2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
6-5-2009 

# W i lli am A Gr ah am C om v

. Thom a s H au ghey P r e c e de nt i al or N on-P r e c e de nt i al : P r e c e de nt i al D ocke t N o . 08-2007

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2009

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2009 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du
. Re c omme nde d C it at ion

" W i ll i am A Gr ah am C om v

. Thom as H au ghey " (2009). 2009 D e cisio n s . P ape r 1105. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2009/1105P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 08- 2007

WI L L I AM A. GR AHAM COMP ANY, d /b / a T h e G r a h a m C o m p a n y, A ppel l ant

v. THOM AS P
. HAU GHEY; USI M I DATLANTI C, I NC.

N o. 08- 2111

WI L L I AM A. GR AHAM COMP ANY, d/b/ a The G r aham C om pany

v. T H O M A S P . H A U G H E Y ; U S I M ID A T L A N T IC , IN C ., A ppel l ant
O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D
. C
. N o. 05- cv- 00612) D istri ct Ju d g e: H o n o rab le H arv eyB artl e, II I

A r gued M ar ch 3, 2009 Be f o r e : S CI RI CA , Ch i e f

J u d g e , S L OVI T E R, a n d HAR DI M AN, C i r cui tJ udges ( Fi l ed: J une 5, 2009 )2 ____ A lek sa n d e r J. G o ra n in M at t hew A
. Pear s on D avi d J
. W ol fs ohn ( A r gued) W o o d co ck W ash b u rn Phi l adel phi a, PA l 9l 04 A t t or ney s forA ppel l anti n N o. 08- 2007 A ppel l ee i n N o. 08- 2111 Fl oy d A br ams ( A r gued) K a th e rin e V o g e le C ahi l l , G or don & R ei ndel N ew Y or k, N Y 10005 T h o m a s E . Z e m a iti s PepperH ami l t on Phi l adel phi a, PA l 9l 03 A t t or ney s forA ppel l ee i n N o. 08- 2007 A ppel l anti n N o. 08- 2111 J as on R
. H el l er C ahi l l , G or don & R ei ndel N ew Y or k, N Y 10005 M a tth e w R . S k o ln ik B aze l on, L es s & Fel dm an Phi l adel phi a, PA l 9l 02 A t t or ney s forA ppel l anti n N o. 08- 2111

OPI NI ON O F THE COURT3 SL O V I T E R , C i r cui tJ udge. W e f a c e a n iss u e o f

f irst im p re ss io n f

o r th is cour t–w hethert he di s coveryrul e ort he i nj ur yrul e governs t he acc rual of cl ai m s undert he C opyr i ghtA ct , w hi ch has a thr eey ea r st atute o f li m it ati o n s fo r civil ac ti o n s, 1 7 U
. S
. C
. § 5 0 7 (b). U ndert he i nj ur yrul e, a cl ai m acc rues , and the s t atut e of lim itatio n s b e g in s to ru n , w h e n th e p lain tiff su f f e rs a leg a lly c o g n iza b le in

ju ry . T h e re f

o re , if th e in

ju ryru le a p p lies in th is cas e, appel l ant/ cr os s - appel l ee W i l l i am A
. G r aham C om pany (“G raham ”) canno trecover on it s cl ai m s that appell ees/ cross appel l ant s U SI M i dA t l ant i c, I nc. and Thom as P. H aughey ( col l ect i vel y , “U SI ”) i nfr i nged i t s copyr i ght s m or e than thr ee y e a rs b e f o re G ra h a m f

iled su it. C o n v e rse ly , if th e d isc o v e ryru le appl i es , t hen G r aham’ s caus e of a ct i on foreac h actof in f rin g e m e n t d id n o t ac c ru e u n til G ra h a m d isc o v e re d , o r w ith rea so n ab le dili g en ce sh o u ld h av e d isco v ere d , the in jury under l y i ng i t s cl ai m . T hus , i f the di s coveryrul e appl i es , G r aham m aybe abl e t o r ecove ron act s of i nfr i ngementt hatoccurr ed m o re th a n th re e y e a rs b e f o re it file d su it. T h e D istric t C o u rt c o n c lu d e d th a t th e d isc o v e ryru le app l i ed to ci vil act i on s und er the C op yri gh tA ctand t he case pr ocee ded t o a j ur yt r i al
. T he j ur yfound thatG r aham w as noton not i ce of U SI ’ s i nfr i ngementpr i ort o February9, 2002–l eadi ng t o i t s concl us i on t hatnone of G r aham’ s i nfr i ngementcl ai m s w as t i m e- barr ed. T hatj ur yent er ed a ve r di cti n G r aham’ s favori n t he amount of $16, 561, 230 agai ns tU SI M i dA t l ant i c and $2, 297, 397 agai ns tH aughey
. H ow ever , t he D i s t r i ctC our ts etas i de the j ur y ’ s fi ndi ng and ul t i m at el yhel d t hatG r aham w as t i m e- barr ed fr om r ecove r i ng foract s of i nfr i ngementt hatoccurr ed more t han three y ea rs be fo re itfil ed su itin li g h t of ce rt ain “ storm w a rn in g s” o f

th o se e a rlier a c ts o f

in f rin g e m e n t. T he ca s e then pr ocee ded t o a s econd j ur yt r i al on t he i s s ue of damages fort he thr ee y earper i od pr ece di ng G r aham’ s fi l i ng; t he s econd j ur yent er ed a ve r di ctforG r aham i n t he amountof $1

. 4 m i l l i on againstU S I M i dA t l anti c and $2 68 , 00 0 ag ai nst H a u g h e y . T h u s, if

w e d e ter m in e th a t th e D istric t C o u rt c o rre c tly4 hel d t hatt he di s coveryrul e governs t he ac crual of cl ai m s under the C o p yri g h t A ct, w e m u st th en d ec ide w h ethe r th e C o u rt corr ect l yappl i ed thatrul e t o t he fa ct s of thi s cas e. Fi nal l y , U SI cr os s - appea l s and r enew s i t s cont ent i on, r ej ect ed byt he D i s t r i ctC our t , t hatG r aham cannotr ecove ron anyof i t s cl ai m s beca us e i tfai l ed t o pr ove a l egal l ys uffi ci ent c a u sa l n e x u s b e tw e e n th e in f rin g e m e n t an d U S I’s p ro f its a w a rd e d to G ra h a m a s c o m p e n sa tio n f o r th e in f rin g e m e n t. I. BA CKGROUND A . F a cts G r aham i s an i ns ur ance br oker age f i r m t hatpr ovi des pr oper t yand ca s ual t yi ns ur ance s ervi ces t o bus i nes s es . H aughey w o rke d fo r G rah am as a p rod u ce r (salesp erso n ) fro m Jan u ary 1985 t hr ough Sept ember1991. Pr oducer s s erve as in te rm e d ia ri e s b e tw e e n th e irc lie n ts a n d in s u ra n c e c o m p a n ie s . G raham ’s produ cers sol i ci tcl i ents byfi rs tprepari ng a ri sk as s es s m ents tudy , cal l ed a s ur veyand ana l y s i s , t hateval uat es t he c lie n t’ s n e e d s . In o rd e r t o p re p a re th e s u rv e ya n d a n a lysis , a p r o d u c e rg e n e r a l l ymu s ts p e n d a s i g n i f i c a n ta mo u n to f

t i me l earni ng t he cl i ent ’ s bus i nes s , as s es s i ng i t s i ns ur ance needs , and revi ew i ng i t s curr ent pol i ci es. T he p roduce r then prepares a w r i t t en pr opos al t hatcont ai ns r ecomm endat i ons addr es s i ng t he cl i ent ’ s needs as i dent i fi ed i n t he s ur veyand ana l y s i s . I f the cl i entagr ees t o G r aham’ s pr opos al , i tpl ace s t he cl i entw i t h an i ns ur ance companyt hatactual l yw r i t es t he i ns ur ance . G r aham r ece i ves a comm i s s i on fr om t he i ns ur ance companyw hi ch i s s ues th e p o licya n d in a d d iti o n re c e iv e s a se rv ice f e e f ro m its c lien t. I n t h e 1 9 8 0 s , Gr a h a m’ s p r e s i d e n t , W i l l i a m Gr a h a m, devel oped form l anguage cal l ed the St andar d Par agr aphs t o be u se d b yG ra h a m ’s p ro d u c e rs to p re p a re su rv e ya n d a n a ly sis document s and cove r age pr opos al s . T he St andar d Par agr aphs w er e notcopyr i ght ed.5 S o m eti m e in 1 9 9 0 , G rah am b eg an to p rep are the S tand ard Sur veyand A nal y s i s and the St andar d Pr opos al ( col l ect i vel y , t he “St andar d W or ks ” ort he “W or ks ”)
. T he St andar d W or ks , w hi ch w er e ea ch hundr eds of page s l ong, i ncl uded s om e l anguage fr om t he St andar d Par agr aphs as w el l as new m at er i al
. A ft erdr aft v ersion s o f th e S tand ard W o rks w ere d istri b u ted to G rah am ’s ei ghtpr oducer s , i ncl udi ng H aughey , t he fi r s tedi t i on of the St andar d Sur veyw as compl et ed ar ound M ar ch orA pr i l 1991 and itw as th en co p yri g h ted. T h e f ir st ed it ion o f th e S tand ard Pr opos al w as compl et ed i n t he fa l l of 1991 and i tal s o w as copyr i ght ed. G r aham pl ace d copyr i ghtnot i ces on cl i ent document s t hati ncorpor at ed the St andar d W or ks and r egi s t er ed cert ai n por t i ons of the W or ks w i t h t he C opyr i ghtO ffi ce. G r aham’ s pr oducer s us e the St andar d W or ks as t empl at es f o r c lien t-sp e c if

ic p ro p o sa ls. T h e S tan d a rd W o rk s in c lu d e p lain E ngl i s h expl anat i ons of i ns ur ance pol i ci es and conc ept s t hat G r aham’ s pr oducer s can c opyi nt o cl i ent
- s peci fi c mat er i al s and t hat cl i ents can ea si l yun derst and
. T he S t and ard W orks al so s erve as r efe r ence m at er i al s t o gui de G r aham’ s pr oducer s i n t he devel opm entof cl i ent
- s peci fi c mat er i al s . G r aham’ s pr es i dent tes tifie d th a t th e S tan d a rd W o rk s a re “ a b so lu telye ss e n tial” to G raham ’s bu si ness “[b]ecause t heyare pr ob ablyt he m ost i m por t antw ayt hatw e ca n es t abl i s h cr edi t abi l i t y[s i c] w i t h a per s pect i ve [s i c] cl i ent
. ” A pp. at371. H a u g h e y ’s e m p lo ym e n t w ith G ra h a m w a s te rm in a ted in S ep tem b er 1 9 9 1 , ap p are n tl yb ec au se H au g h ey ’s cli en ts w ere pr i m ar i l ys m al l er , fami l y - run bus i nes s es and G r aham soughtat t hatt i m e t o at t r actl ar gerbus i nes s es as cl i ent s . H augheyt es t i fi ed att r i al t hathe l eftG r aham on am i cabl e t erm s and he r ece i ved a t hi r t y - t hous and dol l ars ever ance packa ge pay abl e overt hr ee m ont hs
. G r aham and H augheyal s o ent er ed i nt o a t erm i nat i on a g re e m e n t in w h ich H a u g h e yre a f f irm e d h is p ro m ise in h is empl oym entcontr actt o keep c om panyi nform at i on confi dent i al and t o tur n overal l of G r aham’ s “pape r s and the i nform at i on cont ai ned ther ei n” i n H aughey ’ s pos s es s i on upon t erm i nat i on of h is e m p lo ym e n t. A p p . at 1 9 8 7 . N o n e th e les s, f o llo w in g h is term ination H au g h eyretaine d b ind ers tha t con tai n ed at l ea st pa rt of the S t and ard W orks.T his l et t er w as not pr esent ed in evi den ce bef ore the fir st 1 j ur y , w hi ch, as pr evi ous l y s t at ed, concl uded thatG r aham w as not t i m e- barr ed fr om r ecove r i ng foract s of i nfr i ngementoccurr i ng m or e than thr ee y ear s pr i ort o G r aham’ s fi l i ng of t he i ns t antcas e. H ow ever , t he D i s t r i ct C our t r el i ed i n par t on H aughey ’ s i m pr oper s ol i ci t at i on of G r aham’ s cl i ent s as evi dence t hat G raham w as on not i ce of U SI ’ s copyr i ghti nfr i ngementas ear l y as t he fa l l of 1991. U SI cont ends t hatH aughey ’ s t es t i m o n y su pport s an 2 i nfer ence t hat hi s i nfr i ngement began i m m edi at el yaft erhi s arr i val 6 Shor t l yt her eaf

t er , H augheygota j ob ata s m al l er in s u ra n c e b ro k e ra g e f

ir m , F la n ig a n , O ’H a ra & G e n tr y(“ F O G ” ). A taboutt he s ame t i m e thatH augheyj oi ned FO G , H aughey so licite d c e rta in o f

