Martinelli v. Hearst Newspapers ( 2023 )

Case: 22-20333 Document: 00516711690 Page: 1 Date Filed: 04/13/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
April 13, 2023
No. 22-20333 Lyle W. Cayce
Clerk
Antonio Martinelli,
Plaintiff—Appellee,
versus
Hearst Newspapers, L.L.C.; Hearst Magazine Media,
Incorporated,
Defendants—Appellants.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:21-CV-3412
Before Barksdale, Southwick, and Higginson, Circuit Judges.
Stephen A. Higginson, Circuit Judge:
A civil action for copyright infringement under the Copyright Act of
1976 must be “commenced within three years after the claim accrued.” 17
U.S.C. § 507(b). In Graper v. Mid-Continent Casualty Co., our court decided
that this limitations period starts running “once the plaintiff knows or has
reason to know of the injury upon which the claim is based,” which is also
known as the discovery rule. 756 F.3d 388, 393 (5th Cir. 2014) (cleaned up).
Today, appellants Hearst Newspapers, L.L.C. and Hearst Magazine Media,
Incorporated (collective, “Hearst”) ask us to replace the discovery rule with
Case: 22-20333 Document: 00516711690 Page: 2 Date Filed: 04/13/2023
No. 22-20333
a holding that the clock starts when an act of copyright infringement occurs.
Hearst argues that Graper is no longer binding in light of the Supreme Court’s
decisions in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), and
Rotkiske v. Klemm, 140 S. Ct. 355 (2019). Since neither of those cases
unequivocally overruled Graper, we AFFIRM.
I.
In 2015, Sotheby’s International Realty commissioned Antonio
Martinelli to photograph Lugalla, an Irish estate owned by the Guinness
family. 1 Martinelli took seven photographs of the property, and Lugalla was
subsequently listed for sale.
On March 7, 2017, Hearst Newspapers used Martinelli’s photographs
in a web-only article, “The ‘Guinness Castle’ in Ireland Is on the Market,”
which Hearst Newspapers published on websites associated with the
Houston Chronicle, the San Francisco Chronicle, the Times Union, the
Greenwich Time, and The Middletown Press. Six days later, Hearst
Newspapers again used the photographs in a web-only article available on
those websites. The next day, a different entity called Hearst
Communications used four of the photographs in a web-only article
published on a website associated with Elle Décor magazine.
Martinelli first discovered the Houston Chronicle article on
November 17, 2018. Between September 2019 and May 2020, Martinelli
discovered the article on the websites of the San Francisco Chronicle, the
Times Union, the Greenwich Time, and The Middletown Press. On
February 19, 2020, Martinelli discovered the article on the Elle Décor
1
We adopt the parties’ spelling of the estate’s name, even though the more widely
accepted spelling appears to be “Luggala.”
2
Case: 22-20333 Document: 00516711690 Page: 3 Date Filed: 04/13/2023
No. 22-20333
website. Hearst has stipulated that Martinelli could not have discovered
those uses of his photographs with reasonable diligence at earlier times.
On October 18, 2021, Martinelli sued Hearst Newspapers for
copyright infringement, alleging that the Houston Chronicle’s website had
used Martinelli’s photographs without permission. On February 11, 2022,
Martinelli amended his complaint to bring a copyright infringement claim
against Hearst Magazine Media, Inc.—the current owner of the Elle Décor
copyrights—and to allege that his photographs were also used on websites
associated with the San Francisco Chronicle, the Times Union, the
Greenwich Time, and The Middletown Press. Martinelli brought these
claims within three years of discovering the infringements but more than
three years after the infringements occurred.
The parties cross-moved for summary judgment, stipulating that
Hearst committed copyright infringement and that Martinelli would be
entitled to $10,000 if he prevails. Hearst argued that intervening Supreme
Court decisions “undermined” this circuit’s discovery rule and that
Martinelli’s claims were untimely because they accrued when Hearst
infringed Martinelli’s copyrights. The district court rejected this argument,
followed Graper, granted Martinelli’s motion for summary judgment, and
denied Hearst’s motion.
Hearst timely appealed.
II.
On appeal, Hearst argues that Martinelli’s claims are time-barred
because a claim accrues under § 507(b) when the infringement occurs.
Hearst recognizes that under this circuit’s precedents, the § 507(b)
limitations period starts when the plaintiff “knows or has reason to know of
the injury upon which the claim is based.” Graper, 756 F.3d at 393 (cleaned
up). Yet Hearst contends that the Supreme Court’s decisions in Petrella and
3
Case: 22-20333 Document: 00516711690 Page: 4 Date Filed: 04/13/2023
No. 22-20333
Rotkiske “undermined the reasoning of [this circuit’s] precedents” such that
the rule of orderliness does not require this court to follow the discovery rule.
Petrella and Rotkiske had no such effect. Accordingly, as the district court
concluded, Martinelli’s claims were timely under Graper.
A.
Under this circuit’s rule of orderliness, “one panel . . . may not
overturn another panel’s decision, absent an intervening change in the law,
such as by a statutory amendment, or the Supreme Court, or our en banc
court.” Jacobs v. Nat’l Drug Intel. Ctr., 548 F.3d 375, 378 (5th Cir. 2008); see
United States v. Alcantar, 733 F.3d 143, 145-46 (5th Cir. 2013). “[F]or a
Supreme Court decision to change our [c]ircuit’s law, it must . . .
unequivocally overrule prior precedent.” Tech. Automation Servs. Corp. v.
