By Timmy Basista
Timmy Basista is a 3L JD candidate at ASU Law with a strong interest in clerking aiming to carve a pathway up to clerking at the Federal Circuit. They are one of the Student Co-Executive Directors of the McCarthy Institute. They especially enjoy copyright and patent within the field of IP. Along with these IP interests, Timmy simply loves writing whether that is about constitutional law, copyright, ethics, or science.
Introduction: While the legal world keeps a close pulse on the meteoric rise of gen-AI, the Supreme Court has been busy taking up other intellectual property matters. This past term included a bombshell case denying registration of the trademark “Trump Too Small” under the Lanham Act.[1][JH1] [JH2] But a second case also sent a seismic pulse throughout the IP world⸺ this time in copyright.
Warner Chappell Music, Inc. v. Nealy[2] presented the Court with the issue of how far back in time a copyright holder can recover for infringement damages. The Copyright Act,[3] like most federal laws, has a statute of limitations on actions brought; relevant here is the Act’s three-year limitation on any civil action.[4] But does this three-year limitation mean that copyright holders can only recover for the three years immediately prior to the filing of the suit? In a broad reading of the Copyright Act, the Court held that copyright holders can recover for a potentially unlimited window into the past for copyright infringement as long as their suits are timely brought for at least one alleged infringement.[5]
Discussion: Petitioner Warner Chappell Music[6] brought this case to the Supreme Court to answer one distinct question: can a copyright holder recover for infringement damages that occurred more than three years before the civil action was filed?
Musicians Sherman Nealy and Tony Butler formed a music production company in 1983.[7] The company was dissolved several years later but not before producing an album and several singles.[8] Subsequently, Nealy served a nearly 20-year prison sentence followed several years later by a three-year sentence.[9] Without Nealy’s knowledge, Butler licensed out their catalog to Warner Chappell Music,[10] and in 2008 Flo Rida interpolated a single from the catalog into a song that reached No. 9 on the Billboard Hot 100 Chart.[11][JH3]
Nealy did not discover these facts until 2016, sometime after his release from his second prison sentence, but timely filed suit in 2018 within the three-year statute of limitations.[12] No party challenged that Nealy’s “claim accrued” when he discovered the alleged infringement.[13] But regardless of when Nealy’s claim accrued under the Copyright Act, how far back in time could he claim damages? The circuits split on this issue. Under the Second Circuit’s interpretation,[14] Nealy could only claim damages going back three years from when he filed suit. This would leave him unable to recover for any infringement before 2015. Under the Ninth Circuit’s interpretation,[15] Nealy could recover for old infringements as long as at least one infringement occurred in the three years prior to filing suit. In other words, Nealy could claim damages all the way back to 2008 when Flo Rida’s song first hit the charts. On interlocutory appeal, the Eleventh Circuit agreed with this latter position.[16] The Court granted cert to resolve this split.[17]
The Court agreed with the Eleventh and Ninth Circuits’ interpretation of claim accrual that a plaintiff can recover damages going back more than three years from the filing of his suit.[18] First, it reasoned that section 507(b)’s “time-to-sue prescription” does not implicate recovery of damages; that implication must come from the Act’s remedial sections.[19] And the remedial sections provide no time limit.[20] The text is clear. Infringers are liable, period.[21] This result should come as no surprise given the Court’s long-held canon that when statutes are unambiguous and “the statutory scheme is coherent and consistent,”[22] the interpretive song and dance must come to an end.
The dissenters were less romanced by the majority’s tune. They argued that the discovery rule has only been applicable when “fraud or concealment”[23] are at play.[24] Warner Chappell Music never hid its alleged infringement. It had no reason to suspect it was entering into a contract without the full agreement of all interested parties.
Furthermore, the dissent argued that section 507(b) contains standard language, so the standard incident of injury rule should apply.[25] Nealy filed suit long after many, though not all, of Warner Chappell Music’s infringing acts occurred.[26] With little mincing of words, they conclude that “the Act almost certainly does not tolerate a discovery rule.”[27]
Conclusion: What does this mean for corporations purchasing copyrights? Perhaps not much. Even if the legal doomsayers and alarmists sound the clarion call that the floodgates will open and every Tom, Jack, and Sally will bring suits against the industry giants, these fears are unfounded. It’s uncommon for a sample to be incorporated into a financially successful single.[28][JH4] [JH5] Rarer still are legal mistakes by music moguls like Warner Chappell Music— like forgetting to check if a partnership existed before securing the copyright to a music catalog.
Industry giants have most or all of the bargaining power in the contracts they write.[29] Corporate entities like Warner Chappell Music likely have the finances to withstand years-long copyright litigation, or even an adverse judgment. The risk balance to them will likely not be tipped by this decision.