G ra h a m ’s c lien ts in v io latio n o f h is t erm i nat i on agr eement
. G r aham’ s exec ut i ve vi ce pr es i dent ( J udi t h D ool i ng) s entH augheya l et t erm emori al i zi ng a conver s at i on i n w hi ch H augheyagr eed t o cea s e s uch s ol i ci t at i on pendi ng negot i at i on of an a gr eementt o s el l FO G and H aughey cert ai n acco un t s. 1 I n N ovember1991, G r aham, FO G and H augheyent er ed into a n ag ree m en t i n w h ich G rah am so ld F O G six o f H au g h ey ’s p rio r a c c o u n ts. G ra h a m p ro v id e d F O G a n d H a u g h e yw ith m at er i al s r el at ed t o t hos e s i x acc ount s , i ncl udi ng pr opos al s m ade t o t hos e cl i ent s i n t he curr entand pr i ory earw hi ch i ncl uded G ra h a m ’s c o p yrig h ted m a ter ials . H a u g h e ya lso sp e c if ica lly pr om i s ed t o hol d al l “know l edge a nd i nform at i on conce r ni ng” th e S tan d a rd W o rk s “ in tru st [ a n d ] in c o n f id e n c e f o r th e so le benef i tof G r aham, ” t o r etur n al l “pape r s and i nform at i on” obt ai ned fr om G r aham ot hert han i nform at i on r el at ed t o t he acc ount s s ol d, app. at2084, and nott o “us e, di vul ge, or ot herw i s e di s cl os e” a nyof G r aham’ s confi dent i al i nform at i on, app. at2082. N o tw ith sta n d in g h is p ro m ise , H a u g h e ysu b se q u e n tly i nfr i nged G r aham’ s copyr i ght ed mat er i al i n t he St andar d W or ks byi ncludi ng i ti n p roposal s t o F O G ’s cl i ents
. H aug heyfi rs t i ncl uded G r aham’ s copyr i ght ed mat er i al i n a pr opos al t o a cl i ent in Ju ly1 9 9 2
. It is u n c lea r w h e th e r H a u g h e yc o p ied th is

2atFO G i n N ovember 1991, but t he por t i ons of hi s t es t i m onyr el i ed up on byU S I do no test abli sh a da te o f i nfri ng em ent. U S I al so not es th at, dur i ng openi ng ar gum ent s t o t he j ur y , G r aham m ade s t at ement s t hatU SI ’ s i m pr operus e of the S tand ard W or ks began i n 19 91 , and con t end s that G raham shou l d b e held t o these s t at ement s . H ow ever , t hi s co u r thas hel d t hata “j udi ci al a d m is s io n [ ] m u s t b e u n e q u iv o c a l” to b e e f f e c tiv e , G lick

v . W h ite Motor C o. , 4 5 8 F
. 2 d 1 2 8 7 , 1 2 9 1 (3d C ir
. 1 9 7 2 ), an d G rah am ’s s t at ement s do n o t une qui vocal l ys t at e thatan ac tof i nfr i ngement ( as oppos ed t o p o ssess i on of the W or ks ) occurr ed i n 1991. M or eover , G r aham h ad t he bur den t o pr ove thatact s of i nfri ng em ent occu rr ed, and i t s evi den ce est abli shed a d at e of f i rs t i nfr i ngementi n J ul y1992. 7 m at er i al fr om hi s ow n copyof the St andar d W or ks orw hetherhe us ed a c opyof the 1992 ver s i on of the St andar d W or ks ( w hi ch H a u g h e yh a d n o t o b tain e d b e f o re th e ter m in a tio n o f

h is empl oym entw i t h G r aham) br oughtt o FO G byanotherform er G r aham em pl oy ee, D on B or es en, i n t he s pr i ng of 1992. I n any event , ats om e t i m e i n 1994 or1995, FO G copi ed the ent i r e 1992 v e r s i o n o f

t h e S t a n d a r d W o r k s i n t o i t s wo r d p r o c e s s i n g s y s t e m; pap er copi es w ere al so dis t ri bu t ed to FO G ’s em ploy ees. I n 1995, FO G w as acqui r ed byU SI H ol di ngs and s ub s e qu e nt l ymer ge d wi t h tw o o t he re nt i t i e s t o f orm U SI M i dAt l a nt i c . The St a nd a r d W orks w e r e made a va i l a bl e t o USI em ploy ees. A ccor di ng t o G r aham’ s expert , H augheyand U SI copi ed G r aham’ s copyr i ght ed l anguage fr om t he St andar d W or ks i nt o at le a s t 8 5 7 p ro p o s a ls o v e r t h ir te e n y e a rs (1 9 9 2 th ro u g h 2 0 0 5 ). U S I p e rso n n e l tes tifie d th a t it s w ritten p ro p o sa ls to c lien ts ( i ncl udi ng, pr es um abl y , t hos e w i th i nfr i ngi ng l anguage ) w er e an i m por t antpar tof the s al es pr oces s –i n fac t , H augheyeven t es t i fi ed thats om e cl i ent s w er e convi nced t o pur chas e i ns ur ance thro u g h U S I on the b asis o f th e p rop o sals– an d that itw as U S I’s p ra c tice to re v iew th e p ro p o sa l’s c o n ten ts “ p a g e b yp a g e ” w ith t he cl i ent
. A pp. at571. M or eover , FO G had nothi ng compar abl e t o t he St andar d W or ks w hen H augheyfi r s tarr i vedT he D i s t r i ctJ udge w ho i ni t i al l yhear d t hi s m at t erand w ho 3 r ul ed o n t h e s t a tu t e o f l i mi t a t i o n s mot i o n d i e d i n 2 0 0 5
. T he s ucce s s orD i s t r i ctJ udge r eaf fi r m ed thatrul i ng. W e not e thatt h e D ist ri ctC our tpr ovi ded the j ur yw i t h a 4 s pol i at i on i ns t ruct i on beca us e U S I destr oy ed ce r t ai n cl i ent pr opos al s aft ert he C our thad or der ed pr oduct i on o f s uch do cum ents
. 8 and, as not ed above , FO G and U SI m ade e l ectr oni c and pa per copi es of the St andar d W or ks avai l abl e t o t hei rempl oy ees and encour aged them t o us e the St andar d W or ks w hen deve l opi ng cli en t- sp ec ifi c m aterial s. O n the o ther h an d , m o st of U S I’s pr opos al s dur i ng t hi s per i od di d noti ncl ude i nfr i ngi ng l anguage , a n d e v e n th o se th a t d id in c lu d e in f rin g in g lan g u a g e d id so o n ly on a few pag es. It w a s U S I’s p ra c tice to k e e p p ro p o sa ls to c lien ts confi dent i al , and G r aham di d notdi s coverU SI ’ s i nfr i ngement u n ti l N o v em b er 2 0 0 4 , w h en a c li en t sho w ed o n e o f G rah am ’s p ro d u c e rs a c o p yo f

a U S I p ro p o sa l to th e c lien t. B . P roce dural H i s t ory G r aham fi l ed thi s act i on on February8, 2005, as s er t i ng cl ai m s forcopyr i ghti nfr i ngementagai ns tU SI and H augheyas w el l as a br eac h of contr actcl ai m agai ns tH aughey
. U SI m oved forpar t i al s um m aryj udgm ent , cont endi ng t hatanyi nfr i ngement t hatoccurr ed more t han thr ee y ear s pr i ort o fi l i ng of the compl ai ntw as t i m e- barr ed undert he C opyr i ghtA ct ’ s t hr ee- y ear s t atut e of l i m i t at i ons forci vi l act i ons . T he D i s t r i ctC our tdeni ed th e m o tio n , h o ld in g th a t th e d isc o v e ryru le a p p lied to inf ri n g em en t cl aim s u n d er the C o p yri g h t A ct an d that there fo re G ra h a m w a s e n tit led to p re se n t ev id e n c e to d e m o n stra te th a t it co u ld n o t hav e re aso n ab lyd isco v ere d U S I’s i n fring em en t bef o re i tactual l ydi d s o. 3 T he ca s e pr ocee ded t o a j ur yt r i al
. A ft erG r aham 4 vol unt ar i l ydi s m i s s ed the br eac h of contr actcl ai m t hati thad as s er t ed aga i ns tH aughey , t he j ur yr eac hed a ve r di cti n favorofT hi s amount r epr es ent ed the pr ofi t s t hatU SI and H aughey 5 earned as a re s ul t of the i nfr i ngement
. U ndert he C opyr i ghtA ct , 17 U
. S. C
. § 504( b) , G r aham bor e the bur den of e s t abl i s hi ng t he defe ndant s ’ gr os s r evenue fr om i nfr i ngement ; G r aham pr es ent ed evi dence t hat U SI ’ s gr os s comm i s s i ons fr om cl i ent s w ho r ece i ved an i nfr i ngi ng pr opos al w er e appr o x im at el y$32 m i l l i on and that H aughey ’ s gr os s comm i s s i ons w er e appr oxi m at el y$12 m i l l i on. T h e d e f e n d a n ts th e n b o re th e b u rd e n o f p r o v in g th a t ce rta in expens es s houl d be s ubt r act ed fro m t he gr os s r evenue fi gur e and to apport i on t he r evenue s betw een thei ri nfr i ngi ng and nonin f ri n g in g c o n d u c t. I

d. H er e, t he evi dence s how ed thatt w enty - fi ve p erc en t of

the g ross rev en u e w as p aid to p rod u ce rs as a s alary expens e, l eavi ng a t ot al net comm i s s i on fort he def endant s of appr oxi m at el y$27 m i l l i on. T he j ur y ’ s ul t i m at e aw ar d w as appr oxim atelys eventyper centof thatnetcomm i s s i on, i m pl y i ng t hat t he j ur y concl uded t hat t hi r t y per cent of t he ne t c om m i s s i on w a s a ttribu tab le to f

a c to rs o th e r th a n th e in f rin g e m e n t. I n r eac hi ng t hi s concl us i on, t he D i s t r i ctC our tcons i der ed 6 e v id e n c e re g a rd in g H a u g h e y ’s o b lig a tio n s to G ra h a m u n d e r h is em p loym en t and ter m ination co n tr ac ts ev en tho u g h the C o u rt excl uded thos e contr act s fro m t he j ur ybeca us e i thad hel d t hat t hos e contr act s w er e s uper s eded by t he N ovember1991 agr eement b e t w e e n G r a h a m , F O G a n d H a u g h e y. 9 G r aham on t he copyr i ghtcl ai m i n t he amountof $16, 561, 230 agai ns tU SI and $2, 297, 397 agai ns tH aughey
. T he D i s t r i ct 5 C our tpr es ent ed the j ur yw i t h s ever al i nt err ogat or i es , i ncl udi ng, as r el evanther e, w hetherG r aham shoul d have di s cover ed that U S I w a s in f

