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Ninth Circuit Upholds An Alternative Standard For Accrual Of Copyright Infringement Claims

September 9, 2022

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<p style="text-align: justify;"><span>Section 507(b) of the U.S. Copyright Act provides that a copyright infringement claim isn’t timely filed unless it is commenced within three years after the claim accrued. In the recent decision <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/09/Starz-Entertainment-LLC-v.-MGM-Domestic-Television-Distribution-LLC.pdf">Starz Entertainment LLC v. MGM Domestic Television Distribution LLC</a></em></span><span>, the U.S. Court of Appeals for the Ninth Circuit addressed when a claim generally “accrues,” and defined an alternative “accrual” standard under the Copyright Act.</span></p>
<p style="text-align: justify;"><span>By way of background, Starz provides “premium subscription video content through a suite of cable television channels and on-demand services.” To acquire and provide content to its subscribers, Starz enters into licensing agreements with copyright holders that provide them with an exclusive right to use the content on its platform for a specified term. In 2013, Starz entered into such an agreement with MGM whereby Starz was given the exclusive right to use several MGM-owned movies and tv shows. Starz subsequently discovered in 2019 that a number of movies covered by the parties’ licensing agreement, including Bill &amp; Ted’s Excellent Adventure, were also being broadcast on Amazon Prime Video. Starz sued MGM on several grounds, including copyright infringement. The District Court denied MGM’s motion to dismiss the copyright claims based on the statute of limitations, holding that Starz timely filed its claims. </span></p>
<p style="text-align: justify;"><span> </span><span>In affirming the District Court’s decision. t</span><span>he Ninth Circuit noted that, “generally, [a] claim ‘accrues’ when the infringement or violation of one of the copyright holder’s exclusive rights occurs, known as the ‘incident of injury rule.’” However, the court also recognized the exception to the general rule based upon the “discovery rule.” Under that rule, a claim “alternatively accrues when the copyright holder knows or reasonably should know that an infringement occurred.”</span></p>
<p style="text-align: justify;"><span>The Ninth Circuit ultimately rejected MGM’s argument that the discovery rule was abolished by the Supreme Court’s decision in <em>Petrella v. Metro-Goldwyn-Mayer, Inc.</em>, 572 U.S. 663 (2014) and held that Starz had timely filed its copyright infringement claims under the discovery rule. It found that “[T]aking all the facts in the complaint as true, there were no events that occurred that should have placed Starz on notice that MGM was violating its exclusive rights until Starz’s employee discovered the movie Bill &amp; Ted’s Excellent Adventure on Amazon Prime Video in August 2019.” The court found that because Starz brought its claim within three years after its claim accrued, Starz was not barred from seeking damages for all acts of infringement.</span></p>
<p style="text-align: justify;"><span> </span><span>The <em>Starz </em>decision is significant in that the Ninth Circuit has joined several other circuit courts in confirming that the discovery rule has not been abolished and that the time of discovery of copyright infringement claims is important in determining whether the statute of limitations in Section 507(b) of the U.S. Copyright Act will apply to bar the claim.   </span></p>
<p style="text-align: justify;">Thank you to Alexandra Deplas for her contribution to this post. Please contact <a href="mailto:agibbs@wcmlaw.com">Andrew Gibbs</a> with any questions.</p>

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