2nd Circuit Resolves Key Issues in Copyright Case

In May 2020, the 2nd Circuit published an opinion that resolved several significant copyright issues, including conflicts concerning the discovery rule, the recovery of damages accrued before the Copyright Act's three-year statute of limitations, and the sufficiency of registration for a compilation that includes the allegedly infringed work.

The matter, Sohm v. Scholastic Inc., 959 F.3d 39 (2d Cir. 2020), concerned photographer Joseph Sohm's claim that book publisher Scholastic Inc. had used his photos in more print runs than the invoices governing its licenses contemplated.

Discovery Rule Tolls the Copyright Statute of Limitations, Even After Petrella

Scholastic argued that in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), the Supreme Court held that the statute of limitations on a copyright claim begins when the "injury" (i.e., the infringement) occurs, abrogating the traditional discovery rule in nine circuit courts. But the 2nd Circuit disagreed, instead finding that the Supreme Court expressly declined to decide that question.

Accordingly, the 2nd Circuit will continue to use the discovery rule, under which an infringement claim does not accrue until the copyright holder discovers or should have discovered the infringement. In Sohm, the court ruled that this required Scholastic to identify "some affirmative evidence that would have been sufficient to awaken inquiry and prompt an audit" by the photographer, rejecting Scholastic's claim that "the passage of time alone," without any effort by Sohm to conduct an audit or make an inquiry, was sufficient.

Plaintiff May Not Recover Damages for More Than Three Years Before Suit

The 2nd Circuit also reversed the district court's holding that the photographer could recover damages for infringing activity more than three years before suit, resolving conflicting district court cases within the circuit. The court held that Petrella "explicitly delimited damages to the three years prior to the commencement of a copyright infringement action" and that this portion of the opinion was not dicta because it was necessary to the court's ultimate decision refusing to allow a laches defense in copyright actions.

Registration of a Compilation Is Sufficient for Underlying Rights Holders to File a Claim

Relying on the Supreme Court's recent holding that a copyright plaintiff must have a registration before filing suit, Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019), Scholastic claimed the photographer's registrations were insufficient because the works were registered as a compilation by the photographer's assignee, and registration did not include the photographer's name.

Adopting the 9th Circuit's holding in Alaska Stock, LLC v. Houghton Mifflin Harcourt Publishing Co., 747 F.3d 673 (9th Cir. 2014), the 2nd Circuit held that "[t]he 'author' that must be identified in a group registration under 17 U.S.C. § 409(2) is the author of the compilation, rather than the author of each underlying work, and a valid group registration works to register each individual work included in the compilation."

Plaintiff's Allegations that Defendant Exceeded the License's Scope Are Copyright Claims

The 2nd Circuit reversed summary judgment for Scholastic on the photographer's claim that exceeding the print-run limitations constituted copyright infringement. The court examined those provisions, which it determined contained "unmistakable language of conditions precedent" rather than language suggesting covenants.
Accordingly, any violations of these provisions stated copyright-infringement claims, not claims for breach of contract.

Copyright Plaintiffs Bear the Burden of Demonstrating Use Outside the License Scope

Finally, the 2nd Circuit reaffirmed that where the issue is the scope, not the existence, of a license, it is the copyright owner who must prove copying that exceeds a license's scope. It rejected the photographer's claim that "there was 'no legitimate scope of license issue'" because Scholastic had entirely exceeded the print-run limitations, holding instead that the photographer's failure to satisfy its burden by proving Scholastic's unauthorized copying of the pertinent works was fatal to its claim.

James Rosenfeld is a partner in Davis Wright Tremaine's New York office. Ambika Kumar Doran is a partner and Caesar Kalinowski IV an associate in Davis Wright Tremaine's Seattle office.