ri n g in g its c o p yri g h ts p ri o r t o F e b ru a ry 9 , 2 0 0 2
. Be c a u s e t h e j u r ya n s we r e d i n t h e n e g a t i v e , Gr a h a m’ s c l a i ms w er e nott i m e- barr ed undert he di s coveryrul e. Fol l ow i ng t he j ur yver di ct , U SI m oved fora new t r i al on t he s t atut e of l i m i t at i ons i s s ue, and the D i s t r i ctC our tgr ant ed the m o tio n . A c c o rd in g to th e C o u rt, th e ju ry ’s a n sw e r to th e sta tu te of l i m i t at i ons i nt err ogat or y“w as agai ns tt he gr eatw ei ghtof the evi dence ” bec aus e the D i s t r i ctC our tconcl uded thatG r aham knew ors houl d have know n of ce r t ai n s t or m w arni ngs t hat H augheyw oul d i nfr i nge as ear l yas t he fa l l of 1991. Wi l l i a m A. 610 G r aham C o. v. H

aughey , N o. 05- 612, 2006 W L 3386672, at*15 ( E
. D
. Pa. N ov. 21, 2006)
. Speci fi cal l y , t he C our tconcl uded that G r aham shoul d have know n: t hatH augheyr et ai ned a c opyof the St andar d W or ks i n vi ol at i on of hi s empl oym entand t erm i nat i on agr eement s w i t h G r aham as w el l as t he N ovember1991 agreem ent that s old FO G cert ai n o f H aug hey ’s cl i ent accoun t s; t hathe w as w or ki ng as a pr oducerforanotheri ns ur ance b ro k e ra g e f

irm ; an d th a t, giv e n th e se f a c ts, “ it w a s q u ite pos s i bl e, i f notl i kel y , t hatH augheyand FO G w oul d copy[the S tan d a rd W o rk s] in to c lien t p ro p o sa ls, f o r th a t w a s th e o n ly r eas on forH augheyand FO G t o r et ai n [them]. ” I d. a t * 1 4
. T hus , t he D i s t r i ctC our tconcl uded that“G r aham had i nform at i on upon H aughey ’ s departur e [i n t he fa l l of 1991] t hat w o u ld c a u se a p e rso n , in th e e x e rc ise o f re a so n a b le d ili g e n c e , to i nqui r e of H augheyand FO G aboutt he pos s es s i on, us e and copy i ng of the [St andar d W or ks ]
. ” I d. T her efor e, t he D i s t r i ct C our tor der ed a ne w t r i al as t o t he appl i cat i on of the C opyr i ght A ct’s st atute o f li m it ati o n s an d the c alcu lat ion o f G rah am ’s dam ages. B ec au se th e D istri ct C o u rtg ran ted U S I’s m o ti o n fo r a n ew tr ial o n the s tatu te of li m it ati o n s issue , itd id n o t r ea ch U S I’s m o ti o n fo r a n ew tr ial o n the g rou n d s tha t th e jury ’s ap p o rt ion m en t of

U S I’s pro fit s (i
. e., w h ethe r th e p rof it s w ere at t r i but abl e t o i nfr i ngementors om e othernon- i nfr i ngi ng caus e) w as agai ns tt he w ei ghtof the evi dence and/ ort hatt he ver di ct w as exce s s i ve. U SI al s o m oved forj udgm entas a mat t erof l aw on t he gr ound t hatG r aham fai l ed t o pr ove a l egal l ys uffi ci entcaus al co n n ec ti o n b etw ee n an yco p yri g h t i n fring em en t and U S I’s pr ofi t s . T he D i s t r i ctC our tdeni ed thatm ot i on, hol di ng t hat G ra h a m m e t it s b u rd e n o n th is iss u e b e c a u se G ra h a m so u g h t to r ecove rU SI ’ s pr ofi t s onl yas t o U SI ’ s cl i ent s w ho r ece i ved in f rin g in g p ro p o sa ls, d e m o n stra ted th a t th e w ritten p ro p o sa ls w er e an i m por t antpar tof U SI ’ s s al es pr oces s , and demonstr at ed t hat U S I per vasi velyused langu age f rom t he S t and ard W orks. F o ll o w ing su b seq u en t cross-m o ti o n s fo r sum m ary jud g m en t on the s tatu te of li m it ati o n s issue , the D istri ct C o u rtTh e Di s t r i c t Co u r th a d j u r i s d i c t i o n p u r s u a n tt o 2 8 U. S
. C. 7 § § 1 3 3 1 a n d 1 3 3 8 ( a )
. Th i s c o u r t h a s j u r i s d i c t i o n u n d e r 2 8 U. S
. C. 11 hel d t hatas a mat t erof l aw G r aham coul d notr ecove ron any a c ts o f in f ri n g e m e n t th a t o c c u rr e d p ri o r t o F e b ru a ry 9 , 2 0 0 2
. W i l l i am A

. G r aham C o. v. H aughey , 484 F. Supp. 2d 324, 336- 3 7 (E
. D
. P a. 20 0 7 ). T h e C o u rtco n clud ed that su ff ici en t st o rm w arni ngs exi s t ed t o putG r aham on not i ce of H aughey ’ s ( and t hus U SI ’ s ) i nfr i ngementi n t he fa l l of 1991, i
. e. , s hort l yaft er H augheyl eftG r aham. T he C our tnot ed thatG r aham w as or s houl d have be en aw ar e: t hatH augheyr et ai ned pos s es s i on of a c o p yo f th e S tan d a rd W o rk s w h e n h e lef t G ra h a m ; th a t th e o n ly v a lu e o f th e S tan d a rd W o rk s to H a u g h e yw a s to c o p yth e m in to cl i entpr opos al s ; t hatH augheyw entt o w or k fora compet i ng in su ra n c e b ro k e r; a n d th a t H a u g h e yw a s “ n o t a p e rso n o f h is w or d” bec aus e he e ngaged i n i m pr opercompet i t i ve beha vi orby vi ol at i ng t he non- compet e cl aus e of hi s empl oym entand te rm in a tio n c o n tr a c ts
. I d. at336. T he D i s t r i ctC our tr ej ect ed G r aham’ s ar gum entt hat“the c irc u m sta n c e s th is c o u rt h a s id e n tifie d ” a s s to rm w a rn in g s c o u ld nothave putG r aham on not i ce of t he def endant s ’ i nfr i ngement b ec au se th o se sto rm w arn ing s w ere related to H au g h ey ’s “dep arture from G raham i n the fal l of 1 99 1, befo re the fir st e v i d e n c e o f

a n i n f r i n g i n g p r o p o s a l p r e p a r e d b y H a u g h e y i n J u l y, 1992. ” I d. at334. T he C our tconce ded that“i tw oul d be n o n sen sical fo r a statute o f li m it ati o n s to b eg in ru n n ing b ef o re t he ac tual i nj ur yhad occ ur r ed, ” butconcl uded that“w e s ee no r eas on w hyt he cl ock on G r aham’ s cl ai m s s houl d nothave s t ar t ed t o run att he t i m e w hen H augheyfi r s tbegan t o i nfr i nge, s i nce ther e i s no s i gn t hatanyof the s t or m w arni ngs had aba t ed byt hatpoi nt
. ” Id
. T he ca s e pr ocee ded t o a s econd j ur yt r i al on t he i s s ue of d am ag es f

o r ac ts of inf ri n g em en t occ u rri n g o n o r af ter F eb rua ry 8 , 2 0 0 2
. Th e j u r ya g a i n r e tu r n e d a v e r d i c tf o rGr a h a m, t h i s t i me i n the am ou nt of $1

. 4 m i l l i on againstU S I and $2 68 , 00 0 ag ai nst H a ug he y . G r a ha m t i mel ya pp e a l e d o n Apr i l 2, 20 08 a nd U SI t i m el ycr os s - appea l ed on A pr i l 15, 2008. 7§ 1291. 12 II. DI S CU S S I ON A . St at ut e of

Li m i t at i ons T h e C o p yrig h t A c t p ro v id e s th a t “[ n ]o c iv il ac tio n sh a ll b e m a in tain e d u n d e r th e p ro v isio n s o f th is titl e u n les s it is comm ence d w i t hi n t hr ee y ear s aft ert he cl ai m acc rued. ” 17 U
. S
. C
. § 5 0 7 (b). B ec au se G rah am fil ed this acti o n o n F eb rua ry 8, 2005, t he ac crual of G r aham’ s cl ai m s m us tbe eva l uat ed as of February9, 2002. H ow ever , i n cont i nui ng i nfr i ngementcas es s uch as t hi s , “[e ] ach a ctof i nfr i ngementi s a di s t i nctharm gi vi ng r i s e t o an i ndepende ntcl ai m forr el i ef. ” S t o n e v . Wi l l i a ms , 970 F. 2d 1043, 1049 ( 2d C i r . 1992) ( ci t i ng Mountv. B ook- of

- theMonth C l ub, I

nc. , 555 F. 2d 1108 ( 2d C i r . 1977) )
. T hus , as t he D i s t r i ctC our tcorr ect l yhel d, G r aham w as nott i m e- barr ed fr om r ecove r i ng foranyact s of i nfr i ngementt hatoccurr ed on oraft er F eb rua ry9 , 2 0 0 2 , reg ard less o f w h ethe r th e inju ryo r disco v ery rul e appl i es t o det erm i ne the ac crual of cl ai m s undert he C opyr i ghtA ct
. T hati s noti n di s put e. I ns t ead, t he part i es di ffe r on w hetherG r aham m ayal s o r ecove rforanyact s of i nfr i ngementt hatoccurr ed pr i ort o February9, 2002. 1 . C la im A c c r u a l R u le T h e q u esti o n o f w h ethe r th e d isco v eryrule o r th e inju ry rul e appl i es t o det erm i ne w hen a c i vi l caus e of a ct i on acc rues undert he C opyr i ghtA cti s a l egal one. U ndert he di s coveryrul e, a “ c a u se o f

a c tio n a c c ru e s ‘w h e n th e p lain tiff d isc o v e rs, o r w ith due di l i gence s houl d have di s cover ed, t he i nj ur yt hatform s t he bas i s fort he cl ai m . ’ ” D is abl ed i n A ct i on of P enns ylvani a v. Se. P enns ylvani a Trans

p. A uth. , 539 F. 3d 199, 209 ( 3d C i r . 2008) ( quot i ng R om er o v. A l l

s tat e C or p. , 4 0 4 F
. 3 d 2 1 2 , 2 2 2 (3d C ir
. 2005) )
. U ndert he i nj ur yrul e, a ca us e of a ct i on acc rues att he t i m e o f t h e i n j u r y. I n t h i s c a s e , i f

t h e i n j u r y ru l e w e r e t o a p p l y, G r aham w oul d be t i m e barr ed fr om r ecove r yon anyact s of13 i nfr i ngementt hatoccurr ed pr i ort o February9, 2002. A l t hough w e have notpr evi ous l yaddr es s ed thi s i s s ue, eigh t of o u r si ster co u rt s o f a p p ea ls ha v e a p p li ed the d isco v ery ru le to c iv il a c tio n s u n d e r t h e C o p yri g h t A c t. See W ar r en Fr eede nf eld A s s ocs . , I

nc. v. McTigue , 53 1 F
. 3d 38 , 44 -46 (1st C ir. 2 0 0 8 ); C om cas tv. Mul t i

- V is i on E l ecs . , I

nc. , 491 F. 3d 938, 9 4 4 (8 th C ir. 2 0 0 7 ); Roge rMi l l e rMus i c , I nc . v . So ny/

ATV Publ ’ g, LLC , 4 7 7 F .3 d 3 8 3 , 3 9 0 (6 th C ir. 2 0 0 7 ); P ol arB ear P r ods

