Tag: statute-of-limitations

Statute of limitations

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.

 

Copyright Infringement Damages

Are damages for copyright infringement always limited to the three-year period before suit is filed? The Supreme Court says no.

Library of Congress housing the U.S. Copyright oFfice

Warner Chappell Music v. Nealy

Are damages for copyright infringement always limited to the three-year period before suit is filed? The Supreme Court says no.

The Limitations Period for Copyright Infringement

The Copyright Act imposes a three-year statute of limitations for copyright infringement claims: “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). It turns out the rule was easier for legislators to write than for courts to apply.

Sherman Nealy’s Infringement Claims

In the 1980s, Sherman Nealy and Tony Butler formed Music Specialist, Inc. The company released several recordings before the venture was dissolved. Nealy subsequently served two terms in prison, one from 1989 to 2008, and the other from 2012 to 2015.

Meanwhile, Butler licensed songs from the Music Specialist catalog to Warner Chappell Music, without Nealy’s knowledge. Warner Chappell, in turn, licensed them to popular recording artists and television shows.

In 2018, Nealy sued Warner Chappell for copyright infringement. He sought damages and profits for infringement occurring between 2008 and 2018. A significant portion of this claim would have been time-barred if “accrual,” as used in Section 107(b), referred only to the date on which an infringing act occurred. Some courts have held, however, that the rule does not apply if the copyright owner neither knew nor should have known that infringement was occurring. In that situation, a claim accrues when a “plaintiff discovers, or with due diligence should have discovered,” the infringing act. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. 663, 670 (2014). Once a copyright claimant learns that infringement has occurred, he or she then has three years from that time to file suit. Nealy alleged that he did not learn of the infringement until 2016, which was within the three-year limitations under the discovery rule.

The district court ruled that although his claims were timely filed, he could recover damages only for infringement occurring during the three-year period preceding his commencement of the lawsuit.

The Circuit Split

The district court’s ruling was consistent with the Second Circuit’s decision in Sohn v. Scholastic, Inc. 959 F.3d 39, 51-52 (2nd. Cir. 2020). The Ninth Circuit, however, allows recovery for all infringing acts, even beyond the three-year period, when a claim is timely filed under the discovery rule. Starz Entertainment v. MGM, 39 F. 4th 1236, 1244 (CA9 2022)). The Eleventh Circuit Court of Appeals adopted the Ninth Circuit’s view. It therefore reversed the district court.

The United States Supreme Court granted certiorari to resolve the circuit split. (Warner Chappell v. Nealy.) 

The Supreme Court Decision

The Court has never ruled on the validity of the discovery rule. That question, however, was not before it in this case. Warner Chappell had not challenged the rule in the lower court, so the Court limited its review to the scope of recovery under the discovery rule.

Its ruling on that question was simple. The Act prescribes a three-year limitation for filing suit. It imposes no limit on the time for recovering damages. The Act says only that an infringer is liable for damages and profits made from the infringing act. “The Copyright Act contains no separate time-based limit on monetary recovery.” (Warner Chappell v. Nealy.) 

Justices Gorsuch, Thomas and Alito dissented. In their view, the discovery rule is not valid. Accordingly, they would have dismissed the petition as improvidently granted. They would have preferred for the Court to wait for a case that squarely raises the validity of the discovery rule instead of deciding an issue that requires them to assume, arguendo, that it is.

The Take-Away

The decision obviously is a victory for copyright owners and claimants. As long as they file an infringement claim within three years of learning they have one, it does not matter how long ago the infringement occurred. Recovery is not limited to the three years prior to the commencement of the action. It is important, however, to be aware of two limitations on the Court’s decision.

Known infringement

First, the three-year limitation period still exists.

Example: Chuck learns in 2019 that Robert has been infringing his copyright for years. The infringement is ongoing. He waits until 2023, however, to file a claim. Because he did not file a claim within three years of learning of the pre-2019 infringing acts, he will not be able to recover damages or profits for them. In this situation, his recovery will be limited to the three-year period prior to commencing an action.
The validity of the discovery rule

As the dissenters observed, the Court has never directly ruled on the validity of the discovery rule. It is possible that if a litigant were to raise that issue, the question could make its way to the Supreme Court. It is also possible that the Court could decide against its validity at that time.

