In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3037

CHICAGO BUILDING DESIGN, P.C.,

and JEREMIAH JOHNSON,

Plaintiffs-Appellants,

v.

MONGOLIAN HOUSE, INC.,

RYAN GOLDEN, MARK PERRES,

and JOHN A. WILSON,

Defendants-Appellees.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 12 C 1010 — Elaine E. Bucklo, Judge. 

ARGUED FEBRUARY 13, 2013 — DECIDED OCTOBER 23, 2014

Before BAUER, SYKES, and HAMILTON, Circuit Judges.

SYKES, Circuit Judge. This case involves claims of copyright

infringement arising out of a failed business relationship

between a Chicago architectural firm and its client. Chicago

Building Design, P.C. (“CBD”), specializes in the design and

construction of restaurants. Its client, Mongolian House, Inc.,
2 No. 12-3037

wanted to renovate an upscale restaurant in Chicago known as

“Plan B.” CBD designed the interior of the restaurant and in

June 2006 filed blueprints with the City of Chicago to obtain a

“repair and replace” building permit for the project. Mongolian House retained CBD to do the construction work, and the

firm completed the renovations in 2007.

Sometime in 2008 a CBD employee visited the City’s offices

on other business and chanced upon a set of blueprints for Plan

B that appeared to be copies of the firm’s designs but were

labeled with another architect’s name. CBD asked the City for

a copy of the blueprints to determine if they were in fact copies

of its own. The City denied the request, saying the blueprints

were exempt from disclosure. In the meantime, Mongolian

House defaulted on payments due CBD for the 2006–2007

work. On May 8, 2009, the City issued a new building permit

for Plan B based on the 2008 blueprints. On February 13,

2012—not quite three years later—CBD sued Mongolian

House, its owners, and its architect alleging copyrightinfringement and assorted state-law claims.

The defendants moved to dismiss the federal claims as

time-barred under the Copyright Act’s three-year statute of

limitations. See 17 U.S.C. § 507(b). The district court granted the

motion, holding that CBD was on “inquiry notice” of a possible

copyright violation when its employee happened upon the

2008 blueprints at the City’s offices, which occurred not later

than December 31, 2008. The limitations clock started to run on

that date, the court held, even though CBD was unable to

discover whether the 2008 blueprints infringed its copyright.

The court also rejected CBD’s alternative argument under the
No. 12-3037 3

“continuing violation” doctrine, holding that CBD failed to

allege acts of infringement within the limitations period. The

court relinquished jurisdiction over the state-law claims, and

CBD appealed.

We reverse. The Supreme Court recently clarified that the

Copyright Act’s statute of limitations establishes a “separate

accrual rule” so that “each infringing act starts a new limitations period.” Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct.

1962, 1969 (2014). CBD’s complaint alleges potentially infringing acts that occurred within the three-year look-back period

from the date of suit, so the case should not have been dismissed. To the extent that CBD seeks recovery for earlier

infringing acts, the issue may have to be revisited on remand

in light of Petrella. 

I. Background

The plaintiffs are Chicago Building Design, P.C., an

architectural and construction firm, and Jeremiah Johnson, its

president. We refer to them collectively as “CBD” unless the

context requires otherwise. The defendants are Mongolian

House, Inc., a restaurant company; Ryan Golden and Mark

Perres, its owners; and John A. Wilson, its outside architect. We

refer to the defendants collectively as “Mongolian House”

unless it’s necessary to distinguish between them. The case was

dismissed for failure to state a claim under Rule 12(b)(6) of the

Federal Rules of Civil Procedure, so we take the following facts

from the latest iteration of the complaint, accept them as true,

and draw reasonable inferences in CBD’s favor. Larson v.

United Healthcare Ins., Inc., 723 F.3d 905, 908 (7th Cir. 2011). 
4 No. 12-3037

In 2006 Mongolian House retained CBD to design Plan B,

an upscale restaurant in Chicago that it sought to renovate.

