U.S. Supreme Court Decides Copyright Damages-Lookback Issue But Not Discovery-of-Infringement Rule

The issue in Warner Chappell Music Inc v. Nealy, 144 S. Ct. 1135 (2024), involved the calculation of damages in copyright actions where at least some of the infringing conduct dates back more than three years before the commencement of the action. Under §507(b) of the Copyright Act, an infringement claim is timely only if it is commenced within three years after the claim "accrue[s]." Eleven of the 13 circuits have interpreted this language to permit claims to be deemed timely if they are filed within three years after the plaintiff discovered, or reasonably should have discovered, the infringement of rights. This judicially created "discovery rule" has never been addressed by the Supreme Court.

Within the 11 circuits that apply this rule, however, the computation of damages has varied, with some courts permitting a "lookback" for recovery of damages that occurred more than three years before the filing of suit and others, notably the Second Circuit, limiting recovery to the three years immediately preceding filing. See, Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020). It is this latter question, the lookback period for computing damages, that the Supreme Court resolved in Nealy, rejecting the U.S. Court of Appeals for the Second Circuit's position in Sohm and holding that "the Copyright Act contains no separate time-based limit on monetary recovery." As the high court summarized, "a copyright owner possessing a timely claim for infringement is entitled to damages, no matter when the infringement occurred."