Liberty Surplus Ins. Corp., 673 F.3d 399, 405 (5th Cir. 2012) (cleaned up);
Brotherhood of Locomotive Eng’rs & Trainmen v. Union Pac. R.R. Co., 31 F.4th
337, 344 (5th Cir. 2022) (similar). Neither “a mere ‘hint’ of how the
[Supreme] Court might rule in the future,” Alcantar, 733 F.3d at 146, nor a
decision that is “merely illuminating with respect to the case before [us]”
will permit a subsequent panel to depart from circuit precedent, Tech.
Automation, 673 F.3d at 405.
Following these principles, where an intervening Supreme Court
decision “fundamentally changes the focus of the relevant analysis,” our
precedents relying on that analysis are “implicitly overruled.” In re
Bonvillian Marine Serv., Inc., 19 F.4th 787, 792 (5th Cir. 2021) (cleaned up).
But this is only true when the changed analysis clearly applies to the case
before us, such that we are “unequivocally directed by controlling Supreme
Court precedent” to “overrule the decision of [the] prior panel,” United
States v. Zuniga-Salinas, 945 F.2d 1302, 1306 (5th Cir. 1991); see Stokes v. Sw.
Airlines, 887 F.3d 199, 204 (5th Cir. 2018) (“Such a change occurs, for
4
Case: 22-20333 Document: 00516711690 Page: 5 Date Filed: 04/13/2023
No. 22-20333
example, when the Supreme Court disavows the mode of analysis on which
our precedent relied.”); Gonzalez v. Thaler, 623 F.3d 222, 226 (5th Cir. 2010)
(examining whether a Supreme Court decision “establishes a rule of law
inconsistent with our own” (cleaned up)).
B.
The parties identify six cases, three of which are published and
binding, in which this circuit arguably held that a copyright infringement
claim accrues “once the plaintiff knows or has reason to know of the injury
upon which the claim is based.” Graper, 756 F.3d at 393 (cleaned up); see
Pritchett v. Pound, 473 F.3d 217, 220 (5th Cir. 2006); Prather v. Neva
Paperbacks, Inc., 446 F.2d 338, 341 (5th Cir. 1971); Aspen Tech., Inc. v. M3
Tech., Inc., 569 F. App’x 259, 264 (5th Cir. 2014) (per curiam) (unpublished);
Jordan v. Sony BMG Music Ent. Inc., 354 F. App’x 942, 945 (5th Cir. 2009)
(per curiam) (unpublished); Groden v. Allen, 279 F. App’x 290, 294 (5th Cir.
2008) (per curiam) (unpublished). Out of our three published authorities,
only Graper squarely held the discovery rule applies to a copyright
infringement claim. See 756 F.3d at 393. None of these cases explains why
the discovery rule applies to a copyright infringement claim.
Graper resolved an insurance coverage dispute. The insureds were
sued for copyright infringement, and after they tendered the claim to the
insurer, the insurer agreed to defend them subject to a reservation of rights.
Id. at 390. One of the bases for exclusion of coverage was “that the injury
may not have occurred during policy coverage dates.” Id. at 391. The
insureds then retained their own counsel to defend the copyright
infringement suit because “they believed there was a disqualifying conflict of
interest between them and any counsel [the insurer] chose,” and they filed a
separate declaratory action to determine their rights under the relevant
policies. Id.5
Case: 22-20333 Document: 00516711690 Page: 6 Date Filed: 04/13/2023
No. 22-20333
On appeal, the only issue was “whether [the insurer] was obligated to
pay for the [i]nsureds’ selected counsel to defend the [copyright
infringement] claims.” Id. The court explained that an obligation to pay for
an insured’s selected counsel arises if the insurer’s chosen counsel has a
disqualifying conflict of interest. Id. at 392. Such a conflict of interest exists
if “the facts to be adjudicated in the underlying lawsuit are the same facts
upon which coverage depends.” Id. (cleaned up). The insureds argued that
because they defended the “copyright claims on grounds that the claims
‘accrued’ outside the applicable time provided by the statute of limitations”
and because the insurer “reserved the right to deny coverage of the . . . claims
on grounds that the alleged acts of infringement . . . ‘occurred’ outside the
time the policy was in effect,” “many of the same facts [would] determine
both the [i]nsureds’ liability and the [i]nsureds’ coverage.” Id. at 393.
We disagreed, holding that no disqualifying conflict of interest existed
because the limitations period for a copyright-infringement claim runs from
the date that the infringement is discovered, not the date that the
infringement occurs. Id. at 393-94. “In litigating the [i]nsureds’ statute of
limitation defense,” counsel “would only need to have adjudicated the fact
of when the claim accrued, not the fact of when the acts of infringement
occurred,” id. at 393 (emphasis in original), and we explained that “[a] claim
accrues once the plaintiff knows or has reason to know of the injury upon
which the claim is based,” id. (quotation marks and alterations omitted)
(quoting Jordan, 354 F. App’x at 945). Although adjudication of the date
when the infringement was discovered “would signal, in subsequent
litigation, that the infringing conduct occurred before that date of
discovery,” “such a determination . . . would lack the specificity necessary
to decide whether the claim was covered under the [i]nsureds’ policy.” Id.
(emphasis omitted).
