Starz Wins Appeal Affirming Timeliness of Copyright Infringement Claims

On July 14, 2022, the U.S. Court of Appeals for the Ninth Circuit issued a precedential decision affirming the U.S. District Court for the Central District of California’s holding that the Copyright Act did not impose a time‑based bar on damages for copyright infringement claims separate from the three‑year statute of limitations and that, therefore, the copyright infringement claims brought by Cravath client Starz Entertainment, LLC (“Starz”) were timely.

In May 2020, Starz filed a complaint against Defendant MGM Domestic Television Distribution, LLC (“MGM”) alleging that MGM had improperly licensed to third parties hundreds of films and TV series during periods in which MGM had granted Starz the copyrights and exclusive rights to exhibit those titles. MGM moved to dismiss 378 counts on the basis that the infringements occurred more than three years before Starz filed suit, arguing that the U.S. Supreme Court’s decision in Petrella v. Metro‑Goldwyn‑Mayer, Inc. created a “damages bar” that precluded the recovery of damages under the Copyright Act for all acts of infringement occurring more than three years before the suit was filed, as the U.S. Court of Appeals for the Second Circuit had held in Sohm v. Scholastic Inc.

Argument on the appeal was heard in February and was decided on July 14. Writing for the three‑judge panel, U.S. Circuit Judge Kim McLane Wardlaw affirmed U.S. district court Judge Holly M. Gee’s opinion, explaining that, under the “discovery rule”, the three‑year statute of limitations for copyright claims begins to run when a party discovers, or reasonably should have discovered, an infringement. Although the Ninth Circuit had not previously addressed whether Petrella “imposed a damages bar separate from the statute of limitations”, the panel concluded that “[a]pplying a separate damages bar based on a three‑year ‘lookback period’ that is ‘explicitly dissociated’ from the Copyright Act’s statute of limitations in § 507(b) would eviscerate the discovery rule”, and that Petrella did not dictate that result, which “would incentivize violation of the copyright holder’s exclusive rights, not protect those rights, which is the purpose of the Copyright Act itself”. The panel therefore declined to follow the Second Circuit’s decision in Sohm, instead holding that there is no damages bar for copyright infringement claims separate from the three‑year statute of limitations and, “[b]ecause Starz brought its claim within three years after its claim accrued, Starz is not barred from seeking damages for all acts of infringement”.

The Cravath team included partners J. Wesley Earnhardt, who argued the appeal, Evan R. Chesler and Justin C. Clarke, and associates Molly M. Jamison, Nicholas S. Medling, Margaret E. Anderson, Alison A. Doyle, Maura B. Grealish, Melvin E. Kenney III, Vanessa S. Ajagu and Lauren N. Reisig.

The case is Starz Entertainment, LLC v. MGM Domestic Television Distribution, LLC, No. 21‑55379 (9th Cir.).