What does this mean for individual copyright holders? Perhaps much more. To be fair, many copyright holders might know pretty quickly when their works are allegedly infringed. Musicians listen to the radio and use streaming platforms. Artists go to shows. Writers read new novels. And most copyrights are simply not worth much money.[30] But how many creatives are there like Lynn Goldsmith, the famed photographer at the heart of the Warhol case, who did not know about infringement of her Andy Warhol photographs until 30 years after?[31]
While the Court did not say so explicitly, perhaps it was sympathetic to creators who find themselves overwhelmed with the difficulty of constantly assessing whether one of their works has been infringed. In an ever-expanding world in which creative output is increasingly outside the hands of a few large companies, music and art software has become more easily accessible to the global population. Material present on the internet and social media spaces is exponentially increasing.[32] Is it any longer reasonable to expect that a copyright holder would notice, even with diligent searching, that their copyrights are being infringed? After all, with approximately 150 zettabytes[33] of online data expected to be produced this year alone,[34][JH6] a reasonable creator might need years to discover one infringement much less decades-long infringements. Perhaps it was well time that the Court granted starving artists more protection for their works.
[1] Vidal v. Elster, 602 U.S. 286 (2024); see Lanham (Trademark) Act, 15 U.S.C. §§ 1051–1141n (2020).
[2] Warner Chappell Music, Inc. v. Nealy, 601 U.S. 366 (2024).
[3] Copyright Act of 1976, 17 U.S.C. §§ 101–1332.
[4] Id. at § 507(b).
[5] Nealy, 601 U.S. at 373–74.
[6] Unfortunately, Warner Chappell Music is not affiliated with musical superstar Chappell Roan.
[7] Nealy, 601 U.S. at 368.
[8] Id.
[9] Id.
[10] Id. at 369.
[11] Wikipedia, In the Ayer, https://en.wikipedia.org/wiki/In_the_Ayer (June 27, 2024, 8:42pm).
[12] Nealy, 601 U.S. at 369.
[13] The Court briefly remarked that it had never decided whether a copyright infringement claim accrues when the plaintiff discovers the infringement versus when the infringement actually occurs. However, neither party challenged Nealy’s discovery rule infringement theory, so that question was improper for the Court to decide in this case. Id. at 371.
[14] Id. at 370.
[15] Id.
[16] Id.
[17] Id. at 371.
[18] Id. at 372.
[19] Id.
[20] Id.
[21] Id.
[22] Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
[23] Nealy, 601 U.S. at 374 (Gorsuch, J., dissenting).
[24] Though never discussed or litigated here, perhaps Butler was attempting fraud or concealment by entering into the agreement without Nealy’s consent. However, neither party brought that potential issue before this Court.
[25] Nealy, 601 U.S. at 375 (Gorsuch, J., dissenting); the standard incident of injury rule is simply that the civil action accrues when the injury is discovered and limits damages accordingly.
[26] Nealy, 601 U.S. at 374 (Gorsuch, J., dissenting).
[27] Id.
[28] Only 17% of previously released songs are sampled in hit songs. Tracklib, The State of Sampling, (Dec. 13, 2022), https://www.tracklib.com/blog/state-of-sampling-2022#facts.
[29] As one recent law school blog post stated, “Contract negotiations in the entertainment industry often occur in settings riddled with unequal bargaining power.” More so, courts consistently uphold these adhesion-type contracts against individual creators. Chloe Sucato, Can Your Contract Hurt You? A Lesson for Emerging Creatives and Their Attorneys, Brooklyn Sports & Ent. L. Blog (Feb. 11, 2021), https://sports-entertainment.brooklaw.edu/film-tv/can-your-contract-hurt-you-a-lesson-for-emerging-creatives-and-their-attorneys/.
[30] The licensing cost of a single song can be only $30, or less than $100 if incorporated into a video. See Beverly Boy Productions, How Much Do the Rights to a Song Cost?, (Oct. 7, 2020), https://beverlyboy.com/resources/how-much-do-the-rights-to-a-song-cost/; see also Biteable, How to get permission to use a song, (Feb. 22, 2018), https://biteable.com/blog/get-permission-use-song/.
[31] See Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023).
[32] See High Scalability, How big is a Petabyte, Exabyte, Zettabyte, or a Yottabyte?, (Sept. 11, 2012), https://highscalability.com/how-big-is-a-petabyte-exabyte-zettabyte-or-a-yottabyte/.
[33] To put this into context, all human speech ever spoken throughout history would only amount to 42 zettabytes— only a quarter of what has been produced this year alone. See High Scalability, How big is a Petabyte, Exabyte, Zettabyte, or a Yottabyte?, (Sept. 11, 2012), https://highscalability.com/how-big-is-a-petabyte-exabyte-zettabyte-or-a-yottabyte/.
[34] Fabio Duarte, Amount of Data Created Daily (2024), Exploding Topics (June 13, 2024), https://explodingtopics.com/blog/data-generated-per-day.