Tag: damages

Damages, such as for infringement

Top IP Cases

2023 was a big year for U.S. intellectual property law. Major developments occurred in every area. Here are the highlights

2023 was a big year for U.S. intellectual property law. Major developments occurred in every area. Here are the highlights.

Copyright

Fair Use

Andy Warhol Foundation for the Visual Arts v. Goldsmith

This was one of the top copyright cases of 2022. It was a case that was pushing the limits of the  transformative fair use of photographs. The Supreme Court issued a ruling in the case in May. The decision is significant because it finally reined in the “transformative use” doctrine that the Court first announced in Campbell v. Acuff-Rose Music back in 1994. In that case, 2 Live Crew had copied key parts of the Roy Orbison song, “Oh, Pretty Women” to make a parody of the song in its own rap style. The Court held that the 2 Live Crew version, although reproducing portions of both the original song and the original recording of it without permission, transformed it into something else. Therefore, even though it infringed the copyright, the 2 Live Crew version was for a transformative purpose and therefore protected as fair use.

In the thirty years since Campbell, lower courts have been applying the “transformative use” principle announced in Campbell in diverse and divergent ways. Some interpretations severely eviscerated the copyright owner’s exclusive right to make derivative works. Their interpretations often conflicted. What one circuit called transformative “fair use” another circuit called actionable infringement. Hence the need for Supreme Court intervention.

In 1984, Vanity Fair licensed one of photographer Lynn Goldsmith’s photographs of Prince to illustrate a magazine article about him. Per the agreement, Andy Warhol made a silkscreen using the photograph for the magazine and Vanity Fair credited the original photograph to Goldsmith. Unknown to her, however, Warhol proceeded to make 15 additional works based on Goldsmith’s photograph withour her permission.. In 2016, the Andy Warhol Foundation for the Arts licensed one of them to Condé Nast as an illustration for one of their magazines. The Foundation received a cool $10,000 for it, with neither payment nor credit given to Goldsmith. The Foundation then filed a lawsuit seeking a declaration that its use of the photograph was a protected fair use under 17 U.S.C. § 107. The district court granted declaratory judgment in favor of the Foundation. The Second Circuit Court of Appeals reversed, ruling that the four-factor “fair use” analysis favored Goldsmith. The Supreme Court sided with the Court of Appeals.

Noting that it was not ruling on whether Warhol’s making of works using the photograph was fair use, the Court limited its analysis to the narrow question whether the Foundation’s licensing of the Warhol work to Condé Nast was fair use. On that point, the Court determined that the use of the photograph to illustrate a story about Prince was identical to the use Goldsmith had made of the photograph (i.e., to illustrate a magazine article about Prince.) Unlike 2 Live Crew’s use of “Oh, Pretty Woman,” the purpose of the use in this case was not to mock or parody the original work.

The case is significant for vindicating the Copyright Act’s promise to copyright owners of an exclusive right to make derivative works. While Warhol put his own artistic spin on the photograph – and that might have been sufficient to sustain a fair use defense if he had been the one being sued – the Warhol Foundation’s and Condé Nast’s purpose was no different from Goldsmith’s, i.e., as an illustration for an article about Prince. Differences in the purpose or character of a use, the Court held, “must be evaluated in the context of the specific use at issue.” Had the Warhol Foundation been sued for displaying Warhol’s modifications of the photograph for purposes of social commentary in its own gallery, the result might have been different.

Although the holding is a seemingly narrow one, the Court did take the opportunity to disapprove the lower court practice of ending a fair use inquiry at the moment an infringer asserted that an unauthorized copy or derivative work was created for a purpose different from the original author’s.

Statute of Limitations and Damages

Warner Chappell Music v. Nealy

The U.S. Supreme Court granted certiorari to review this Eleventh Circuit decision. At issue was whether a copyright plaintiff may recover damages for infringement that occurred outside of the limitations period, that is, infringement occurring more than three years before a lawsuit was filed.

The circuits were split on this question. According to the Second Circuit, damages are recoverable only for acts of infringement that occurred during the 3-year period preceding the filing of the complaint. The Ninth and Eleventh Circuits, on the other hand, had held that as long as the lawsuit is timely filed, damages may be awarded for infringement that occurred more than three years prior to the filing, at least when the discovery rule has been invoked to allow a later filing. In Nealy, the Eleventh Circuit held that damages may be recovered for infringement occurring more than three years before the claim is filed if the plaintiff did not discover the infringement until some time after it first began.

