Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-14-03231/USCOURTS-ca7-14-03231-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-3231 

CONSUMER HEALTH INFORMATION 

CORPORATION,

Plaintiff-Appellant,

v.

AMYLIN PHARMACEUTICALS, INC., et al.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:13-cv-01061-TWP-DML — Tanya Walton Pratt, Judge.

____________________

ARGUED MAY 28, 2015 — DECIDED APRIL 15, 2016

____________________

Before FLAUM, KANNE, and SYKES, Circuit Judges.

SYKES, Circuit Judge. Consumer Health Information Corporation sued Amylin Pharmaceuticals, Inc., alleging copyright infringement. 17 U.S.C. §§ 101 et seq. The dispute 

centers on copyright ownership: Who owns the copyright in

certain patient-education materials Consumer Health developed for Amylin’s use in marketing its diabetes drug Byetta? 

The parties’ contract, executed in March 2006, unambiguousCase: 14-3231 Document: 38 Filed: 04/15/2016 Pages: 11
2 No. 14-3231

ly assigns the copyright to Amylin. This suit is an attempt to

reclaim ownership of the copyright and recover damages for 

infringement. To that end, Consumer Health alleges that the 

contract was induced by fraud or economic distress and 

seeks rescission. The district court dismissed the suit as 

untimely.

We affirm. Consumer Health assigned the copyright to 

Amylin in 2006 but did not file this suit until July 2013, 

several years too late under either of two applicable statutes 

of limitations. A four-year limitations period applies to

claims for contract rescission under California law, which 

governs the parties’ contract. CAL. CIV. PROC. CODE § 337. 

Claims under the Copyright Act are subject to a three-year 

statute of limitations. 17 U.S.C. § 507(b). Consumer Health’s

cause of action accrued in March 2006, when the contract 

was executed; at that point Consumer Health knew that 

Amylin owned the copyright, and the limitations clock on a 

suit to reclaim ownership started ticking. Under either 

statute of limitations, the suit is untimely.

I. Background

Consumer Health is headquartered in Virginia and promotes itself as having “expertise in patient engagement and 

patient adherence strategies, health literacy, and patient 

education program development for prescription drugs, 

over-the-counter products, and medical devices.” Amylin, a 

large pharmaceutical company, is based in California. Jointly 

with Eli Lilly & Co., a pharmaceutical giant based in Indiana, 

Amylin developed and owns the rights to Byetta, an injectable diabetes drug.

Case: 14-3231 Document: 38 Filed: 04/15/2016 Pages: 11
No. 14-3231 3

When Byetta launched in 2005, its initial sales were disappointing. Amylin attributed the slow start to patients not 

understanding how to properly use the drug and thus

declining to refill their prescriptions. An additional problem 

was that doctors were not adequately trained to demonstrate 

the use of Byetta to their patients and so were reluctant to

prescribe it as often as Amylin had projected. So Amylin 

approached Consumer Health to develop materials that 

would increase patient education and compliance. 

Consumer Health commenced work on the project in December 2005 on the verbal assurance that it would be paid 

for its services. In March 2006 the parties formalized their 

arrangement by executing a Master Services Agreement. The 

contract explicitly assigned to Amylin the copyright in any 

materials Consumer Health created:

[Consumer Health] hereby assigns to AMYLIN 

all right, title, and interest in and to said copyrights in the United States and elsewhere, including registration and publication rights, 

rights to create derivative works and all other 

rights which are incident to copyright ownership.

Amylin stopped paying for work after September 30, 2006,

but continued to use the materials Consumer Health had 

developed, or at least certain “constituent elements” of them. 

Almost seven years later, in July 2013, Consumer Health 

sued Amylin and Eli Lilly alleging copyright infringement.1

 1 For the rest of this opinion, we’ll refer to the defendants collectively as 

“Amylin.”

