IP Law Daily, COPYRIGHT—S.D. Tex.: Ruling over oil industry newsletter deals another blow to Second Circuit limitations doctrine, (Sep 29, 2022)

By Matthew Hersh, J.D.

No reason why damages and claims should accrue at different times, a Texas court finds.

A publisher that filed a copyright infringement lawsuit within three years of its discovery of a user’s unauthorized reproductions would be entitled to seek damages for the entire time the alleged misbehavior was taking place, the federal district court in Houston has held. The court, in dismissing the subscriber’s motion for summary judgment over this and other statute of limitations questions, added to a growing body of caselaw rejecting the Second Circuit’s three-year “lookback” limitation for discovery rule cases (Energy Intelligence Group, Inc. v. Kirby Inland Marine, LP, September 28, 2022, Eskridge, C.).

The lawsuit arose when Energy Intelligence Group, the publisher of a daily newsletter entitled “Oil Daily,” sued a subscriber for allegedly misusing a single-use subscription by forwarding copies of the newsletter internally. The subscriber, Kirby Inland Marine LP, moved for summary judgment as to several aspects of the publisher’s claim, leading to this opinion.

Statute of limitations. The court, in rejecting the subscriber’s motion to dismiss, found that the lawsuit was timely filed and that the publisher’s damages would not be limited under the copyright statute of limitations. The court’s analysis proceeding in three steps.

The court first found that the discovery rule remained intact in copyright actions, despite the subscriber’s efforts to argue otherwise. The subscriber pointed to a 2019 Supreme Court case, Rotkiske v. Klemm, 140 S. Ct. 355 (2019), to argue that the discovery rule did not apply absent express language in the relevant statute. But that case was easily distinguishable, the court found. In Rotkiske, the Court was evaluating a statute that limited claims to a particular time frame after the “violation” occurs. The Copyright Act, by contrast, runs the statute of limitations from the time the “claim accrue[s].” The conceptual difference between the time a violation occurs and when a claim accrues, the court observed, “is familiar even to law students.” Thus, the discovery rule for copyright actions remained intact.

The court also found that the publisher’s right to recover damages was not limited by the statute of limitations. Some courts, perhaps most notably the Second Circuit in the case of Sohm v Scholastic Inc., 959 F3d 39, 52 (2nd Cir. 2020), have concluded that even if a lawsuit is timely filed due to the discovery rule, the plaintiff is entitled only to damages during the three-year “lookback” period of the statute of limitations. But the distinction between the accrual of claims and the accrual of damages “largely eludes conceptual grasp,” the court observed. In any event, the court noted, “the text of the statute contains no hint that the limitations period of a copyright claim and the resulting damages should be bifurcated.” (The Houston court did not mention it, but the Ninth Circuit in Starz Entertainment, LLC v. MGM Domestic Television Distribution, LLC also rejected the Second Circuit’s rule, thus setting up a split between the nation’s two leading copyright circuits on the question.).

Finally, the court refused to find—at least as a matter of law—that the publisher should have been aware of the alleged copyright infringement more than three years before filing its lawsuit. The subscriber argued that the publisher’s email delivery service partner was sending the publisher notices of the alleged infringement well before that time, but the publisher tendered evidence that these notices didn’t start until 2018. This was a factual dispute that would have to be resolved by a jury, the court held.

Other issues. The court also resolved several other preliminary issues in its relatively concise opinion. The court easily rejected the subscriber’s summary judgment motion over the publisher’s failure-to-mitigate and copyright misuse defenses—the former because failure to mitigate is not a defense to copyright infringement actions (though it could be considered later in setting the amount of statutory damages), and the latter because there was no evidence the publisher sought to use its copyright to protect uncopyrightable works, as would be required for a misuse claim. Finally, the court granted the publisher’s summary judgment motion over the subscriber’s bid to reduce its exposure to statutory damages due to innocence or non-willfulness. The newsletter contained the publisher’s copyright notice, the court observed—thus precluding the subscriber from arguing these points.

The case is No. 4:19-cv-03520.

Attorneys: Patrick Burke Monahan (Powley & Gibson PC) for Energy Intelligence Group Inc. Robert L. Powley (Powley and Gibson, PC) for Energy Intelligence Group [UK] Ltd. George T. Shipley (Shipley Snell Montgomery LLP) for Kirby Inland Marine LP.

Companies: Energy Intelligence Group Inc.; Energy Intelligence Group [UK] Ltd.; Kirby Inland Marine LP

Cases: Copyright TexasNews GCNNews