Fifth Circuit joins Second and Ninth circuits in holding that U.S. Supreme Court’s decision in Petrella does not preclude application of “discovery rule” for purposes of Copyright Act’s statute of limitations, affirming grant of summary judgment for plaintiff photographer in copyright infringement case.
Plaintiff Antonio Martinelli was commissioned by Sotheby’s in 2015 to photograph an Irish estate owned by the Guinness family. The estate was subsequently listed for sale, and Hearst Newspapers used Martinelli’s photographs in a March 2017 online article that was published on websites associated with the Houston Chronicle, the San Francisco Chronicle, the Times Union, the Greenwich Time and The Middletown Press. A week later, Hearst Newspapers used Martinelli’s photographs in another article on those same websites. The next day, a different entity—Hearst Communications—used four of the photographs in an online article published on a website associated with Elle Décor magazine.
Martinelli discovered his photographs in the Houston Chronicle in November 2018 and, between September 2019 and May 2020, discovered his photographs in the San Francisco Chronicle, the Times Union, the Greenwich Time and The Middletown Press. He found the Elle Décor magazine photographs in February 2020. Martinelli sued Hearst Newspapers in 2021 for copyright infringement related to the photographs in the Houston Chronicle and later amended his complaint to bring a copyright infringement claim against Hearst Magazine Media, the publisher of Elle Décor, and to allege that his photographs were also used on websites associated with the San Francisco Chronicle, the Times Union, the Greenwich Time and The Middletown Press. Martinelli brought these claims against the Hearst defendants within three years of discovering the infringements but more than three years after the infringements occurred.
On cross-motions for summary judgment before the district court, the parties stipulated that the Hearst defendants committed copyright infringement and that Martinelli would be entitled to damages. The Hearst defendants argued, however, that Martinelli’s infringement claims were time-barred under the Copyright Act’s three-year statute of limitations. Specifically, the Hearst defendants argued that Fifth Circuit precedent that applied the discovery rule and held that a copyright infringement claim accrues “once the plaintiff knows or has reason to know of the injury upon which the claim is based”—specifically, Graper v. Mid-Continent Casualty Co.—was no longer binding given the Supreme Court’s decisions in Petrella v. Metro-Goldwyn-Mayer, Inc., and Rotkiske v. Klemm. The district court rejected this argument, denied Hearst’s motion and granted Martinelli’s motion. The Fifth Circuit subsequently affirmed on appeal.
At the outset, the court explained that under the Fifth Circuit’s rule of orderliness, one panel may not overturn a prior panel’s decision, absent an intervening change in the law, such as by a statutory amendment, the Supreme Court or the circuit court sitting en banc. In particular, for a Supreme Court decision to change the circuit’s law, it must “unequivocally overrule prior precedent.” When an intervening Supreme Court decision fundamentally changes the focus of the relevant analysis, the precedent relying on that analysis is implicitly overruled. As the court explained, this happens only when the Supreme Court’s analysis clearly applies to the case at hand, such that the Fifth Circuit is unequivocally directed by controlling Supreme Court precedent to overrule the decision of the prior panel.
The Hearst defendants first argued that the Supreme Court’s discussion in Petrella compelled the conclusion that the discovery rule does not apply to Section 507(b) of the Copyright Act. The Fifth Circuit disagreed, reasoning that Petrella’s general statements about statutes of limitations and the separate-accrual rule left room for case law holding that the discovery rule did apply to Section 507(b). In Petrella, the Supreme Court decided under what circumstances a defendant can assert the equitable defense of laches against a copyright infringement claim that is brought within Section 507(b)’s limitations period. Before reaching the question of laches, the Supreme Court explained how the Section 507(b) limitations period works, noting that a claim ordinarily accrues when a plaintiff has a complete and present cause of action, and therefore a copyright claim generally accrues when an infringing act occurs. The Petrella Court further explained in a corresponding footnote that although it was not ruling on the question, nine federal circuit courts of appeal had adopted a discovery rule, which starts the limitations period when the plaintiff discovers—or with due diligence should have discovered—the injury that forms the basis for the claim.