Mongolian House promised to pay CBD $15,000 for architectural services. Afterreceiving CBD’s design, Mongolian House

awarded the firm the corresponding construction work. Under

the construction contract, Mongolian House promised to

compensate CBD in two ways: a cash payment of $259,100,

plus 15% of the profits earned by Plan B.

In June 2006 CBD filed blueprints for the Plan B renovation

with the City in orderto obtain a “repair and replace” building

permit for the project. The City issued the permit authorizing

the work to begin, and CBD completed the renovation in

March 2007. CBD registered its copyright in the blueprints on

May 1, 2009.

The complaint alleges that sometime in 2008, Golden and

Perres, Mongolian House’s owners, copied CBD’s blueprints

and distributed them to Wilson, who placed his name on the

copies and filed them with the City with the intention of

passing the blueprints off as his own. The purpose was to

obtain a “full” building permit for Plan B. In contrast to a

“repair and replace” permit, a “full” permit authorizes certain

additional interior alterations and an increase in occupancy on

the premises. On May 8, 2009, the City issued the full permit,

and in accordance with customary practice, distributed two

copies of the approved 2008 blueprints to Mongolian House.

To comply with the City’s regulations, Mongolian House was

required keep the blueprints on the premises. Golden, Perres,

and Wilson thereafter used the infringing blueprints to pass an
No. 12-3037 5

inspection on or about July 27, 2009, and used them again in

other periodic inspections through January 2012.

Sometime in 2008, a CBD employee visited the City’s offices

on unrelated zoning business and happened to see documents

that looked like the firm’s blueprints but bore Wilson’s name.

At this point CBD “did not know ... whether the Blueprints

were the ones Plaintiffs filed with the City of Chicago to secure

a repair and replace permit for the Premises, some modified

version of the Blueprints submitted for other purposes, or a

wholly different non-infringing set of blueprints copyrighted

by Wilson.” To get more information, CBD filed a complaint

with the Illinois Department of Financial and Professional

Regulation, which responded by letter explaining that it may

open an investigation. CBD next asked the City’s Buildings

Department for a copy of the 2008 blueprints underthe Illinois

Freedom of Information Act. The Department responded that

the blueprints were exempt from disclosure. Finally, CBD

periodically consulted Chicago’s Building Data Warehouse

Report, in which the City announces the issuance of building

permits. CBD reviewed the May 8, 2009 report and learned that

the City issued a building permit that day based on the 2008

blueprints Wilson had submitted.

Meanwhile, Mongolian House defaulted on payments due

CBD under the parties’ contracts. To date, Mongolian House

has paid CBD $11,000 on the design contract and just $45,000

on the construction contract.

On February 13, 2012, CBD sued Mongolian House,

Golden, Perres, and Wilson alleging various formsof copyright

infringement under the Copyright Act. See 17 U.S.C. §§ 101
6 No. 12-3037

et seq. The infringement allegations cluster into the following

categories: (1) when Golden and Perres copied the original

blueprints without authorization, they violated CBD’s exclusive right to copy, see id. § 106(1); (2) when they gave the

blueprints to Wilson, they violated CBD’s exclusive right to

distribute, see id. § 106(3); (3) when Wilson put his name on the

blueprints to pass them off as his own, he violated CBD’s

exclusive right to create derivative works, see id. § 106(2); and

(4) when the defendants used the infringing blueprints to pass

periodic city inspections, they again violated CBD’s exclusive

right to distribute, see id. § 106(3). The complaint also alleged

state-law claims based on Mongolian House’s failure to pay

what it owed CBD for design and construction work.

The defendants moved to dismiss the copyright claims

under Rule 12(b)(6), invoking the Copyright Act’s three-year

statute of limitations. See § 507(b). The district court granted

the motion, holding that CBD was on “inquiry notice” of a

possible violation of its rights when its employee visited the

City’s offices on other business and “saw the blueprints, which

happened no later than Dec. 31, 2008.” The limitations period

began to run on that date, the judge concluded, and this was so

even though CBD “could not at that time verify that infringement had occurred.” Starting the limitations clock on that date

meant that CBD’s suit—filed on February 13, 2012— was about

six weeks too late.

