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SCOTUS Settles a Circuit Split on Copyright Damages under the Discovery Rule in Favor of Copyright Holders

Being a copyright owner comes with numerous rights and benefits in relation to the copyrighted work. Known colloquially as the “bundle of sticks,” a copyright owner has the exclusive rights to the reproduction, derivation, distribution, public performance, public display, and digital transmission of the work. If someone unlawfully infringes on one of those rights, the copyright owner can sue for, amongst other things, damages.

But for the copyright owner to recover damages, a civil suit for copyright infringement must be filed “within three years after the claim accrued” (17 U.S.C. § 507). But what does it mean for a copyright claim to accrue? And what if the copyright owner did not know about the infringement until more than three years since the infringing act? Earlier this month, the Supreme Court provided clarity on these issues in its ruling of Warner Chappell Music, Inc. v. Nealy, 144 S. Ct. 1135 (2024) – particularly in favor of copyright holders.

Depending on the Circuit in which a copyright infringement suit is brought, a claim accrues either at the time the act of infringement occurred, or when “the plaintiff discovers, or with due diligence should have discovered,” the infringing act. The latter accrual method, known as the discovery rule, allows a copyright holder to timely bring suit for acts of infringement that occurred more than three years before the lawsuit was filed. But as argued in Warner, just because a suit is timely, can a copyright holder still be awarded damages for acts of infringement that occurred outside of the three-year limitations period? The Supreme Court responded with a resounding “yes!”

“[A] copyright owner possessing a timely claim [under the discovery rule] is entitled to damages for infringement, no matter when the infringement occurred” (Warner, 144 S. Ct. at 1139). In other words, under the discovery rule, if a copyright owner learns for the first time today that their rights were infringed ten years ago, their claims would be timely if filed within the next three years, and they could recover damages for all the infringing acts since the first infringement ten years ago.

Copyright owners should note that there are still checks in play to control such sweeping damages. First, and as emphasized above, the claims must be brought in a circuit that follows the discovery rule. As of 2024, the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, and now the Eleventh Circuits have recognized the discovery rule. Second, even under the discovery rule, a copyright owner cannot bury their head in the sand as to potential infringement in hopes of recovering significant damages in the future. The three-year clock starts to tick when the copyright owner “with due diligence should have discovered” the alleged infringement. Finally, the copyright owner must still prove infringement by establishing that their copyright is valid, and that the alleged infringer had access to and copied the underlying work.

Category: Copyrights, Intellectual Property