The Biggest Copyright Decisions Of 2024
In this Law360 article, Claudia Ray discussed the top copyright cases from 2024 and how they will shape the practice decisions going forward.
The U.S. Supreme Court made it possible for copyright plaintiffs to pursue damages for periods longer than three years — while leaving lawyers speculating about how long the ruling will stand — and the Second Circuit put an end to a free digital library. Here are Law360's picks for the top copyright decisions of 2024.
Warner Chappell Music Inc. et al. v. Sherman Nealy et al.
Copyright plaintiffs can recover damages for infringing acts going back more than three years — an expansion that the U.S. Supreme Court endorsed while leaving some IP attorneys scratching their heads about whether a majority of justices believes the doctrine the expansion is based on is even proper.
In Warner Chappell, justices were tasked with deciding whether music producer Sherman Nealy could recover damages from the record company for more than three years before he filed his suit in 2018. Attorneys hoped the case would force justices to finally address the propriety of the so-called discovery rule, which holds that copyright claims begin to accrue when a plaintiff becomes aware of an infringement, rather than when the infringement happened.
The justices said in a 6-3 May ruling that Nealy could seek damages beyond three years because "a copyright owner possessing a timely claim is entitled to damages for infringement, no matter when the infringement occurred," noting the Copyright Act is silent regarding a time limit on monetary recovery. The justices otherwise left the discovery rule alone, saying it was not properly presented because Warner Chappell never challenged it in proceedings below.
The court's decision was straightforward because "it flows right out of the Copyright Act," said Claudia Ray, a partner at Kirkland & Ellis LLP's IP practice group.
"But there's language in the decision that's actually quite interesting and I think leaves open questions for a later day," Ray said, referring to the dissent from Justices Neil Gorsuch, Samuel Alito and Clarence Thomas.
Justice Gorsuch, who penned the dissent, said the high court has previously held in other cases that the discovery rule does not apply across all contexts within statutes of limitations and that the Copyright Act "almost certainly does not tolerate a discovery rule" — all but inviting a challenge.
As for Nealy and Warner Chappell, the parties settled their dispute in September.
The case is Warner Chappell Music Inc. et al. v. Sherman Nealy et al., case number 22-1078, in the Supreme Court of the United States.
Hachette Book Group Inc. v. Internet Archive
Book publishers stopped the Internet Archive's free digital lending library in September when a Second Circuit panel affirmed a Manhattan federal judge's ruling that the nonprofit's system of scanning physical books to convert into e-books was not fair use.
Hachette Book Group Inc., HarperCollins Publishers LLC, John Wiley & Sons Inc. and Penguin Random House LLC sued the Internet Archive in June 2020, accusing it of engaging in "willful digital piracy on an industrial scale" with its collection of more than 3 million books, which the nonprofit bought or obtained through donations.
The Internet Archive argued its digital library made e-book "lending more convenient and efficient" and was thus transformative, a factor that courts weigh in fair use cases. The Second Circuit unequivocally said in its published opinion that what the Internet Archive did was not transformative and that the nonprofit's digital books served the same purpose as the originals.
The appeals court's decision was unsurprising to Jacqueline Charlesworth, former general counsel of the U.S. Copyright Office and partner at Frankfurt Kurnit Klein & Selz PC.
"But I do think it's helpful to have the Second Circuit explaining why just converting books to a digital format is not transformative under copyright law, even if you're a nonprofit," she said.
The lower court had found that the Internet Archive's e-book lending program was commercial because although it was free, it generated donations. The appeals court reversed the commerciality finding but sided with the publishers' arguments that it was not enough to outweigh the potential harm to the e-book market.
"It's very interesting that you can have non-commerciality and nevertheless a finding of market harm and no fair use," said Felicity Kohn, a partner at Pryor Cashman LLP.
The Internet Archive said this month it would not ask the U.S. Supreme Court to review the Second Circuit's decision.
The case is Hachette Book Group Inc. et al. v. Internet Archive, case number 23-1260.
Structured Asset Sales LLC v. Sheeran
Pop superstar Ed Sheeran defeated another claim that he ripped off Marvin Gaye's Motown classic "Let's Get It On" to create his hit "Thinking Out Loud" when a Second Circuit panel agreed with a lower court's conclusion that the musical building blocks of Gaye's song are not original enough to be protectable.
Further, the appeals panel was unconvinced by Structured Asset Sales' argument that a Manhattan federal judge should have allowed evidence and expert testimony that went beyond the sheet music included with the 1973 copyright registration for the song Gaye wrote with Ed Townsend. The panel said the Copyright Act of 1909, under which "Let's Get It On" was registered, does not protect the song's audio recording.