CBD argued in the alternative that the infringing acts

constituted a “continuing violation” that extended into the

three-yearlimitations period. The judge rejected this argument

as well, holding that the “post-2008 acts” did not amount to
No. 12-3037 7

infringement because distributing an architectural work to a

building inspectoris a “limited publication” not covered by the

Copyright Act.

Having dismissed the copyright claims, the court relinquished jurisdiction over the state-law claims. See 28 U.S.C.

§ 1367(c)(3). The court entered final judgment, and this appeal

followed.

II. Discussion

When a defendant charges noncompliance with the statute

oflimitations, “[d]ismissal underRule 12(b)(6) [is] irregular,for

the statute of limitations is an affirmative defense.” United

States v. N. Trust Co., 372 F.3d 886, 888 (7th Cir. 2004). Because

“complaints need not anticipate and attempt to plead around

defenses,” id., a motion to dismiss based on failure to comply

with the statute of limitations should be granted only where

“the allegations of the complaint itself set forth everything

necessary to satisfy the affirmative defense.” United States v.

Lewis, 411 F.3d 838, 842 (7th Cir. 2005). In other words, the

plaintiff must affirmatively plead himself out of court; the

complaint must “plainly reveal[] that [the] action is untimely

under the governing statute of limitations.” Id. We review de

novo a district court’s decision to dismiss a complaint on

statute-of-limitations grounds. Indep. Trust Corp. v. Stewart Info.

Servs. Corp., 665 F.3d 930, 934 (7th Cir. 2012).

The Copyright Act provides that “[n]o civil action shall be

maintained under the provisions of this title unless it is

commenced within three years after the claim accrued.”
8 No. 12-3037

§ 507(b). Our circuit recognizes a discovery rule in copyright

cases: “[T]he copyright statute of limitations starts to run when

the plaintiff learns, or should as a reasonable person have

learned, that the defendant was violating his rights.” Gaiman v.

McFarlane, 360 F.3d 644, 653 (7th Cir. 2004); see also Taylor v.

Meirick, 712 F.2d 1112, 1117 (7th Cir. 1983). As this case

originally came to us, the parties’ dispute centered on the

proper application of the discovery rule to the facts alleged in

CBD’s complaint. But the Supreme Court’s recent decision in

Petrella casts the limitations question in quite a different light.

The issue in Petrella was “whether the equitable defense of

laches ... may bar relief on a copyright infringement claim

brought within § 507(b)’s three-year limitations period.”

134 S. Ct. at 1967. To answer that question, the Court first

examined “how the Copyright Act’s limitations period works”

and “when a copyrightinfringement claim accrues.” Id. at 1969.

This part of Petrella affects the analysis here.

The Court began its opinion in Petrella by noting the

generally applicable rule of accrual in limitations law: A cause

of action accrues, and the limitations period begins to run,

“when [a] plaintiff has a complete and present cause of action.”

Id. (quoting Bay Area Laundry & Dry Cleaning Pension Trust

Fund v. Ferber Corp. of Cal., 522 U.S. 192, 201 (1997) (alteration

in original)). For copyright cases in particular, the Court

explained that an infringement claim accrues “when an

infringing act occurs.” Id. More specifically, the Court held that

the Copyright Act’s statute of limitations establishes a “separate accrual rule” for each violation:
No. 12-3037 9

Under that rule, when a defendant commits

successive violations, the statute of limitations

runs separately from each violation. Each time

an infringing work is reproduced or distributed,

the infringer commits a new wrong. Each wrong

gives rise to a discrete “claim” that “accrue[s]” at

the time the wrong occurs. In short, each infringing act starts a new limitations period.

Id. (footnote & citation omitted). Put more succinctly, § 507(b)

prescribes “a three-year look-back limitations period for all

civil claims arising under the Copyright Act.” Id. at 1968.