6
Case: 22-20333 Document: 00516711690 Page: 7 Date Filed: 04/13/2023
No. 22-20333
Although it was necessary to the decision in Graper that the discovery
rule controlled the limitations period for a copyright infringement claim,
Graper did not explain why the discovery rule applied. Instead, as noted
above, the discovery rule holding in Graper quoted from our unpublished
decision in Jordan v. Sony BMG Music Entertainment Inc. See 354 F. App’x
at 945. 2 At most, Graper included a footnote recognizing that “[o]ther
circuits agree that this is the proper inquiry” without endorsing the reasoning
of those out-of-circuit decisions. Graper, 756 F.3d at 393 n.5 (citing Cooper v.
NCS Pearson, Inc., 733 F.3d 1013 (10th Cir. 2013); and William A. Graham
Co. v. Haughey, 568 F.3d 425, 433 (3d Cir. 2009)).
Two other recent unpublished cases from this court apply the
discovery rule to copyright infringement claims without giving a rationale.
See Aspen, 569 F. App’x at 264 (stating that “the discovery rule . . . appl[ies]
to . . . infringement claims”); Groden, 279 F. App’x at 294 (stating that “the
relevant inquiry” under § 507(b) “is when the claim accrued, not when the
infringement occurred”). Both cases rely on our earlier published decision
in Prather v. Neva Paperbacks, Inc. See Aspen, 569 F. App’x at 264 n.8.;
Groden, 279 F. App’x at 294.
However, Prather concerned whether the “fraudulent concealment”
of a copyright infringement cause of action “by the defendant will [equitably]
2
In turn, Jordan does not explain why the discovery rule applies to copyright
infringement claims and instead quotes from our published decision in Pritchett v. Pound.
354 F. App’x at 945 (quoting Pritchett, 473 F.3d at 220). But Pritchett involved a copyright
ownership claim, did not address whether the discovery rule applied to a copyright
infringement claim, and also did not explain why the discovery rule applied to the claims at
issue. See Pritchett, 473 F.3d at 220. Instead, it cited to a Second Circuit case that similarly
does not explain why the discovery rule applies to a copyright ownership claim. See id.(citing Est. of Burne Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 165 (2d Cir. 2003)).
7
Case: 22-20333 Document: 00516711690 Page: 8 Date Filed: 04/13/2023
No. 22-20333
toll the statute of limitations” under the Copyright Act as amended in 1957. 3
446 F.2d at 341. The district court had found “that the last publication of
the alleged infringing work occurred in June, 1964, but [the] suit was not filed
until August, 1969,” and “no circumstances . . . excuse[d] plaintiff’s lack of
knowledge of the infringement.” Id. at 339. On appeal, we considered only
whether the plaintiff was entitled to equitable tolling. Id. at 339-41.
At the outset, we refused to apply a Florida-law equitable doctrine
called the “Blameless Ignorance rule” because enforcing “a peculiarly local
doctrine” would “frustrate the Congressional goal of homogeneity” in
enacting a uniform three-year limitations period. Id. at 339-40. Then, we
considered whether the federal-law fraudulent concealment doctrine tolled
the limitations period. Id. at 340-41. The plaintiff argued that the defendants
had concealed the existence of a book that infringed his copyrights “and
prevented him from obtaining a copy of that book.” Id. at 340. But the court
concluded that the defendants had not fraudulently concealed the book
because the plaintiff knew about the book all along. Id. at 341. That the
“plaintiff was unable to procure a copy of the [allegedly infringing book was]
insufficient to show the successful concealment necessary to toll the statute
of limitations.” Id. In more general terms, we said that “[o]nce [a] plaintiff
is on inquiry that it has a potential claim, the statute can start to run,” even
3
As the Supreme Court explained in Petrella, “[u]ntil 1957, federal copyright law
did not include a statute of limitations for civil suits,” and so federal courts “used
analogous state statutes of limitations.” 572 U.S. at 669. In 1957, Congress added a three-
year limitations period for civil claims, which read, “[n]o civil action shall be maintained
under [the Act] unless the same is commenced within three years after the claim accrued.”
See Act of Sept. 7, 1957, Pub. L. 85–313, 71 Stat. 633, 17 U.S.C. § 115(b) (1958 ed.).
Essentially the same language was recodified in the Copyright Act of 1976: “No civil action
shall be maintained under [the Act] unless it is commenced within three years after the
claim accrued.” 17 U.S.C. § 507(b); see Petrella, 572 U.S. at 670 n.3 (“The Copyright Act
was pervasively revised in 1976, but the three-year look-back statute of limitations has
remained materially unchanged.”).
8
Case: 22-20333 Document: 00516711690 Page: 9 Date Filed: 04/13/2023
No. 22-20333
if the plaintiff has not yet “obtain[ed] a thorough understanding of all the
facts.” Id. (citation omitted). Prather borrowed this principle from a decision
of the Court of Claims, which explained that “[t]his standard is in line with
the modern philosophy of pleading which has reduced the requirements of
the petition and left for discovery and other pretrial procedures the
opportunity to flesh out claims and to define more narrowly the disputed
facts and issues.” Id. (quoting Japanese War Notes Claimants Ass’n of
Philippines, Inc. v. United States, 373 F.2d 356, 359 (Ct. Cl. 1967)). As Prather
put it, “[t]he bells do not toll the limitations statute while one ferrets the
facts.” Id.Thus, in Prather, we appear to have assumed that the statute of
limitations would bar the plaintiff’s claim unless the fraudulent concealment
doctrine applied. And since the plaintiff knew about the alleged
infringement, he could not assert that the defendants had concealed it. So
Prather narrowly held that a plaintiff’s inability to obtain evidence of
infringement does not equitably toll the limitations period under a fraudulent
concealment theory. The issue of whether the limitations period of the
Copyright Act as amended in 1957 started running when the defendants
published the book or when the plaintiff discovered the book was not clearly
raised or resolved.