The United States Supreme Court has resolved the Circuit split. Read about the Supreme Court’s decision in Warner Chappell Music, Inc. v. Nealy.

Artificial Intelligence

Copyrightability

Thaler v. Perlmutter

This was an APA proceeding initiated in the federal district court of the District of Columbia for review of the United State Copyright Office’s refusal to register a copyright in an AI-generated work. In August, 2023, the district court upheld the Copyright Office’s decision that an AI-generated work is not protected by copyright, asserting that “human creativity is the sine qua non at the core of copyrightability….” For purposes of the Copyright Act, only human beings can be “authors.” Machines, non-human animals, spirits and natural forces do not get copyright protection for their creations.

Thaler appealed. Read more about what happened in Last Exit from Paradise.

Infringement

Many cases that are pending allege that using copyrighted works to train AI, or creating derivative works using AI, infringes the copyrights in the works so used. Most of these cases make additional claims as well, such as claims of unfair competition, trademark infringement, or violations of publicity and DMCA rights.

 I have been blogging about these cases for some time and periodically provide updates on them.

Trademark

Parody Goods

Jack Daniel’s Properties v. VIP Products

For more information about this case, read Balancing the First Amendment on Whiskey and Dog Toys.

This is the “parody goods” case. VIP Products used the “Bad Spaniels” name to market its dog toys, which were patterned on the distinctive shape of a Jack Daniel’s whiskey bottle. VIP filed a lawsuit seeking a declaratory judgment that its product did not infringe the Jack Daniel’s brand. Jack Daniel’s counterclaimed for trademark infringement and dilution. Regarding infringement, VIP claimed First Amendment protection. Regarding dilution, VIP claimed the use was a parody of a famous mark and therefore qualified for protection as trademark fair use. The district court granted summary judgment to VIP.

The Supreme Court reversed. The Court held that when an alleged infringer uses the trademark of another (or something confusingly similar to it) as a designation of source for the infringer’s own goods, it is a commercial, not an expressive, use. Accordingly, the First Amendment is not a consideration in such cases.

Rogers v. Grimaldi had held that when the title of a creative work (in that case, a film) makes reference to a trademark for an artistic or expressive purposes (in that case, Fred Astaire and Ginger Rogers), the First Amendment shields the creator from trademark liability. In the Jack Daniel’s case, the Court distinguished Rogers, holding that it does not insulate the use of trademarks as trademarks (i.e. as indicators of the source or origin of a product or service) from ordinary trademark scrutiny. Even though the dog toys may have had an expressive purpose, VIP admitted it used Bad Spaniels as a source identifier. Therefore, the First Amendment does not apply.

The Court held that the same rule applies to dilution claims. The First Amendment does not shield parody goods from a dilution claim when the alleged diluter uses a mark (or something confusingly similar to it) as a designation of source for its own products or services.

International Law

Abitron Austria v. Hetronic International

Here, the Supreme Court held that the Lanham Act does not have extraterritorial reach. Specifically, the Court held that Sections 1114(1)(a) and 1125 (a)(1) extend only to those claims where the infringing use in commerce occurs in the United States. They do not extend to infringement occurring solely outside of the United States, even if consumer confusion occurs in the United States.

The decision is a reminder to trademark owners that if they want to protect their trademark rights in other countries, they should take steps to protect their rights in those countries, such as by registering their trademarks there.

Patents

Patents are beyond the scope of this blog. Even so, a couple of developments are worth noting.

Enablement

Amgen v. Sonofi

In this case, the Supreme Court considered the validity of certain patents on antibodies used to lower cholesterol under the Patent Act’s enablement requirement (35 U.S.C. sec. 112(a)).  At issue was whether Amgen could patent an entire genus of antibodies without disclosing sufficient information to enable a person skilled in the art to create the potentially millions of antibodies in it. The Court basically said no.

If a patent claims an entire class of processes, machines, manufactures, or compositions of matter, the patent’s specification must enable a person skilled in the art to make and use the entire class. In other words, the specification must enable the full scope of the invention as defined by its claims.

Amgen v. Sanofi, 598 U.S. ____ (2023)

Conclusion

My vote for the most the significant IP decision in recent times is Andy Warhol Foundation v. Goldsmith. Lower courts had all but allowed the transformative use defense to swallow up the exclusive right of a copyright owner to create derivative works. The Supreme Court provided much-needed correction. I predict that going forward, the most significant decisions will also be in the copyright realm, but they will have to do with AI.

Visit my extensive Copyright FAQs page.

