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Copyright Plaintiffs Recovery Limited To Three Years – U.S. Supreme Court

The U.S. Supreme Court has capped all copyright infringement damages by limiting those damages to a three year period prior to the filing of suit.  Petrella v. Metro-Goldwyn-Mayer, Inc., case no. 12-1315 (May 19, 2014) (available here).  Moreover, the doctrine of estoppel may bar all claims entirely.

“The Copyright Act provides that ‘[n]o civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued.’ 17 U. S. C. §507(b). This case presents the question whether the equitable defense of laches (unreasonable, prejudicial delay in commencing suit) may bar relief on a copyright infringement claim brought within §507(b)’s three-year limitations period. Section 507(b), it is undisputed, bars relief of any kind for conduct occurring prior to the three year limitations period. To the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period, however, courts are not at liberty to jettison Congress’ judgment on the timeliness of suit. Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window.”  opn. pg. 1.

A claim accrues when a plaintiff has a complete and present cause of action. Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U. S. 192, 201 (1997).  “In other words, the limitations period generally begins to run at the point when ‘the plaintiff can file suit and obtain relief.’ A copyright claim thus arises or ‘accrue[s]’ when an infringing act occurs.”

However, the Copyright Act defines multiple, different violations (for example, sale, copying and distribution are all separate violations).  Under the separate-accrual rule “when a defendant commits successive violations, the statute of limitations runs separately from each violation. Each time an infringing work is reproduced or distributed, the infringer commits a new wrong. Each wrong gives rise to a discrete ‘claim’ that ‘accrue[s]’ at the time the wrong occurs.6 In short, each infringing act starts a new limitations period. See Stone v. Williams, 970 F. 2d 1043, 1049 (CA2 1992) (‘Each act of infringement is a distinct harm giving rise to an independent claim for relief.’).” opn. pg. 5.

When a defendant engages in a series of discrete infringing acts, the copyright holder’s suit will be timely under §507(b) with respect to the more recent acts of infringement.

“[A] successful plaintiff can gain retrospective relief only three years back from the time of suit. No recovery may be had for infringement in earlier years. Profits made in those years remain the defendant’s to keep.” opn. pg. 11.

Further, “[a]lthough registration is ‘permissive,’ both the certificate and the original work must be on file with the Copyright Office before a copyright owner can sue for infringement.” opn. pg. 18.

As for excessive delays by the copyright owner, estoppel may bar relief.  “The defendant [] may retain the return on investment shown to be attributable to its own enterprise, as distinct from the value created by the infringed work. See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U. S. 390, 402, 407 (1940) (equitably apportioning profits to account for independent contributions of infringing defendant).” opn. pg. 11.  “[W]hen a copyright owner engages in intentionally misleading representations concerning his abstention from suit, and the alleged infringer detrimentally relies on the copyright owner’s deception, the doctrine of estoppel may bar the copyright owner’s claims completely, eliminating all potential remedies.”  opn. pg. 19.

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