It does seem to be a just and fair rule. After all, why should infringers be permitted to benefit from their victims’ lack of knowledge? The Court, however, could decide against adopting a per se rule of validity, instead leaving it to trial courts to balance the equities in each individual case. We simply have no way of knowing, at this point, what approach the Court would take if the validity of the discovery rule were to come squarely before it.

Subject to these caveats, the decision is cause for celebration in the creative community.

Read about other non-AI-related legal issues. 

Continuing education

On June 10, 11 and 12, 2024, I presented a series of 1-hour webinars covering: basic trademark law and “likelihood of confusion” analysis; searching the USPTO database; and advanced searching with RegEx. For more information, visit the Echion CLE course page.

Visit my extensive Copyright FAQs page.

Copyright Claims Board (CCB) Update

The CASE Act of 2020 establishes a Copyright Claims Board (CCB). Attorney Tom James explains what the CCB is and what it will do.

front view of the Library of Congress building housing the U.S. Copyright office

In December 2020, Congress passed the Copyright Alternative in Small-Claims Enforcement Act of 2020. More commonly known as the CASE Act, it directs the Copyright Office to establish a Copyright Claims Board (CCB). The CCB is a three-member board within the Copyright Office. It is empowered to hear and decide copyright infringement claims amounting to $30,000 or less. Although the CCB was expected to be up and running sooner, there have been some delays. 

CCB staffing

The Copyright Office has nearly completed all of the steps needed to be undertaken in order to implement the CASE Act. Copyright claims officers have been selected. Attorney-advisors, a program specialist, and a paralegal have been selected.

Rulemaking

The Office published a Final Rule on August 18, 2021, with a Clarification published April 22, 2022.

A final rule for small claims procedures for library and archive opt-outs and class actions was published on March 9, 2022.

A final rule on initiation of proceedings and related procedures was published on March 25, 2022.

A final rule on law student representatives and business entity representation was published on April 8, 2022.

The comment period has closed for a final rule on active proceedings on evidence.

The CCB is expected to be up and running in June, 2022.

What the CCB will look like

The new CCB is a voluntary process for claims totaling up to $30,000. Claimants may elect to file claims in federal court instead if they prefer.

Although located in Washington, DC, proceedings will be conducted entirely electronically and remotely. It will not be necessary to travel to the District of Columbia in order to file or defend against a claim.

Proceedings will be presided over by three judges appointed by the Librarian of Congress.

The statute of limitations (normally three years) applies to claims filed with the CCB in the same way it applies to court proceedings.

Again, the proceeding is voluntary. A party who is served a claim that has been filed with the CCB has a right to opt out. The party filing the claim then has the right to file the claim in court instead.

The CCB has the power to issue a determination by default if a party fails to respond to a properly served claim or fails to participate in the proceeding without exercising the opt-out right. The CCB may also dismiss or issue a default determination against a claimant who fails to prosecute the claim, misses deadline, or otherwise fails to comply with board rules.

Registration

One major advantage of the new CCB is that an infringement claim may be filed even if the Copyright Office has not issued a registration certificate yet. In order to file a claim, however, you must have submitted an application to register the work, either prior to filing the infringement claim or simultaneously with filing the CCB claim.

If your registration application is refused, the CCB will dismiss your claim without prejudice. This means you may still file the claim in federal court.

This is different from the rule that applies when filing a claim initially in federal court. A claim of infringement of a U.S. work normally may not be filed in federal court until after the U.S. Copyright Office has either issued a registration certificate or officially refused to issue a registration.

Available remedies

Total damages awarded cannot exceed $30,000. As in a court filing, the claimant may elect either statutory damages, on one hand, or actual damages or lost profits on the other.

The CCB does not have the power to issue injunctions. It can, however, include in its determination a requirement that a party stop or modify certain activities if the party has agreed to do so.

Attorney fees and costs are not recoverable unless the other party has acted in bad faith. There is a $5,000 cap if the other party is represented by an attorney. Otherwise, the cap is $2,500. In some extraordinary circumstances, a higher amount may be awarded.

Review and appeal of CCB decisions

If you disagree with a CCB determination, you have several options:

  • Request CCB reconsideration
  • Seek review by the Register of Copyrights
  • Request a federal district court to reverse or correct the CCB determination (only possible in certain circumstances.)

Enforcement of CCB decisions

If an infringer fails to pay the amount the CCB has ordered, the claimant may bring an action in federal district court to enforce payment.

Update: The first two CCB determinations have been issued. 

Visit my extensive Copyright FAQs page.

Need help with a copyright matter? Contact attorney Thomas James.