Court Opinion

ID: 6500008
Source: CourtListenerOpinion
Date Created: 2022-07-14 17:00:33.324177+00
Date Added: 2024-06-11T09:16:44.957443
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

STARZ ENTERTAINMENT, LLC,               No. 21-55379
               Plaintiff-Appellee,
                                          D.C. No.
                v.                     2:20-cv-04085-
                                          DMG-KS
MGM DOMESTIC TELEVISION
DISTRIBUTION, LLC,
              Defendant-Appellant.        OPINION

     Appeal from the United States District Court
        for the Central District of California
       Dolly M. Gee, District Judge, Presiding

       Argued and Submitted February 10, 2022
              San Francisco, California

                 Filed July 14, 2022

  Before: Kim McLane Wardlaw, Sandra S. Ikuta, and
           Bridget S. Bade, Circuit Judges.

             Opinion by Judge Wardlaw
2              STARZ ENTERTAINMENT V. MGM

                          SUMMARY *

                            Copyright

    The panel affirmed the district court’s denial of a motion
to dismiss copyright infringement claims as barred by the
three-year limitations period set forth in 17 U.S.C. § 507(b).

    Generally, a copyright claim accrues when the
infringement occurs. The panel held that Petrella v. Metro-
Goodwyn-Mayer, Inc., 572 U.S. 663 (2014), did not do away
with the discovery rule, under which a claim alternatively
accrues when the copyright holder knows or reasonably
should know that an infringement occurred. Declining to
adopt the approach taken by the Second Circuit, the panel
held that the discovery rule allows copyright holders to
recover damages for all infringing acts that occurred before
they knew or reasonably should have known of the
infringing incidents, and the three-year limitations period
runs from the date the claim accrued.

    The panel held that the district court correctly applied the
discovery rule to conclude that plaintiff timely filed its
claims of copyright infringement. Because plaintiff brought
its claims within three years after they accrued, it was not
barred from seeking damages for all acts of infringement.

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
             STARZ ENTERTAINMENT V. MGM                   3

                       COUNSEL

Mark A. Perry (argued), Gibson Dunn & Crutcher LLP,
Washington, D.C.; Orin Snyder, Gibson Dunn & Crutcher
LLP, New York, New York; Blaine H. Evanson, Gibson
Dunn & Crutcher LLP, Irvine, California; Jay P. Srinivasan,
Gibson Dunn & Crutcher LLP, Los Angeles, California; for
Defendant-Appellant.

J. Wesley Earnhardt (argued), Evan R. Chesler, and Justin
C. Clarke, Cravath Swaine & Moore LLP, New York, New
York; Robert N. Klieger, Hueston Hennigan LLP, Los
Angeles, California; for Plaintiff-Appellee.

Tyler T. Ochoa, Santa Clara University School of Law,
Santa Clara, California, for Amicus Curiae Professor
Tyler T. Ochoa.

Benjamin H. Diessel and Michael Rondon, Wiggin and Dana
LLP, New Haven, Connecticut; Nathan E. Denning, Wiggin
and Dana LLP, New York, New York; for Amici Curiae
Authors Guild Inc., and Other Artists’ Rights Organizations.
4            STARZ ENTERTAINMENT V. MGM

                         OPINION

WARDLAW, Circuit Judge:

     The Copyright Act, 17 U.S.C. § 101 et seq., provides that
a civil action for copyright infringement is timely so long as
it is “commenced within three years after the claim accrued.”
17 U.S.C. § 507(b). Generally, the claim “accrues” when the
infringement or violation of one of the copyright holder’s
exclusive rights occurs, known as the “incident of injury
rule.” In our circuit, and every other circuit to have reached
the question, an exception to that infringement rule has
developed. Known as the “discovery rule,” a claim
alternatively accrues when the copyright holder knows or
reasonably should know that an infringement occurred.

    In 2014, the Supreme Court addressed the interplay
between § 507(b) and the doctrine of laches, holding that
laches does not bar relief on a copyright infringement claim
brought within § 507(b)’s three-year limitations period.
Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 667–
68 (2014). Since then, defendants accused of copyright
infringement have seized upon certain language in Petrella
to argue that the Court also did away with the discovery rule.
Most courts, including the district court here, have rejected
that argument, reasoning that Petrella addressed only the
availability of laches in cases where the copyright owner is
seeking damages for infringing acts that occurred during the
three-year window before a claim is filed. Moreover,
because Petrella noted, but did not pass upon, the discovery
rule, any language in that opinion discussing relief beyond
that window is dicta and did not affect the viability of the
discovery rule. Because we agree with the district court that
the discovery rule of accrual of copyright claims is alive and
well, we affirm.
             STARZ ENTERTAINMENT V. MGM                      5

                              I.