. , I nc. v. Ti m ex Corp. , 3 8 4 F
. 3 d 7 0 0 , 7 0 5 -07 (9th C ir
. 2 0 0 4 ); G ai m an v. McFarlane , 3 6 0 F
. 3 d 6 4 4 , 6 5 3 (7th C ir
. 2 0 0 4 ); Lyons P ’s hi

p, L. P

. v. Mor r is C os t um es , I nc. , 243 F. 3d 789, 796 (4 th C ir. 2 0 0 1 ); D aboub v. G i bbons , 4 2 F
. 3 d 2 8 5 , 2 9 1 (5th C ir
. 1 9 9 5 ); S t o n e v . Wi l l i a ms , 9 7 0 F
. 2 d 1 0 4 3 , 1 0 4 8 (2d C ir
. 1 9 9 2 ). U SI cont ends t hatt hes e pr ece dent s ar e notper s uas i ve b e c a u se th e q u e stio n o f w h e th e r th e in

ju ryo r d isc o v e ryru le ap p li ed w as n o t squ are lyraised in m o st of them an d , m o re im p o rta n tly , the yf

a il t o a d d re ss th e S u p re m e C o u rt’s d e c isio n in T RW I n c . v . An dr e ws , 5 3 4 U
. S
. 1 9 (20 0 1 ). T he TRW

cas e di d notar i s e undert he C opyr i ghtA ctbut undert he Fai rC r edi tR epor t i ng A ct( “FC R A ”)
. I n r eac hi ng t he st atute of l i m i t at i on s i ssue, t he N i nth C i rcui theld that, becau se C ongr es s had not“‘ expr es s l yl egi s l at ed otherw i s e, ’ ” the d is c o v e ry ru le a p p lie d to c la im s u n d e r t h e F C R A
. I d. at26 ( quot i ng A ndr ew s v. TR W I nc. , 2 2 5 F
. 3 d 1 0 6 3 , 1 0 6 7 (9th C ir
. 2000) )
. T he Supr eme C our tr ej ect ed thatappr oach a nd hel d t hat t h e d i s c o v e r yru l e d i d n o ta p p l yt o a c t i o n s u n d e rt h e F CRA becau se “the textand structure of [the F C R A ] evi nce C on gress ’ i nt entt o pr ecl ude j udi ci al i m pl i cat i on of a di s coveryrul e. ” I d. at 2 8
. S p e c i f

i c a l l y , t h e Co u r tr e a s o n e d t h a tb e c a u s e t h e F CRA pr ovi ded thatt he “s t atut e of l i m i t at i ons runs fr om ‘ t he dat e on w h i c h t h e l i a b i l i t y a r i s e s , ’ s u b j e c tt o a s i n g l e [ s t a tu t o r y] exce pt i on forcas es i nvol vi ng a def endant ’ s w i l l ful m i s r epr es ent at i on of m at er i al i nform at i on, ” the “mostnatur al r eadi ng of [the FC R A ] i s t hatC ongr es s i m pl i ci t l yexcl uded a gener al di s coveryrul e byexpl i ci t l yi ncl udi ng a more l i m i t ed one. ” I d. (qu o ti n g 1 5 U
. S
. C
. § 1 6 8 1 p ).14 T h i s c o u r th a d t h e o c c a s i o n t o i n t e rp r e ta n d a p p l y TRW w hen i tw as fac ed w i t h t he i s s ue of the s t atut e of l i m i t at i ons appl i cabl e t o t he A m er i cans w i t h D i s abi l i t i es A ctand the R e h a b ilita tio n A c t. D is abl ed i n A ct i on , 5 3 9 F .3 d a t 2 0 8 -0 9
. Be c a u s e n e i t h e ra c ti n c l u d e d a n e x p r e s s s t a tu t e o f l i mi t a t i o n s , we a p p lie d th e tw o -ye a r s ta te s ta tu te o f lim ita tio n s . I

d. at 20 8
. In r eac hi ng t he “mor e di ffi cul tques t i on” of w hen the tw o y ear s ta tu te b e g in s to ru n , i d. , w e i nt erpr et ed T R W t o r equi r e the fol l ow i ng i nqui r yt o det erm i ne the appl i cabl e ac crual rul e for fede r al caus es of ac t i on. Fi r s t , “[w ] her e C ongr es s has s peci fi ed an ac crual dat e by‘ expl i ci tcomm and’ or‘ byi m pl i cat i on fr om t he s t ructur e and t extof the s t atut e, ’ w e def ert o i t s di r ect i ve. ” Id

. at209 ( quot i ng TRW , 534 U
. S. at27- 28)
. Second, “‘ [i ] n t he abs ence of a c ont r arydi r ect i ve fr om C ongr es s , ’ w e appl yt he
‘ fede r al di s coveryrul e. ’ ” I d. ( quot i ng R om ero , 4 0 4 F
. 3 d at 22 2 ). U S I w o u ld h a v e u s s e t as id e th a t an a ly sis , ap p lied b yth is co u rtless than a y ea r ag o , in f av o r of a sin g le distr ictco u rt d e c isio n in a n o th e r c irc u it w h ich u se d th e in ju ryru le to d e te rm in e w h e n c la im s a c c ru e u n d e r t h e C o p yri g h t A c t. See A u sca p e In t’ l v. N

a t’ l G eo g ra

p h ic So c’y , 409 F. Supp. 2d 235, 2 4 7 (S .D .N .Y . 2 0 0 4 ). W e d e c lin e to d o so . E v e n th e c o u rt in A us cape conce ded that“the t extand s t ructur e of the [Copy r i ght A c t] len d n o g u id a n c e ” a s to “ C o n g re ss ’ in ten t w ith re g a rd to w hen an i nfr i ngementcl ai m acc rues . ” I d. a t 2 4 4 . T h is c o n c e ss io n a n sw e rs in th e n e g a tiv e th e f irst q u e stio n ra ise d in D is abl ed i n A ct i on : w hether“C ongr es s has s peci fi ed an a ccrual d ate b y‘ex p li citco m m an d ’ or ‘b yim p li ca ti o n fro m the s tru cture and t extof the s t atut e. ’ ” 539 F. 3d at209 ( quot i ng TRW , 534 U
. S
. at 27 -28 ). Fur t her , t he t extand s t ructur e of the C opyr i ghtA ct a c tu a l l yf

a v o ru s e o f

t h e d i s c o v e r yru l e . As n o t e d b yGr a h a m, cr i m i nalact i ons undert he C opyr i ghtA ctm us tbe “c om m ence d w i t hi n 5 y ear s aft ert he cau se of acti on arose .” 1 7 U .S .C . § 507( a) ( emphasi s added)
. J us ts i x y ear s pr i ort o the amendm ent t o t he C opyr i ghtA ctt hatadded the ci vi l l i m i t at i ons per i od now codi fi ed at17 U
. S. C
. § 507( b) , t he Supr eme C our ti nt erpr et ed l anguage s i m i l art o § 507( a) ’ s cr i m i nal l i m i t at i ons per i od i n t he A d m ir altyA ct (“ca u se o f a cti o n arises” ) t o em b o d ythe in jury15 ru le
. McM

ahon v. U

ni t ed Stat es , 3 4 2 U .S . 2 5 -2 6 , 2 7 (1 9 5 1 ); s ee a l s o TRW , 5 3 4 U
. S
. at 32 (no ti n g that p eti ti o n er “ o ff er[ ed ] a s t r ong ar gum ent ” thatus e of the w or d “ar i s e” i n a s t atut e of l i m i t at i ons pr ovi s i on s i gnal s congr es s i onal i nt entt o adoptt he i nj ur yrul e ( ci t i ng McM ahon, 342 U

. S. 25 ) )
. S i g n i f i c a n t l y, C ongr es s us ed di ffe r entl anguage i n t he c ivill i m i t at i ons p rov isi o n (“a fter the claim ac cru ed ”), w h ich th e S u p rem e C o u rt h a d p re v io u s ly in te rp re te d a s e m b o d y in g th e d is c o v e ry ru le
. See U r i e v. Thom

ps on , 337 U
. S. 163, 169- 170 ( 1949) ( cons t rui ng “ca us e of a ct i on acc rued” i n Feder al E m pl oy er s ’ L i abi l i t yA ct a n d h o ld in g th a t sta tu te o f lim itatio n s w a s n o t trigg e re d u n til i nj ur ed empl oy ee s houl d have know n of i nj ur y )
. G i ven the m axi m of s t atut or ycons t ruct i on t hat“w hen the l egi s l atur e us es cert ai n l anguage i n one partof the s t atut e and di ffe r entl anguage in a n o th e r, t h e c o u rt a s s u m e s d if f e re n t m e a n in g s w e re in te n d e d ,” S o sa v . A lva re z-Ma c h a in , 542 U
. S. 692, 711 n. 9 ( 2004) ( quot at i on om i t t ed) , G r aham per s uas i vel yar gues t hatt he c rim in a l an d c iv il l im itatio n s p e rio d s e m b o d yd if f e re n t cla im acc rual rul es and that§ 507( b) s houl d be i nt erpr et ed t o embody t he di s coveryrul e. U SI , once a gai n poi nt i ng t o A us cape , i nt erpr et s t he l egi s l at i ve hi s t or yof the C opyr i ghtA ct ’ s s t atut e of l i m i t at i ons p rov isi o n as e v iden ce o f c o n g ression al i n tent to ad o p t th e inju ry ru le f o r c iv il c la im s b ro u g h t p u rs u a n t to th e C o p yri g h t A c t. H ow ever , C ongr es s pr ovi ded no “di r ect i ve” mandat i ng us e of th e in ju ry ru le in th a t le g is la tiv e h is to ry. D is abl ed i n A ct i on , 539 F. 3d at209. Forexampl e, unt i l t he s t atut e of l i m i t at i ons pr ovi s i on now codi fi ed at17 U
. S. C
. § 507( b) w as enac t ed i n 1957, t he C o p yrig h t A c t lac k e d a sta tu te o f lim itatio n s p e rio d f

o r c iv il act i ons and court s bor r ow ed s t at e s t atut es of l i m i t at i on for a n a lo g o u s c la im s . See S . R e p . N o . 8 5 -1 0 1 4 (1 9 5 7 ), as r epr i nt ed in 1957 U
. S. C
. C
. A
. N
. 1961, 1961- 62. U SI not es s ever al i ns t ance s i n t he l egi s l at i ve hi s t or yof § 507( b) i n w hi ch congr es s per s ons and w i t nes s es ar gued that§ 507( b) w as n e c e s s a ry to p ro v id e a “ u n if o rm ” o r “ f

ix e d ” lim ita tio n s p e ri o d
. H ow ever, t hese st at em ents refl ect ed d i ssat i sfact i on w i t h the use of s t at e s t atut es of l i m i t at i ons , w hi ch r anged f r om one t o ei ght16 y e a rs a n d th e re f

o re e n c o u ra g e d f

o ru m -s h o p p in g . S e e id

. at 1 9 6 2 ; see al

so C opyr ight

s –Stat ut e of

Li m i tat i ons : Hear i ng on H

. R

. 78 1 B ef

ore H

. C om m . on the Ju dici ary , 84t h C ong. 9, 35, 4 0 (1 9 5 5 ) (h e re a f

ter “ H e a rin g ” ). N o n e o f th e se sta tem e n ts addr es s ed the s epar at e i s s ue of w hen a c l ai m w oul d acc rue under t he n ew fede ral t hree- y ear s t atute of l i m i t at i on s. U SI al s o r el i es on a s t at ementi n t he Senat e R epor tt hat “due t o t he natur e of publ i cat i on of w or ks of art
. . . gener al l yt he p e rso n in ju re d re c e iv e s re a so n a b lyp ro m p t n o tice o r c a n e a sily as cert ai n anyi nfr i ngementof hi s r i ght s . T he comm i t t ee a gr ees t hat3 y ear s i s an appr opr i at e per i od fora uni form s t atut e of l i m i t at i ons forci vi l copyr i ghtact i ons and thati tw oul d pr ovi de a n a d e q u a te o p p o rtu n ityf o r th e in ju re d p a rtyto c o m m e n c e h is a c tio n .” S . R e p . N o . 8 5 -1 0 1 4 (1 9 5 7 ), a s r e p rin tedin 1957 U
. S. C
. C
. A
. N
. 1961, 1962. A gai n, t hi s s t at ementdoes nots peak di r ect l yt o t he ac crual of ac t i ons , butr athers eeks t o s uppor tt he three -y ea r l im it ati o n s p eriod ad o p ted b yC o n g ress. M o reo v er, t he fa ctt hatC ongr es s bel i eved thati nfr i ngementw as “gene r al l y ” a publ i c ac tdoes notnece s s ar i l yi m pl yt hat , i n cas es in w h ich in f

