United States: What 11th Circ. Guitar Ruling Means For Copyright Litigants

From the world of heavy metal rock-and-roll comes an important lesson for both putative copyright owners and accused infringers. If the accused infringer believes that the putative owner does not actually own the rights in the asserted copyright, it must speak up and repudiate ownership. Once that happens, the accuser must act within three years. If it doesn't, its claim is barred.

In a recent decision of first impression, the  U.S. Court of Appeals for the Eleventh Circuit joined seven of its sister circuits in adopting the rule that copyright ownership claims accrue only once for purposes of the statute of limitations under the Copyright Act.¹

Not only does this rule clarify the copyright statute of limitations in the Eleventh Circuit, but it further solidifies the growing and consistent body of law holding that copyright ownership claims accrue only once, even though copyright infringement claims accrue each time a new infringement occurs.

Before jumping into the substance of the Webster v. Dean Guitars case, in which we represented Dean Guitars, some background on the key players. If you are a fan of metal music - and even if you aren't - odds are you have encountered the so-called Dean from Hell guitar and its distinctive lightning bolt graphic at issue in this case.

The origins of this guitar date back to the early 1980s when Darrell Abbott, then a teenager, won a maroon Dean ML, the model of the Dean from Hell, in a guitar contest. Abbott eventually sold that guitar to buy a car, and in 1984, a man named Buddy Webster acquired that same maroon Dean ML.

Webster made some physical alterations to the guitar and commissioned somebody to paint the lightning bolt design shown on the guitar. Webster gave the guitar back to Abbott in 1987. Abbott proceeded to name the guitar the Dean from Hell, and the rest is history. Abbott played the guitar for decades, making it famous by featuring it on stage, on Pantera album cover and in publications.

Fast-forward to November 2004, when Abbott entered into an endorsement agreement with Armadillo Distribution Enterprises Inc. - owner of the Dean Guitars brand - and licensed the Dean from Hell lightning bolt graphic to Armadillo. Unfortunately, Abbott did not live to see the release of these reissues because he was tragically shot and killed on stage by a deranged individual in December 2004. Armadillo continued to license the lightning graphic from Abbott's estate after his death, continuously making and selling Dean from Hell reissues.

It wasn't until after Abbott's death that Webster began claiming that he owned a copyright in the lightning graphic from the Dean from Hell guitar. In response to these claims, the CEO of Armadillo, the late Elliott Rubinson, emailed Webster on April 30, 2007, stating that Rubinson, and others in the know, believed that Darrell Abbott's estate owned the copyright, not Webster. Ten years later, on April 21, 2017, Webster sued Armadillo, the Abbott estate and others for copyright infringement.

But this wasn't a run-of-the-mill copyright infringement case because ownership was contested, not infringement. Indeed, once we learned who actually painted the lightening graphic through discovery, our team was able to locate that person and negotiate the transfer of his rights to Abbott's estate.

This was critical because under the Copyright Act, "[n]o civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued."² Thus, where ownership is not in dispute, the three-year limitations period resets every time a new infringement occurs, so a copyright plaintiff can always recover for the past three years of infringement, even if the first violation occurred more than three years ago.

When claims center on copyright ownership, the statute of limitations rule is not so clear.

Three circuits - the U.S. Courts of Appeals for the Sixth,³ Ninth⁴ and Tenth⁵ Circuits - hold that a copyright ownership claim accrues when there is a "plain and express repudiation" of ownership.

Four circuits - the U.S. Courts of Appeals for the First,⁶ Second,⁷ Fifth⁸ and Seventh⁹ Circuits - have adopted a different standard, finding that the statute of limitations begins to run when the plaintiff learns, or should have learned, of the alleged grounds for the ownership claim.

Different standards aside, the seven circuits that had spoken on the ownership statute of limitations issue all agreed that there was a distinction between accrual of copyright infringement and ownership claims, and ownership claims should accrue only once.

Even with this agreement, Webster insisted that his claim was not time-barred. All but the  U.S. Court of Appeals for the Seventh Circuit's decision on ownership accrual came before the  U.S. Supreme Court's 2014 landmark copyright ruling in Petrella v. Metro-Goldwyn Mayer Inc. There, the Supreme Court ruled that a laches defense cannot bar damages for infringement occurring three years before the suit because each time an infringing work is reproduced or distributed, a new wrong occurs, and the statute of limitations runs separately from each violation.¹⁰

Webster argued that Petrella displaced these earlier circuit court decisions and the distinction between ownership and infringement claims in favor of a single, standardized rule that a copyright owner may always sue for the past three years of damages. But Petrella was a garden-variety infringement case with no ownership dispute, leaving the ownership accrual rule unaddressed.

Taking all of this into account, the  U.S. District Court for the Middle District of Florida held, on summary judgment, that Webster's copyright ownership claim accrued long before he sued in 2017 because he should have known of Armadillo's alleged copyright violation as early 2004, when it began producing the Dean from Hell reissues, or 2007, when Armadillo's CEO repudiated Webster's copyright ownership in an email.