                              A.

               1. The exclusivity agreements

    Starz Entertainment LLC (Starz) provides premium
subscription video programming through a suite of premium
cable television channels and on-demand services. The
content Starz provides to subscribers includes original
programming as well as popular movies and television
shows licensed from other studios. To acquire external
content, Starz enters into licensing agreements with studios
and other copyright holders, providing Starz with the
exclusive right to exhibit specific content on its services for
a defined period.

    On July 26, 2013, Starz entered into a licensing
agreement (a “Library Agreement”) with MGM Domestic
Television Distribution LLC (MGM). The parties entered
into a second Library Agreement on May 7, 2015, providing
Starz with exclusive exhibition rights to more MGM-owned
content. Together, the two Library Agreements provided
Starz with the exclusive right to exhibit 585 movies and
176 television series episodes in exchange for about $70
million. More specifically, MGM granted Starz the
exclusive right to exhibit those MGM-owned movies and
television series episodes on Starz’s suite of services within
the United States for specified time periods ranging from
months to years. For some titles, Starz secured multiple
license periods from MGM, resulting in more than 1,000
separate license periods each operating on its own time
frame. In addition to the exclusive exhibition rights, Starz
received contractual warranties from MGM that it would not
exhibit or license to third parties any of the licensed content
in violation of Starz’s exclusive rights.
6            STARZ ENTERTAINMENT V. MGM

            2. Discovery of MGM’s infringement

    In August 2019, a Starz employee discovered that one of
the films covered by the licensing agreements, Bill & Ted’s
Excellent Adventure, was available to stream on Amazon
Prime Video during Starz’s exclusivity period. Starz
notified MGM of its discovery, and MGM admitted that this
improper license violated Starz’s rights. MGM offered to
provide additional periods of exclusivity to remedy this
violation. At the time, MGM did not inform Starz of any
additional potential exclusivity violations.

     Starz decided to investigate further, and, by the end of
August, discovered that twenty-two additional movies
covered by the Library Agreements were available on
Amazon Prime Video.             MGM acknowledged these
violations in September 2019. Starz then sought formal
assurances from MGM in October 2019 that the identified
titles were not licensed to any other service provider and that
MGM licensed no other covered content in violation of the
Library Agreements. Instead of those assurances, in
November 2019, MGM provided Starz with a list of
136 movies and 108 television series episodes that had been
licensed to other service providers (including MGM-owned
rival service Epix) in violation of the Library Agreements.
Starz continued to conduct its own investigation and
subsequently identified nearly 100 additional movies not
included on MGM’s November list that were licensed to
third parties during time periods they were exclusively
licensed to Starz.

                              B.

    Starz sued MGM in May 2020, asserting 340 claims of
direct copyright infringement, 340 claims of contributory
copyright infringement, 340 claims of vicarious copyright
                STARZ ENTERTAINMENT V. MGM                              7

infringement, one claim of breach of contract, and one claim
of breach of the covenant of good faith and fair dealing. In
July 2020, MGM moved for dismissal under Federal Rule of
Civil Procedure 12(b)(6), arguing that many of Starz’s
copyright infringement claims are barred by the Supreme
Court’s decision in Petrella, which MGM asserts “imposes
a strict bar to collecting any damages for copyright
infringements that occur more than three years prior to the
filing of the complaint.” 1 In a well-reasoned order, the
district court concluded that Petrella left unaffected the
discovery rule—that under the Copyright Act there exists “a
three-year damages bar [under § 507(b)] except when the
plaintiff reasonably was not aware of the infringements at
the time they occurred.”

                                   II.

    The district court had jurisdiction pursuant to 28 U.S.C.
§ 1338, which confers subject matter jurisdiction over
copyright actions. At MGM’s request, the district court
certified its order for interlocutory appeal, which we
accepted, vesting us with jurisdiction pursuant to 28 U.S.C.
§ 1292(b).

   We review the district court’s denial of a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6) de
novo. Platt v. Moore, 15 F.4th 895, 901 (9th Cir. 2021). We
accept all well-pleaded factual allegations contained in the
complaint as true, Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009), and decide whether the complaint articulates
“enough facts to state a claim to relief that is plausible on its

    1
      The parties entered into a tolling agreement that made the operative
date of the Complaint for assessing the statute of limitations March 24,
2020.
8            STARZ ENTERTAINMENT V. MGM

face,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
The district court’s interpretations of the Copyright Act are
reviewed de novo. Perfect 10, Inc. v. Giganews, Inc.,
847 F.3d 657, 665 (9th Cir. 2017).

                            III.

                             A.

    17 U.S.C. § 507 establishes the statute of limitations
under the Copyright Act: “No civil action shall be
maintained under the provisions of this title unless it is
commenced within three years after the claim accrued.” The
key question we must answer is when does a copyright
infringement claim accrue?

