Breadth of Copyright Damages to be Taken Up by Supreme Court

The US Supreme Court on Friday agreed to hear a case seeking to clarify the timeline for monetary damages in copyright cases, a question that has divided federal appellate courts and will have important implications for litigation in creative industries.

The publishing company Warner Chappell Music Inc. asked the high court to determine whether plaintiffs in a copyright lawsuit can ask for damages from acts that happened before the federal Copyright Act’s three-year statute of limitations.

The Atlanta-based US Court of Appeals for the Eleventh Circuit determined earlier this year that plaintiffs can reach past the statute’s three-year limitation when they aren’t able to discover the alleged infringement during that period, widening an already apparent split between circuit courts in New York and California, both of which take a high load of copyright cases.

The Supreme Court specifically noted the case would be limited to whether the discovery accrual rule applied by the circuit courts allowed a copyright plaintiff to recover damages beyond the three-year window.

The case involves a suit from Sherman Nealy and his company Music Specialist Inc. which claimed that record labels and publishers including Warner obtained unauthorized licenses from third parties to use his music.

Nealy had been in and out of prison since the 1980s, and he claimed he didn’t know that Warner had been infringing his copyrights until January 2016. He sued in Florida federal court in December 2018 but sought damages from alleged infringement that occurred as early as 2008.

Warner is asking the high court to rule that Nealy can only seek damages that occurred from three years before he sued, which is the time barrier under the Copyright Act.

The question about the correct timeline “is the subject of an entrenched conflict among three federal courts of appeals, which are home to the major artistic centers of New York, Los Angeles, and Miami,” Warner said in its petition. “Only this Court can resolve that conflict.”

Some legal experts believe the circuit split could encourage plaintiffs to file more lawsuits in courts based in the West Coast or Southeast.

Paul Weiss Rifkind Wharton & Garrison LLP represents Warner. The KLK Law Firm represents Nealy.

The case is Warner Chappell Music Inc. v. Nealy, U.S., No. 22-1078, 9/29/23.