Supreme Court Rejects “Judicially Invented Damages Limit” for Copyright Infringement

The Supreme Court recently ruled that there is no damages time-bar to recovery for violation of the Copyright Act. In other words, so long as a copyright owner’s claim for infringement is timely brought, damages are available regardless of when the infringement occurred, even if well beyond the Copyright Act’s three-year statute of limitations. Warner Chappell Music, Inc. v. Nealy, 144 S. Ct. 1135 (2024); 17 USC § 507(b). The decision therefore opens the door to higher damages awards for copyright plaintiffs and increases possible exposure to would-be defendants.

In reaching its decision, the Supreme Court was careful to predicate its ruling on the assumption that the plaintiff’s claim was timely under the “discovery rule,” currently followed by all 11 of the United States’ Circuit courts. In the Seventh Circuit, the “discovery rule” triggers the Copyright Act’s three-year statute of limitations when the plaintiff learns or reasonably should have learned of infringement. The alternative to the discovery rule is the so-called injury or accrual rule where claims accrue when the infringement occurs, regardless of when a plaintiff learns of it.

In the underlying case before the Supreme Court, the plaintiff Nealy sued Warner Chappell for copyright infringement dating back ten years, asserting he had only first learned of the infringement less than three years prior to bringing suit (in accordance with the discovery rule). Warner Chappell did not challenge that the discovery rule governed the timeliness of Nealy’s claims, but rather that Nealy could only recover damages or profits occurring in the three years immediately preceding the lawsuit.

The Supreme Court’s majority opinion rejected what it saw as Warner Chappell’s call to apply a “judicially invented damages limit” not present in the Copyright Act, that would otherwise seemingly undermine the preservation of damages provided by the discovery rule. The majority opinion clarified the Petrella decision upon which Warner Chappell relied in support of its position did not enunciate a three-year damages cap for copyright infringement.

Importantly, the Supreme Court explicitly did not opine on whether the discovery rule or an accrual rule should properly govern the timeliness of a copyright claim.