Webster appealed the ruling to the Eleventh Circuit, where the court considered the issues of first impression of whether a copyright ownership claims accrues only once and, if so, whether a barred copyright ownership claim also bars all later infringement claims.

Like the district court, the Eleventh Circuit held that Petrella did not overrule the scores of circuit and district courts recognizing the distinction between copyright ownership and infringement claims.

The Eleventh Circuit joined the First, Second, Fifth and Seventh Circuits, finding that "an ownership claim accrues when a plaintiff learns, or should as a reasonable person have learned, that the defendant was violating his ownership rights."¹¹ Applying this rule, the Eleventh Circuit agreed with the district court that Webster's copyright claims were barred because they accrued either in 2004, when Armadillo first began producing the Dean from Hell reissues, or in April 2007, when Armadillo's CEO repudiated Webster's ownership of the copyright in an email.

The Eleventh Circuit's decision in Webster v. Dean Guitars has myriad practical implications. First, and most importantly, the decision solidifies yet another circuit that recognizes the distinction between copyright infringement and ownership claims and finds that the statute of limitations accrues differently for each. Not only that, but the Eleventh Circuit joins the Seventh Circuit as the second circuit court to uphold the distinction between infringement and ownership accrual after the Supreme Court's decision in Petrella.

Now, with two circuits expressly stating that Petrella does not alter the past precedent on this topic, future arguments that Petrella does affect the distinction between infringement and ownership accrual will be even more difficult to make.

At this point, only three circuits - the Third, Fourth and Eighth Circuits - have not spoken on this distinction, and two circuits have held the distinction applies post-Petrella - the Seventh and Eleventh.

While there is still some parity in the standard that should be applied when determining exactly when a copyright ownership claim has accrued - express repudiation vs. knew or should have known - it seems clear that the distinction between copyright infringement and ownership claims is, at this point, well-established. If one of these other circuits disregards this distinction in a future case or holds the Petrella alters the distinction, the issue would be primed for review by the Supreme Court.

For litigants, this means that a copyright owner must clearly understand the type of claim it is asserting, and it must prepare its arguments accordingly. If the copyright owner believes it is bringing a garden-variety infringement claim, but the issue really lies in ownership, the copyright owner could be met with the unfortunate surprise that its claim is barred in its entirety. For copyright defendants, this distinction provides another tool in the arsenal to eliminate a copyright claim altogether, irrespective of the substantive merits.

Second, the decision teaches a valuable lesson in actively enforcing one's intellectual property. Other issues of copyright ownership aside, had Webster actively enforced his alleged copyright when he first discovered Armadillo's and the Abbott estate's allegedly infringing acts, he likely would not have had to deal with the procedural statute-of-limitations issue, and the merits of his claim could have been addressed.

This case underscores the importance of monitoring the marketplace for potentially infringing material, understanding the relevant procedural framework for enforcing against that material, and acting swiftly to protect one's rights - particularly in the face of an ownership challenge.

In other words, when a copyright owner learns of an infringement, it should not sit by idly. Rather, it should object promptly, particularly in jurisdictions that follow the rule that "an ownership claim accrues when a plaintiff learns, or should as a reasonable person have learned, that the defendant was violating his ownership rights." And in the face of an assertion that the challenger does not, in fact, own the asserted rights, time is unquestionably of the essence. After three years, the claim is barred and effectively disappears.

Third, and certainly not least, this case provides the practical caveat that, if you want your arguments addressed on appeal, you must make those arguments in the first instance before the district court. On appeal, Webster argued for the first time that the statute of limitations under the Copyright Act bars only remedial, not substantive rights. Because Webster did not raise this issue with the district court, the Eleventh Circuit refused to consider it.¹² Litigants should carefully analyze and consider all possible arguments when before a district court to preserve them for appeal.

Footnotes

1 Webster v. Dean Guitars, et al., 955 F.3d 1270 (11th Cir. 2020).

2 17 U.S.C. §507(b).

3 Ritchie v. Williams, 395 F.3d 283, 289 n.5 (6th Cir. 2005).

4 Seven Arts Filmed Entm't Ltd. v. Content Media Corp., 733 F.3d 1251, 1254 (9th Cir. 2013).

5 Stan Lee Media, Inc. v. Walt Disney Co., 774 F.3d 1292, 1300 n.4 (10th Cir. 2014).

6 Santa-Rosa v. Combo Records, 471 F.3d 224, 227-28 (1st Cir. 2006) (citation omitted).

7 Kwan v. Schlein  , 634 F.3d 224, 228 (2d Cir. 2011) (citation omitted).

8 Pritchett v. Pound , 473 F.3d 217, 220 (5th Cir. 2006).

9 Consumer Health Info. Corp. v. Amylin Pharm., Inc.  , 819 F.3d 992, 997 (7th Cir. 2016).

10 Petrella v. Metro-Goldwyn Mayer, Inc.  , 572 U.S. 663, 671 (2014).

11 Webster v. Dean Guitars, et al., 955 F.3d 1270, 1276 (11th Cir. 2020).

12 Id. at 1275 n.3.