09 May 2024

Hens' Teeth

Well, the Supreme Court agrees with me about something: New York City is not the center of the universe. At least not as far as copyright damages are concerned. Today's decision in Warner Chappell Music, Inc. v. Nealy held that:

In this case, we assume without deciding that a claim is timely under that provision if brought within three years of when the plaintiff discovered an infringement, no matter when the infringement happened. We then consider whether a claim satisfying that rule is subject to another time-based limit—this one, preventing the recovery of damages for any infringement that occurred more than three years before a lawsuit’s filing. We hold that no such limit on damages exists. The Copyright Act entitles a copyright owner to recover damages for any timely claim.

Warner Chappell Music, Inc. v. Nealy, No. [20]22–1078 (U.S. 09 May 2024) (PDF), slip op. at 1.

Nealy matters to authors and other creators in several ways, some of which aren't all that obvious — and buried in footnotes. Starting with the obvious ones:

  • The Court explicitly sided with jurisprudence from the Ninth Circuit on copyright matters against that from the Second Circuit. This has been a trend since the 1976 Act came into force — not uniform, often not explicit, but conflicts between the Ninth and Second Circuits on copyright matters have a very distinct tilt toward the Left Coast once they reach the Supreme Court. (Interestingly, that also extends to civil-procedure matters embedded in copyright disputes; for example, although it was far from explicit, the Court came down hard on the side of the Ninth Circuit's treatment of summary judgment burdens for defenses in Grokster.)
  • In a broader sense, the Court held that limitations on remedies — and probably not just in the Copyright Act — are not presumed from statutes of limitations on causes of action, particularly not when a discovery rule is at issue. This particularly makes sense when late discovery (and late steps in chains of events) are at issue; one obvious example is the employee not selected for a promotion carrying a significant pay bump who does not discover an unlawful discriminatory reason for the selection for five years thereafter (well after the statute of limitations). That matters to authors, composers, and other freelancers with day jobs…

    But it also matters in a piracy context. Indeed, that's closely analogous to Nealy's situation — at least at this stage of the proceedings, he was unable to discover the infringement while incarcerated. That's not all that different from an author with no access to a behind-a-paywall/membership-required pirate site, or no awareness of a cheap pirated printed edition being sold in stores on the opposite coast.

  • The ability to reach back to the original date of infringement for a remedy also shifts the balance slightly in favor of the creator for perhaps the most important purpose of all: Settlement. The vast majority of copyright claims are settled, either before or during litigation.

But the most important things may be buried in two footnotes.

Scholars have speculated about “exceptional case[s]” in which a copyright plaintiff could get some benefit out of a discovery rule even when combined with a three-year damages bar. 3 M. Nimmer & D. Nimmer, Copyright §12.05[B][2][c][ii] (2023). Suffice to say that assuming those cases exist at all, they are as rare as hen’s [sic] teeth.

Id. at 6 n.2. It pleases me to see one of the (far too many) speculations in what has all too often been treated by the Courts of Appeal and especially the District Courts as the Restatement (0th) of Copyright smacked down as unrelated to reality.

There was also advice that applies in all appeals — not just copyright matters.

[E]ven supposing Warner Chappell’s petition had urged us to opine on the discovery rule, our reformulation of the question presented should have put an end to such arguments. “The Court decides which questions to consider through well-established procedures; allowing the able counsel who argue before us to alter these questions or to devise additional questions at the last minute would thwart this system.”

Id. at 5 n.1 (citation omitted). The short, snarky version of this is "Answer the question(s) specified for review, even if that's not what you really want to answer." Especially when the client already has a reputation for overreaching copyright management (and this is just one rather well-known example).

Nealy is good for actual creators. It may also prove good for some transferees. It's bad for "don't notice me!" and difficult-to-identify infringers. Schade.

I anticipate some lobbying to amend the Copyright Act to put a specific time limit on remedies…