Nealy’s label Music Specialist owns rights to the electronic dance song Jam the Box by rapper and sound engineer Tony Butler, who went by the stage name Pretty Tony. What is not in dispute is that Warner artist Flo Rida, whose given name is Tramar Dillard, incorporated elements of Jam the Box into his 2008 song In the Ayer.
It’s common in rap music to mix elements of different songs into a new song. However, Nealy sued music publishing company Warner Chappell and others, arguing they took an invalid license to Jam the Box rom Butler, his former business partner, while Nealy was incarcerated for cocaine distribution.
The producer requested damages for alleged copyright infringement dating back to 2008.
What was in dispute at the Supreme Court was whether Nealy could claim damages for such a long period, given he only recently sued Warner Music over copyright infringement.
The court has now ruled in favor of Nealy, setting a new precedent that rejects the idea there is a time limit for recovering monetary damages in copyright cases that have been filed before the expiration of a statue of limitations.
The 6-3 ruling, authored by liberal Justice Elena Kagan, affirmed a lower court’s decision that favored Nealy, who filed his original lawsuit in a Florida federal court in 2018. The judge hearing the case ruled that Nealy could only recover damages for infringement that happened during the three years before he filed the lawsuit, based on the US statute of limitations for bringing a copyright-infringement case after discovering a claim.
Nealy, however, argued the statute of limitations only affects whether or not a claim could be made. Since he had made his claim before the statute of limitations expired, Nealy argued he was due full compensation for the period in which the song had been published.
The Atlanta-based 11th U.S. Circuit Court of Appeals agreed, reversing the decision and said there was “no bar to damages in a timely action.”
The Supreme Court’s ruling upheld the 11th Circuit’s ruling.
“The Copyright Act entitles a copyright owner to recover damages for any timely claim,” Supreme Court Justice Elena Kagan wrote in the majority decision, referring to the 1976 federal law at issue in the case. “If Nealy’s claims are thus timely, he may obtain damages for them.”
Nealy’s attorney Wes Earnhardt said the decision provides clear guidelines for copyright holders.
“By holding that damages are available for all timely filed infringement claims, regardless of when the infringements occurred, the court’s decision provides clarity on an important issue that had divided the circuit courts,” Earnhardt said.
The ruling is important to any company or individual who deals in intellectual property, and may cause several new cases to be filed, according to intellectual property lawyer Zachar Al-Tabbaa, of the national law firm Hall Estill.
“Once again, the Supreme Court has unleashed a flood of potential legal actions,” said Al-Tabbaa. “With this ruling, a surge of copyright infringement lawsuits looms, some reaching back decades. The crux of the decision here rests on the validation of discovery rules in copyright infringement claims, receiving clear affirmation from the Court.”“The ruling goes on to addresses a crucial question: the duration for which damages can be sought in cases of timely filed suits,” Al-Tabbaa added. “While some jurisdictions limited damages to the three years preceding the suit, this is no longer the case. The new rule allows claimants to seek damages for the entire duration of infringement, no matter how distant.”
With more at stake in cases of copyright infringement, Al-Tabbaa says companies involved in intellectual property licensing deals will have to be far more careful to ensure they have secured indemnity or other similar protections against legal claims, because there is no longer a statute of limitations on damages.
“This decision underscores the importance of caution in the digital age,” he said. “Clients must be advised not to utilize copyrighted material in their business activities, websites, etc., unless they are absolutely certain they have the rights to do so.
“Otherwise, the liability may persist indefinitely if discovered later and a suit is timely filed,” Al-Tabbaa warned.