Structured Asset Sales buys royalty interests from copyright holders and sells them as securities to investors.
Charlesworth of Frankfurt Kurnit said the Second Circuit panel's opinion touched on two key issues the Ninth Circuit also addressed in 2020 when it ruled in favor of Led Zeppelin in a suit accusing the band of stealing the intro to "Stairway to Heaven" from a little-known song "Taurus" by the group Spirit. In that case, the full Ninth Circuit said common musical elements are not protected by copyright and that like "Let's Get It On," the "Taurus" sound recording was not protected by the 1909 Copyright Act under which it was registered.
"You have both of the big copyright circuits issuing important and parallel opinions in this area," Charlesworth said, noting that copyright law has been updated to include song recordings. "We have old songs, they're still very valuable, and so this is an issue that comes up."
The Second Circuit rejected Structured Asset Sales' request for either a panel or rehearing en banc.
Prior to Sheeran's victory in the Second Circuit, he won a trial in Manhattan where he faced the same allegations from the family of deceased "Let's Get It On" co-writer Townsend.
The case is Structured Asset Sales LLC v. Sheeran et al., case number 23-905.
The Intercept Media Inc. v. OpenAI Inc. et al.
Microsoft Corp., one of OpenAI's biggest financial backers, notched its first win in November in one of the several copyright complaints it is facing from content creators who accuse the tech companies of pilfering their works to train ChatGPT.
The Intercept hit Microsoft and OpenAI with a suit in Manhattan this year that alleged the companies used its content to develop ChatGPT and removed author and copyright information from it. Two other news outlets also hit OpenAI with a nearly identical suit.
In a two-page Nov. 21 order, U.S. District Judge Jed S. Rakoff dismissed with prejudice The Intercept's two claims against Microsoft under the Digital Millennium Copyright Act — one for allegedly creating copies of works for use in training sets with copyright information removed and another for allegedly distributing those works with that information out.
The Intercept brought the same claims against OpenAI but Judge Rakoff, who said he would issue a written opinion later, tossed only the claim alleging the company distributed works without copyright information.
News organizations Raw Story and AlterNet, which filed a suit similar to The Intercept's case with the same attorneys in Manhattan, saw U.S. District Judge Colleen McMahon dismiss their DMCA suit two weeks before Judge Rakoff's decision. Judge McMahon gave the plaintiffs a chance to amend their complaint, which targets only OpenAI.
According to Peter Swanson, a partner at Covington & Burling LLP, unlike other complaints accusing tech companies of using content to train AI platforms without authorization, the suits from The Intercept, Raw Story and AlterNet only allege DMCA violations, not infringement. DMCA claims in other complaints against AI companies that also allege copyright infringement have been among the first to fail, but plaintiffs likely will keep trying.
"Anytime there's a significant technological development, it takes a while for copyright law to catch up and for courts and litigants to figure out how to adapt the law to this new technology," Swanson said. "I think you'll see plaintiffs taking different approaches and seeing what works and refining their litigation models."
The case is The Intercept Media Inc. v. OpenAI Inc. et al., case number 1:24-cv-01515, in the U.S. District Court for the Southern District of New York.
Griner et al. v. King et al.
Much like the wildly popular meme he inspired, the fist-pumping "Success Kid" won a case — filed by his mom — against former Iowa U.S. Rep. Steve King's campaign committee for using in fundraising the copyrighted photo that inspired the meme.
In a June precedential opinion, an Eighth Circuit panel upheld an Iowa jury verdict against King's campaign and said his committee needed a particularly compelling reason for using the photo to support a fair use defense against infringement because the use was commercial. In the opinion, the panel cited Andy Warhol Foundation v. Goldsmith , last year's landmark U.S. Supreme Court decision on fair use, to explain its rationale for affirming the jury verdict.
The panel wrote that "controlling the commercial use of the meme" was the reason Laney Griner registered the photo she took in 2007 of her then 11-month-old son. She has licensed the photo to several companies, including Microsoft and Coca-Cola, but the meme has also proliferated countless times on the internet. King unsuccessfully argued that gave his committee an "implied license."
"There was no particular justification, and it gets at something that I think is often an issue that can be a challenge in cases raising fair use defenses where you have humor as an element of the use," said Ray of Kirkland. "It could be a parody, it could be satire, and the question is: 'Did you need to use this particular work to accomplish that purpose? Could you have done it with something else?' And here you have that, plus you've got the fact that it's also in service of this political campaign."
The case is Griner et al. v. King et al., case number 23-2117, in the U.S. Court of Appeals for the Eighth Circuit.
