IP News

In 1983, Sherman Nealy and Tony Butler established Music Specialist, Inc., a music venture designed to help artists overcome the challenges of the music industry. The company released one album and several singles before dissolving a few years later. Nealy was subsequently sentenced to two separate prison terms for drug-related offenses. During Nealy's incarceration, Butler, without Nealy's knowledge, agreed to license Music Specialist's music to Warner Chappell Music. Notably, one of Music Specialist's songs, "Jam the Box," was used to create the hit song "In the Ayer" by artist Flo Rida. This song achieved significant commercial success, being licensed in several television shows.

After his second prison term, Nealy sued Warner in 2018 for copyright infringement. He claimed that he, not Butler, owned the copyrights to the licensed music and that Warner's use of the music infringed upon his copyrights. Nealy sought damages and profits for the alleged misconduct, claiming the infringement took place in 2008. Although his claims were timely under the discovery rule, Warner argued in the District Court that Nealy was limited to damages or profits for acts of infringement that occurred within the last three years, regardless of the timeliness of the complaint. The District Court agreed, ruling that Nealy could not recover damages for infringing acts beyond the three years prior to the suit having been filed. On appeal, the Eleventh Circuit reversed the District Court's decision, relying on the plain text of the Copyright Act to reject the position of a three-year damages bar on a timely claim. The U.S. Supreme Court affirmed the Eleventh Circuit's decision, holding that a plaintiff with a timely claim under the discovery rule is entitled to a monetary recovery, even if the infringement acts occurred more than three years ago.