    A claim ordinarily accrues when the plaintiff has a
“complete and present cause of action.” Bay Area Laundry
& Dry Cleaning Pension Tr. Fund v. Ferbar Corp. of Cal.,
522 U.S. 192, 201 (1997) (citation omitted). In the copyright
context, a claim accrues “when an infringing act occurs,”
Petrella, 572 U.S. at 670, i.e., when the infringer “violates
any of the exclusive rights of the copyright owner,” Bell v.
Wilmott Storage Servs., LLC, 12 F.4th 1065, 1080 (9th Cir.
2021) (emphasis omitted) (quoting 17 U.S.C. § 501(a)),
although this is not the only time a claim accrues, as
explained below.

    In Roley v. New World Pictures, Ltd., 19 F.3d 479 (9th
Cir. 1994), we addressed the situation of a continuing
violation, where the copyright holder, Roley, had witnessed
the original screening of a new movie in August 1987 that
he claimed, at that time, infringed his screenplay. We held
that a “cause of action for copyright infringement accrues
when one has knowledge of a violation or is chargeable with
such knowledge.” Id. at 481. But Roley did not file his
                STARZ ENTERTAINMENT V. MGM                              9

complaint alleging infringement until February 1991. Id.
at 480. He sought the benefit of the Seventh Circuit’s then 2
view of the three-year limitation period, “that so long as any
allegedly infringing conduct occurs within the three years
preceding the filing of the action, the plaintiff may reach
back and sue for damages or other relief for all allegedly
infringing acts,” beginning when the first infringing act
occurred, no matter how long ago. Id. at 481 (citing Taylor
v. Meirick, 712 F.2d 1112, 1118–19 (7th Cir. 1983)). We
squarely rejected that theory of recovery for continuing
copyright violations, holding that Roley could recover only
for infringing acts that occurred within the three years
preceding the filing of the copyright infringement lawsuit.
Id. Thus, as early as 1994, we both recognized the discovery
rule in the “specific context of cases where infringement and
accrual happen simultaneously,” and that when the copyright
holder knew of earlier infringing acts, recovery was
allowable only for infringing acts occurring within the three-
year window before commencing suit.

    Our subsequent decision in Polar Bear Productions, Inc.
v. Timex Corp., 384 F.3d 700 (9th Cir. 2004) (as amended),
recognized the latter point—that Roley did not create a bar
against recovery for acts of infringement that occurred prior
to the three-year window. Rather, Roley held that a claim
accrues at “the moment when the copyright holder ‘has
knowledge of a violation or is chargeable with such
knowledge,’” and therefore “the three-year clock begins
upon discovery of the infringement.” Id. at 706 (quoting

    2
      At that time, the Seventh Circuit applied the “continuing violation”
doctrine to copyright infringement. It has since recognized that the
“‘continuing violation’ doctrine is incompatible with the separate-
accrual rule of § 507(b) . . . .” Chicago Bldg. Design, P.C. v. Mongolian
House, Inc., 770 F.3d 610, 616 (7th Cir. 2014).
10           STARZ ENTERTAINMENT V. MGM

Roley, 19 F.3d at 481). Therefore, under Roley, § 507(b)
does not prohibit the recovery of damages for infringing acts
that occurred outside the three-year window so long as “the
copyright plaintiff was unaware of the infringement, and that
lack of knowledge was reasonable under the circumstances.”
Id. We reasoned:

       Without the benefit of tolling in this situation,
       a copyright plaintiff who, through no fault of
       its own, discovers an act of infringement
       more than three years after the infringement
       occurred would be out of luck. Such a harsh
       rule would distort the tenor of the statute.
       Section 507(b), like all statutes of limitations,
       is primarily intended to promote the timely
       prosecution of grievances and discourage
       needless delay. It makes little sense, then, to
       bar damages recovery by copyright holders
       who have no knowledge of the infringement
       ....

Id. In other words, a claim for copyright infringement may
accrue when the copyright owner discovers, or reasonably
should have discovered, the infringement. Id. at 705.

    In addition to first establishing the discovery rule, Roley
was important for another reason—while not labeling it as
such, it recognized the “separate accrual” rule. In examining
whether any actionable conduct occurred in the three years
before Roley filed his complaint, we recognized that the
statute of limitations runs separately for each successive
incident of infringement. See Roley, 19 F.3d at 481.
Although we held that “an action may be brought for all acts
that accrued within the three years preceding the filing of the
suit,” in an ironic twist, Roley was unable to adduce any
             STARZ ENTERTAINMENT V. MGM                    11

evidence of any infringing act that occurred during that
period. Id. at 481–82.