rin g e m e n t w a s n o t p u b lic, C o n g re ss in ten d e d to r ej ectappl i cat i on of the di s coveryrul e. I ndeed, t he quot ed p a ss a g e sp e a k s o f

w h e th e r th e in

ju re d p a rtyh a s “ re a so n a b ly pr om ptnot i ce” of i nfr i ngement–an i nqui r ycons i s t entw i t h t he di s coveryrul e. U SI nextpoi nt s t o w hatw e vi ew as an unenl i ght eni ng excha nge betw een Repr es ent at i ve Shepar d J
. C rum packe rand a l ob by i stfor the m oti on picture i nd ust rydu ri ng a H ou se comm i t t ee he ar i ng. R epr es ent at i ve C rum packe rw as conce r ned t hata movi e companycoul d m ake a m ovi e thati nfr i nged on a w r i t er ’ s s cr i pt , s ecr et l ys how t hatm ovi e i n a s m al l t ow n, s i ton t he m ov i e un t i l t he st atute of l i m i t at i on s passed, and t hen rel ease t he movi e gene r al l yw hi l e cl ai m i ng t hatt he w r i t erw as barr ed from enfo rci ng his or her r i gh t s. H eari ng at47
. T he lobby i st r es ponded thateac h per form ance of the fi l m w oul d cons t i tut e a s e p a ra te a c t o f

in f ri n g e m e n t. I

d. at48. T hi s excha nge i s not i l l us t r at i ve of Congre s s i onal i nt entr egar di ng w hen copyr i ght cl ai m s accrue, bu ti s ci t ed b yU S I because the lobby i stal so s t at ed that“i f [a n actof i nfr i ngement ] occurr ed thr ee y ear s ago .U SI corr ect l ynot es t hatt he l egi s l at i v e h ist or yr egar di ng 8 t he r ej ect ed s t atut or y exce pt i ons t o t he C opyr i ghtA ct ’ s t hr ee- y ear l i m i t at i ons per i od w as di r ect ed t ow ar d equi t abl e t ol l i ng r athert han 17 . . [, t hen i t ] w oul d be barr ed i n t hr ee y ear s . ” I d. T h a t sin g le s t at ementbya w i t nes s ata congr es s i onal hear i ng, w hi ch no congr es s per s on comm ent ed on oragr eed w i t h, s i gni fi es not hi ng a n d is h a rd lya b a sis to c o n c lu d e th a t C o n g re ss in ten d e d to a p p ly t he i nj ur yrul e. U S I a lso n o tes th a t C o n g re ss c o n sid e re d in c lu d in g c e rta in exp res s provi si on s t o p erm i tt oll i ng of the st atute of l i m i t at i on s, i ncl udi ng w her e the i nfr i ngerw as gui l t yof fr audul ent con ceal m ent, and i targues t hat the co nsi derat i on of these exce pt i ons w oul d have be en unnec es s aryhad C ongr es s i nt ended to a p p ly th e d is c o v e ry ru le to c la im s u n d e r t h e C o p yri g h t A c t. O f cour s e, had C ongr es s i ncl uded thos e l i m i t ed exc ept i ons w i t hi n § 507( b) , t he hol di ng i n TRW m i ghtw el l have i ncl i ned us t o r ej ectt he di s coveryrul e her e. B utt he i m por t antfac ti s t hat C ongr es s r ej ect ed i ncl us i on of anys t atut or yexce pt i ons t o t he s t atut e of l i m i t at i ons per i od, and di d s o beca us e “the Feder al d istric t co u rts, g e n e ra lly , w o u ld re c o g n ize th e se e q u itab le d ef en ses a n yw ay . ” H
. R ep . N o . 8 4 -24 1 9 , at 2 (1 9 5 6 ). M or eover , t he l egi s l at i ve hi s t or ym akes cl eart hat C o n g re ss in ten d e d th e C o p yrig h t A c t’s s tatu te o f lim itatio n s to a p p ly“ to th e re m e d yo f th e p e rso n a f

f e c ted th e re b y , an d n o t to hi s s ubs t ant i ve r i ght s , ” id ., byw hi ch C ongr es s m eantt hat “[e ] qui t abl e cons i der at i ons ar e ava i l abl e t o pr ol ong t he t i m e for br i ngi ng s ui t , ” i d. at3. Fur t her , C ongr es s fea r ed thati ncl us i on of s peci fi c s t atut or yexce pt i ons t o t he thr ee- y earl i m i t at i ons per i od “mi ghtr es ul ti n unfai r nes s t o s om e per s ons . ” S. R ep. N o. 8 5 -1 0 1 4 (1 9 5 7 ), a s r e

p rin tedin 1 9 5 7 U .S .C .C .A .N . 1 9 6 1 , 1 9 6 3
. T hu s, t his case actuall ypresent s the o pp osi t e si tuati on as TRW: C o n g ress c o n side red , b u t r ejec ted, i n clus ion o f sp ec ifi c statuto ry exce pt i ons t o t he C opyr i ghtA ct ’ s s t atut e of l i m i t at i ons i n or der to e n su re th a t th e c o u rts c o u ld c o n sid e r a n ye q u itab le ci r cumst ance s s uffi ci entt o excus e a pl ai nt i ff’ s fai l ur e t o s ue w i t hi n t he thr ee- y earl i m i t at i ons per i od. 8the d isco v eryrule, an d that thes e d o ctri n es a re d ist inct. H o w ev er, as di s cus s ed above , t he l egi s l at i ve hi s t or ydemonstr at es t hat C ongr es s r ej ect ed the i ncl us i on of s peci fi c exc ept i ons t o t he C op yri gh tA ct ’s st atute of l i m i t at i on s i n o rdert o all ow t he c o u rts t o cons i deranyequi t abl e co n si der at i ons nece s s aryt o ens ur e that copyr i ghthol der s ’ r i ght s w er e fa i r l ypr ot ect ed. A s w e have expl a i n e d , t h e “ d i s c o v e r yru l e o r i g i n a t e d a s a n e q u i t a b l e d o c t r i ne to e x ten d th e p e rio d d u rin g w h ich v ictim s o f late n t in ju rie s c o u ld s eek r ecove r y . ” Di s a b l e d i n A ct i on , 5 39 F. 3d at216 n. 16 (e m p h a sis o m itt e d ) . A s th is c a se d e m o n stra tes , the re a re c e rta in i nfr i ngement s w hi ch, l i ke l at enti nj ur i es , a pl ai nt i ff c annot reas on ablybe ex pected t o d i scover att he ti m e i toccu rr ed. T hu s, w e b e liev e th a t C o n g re ss ’ e x p re ss e d in ten t to a llo w th e c o u rts to cons i derequi t abl e ci r cumst ance s t o ext end the t i m e forfi l i ng an i nfr i ngementact i on i s cons i s t entw i t h us e of the di s coveryrul e. 18 F in a lly , U S I a rg u e s th a t u se o f th e d isc o v e ryru le w o u ld be i nappr opr i at e as a mat t erof pol i cy . U SI not es t hati n TRW t he Supr eme C our ts t at ed thati thas “r ecogni zed apr evai l i ng di s coveryrul e . . . i n t w o cont ext s , l at entdi s eas e and medi cal m al pr act i ce, ‘ w her e the cryfors uch a rul e i s l oudes t
. ’ ” TRW , 534 U
. S. at27 ( quot i ng R ot el l a v. W ood , 528 U
. S. 549, 555 ( 2000) )
. U SI w oul d di s t i ngui s h copyr i ghti nfr i ngement , ar gui ng t hat“ther e i s not hi ng i nt r i ns i cal l y‘ hi dden’ or‘ l at ent ’ about copyr i ghti nfr i ngementbeca us e i ti s byi t s natur e a publ i c ac t that is on lyv eryrarelyh idd en fro m the c o p yri g h t ow n er.” U S I’s R e p lyB r. at 1 6 . T h a t m a yb e tru e in so m e in sta n c e s b u t n o t in al l
. T echnol ogi cal advanc es s uch as per s onal comput i ng and the in ter n e t h a v e “ m a [ d e ] it m o re d if f icu lt fo r rig h ts h o ld e rs to s t r i dent l ypol i ce a nd pr ot ectt hei rcopyr i ght s . ” J ohn R ami r ez, N o te , D is cove r i ng I

nj ur y? The C onf

us ed Stat e of

the Stat ut e of Li m i tat i ons f

orFeder alC opyr ightI

nf r i ngem ent , 17 For dham I nt el l
. Pr op. M edi a & E nt
. L
. J
. 1125, 1158 ( 2007) ( concl udi ng that d isco v eryrule is ap p rop ri ate f o r co p yri g h t acti o n s). I n s um , C ongr es s pr ovi ded no di r ect i ve mandat i ng us e of t he i nj ur yrul e t o govern t he ac crual of cl ai m s undert he C o p yrig h t A c t. W e c o n c lu d e th a t u se o f th e d isc o v e ryru le comport s w i t h t he t ext , s t ructur e, l egi s l at i ve hi s t or yand19 u n d e rly in g p o licie s o f

th e C o p yrig h t A c t. T h u s, c o n sis ten t w ith D is abl ed i n A ct i on and i n agr eementw i th ours i s t ercour t s of appea l s , w e hol d t hatt he fe der al di s coveryrul e governs t he a c c ru a l o f

c iv il cla im s b ro u g h t u n d e r th e C o p yrig h t A c t. 2 . A p p lica tio n o f th e D isc o v e r y R u le T he fi r s tj ur ypr ocee ded t o cal cul at e damages havi ng been i ns t ruct ed t o us e the di s coveryrul e i n l i ghtof the D i s t r i ct C o u rt ’s re

je c tio n o f

U S I’ s a rg u m e n ts in f

a v o r o f th e in ju ry ru le
. N onethel es s , des pi t e the j ur y ’ s fi ndi ng t o t he contr ary , t he D istric t C o u rt o v e rtu rn e d th e ju ry ’s d e ter m in a tio n a n d ru led th a t, undert he di s coveryrul e, G r aham’ s caus e of a ct i on forcopyr i ght i nfr i ngementacc rued i n t he fa l l of 1991 af t erH augheyl eft G r a h a m t o w o r k a tU S I ’ s p r e d e c e s s o rc o m p a n y. A c c o r d i n g l y, t he D i s t r i ctC our tgr ant ed U SI ’ s m ot i on fora new t r i al
. A ft er c r os s - mot i on s fo rs umm a r yj ud gmen t , t he Cour tgr a nt e d USI j u d g me n ta s a ma t t e ro f l a w a s t o Gr a h a m’ s i n f r i n g e me n tc l a i ms f o r a c ts o f in f ri n g e m e n t th a t o c c u rr e d b e f o re F e b ru a ry 9 , 2 0 0 2
. A ccor di ng t o t he D i s t r i ctC our t , “s t or m w arni ngs ors us pi ci ous ci r cumst ance s aboutpos s i bl e i nfr i ngementw er e compel l i ng l ong befor e February9, 2002, butG r aham i gnor ed them. ” G r aham , 4 8 4 F . S u p p . 2 d . at 3 3 6 . T h e re f o re , G ra h a m c o u ld re c o v e r o n ly foract s of i nfr i ngementt hatoccurr ed w i t hi n t he thr ee y ear per i od pr i ort o i t s fi l i ng of the i ns t antact i on ( i
. e. , act s occurr i ng o n o r af ter F eb rua ry9 , 2 0 0 2 ). I n r evi ew i ng t he D i s t r i ctC our t ’ s deci s i on t o gr anta new tr ia l, w e a p p ly an a b u s e o f d is c re tio n s ta n d a rd
. F i nem an v. A r m s tr ong W

or ld I ndus

. , I nc. , 9 8 0 F .2 d 1 7 1 , 2 0 6 (3 d C ir . 1 9 9 2 ). W her e, as her e, a di s t r i ctcour tgr ant s a mot i on fora new t r i al beca us e i tdet erm i nes t hatt he j ur yver di ctw as agai ns tt he w ei ght o f th e e v id e n c e , itis “ ‘th e d u tyo f th e a p p e llate trib u n a l to exer ci s e a c l os erdegr ee of s crut i nyand s upervi s i on t han i s t he cas e w her e a ne w t r i al i s gr ant ed bec aus e of s om e undes i r abl e or perni ci ous i nfl uence obt rudi ng i nt o t he tr i al ’ ” i n or dert o pr ot ect th e ju ry’s f

a c t- f in d in g ro le
. I

d. at211 ( quot i ng Li nd v. Schenley I ndus

. I nc. , 278 F. 2d 79, 90 ( 3d C i r . 1960) ( en banc ) )
. A s t o t he D istric t C o u rt’s g ra n t o f su m m a ryju d g m e n t, ou r re v iew is p le n a ry. N

or thvi ew Mot ors , I

nc. v. C hr

ys l erMot ors C or

p. , 22720 F
. 3 d 7 8 , 8 8 (3d C ir
. 2 0 0 0 ). G r aham chal l enges bot h t he D i s t r i ctC our t ’ s rul i ng t hat U SI w as ent i t l ed t o a new t r i al on t he s t atut e of l i m i t at i ons and its s u b s e q u e n t g ra n t o f

s u m m a ry ju d g m e n t to U S I o n th a t is s u e . T h a t is, G ra h a m a rg u e s th a t th e e v id e n c e w a s s u f f icie n t to su p p o rt th e f

irst ju ry ’s f

in d in g th a t G ra h a m w a s n o t ch a rg e a b le w ith k n o w le d g e o f

