WASHINGTON (CN) — The Supreme Court ruled on Thursday to let music producer Sherman Nealy claim over a decade's worth of damages for an unlicensed sample of his work used in Flo Rida’s 2008 hit “In the Ayer.”
In the 6-3 ruling, the court said there was no limit on damages that occurred more than three years before a copyright claim was filed.
"If Nealy’s claims are thus timely, he may obtain damages for them," Justice Elena Kagan, a Barack Obama appointee, wrote for the majority. "The Copyright Act contains no separate time-based limit on monetary recovery."
Kagan was joined by justices Sonia Sotomayor, Brett Kavanaugh, Amy Coney Barrett, Ketanji Brown Jackson and Chief Justice John Roberts.
Nealy formed the label Music Specialist with Tony Butler in 1983. The label recorded and released music for three years before Nealy was sent to prison for distributing cocaine.
While Nealy was in prison, Butler started a new company, 321 Music. The label licensed songs from Music Specialist’s catalog, including a sample that was bought by Atlantic Recording Corp. for Flo Rida’s “In the Ayer.” Butler later gave Warner Chappell Music exclusive publishing rights to Music Specialist’s catalog.
Nealy claims he did not find out about a lawsuit over the rights to Music Specialist’s work, including the 2008 sample sale, until 2016. Two years later he sued Warner Chappell Music and Atlantic Recording Corp. for copyright infringement. Nealy wanted damages dating back to 2008, claiming that the discovery rule allowed him to file his lawsuit within three years of finding out about the violation.
Warner Chappell didn’t fight Nealy’s argument that he could still seek damages for the infringement, but the label claimed those damages could only extend back three years.
The court refused to weigh in on the discovery rule — which allowed Nealy to bring copyright claims long before his lawsuit was filed — but decided the case assuming Nealy’s claim was timely.
Kagan said the Copyright Act makes clear that there is a three-year time limit to file a copyright claim, which, in this case, begins when Nealy discovered the infringement.
“That clock is a singular one,” Kagan wrote. “The ‘time-to-sue prescription,’ as we have called it, establishes no separate three-year period for recovering damages, this one running from the date of infringement.”
Justices Neil Gorsuch, Clarence Thomas and Samuel Alito dissented, arguing that the court should have addressed the discovery rule. Gorsuch, a Donald Trump appointee, said that if the court had done so, it would have found that Nealy couldn’t recover copyright damages.
“Rather than address that question, the court takes care to emphasize that its resolution must await a future case,” Gorsuch wrote. “The trouble is, the act almost certainly does not tolerate a discovery rule. And that fact promises soon enough to make anything we might say today about the rule’s operational details a dead letter.”
Gorsuch said there was little reason to assume the Copyright Act would diverge from the usual rules that limit claims to three years after a plaintiff with due diligence should have discovered the injury.
That reasoning, Gorsuch said, would mean Nealy’s claims were untimely.
The dissenters said the court should have dismissed this case, waiting to rule on this issue until they were presented with a case asking about the discovery rule.
“Better, in my view, to answer a question that does matter than one that almost certainly does not,” Gorsuch wrote.
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