Ex©lusive Rights

L.A. Printex Industries, Inc. v. At Last Sportswear, Inc., 2009 WL 1285923 (S.D.N.Y. 2009)

This decision is almost a month old but I’ve been meaning to write about it for a while.  As many of you know, the Copyright Act states that a copyright owner must commence a suit “within three years after the claim accrued.” The Copyright Act, however, doesn’t explicitly state when a claim accrues.  Federal courts have at times used two different rules for determining when a claim for copyright infringement accrues: under the injury rule, a claim accrues at the time of infringement; under the discovery rule, accrual often occurs later, at the time a “plaintiff knows of the infringement or is chargeable with such knowledge.” See Bridgeport Music Inc. v. Diamond Time, Ltd., 371 F.3d 883 (6th Cir. 2004).

Nowhere is there as many divergent decision by district courts in regards to the statue of limitations than in the Second Circuit. On May 4, Judge Jed S. Rakoff issued an order finding that the Court didn’t need to decide what rule to apply because the statute of limitations was equitably tolled because the plaintiff had filed a complaint in the Central District of California, which was dismissed for lack of personal jurisdiction. I may be reading too much into the decision, such is the state of armchair quarterbacking, but it almost seems like the Court was relieved not to have to decide the issue:

Defendant urges this Court to join several other courts in this district in finding that the 2001 Supreme Court decision TRW Inc. v. Andrews, 534 U.S. 19 (2001), necessitates reconsideration of the Second Circuit’s previous adoption of a discovery rule. See Auscape International, 409 F.Supp.2d 235 (S.D.N.Y.2004); Vasquez v. Torres-Negron, No. 06 Civ. 819, 2007 WL 2244784, at *5 (S.D.N.Y. Jul. 11, 2007); Roberts v. Keith, No. 04 Civ. 10079, 2006 WL 547252, at *2-3 (S.D.N.Y. Mar. 7, 2006); Med. Educ. Dev. Servs., Inc. v. Reed Elsevier Group, PLC, No. 05 Civ. 8665, 2008 WL 4449412, at *10 (S.D.N.Y. Sept. 30, 2008). Plaintiff argues, in response, that the Second Circuit’s pre- TRW rule remains the law in this Circuit and, unless changed by the Court of Appeals itself, must be followed. Cf. Home Design Servs., Inc. v. B & B Custom Homes, LLC, 509 F.Supp.2d 968 (D.Colo.2007) (rejecting the argument that TRW mandates the reassessment of the discovery rule in the copyright context).

The Court need not resolve this issue, however, because the Court finds that the statute of limitations was equitably tolled for a period sufficient to defeat defendant’s claim that the statute of limitations has run.

* * * * *

Here, plaintiff filed a timely action against At Last on May 15, 2008 in the Central District of California. It litigated defendant’s motion to dismiss for lack of personal jurisdiction, and then, when the California Action was dismissed, it filed the instant action within three weeks, a span of time that suggests reasonable diligence, see Abbas v. Dixon, 480 F.3d 636, 642 (2d Cir.2007) (noting that “[d]ue diligence on the part of the plaintiff in bringing an action … is an essential element of equitable relief”) (quotation marks and alterations deleted).

Defendant attempts to characterize plaintiff as a chronic litigator, but there is nothing to suggest that the instant action is frivolous and a copyright holder is understandably assiduous in defense of its copyright. Defendant also argues that plaintiff should have either abandoned the California Action when defendant filed its motion to dismiss in the California Action-at which point the statute of limitations had not run under any rule-or moved for transfer of venue when personal jurisdiction was found not to exist. The Court does not believe, however, that plaintiff was obligated to abandon the California Action mid-stream just because defendant asserted it was not subject to personal jurisdiction. And while plaintiff, as it now acknowledges, could have avoided the statute of limitations problem altogether by seeking transfer, nonetheless, given the fact that plaintiff promptly brought suit in the Southern District of New York after the California Action was dismissed, the Court does not see this
oversight as reason to deny plaintiff equitable tolling.

As the Supreme Court has noted, “[w]hen a lawsuit is filed, that filing shows a desire on the part of the plaintiff to begin his case and thereby toll whatever statutes of limitation would otherwise apply.” Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962). Defendant has been on notice since at least May 15, 2008 that it will be called upon to defend against plaintiff’s lawsuit and cannot claim that it suffers any prejudice as a result of plaintiff’s actions.

Accordingly, the Court finds that the statute of limitations was equitably tolled during the four and one-half months that the California Action was pending. The instant action was therefore timely brought regardless of whether an injury rule or a discovery rule is applied. Defendant’s motion to dismiss is therefore denied.