In sum, Graper is the only precedent binding this court to apply the
discovery rule with respect to the § 507(b) limitations period for copyright
infringement claims.
C.
Hearst argues that the panel “need not . . . follow[]” this circuit’s
discovery rule because cases like Graper “cannot be reconciled” with Petrella
and Rotkiske. But Petrella and Rotkiske did not “unequivocally overrule”
Graper, either by holding that the limitations period in § 507(b) starts running
9
Case: 22-20333 Document: 00516711690 Page: 10 Date Filed: 04/13/2023
No. 22-20333
when infringement occurs or by “fundamentally chang[ing] the focus of the
relevant analysis” with respect to the Copyright Act. Bonvillian, 19 F.4th at
792 (cleaned up). To the contrary, Petrella and Rotkiske leave open the
possibility that in a later case, the Supreme Court might decide that the
discovery rule does apply to § 507(b).
1.
In Petrella, the Court decided under what circumstances a defendant
can assert the equitable defense of laches—an “unreasonable, prejudicial
delay in commencing suit”—against a copyright infringement claim that is
brought within § 507(b)’s limitations period. 572 U.S. at 667. The Court
held that although laches cannot preclude a timely claim for damages, in
“extraordinary circumstances,” laches may bar equitable relief. Id. at 667-
68. But the Court left for another day the question of whether discovery or
occurrence of an infringing act triggers § 507(b).
Before reaching the question of whether a laches defense was
available, the Court explained how the § 507(b) limitations period works. Id.
at 669-72. The Court noted that “[a] claim ordinarily accrues when a plaintiff
has a complete and present cause of action,” and then stated that “[a]
copyright claim thus arises or accrues when an infringing act occurs.” Id. at
670 (cleaned up). However, in a corresponding footnote, the Court clarified
that “[a]lthough we have not passed on the question, nine Courts of Appeals
have adopted, as an alternative to the incident of injury rule, a ‘discovery
rule,’ which starts the limitations period when the plaintiff discovers, or with
due diligence should have discovered, the injury that forms the basis for the
claim.” Id. at 670 n.4 (cleaned up).
Although the Court appears to have assumed without deciding that
the limitations period starts to run when the infringement occurs, that
assumption was not necessary to the Court’s decision. The Court held that
10
Case: 22-20333 Document: 00516711690 Page: 11 Date Filed: 04/13/2023
No. 22-20333
laches may not be invoked as a bar to damages under the Copyright Act
because § 507(b) “itself takes account of delay.” Id. at 677. Specifically,
under “the separate-accrual rule,” “the statute of limitations runs separately
from each violation” of the Copyright Act, meaning that “each infringing act
starts a new limitations period.” Id. at 671. Because “a successful plaintiff
can gain retrospective relief only three years back from the time of suit,” the
plaintiff could not reach the defendant’s “returns on its investments”
realized earlier than three-years prior to the date of the suit. Id. at 677. None
of this analysis requires that the limitations period start running with the
infringing act—only that the plaintiff’s recovery be limited to a three-year
window “from the time of suit,” and that separate infringing acts trigger
separate limitations periods. Id.
In rebutting the counterargument that laches should be treated like
equitable tolling and read into every federal statute of limitations, the Court
said that unlike tolling, laches “originally served as a guide when no statute
of limitations controlled the claim” and “can scarcely be described as a rule
for interpreting a statutory prescription.” Id. at 681-82. To illustrate the
point, the Court noted that § 507(b) “makes the starting trigger an infringing
act committed three years back from the commencement of suit, while
laches, as conceived by [the court of appeals] and advanced by [the
respondent], makes the presumptive trigger the defendant’s initial infringing
act.” Id. at 682 (emphasis omitted). But the Court’s gloss on what condition
triggers the limitations period was not necessary to the Court’s point that
§ 507(b) contained a limitations period, and so there was no need to use
laches “as a guide.” Id. at 681. After all, regardless of whether the discovery
or occurrence of infringement starts the clock, what mattered to the Court
was that the “limitations period . . . coupled to the separate-accrual rule . . . .
allows a copyright owner to defer suit until she can estimate whether
litigation is worth the candle.” Id. at 682-83.
11
Case: 22-20333 Document: 00516711690 Page: 12 Date Filed: 04/13/2023
No. 22-20333
The Court later confirmed that Petrella didn’t disturb the discovery
rule in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC,
580 U.S. 328 (2017). There, the Court decided that laches could not be
asserted as a defense against a timely claim for damages from patent
infringement under the Patent Act, 35 U.S.C. § 286. SCA Hygiene, 580 U.S.
at 346. The infringer tried to distinguish Petrella on the basis that unlike
§ 507(b), § 286 was not a “true statute of limitations” because it “runs
backward from the time of suit.” Id. at 336 (citation omitted). The Court
rejected this distinction, explaining that Petrella described § 507(b) as “a
three year look-back limitations period” that “allows plaintiffs to gain
retrospective relief running only three years back from the date the complaint
was filed.” Id. at 336-37 (cleaned up and emphasis omitted). Nor was the
Court persuaded that § 286 of the Patent Act is different from § 507(b)
because § 286 “turns only on when the infringer is sued, regardless of when
the patentee learned of the infringement.” Id. at 337 (citation omitted). The
Court quoted Petrella that “a claim ordinarily accrues when a plaintiff has a
complete and present cause of action,” and further explained that “[w]hile
some claims are subject to a ‘discovery rule’ . . . that is not a universal feature
of statutes of limitations.” Id. (cleaned up). The Court further recognized
that “in Petrella, we specifically noted that ‘we have not passed on the
question’ whether the Copyright Act’s statute of limitations is governed by
such a rule.” Id. at 337-38 (citation omitted).