Inanimportantfootnote with potential implications forthis

case, the Court noted that although copyright claims generally

accrue when the infringing act occurs, most circuits “have

adopted, as an alternative to the incident of injury rule, a

‘discovery rule,’ which starts the limitations period when ‘the

plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for his claim.’” Id. at 1969

n.4 (quoting William A. Graham Co. v. Haughey, 568 F.3d 425,

433 (3d Cir. 2009)). The Court did not comment further on the

subject, but simply observed that it had not yet had an opportunity to “pass[] on the question” of discovery accrual in

copyright cases. Id.

The Court did, however, specifically distinguish the

separate-accrual rule established in § 507(b) from the “continuing violation” doctrine: “Separately accruing harm should not

be confused with harm from past violations that are continuing.” Id. at 1969 n.6; see also Nat’l R.R. Passenger Corp. v. Morgan,

536 U.S. 101, 114–121 (202) (distinguishing between discrete
10 No. 12-3037

acts of employment discrimination, each of which is individually actionable, and conductthatis continuing and “cumulative

in effect,” like a claim of hostile work environment). We take

the Court’s statement to mean that the continuing-violation

doctrine does not apply in this context. 

That understanding is confirmed by the Court’s summary

of this part of its opinion: 

Under the [Copyright] Act’s three-year

provision, an infringement is actionable within

three years, and only three years, of its occurrence. And the infringer is insulated from liability for earlier infringements of the same work.

See 3 M. Nimmer & D. Nimmer, Copyright

§ 12.05[B][1][b], p. 12–150.4 (2013) (“If infringement occurred within three years prior to filing,

the action will not be barred even if prior infringements by the same party as to the same

work are barred because they occurred more

than three years previously”). 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 threeyear window), but untimely with respect to prior

acts of the same or similar kind.

Petrella, 134 S. Ct. at 1969–70 (footnote omitted).

Petrella significantly changes the focus of analysis in this

case. As the parties framed the issue, the dispute hinges on the
No. 12-3037 11

start date for the statute of limitations—more particularly, the

date on which CBD either actually or “constructively” discovered the copyright infringement. Actual discovery is just what

it sounds like; “constructive” discovery refers to the date on

which CBD as a reasonably diligent plaintiff should have

discovered that the defendants were violating its rights. See

Gaiman, 360 F.3d at 653. The district court held that the statute

of limitations began to run when CBD had “inquiry notice,”

i.e., knowledge that would have led a reasonable person to

start investigating the possibility that his rights had been

violated.

But “inquiry notice” is not the same as actual or constructive discovery. In another context, the Supreme Court has

explained that when a limitations period is keyed to the

plaintiff’s discovery of his injury, “inquiry notice” does not

start the limitations clock. See Merck & Co., Inc. v. Reynolds,

559 U.S. 633, 651–53 (2010). In Merck the Court was asked to

interpret the statute of limitations for securities fraud, 28 U.S.C.

§ 1658(b)(1), which provides in relevant part that an action for

securities fraud must be brought “not laterthan ... 2 years after

the discovery of the facts constituting the violation.” Some

circuits had equated “discovery” with “inquiry notice,” i.e.,

“the point at which a plaintiff possesses a quantum of information sufficiently suggestive of wrongdoing that he should

conduct a further inquiry” Merck, 559 U.S. at 650 (internal

quotation marks omitted). The Court firmly rejected that

understanding of “discovery”:

We conclude that the limitations period in

§ 1658(b)(1) begins to run once the plaintiff did
12 No. 12-3037

discover or a reasonably diligent plaintiff would

have “discover[ed] the facts constituting the

violation”—whichever comes first. In determining the time at which “discovery” of those

“facts” occurred, terms such as “inquiry notice”

and “storm warnings” may be useful to the

extent that they identify a time when the facts

would have prompted a reasonably diligent

plaintiff to begin investigating. But the limitations period does not begin to run until the

plaintiff thereafter discovers or a reasonably

diligent plaintiff would have discovered “the

facts constituting the violation” ...irrespective of

whether the actual plaintiff undertook a reasonably diligent investigation.

Id. at 653.

