Court Finds Copyright Ownership Claim Time-Barred, Allows Work-for-Hire Defense

In a June 26, 2015 ruling, Judge Kimba M. Wood ruled that the counterclaim plaintiff’s copyright ownership claim over certain photographs taken by the counterclaim defendant was barred by the three year statute of limitations. The Court wrote that the statute begins to run “‘when a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.’” Judge Wood found that the counterclaim plaintiff had been put on notice of the counterclaim defendant’s “‘express assertion of sole authorship or ownership’” more than three years before suit. Judge Wood nevertheless permitted the counterclaim plaintiff to assert its work-for-hire defense in response to the counterclaim defendant’s copyright ownership claim, noting that the statute of limitations does not bar a defense. In considering the work-for-hire defense, the Court wrote that merely because the counterclaim defendant’s job responsibilities included taking photographs at times, that does not automatically mean that every photograph the counterclaim defendant took (for example, while “off the clock”) was in the scope of his employment duties, and thus denied in part summary judgment on the defense.

Court Declines to Rescind Copyright Assignments, and Dismisses Infringement Claims

In a January 13, 2014 ruling, Judge William H. Pauley III granted summary judgment in favor of defendants Thomas v. Conigliaro and another defendant dismissing plaintiff Christian McDonald’s copyright infringement and other claims against them. Judge Pauley ruled that McDonald could not rescind his assignment of the copyrights at issue because Conigliaro was a bona fide purchaser, and that McDonald’s rescission claim was time-barred in any event.

McDonald claimed that an interim August 2006 assignment of the copyrights to Reiss had been fraudulently induced, and that the later assignment to Conigliaro was void because Conigliaro “had notice of the alleged fraud.” Judge Pauley noted that “[c]ontracts effecting the sale and license of copyrights are construed ‘according to state law principles of contract interpretation,’” and wrote that under “‘New York law, a recipient of property takes the property free of any equitable interest, such as would give rise to a constructive trust, when the recipient is a bona fide purchaser.’” After considering the evidence of Conigliaro’s knowledge of the alleged fraud urged by McDonald, the Court concluded that “no reasonable jury could find that Conigliaro was on notice of Reiss’s purported fraud,” and ruled that Conigliaro was a bona fide purchaser of the copyrights.

With regard to the statute of limitations issue, Judge Pauley wrote that “McDonald’s claim to the . . . copyrights rests on rescission of the 2006 assignments because Reiss allegedly fraudulently induced them.” The Court ruled that a “‘claim for rescission based on actual fraud is governed by the statute of limitations for claims based on fraud.’” Since McDonald filed the action more than six years after the supposed fraud giving rise to the rescission, the action was, according to the Court, time barred unless it was nevertheless filed within “’two years from the time the plaintiff . . . discovered the fraud, or could with reasonable diligence have discovered it.’” Judge Pauley found that McDonald was aware of the alleged fraud more than two years before filing suit, and held that the rescission claim was time barred.

Court Applies Injury Rule, Rather than Discovery Rule, to Accrual of Copyright Infringement Claim

In an August 21, 2013 ruling, Judge Loretta A. Preska granted in part and denied in part defendants' motion for summary judgment on statute of limitations grounds in plaintiff Muench Photography, Inc.'s copyright infringement claims.  The parties agreed "that the principal question of law at issue with respect to whether certain of plaintiff's claims are time-barred is when a copyright infringement claim accrues under the three-year statute of limitations in the Copyright Act, 17 U.S.C. § 507(b)."  The two accrual possibilities are when the injury occurred or when it was discovered.  According to the Court, prior Second Circuit law strongly indicated that the discovery rule applied, but the Supreme Court's decision in TRW v. Andrews, 534 U.S. 19 (2001) required reassessment that position.  Judge Preska surveyed the split of authority in the District on the issue, and joined "what is now the majority approach in this jurisdiction in adopting the injury rule for the purposes of evaluating whether copyright infringement claims are time barred."  Applying the injury rule, Judge Preska found some of Muench's claims time barred, and allowed others to proceed.