Hearst acknowledges that Petrella did not decide whether the statute
of limitations in § 507(b) starts running when the infringing act occurs or is
discovered. So instead of arguing that Petrella unequivocally overruled
Graper, Hearst contends that “the Court’s articulation of when claims
generally accrue, and its explanation [of] how statutes of limitations generally
work, leads to the conclusion that [the discovery rule] does not apply” to
12
Case: 22-20333 Document: 00516711690 Page: 13 Date Filed: 04/13/2023
No. 22-20333
§ 507(b). 4 Petrella does not lead to that conclusion. But even if it did, under
this circuit’s rule of orderliness, we would still be bound to Graper.
Petrella’s general statements about statutes of limitation and the
separate-accrual rule leave room for caselaw holding that the discovery rule
applies to § 507(b). Petrella said that limitations periods “generally begin[]
to run at the point when the plaintiff can file suit and obtain relief,” assumed
that “[a] copyright claim . . . accrues when an infringing act occurs,” and
reasoned that “each infringing act starts a new limitations period” under the
separate-accrual rule. Petrella, 572 U.S. at 670-71 (cleaned up). But the
Court did “not pass[]” on whether the § 507(b) limitations period is
triggered by discovery of infringement. Id. at 670 n.4; see SCA Hygiene, 580
U.S. at 337. Instead, the Court left open the possibility that at the time of
§ 507(b)’s enactment, a copyright infringement claim accrued like claims
arising from “latent disease and medical malpractice,” TRW Inc. v. Andrews,
534 U.S. 19, 27 (2001), which are “unknown or unknowable until the injury
manifests itself,” Rotella v. Wood, 528 U.S. 549, 556 (2000) (citation
omitted), and for which the Court has “recognized a prevailing discovery
rule,” TRW Inc., 534 U.S. at 27.
However, even accepting as true that Petrella “leads to the conclusion
that” the discovery rule does not apply to § 507(b), the rule of orderliness
still requires us to follow Graper. As set forth above, Petrella’s statements
suggesting that a copyright infringement claim accrues when the
4
Graper issued on June 24, 2014, about a month after Petrella. See 572 U.S. 663(decided May 19, 2014). However, as Hearst points out, just because Graper came out after
Petrella doesn’t mean that Graper actually decided that the discovery rule survives Petrella.
See Gahagan v. USCIS, 911 F.3d 298, 302 (5th Cir. 2018). Graper did not mention Petrella
or address whether Petrella foreclosed the discovery rule, and no party appears to have
brought Petrella to the court’s attention. The issue of whether Petrella unequivocally
overruled the discovery rule is accordingly before us as a matter of first impression.
13
Case: 22-20333 Document: 00516711690 Page: 14 Date Filed: 04/13/2023
No. 22-20333
infringement occurs are dicta, which do not bind us and are therefore at most
“merely illuminating” with respect to this case. Tech. Automation, 673 F.3d
at 405.
This court’s decision in Energy Intelligence Group, Inc. v. Kayne
Anderson Capital Advisors, L.P. does not compel a different result. 948 F.3d
261 (5th Cir. 2020). There, we did not interpret Petrella as unequivocally
overruling Graper, and we certainly did not bind future courts to such an
interpretation. Rather, we decided that “mitigation is not an absolute
defense to statutory damages under the Copyright Act.” Id. at 275. Before
reaching that holding, we explained that the viability of a mitigation defense
turned on “whether the Copyright Act contains a statutory purpose”
contrary to “the common-law principle of mitigation,” and we summarized
Petrella because “statutory purpose and the nature of the common-law
defense asserted . . . were central to [that case].” Id. at 270-71. In our recap
of Petrella, we said in a footnote that “[t]he rule of separate accrual, as
discussed in Petrella, takes as given that a copyright claim accrues when an
infringing act occurs (the ‘incident of injury’ rule) and treats each successive
infringing act as a new, independent wrong with its own limitations period.”
Id. at 271 n.5. This footnote simply reiterates that Petrella assumed without
deciding that a copyright infringement claim accrues when the infringement
occurs. It does not say that Graper is bad law. Indeed, even if we are bound
to this claim that Petrella assumed that the “incident of injury” rule applies,
as discussed above, it might still be that the limitations period in § 507(b)
starts running at the discovery of each infringing act.