    Fast forward two decades from Roley to Petrella v.
Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014). There,
the Supreme Court was tasked with determining whether the
doctrine of laches could bar claims of infringement that
accrued within the three-year window of § 507(b). Paula
Petrella, the heir to the author of the 1963 screenplay upon
which MGM’s 1980 movie Raging Bull was based, renewed
the copyright in the 1963 screenplay. Petrella, 572 U.S.
at 673. She became aware that she had a copyright
infringement claim against MGM for its continued
exploitation of Raging Bull at least as early as 1998, but she
waited to commence an action until January 6, 2009, when
the movie began to show profits. Id. at 674–75. However,
recognizing that the statute of limitations for copyright
claims requires commencement of suit within three years
after the claim accrued, 17 U.S.C. § 507(b), Petrella sought
damages for only those acts of infringement that occurred on
or after January 6, 2006. Id. at 674–75. MGM asserted the
defense of laches based on Petrella’s knowledge of her
potential infringement claim since 1998. Id. at 675.

    The Court held that laches is not a defense to claims for
relief for violations that accrue within the three-year
limitations window. It first explained that “the separate-
accrual rule attends the copyright statute of limitations,”
such that “each infringing act starts a new limitations
period.” Id. at 671. Thus, in deciding that laches is
inapplicable, the Court explained that “the copyright statute
of limitations, § 507(b), itself takes account of delay.” Id.
at 677. It continued:

       As earlier observed, a successful plaintiff can
       gain retrospective relief only three years back
12           STARZ ENTERTAINMENT V. MGM

       from the time of suit. No recovery may be
       had for infringement in earlier years. Profits
       made in those years remain the defendant’s to
       keep. Brought to bear here, § 507(b) directs
       that MGM’s returns on its investment in
       Raging Bull in years outside the three-year
       window (years before 2006) cannot be
       reached by Petrella. Only by disregarding
       that feature of the statute, and the separate-
       accrual rule attending § 507(b), could the
       Court of Appeals presume that infringing acts
       occurring before [three years prior to filing
       suit] bar all relief, monetary and injunctive,
       for infringement occurring on and after that
       date.

Id. (cleaned up).

    The discovery rule had no place in the Court’s laches
analysis, nor could it. In the course of discussing the
question of when a claim accrues, the Court stated the
general rule: A copyright claim “‘accrue[s]’ when an
infringing act occurs,” which it labeled “the incident of
injury rule.” Id. at 670 (alteration in original). It then
dropped a footnote, noting that

       [N]ine Courts of Appeals 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 the claim.”
       William A Graham Co. v. Haughey, 568 F.3d
       425, 433 (3d. Cir. 2009) (internal quotation
       marks omitted). See also 6 W. Patry,
                STARZ ENTERTAINMENT V. MGM                            13

         Copyright § 20:19, p. 20–28 (2013) . . . (“The
         overwhelming majority of courts use
         discovery accrual in copyright cases.”).

Id. at 670 n.4. However, the Court expressly noted that it
had “not passed on the question,” and it did not do so in
Petrella. Id. Nor has it had the occasion to address the
discovery rule since. See, e.g., SCA Hygiene Prods.
Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct.
954, 962 (2017) (recognizing that the Court has not decided
“whether the Copyright Act’s statute of limitations is
governed by [a discovery] rule”). And because the Petrella
Court was solely concerned with laches—a doctrine
addressing concerns about delay when plaintiffs know of
their claims, but sleep on their legal rights 3—it could not
have intended its language to address the situation where a
copyright holder does not know about the infringing act to
which the discovery rule, not the incident of injury rule,
applies. It thus seems fair to draw the conclusion that in
Petrella, “the Court acknowledged that the ‘incident of
injury’ rule it described in the main text of the case is not the
only [accrual] rule that federal courts apply in copyright
infringement cases,” Mitchell v. Capitol Recs., LLC, 287 F.
Supp. 3d 673, 677 (W.D. Ky. 2017), but said nothing else
about the discovery rule’s continued viability.

    3
        See Restatement (Second) of Torts § 939 (1979) (defining laches
as an equitable remedy that may bar relief where there is “delay by the
plaintiff in bringing suit, after he knew or should have known of the tort
. . . if the delay has operated to the prejudice of the defendant or has
weakened the court’s facility of administration”).
14            STARZ ENTERTAINMENT V. MGM

                              B.

