Supreme Court skeptical of 3-year limit on copyright damages, attorneys say
2024 IPDBRF 0019
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By Patrick H.J. Hughes
WESTLAW Intellectual Property Daily Briefing
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February 23, 2024
(February 23, 2024) - The U.S. Supreme Court grilled both sides in a copyright battle over whether a musician can collect damages incurred from many years ago, and some intellectual property attorneys say the justices appeared unconvinced that those damages should be limited.
Warner Chappell Music Inc. et al. v. Nealy et al., No. 22-1078, oral argument held, (U.S. Feb. 21, 2024).
Petitioners Warner Chappell Music Inc. and Artist Publishing Group LLC say Section 507(b) of the Copyright Act, 17 U.S.C.A. § 507(b), called the "limitations on actions" provision, precludes relief going back more than three years from when a suit is filed.
"My point is simply that when it comes to retrospective relief, if the act took place more than three years earlier, the implication of the statutory language is you are out of luck," Kannon K. Shanmugam of Paul, Weiss, Rifkind, Wharton & Garrison LLP said on behalf of the music labels during the Feb. 21 oral argument.
J. Wesley Earnhardt of Cravath, Swaine & Moore LLP argued for music producer Sherman Nealy, the respondent who says he is entitled to damages from years ago because the damages provision of the Copyright Act, 17 U.S.C.A. § 504(b), has no such limitation.
David Ervin, an attorney at Crowell & Moring LLP who is not involved in the dispute, said the justices seemed dubious of the petitioners' claim that Section 507(b) has a limiting effect on Section 504(b).
"Justice [Samuel] Alito called it 'halfway textualism' and Justices [Amy Coney] Barrett and [Ketanji Brown] Jackson expressed skepticism regarding such a statutory interpretation approach," he said.
He theorized that the justices could dismiss the case as improvidently granted or could put the dispute on hold while they decide a different case involving the late discovery of copyright damages.
If the justices decide the case on the merits, they probably will not limit retrospective damages to just three years in some cases, Ervin said.
Justices to mend circuit split
Nealy sued the music labels in 2018 for damages that accrued from the infringement of his music while he was serving a lengthy term in prison.
That decision conflicted with the 2nd U.S. Circuit Court of Appeals' reasoning in Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020), that even in cases in which there is a legitimate reason for the late discovery of infringement, relief can be based only on a specific "lookback period."
Barry Werbin, an attorney at Herrick Feinstein LLP who also is not involved in the case, said "There is an urgent need to establish a single, consistent standard among the circuits on this critical copyright damages issue."
He said the need for clarity in the courts and a concern over too much leniency for infringers will guide the Supreme Court's decision.
"Defendants within the jurisdictions of courts following the 2nd Circuit's position can arguably infringe with impunity, knowing that upon discovery of their actions their liability would be limited to only a three-year lookback for damages," Werbin said.
"Many hope that whatever the Supreme Court decides, its ruling will clarify the issue and resolve the circuit split," she said. "Until then, copyright owners hoping to recover damages that occurred more than three years before the timely filing of a suit … will likely continue forum shopping, favoring bringing suit in the 9th or 11th Circuit over the 2nd Circuit."
By Patrick H.J. Hughes
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