In any event, the Energy Intelligence footnote is dicta to which the rule
of orderliness does not apply. Netsphere, Inc. v. Baron, 799 F.3d 327, 333 (5th
Cir. 2015) (citation omitted). Our decision that mitigation is not an absolute
defense to statutory damages was based on the insight that statutory damages
under the Copyright Act “are not solely intended to approximate actual
14
Case: 22-20333 Document: 00516711690 Page: 15 Date Filed: 04/13/2023
No. 22-20333
damages,” “serve purposes that include deterrence,” and “are therefore
distinct from the type of damages that are typically calculated according to
rules of mitigation.” Energy Intel. Grp., 948 F.3d at 274. Although we
rejected the defendant’s argument that the “harm . . . for purposes of its
mitigation defense, was [its] continuing infringing conduct” because
“Petrella unequivocally approved the rule of separate accrual and held that
every act of copyright infringement is an independently actionable legal
wrong,” id., this part of our analysis depended solely on the fact that the
separate-accrual rule creates a separate limitations period for each infringing
act—not that the limitations period starts running when each separate
infringement occurs. The first part of the footnote about the separate-accrual
rule—“[t]he rule of separate accrual, as discussed in Petrella, takes as given
that a copyright claim accrues when an infringing act occurs (the ‘incident of
injury’ rule),” id. at 271 n.5—“could have been deleted without seriously
impairing the analytical foundations of the holding and being peripheral, may
not have received the full and careful consideration of the court that uttered
it,” Netsphere, Inc., 799 F.3d at 333 (citation omitted). We know that this is
true because if we “turn the questioned proposition around . . . to assert
whatever alternative proposition the court rejected in its favor”—namely,
that the separate limitations periods start running when the infringing acts
are discovered—“the insertion of the rejected proposition. . . would not
require a change in either the court’s judgment or the reasoning that supports
it.” Pierre N. Leval, Judging Under the Constitution: Dicta About Dicta, 81
N.Y.U. L. Rev. 1249, 1257 (2006).
2.
Next, Hearst argues that Rotkiske “fundamentally changes the focus
of the relevant analysis” by holding that “the discovery rule does not
generally apply to statutes of limitations absent clear language in the statute
15
Case: 22-20333 Document: 00516711690 Page: 16 Date Filed: 04/13/2023
No. 22-20333
to that effect.” But Hearst misconstrues Rotkiske and overstates the extent
to which Rotkiske governs this court’s interpretation of the Copyright Act.
Rotkiske held that the statute of limitations in the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C. § 1692k(d), “begins to run on the date on
which the alleged FDCPA violation occurs, not the date on which the
violation is discovered.” 140 S. Ct. at 358. To start, the Court considered
whether § 1692k applied “a general discovery rule as a principle of statutory
interpretation.” Id. at 360. The Court explained that “we begin by analyzing
the statutory language,” and “[i]f the words of a statute are unambiguous,
this first step of the interpretive inquiry is our last.” Id. The limitations
provision in the FDCPA says that an action may be brought “within one year
from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). The
Court held that this “language unambiguously sets the date of the [FDCPA]
violation as the event that starts the one-year limitations period.” Rotkiske,
140 S. Ct. at 360.
Given § 1692k(d)’s unambiguous text, the Court refused “to read in
a provision stating that [the] limitations period begins to run on the date an
alleged FDCPA violation is discovered.” Id. The Court called such an
attempt to add a discovery rule into a statute where Congress did not include
one a “bad wine of recent vintage.” Id. (quoting TRW Inc., 534 U.S. at 37(Scalia, J., concurring in judgment)). Although “at the time Congress
enacted the FDCPA, many statutes included provisions that . . . would begin
the running of a limitations upon the discovery of a violation, injury, or some
other event,” Congress did not say as much in § 1692k. Id. at 361 (emphasis
omitted). Thus, the Court declined “to second-guess Congress’ decision to
include a ‘violation occurs’ provision, rather than a discovery provision, in
§ 1692k(d).” Id.
16
Case: 22-20333 Document: 00516711690 Page: 17 Date Filed: 04/13/2023
No. 22-20333
The Court also noted that “[i]f there are two plausible constructions
of a statute of limitations, we generally adopt the construction that starts the
time limit running when the cause of action accrues because Congress
legislates against the standard rule that the limitations period commences
when the plaintiff has a complete and present cause of action.” Id. at 360
(internal quotation marks and alteration omitted) (quoting Graham Cnty. Soil
& Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 418-
19 (2005)). But because the Court decided that § 1692k was unambiguous, it
had no occasion in Rotkiske to apply this general rule.
Therefore, contrary to Hearst’s position, Rotkiske did not introduce a
clear statement rule that a limitations period runs from the occurrence of the
injury unless the statute expressly says that the discovery rule applies.
Rather, Rotkiske identified how to resolve the limitations question in two
categories of cases. First, in cases where a limitations period is unambiguous
with respect to what conditions starts the clock running, the statutory
language controls. Rotkiske, 140 S. Ct. at 360. Second, for cases where
“there are two plausible constructions,” the court “generally adopt[s] the
construction that starts the time limit running when the cause of action
accrues.” Id. (cleaned up).
But Rotkiske did not describe how to analyze every statute of
limitations in the U.S. Code. Because the limitations period at issue in
Rotkiske “unambiguously set[] the date of the violation as the event that starts
the . . . limitations period,” id., the Court did not need to decide whether or
under what circumstances an ambiguous limitations period could be
construed to apply the discovery rule. Indeed, with respect to ambiguous
statutes, while Rotkiske said that courts “generally adopt the construction that
starts the time limit running when the cause of action accrues,” id. (emphasis
added and alteration omitted), it did not survey when courts might
permissibly adopt an alternative construction. For example, statutory
17
Case: 22-20333 Document: 00516711690 Page: 18 Date Filed: 04/13/2023
No. 22-20333
language describing the limitations period might be ambiguous, yet the only
plausible construction might be that the discovery rule applies. Rotkiske did
not address this scenario.