The Copyright Discovery Rule Stands

The Copyright Act imposes a 3-year limitations period for copyright infringement claims. But when does a claim accrue? That is the (potentially) million-dollar question.

Last year, the United States Supreme Court held that as long as a claim is timely filed, damages may be recovered for any loss or injury, including losses incurred more than three years before the claim is filed (Warner Chappell Music. v. Nealy). The Court expressed no opinion about whether the Copyright Act’s three-year limitation period begins to run when the infringing act occurs or when the victim discovers it, leaving that question for another day. “Another day” arrived, but the Court still declined to address it. What, if anything, can be made of that?

front view of the Library of Congress building

Statute of Limitations for Copyright Infringement

The Copyright Act imposes a 3-year limitations period for copyright infringement claims. Specifically:

No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.

17 U.S.C. 507(b).

But when does a claim accrue? That is the (potentially) million-dollar question.

According to the “incident of injury” rule, an infringement claim accrues when an infringing act occurs. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. 663, 670 (2014). Under this rule, an infringement victim who did not learn about an infringing act until three years after it occurred would be out luck.

Courts in many circuits, however, apply an alternative rule. Known as the “discovery rule,” it holds that a copyright infringement claim accrues when “the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.” William A. Graham Co. v. Haughey, 568 F. 3d 425, 433 (CA3 2009) (internal quotation marks omitted). According to Patry on Copyright, this is the majority rule.

If a court applies the discovery rule, then the infringement complaint must be filed within three years after the victim learns or should reasonably have learned of the infringing act, even if that act occurred more than three years earlier.


The Look-Back Period for Damages

As I explained in Copyright Infringement Damages, the United States Supreme Court did not have the question about the validity of either accrual theory before it in Warner Chappell Music. Accordingly, it did not address the issue. Instead, the Court limited itself to deciding only the specific question before it, namely, whether damages can be claimed for all injuries that occurred before the victim learned (or reasonably should have learned) of an infringing act. The Court held that they can be. And this is true even for losses occurring more than three years before the infringement was discovered. Statutes of limitations only determine when a claim may be filed; they do not limit the look-back period for recovering damages for injury. “The Copyright Act contains no separate time-based limit on monetary recovery.” Warner Chappell Music, supra.

It must be kept in mind that the discovery rule has an important proviso. The clock starts clicking on a claim from the first date a victim actually knew or should have known of an infringement. In many cases, it may become more difficult to convince a judge that the victim’s unawareness of the infringing act was reasonable if a lot of time has gone by since the infringement occurred. Reasonableness, however, depends on all the facts and circumstances, so it has to be decided on a case-by-case basis.

RADesign, Inc. v. Ruthie Davis et al.

Michael Grecco Productions, Inc. sued RADesign, Inc. and others for copyright infringement. The complaint alleged that the defendant’s infringing use of a copyright-protected photograph began on August 16, 2017, and that the plaintiff discovered it on February 8, 2021. The complaint was filed in October, 2021. As a result, the claim would be barred under the “incident of injury” rule because it was filed more than three years after the alleged infringement occurred. The complaint, however, was filed in the Second Circuit, a jurisdiction that recognizes the discovery rule. Therefore, the question became whether the failure to discover the infringement within three years was reasonable. The district court held that it was not. The court described the copyright owner in this case as “sophisticated” in detecting and litigating infringements and therefore not entitled to the benefit of the discovery rule.

The Second Circuit Court of Appeals reversed, declaring, “This ‘sophisticated plaintiff’ rationale has no mooring to our cases.”

The U.S. Supreme Court’s Denial of Certiorari

RADesign, Inc. filed a petition for certiorari to the United States Supreme Court. The sole question presented was “Whether a claim ‘accrue[s]’ under the Copyright Act’s statute of limitations for civil actions, 17 U.S.C. 507(b), when the infringement occurs (the ‘injury rule’) or when a plaintiff discovers or reasonably should have discovered the infringement (the ‘discovery rule’).” The petition argued that the Copyright Act does not explicitly provide for a discovery rule and asserted that the courts of appeal should not have adopted one.

Unlike in Warner Chappell Music, the Court now had the validity of the discovery rule in copyright infringement cases squarely before it. The Court, however, declined the invitation to review that question. On June 16, 2025, it denied certiorari.

What a Denial of Certiorari Means

Really, the only legal effect of a denial of certiorari is that the lower court’s decision stands. In this case, that would mean that the Second Circuit Court of Appeals’ decision remains in effect for that specific case. For the time being, anyway, attorneys can cite the reasoning and holding of the Second Circuit Court of Appeals decision as legal precedent in other cases.

