Yesterday, the Supreme Court heard argument in Warner Chappell v. Nealy, which (at least ostensibly, as you'll see below) raises the question of whether a copyright plaintiff's damages are limited to the three years before filing of the Complaint--or if recovery could go back forever. For a little background on the case, see my prior post (https://ipandmedialaw.fkks.com/post/102ioxf/supreme-court-to-weigh-in-on-damages-for-copyright-infringement). Below are a few quick thoughts on the argument:
- The trouble with this case, which also seemed troubling to the Justices, was in figuring out what was really before the Court. The original question presented to the Court was: "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." The Court later reformulated the question to: "Whether, under the discovery accrual rule applied by the circuit courts and the Copyright Act's statute of limitations for civil actions, 17 U. S. C. §507(b), a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit." The reformulation led to a fair amount of confusion. Was the issue of the discovery rule taken off the table by the reformulation? Justices Amy Coney Barrett and Ketanji Brown Jackson suggested as much to counsel for Warner Chappell, who argued instead that putting the discovery rule more squarely in the question actually invited argument about its scope. He suggested that any discovery rule should be limited to instances of fraud, and fought the notion that Nealy's side had not had an opportunity to directly brief this issue.
- In light of the elephant in the room--whether the discovery or injury rule should govern in a copyright infringement case--there was some discussion of whether the Court should dismiss the petition as improvidently granted. Warner Chappell's counsel confirmed that, if the Court were inclined to tackle that issue and find that the injury rule governed, the direct question presented on the damages bar would go away, and the Justices generally seemed troubled that they were deciding a secondary question rather than the primary issue. (From here on the Nealy side, the questioning devolved into a series of dog metaphors that I will not recount.) There was also a reference made to Hearst Newspapers LLC v. Martinelli, No.23-274, which squarely presents the statute of limitations question. Hearst petitioned for cert. and asked that its case be heard with Nealy. The Court chose not to do that, but has circulated the petition twice at conference and requested a response from Respondent in that case.
- It's not clear how the Court would come out if it were to pass on that rule. In the above-mentioned discussion by Justice Ketanji Brown Jackson, both she and Justice Amy Coney Barrett seemed to be taking the discovery rule as governing--which Nealy's counsel suggested was supported by some Supreme Court precedent. However, other Justices noted Justice Scalia's takedown of discovery rules more generally in TRW v. Andrews as "a recent wine of bad vintage", and questioned whether a decision here imposing a three-year damages bar (or not), would be tantamount to an endorsement of the discovery rule that would preclude the Court from ruling on this issue later.
- Everyone seemed to struggle with how case law fit with the text of the Copyright Act. As Nealy's counsel noted, it is 17 USC 507--the statute of limitations provision--that includes three-year language, rather than 17 USC 504--the damages provision--which does not have any time modifier. Nealy's counsel argued that this distinction meant that a case can only be brought within three years (of discovery rather than injury), but that, once timely brought, damages were not limited. The Second Circuit's decision in Sohm did not necessarily account for the lack of three-year language in establishing a damages bar and largely pointed to Petrella. And, perhaps to add to the lack of clear textual analysis, Justice Ginsburg's decision in Petrella specifically noted that "a successful plaintiff can gain retrospective relief only three years back from the time of suit" (emphasis added). "Relief", as used there, would seem to apply to damages, but Nealy's counsel argued that she was simply referring to the time to file a claim under 17 USC 507. The Justices were not so sure that that squared with their memory of Petrella--and certainly Justice Ginsburg was well-versed in copyright law.
- And, finally, the government didn't have much to say, despite asking for and being granted argument time. While the government came out against a damages bar, Justice Thomas joked that the government had little in the way of positions, when it would not take a position on his (admittedly unfair) question as to what statute of limitations should apply.
We will be looking out for a decision (or not) that clarifies some of these questions (or doesn't).
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