The Supreme Court recently ruled 6-3 in the case of Warner Chappell Music, Inc., et al. v. Nealy, et al.[1] that producer Sherman Nealy may claim damages for an unlicensed sample of his work used in Flo Rida’s 2008 hit song “In the Ayer.” The infringing activity, Nealy claimed, dated back to 2008— ten years before he brought suit. Nealy sought damages and profits for the alleged misconduct.

Why Was the Claim Delayed?

The song “In the Ayer” was released in July 2008 however Plaintiff’s claim was not filed until December 2018. Typically, under the U.S. Copyright Act, a plaintiff must file suit “within three years after a claim begins.”[2] However under the “discovery rule,” a claim is considered to begin when “the plaintiff discovers, or with due diligence should have discovered,” the infringing act.[3]

In this case, Nealy argued that his claims were timely because he first learned of the infringing conduct less than three years before he sued. Nealy served one prison term from 1989 to 2008, and another from 2012 to 2015; he argued that his claims were timely because he first learned of the infringing conduct around 2016, less than three years before he sued.

What About the Damages Claim?

Defendants accepted that the discovery rule governed the timeliness of Nealy’s claims. But it argued that, even if Nealy could sue under that rule for older infringements, he could recover damages or profits for only those occurring in the last three years. The District Court agreed. On interlocutory appeal, the Eleventh Circuit reversed, rejecting the notion of a three-year damages bar on a timely claim.

This holding was affirmed by the U.S. Supreme Court, holding that The Copyright Act contains no separate time-based limit on monetary recovery.

What Does This Mean?

The holding means that if a filing is timely then there is no limit on how far back a Plaintiff may claim damages.

“That clock is a singular one,” Justice Kagan wrote. See F.N.1 “The ‘time-to-sue prescription,’ as we have called it, establishes no separate three-year period for recovering damages, this one running from the date of infringement.” Id.

The Music Industry has been closely watching this case which has recently seen an increase in delayed copyright lawsuits, targeting Meatloaf, U2, Led Zeppelin, and others.

In a brief filed last year, the Recording Industry Association of America and National Music Publishers’ Association called the case “vitally important to the music industry.” “Because copyrights are the music industry’s most consequential asset, music labels, and music publishers regularly find themselves both enforcing and defending copyright lawsuits,” lawyers for RIAA and NMPA wrote. “Without a clear national rule setting the temporal limits of recoverable damages, amici and their members face serious uncertainty.”

The result of this ruling may encourage future litigation due to the increased time period for claims.

What About the Discovery Rule?

The court did not address the merits of the discovery rule and decided the case assuming Nealy’s claim was timely.

The dissenting Justices argued that the court should have addressed the discovery rule. Justice Gorsuch said that if the court had done so, it would have found that Nealy couldn’t recover copyright damages. Gorsuch said there was little reason to assume the Copyright Act allows for a divergence from the typical three-year requirement to pursue a claim after a plaintiff with due diligence should have discovered the injury.

[1] https://www.supremecourt.gov/opinions/23pdf/22-1078_4gci.pdf

[2] 17 U. S. C. § 507(b)

[3] Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. 663, n. 4.

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