The Petrella Court concluded that laches may not be invoked as a bar to damages under the Copyright Act because Section 507(b) itself takes account of delay. In particular, the Supreme Court noted that under the separate-accrual rule, the statute of limitations runs separately from each infringing act. The Supreme Court recognized that this analysis does not require that the limitations period start running with an infringing act; rather, it requires that plaintiff’s recovery be limited to a three-year window from the time of suit and that separate infringing acts trigger separate limitations periods.
The Fifth Circuit here noted also that in a later case, SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the Supreme Court confirmed that Petrella did not disturb the discovery rule. In SCA Hygiene, the Supreme Court decided that laches could not be asserted as a defense against a timely claim for damages from patent infringement. The Supreme Court in SCA Hygiene quoted Petrella, stating that “a claim ordinarily accrues when a plaintiff has a complete and present cause of action,” and further explained that while some claims are subject to a discovery rule, that is not a universal feature of statutes of limitations.
The Fifth Circuit acknowledged the Supreme Court’s statements in Petrella and SCA Hygiene and concluded that these general statements leave room for case law holding that the discovery rule does apply to Section 507(b) of the Copyright Act. As the court observed, Petrella said that limitations periods “generally begin to run at the point when the plaintiff can file suit and obtain relief,” assumed that a copyright claim accrues when the infringing act occurs, and reasoned that each infringing act starts a new limitations period under the separate-accrual rule. It did not, however, rule on whether the limitations period is triggered by discovery of infringement, thus leaving open the possibility that copyright infringement claims accrue when they are discovered. Accordingly, the Fifth Circuit held, the rule of orderliness required continued adherence to its earlier holding in Graper.
The Hearst defendants further argued that under the Supreme Court’s decision in Rotkiske, the discovery rule does not apply to statutes of limitations absent clear statutory language to that effect (which the Copyright Act does not contain). The Fifth Circuit rejected this argument as well. As the court explained, Rotkiske held that the statute of limitations in the Fair Debt Collection Practices Act (FDCPA) begins to run on the date on which the alleged FDCPA violation occurs, not on the date on which the violation is discovered. To reach that conclusion, the Rotkiske court relied upon the specific language of the FDCPA, which states that “an action may be brought within one year from the date on which the violation occurs.” The Fifth Circuit therefore concluded that Rotkiske did not introduce a blanket rule that a limitations period runs from the date of the offending conduct. Rather, because the limitations period in the FDCPA was unambiguous, the Rotkiske Court did not need to decide whether, or under what circumstances, a potentially ambiguous limitations period such as under the Copyright Act could incorporate the discovery rule.
The Fifth Circuit bolstered its conclusion by pointing to the decisions of the only two circuit courts to have previously considered whether Petrella and Rotkiske preclude application of the discovery rule in the copyright context. In Sohm v. Scholastic Inc., the Second Circuit declined to alter circuit precedent mandating the use of the discovery rule despite the Supreme Court’s decisions in Petrella and Rotkiske. The Second Circuit emphasized in Sohm that the Petrella Court stated “it was not passing on the question of the discovery rule” and that SCA Hygiene later reaffirmed that notion. The Second Circuit concluded that although some language in Petrella may be consistent with the rule that the clock starts running when the infringement occurs, in light of the Supreme Court’s direct and repeated representations that it has not opined on the discovery rule, it would contravene principles of stare decisis for the Second Circuit to depart from its prior holding on the basis of Petrella. The Sohm court also noted that Rotkiske did not persuade it to depart from its prior holding because Rotkiske was based on the FDCPA’s text and not the Copyright Act’s text. (Read our summary of the Second Circuit decision here.)
In Starz Entertainment, LLC v. MGM Domestic Television Distribution, the Ninth Circuit also held that Petrella did not change its discovery rule with respect to the statute of limitations in the Copyright Act. The Ninth Circuit read Petrella as acknowledging that the incident of injury rule is not the only accrual rule that federal courts apply in copyright infringement cases and saying nothing else about the discovery rule’s continued viability. (Read our summary of the Ninth Circuit decision here.)
Because the court found that the Supreme Court’s decisions in Petrella and Rotkiske did not unequivocally overrule Graper, and that under Graper, Martinelli’s copyright infringement claims were timely because he brought them within three years of discovering Hearst’s infringements, the Fifth Circuit affirmed the grant of summary judgment in Martinelli’s favor.
Summary prepared by Frank D’Angelo and Jennifer Kahn