In 1983, Sherman Nealy and Tony Butler founded Music Specialist Inc, an independent label that recorded just one album and a few tracks.
The venture didn’t score any hits and it eventually dissolved after a few years. Nealy’s personal life was no major success either, as he spent time in prison from 1989 to 2008, and again from 2012 to 2015.
While Nealy was doing time, his former partner licensed the Music Specialist catalog to Warner Chappell. This was a big deal, especially after a ‘sample’ was used in Flo Rida’s hit song “In the Ayer”. That release sold millions of copies reaching the Billboard chart’s top ten.
The popular Flo Rida track was subsequently licensed to several TV-shows, while other works from Music Specialist ended up in recordings by the Black Eyed Peas and Kid Sister.
Nealy sues over ‘dated’ copyright infringements
The underlying deal didn’t benefit Nealy, who found out about it after he was released from prison for the second time. In response, he filed a lawsuit against Warner Chappell in 2018, demanding compensation for the alleged copyright infringements, dating back to 2008.
The backstory of this lawsuit is intriguing in itself, but it also sparked a key debate on whether rightsholders can pursue claims that are ‘dated’, as is the case here. Specifically, how long is the period during which rightsholders can recover damages for copyright infringement?
According to U.S. copyright law, there’s a three-year statute of limitations to file complaints. This period starts after a rightsholder ‘discovers’ the infringement. Courts have been split on whether this three-year limitation also applies to the damages that can be claimed, or if ‘damages accrual’ can go further back.
In the Nealy v. Warner Chappell Music lawsuit, the District Court previously ruled that a three-year bar also applies to damages. This means that the 2008 infringements expired a long time ago. However, the Supreme Court took on the case and reached a different conclusion.
Supreme Court Rejects Three-Year Time Limit
Instead of limiting the damages to copyright infringements that took place over the past three years, the Supreme Court finds that Nealy and other plaintiffs have no time limitation on their claims.
In a six-to-three majority decision, written by Justice Elena Kagan, the Supreme Court rejects the narrow timeframe set by the lower court.
“The Copyright Act entitles a copyright owner to obtain monetary relief for any timely infringement claim, no matter when the infringement occurred,” the opinions reads.
The opinion stresses that there is no time limit on recovering damages. As long as the lawsuit is filed within three years of discovering an infringement, damages can be claimed no matter when the infringement occurred.
“The Act’s statute of limitations establishes a three year period for filing suit, which begins to run when a claim accrues. That provision establishes no separate three-year limit on recovering damages.”
Samples & Trolls
This Supreme Court ruling is good news for Nealy but not everyone is equally excited. Warner Chappell and other rightsholders can now face scrutiny over samples that were used decades ago.
Outside the music industry, the topic raised concerns as well. A few months ago, the EFF cautioned that an ‘unlimited’ damages timeframe may serve as an open invitation to copyright trolls. For example, those who use reverse image search tools to discover ‘copyright infringing’ images in old blog posts.
“An indefinite statute of limitations would throw gasoline on the copyright troll fire and risk encouraging new trolls to come out from under the figurative bridge,” EFF wrote at the time.
While these concerns may be justified, the Supreme Court concludes that the Copyright Act is crystal clear. As long as a lawsuit is filed in a timely fashion, rightsholders can pursue damages on claims, no matter when they occurred.
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A copy of the Supreme Court Decision, written by Justice Elena Kagan, is available here (pdf).
For the fans of electric funk from the 80s, the “Jam the Box” track that was interpolated into Flo Rida’s “In the Ayer” can be enjoyed on YouTube.