Case: 14-3231 Document: 38 Filed: 04/15/2016 Pages: 11
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The complaint, filed in the Southern District of Indiana,

seeks actual damages and disgorgement of profits attributable to the infringement. The premise of the suit is that Consumer Health owns the copyright in the educational materials because the contract was induced by fraud or economic 

duress, either of which is a basis for rescission. More specifically, the complaint alleges that Amylin never intended to 

fulfill its end of the bargain and that Consumer Health

signed the contract under economic duress. The factual

premise of the latter contention is that Consumer Health had 

not yet been paid for its work from December 2005 to March 

2006, when it signed the contract, and therefore agreed to the 

contract only under economic duress.2

Amylin moved to dismiss the suit as untimely. The district court granted the motion, concluding that the complaint 

was filed several years too late under either of two applicable statutes of limitations. Under the contract’s choice-of-law 

provision, the rescission claim is governed by California law, 

and the California limitations period for rescission claims 

based on fraud or economic duress is four years. CAL. CIV.

PROC. CODE § 337. The judge held that Consumer Health’s 

rescission claim accrued in March 2006, when the contract 

was signed, or at the very latest in October 2006, when 

Amylin stopped paying for its services. On this accrual 

analysis, the four-year limitations period expired in either 

 2 This suit was preceded by an earlier one making essentially the same 

claims. In December 2008 Consumer Health sued Amylin and Eli Lilly in 

the United States District Court for the District of Columbia alleging 

(among other things) copyright infringement, fraud, and breach of 

contract. For reasons not revealed in the record, Consumer Health 

voluntarily dismissed that case. 

Case: 14-3231 Document: 38 Filed: 04/15/2016 Pages: 11
No. 14-3231 5

March or October 2010, roughly three years before the suit 

was filed.

To avoid the time bar, Consumer Health invoked the 

principle that the statute of limitations does not bar contract 

defenses and insisted that it was asserting fraud and duress 

defensively, to block enforcement of the contract. The judge 

rejected this argument, holding that Consumer Health was 

using rescission offensively in a suit to recover damages for 

copyright infringement.

Alternatively, the judge held that the suit was untimely 

under the Copyright Act’s three-year statute of limitations. 

17 U.S.C. § 507(b). Because the copyright claim was essentially a dispute over copyright ownership, the judge determined 

that the claim accrued in March 2006 when the parties 

signed the contract clearly giving Amylin “all right, title, and 

interest in and to” the copyright to the educational materials

Consumer Health had and would develop. On this accrual 

analysis, any suit seeking to reclaim copyright ownership 

had to be filed by March 2009. 

To avoid this time bar, Consumer Health urged the court 

to apply the separate-accrual rule, which holds that each 

infringing use of copyrighted material triggers a new threeyear limitations period. See Petrella v. Metro-Goldwyn-Mayer, 

Inc., 134 S. Ct. 1962, 1969 (2014). The judge rejected this 

argument, distinguishing between ordinary infringement 

cases and cases disputing copyright ownership. Following the 

Ninth Circuit’s decision in Seven Arts Filmed Entertainment, 

Ltd. v. Content Media Corp. PLC, 733 F.3d 1251 (9th Cir. 2013), 

the judge held that in the latter category, the cause of action

accrues when the ownership dispute becomes explicit. 

Because this ownership dispute was obvious in March 2006 

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when the parties executed the Master Services Agreement, 

the suit was more than four years too late.

II. Discussion

The judge dismissed Consumer Health’s complaint under

Rule 12(b)(6) of the Federal Rules of Civil Procedure, so our 

review is de novo. Thulin v. Shopko Stores Operating Co., 

771 F.3d 994, 997 (7th Cir. 2014). Consumer Health attacks 

the judge’s rulings under both the four-year statute of limitations for contract rescission and the Copyright Act’s threeyear limitations period. Both rulings were sound, and either 

one independently justifies dismissal, but we’ll begin with 

the rescission statute of limitations. If Consumer Health

cannot successfully avoid the contractual assignment by 

rescinding the Master Services Agreement, its claim under 

the Copyright Act is doomed.