Merck involved a statutory discovery rule; in copyright

cases the discovery rule is a common-law gloss. Still, Merck

clarified that “inquiry notice” is not a substitute for actual or

constructive discovery, andthat clarification is instructive here.

The concept of inquiry notice may help to identify the time at

which a reasonable plaintiff can be expected to start investigating a possible violation of his rights, but it does not itself

triggerthe statute of limitations. Accordingly, the district court

should not have used inquiry notice as the starting date forthe

statute of limitations.

More fundamentally, however, in light of Petrella, we now

know that the right question to ask in copyright cases is

whether the complaint contains allegations of infringing acts
No. 12-3037 13

that occurred within the three-year look-back period from the

date on which the suit was filed. Here, the answer to that

question is plainly “yes.” The complaint alleges that Perres,

Golden, and Wilson distributed the infringing blueprints to

building inspectors during inspections in July 2009 and

periodically thereafter, through January 2012. These acts fall

within the three-year limitations period from the date of suit

(February 13, 2012).

Mongolian House argues that these “post-2008 acts” do not

constitute copyright infringement because distributing an

architectural work to building inspectors is a “limited

publication” that falls outside the Copyright Act. Mongolian

House advances this argument in response to CBD’s fallback

position that the infringement alleged here should be construed as a continuous violation that stretched into the limitations period. As we have explained, however, the “continuing

violation” doctrine is incompatible with the separate-accrual

rule of § 507(b), so CBD’s alternative argument is no longer in

the picture.

To the extent that the “limited publication” argument is

addressed to the merits ratherthan the statute of limitations, it

was misapplied here. The “limited publication” concept was

developed under the copyright regime that existed between

1909 and 1978, when copyright was governed by both the

federal Copyright Act of 1909 and state common law. See

JANE C. GINSBURG & ROBERT A. GORMAN, COPYRIGHT LAW

108–09 (2012). At common law and under the 1909 Act, an

author’s ability to enforce his rights ina work depended in part

on whether the work was published, whether it was marked
14 No. 12-3037

with a copyright notice, and whether the copyright was

registered. Id. The Copyright Act of 1976 abolished state

copyright law and changed the rules governing the effect of

registration and publication on the author’s rights and remedies under the Act. Id. at 114–15.

Because the way in which an author published his work

affected his rights and remedies under both the old and new

copyright regimes, some courts developed the concept of

“limited publication” to mitigate some of the harsher effects of

these rules. Id. at 109; see also 2 MELVILLE B. NIMMER & DAVID

NIMMER, NIMMER ON COPYRIGHT § 8.11[C][1] (2014). The basic

idea is that an author doesn’t surrenderrights in a work simply

by sharing it with a small group of people forlimited purposes.

See GINSBURG & GORMAN, supra, at 109. The cases Mongolian

House cites for the limited-publication principle are of this

type; they hold that an author’s publication of his work to a

limited group for a limited purpose (for example, “publishing”

an architectural work to building inspectors) does not forfeit

his rights. See, e.g., Data Cash Sys., Inc. v. JS&A Grp., Inc.,

628 F.2d 1038 (7th Cir. 1980); McIntosh v. N. Cal. Universal

Enters. Co., 670 F. Supp. 2d 1069 (E.D. Cal. 2009); Kunycia v.

Melville Realty Co., 755 F. Supp. 566 (S.D.N.Y. 1990); Intown

Enters., Inc. v. Barnes, 721 F. Supp. 1263 (N.D. Ga. 1989); Aitken,

Hazen, Hoffman, Miller, P.C. v. Empire Const. Co., 542 F. Supp.

252 (D. Neb. 1982); Kisling v. Rothschild, 388 So. 2d 1310

(Fla. Dist. Ct. App. 1980).

So the limited-publicationprincipleprotects authors against

a forfeiture of their rights. But it’s not at all clear what bearing

it has on the question of infringement. Mongolian House has
No. 12-3037 15

not explained how the principle applies to its own conduct as

an accused infringer or provides a defense to copyright

liability. 

