Copyright owners can breathe easier for a while. On June 16th, the Supreme Court again declined to address longstanding copyright doctrine holding that the statute of limitations for an infringement claim starts to run upon the plaintiff’s discovery of the infringement rather than the commencement of the infringing activity. SCOTUS’ denial of cert in RADesign, Inc. v. Michael Grecco Productions, Inc. leaves in place the discovery rule adopted by every circuit court of appeals that has a number.
What is the Discovery Rule?
The “discovery rule” is a legal principle that impacts the statute of limitations in copyright infringement cases. Generally, the statute of limitations provides a time limit within which a claim must be filed. Section 507(b) of the U.S. Copyright Act states that the statute of limitations for filing an infringement lawsuit is three years from the date the infringement occurred. Barring suits filed more than three years after infringement commenced, whether the copyright owner was aware of the infringing activity, is called the “injury rule.” However, the discovery rule modifies this timeline by stating that the three-year period begins not at the time the infringement occurs but when the copyright owner discovers, or reasonably should have discovered, the infringement.
Courts established the discovery rule to address situations where the copyright owner might not immediately know about the infringement. In contrast to other property torts where the claimant is immediately aware of the injury, copyright violations can often happen secretly, such as unauthorized distribution, reproduction, or publication occurring without the creator’s knowledge. It is practically impossible for a copyright owner to police infringements throughout the world. Without this rule, content creators might lose their right to bring a claim simply because they were not aware of an infringement outside their scope of vision. A strict statute of limitations running from the moment of first infringement would perversely incentivize infringers to infringe in secret, or at least with a minimum of publicity, to start the clock on a potential claim.
Recent Developments with the Discovery Rule
Large businesses that rely on or use copyrighted material understandably oppose the discovery rule. Frequent copyright defendants, such as the fashion industry, record labels, music publishers and sports teams would prefer the injury rule, preventing infringement suits more than three years after the infringement commenced.
In 2024 the Supreme Court ruled that a successful copyright claimant who filed within the statute of limitations could recover all damages resulting from the infringement, even damages that accrued more than three years before suit was filed. The decision in Warner Chappell Music, Inc. v. Nealy overturned the Second Circuit’s rule limiting damages to three years prior the plaintiff filing suit. The Warner Chappell decision was especially notable for Justice Gorsuch’s impassioned dissent, joined by Justices Thomas and Alito, where he wrote that the Copyright Act “almost certainly does not tolerate a discovery rule”, and called for a strict interpretation of Section 507(b)’s provision “that ‘[n]o civil action shall be maintained . . unless it is commenced within three years after the claim accrued.”
Warner Chappell showed that at least three justices favored the injury rule. They only needed a case before them. RADesign appeared to be the perfect vehicle
Grecco v. RADesign
Michael Grecco is an experienced photographer who aggressively protects his copyrights. He regularly files copyright infringement cases, either in his own name or through his company, and he has gone on record to discuss his methods for registering his copyrights, detecting infringements and seeking compensation for their violations. RADesign allegedly began using at least two of Grecco’s photographs without a license in August 2017. Grecco claimed that he discovered the unauthorized use in February 2021 and then filed suit in October 2021, well beyond the injury rule’s three years from first infringement.
The district court found that Grecco was “sophisticated” at detecting and litigating infringement, and, thus, should be held to the injury rule because he should have uncovered the infringement within three years. It dismissed Grecco’s complaint. On appeal, the Second Circuit reversed the district court, finding that there was no “sophisticated plaintiff” exception to the discovery rule and that the discovery rule applied to all plaintiffs, not just some.
When RADesign’s counsel filed a cert petition with the Supreme Court, many observers thought this the perfect vehicle for the Court to address, on the heels of last year’s damage period ruling, the discovery rule itself. However, the three Warner Chappell dissenters appeared unable to convince another colleague to grant cert.
Conclusion
For now, copyright owners can rely on the discovery rule to bring an infringement suit, knowing that it will be timely if filed within three years of when they knew or with reasonable due diligence should have known of the infringement.