    “The overwhelming majority of courts” today use the
discovery rule for determining accrual in copyright cases.
See 6 William F. Patry, Patry on Copyright § 20:19 (2013)
(collecting cases). Our circuit has continued to apply the
discovery rule post Petrella. See Oracle Am., Inc. v. Hewlett
Packard Enter. Co., 971 F.3d 1042, 1047 (9th Cir. 2020)
(“[A] copyright infringement claim accrues—and the statute
of limitations begins to run—when a party discovers, or
reasonably should have discovered, the alleged
infringement.”); Media Rts. Techs., Inc. v. Microsoft Corp.,
922 F.3d 1014, 1022 (9th Cir. 2019) (same). But most
circuit courts, including ours, have not yet addressed
whether Petrella imposed a damages bar separate from the
statute of limitations, as MGM suggests.

    The Second Circuit is the only exception. See Sohm v.
Scholastic Inc., 959 F.3d 39 (2d Cir. 2020). There, Sohm, a
professional photographer, entered into an agreement with
different agencies to issue limited licenses to third parties to
use his photographs. Id. at 42. In 2004, one of those
agencies entered into an agreement with Scholastic, a
publisher and distributor of children’s books, that
established fees for certain print-run ranges of Sohm’s
photos. Id. Some twelve years later, in May 2016, Sohm
sued Scholastic for copyright infringement, alleging that
Scholastic used his photos in numbers in excess of those
contemplated in the monthly invoices governing
Scholastic’s licenses. Id. Scholastic moved for summary
judgment, arguing that the incident of injury rule should
apply to determine when Sohm’s claim accrued and, even if
the discovery rule applied, first, Sohm should have
discovered the ongoing infringements more than three years
before he filed suit, and second, that Petrella created a
             STARZ ENTERTAINMENT V. MGM                     15

“damages bar” such that damages should be strictly limited
to three years from the time the complaint was filed. See id.
at 44. The district court rejected each of Scholastic’s
arguments, applied the discovery rule, found Sohm was not
on inquiry notice three years before he filed suit, and was
thus entitled to damages for infringing acts before the three-
year period preceding suit. See id.

    The Second Circuit affirmed the district court’s grant of
summary judgment, concluding “that the discovery rule
applies for statute of limitations purposes in determining
when a copyright infringement claim accrues under the
Copyright Act.” Id. at 50. It explained that “an infringement
claim does not ‘accrue’ until the copyright holder discovers,
or with due diligence should have discovered, the
infringement,” citing its binding precedent in Psihoyos v.
John Wiley & Sons, Inc., 748 F.3d 120 (2d Cir. 2014). Sohm,
959 F.3d at 50. It recognized that the Supreme Court in
Petrella “specifically noted that it was not passing on the
question of the discovery rule,” a position that was
“reaffirmed” in SCA Hygiene Products.                       Id.
“Consequently,” the Second Circuit found that “in light of
the Supreme Court’s direct and repeated representations that
it has not opined on the propriety of the discovery or injury
rules, it would contravene settled principles of stare decisis
for this Court to depart from its prior holding in Psihoyos on
the basis of Petrella.” Id.

    The Second Circuit next considered whether the district
court correctly found that Sohm “did not discover, nor with
due diligence should have discovered, Scholastic’s
purported copyright infringements more than three years
prior to when he filed suit.” Id. It concluded that Scholastic
failed to identify any facts or circumstances that would have
put Sohm on inquiry notice that Scholastic was infringing its
16            STARZ ENTERTAINMENT V. MGM

copyrights, reasoning that “Scholastic cannot rely on the
passage of time alone to establish that Sohm should have
discovered” the infringing acts. Id. at 51. It upheld the
district court’s determination that Sohm’s claims accrued
within the statute of limitations—that he discovered the
earlier acts of infringement within the three-year period
before he filed suit. That should have been the end of
discussion, but it wasn’t.

    Scholastic, like MGM here, went on to argue that even if
the discovery rule means the pre-three-year window claims
timely accrued, Petrella created a separate damages bar that
limits damages to only those arising from acts of
infringement within the three-year window. The Second
Circuit agreed, holding that the Petrella Court “explicitly
delimited damages to the three years prior to the
commencement of a copyright infringement action.” Id. It
found that “Petrella’s plain language explicitly dissociated
the Copyright Act’s statute of limitations from its time limit
on damages.” Id. at 52. The Second Circuit reasoned from
Psihoyos and certain language in Petrella that “we must
apply the discover[y] rule to determine when a copyright
infringement claim accrues, but a three-year lookback period
from the time a suit is filed to determine the extent of the
relief available.” Id. Accordingly, the Sohm court
concluded that “a plaintiff’s recovery is limited to damages
incurred during the three years prior to filing suit,” even
where the copyright holder was unaware of the infringing
acts, and the district court’s contrary conclusion was in error.
Id.

                              C.