U S I’ s in f

ri n g e m e n t p ri o r t o F e b ru a ry 9 , 2 0 0 2
. A ccordi ng l y , G raham con t end s that w e shou l d rei nst at e t he fir st j ur y ’ s ver di cti n favorof G r aham i n t he amountof $16, 561, 230 a g a i n s tU S I a n d $ 2 , 2 9 7 , 3 9 7 a g a i n s tH a u g h e y. 3. St orm W arni ngs W e r ei t er at e that , undert he di s coveryrul e, a ca us e of act i on acc rues “‘ w hen the pl ai nt i ff di s cover s , orw i t h due d ili g e n c e sh o u ld h a v e d isc o v e re d , the in ju ryth a t f

o rm s th e b a sis fort he cl ai m . ’ ” D is abl ed i n A ct i on , 539 F. 3d at209 ( quot i ng R om ero , 40 4 F
. 3d at22 2). A pp l y i ng t hat pr ecept here, w e ask w hetherG raham “shou l d h ave k no w n o f t he b asi s for [i t s] cl ai m s [, w hi ch] depends on w hether[i t ] had s uffi ci ent inf o rm ati o n o f p o ssible w ron g d o ing to p lace [it ] on inq u iry not i ce ort o exci t e s t or m w arni ngs of cul pabl e ac t i vi t y . ” B enak ex re l. A lli a n c e P re m ierG ro w th Fu n d v . A lli a n c e C a

p ita l M g m t. L. P. , 435 F. 3d 396, 400 ( 3d C i r . 2006) ( quot i ng I n r e NAHC, I nc. Sec. Li t ig. , 306 F. 3d 1314, 1325 ( 3d C i r . 2002) ) ( i nt ernal quot at i on m arks om i t t ed)
. U SI and H augheybeart he bur den of demonstr at i ng s uch s t or m w arni ngs and, i f theydo s o, “the b u rd e n sh if

ts to [ G ra h a m ] to sh o w th a t [ it] ex e rc ise d re a so n a b le due di l i gence and y et[w as ] unabl e t o di s cover[i t s ] i nj ur i es . ” I d. ( quot i ng Mathew s v. K i dder, P eabody & C o. , I nc. , 260 F. 3d 239, 2 5 2 (3d C ir
. 2 0 0 1 )). G r aham fi r s tcont ends t hatt he D i s t r i ctC our terr ed b ec au se th e sto rm w arn ing s reli ed u p o n b ythe D istri ct C o u rt p re d a ted th e f

irst a c t o f

in f rin g e m e n t. A s w e h a v e p re v io u sly e x p lain e d , “[ b ]e c a u se a p o ten tial p lain tiff c a n n o t d isc o v e r h is i n j u r y b e f o r e i th a s o c c u r r e d , t h e d i s c o v e r y ru l e o n l y pos t pones t he ac crual dat e of a cl ai m w her e the pl ai nt i ff i s unaw ar e of the in ju ry . It d o e s n o t a c c e ler a te t he ac crual dat e w hen the pl ai nt i ff21 becomes aw ar e thathe w i l l s uffe ri nj ur yi n t he futur e. ” D is abl ed i n A ct i on , 539 F. 3d at214 ( quot at i ons , al t er at i ons , and i nt ernal cit ati o n o m itted). T h u s, “the firststep in ap p ly ing the d isco v ery rul e . . . i s t o es t abl i s h w hen the i nj ur i ous . . . actdefi ned byt he s t atut e ac tual l yoccurr ed. ” I d. N ext , w e must“det erm i ne w hethert hati nj ur yw as i m m edi at el ydi s cover abl e, orw hether t he ac crual dat e w i l l be pos t poned unt i l i ti s r eas onabl e t o expec t t he pl ai nt i ff t o di s covert he i nj ur y . ” I d. A l t hough t he D i s t r i ctC our tr ecogni zed thatt he s t atut e of l i m i t at i ons coul d nothave be gun t o run unt i l t he fi r s tactof in f rin g e m e n t o c c u rre d in Ju ly1 9 9 2 , the C o u rt c o n c lu d e d th a t it s aw “no r eas on w hyt he cl ock on G r aham’ s cl ai m s s houl d not h a v e sta rte d to ru n a t th e tim e w h e n H a u g h e yf irst b e g a n to i nfr i nge, s i nce ther e i s no s i gn t hatanyof the s t or m w arni ngs had aba t ed byt hatpoi nt
. G r aham i s i ncorr ecti n i t s cont ent i on t hats t or m w arni ngs m us tw arn of an a ctual i nj ur yt hathas a lre a d ytak e n p lac e . . . . A c o p yrig h t o w n e r h a s th e d u tyto i nves t i gat e i ndi cat i ons t hati nfr i ngementi s i n t he off i ng, even i f, i n t he cour s e of the i nves t i gat i on, i tl earns t hati nfr i ngementhas noty etoccurr ed. ” G r aham , 484 F. Supp. 2d at334 ( ci t i ng B enak , 4 3 5 F .3 d a t 4 0 0 -0 1 ; M a th e w s , 2 6 0 F
. 3 d at 25 1 -52 ). W e do notagr ee thatt he di s coveryrul e oper at es i n t he m anners ugges t ed byt he D i s t r i ctC our t
. Si gni fi cant l y , nei t herof ourpr ece dent s r el i ed upon byt he D i s t r i ctC our tfort he p ro p o sitio n th a t a c o p yrig h t o w n e r h a s a d u tyto in v e stig a te i nfri ng em ent “i n the offing” sup po rt s such a rul e. In both cases, w hi ch dea l tw i t h a s ecur i t i es act i on and R I C O act i on, not co p yri g h t i n fring em en t, w e h eld th at th e p lai n ti ff s’ claim s w ere unt i m el yundert he di s coveryrul e bec aus e s t or m w arni ngs of the al l eged w r ongs putt he pl ai nt i ffs on i nqui r ynot i ce be for e the r el evantdat e. I n fac t , t he s t or m w arni ngs ar os e af t ert he al l eged w ro n g s . B enak , 4 3 5 F .3 d a t 3 9 8 -9 9 , 4 0 3 ; M a th e ws , 260 F. 3d at 2 4 4 , 2 5 3 -5 4 . T h u s , B enak and M a th e ws do nots t and fort he p ro p o sitio n th a t p ro sp e c tiv e p lain tiff s h a v e a d u tyto in q u ire in to futur e w r ongdoi ng. R ather , t heydeal tw i t h t he t i m e atw hi ch i nq uiryno t i ce arose for pastw rongs. I ndeed, w e have r ej ect ed the pr opos i t i on t hatt he22 d isco v eryrule p lace s a d u tyo n p rosp ec ti v e p lai n ti ff s to inq u ir e i nt o pos s i bl e futur e w r ongful conduct
. Forexampl e, i n CGB O ccupat i onalTher apy, I nc. v. R H A Heal th Ser vs . I

nc. , 357 F. 3d 375, 384 ( 3d C i r . 2004) , w e hel d t hats ever al cl ai m s fort or t i ous i nt er fer ence of contr actdi d notacc rue “unt i l , atl eas t , t he p lai n ti ff su ff er[ ed ] i n jury
. . . as a resu lto f th e d ef en d an t’ s co n d u ct. ” W e re

jected the d ef

en d an t’ s arg u m en t th at “m ere not i ce of t erm i nat i on [of the pl ai nt i ff’ s contr act s ] t r i gger ed the c laim ” b e c a u se th e p lain tiff d id n o t su f

f e r a leg a llyc o g n iza b le in ju ry u n til th e c o n tr a c ts w e re a c tu a lly te rm in a te d
. I d. We s t at ed: “Sunr i s e [the def endant ] at t empt s t o t ake that u n re m a rk a b le p ro p o sitio n

– th a t th e sta tu te o f lim itatio n s s h o u ld be pos t poned w her e the vi ct i m i s unaw ar e of the i nj ur y–and r ever s e i t , s o as t o m andat e thatt he s t atut e of l i m i t at i ons acce l er at es w hen the vi ct i m becomes aw ar e thathe w i l l s uffe r i nj ur yi n t he futur e. T hati s l ogi cal l yfal l aci ous . ” I d. F u rth er, w e ana l ogi zed CGB t o a ca s e i n w hi ch one pe r s on t el l s another “that , i n t hr ee mont hs , he i nt ends t o t r es pas s . T he t or tof t r es pas s has notoccurr ed unt i l t he vi ct i m ’ s pr oper t yi s ent er ed by t he t or t fea s or . T hatt he vi ct i m w as i nform ed i n advanc e of the i nevi t abl e does notal t ert he ac crual of hi s damages act i on for t r es pas s . ” I

d. at384 n. 9. U SI ’ s ar gum enti s no di ffe r entt han the one w e r ej ect ed i n CGB
. T h e D istri ct C o u rtalso saw storm w arn ing s in H au g h ey ’s departur e fr om G r aham, even though t hatdepartur e w as t en m o n th s b e f

o re H a u g h e yb e g a n to in f rin g e . T h a t d e p a rtu re in i t s el f ca nnotbe cons i der ed a s t or m w arni ng beca us e a c opyr i ght ow nerdoes nothave a dut yt o ferr etoutpot ent i al act s of in f ri n g e m e n t b e f

o re th e yo c c u r. C

f

. MacLean Ass ocs . , I

nc. v. W m . M

. Mer cer - Mei di nger - H ans en, I nc. , 952 F. 2d 769, 780 ( 3d C i r . 1991) ( r ej ect i ng ar gum entt hata copyr i ghti nfr i ngement cl ai m w as barr ed byl ache s beca us e “the di s t r i ctcour t ’ s l ache s r at i onal e w oul d have put[pl ai nt i ff] undera neve rendi ng obl i gat i on t o di s coverw hetherany one t o w hom he eve rs uppl i ed hi s s oftw ar e w oul d copyi t , ” an obl i gat i on t hatt he “Copy r i ght A ctdoes notr ecogni ze” )
. T he D i s t r i ctC our tfea r ed that , i f a copyr i ghtow nerdi d nothave a dut yt o i nves t i gat e i nfr i ngement i n t he off i ng, t hen “H augheycoul d have t ol d G r aham on dayone t hathe w as ant i ci pat i ng i nfr i ngi ng on dayt w o, and bec aus e he23 w a s n o t in f

rin g in g o n d a yo n e , the sta tu te o f lim itatio n s w o u ld have be en t ol l ed fory ear s w i t houtt he nee d foranyfur t heract i on on t he partof G r aham. ” G r aham , 484 F. Supp. 2d at334. T hat hypot het i cal i s s i m pl ynotourcas e. W e h a v e p re v io u slyre c o g n ize d th a t th e a g g re g a te “ ‘m ix of i nform at i on’ m aycons t i tut e a s t or m w arni ng. ” Ma th e ws , 260 F
. 3 d a t2 5 2
. Be f