While Rotkiske refused to “enlarge[]” the FDCPA by “read[ing] in”
a discovery rule provision and noted that “[a]textual judicial
supplementation” of a discovery rule was “particularly inappropriate”
because “Congress has enacted statutes that expressly include” discovery
rule language, id. at 360-61, the Court said so in the context of an
unambiguous statute that provided a limitations period “within one year
from the date on which the violation occurs,” 15 U.S.C. § 1692k(d) (emphasis
added). The Court did not hold that any ambiguity forecloses application of
a discovery rule. And the Court did not hold that the only way that Congress
can signal a discovery rule is by using the word “discover.”
Accordingly, the issues decided in Rotkiske and Graper are distinct.
See Gahagan v. USCIS, 911 F.3d 298, 302-03 (5th Cir. 2018) (In determining
whether “a Supreme Court decision involving one statute implicitly
overrules our precedent involving another statute,” “[t]he overriding
consideration is the similarity of the issues decided.”). Rotkiske declined to
read a discovery rule into an unambiguous statute that said that “the date on
which the violation occurs” is the date that the limitations period starts.
Graper interpreted the Copyright Act’s limitations period, which provides
that a civil action must be “commenced within three years after the claim
accrued,” 17 U.S.C. § 507(b), as running from the date that infringement is
discovered. Unlike the FDCPA, the Copyright Act does not explicitly pin
the limitations period to the date that the “violation occurred.” Compare 17
U.S.C. § 507(b) with 15 U.S.C. § 1692k(d).
Further, even assuming, as Hearst argues, that Rotkiske “rejects
any . . . presumption” that “all federal statutes of limitations, regardless of
18
Case: 22-20333 Document: 00516711690 Page: 19 Date Filed: 04/13/2023
No. 22-20333
context, incorporate a general discovery rule unless Congress has expressly
legislated otherwise,” Rotkiske did not fundamentally change the focus of the
analysis in Graper. Graper did not explain why it was adopting the discovery
rule, let alone announce that it was applying such a presumption. 5 Graper
could have concluded that at the time of § 507(b)’s adoption, a copyright
infringement claim accrued in the same manner as other claims that the
Supreme Court has decided are controlled by the discovery rule. See TRW
Inc., 534 U.S. at 27-28; Rotella, 528 U.S. at 556. Had Graper reached that
conclusion, the court might have further concluded that the only plausible
construction of the phrase “claim accrued” in § 507(b) is that the discovery
rule applies. Graper and Rotkiske can be reconciled along those lines.
Finally, Hearst argues that In re Bonvillian Marine Service, Inc. “maps
perfectly on this case.” But Bonvillian is an awkward fit.
In Bonvillian, the district court dismissed an untimely action under the
Limitation of Liability Act of 1851 for lack of subject-matter jurisdiction in
accordance with In re Eckstein Marine Service L.L.C., 672 F.3d 310, 315-16
(5th Cir. 2012), which held that the time bar in the Limitation Act was
jurisdictional. Bonvillian, 19 F.4th at 789-90. In holding that the time bar was
jurisdictional, Eckstein asserted that “[w]hile many statutory filing deadlines
are not jurisdictional, we have long recognized that some are” and the
Limitation Act’s “requirement is one of these.” Eckstein, 672 F.3d at 315.
To support that proposition, Eckstein cited to, among other cases, our
decision in In re FEMA Trailer Formaldehyde Products Liability Litigation, 646
5
Hearst argues that Graper “relied on two pre-Rotkiske and Petrella cases that
employed” this presumption. However, as we explained, Graper merely cited those cases
for the proposition that “[o]ther circuits agree” that the discovery rule applies, not to
incorporate the reasoning of those out-of-circuit cases. Graper, 756 F.3d at 393 n.5.
19
Case: 22-20333 Document: 00516711690 Page: 20 Date Filed: 04/13/2023
No. 22-20333
F.3d 185, 189 (5th Cir. 2011), which held that the FTCA’s statute of
limitations was jurisdictional. Eckstein, 672 F.3d at 315 n.12.
On appeal, we concluded that the rule of orderliness did not bind us
to Eckstein. After we had decided Eckstein, in United States v. Kwai Fun
Wong, the Supreme Court held that procedural rules like time bars are
jurisdictional “only if Congress has clearly stated as much.” 575 U.S. 402,
409 (2015). And Wong had “directly abrogated” FEMA Trailer, which was
“a logical linchpin” of Eckstein. Bonvillian, 19 F.4th at 791. So we held that
Wong “fundamentally change[d] the focus of the relevant analysis,” id. at 792
(internal quotation marks omitted), because “the Eckstein panel largely
assumed—by citation to a prior panel’s unsupported assumption . . . and by
analogy to this court’s since-abrogated interpretation of the FTCA’s statute
of limitations—that [the] action’s untimeliness deprives a district court of
jurisdiction,” while Wong said “that the essential hallmark of a jurisdictional
procedural rule is a clear congressional statement, which is nowhere to be
found in the Limitation Act.” Id. at 793.
Unlike in Bonvillian, here, intervening Supreme Court decisions have
not unequivocally established a clear rule for determining when a statute of
limitations is triggered by the discovery rule. Petrella and Rotkiske left room
for exceptions, including an exception upon which our court might have
relied in Graper—the nature of the copyright infringement injury. 6
6
Graper’s reference to out-of-circuit cases using the discovery rule is also different
from Eckstein’s citation to FEMA Trailer. Eckstein cited FEMA Trailer for an example of a
jurisdictional statutory filing deadline and said that the Limitation Act’s deadline was
analogous. See 672 F.3d at 315 n.12. Graper cited out-of-circuit cases merely to show that
other circuits had reached a similar conclusion as to § 507(b), not to adopt the reasoning of
those cases.