What a Denial of Certiorari Does Not Mean

A denial of certiorari does not mean that the Supreme Court agreed with the Court of Appeals. The Court of Appeal’s decision sets a precedent in the Second Circuit, but the denial of certiorari does not have that effect. It simply means the Supreme Court has decided not to trouble itself with the question at this time.

Visit my extensive Copyright FAQs page.

 

 

Top Copyright Cases of 2024

Many AI-related copyright lawsuits continued to proceed through the courts

Warner Chappell Music Inc. v. Nealy

The Copyright Act imposes a three-year period of limitations for copyright infringement claims. There has been a split in the circuits about whether this means that damages could be claimed only for infringement occurring during the three-year period or whether damages could be recovered for earlier acts of infringement so long as the claim is timely filed. The Supreme Court has now resolved the split.

The issue arises in cases where a claimant invokes the discovery rule. The general rule is that a limitations period runs from the date of the act giving rise to the cause of action. The discovery rule, by contrast, measures the limitations period from the date the infringing act is discovered. Thus, for example, if an infringing act occurred in 2012 but the copyright owner did not learn about it until 2022, then under the traditional rule, the claim would be time-barred. Under the discovery rule, it would not be.

The U.S. Supreme Court’s holding in this case is to the effect that if the discovery rule applies in the jurisdiction where suit is filed, and a claimant properly invokes it, then damages are not limited to the three years preceding suit. Rather, any damages incurred since the date of the infringing act are recoverable.

The Court did not rule on the validity of the discovery rule.

Warner Chappell Music Inc.. v. Nealy, 601 U.S. ____ (2024).

 Hachette Book Group Inc. v. Internet Archive

I wrote about Hachette Book Group v. Internet Archive back in 2022, when it was at the summary judgment stage in the district court for the Southern District of New York. Astute readers with much better memory than I possess will recall that I included in my list of the top copyright cases os 2022. The complaint, filed by book publishers, alleged that the Internet Archive made digital copies of over a million print books and then freely distributed the copies to members of the public, all without the permission of the copyright owners. In 2023, the district judge ruled in favor of the publishers, holding that the enterprise was not “fair use.” It subsequently issued an injunction against further scanning and distribution of books. (See A Copyright Win in the Internet Archive Lawsuit.) This year, the Second Circuit Court of Appeals affirmed the decision.

To some, the decision might seem like a no-brainer. Copying other people’s books and giving them away for free, without the copyright owners’ permission, sounds like core copyright infringement, right? Yet, before the Warhol v. Goldsmith decision in 2023, courts had been applying such an expansive view of the “transformative use” branch of fair use that some people thought that making digital copies of a print book was categorically “transformative” and therefore fair use. This decision makes it clear that no, it isn’t.

The Internet Archive has said it will not appeal the decision to the United States Supreme Court.

Hachette Book Group Inc. et al. v. Internet Archive, No. 23-1260 (2nd Cir. 2024)

Griner v. King

U.S. Representative Steve King’s campaign committee used a copyright-protected photograph in his campaign without permission. King’s committee had argued fair use and that it had an “implied license” to use the image because it had been widely circulated as a meme on the Internet. The Eighth Circuit Court of Appeals upheld an Iowa jury’s verdict for the copyright owner.

Griner et al. v. King et al., No. 23-2117, (8th Cir. 2024)

The Intercept Media v. OpenAI

This isn’t really a momentous decision, in terms of precedential value, but it is the first major victory for Big AI in the plethora of AI-related lawsuits they are facing.

The Intercept Media, Inc. sued OpenAI and Microsoft Corporation for alleged Digital Millennium Copyright Act (DMCA) violations in connection with training the AI tool, ChatGPT. The defendants filed a motion to dismiss. On November 21, 2024 the New York court dismissed claims against Microsoft with prejudice. The court dismissed the 17 U.S.C. § 1202(b)(3) claim against OpenAI but allowed the claim under 17 U.S.C. §1202(b)(1) to proceed.  

Section 1202(b)(1) prohibits unauthorized removal or alteration of copyright management information, including author information and the copyright notice.

The Intercept Media Inc. v. OpenAI Inc., No. 1:24-cv-01515, (S.D.N.Y. Nov. 21, 2024).

Stay tuned…

Many AI-related copyright lawsuits continued to proceed through the courts in 2024, with decisions expected in 2025 or later.

Visit my extensive Copyright FAQs page.