The Supreme Court will clarify the extent to which copyright holders can recover damages for infringement in a case involving a Florida producer who sued Warner Chappell Music after Flo Rida sampled a song he owns.
The justices agreed Friday to review an appeal by Warner Music and Artist Publishing Group against a lower court’s ruling that allowed recovery for damages that occurred before the three-year period to sue. The decision could clarify uncertainty about whether there is truly unlimited copyright liability, as two federal appeals courts recently ruled.
Central to the discussion is the 1984 song ‘Jam the Box’, which is owned by Sherman Nealy’s record label Music Specialist in Miami and used by Flo Rida in his 2008 song ‘In the Ayer’. Nealy was incarcerated at the time for the distribution of cocaine. In 2018, he sued Atlantic Records, Warner Chappell and Artists Publishing Group, arguing that he had not authorized the use of his label’s music and that his former business partner did not have permission to license it.
In summary proceedings, the music publishers argued that Nealy had not filed a lawsuit for copyright infringement within the three-year period. The federal judge overseeing the case agreed, but his decision was reversed by the 11th U.S. Circuit Court of Appeals. The study found that the three-year statute of limitations only starts when the copyright owner “knows or has reason to know that he or she has been injured.” The finding upheld the application of the so-called “discovery rule” under the Copyright Act, which states that the clock for a lawsuit starts when plaintiffs learn or reasonably should have learned that their rights are being violated. This violates the so-called “damages rule,” which states that the statute of limitations begins to run as soon as the violation occurs, regardless of the plaintiff’s knowledge.
Federal appeals courts have reached conflicting conclusions on this issue. In Petrella vs. Metro-Goldwyn-Mayer, the Supreme Court in 2014 banned the recovery of damages for infringement after the three-year period to file a lawsuit. It ruled that the Copyright Act “prohibits any form of relief for conduct that occurred before the three-year statute of limitations.” The interpretation of this language remains unresolved.
The 11th Circuit joined the 9th U.S. Circuit Court of Appeals in February in choosing not to impose a time limit, ruling that copyright holders can seek damages for infringement more than three years before filing a lawsuit, as long as they are “on time under the discovery rule.” This contrasts with the 2nd US Circuit Court of Appeals, which ruled that “a plaintiff’s recovery is limited to damages incurred during the three years prior to the filing of the lawsuit.”
Randy McCarthy, an intellectual property attorney, says it is likely the Supreme Court will reverse the 11th Circuit’s ruling because “copyright has indefinite liabilities that could be potentially devastating to broad sectors of our society. ” He adds: “The potential liability for things you did 20 years ago, as long as someone finds it online, seems a bit chilling.”
The Recording Industry Association of America and the National Music Publishers’ Association have filed a friend-of-the-court brief urging the Supreme Court to review the case, saying uncertainty about the issue encourages forum shopping.