United States: Fifth Circuit Upholds "Discovery Rule" In Affirming Victory For Photographer In Copyright Suit

Under the Copyright Act of 1976, a civil action for copyright infringement must be "commenced within three years after the claim accrued." 17 U.S.C. § 507(b). But when does a claim accrue? To answer that question, the Fifth Circuit applied what is known as the "discovery rule." That is, the limitations period starts running when a "plaintiff knows or has reason to know of the injury upon which the claim is based." Graper v. Mid-Continent Casualty Co., 756 F.3d 388, 393 (5th Cir. 2014). That rule came under attack in Martinelli v. Hearst Newspapers, LLC, with Hearst asking the Fifth Circuit to jettison the discovery rule and hold that the clock starts when an act of copyright infringement occurs—not when the act is discovered—because, according to Hearst, more recent Supreme Court decisions no longer permit application of the discovery rule. The Fifth Circuit declined the invitation, affirming the application of the discovery rule and refusing to create a circuit split in the process.

The facts here were straightforward and stipulated. In 2015, photographer Antonio Martinelli took seven photographs of an Irish estate named "Lugalla" owned by the Guinness family. Lugalla was eventually listed for sale, and in March 2017, Hearst Newspapers and its affiliates published several online stories about the listing using Martinelli's photographs without authorization. Martinelli discovered these uses on various dates ranging from November 17, 2018 through May 28, 2020, and the parties agreed Martinelli could not have discovered them earlier. Martinelli filed his complaint (later amended to add a defendant) for direct and contributory copyright infringement on October 18, 2021. Hearst conceded that it infringed Martinelli's copyrights and, if Martinelli was successful, agreed to pay $10,000 in damages. This stipulation left just one issue for the court: did Martinelli timely bring his claims under the Copyright Act's statute of limitations.

Applying the Fifth Circuit's discovery rule, the district court held the claims timely because Martinelli sued within three years of discovering the infringement. Hearst appealed, arguing that the Supreme Court's decisions in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014) and Rotkiske v. Klemm, 140 S. Ct. 355 (2019) "undermined the reasoning" for applying the discovery rule and asking that rule be jettisoned for one starting the clock when infringement occurs.

The Fifth Circuit refused to depart from its precedent. Instead, it found the Supreme Court had never passed on the question of whether the discovery rule should or should not apply and thus neither Supreme Court decision "unequivocally overruled" the Fifth Circuit's precedent applying it. To the contrary, the Fifth Circuit found that both the Petrella and Rotkiske decisions left open the possibility for application of the discovery rule.

The Fifth Circuit began its analysis with Petrella, which dealt with whether a defendant can assert the equitable laches defense against a copyright infringement claim timely brought within the statute of limitations. In reaching that question, the Supreme Court noted that a copyright claim "arises or accrues when an infringing act occurs." Petrella, 572 U.S. at 670. Hearst contended that this statement led to the conclusion that the discovery rule could not apply. The Fifth Circuit disagreed, pointing to a footnote in Petrella that recognized "nine Courts of Appeals have adopted, as an alternative to the incident of injury rule, a 'discovery rule'" and explicitly stated the Supreme Court "ha[s] not passed" on the question of whether the discovery or incident of injury rule applies to the Copyright Act's statute of limitations. Id. at 670 n.4. This, the Fifth Circuit found, left room for future caselaw holding that the discovery rule could apply as the Fifth Circuit has applied it in the past. And even if the statement in Petrella did lead to the conclusion that the discovery rule should not apply, the Fifth Circuit still found it insufficient to overturn its precedent applying the discovery rule because the statement in Petrella was dicta unnecessary to the outcome of that case.

The Fifth Circuit next moved to Rotkiske, which held that the statute of limitation in the Fair Debt Collection Practice Act ("FDCPA") began to run when the alleged violation occurred, not the date when the violation was discovered. 140 S. Ct. at 358. This holding, Hearst argued, prevented the discovery rule from applying to any statute of limitations (including in the Copyright Act) absent clear language in the statute permitting its application. Once again, the Fifth Circuit disagreed. The language in the FDCPA's statute of limitations unambiguously stated that an action may be brought "within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d) (emphasis added). Because of that unambiguous language, the Fifth Circuit rejected the argument that Rotkiske stood for the proposition that a limitations period runs from the occurrence of the injury unless the statute expressly states otherwise. To the contrary, the Fifth Circuit devised two rules from Rotkiske: (1) in cases where a limitations period is unambiguous with respect to when it starts to run (as in the FDCPA), the statutory language controls; and (2) for limitations periods with two possible constructions, courts generally, but not always, adopt the construction that starts the clock at the incident of injury. Importantly, the Fifth Circuit noted that Rotkiske did not discuss under what circumstances an ambiguous limitations period could be construed to apply the discovery rule. Because the Fifth Circuit found the Copyright Act's limitations period fell into the ambiguous category, it determined that Rotkiske did not preclude application of the discovery rule to the Copyright Act's limitations period.

As additional support for its decision not to discard the discovery rule, the Fifth Circuit highlighted that both other circuits considering this rule post-Petrella and Rotkiske—namely, Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020) and Starz Ent., LLC v. MGM Domestic Television Distrib., LLC, 39 F.4th 1236 (9th Cir. 2022)—continued to apply it. Recognizing it would be the only court of appeals to abandon the discovery rule after Petrella and Rotkiske, the Fifth Circuit declined to create a circuit split, upheld the discovery rule, and affirmed the district court's decision finding Martinelli's copyright infringement claims timely filed within the statute of limitations.

Currently, the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Ninth, and Tenth Circuits expressly apply the discovery rule to determine the limitations period in copyright cases. While the Eighth and Eleventh Circuits have not yet spoken on the issue, district courts in those circuits have also applied the discovery rule. This case was not the first challenge to the discovery rule, and it surely will not be the last. And as these challenges continue, other appellate courts will have the opportunity to weigh in on the effects of Petrella and Rotkiske. For now, the discovery rule remains the prevailing rule on the limitations period for copyright claims.

The case is Martinelli v. Hearst Newspapers, LLC and Hearst Magazine Media, Inc., No. 22-20333 (5th Cir. Apr. 13, 2023).

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