   MGM asks us to adopt the approach taken by the Second
Circuit in Sohm, and hold, in light of Petrella, that the
damages that Starz may recover on its infringement claims
             STARZ ENTERTAINMENT V. MGM                     17

are strictly limited to damages for the incidents of
infringement that occurred during the three-year period
before Starz filed suit, without regard to the date of accrual.
We disagree that such a limitation on recovery of damages
is dictated by Petrella. We hold that the discovery rule for
accrual allows copyright holders to recover damages for all
infringing acts that occurred before they knew or reasonably
should have known of the infringing incidents and that the
three-year limitations period runs from the date the claim
accrued, i.e., from the date when the copyright holder knew
or should have known of the infringement.

    Applying a separate damages bar based on a three-year
“lookback period” that is “explicitly dissociated” from the
Copyright Act’s statute of limitations in § 507(b) would
eviscerate the discovery rule. There is no reason for a
discovery rule if damages for infringing acts of which the
copyright owner reasonably becomes aware years later are
unavailable. This case provides a textbook example of the
absurdity of such a rule. The Library Agreements between
Starz and MGM covered hundreds of titles under separate
time periods, and some of the exclusivity periods ended as
early as 2013. Under the approach urged by MGM and
adopted in Sohm, damages may only be recovered for a 2013
infringement if the complaint is filed within three years of
2013, or by 2016. But here, Starz did not discover any
infringement until August 2019, and Starz brought suit less
than a year later. Thus, while Starz’s copyright infringement
claim accrued upon discovery in August 2019, and was
therefore timely under § 507(b) because the complaint was
filed before August 2022, under MGM’s theory, that same
act of infringement has been nonrecoverable since 2016. As
the district court noted, under Sohm’s rule, “[t]o the extent
the discovery rule ‘saved’ the claims, it was a pyrrhic
victory.” Moreover, recognizing a damages bar would
18              STARZ ENTERTAINMENT V. MGM

render the “discovery rule” functionally identical to the
“incident of injury” rule. See Br. of Amicus Curiae
Professor Tyler Ochoa in Supp. of Pl.-Appellee &
Affirmance at 13–15. By purporting to apply the discovery
rule but imposing a three-year damages bar, Sohm is
inherently self-contradictory. See 3 Melville B. Nimmer &
David Nimmer, Nimmer on Copyright § 12.05[B][2][d][ii]
(2021) (“But, immediately after nominally reaffirming the
discovery rule, Sohm v. Scholastic took a hundred-and-
eighty degree turn . . . In sum, the practical import of this
case is to adopt the injury rule and reject the discovery rule
that it had previously upheld.”). The overwhelming majority
of district courts in discovery rule circuits has rejected the
concept of a damages bar in discovery rule cases, as Starz
argues. 4

     4
       Starz cites in its brief nearly thirty cases that have explicitly or
implicitly rejected the notion that Petrella, a non-discovery rule case,
created a damages bar in cases where the discovery rule applies. See,
e.g., Mavrix Photo, Inc. v. Rant Media Network, LLC, No. CV 19-7270-
DMG-AFMx, 2020 WL 8028098, at *4 (C.D. Cal. Nov. 2, 2020);
D’Pergo Custom Guitars, Inc. v. Sweetwater Sound, Inc., 516 F. Supp.
3d 121, 135 (D.N.H. 2021); Stross v. Hearst Commc’ns, Inc., No. SA-
18-CV-01039-JKP, 2020 WL 5250579, at *8 (W.D. Tex. Sept. 3, 2020);
Menzel v. Scholastic, Inc., No. 17-cv-05499-EMC, 2019 WL 6896145,
at *6 (N.D. Cal. Dec. 18, 2019); Adobe Sys. Inc. v. NA Tech Direct Inc.,
No. 17-cv-05226-YGR, 2019 WL 5579472, at *8 (N.D. Cal. Oct. 29,
2019); Krasemann v. Scholastic, Inc., No. CV-18-08313-PCT-DWL,
2019 WL 3220535, at *7 (D. Ariz. July 17, 2019); Evox Prods. LLC v.
Chrome Data Sols., LP, No. 3:16-cv-0057-PK, 2018 WL 6059530,
at *16 (D. Or. Sept. 6, 2018); Kelly v. Maricopa Cnty. Sheriff’s Off., No.
CV-15-02572-PHX-GMS, 2017 WL 6054675, at *2 (D. Ariz. Dec. 7,
2017); Phoenix Techs. Ltd. v. VMware, Inc., No. 15-cv-01414-HSG,
2017 WL 1289863, at *7 (N.D. Cal. Jan. 6, 2017); Yue v. MSC Software
Corp., No. 15-cv-05526-PJH, 2016 WL 3913001, at *1 (N.D. Cal. July
20, 2016); Wolf v. Travolta, 167 F. Supp. 3d 1077, 1092–93 (C.D. Cal.
2016); UMG Recordings, Inc. v. Glob. Eagle Ent., Inc., No. CV 14-3466
               STARZ ENTERTAINMENT V. MGM                           19

