Warner Chappell Music v. Nealy

In the early 1980s, Sherman Nealy and Tony Butler formed Music Specialist, Inc. (MSI), a Florida corporation involved in the music industry. Nealy, a newcomer to the sector, financed the operation while Butler, an experienced disc jockey, authored or co-authored the musical works at the heart of the case. MSI released an album and several singles from 1983 to 1986 before dissolving as a corporation, although its business activities continued until 1989. During Nealy’s subsequent incarceration for drug offenses, Butler formed a new company, 321 Music, LLC, and began licensing rights to MSI’s musical works. This included an agreement in 2008 with Atlantic to interpolate one of MSI’s works into a song by artist Flo Rida.

Upon his release, Nealy discovered third-party usage of MSI’s catalog but took no decisive action. He was unaware of ensuing litigation over the works among various entities including Warner Chappell Music, Inc., Artist Publishing Group, LLC, Atlantic Recording Corporation, and Butler's 321 Music. It wasn't until post-release from a second prison term that he learned of the prior litigation and alleged unauthorized transfers of rights. Finally, in December 2018, Nealy and MSI filed a lawsuit alleging copyright infringement by Atlantic, Artist, and Warner for activities dating back to 2008. Following a pre-trial stipulation framing the case as an “ownership dispute,” the defendants moved for summary judgment, which the district court granted in part and denied in part. On an interlocutory appeal, the U.S. Court of Appeals for the Eleventh Circuit held that when a copyright plaintiff has a timely claim under the discovery accrual rule for infringement that occurred more than three years before the lawsuit was filed, the plaintiff may recover damages for that infringement.