Page:Nealy v. Warner Chappell Music, Inc. (11th Cir. 2023).pdf/4

 F.4th 1236, 1242–44 (9th Cir. 2022) (accepting this argument).

The district court certified the following question for interlocutory appellate review: whether damages in this copyright action are limited to a three-year lookback period as calculated from the date of the filing of the complaint. After briefing and with the benefit of oral argument, we agree with the plaintiffs. We hold that, when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the lawsuit was filed, the plaintiff may recover damages for that infringement.

This interlocutory appeal arises from Music Specialist, Inc. and Sherman Nealy’s copyright infringement suit against Warner Chappell Music, Inc.; Artist Publishing Group, LLC; and Atlantic Recording Corporation. Because we must decide a pure question of law in this interlocutory appeal, we provide the following background only as context for our decision. To be clear, “our description of the facts is not binding on the district court as the actual facts will be established later at trial.” Mitsubishi Int’l Corp. v. Cardinal Textile Sales, 14 F.3d 1507, 1511 n.2 (11th Cir. 1994).

At its core, MSI and Nealy’s suit alleges that Warner, Artist, and Atlantic are infringing their copyrights to certain musical works because the defendants are using the works based on invalid licenses to the copyrights that they obtained from third parties. The licenses are invalid, MSI and Nealy say, because MSI and Nealy, not the third-party licensors, are the owners of the copyrights.

The story of MSI and Nealy’s alleged copyright ownership begins in the 1980s. In 1983, MSI was incorporated under Florida law with Tony Butler listed as president in the articles of incorporation. Later amendments to the articles of incorporation listed Nealy as MSI’s president and Butler as its vice president. MSI was Nealy’s first venture in the music industry. He provided the funding for MSI’s operation, and Butler was a disc jockey who had more knowledge than Nealy about the music industry. Butler authored or co-authored all the musical works at issue in this case.

From 1983 to 1986, MSI recorded and released one album and several singles on vinyl and cassette. Those singles include all the works involved in this case, each of which is registered with the United States Copyright Office. Then, in 1986, MSI dissolved as a corporation and remained an inactive corporation until its reinstatement in 2017 with Nealy as owner, president, and shareholder. Although it dissolved in 1986, MSI’s business did not cease until 1989 when Nealy began serving a prison sentence following a conviction for distributing cocaine. Nealy was released in 2008.

While Nealy was in prison, Butler formed another company named 321 Music, LLC and began licensing the rights to musical works from the MSI catalog. In February 2008, Atlantic obtained a license from Butler and 321 to interpolate “Jam the Box,” one of the works at issue in this case, into the artist Flo Rida’s hit song “In the Ayer.” Then, in July of that same year, Artist and Warner entered into an agreement with Butler and 321 that purportedly made Artist and Warner the exclusive administrators of the music publishing rights to all the musical works at issue in this case. Nealy did not authorize anyone to exploit the rights to the MSI catalog while he was in prison. And Nealy did not continue his involvement in the music industry or with MSI while in prison.

After Nealy left prison, he learned that another third party, Robert Crane, was distributing works from the MSI catalog.