    The Supreme Court did not create a damages bar
separate from the statute of limitations in Petrella. The
language that MGM relies on in Petrella is relevant only to
incident of injury rule cases, not to cases where we apply the
discovery rule. MGM relies, like the Second Circuit in
Sohm, on the Petrella Court’s statement that “the statute
‘itself takes account of delay’ by limiting damages to the
three years prior to when a suit is filed.” Sohm, 959 F.3d
at 52 (quoting Petrella, 572 U.S. at 677). This statement is
accurate when the incident of injury rule applies because the

MMM (JPRx), 2015 WL 12752881, at *8 (C.D. Cal. Aug. 27, 2015);
Oracle USA, Inc. v. Rimini St., Inc., No. 2:10-CV-00106-LRH-PAL,
2015 WL 5089779, at *6 (D. Nev. Aug. 27, 2015); Richardson v.
Kharbouch, No. 19-C-02321, 2020 WL 1445629, at *6–7 (N.D. Ill. Mar.
25, 2020); Design Basics, LLC v. Forrester Wehrle Homes, Inc., 305 F.
Supp. 3d 788, 792–94 (N.D. Ohio 2018); Energy Intel. Grp., Inc. v. CHS
McPherson Refinery, Inc., 300 F. Supp. 3d 1356, 1371 (D. Kan. 2018);
Krist v. Scholastic, Inc., 253 F. Supp. 3d 804, 811–12, 812 n.44 (E.D.
Pa. 2017); Mitchell287 F. Supp. 3d at 677–78; Design Basics, LLC v.
McNaughton Co., No. 3:17-cv-258, 2017 WL 11068761, at *4–5 (M.D.
Pa. Nov. 15, 2017); Boehm v. Svehla, No. 15-cv-379-jdp, 2017 WL
4326308, at *8–9 (W.D. Wis. Sept. 27, 2017); Topline Sols., Inc. v.
Sandler Sys., Inc., No. ELH-09-3102, 2017 WL 1862445, at *21 (D. Md.
May 8, 2017); Alfa Laval Inc. v. Flowtrend, Inc., No. H-14-2597, 2016
WL 2625068, at *5–6 (S.D. Tex. May 9, 2016); Energy Intel. Grp., Inc.
v. Kayne Anderson Cap. Advisors, LP, No. H-14-1903, 2016 WL
1203763, at *4 (S.D. Tex. Mar. 22, 2016); Raucci v. Candy & Toy
Factory, 145 F. Supp. 3d 440, 448 (E.D. Pa. 2015); Design Basics LLC
v. J & V Roberts Invs., Inc., 130 F. Supp. 3d 1266, 1281–82 (E.D. Wis.
2015); Design Basics LLC v. Campbellsport Bldg. Supply Inc., 99 F.
Supp. 3d 899, 919 (E.D. Wis. 2015); Grant Heilman Photography, Inc.
v. McGraw-Hill Cos., Inc., 28 F. Supp. 3d 399, 410–11 (E.D. Pa. 2014);
Frerck v. Pearson Educ., Inc., 63 F. Supp. 3d 882, 887 n.3 (N.D. Ill.
2014); Beasley v. John Wiley & Sons, Inc., 56 F. Supp. 3d 937, 945 n.5
(N.D. Ill. 2014); Panoramic Stock Images, Ltd. v. McGraw-Hill Glob.
Educ. Holdings, LLC, No. 12 C-9881, 2014 WL 6685454, at *3 (N.D.
Ill. Nov. 25, 2014); Frerck v. John Wiley & Sons, Inc., No. 11-cv-2727,
2014 WL 3512991, at *6 n.5 (N.D. Ill. July 14, 2014).
20              STARZ ENTERTAINMENT V. MGM

three-year look-back period from the date of filing suit is
coextensive with the three-year period following the act of
infringement. When accrual is triggered by the act of
infringement, we can accurately describe the statute of
limitations as running forward from the act of infringement
or looking backward from the date the complaint is filed—
either way it is the same exact period of time.