o r e d e t e r mi n i n g wh e t h e rt h i s i s s u c h a c a s e , we m u st fir st ad d ress e ac h o f th e D istri ct C o u rt ’s pu rpo rt ed storm w arni ngs s epar at el y . H i gh on t he D i s t r i ctC our t ’ s l i s tof r eas ons f o r its c o n c lu sio n th a t th e re w e re a m p le s to rm w a rn in g s w a s its focus on H aughey ’ s r et ent i on of a c opyof the St andar d W or ks w hen he l eftG r aham i n Sept ember1991. H ow ever , as t he D i s t r i ctC our tr ecogni zed, pos s es s i on of a c opyof a w or k al one does notcons t i tut e copyr i ghti nfr i ngementora s t or m w arni ng th e re o f
. G r aham , 4 8 4 F . S u p p . 2 d a t 3 3 1 ; s ee al s o 1 7 U .S .C . § 1 0 6 (e n u m e ra tin g e x c lu s iv e ri g h ts o f c o p yri g h t o w n e r)
. N onethel es s , t he D i s t r i ctC our tconcl uded thata s t or m w arni ng exi s t ed her e bec aus e G r aham w as on not i ce thatt he “onl yr eal u se H a u g h e yw o u ld h a v e f o r th e W o rk s w a s to c o p yth e m in vi ol at i on of G r aham’ s copyr i ght
. ” 484 F. Supp. 2d at336. T hat w as a j ur yar gum entand the r ecor d befor e the fi r s tj ur ydi d not compel t hati nfer ence . A lth o u g h the ju ryh ea rd e v iden ce that the W o rks w ere val uabl e bec aus e theycoul d be ea s i l ycopi ed t o pr ovi de con si st ent and accu rat e exp l anati on s of co verage, t he juryal so hear d evi dence t hatpr oducer s atbot h G r aham and U SI us ed the W o rk s a s re f

e re n c e m a ter ials (w ith o u t d ire c tlyc o p y in g a n ytex t) b ec au se th eyinclu d ed instruction s an d ch ec k li sts fo r pro d u ce rs t o u se w hen creat i ng propo sal s for cl i ents
. T he mer e fa ctt hata copyr i ghtow nerhas not i ce that anotherper s on al s o pos s es s ed i t s copyr i ght ed mat er i al and may f in d it u se f

u l to c o p ysh o u ld n o t an d d o e s n o t b yitse lf c o n stitu te a s to rm w a rn in g o f

p o s s ib le in f

ri n g e m e n t. C

f

. W ar r en Freeden f eld A ssocs. , 531 F. 3d at45 ( “Ther e i s no pr es um pt i on t hatfai l ed bus i nes s r el at i ons hi ps i nevi t abl yw i l l gi ve r i s e ei t her to to rtio u s c o n d u c t o r d isre g a rd o f p ro p rie tar yrig h ts. T h a t a r el at i ons hi p betw een a n ar chi t ectand a c l i enthas become fr ay ed24 and the cl i enthas deci ded t o for ge ahe ad w i t h t he pr oj ectby engagi ng s om e otherar chi t ectdoes not , i n and of i t s el f, s erve as a h arb ing er o f a n inten ti o n to v iolate th e o ri g inal arc h it ec t’ s co p yri g h t pro tecti o n . ”). T he D i s t r i ctC our t( i n i t s s um m aryj udgm entdeci s i on) also co n clud ed that G rah am h ad a sto rm w arn ing o f H au g h ey ’s ( y et
- t o- occur ) i nfr i ngementbas ed upon H aughey ’ s i m pr oper s ol i ci t at i on of G r aham’ s cl i ent s , i n vi ol at i on of hi s empl oym ent and t erm i nat i on agr eement s . H ow ever , i m pr opers ol i ci t at i on of bus i nes s , i f i ti n fac toccurr ed, i s a fa rcryfr om copyr i ght i nfr i ngement
. I n I

n r e Mer ck & C o. , I

nc. Secs

. , D er i vat i ve & “ER I SA ” Li t ig. , 5 4 3 F .3 d 1 5 0 (3 d C ir. 2 0 0 8 ), w e d e a lt w ith appl i cat i on of the di s coveryrul e t o al l egat i ons of s ecur i t i es fr aud. W e hel d t hat“s i m pl ys t at i ng t hata s m at t er i ng of evi dence hi nt ed att he pos s i bi l i t yof s om e type of f r aud does notans w er t he ques t i on w hethert her e w as ‘ s uffi ci enti nform at i on of p o ss ib le w ro n g d o in g . . . to e x c ite s to rm w a rn in g s o f c u lp a b le act i vi t y ’ undert he s ecur i t i es l aw s . ” I d. at164 ( quot i ng B enak , 4 3 5 F .3 d a t 4 0 0 ) ( e m p h a s is o m itte d ) ( a lte ra tio n in o ri g in a l)
. T hus , w e conc l uded thatt he FD A ’ s publ i c al l egat i ons of m isre p re se n tatio n s b yM e rc k in its c o n su m e r a d v e rtise m e n ts w e re n o t a s to rm w a rn in g o f th e s e c u ri tie s f

ra u d a lle g e d
. I

d. at 169- 72. Si m i l ar l y , even i f G r aham knew t hatH augheyhad i m pr oper l ys ol i ci t ed ce r t ai n of G r aham’ s cl i ent s , t hat w ron g d o ing d id n o t pu t G rah am o n n o ti ce o f H au g h ey ’s c o p yrig h t in f

rin g e m e n t. T h e D istric t C o u rt sta ted th a t th is conductw as a s t or m w arni ng of i nfr i ngementbeca us e a “ per s on w h o h a d b re a c h e d a n a g re e m e n t w ith G ra h a m in th is re g a rd is l i kel yt o i nfr i nge the copyr i ghton i t s W or ks
. ” G r aham , 48 4 F. Supp. 2d at336. H ow ever , i nqui r ynot i ce de m ands m or e than evidence thata person is a bad act or i n som e gen eral sense befor e a c our tcan c oncl ude thata s t or m w arni ng exi s t s as t o a s peci fi c ca us e of a ct i on. M or eover , aft erG r aham di s cover ed H aughey ’ s al l eged i m pr opers ol i ci t at i on of cl i ent s i n O ct ober1991, i tgotH aughey to a g re e to sto p a n d , sig n if ica n tly , in N o v e m b e r 1 9 9 1 , jus t a25 m ont h l at er , s ol d H augheyand FO G s i x of H aughey ’ s ol d cl i ent a c c o u n ts. T h u s, b yth e tim e o f th e f irst a c t o f

in f rin g e m e n t in Ju ly1 9 9 2 , H a u g h e y ’s a lleg e d so licita tio n o f c lien ts w a s a n o ld pr obl em t hatt he part i es had r es ol ved, nota s t or m w arni ng of H a u g h e y ’s in f

rin g e m e n t. I ndeed, G r aham’ s cour s e of c onductatt he t i m e of H aughey ’ s s epar at i on fr om G r aham dem ons t r at es t hatG r aham d il igen tl yso u g h t t o p rotec t i ts r igh ts i n the S tand ard W o rks. In hi s empl oym entand t erm i nat i on agr eement s , as w el l as i n t he N o v e m b e r 1 9 9 1 a g re e m e n t se lli n g c e rta in c lien t ac c o u n ts to F O G , H a u g h e yre p e a ted lya g re e d to re sp e c t G ra h a m ’s r ig h ts to it s intell ec tual p rop erty , inclu d ing sp ec ifi ca ll ythe S tand ard W or ks
. T he D i s t r i ctC our tdow npl ay ed the s i gni fi canc e of G r aham’ s copyr i ghtnot i ces , s t at i ng: “G r aham obvi ous l ydi d not deem t he copyr i ght s on t he W or ks i n and of themsel ves t o be a s uffi ci entdet err entt o i nfr i ngement
. O t herw i s e, i tw oul d not have ne eded t o negot i at e a r eaf fi r m at i on of H aughey ’ s obl i gat i on to tu rn o v e r th e b in d e rs [ c o n tain in g th e W o rk s] u p o n h is departur e . . . . ” G r aham , 484 F. Supp. 2d at333. T hati s , t he D i s t r i ctC our ts eemed t o s ugges tt hatt he fa ctt hatG r aham s oughtt o but t r es s i t s s t atut or yr i ght s undert he C opyr i ghtA ct w i t h contr actual obl i gat i ons i m pl i ed thatG r aham w as on not i ce of H aughey ’ s ( y et
- t o- occur ) i nfr i ngement
. T he j ur yw as ent i t l ed to m a k e th e o p p o site in f e re n c e , i. e ., th a t G ra h a m w a s d ili g e n tly prot ect i ng i t s r i gh t s. T h e e v id e n c e b e f

o re th e ju ryw a s s u f

f icie n t to su p p o rt its concl us i on t hatG r aham w as noton not i ce of H aughey ’ s ( and U SI ’ s ) i nfr i ngementpr i ort o February9, 2002. T her e i s no evi dence t o s ugges tt hatG r aham had actual know l edge of any i nfr i ngementunt i l 2004. E ven i f G r aham w as ors houl d have b ee n aw are that H au g h eyp o sses sed a c o p yo f th e S tand ard W or ks w hen he l eftG r aham, t he j ur yhear d t es t i m onyt hat H augheyw as aw ar e thatt he St andar d W or ks w er e conf i dent i al inf o rm ati o n an d that G rah am h ad co p yri g h ted th em . T h e jury al s o hear d evi dence t hatH augheypr om i s ed ( i n t he N ovember 1991 agr eement ) t o hol d G r aham’ s pr opr i et aryi nform at i on, i ncl udi ng s peci fi cal l yt he St andar d W or ks , “i n t rus t
. . . [and] confi dence , ” app. at2084, and agr eed nott o “us e, di vul ge, orW e e x e rc is e p le n a ry re v ie w o f th a t d e n ia l. Lightni ng Lube, 9 I nc. v. W i t co C or p. , 4 F
. 3 d 1 1 5 3 , 1 1 6 6 (3d C ir
. 1 9 9 3 ).

26 o th e rw is e d is c lo s e ” s u c h in f o rm a tio n , i d. Fi nal l y , t he j ur yknew th a t af ter H a u g h e ya n d U S I in f rin g e d th e c o p yrig h ted m a ter ial in t he S t and ard W orks i n a n um ber of cli ent pr op osal s, t hese p rop o sals w ere k ep t con fid en ti al byU S I. T o sum m ari ze, U S I w as not ent i t l ed to j ud gm ent as a m att er o f law o n the s tatu te of li m it ati o n s issue (an d there fo re th e D istric t C o u rt e rre d in g ra n tin g U S I su m m a ryju d g m e n t) beca us e the evi dence befor e the fi r s tj ur yw as cl ear l ys uffi ci ent t o s uppor ti t s fi ndi ng t hatG r aham w as noton i nqui r ynot i ce of H aughey ’ s and U SI ’ s i nfr i ngementbefor e February9, 2002 ( and t her efor e the D i s t r i ctC our tabus ed i t s di s cr et i on i n gr ant i ng U S I’s m o tio n f

o r a n e w trial). O u r c o n c lu sio n sh o u ld lea d u s to re in sta te th e f

irst ju ry ’s v e rd ict, b u t, rely in g o n its ru lin g w ith resp ec t t o the s tatu te of li m it ati o n s issue , the D istri ct C o u rt d e c lin e d to re a c h U S I’ s a lte rn a tiv e a rg u m e n ts f o r a n e w tr ia l. Fi r s t , U SI pr es erved i t s ar gum entt hatt he j ur y ’ s appor t i onm ent o f th e d e f e n d a n ts’ p ro f

