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‘Discovery' Rule Applies to Copyright Statute of Limitations in Second Circuit

Wednesday, April 9, 2014

By Anandashankar Mazumdar  

April 4 --The clock begins ticking for the three-year statute of limitations under the Copyright Act when a copyright holder discovers that an infringement has occurred and not when the injury first began, the U.S. Court of Appeals for the Second Circuit ruled April 4.

Affirming a jury verdict in favor of a photographer who had accused a textbook publisher of copyright infringement, the court joined several sister circuits in stating that a plaintiff has three years from the time he or she discovers an alleged infringement in order to bring a claim. The court rejected the publisher's argument that the court should adopt the rule that the claim begins to accrue as soon as the alleged infringement starts.

In so doing, the Second Circuit rejected the argument that different rules should apply to plaintiffs' claims of ownership of a copyright as opposed to claims of infringement.

In addition, the court declined to adopt either the “application rule” or the “registration rule” for the purposes of determining whether a copyright infringement plaintiff has satisfied Section 411(a)'s registration requirement, finding that this issue need not be decided in order to resolve the instant case. The question of whether having applied to register a work satisfies Section 411(a) has come up in several recent cases.

The case is one of several that have recently been brought by photographers against educational publishers. In many of these cases, issues arose regarding whether the claims were barred based on the statute of limitations or because of the photographer's failure to register.

Another Photographer Sues Over Textbook Use

Louis Psihoyos was a photographer that discovered that textbook publisher John Wiley & Sons Inc. of Hoboken, N.J., had used several of his photographs in its publications. Psihoyos sued, alleging copyright infringement.

Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York granted Wiley summary judgment on several of the claims after finding that Psihoyos had failed to comply with Section 411(a) of the Copyright Act, which requires a plaintiff to register a work with the Copyright Office before bringing a copyright infringement clam.

Following a trial, a jury found that Wiley had willfully infringed Psihoyos's copyright interest in two images and awarded $130,000 in statutory damages. The district court rejected Wiley's request for remittitur or a new trial on the basis of an excessive award. Wiley appealed.

'Discovery Rule' Applies to Statute of Limitations

The court first rejected Wiley's argument that more of Psihoyos's claims should have fallen to the statute of limitations. The court disagreed with Wiley that different rules should apply depending on whether the plaintiff has asserted a claim of ownership over a work or is asserting that the copyright interest in the work has been infringed.

The court rejected an analogy with the Fair Credit Reporting Act, under which TRW Inc. v. Andrews, 534 U.S. 19 (2001), held that the discovery rule was precluded.

“We agree with our sister Circuits that the text and structure of the Copyright Act, unlike the FCRA, evince Congress's intent to employ the discovery rule, not the injury rule,” the court said.

Thus, in the Second Circuit, “copyright infringement claims do not accrue until actual or constructive discovery of the relevant infringement.”

No Resolution of 'Application' or 'Registration' Issue

Psihoyos had also appealed the rejection of several of his claims under Section 411(a). He argued that the district court should have allowed him to amend his claims in order to reflect that he had subsequently filed applications to register the relevant works.

The court found no abuse of discretion in the lower court's refusal to allow such amendment, on the basis that Psihoyos had been on notice since he first filed his claim that proof of registration would be required, and he had not acted to submit his applications to register until after discovery had closed.

Based on these facts, the court affirmed the district court's ruling without finding any need to resolve the question of whether the application rule or the registration rule should be applied to determine whether a plaintiff has satisfied Section 411(a).

Finally, the court rejected Wiley's appeal of the amount of the award, finding that there was no rule that “there must be a direct correlation between statutory damages and actual damages.” The court thus affirmed the district court's rulings.

The court's opinion, written by Judge Raymond Joseph Lohier Jr., was joined by Judges John M. Walker Jr. and José A. Cabranes. Psihoyos was represented by Kevin P. McCulloch of Nelson & McCulloch LLP, New York. Wiley was represented by Christopher Perry Beall of Levine Sullivan Koch & Schulz LLP, New York.

 

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com


Text is available at http://pub.bna.com/ptcj/12048742dCir20140404.pdf.

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