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Psihoyos v. John Wiley & Sons, Inc.

Second Circuit adopts “discovery rule” for accrual of copyright infringement claims, affirms dismissal of infringement claims with respect to photographs that were not registered prior to instituting suit, and upholds jury award of statutory damages notwithstanding the absence of a direct correlation with actual damages.

Plaintiff, a professional photographer, sued publisher Wiley & Sons, Inc., for copyright infringement based on Wiley’s publication of textbooks containing several of plaintiff’s photographs. The district court determined that the applicable three-year statute of limitations barred none of plaintiff’s infringement claims because plaintiff did not discover the infringements until fewer than three years before bringing suit. The district court nevertheless granted Wiley’s motion for summary judgment as to several of plaintiff’s infringement claims on the ground that plaintiff had failed to register certain of the subject photographs with the Copyright Office prior to instituting suit. After a jury trial in which the jury awarded statutory damages of $750, $30,000 and $100,000, respectively, as to three of the remaining photographs, the district court denied Wiley’s motion for remittitur or, in the alternative, for a new trial.

On appeal, the Second Circuit expressly adopted the “discovery rule” for determining when infringement claims accrue for purposes of the Copyright Act’s three-year statute of limitations. The court also affirmed dismissal of plaintiff’s claims with respect to certain of the photographs for which plaintiff had not applied to register a copyright prior to instituting suit.

Finally, the court upheld the jury’s award of statutory damages to plaintiff, which was based on a consideration of factors other than actual damages suffered by plaintiff.

The court initially addressed the accrual of plaintiff’s claims under the Copyright Act. In joining every circuit court to have considered the issue of claim accrual in the context of copyright infringement claims, the court held that an infringement claim does not accrue until the copyright holder discovers, or with reasonable diligence should have discovered, the alleged infringement. In doing so, the court rejected Wiley’s argument that a different accrual rule should apply to infringement claims, reasoning that the text and structure of the Copyright Act evince Congress’s intent to employ the discovery rule, not an injury rule. Accordingly, the court concluded that copyright infringement claims do not accrue until actual or constructive discovery of the alleged infringement, and that the Act’s statute of limitations did not bar any of plaintiff’s infringement claims.

Next, the court considered the effect of plaintiff’s failure to register the relevant photographs with the Copyright Office prior to commencing his action. Under Section 411(a) of the Copyright Act, no action for infringement may be instituted until the copyright claim has been registered with the Copyright Office. Conceding that his application for registration remained pending with the Copyright Office at the time of the summary judgment motion, plaintiff argued that the mere act of submitting an application to the Copyright Office satisfies the registration requirement of Section 411(a). Although the court acknowledged a circuit split over whether a pending application satisfies the registration requirement, the court did not need to decide the issue. Even assuming that a pending application constitutes a registration, plaintiff had not submitted an application to register the relevant works until after instituting the action. Plaintiff submitted the applications after discovery had closed and Wiley had filed its summary judgment motion. Accordingly, the court held that plaintiff failed to satisfy the preconditions to suit under Section 411(a).

Finally, the court addressed Wiley’s motion for remittitur of the jury’s award of statutory damages. Although it did not contest the jury’s finding of willful infringement as to two of the photographs, Wiley argued that the district court erred by failing to consider whether the statutory damages award related to the proven amount of plaintiff’s actual loss. The Second Circuit, noting the deferential standard governing jury awards, concluded that while revenue lost is one factor to consider, there need not be a direct correlation between statutory damages and actual damages. Because several of the relevant factors could explain the jury’s award—including Wiley’s substantial profits and the deterrent effect on Wiley—the panel affirmed the statutory damages award.