Copyright Litigation Issues Resolved in Recent Copyright Case

Posted: November 18, 2020 | News

Can a party still file a copyright lawsuit after the statute of limitations if he/she was unaware that his or her work has been infringed?  For what period of time before filing suit can a plaintiff recover damages?  If the infringed work is a compilation, what kind of registration satisfies the “registration” requirement?  A recent case out of the U.S. Court of Appeals in New York answered these questions in an important case that addressed unresolved interpretations of a Supreme Court opinion.

In a significant case watched by copyright lawyers nationwide, the U.S. Court of Appeals for the Second Circuit in New York issued an opinion that resolved several legal issues about how to interpret a Supreme Court case that had been left key issues unclarified and disputed. These issues included conflicts concerning the so-called “discovery rule,” the recovery of damages accrued before the Copyright Act's three-year statute of limitations, and the sufficiency of registration for a compilation that includes the allegedly infringed work.

The case is Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020), which arose out of a claim by photographer Joseph Sohm that book publisher Scholastic Inc. had used his photographs in more print runs than the invoices governing its licenses contemplated.

1. “Discovery Rule” Tolls the Copyright Statute of Limitations, Even After Petrella v. MGM

Nine Circuit courts had followed the traditional “discovery rule” that the statute of limitations on a copyright claim does not begin to run until the copyright owner discovers or should have discovered the infringement. Defendant Scholastic argued that in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), the Supreme Court held that the statute of limitations on a copyright claim begins when the "injury" (i.e., the infringement) occurs, abrogating the traditional discovery rule in nine circuit courts. But the Second Circuit in Sohm disagreed, holding instead that the Supreme Court expressly declined to decide that question.

Accordingly, the Second Circuit will continue to use the traditional discovery rule, under which an infringement claim only accrues when the copyright holder discovers or should have discovered the infringement. The Sohm court ruled that this required Scholastic to identify "some affirmative evidence that would have been sufficient to awaken inquiry and prompt an audit" by the photographer, rejecting Scholastic's claim that "the passage of time alone," without any effort by Sohm to conduct an audit or make an inquiry, was sufficient.

It remains to be seen whether other Circuit courts will follow Sohm’s reading of the Supreme Court’s Petrella case.

2. Plaintiff May Not Recover Damages for More than Three Years Before Filing Litigation

The Sohn court also reversed the district court's holding that the photographer could recover damages for infringing activity more than three years before suit, resolving conflicting district court cases within the Second Circuit and elsewhere. The court held that Petrella "explicitly delimited damages to the three years prior to the commencement of a copyright infringement action," and that this portion of the opinion was not dicta, because it was necessary to the court's ultimate decision refusing to allow a laches defense in copyright actions.

3. Registration of a Compilation is Sufficient for Underlying Rights Holders to File a Claim

Scholastic had relied on the Supreme Court's recent holding that a copyright plaintiff must have a registration before filing suit, Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019).  Scholastic claimed the photographer's registrations did not meet this registration requirement, because the works were registered as a compilation by the photographer's assignee, and registration did not include the photographer's name.

Adopting the Ninth Circuit's holding in Alaska Stock, LLC v. Houghton Mifflin Harcourt Publishing Co., 747 F.3d 673 (9th Cir. 2014), the Second Circuit in Sohn held that "[t]he 'author' that must be identified in a group registration under 17 U.S.C. § 409(2) is the author of the compilation, rather than the author of each underlying work, and a valid group registration works to register each individual work included in the compilation."

4. Plaintiff's Allegations that Defendant Exceeded the License's Scope Are Copyright Infringement Claims, Not Breach of Contract Claims

The Second Circuit in Sohn reversed summary judgment for Scholastic on the photographer's claim that exceeding the print-run limitations constituted copyright infringement. The court examined those provisions, which it determined contained "unmistakable language of conditions precedent" rather than language suggesting covenants.  Accordingly, any violations of these provisions stated copyright-infringement claims, not claims for breach of contract.

5. Copyright Plaintiffs Bear the Burden of Demonstrating Use Outside the License Scope

Finally, the Second Circuit reaffirmed that where the issue is the scope, not the existence of a license, it is the copyright owner who bears the burden of proving that a publication exceeds a license's scope. It rejected the photographer's claim "there was 'no legitimate scope of license issue,'" because Scholastic had entirely exceeded the print-run limitations. Instead, the Sohn court held that the photographer's failure to satisfy its burden by proving Scholastic's unauthorized copying of the pertinent works invalidated its claim.

If you have questions about copyrights in general, a copyright claim to bring forward, or a copyright lawsuit to defend, the attorneys at North & Nash, A Professional Law Corporation have a wealth of experience in copyright law. We stand ready to help you navigate these complex situations, so please reach out to us at 949-752-2200

Author: Partners at North & Nash, A Professional Law Corporation