20
Case: 22-20333 Document: 00516711690 Page: 21 Date Filed: 04/13/2023
No. 22-20333
This case is more like Jacobs v. National Drug Intelligence Center than
Bonvillian. In Jacobs, the defendant appealed the district court’s award of
emotional-distress damages to the plaintiff under the Privacy Act of 1974, 5
U.S.C. § 552a, arguing that the plaintiff was limited to out-of-pocket
expenses. See 548 F.3d at 377. In affirming the damages award, we adhered
to an earlier decision of this court, Johnson v. National Drug Intelligence
Center, 700 F.2d 971 (5th Cir. 1983), which held that the Privacy Act’s
damages remedy included emotional-distress damages, id. at 986; see Jacobs,
548 F.3d at 377-79. To overcome our rule of orderliness, the appellant argued
that “post-Johnson, Supreme Court cases have construed other statutory
waivers of sovereign immunity narrowly; and therefore, were Johnson to be
re-decided today, our court’s analysis of what damages are recoverable under
the Privacy Act might reach a different outcome.” Jacobs, 548 F.3d at 378.
We declined to address whether the outcome in Johnson would be different
under a present-day analysis because the fact that those intervening Supreme
Court cases arguably changed the method for construing statutory waivers of
sovereign immunity did not count as an “intervening change in law” that
would permit us to overrule Johnson. Id. “[I]n Jacobs, we specifically
rejected the idea that later Supreme Court and other decisions that were not
directly on point could alter the binding nature of our prior precedent.”
United States v. Traxler, 764 F.3d 486, 489 (5th Cir. 2014). Here, Rotkiske is
not “directly on point.” Id. It leaves room for a Copyright Act discovery
rule grounded in the nature of the copyright infringement injury.
3.
Both circuits that have considered whether Petrella and Rotkiske
overturned their Copyright Act discovery rules have rejected the argument
and stuck with their precedents.
21
Case: 22-20333 Document: 00516711690 Page: 22 Date Filed: 04/13/2023
No. 22-20333
First, in Sohm v. Scholastic Inc., the Second Circuit “decline[d] to alter
. . . [c]ircuit[] precedent mandating use of the discovery rule” despite Petrella
and Rotkiske. 959 F.3d 39, 50 (2d Cir. 2020). In the Second Circuit, “a
published opinion of a prior panel . . . is binding precedent . . . unless and until
its rationale is overruled, implicitly or expressly, by the Supreme Court or
[the Second Circuit] en banc.” Id. (cleaned up). The Second Circuit
emphasized that “Petrella specifically noted that it was not passing on the
question of the discovery rule” and that SCA Hygiene “reaffirmed that
position.” Id. Thus, the Second Circuit concluded that “while some
language in Petrella is perhaps consistent with the [rule that the clock starts
running when the infringement occurs], in light of the Supreme Court’s
direct and repeated representations that it has not opined on the propriety of
[these] rules, it would contravene settled principles of stare decisis for this
Court to depart from its prior holding . . . on the basis of Petrella.” Id.Rotkiske did “not persuade [the Second Circuit] to depart from this holding,”
either. Id. at 50 n.2. Because “Rotskiske’s holding . . . was based on the
Court’s interpretation of the FDCPA’s text,” not “the Copyright Act’s
statute of limitations,” the Second Circuit decided that “Rotkiske is
inapposite here.” 7 Id.Second, in Starz Entertainment, LLC v. MGM Domestic Television
Distribution, LLC, the Ninth Circuit affirmed that Petrella did not change its
discovery rule. See 39 F.4th 1236, 1246 (9th Cir. 2022). The Ninth Circuit
read Petrella as “acknowledg[ing] that the ‘incident of injury’ rule it
7
Although Sohm adhered to the Second Circuit’s discovery rule precedents,
following Petrella, Sohm also held that “a plaintiff’s recovery is limited to damages incurred
during the three years prior to filing suit.” 959 F.3d at 52. Hearst does not argue that this
court should adopt a similar interpretation of the Copyright Act, and because the parties
have stipulated to the amount of damages to which Martinelli is entitled, this case does not
present the issue of whether we should adopt the Sohm rule.
22
Case: 22-20333 Document: 00516711690 Page: 23 Date Filed: 04/13/2023
No. 22-20333
described in the main text of the case is not the only accrual rule that federal
courts apply in copyright infringement cases” and saying “nothing else about
the discovery rule’s continued viability.” Id. at 1242 (cleaned up).
Thus, “[w]ere we to hold” that the discovery rule does not apply to
§ 507(b), “we would be the only court of appeals to do so after [Petrella and
Rotkiske].” Gahagan, 911 F.3d at 304. “We are always chary to create a
circuit split, including when applying the rule of orderliness,” and we decline
to do so in this case. Id. (cleaned up).
III.
For those reasons, the Supreme Court’s decisions in Petrella and
Rotkiske did not unequivocally overrule Graper. And under Graper,
Martinelli’s copyright infringement claims were timely because he brought
them within three years of discovering Hearst’s infringements. Accordingly,
the judgment of the district court is AFFIRMED.
23