60 F.4th at 1331 (emphasis added).
[8] Starz Ent., LLC v. MGM Domestic Television Distrib., LLC, 39 F.4th 1236, 1244 (9th Cir. 2022).
[9] Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 670 (2014) (quoting William A. Graham Co. v. Haughey, 568 F.3d 425, 433 (C.A.3 2009)) (internal quotation marks omitted).
[10] Petition for a Writ of Certiorari, supra note 6, at 12 (describing Sohm v. Scholastic, Inc., 959 F.3d 39 (2d Cir. 2020)).
[11] Petrella, 572 U.S. at 670.
[12] Brief of the Recording Industry Association of America and National Music Publishers’ Association as Amici Curiae Supporting Petition for a Writ of Certiorari, Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325 (11th Cir. 2023) (No. 22-1078).
[13] Petition for a Writ of Certiorari, supra note 6, at 15.
[14] See Id. at 16.
[15] Brief in Opposition at 11, 18, Nealy v. Warner Chappell Music, Inc., 60 F.4th 1325 (11th Cir. 2023) (No. 22-1078).
[16] Id. at 19–20.