Discovery Rule Bars Website Display Claims, But Not Other Copying Claims

Design Basics (DB) publishes and licenses architectural designs.  Carhart sells home building products and provides blueprint drafting services.  On February 24, 2010, DB’s senior designer investigated Carhart’s website for infringing elevations and printed parts of Carhart’s website containing elevations he thought looked substantially similar to DB’s designs.

DB sued Carhart for copyright infringement on April 18, 2013, alleging that Carhart infringed DB’s copyrights on April 20, 2010.  Carhart filed a motion for summary judgement, arguing that DB’s copyright infringement claims were barred by the statute of limitations.  The district court granted Carhart’s motion with respect to some of DB’s copyright infringement claims, but not others.

No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.

17 U.S.C. §507(b).

When did DB’s claim accrue?  Does a copyright claim accrue when an infringing act occurs (occurrence rule) or does it accrue with the copyright owner discovers the infringement (discovery rule)?

A copyright-infringement claim accrues for purposes of that statute when an infringing act occurs.  Further, each time an infringing work is reproduced or distributed, the infringer commits a new wrong, and each wrong constitutes a claim that accrues when the wrong occurs. Therefore, each infringing act starts a new limitations period. Thus, when a defendant has engaged (or is alleged to have engaged) in a series of discrete infringing acts, the copyright holder’s suit ordinarily will be timely under § 507(b) with respect to more recent acts of infringement (i.e., acts within the three-year window), but untimely with respect to prior acts of the same or similar kind.

Applying this ‘occurrence’ rule to this case, DB may gain retrospective relief running only three years back from the date the complaint was filed. Because DB’s complaint was filed on April 18, 2013, it may recover for Carhart’s alleged copyright infringement occurring on or after April 18, 2010.

(Opinion pdf page 4).

Under the discovery rule, the statute of limitations period starts when the coppyright owner discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.  The U.S. Supreme Court has not decided whether the discovery rule applies in copyright cases.  Nine Courts of Appeal have adopted the discovery rule.

The district court followed its circuit, the Eighth Circuit, and applied the discovery rule to this case.  The district court ruled that DB’s senior designer

clearly had notice of Carhart’s possible infringement of four specific DB plans on February 24, and he could have confirmed the existence of such infringement if he had continued to look further on Carhart’s website that day, instead of simply filing the material until he had more time.

I find that the statute of limitations on DB’s claims involving Carhart’s posting on its website house plans that potentially infringed DB’s copyrighted ‘Winter Woods,’ ‘Sinclair,’ ‘Laramy,’ and ‘Gabriel Bay’ plans expired three years after February 24, 2010, the date of discovery. Therefore, DB’s filing of those specific claims on April 18, 2013, was untimely, and Carhart’s motion for summary judgment on its statute-of-limitations defense must be granted as to infringement related to the posting of those four specific plans on Carhart’s website. However, DB’s claims involving other possible acts of infringement related to those four house plans—such as reproducing unauthorized copies of the plans, aiding in the construction of infringing structures from those plans, and marketing or selling infringing structures derived from those plans—are not barred.

As to the remaining copyrighted house plans and plan books referenced in DB’s complaint, I conclude that the complaint reasonably encompasses potentially infringing acts that occurred within the three-year period leading up to the filing of the complaint, so section 507(b) does not bar DB’s claims against Carhart for its potential acts of copyright infringement that DB first discovered, or with due diligence should have discovered, on or after April 18, 2010.

(Opinion pdf pages 6 – 8).

This case is Design Basics, LLC. v. Carhart Lumber Company, No. 8:13CV125, U.S. District Court, District of Nebraska.

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