      MGM argues that Petrella’s “look-back” language
created a three-year damages bar that is determined solely
by the date the complaint is filed even in cases where the
discovery rule applies. But the text of the statute provides
no support for this argument. In Petrella, the Court
explained that, in the Copyright Act, Congress provided for
just “two controlling time prescriptions: the copyright term
. . . and § 507(b)’s limitations period.” Petrella, 572 U.S.
at 672. Section 507(b)’s limitation period is not based on the
date the complaint is filed, but instead limits civil actions to
“three years after the claim accrued.” In other words, the
claim under the Copyright Act does not arise—is not even
actionable—until accrual. 5       Nowhere in § 507(b), or
anywhere else in the Copyright Act, is there any reference to
a separate three-year damages bar based on the complaint’s
filing date. The Court did not disregard the plain text of the
Copyright Act and invent a third time prescription for
damages in a case where the issue was not before it. Plainly
the Court’s look-back language was simply a shorthand for
the statute of limitations laid out in § 507(b) in incident of

     5
       See Black’s Law Dictionary (11th ed. 2019) (defining “accrue” as
“[t]o come into existence as an enforceable claim or right; to arise,” and
providing the following example: “the plaintiff’s cause of action for
silicosis did not accrue until the plaintiff knew or had reason to know of
the disease”).
              STARZ ENTERTAINMENT V. MGM                      21

injury cases—where infringement and accrual occur
simultaneously.

    Nor does § 504, the provision of the Copyright Act
governing damages, support the imposition of a damages
bar. Rather, § 504 allows recovery for “actual damages . . .
as a result of the infringement,” “any profits . . . attributable
to the infringement,” 17 U.S.C. § 504(b), or “statutory
damages for all infringements involved in the action,” id.
§ 504(c)(1) (emphasis added). Had Congress intended to
limit recoverable damages or profits to those arising only
from acts of infringement during the three-year period before
suit was commenced, it would have said so, and said so in
§ 504, which sets forth detailed instructions as to the proper
calculation of actual and statutory damages and profits.

    Finally, unlike laches which serves to discourage a
plaintiff from knowingly “sleeping upon his rights,” where
the discovery rule applies, the plaintiff reasonably does not
know that he is in such a slumber. Adopting a damages bar
would mean that “a copyright plaintiff who, through no fault
of its own, discovers an act of infringement more than three
years after the infringement occurred would be out of luck.
Such a harsh rule would distort the tenor of the statute.”
Polar Bear, 384 F.3d at 706. “Section 507(b), like all
statutes of limitations, is primarily intended to promote the
timely prosecution of grievances and discourage needless
delay.” Id. It makes little sense to bar recovery of damages
beyond the three-years before the suit was filed where the
copyright holder did not delay, but acted in accordance with
§ 507(b) by filing his complaint within three years of
discovery. This is particularly true in a case such as this
where the alleged infringer knows of and controls the
infringing acts and the copyright holder has little means of
discovering those acts. This would incentivize violation of
22             STARZ ENTERTAINMENT V. MGM

the copyright holder’s exclusive rights, not protect those
rights, which is the purpose of the Copyright Act itself. 6 As
amici argue, with the constant evolution of technology,
copyright infringement is now “easier to commit, harder to
detect, and tougher to litigate.” Br. of Amici Curiae The
Authors Guild, Inc. and Other Artists’ Rights Organizations
in Sup. Of Pl.-Appellee & Affirmance at 3; see also William
A. Graham Co. v. Haughey, 568 F.3d 425, 437 (3d Cir. 2009)
(“Technological advances such as personal computing and
the internet have [made] it more difficult for rights holders
to stridently police and protect their copyrights.” (internal
quotation marks and citation omitted)).

    The district court correctly concluded that “the best read
of Petrella is that it did not change any law in the Ninth
Circuit pertaining to the discovery rule and the three year
damages bar.” This is because the discovery rule is an
exception to the general incident of injury rule. When
copyright infringement occurs prior to discovery, a simple
application of the general rule to the three-year statute of
limitations in § 507(b), undertaken by the Court in Petrella,
is impossible. Instead, the three-year limitations period
begins only when the copyright holder knows or should
know of the infringing act. Neither the text of the Copyright
Act nor Petrella imposes a three-year damages bar in a
discovery rule case.

     6
      See 1 Nimmer, supra, § 1.02 (explaining that the Copyright Act,
like all copyright laws, serves to promote the progress of science and
other useful arts by providing protection for a limited time of certain
exclusive rights in their works).
             STARZ ENTERTAINMENT V. MGM                     23

                              D.

    The district court correctly applied the discovery rule to
conclude that Starz timely filed its claims of copyright
infringement. Taking all the facts in the complaint as true,
there were no events that occurred that should have placed
Starz on notice that MGM was violating its exclusive rights
until Starz’s employee discovered the movie Bill & Ted’s
Excellent Adventure on Amazon Prime Video in August
2019. And as the district court aptly put it, “When Starz did
detect smoke, in the form of Bill & Ted’s Excellent
Adventure, it quickly discovered the fire and promptly sued
for all 340 infringements.” Because Starz brought its claim
within three years after its claim accrued, Starz is not barred
from seeking damages for all acts of infringement.

                             IV.

   We therefore affirm the district court’s denial of MGM’s
motion to dismiss under Rule 12(b)(6).

   AFFIRMED.