The US Supreme Court ruled that if a copyright claim is timely, all damages may be recovered and there is no separate three-year limitation to recovery. The case involved the so-called "discovery rule" that allows a claim to be brought within three years of it being discovered or with reasonable diligence should have been discovered, but the Court declined to opine on whether the discovery rule itself is valid, leaving that for another day. This leaves open, at least for the time being, increased damages for copyright claimants.

On May 9, 2024, the US Supreme Court ruled that if a copyright claim is timely, all damages may be recovered and there is no separate three-year limitation to recovery, stating that “[t]he Copyright Act entitles a copyright owner to recover damages for any timely claim.”[1] The Court pointed to the text of the Copyright Act, holding that “[t]he Copyright Act contains no separate time-based limit on monetary recovery” and thus, the three-year statute of limitations applies only to timeliness and not to recovery.[2]

The Court did not opine on whether the discovery rule is valid, leaving that for another day—perhaps in Hearst Newspapers, LLC v. Martinelli if certiorari is granted. The Court explains that its review is “excluding consideration of the discovery rule and asking only whether a plaintiff with a timely claim under the rule can get damages going back more than three years.”[3] The Court repeats a few times that for purposes of the decision it “assumes without deciding that a claim is timely under that provision if brought within three years of when the plaintiff discovered an infringement, no matter when the infringement happened.”[4]The Court explains that it “has never decided whether that assumption is valid” and “that issue is not properly presented here.”[5]

The Court explained that its prior decision in Petrella v. Metro-Goldwyn-Mayer Inc. did not decide this issue because there the plaintiff did not invoke the discovery rule but was only seeking damages back three years from the time of suit. It explains that in Petrella, the Court determined that laches was not an additional bar to recovery for a timely claim under the Copyright Act’s statute of limitations.

LOOKING AHEAD

On the one hand, the Court’s decision does not limit recoverable damages, but on the other hand, its decision is not an overall expansion of recoverable damages either.

The exception may be for those cases currently pending in the Second Circuit that are relying upon precedent from Sohm v. Scholastic,[6] to impose a three-year look-back period on damages calculated from the commencement of litigation. The Court’s decision directly criticized Sohm and explicitly rejected this approach, requiring the Second Circuit to allow for damages beyond the three years preceding the filing where the action itself is timely.

Given that the Court passed on the underlying question of whether the discovery rule is valid, stay tuned for a decision that could potentially address this issue directly. Notably, Justices Neil Gorsuch, Clarence Thomas, and Samuel Alito in the Court’s dissent already indicated that the Copyright Act “almost certainly does not tolerate a discovery rule.” A decision addressing this narrower issue would likely have a far greater impact on the question of whether a claim is timely, and hence what relief is available.

[1] Warner Chappell Music Inc., et al. v. Nealy, et al., 601 US ___ (2024).

[2] Id. at *7.

[3] Id. at *4-5.

[4] Id. at *1, 4 (emphasis added).

[5] Id. at *4.

[6] 959 F. 3d 39, 51–52 (2d Cir. 2020).

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