The Copyright Act provides that “[a]nyone who violates

any of the exclusive rights of the copyright owner ... is an

infringer.” 17 U.S.C. § 501(a). As relevant here, the exclusive

rights of the copyright owner include the following: 

(1) to reproduce the copyrighted work in copies

or phonorecords;

(2) to prepare derivative works based on the

copyrighted work; [and]

(3) to distribute copies or phonorecords of the

copyrighted work to the public by sale or other

transfer of ownership, or by rental, lease, or

lending[.]

Id. § 106.

The complaint alleges that Golden, Perres, and Wilson

distributed the infringing blueprints to city building inspectors

at periodic inspections from July 2009 through January 2012, in

violation of CBD’s rights under § 106(3). These acts occurred

within the three-year look-back period from the date of suit

and are at least potentially actionable. Mongolian House has

not developed a substantive argumentthatthese post-2008 acts

do not qualify as acts of infringement based on the text of the

statute, though we can certainly envision one. A copyright

owner has the exclusive right to distribute his work “to the

public by sale or other transfer of ownership, or by rental,

lease, or lending.” Id. § 106(3). It’s an open question whether
16 No. 12-3037

distributing an unlawfully copied architectural work to a

building inspector qualifies as a violation of the author’s

exclusive right to distribute his work “to the public by sale or

other transfer of ownership, or by rental, lease, or lending.”

As far as we can tell, this is a question of first impression in

this circuit and apparently in other circuits as well. As a more

general matter, the scope of the exclusive right to distribute

under § 106(3) is a difficult issue on which courts have disagreed.1

See generally 2 NIMMER& NIMMER, supra, § 8.11[C][1].

Mongolian House’s argument on this point is at best underdeveloped. The proper scope of § 106(3)’s exclusive right to

distribute has implications far beyond this case; it would be

imprudent for us to venture an opinion based on inadequate

briefing. See Judge v. Quinn, 612 F.3d 537, 557 (7th Cir. 2010)

(“Perfunctory and undeveloped arguments ... are waived.”

(internal quotation marks omitted)).

The most we can say at this juncture is that the case should

not have been dismissed on the pleadings based on the statute

1

“Distribute” is not a defined term in the Copyright Act, but the language

of 17 U.S.C. § 106(3) is almost identical to the Act’s definition of “publication.” See 17 U.S.C. § 101. There is support both for and against reading the

two terms as coextensive. See generally 2 MELVILLE B. NIMMER & DAVID

NIMMER, NIMMER ON COPYRIGHT § 8.11[C][1] (2014) (collecting legislative

history and cases). The district court stated that “[t]he Seventh Circuit has

held that [the] right of distribution in the Copyright Act is synonymous

with the right of publication.” That was a mistake. The court cited Kennedy

v. National Juvenile Detention Ass’n, 187 F.3d 690, 697 (7th Cir. 1999), as

support for this proposition, but the cited passage actually appears in a

partial dissent. As we’ve noted, the merits question here is one of first

impression in this circuit.
No. 12-3037 17

of limitations. CBD’s complaint alleges that the defendants

committed infringing acts within the three-year look-back

period before suit. The limited-publication principle does not

take these acts outside the Act as a categorical matter. The case

can move forward, though much remains for further development, both legally and factually.

A final word on the statute-of-limitations: If on remand

CBD continues to claim a right to recover for infringing acts

that occurred in 2008, outside the three-yearlook-back period,

the parties will need to address whether Petrella abrogates the

discovery rule in copyright cases. We express no opinion on

that question today. The parties have not briefed it,2and it may

not arise on remand. We note that CBD seeks statutory

damages in lieu of actual damages; an award of statutory

damages is cumulative in nature, covering “all infringements

involved in the action, with respect to any one work.” 17 U.S.C.

§ 504(c)(1). So Petrella’s effect on the discovery rule may not

need to be decided in this case. We leave that matter to be

sorted out on remand.

For the foregoing reasons, we REVERSE and REMAND for

further proceedings consistent with this opinion.

2 Neither side filed a Rule 28(j) letter regarding the effect of Petrella on this

case. See FED. R. APP. P. 28(j).