Psihoyos v. John Wiley & Sons, Inc.

Addressing the issue of accrual of a claim for copyright infringement, the U.S. Court of Appeals for the Second Circuit upheld the lower court’s denial of summary judgment for the defendants, concluding that the statute of limitations under the Copyright Act did not bar the plaintiff’s infringement claims because copyright infringement claims do not accrue until actual or constructive discovery of the infringement. Psihoyos v. John Wiley & Sons, Inc., Case Nos. 12-4874, -5069 (2d Cir., Apr. 4, 2014) (Lohier, J.). 

In November 2010, John Wiley & Sons, Inc. (Wiley) discovered its unauthorized use of a pair of photographs taken by professional photographer Louis Psihoyos in several of its textbooks and sought a retroactive licensing arrangement with him. Upon Psihoyos request for full disclosure, Wiley admitted to unauthorized use of two additional photographs. In March 2010, Psihoyos sued Wiley for copyright infringement for publication of eight of his photographs in textbooks from 2005 to 2009. Wiley moved for summary judgment, arguing that many of Psihoyos’s claims were barred by the three-year statute of limitations because they arose from alleged infringements that occurred more than three years prior to the suit.

Section 507(b) of the Copyright Action requires civil actions for copyright infringement to be commenced within three years after the claim accrues. The district court concluded that an infringement claim does not “accrue” until the copyright holder discovers, or with due diligence should have discovered, the infringement (the so‐called “discovery rule”). The court determined that Psihoyos’s infringement claims were not barred by the statute of limitations because Psihoyos did not discover the infringements until 2010, well within three years of filing suit, despite exercising reasonable diligence. Wiley appealed.

The 2d Circuit cited its previous use of discovery rule for copyright claims under § 507(b) and rejected Wiley’s attempts to distinguish those cases on the ground that they involved co‐ownership claims. Wiley urged the Court to adopt an “injury rule” in case of copyright infringement actions relying on TRW, where the Supreme Court had reversed a decision of the U.S. Court of Appeal for the Ninth Circuit, which had employed the discovery rule as a default unless Congress had expressly legislated otherwise. TRW concerned the Fair Credit Reporting Act (FCRA), which provides that the statute of limitations runs from “the date on which the liability arises.” Holding that the text and structure of FCRA evince Congress’ intent to preclude judicial implication of a “discovery” rule for FCRA claims, the Supreme Court concluded that the most natural reading of the FCRA is that Congress implicitly excluded a general discovery rule by explicitly including a more limited one.

The 2d Circuit refused to apply different accrual rules for ownership and infringement claims, both of which are governed by § 507(b).  Rather, the 2d Circuit agreed with other circuits which have considered the issue of claim accrual in the context of infringement claims and have found that the text, structure, legislative history and underlying policies of the Copyright Act comport with the use of discovery rule, not the injury rule.