Trademark And Copyright Update - March 2024

• Published date: 22 March 2024
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Copyright, Trademark, Music and the Arts
• Law Firm: Quinn Emanuel Urquhart & Sullivan
• Author: Quinn Emanuel Urquhart & Sullivan

Supreme Court Considers Whether Copyright Plaintiffs May Recover Damages for Infringing Acts Occurring Outside the Copyright Act's Three-Year Statute of Limitations

The Supreme Court recently heard argument in a case that stands to have significant implications for the scope of damages available in a copyright case. In Nealy v. Warner Chappel Music, Inc., the Court is asked to decide whether, under the discovery rule, a copyright plaintiff can recover damages for infringing acts that occurred outside the Copyright Act's three-year statute of limitations. The discovery rule generally measures the limitations period from when the plaintiff discovered or reasonably should have discovered its claim, whereas the injury rule measures the limitations period in a copyright case from the act of infringement. The defendant seeks reversal of the Eleventh Circuit's holding that, where a plaintiff timely commences suit under the discovery rule, the Copyright Act's three-year statute of limitations does not preclude the plaintiff from obtaining damages for acts that occurred more than three years before filing suit and before the plaintiff's discovery of its claim.

Circuit courts are split on this question based largely on diverging interpretations of the Supreme Court's 2014 decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014). There, the Court held that a defendant cannot invoke the doctrine of laches (i.e., unreasonable, prejudicial delay in bringing suit) to bar a timely claim seeking damages for acts within the Copyright Act's three-year window for commencing suit. Id. at 667. The Court noted that, under the separate-accrual rule, each act of infringement 'starts a new limitations period,' and the plaintiff sought damages only for infringing acts within the limitations period. Id. at 668, 671. Thus, a defendant cannot use laches to argue that the plaintiff's failure to bring suit over infringing acts outside the limitations period bars a claim for damages as to infringing acts within the limitations period. In reaching its decision, the Court explained that the Act's statute of limitations 'itself takes account of delay' because a plaintiff 'can gain retrospective relief only three years back from the time of suit' and '[n]o recovery may be had for infringement in earlier years.' See id. at 677. The Court noted that it was not passing on the question of whether the discovery rule applies in copyright cases, which was not at issue. See id. at 670...