A. California’s Statute of Limitations for Rescission

As we’ve noted, unless the claim for rescission can go 

forward, Consumer Health cannot hope to satisfy the first 

and necessary element of a claim for copyright infringement: 

ownership of a valid copyright. See Feist Publ’ns., Inc. v. Rural 

Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991). Consumer Health 

alleges that it was induced to enter into the Master Services 

Agreement by fraud or economic duress, giving it the option

to rescind. 

The merits of this rescission argument are not before us; 

we have only the question of timeliness. The parties’ contract 

specifies that California law controls. California has enacted

a four-year statute of limitations for claims of contract 

rescission based on allegations that the contract was induced 

by fraud or economic duress. CAL. CIV. PROC. CODE § 337. 

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The judge held that Consumer Health’s rescission claim 

accrued in March 2006, when the contract was signed, or at 

the latest in October 2006, when Consumer Health would 

have known the factual basis for rescission. 

Consumer Health doesn’t quarrel with this part of the 

judge’s analysis. Instead, it seeks refuge in the general 

principle that statutes of limitations do not apply to contract 

defenses. See Styne v. Stevens, 26 P.3d 343, 350 (Cal. 2001) 

(“Under well-established authority, a defense may be raised 

at any time, even if the matter alleged would be barred by a 

statute of limitations if asserted as the basis for affirmative 

relief.”). Consumer Health characterizes its fraud and economic-duress allegations as defensive claims, asserted as a 

means to avoid enforcement of the Master Services Agreement.

This argument both misunderstands the legal rule and 

mischaracterizes Consumer Health’s own litigating position. 

The Supreme Court of California describes the legal rule this 

way: “One [who is] sued on a contract may urge defenses 

that render the contract unenforceable, even if the same 

matters, alleged as grounds for restitution after rescission, 

would be untimely.” Id. More generally, “whether affirmative defenses are exempt from statutes of limitations largely 

hinges on a realistic assessment of the parties’ litigation 

posture.” City of St. Paul v. Evans, 344 F.3d 1029, 1035 (9th 

Cir. 2003) (applying an identical rule from another state).

To state the obvious here, Amylin didn’t sue Consumer 

Health to enforce the contract. Consumer Health sued 

Amylin asking for rescission as a necessary predicate to a 

claim of copyright ownership and recovery of damages for 

infringement. In short, Consumer Health is asserting fraud 

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and economic duress offensively, not defensively, and as such 

cannot avoid the statute of limitations. The suit is untimely 

under California’s four-year statute of limitations for rescission claims.

B. The Copyright Act Statute of Limitations

Consumer Health also argues that its infringement claim 

is timely under the Copyright Act’s three-year limitations 

period if the separate-accrual rule is applied. Under that rule 

each alleged act of infringement “gives rise to a discrete 

‘claim’ that ‘accrue[s]’ at the time the wrong occurs.” Petrella, 

134 S. Ct. at 1969. Because “each infringing act starts a new 

limitations period,” any infringing act within the three-year 

look-back period from the date of the complaint can form 

the basis of an infringement claim. Id. at 1969, 1975.

Consumer Health cannot benefit from the separateaccrual rule, which applies to ordinary infringement suits,

not suits in which the central dispute is copyright ownership.

As the Ninth Circuit has explained, copyright claims premised on disputes about ownership accrue “‘when plain and 

express repudiation of co-ownership is communicated to the 

claimant, and are barred three years from the time of repudiation.’” Seven Arts, 733 F.3d at 1254 (quoting Zuill v. Shanahan, 80 F.3d 1366, 1369 (9th Cir. 1996)).