its b e tw e e n th o se th a t w e re a ttribu tab le to i nfr i ngement( and thus r ecove r abl e byG r aham) and thos e that w er e att r i but abl e t o ot herfac t or s ( and thus notpr oper l ypar tof th e d a m a g e s c a lc u la tio n ) w a s a g a in s t th e w e ig h t o f th e e v id e n c e . S e c o n d , U S I a rg u e d th a t th e v e rd ict w a s e x c e ss iv e . W e w ill th e re f o re re m a n d th e c a se to th e D istric t C o u rt to a llo w it t o cons i dert hes e i s s ues i n t he fi r s ti ns t ance . B . C ausat i on W e tur n t o U SI ’ s cr os s - appea l
. U SI cont ends t hat Gr a h a m c a n n o tr e c o v e ro n a n yo f i t s i n f r i n g e me n tc l a i ms beca us e i tfai l ed t o pr ove a l egal l ys uffi ci entcaus al connec t i on betw een the copyr i ghti nfr i ngementati s s ue and the pr ofi t s of U SI and H augheyt hatt he j ur yaw ar ded t o G r aham as compensa t i on fort hati nfr i ngement
. T he D i s t r i ctC our tr ej ect ed t hatar gum enti n U SI ’ s pos t
- t r i al m ot i on forj udgm entas a mat t er o f l a w. 927 A s r el evanther e, t he C opyr i ghtA ctpr ovi des t hatt he “copyr i ghtow neri s ent i t l ed t o r ecove r. . . anypr ofi t s of the inf ri n g er tha t are attri b u table to th e inf ri n g em en t .
. . . In e sta b lish in g th e in f

rin g e r’s p ro f

its, the c o p yrig h t o w n e r is r equi r ed t o pr es entpr oof onl yof the i nfr i nger ’ s gr os s r evenue , a n d th e in f

rin g e r is re q u ire d to p ro v e h is o r h e r d e d u c tib le expens es and the el ement s of pr ofi tat t r i but abl e t o fac t or s ot her than the c o p yri g h ted w o rk.” 1 7 U
. S
. C
. § 5 0 4 (b). G rah am ’s t heoryof r ecove r yw as t hati tw as ent i t l ed t o U SI ’ s and H aughey ’ s comm i s s i ons as “i ndi r ectpr ofi t s ” of i nfr i ngement ( i
. e. , pr ofi t s earned notbys el l i ng an i nfr i ngi ng pr oduct , but r atherearned fr om t he i nfr i nger ’ s oper at i ons t hatw er e enha nced byt he i nfr i ngement )
. A s expl ai ned byt he N i nt h C i r cui t , “§ 504( b) cr eat es a tw o- s t ep fr amew or k forr ecove r yof i ndi r ect pr ofi t s : 1) t he copyr i ghtcl ai m antm us tfi r s ts how a ca us al nexus betw een the i nfr i ngementand the [i nfr i nger ’ s ] gr os s r evenue ; and 2) once the ca s ual nexus i s s how n, t he i nfr i ngerbear s t he bur den of a ppor t i oni ng t he pr ofi t s t hatw er e nott he r es ul tof i nfr i ngement
. ” P olar Bea r P rods. , 384 F. 3d at711. U SI cont ends t hatG r aham fai l ed t o s at i s fyi t s bur den beca us e G r aham l acke d anyevi dence connec t i ng “the i nfr i ngement–t hati s t o s ay , t he us e of G r aham’ s copyr i ght ed l anguage –and the dec i s i on of the cl i entt o pur chas e i ns ur ance thro u g h U S I. ” U S I’s B r. at 66
. H o w ev er, G rah am ’s ex p ert i dent i fi ed cl i entpr opos al s i s s ued byU SI t hati ncl uded i nfr i ngi ng l anguage and then ca l cul at ed the r evenue s obt ai ned byU SI fr om th o s e c lie n ts a f

te r t h e c lie n t h a d re c e iv e d a n in f ri n g in g p ro p o s a l. T he j ur yal s o hear d t es t i m onyfr om U SI per s onnel t hatt he w r i t t en pr opos al s ( i ncl udi ng, pr es um abl y , t hos e w i t h i nfr i ngi ng lan g u a g e ) w e re a n im p o rta n t p a rt o f th e sa les p ro c e ss

– in f

a c t, H a u g h e ye v e n tes tifie d th a t so m e c lien ts w e re c o n v in c e d to pur chas e i ns ur ance t hr ough U SI on t he bas i s of the p rop o sals– an d that itw as U S I’s prac ti ce to rev iew the p rop o sal’s cont ent s “page bypage” w i t h t he cl i ent
. M or eover , G r aham in tro d u c e d e v id e n c e th a t th e S tan d a rd W o rk s w e re v a lu a b le in par tbeca us e theycoul d be ea s i l ycopi ed t o pr ovi de cons i s t ent and ac cur at e expl anat i ons of cove r age c om pr ehens i bl e t o l ay peopl e. G r aham al s o i nt r oduced e vi dence t hatFO G had nothi ng l i k e t h e S t a n d a r d Wo r k s wh e n Ha u g h e yf i r s ta r r i v e d ; t h a tF OG28 an d U S I m ad e e lectron ic an d p ap er c o p ies o f th e S tand ard W orks a va i l a bl e t o the i re mpl oy e e s ; a nd t ha tFO G a nd U SI e n c o u r a g e d t h e i rp r o d u c e r s t o u s e t h e S t a n d a r d W o r k s . F i n a l l y, t he D i s t r i ctC our ti ns t ruct ed the j ur yt hati tcoul d dr aw an i nfer ence agai ns tU SI bas ed on U SI ’ s des t ruct i on of evi dence relev an t t o inf

ri n g em en t ( ce rt ain c li en t pro p o sals). W e a g ree w ith the D istri ct C o u rtthat a re aso n ab le j u ry coul d concl ude fr om t hi s evi dence t hatG r aham m eti t s i ni t i al b u rde n to d em o n str ate tha t th e inf ri n g em en t con tr ibu ted to U S I’s p ro f its. T h e o p in io n o f

th e C o u rt o f

A p p e a ls f

o r th e E ig h th C i r cui ti n A ndr eas v. V

olks w agen of

A m er i ca, I

nc. , 336 F. 3d 789 (8 th C ir. 2 0 0 3 ), is in stru c tiv e . T h e re , V o lk sw a g e n (d /b /a A u d i) i nfr i nged A ndr eas ’ copyr i ght ed poem byi ncl udi ng t extfr om t he poem i n one comm er ci al t hatw as par tof a thr ee- comm er ci al ad c a m p a ig n f

o r t h e A u d i T T a u to m o b ile
. Id
. at791- 92. A ft ert he j ur yaw ar ded A ndr eas a por t i on of A udi ’ s pr ofi t s fort he A udi T T dur i ng t he per i od of i nfr i ngement , t he di s t r i ctcour tgr ant ed A u d i ju d g m e n t a s a m a tte r o f la w . I d. T h e C o u rt o f

A p p e a ls r ever s ed, hol di ng t hatA ndr eas onl ybor e the bur den of pr ovi ng “w hetherA udi pr ofi t ed fr om t he i nfr i ngi ng comm er ci al atal l
. ” I d. at796. I tconcl uded thatA udi di d s o i n l i ghtof evi dence t hat t he “i nfr i ngementw as t he ce nt erpi ece of [the] comm er ci al ; ” that
“ A u d i en th u sia stic a llyp re se n ted th e c o m m e rc ial to its d e a ler s;” t hats al es of the A udi T T exce eded pr oj ect i ons ; t hatt he ad c a m p a ig n re c e iv e d h ig h ra tin g s; a n d th a t A u d i p a id its advert i s i ng cons ul t anta bonus bas ed on the s ucce s s of the c a m p a ig n . I

d. at796- 97. S im ilarly , G ra h a m a p p ro p ria telyso u g h t to re c o v e r o n ly U S I’s an d H au g h ey ’s co m m issi o n s fro m their cli en ts th at w ere pr ovi ded w i t h i nfr i ngi ng pr opos al s . G r aham al s o s how ed that t he w r i t t en pr opos al s w er e i m por t antt o U SI ’ s cl i ent s , thatt he i nfr i nged l anguage fr om t he St andar d W or ks contr i but ed t o t he su c c e ss o f

th o se p ro p o sa ls, a n d th a t U S I u rg e d its e m p lo y e e s to use t he S t and ard W orks. I n A ndr eas , the E igh th C ir cu italso rejected A u d i’ s ar gum entt hatA ndr eas w as r equi r ed t o pr ovi de t es t i m onyt hat p u rc h a sin g d e c isio n s w e re in f lu e n c e d b yth e c o m m e rc ial,I ndeed, att r i al , U SI p rese nt ed evi dence on t he i s s ue of 10 appo rt i onm entand devot ed a s i gni fi cantpor t i on of i t s cl os i ng arg u m en t t o the issu e, an d th e juryu lt im atelyred u ce d G rah am ’s r equest ed pr ofi t s byt hi r t yper centt o acc ountfort he contr i but i on of U S I’ s non -i nfri ng i ng con du ctt o it s r even ues. 29 r eas oni ng t hat“[o] nce a nexus w as s how n . . . [and] A ndr eas es t abl i s h[ed] A udi ’ s gr os s r evenue . . . [, ] A udi t hen bor e the b u rde n o f e stab li sh ing that it s p rof itw as a ttri b u table to f

ac tors o th e r t h a n th e in f

ri n g in g w o rd s : th e o th e r t w o c o m m e rc ia ls [ ,] . . . c u s to m e r l o y a lty, b ra n d re c o g n itio n , e tc .” 3 3 6 F .3 d a t 7 9 7
. Si m i l ar l y , as not ed byG r aham, U SI ’ s cont ent i on t hatG r aham w as r equi r ed t o s how t hatt he i nfr i ngementw as “an e s s ent i al and i nt egr al key ” t o i t s cl i ent s ’ deci s i ons t o pur chas e i ns ur ance t hr ough U SI m i s cons t rues t he part i es ’ bur dens of pr oof under17 U
. S. C
. § 504( b)
. U SI ’ s B r . at68. T hi s ar gum entr el at es t o t he appor t i onm entof U SI ’ s pr ofi t s betw een U SI ’ s i nfr i ngi ng and non- i nfr i ngi ng conduct , a mat t eroverw hi ch U SI bor e the bur den of pr oof. I n or dert o s at i s fyi t s i ni t i al bur den of pr oof, G r aham

10 w as r equi r ed t o pr ove onl yt hatt he pr ofi t s i ts oughtt o r ecove r w er e “r eas onabl yr el at ed t o t he i nfr i ngement , ” O n D avis v. G ap, I nc. , 246 F. 3d 152, 160 ( 2d C i r . 2001) , and G r aham di d s o her e. I n s um , t he D i s t r i ctC our tcorr ect l yr ej ect ed U SI ’ s m ot i on forj udgm entas a mat t erof l aw on t he i s s ue of c aus at i on aft er fi ndi ng t hatG r aham had s at i s fi ed i t s bur den of pr oof under17 U
. S. C
. § 504( b)
. O n r emand, U SI m ayr enew i t s r el at ed cont ent i ons t hatt he j ur y ’ s appor t i onm entof i t s pr ofi t s w as agai ns tt he w ei ghtof the evi dence and thatt he ver di ctw as exce s s i ve. III . CO NC L US I ON W e w il l aff

irm the D istri ct C o u rt ’s rejecti o n o f U S I’s m ot i on forj udgm entas a mat t erof l aw w i t h r es pectt o t he ca u sati o n issue
. A lth o u g h w e a g ree w ith the D istri ct C o u rt ’s rul i ng t hatt he di s coveryrul e appl i es t o copyr i ghti nfr i ngement30 claim s, w e w il l r ev erse the D istri ct C o u rt ’s ord ers g ran ti n g U S I’s m o tio n s f

o r a n e w trial a n d su m m a ryju d g m e n t w ith re sp e c t to accrual of the st atute of l i m i t at i on s i ssue. W e rem and on l yso th a t th e D istric t C o u rt m a yd e c id e d e f e n d a n ts’ a rg u m e n ts co n ce rnin g ap p o rt ion m en t and ex ce ssive n ess o f th e v erd ict
. If t he D i s t r i ctC our tr ej ect s t hes e ar gum ent s , i ts hal l r ei ns t at e the ver di ctof the fi r s tj ur yand undert ake a nynece s s aryfur t her pr ocee di ngs cons i s t entw i t h t hi s opi ni on.