Background
On May 9, 2024, the Supreme Court of the United States rendered judgment in Warner Chappell Music, Inc., et al. v. Nealy, et al., holding that the Copyright Act's three-year statute of limitations is only relevant for determining whether a claim was timely filed and does not delimit the period for which a successful plaintiff may recover damages.
The case arose from a dispute between Sherman Nealy, a musician who recorded an album and several singles in the 1980s, and Warner Chappell, which licensed works from the Nealy catalog under an agreement with Nealy's former partner Tony Butler. Pursuant to this license, hooks from songs in that catalog were sampled and incorporated into songs by popular artists including Flo Rida, the Black Eyed Peas, and Kid Sister. However, Nealy did not learn of these uses until 2016 following his release from prison. Nealy brought suit in 2018 alleging copyright infringement in relation to Warner Chappell's licensing of his music dating back to 2008.
The Copyright Act's statute of limitations at §507 establishes a three-year limitation period for filing a copyright infringement suit, starting from the claims "accrual". Under the "discovery rule" endorsed by several judicial circuits including the Eleventh Circuit, where Nealy brought his initial claim, a cause of action for copyright infringement accrues from the moment that the plaintiff discovers (or should have discovered) the allegedly infringing conduct, rather than from the time of the infringement itself. Although Warner Chappell accepted that Nealy was entitled to bring his infringement action under the discovery rule, it argued—and the district court agreed—that the limitation period meant that Nealy could only recover damages or profits in relation to acts that occurred within three years of the filing of Nealy's lawsuit. The Eleventh Circuit Court of Appeals reversed. The Supreme Court subsequently agreed to review the case to settle a circuit split among the eleven circuits that apply the discovery rule as to whether the Copyright Act precludes the award of damages for acts before the three-year period.
Decision
Writing for a 6-3 majority, Justice Elena Kagan concluded that no such restriction on the recovery of damages exists. Justice Kagan drew on both textual and logical arguments to reach this conclusion. The textual argument is based on a plain reading of the Copyright Act's statute of limitations provision (§507(b)), which includes no suggestion that it intends to limit damages for timely filed claims, and on its remedies provisions (§504(a)–(c)), which states no time limit on monetary recovery. Justice Kagan also found logical flaws with the potential coexistence of the bar to recovering damages for earlier infringements with the discovery rule; recognition of the discovery rule while rejecting the ability of a plaintiff to seek damages for such infringements that occurred earlier than three years before the claim would be "essentially self-defeating."
In a dissent, Justice Neil Gorsuch contended that a consideration of the implications of the discovery rule cannot proceed absent a discussion of "whether the [Copyright] Act has room for such a rule." Because this case doesn't present the question of whether the discovery rule is consistent with the statute, Justice Gorsuch and his fellow dissenters would dismiss certiorari as improvidently granted and await a case to serve as a better vehicle to decide the correctness of the discovery rule itself.