Other circuits recognize the same distinction between ordinary infringement suits and suits in which the core dispute 

is about copyright ownership. The Second, Sixth, and Tenth 

Circuits have held that when the gravamen of a copyright

suit is a contest over copyright ownership, the claim accrues 

when the claimant has express notice of a competing claim 

of ownership. See Stan Lee Media, Inc. v. Walt Disney Co., 

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774 F.3d 1292, 1300 n.4 (10th Cir. 2014); Kwan v. Schlein, 

634 F.3d 224, 229 (2d Cir. 2011); Ritchie v. Williams, 395 F.3d 

283, 288 n.5 (6th Cir. 2005). 

This distinction makes sense for purposes of claimaccrual analysis. “In the ordinary infringement case, ownership is not in dispute ... .” Seven Arts, 733 F.3d at 1254. 

Instead, the focus is on the infringing acts—the nature and 

scope of the unauthorized work—and any defenses to 

liability (i.e., “fair use”). Id. But disputes about copyright 

ownership are different. Unlike an ordinary infringement 

case in which each infringing act is a discrete wrong triggering a new limitations period, ownership claims “accrue only 

once,” when the claimant receives notice that his ownership 

has been expressly repudiated or contested. Id.; see also

Kwan, 634 F.3d at 228 (“An ownership action accrues only 

once, when ‘a reasonably diligent plaintiff would have been 

put on inquiry as to the existence of a right.’” (quoting Stone 

v. Williams, 970 F.2d 1043, 1048 (2d Cir. 1992))).

Consumer Health acknowledges this line of cases but argues that the Supreme Court’s decision in Petrella has unsettled the distinction between ordinary infringement claims 

and disputes about copyright ownership. We disagree. 

Petrella did not involve an issue of copyright ownership. 

134 S. Ct. at 1971 (“Petrella is now sole owner of the copyright in that work.”). The Court had no reason to—and did 

not—address whether the separate-accrual rule applies to 

disputes about copyright ownership. Indeed, the Court 

made no mention at all of the Second, Sixth, or Ninth Circuit 

cases we’ve cited. And the Tenth Circuit’s decision in Stan 

Lee Media—adopting the approach of the Second, Sixth, and 

Ninth Circuits—was issued after the Supreme Court’s deciCase: 14-3231 Document: 38 Filed: 04/15/2016 Pages: 11
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sion in Petrella. 774 F.3d at 1300 n.4 (relying on Seven Arts, 

Kwan, and Ritchie). Accordingly, Petrella has not displaced 

the consensus view of our sister circuits that disputes about 

copyright ownership accrue only once. 

Finally, Consumer Health seeks support from Chicago 

Building Design, P.C. v. Mongolian House, Inc., 770 F.3d 610 

(7th Cir. 2014); Kling v. Hallmark Cards Inc., 225 F.3d 1030 (9th 

Cir. 2000); and Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983).

Reliance on these decisions is misplaced. Taylor involved a 

garden-variety infringement action; copyright ownership 

was not in dispute. 712 F.2d at 1117 (“The validity of [the 

plaintiff’s] copyrights is conceded ... .”). Similarly, Chicago 

Building Design did not address the distinction between 

ordinary infringement cases and disputes about copyright 

ownership; the decision straightforwardly applied the 

separate-accrual rule in an infringement-focused case. 

770 F.3d at 616. The question in Kling was whether a copyright owner must sue for a declaration of ownership prior to 

any infringing conduct. 225 F.3d at 1037. And Kling cannot

unsettle the Ninth Circuit’s decision in Seven Arts, which 

came later and specifically addressed the accrual rule for 

disputes over copyright ownership.

We’re persuaded by the unanimous line of cases from our

sister circuits and now hold that when the gravamen of a 

copyright suit is a question of copyright ownership, the 

claim accrues when the ownership dispute becomes explicit—that is, when the claimant has notice that his claim of 

ownership is repudiated or contested. Applying this accrual 

rule here, Consumer Health knew when it signed the Master 

Services Agreement in March 2006 that Amylin owned the 

copyright via express assignment. Consumer Health’s suit to 

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No. 14-3231 11

reclaim copyright ownership—filed in July 2013—was more 

than four years too late.

AFFIRMED.

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