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Exploring the Latest in Intellectual Property Law
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Exploring the Latest in Intellectual Property Law
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Copyright Office Issues New Rule

by | Aug 17, 2023 |

Adopting its interim rule from December 2022, the US Copyright Office issued a final rule that governs district court referrals, proof of service forms, default proceedings and the appearance of law student representatives before the Copyright Claims Board (CCB).

District Court Referrals

CCB proceedings qualify as alternative dispute resolution processes under 28 U.S.C. § 651 for purposes of referral of eligible cases by US district courts upon consent of the parties. The CCB was created to resolve certain copyright claims more efficiently and at a lower cost than a district court. In furtherance of this objective, the CCB has the authority to adjust or suspend certain rules that would otherwise apply if doing so would be in the interest of efficiently resolving the dispute. The new rule excludes district court referrals from the limits on the number of proceedings a claim, attorney or law firm may file with the CCB and does not require a claimant to pay a filing fee for such a proceeding.

Proof of Service Forms

Claimants may file either the proof of service form provided on the CCB’s website or an alternative proof of service form that contains all of the information required by the CCB-provided form.

Evidence in Default Proceedings

Evidence presented by the parties in a default proceeding is not limited to materials exchanged during discovery, as a default proceeding may occur before discovery has begun.

Law Student Representatives

The final rule allows for law student representatives, provided that they qualify under the laws, court rules, or bar rules of the jurisdiction that allows, authorizes or permits them to practice law. The CCB’s regulations only govern law students who make a formal appearance in CCB proceedings, rather than those who provide legal assistance to parties in other capacities.



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A Textbook Example: Single Online Sale Does Not a Minimum Contact Make

by | Aug 10, 2023 |

The US Court of Appeals for the Eighth Circuit affirmed a district court’s grant of a motion to dismiss for lack of personal jurisdiction, finding that a single online sale did not establish minimum contacts to support personal jurisdiction. Kendall Hunt Publishing Company v. The Learning Tree Publishing Corporation, Case No. 22-1885 (8th Cir. July 24, 2023) (Smith, Wollman, Loken, JJ.)

Kendall Hunt Publishing filed a copyright infringement lawsuit against The Learning Tree Publishing in the District of Iowa. Before founding Learning Tree, Frank Forcier and John Coniglio worked remotely for Kendall Hunt from their homes in California. Both individuals traveled to Iowa for work, had regular contact with Iowa co-workers during their tenures and accessed files on an Iowa-based server. Nicholas Baiamonte teaches in California, where he wrote an online ethics textbook. Forcier negotiated with Baiamonte on behalf of Kendall Hunt from 2014 to 2016, and as a result, Baiamonte entered into contracts with Kendall Hunt to publish his textbook as Course Pack 4: Ethics. Baiamonte assigned publication rights to Kendall Hunt.

In 2019, Forcier and Coniglio incorporated Learning Tree in California to sell online textbooks to post-secondary students. Learning Tree targeted its advertising to California professors and educational institutions, as well as some limited sales to Colorado and Oklahoma. One of these textbooks was an ethics textbook that included some copyrighted portions of Baiamonte’s ethics textbook.

Kendall Hunt’s lawsuit alleged that a single purchase of the ethics textbook by an Iowa-based Kendall Hunt employee established the requisite minimum contacts with Iowa to support personal jurisdiction. Kendall Hunt also alleged that the prior contacts Forcier and Coniglio established with Iowa through their employment with Kendall Hunt should be attributed to Learning Tree. These contacts included Coniglio regularly traveling to Iowa from 1995 to 2006 and Forcier traveling to Iowa in 2005 and 2006. The district court rejected Kendall Hunt’s jurisdictional arguments and dismissed the complaint. Kendall Hunt appealed.

Reviewing de novo, the Eighth Circuit set out the factors to analyze Iowa’s long-arm statute, which is permissive up to the extent of due process. These factors include the nature and quality of Learning Tree’s contracts with Iowa, the quantity of the contacts, the relation of the cause of action to the contacts, the interest of the forum state and the convenience of the parties. They also include the additional factors for intentional torts: the intentionality of the acts; whether the contacts were uniquely or expressly aimed at the forum; and whether the contacts caused harm, or the defendant knew they were likely to cause harm, of which the majority occurred in the forum state.

The Eighth Circuit concluded that Learning Tree did not expressly aim at or target Iowa because it did not advertise in Iowa. The Court found that Kendall Hunt’s litigation-based purchase was the only sale, and the infringing conduct occurred in California. Based on this fact and the Court’s 2022 decision in Brothers & Sisters in Christ v. Zazzle, which was decided under similar facts, the Court [...]

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Off the Charts: Derivative Work Copyright Registers All Material in Derivative Work

by and | Jul 27, 2023 |

In a matter of first impression, the US Court of Appeals for the Ninth Circuit reversed the district court’s partial grant of summary judgment in favor of the defendants, vacated a jury verdict and an award of attorneys’ fees, and remanded an action alleging infringement of copyright in two charts depicting organizational change. The Court agreed with other circuits that by registering a derivative work, an author registers all the material included in the derivative work, including any unregistered original works. Enterprise Management Limited, Inc. v. Construx Software Builders Inc., Case No. 22-35345 (9th Cir. July 17, 2023) (Fletcher, Clifton, Ikuta, JJ.)

Mary Lippitt and her company Enterprise Management filed a lawsuit against Steve McConnell and his company Construx for copyright infringement. Lippitt has built a career around advising companies on organizational change. To this end, she created charts and materials, including one titled “Managing Complex Change,” to demonstrate how an organization can fail by missing key transitional elements. According to Lippitt, the “Managing Complex Change” chart was registered with the US Copyright Office in 1987 as part of a presentation called “Transition: Accomplishing Organization Change.” The Copyright Office subsequently destroyed the deposit copy of the registration as part of its routine practice. In 2000, an updated presentation with an updated version of the chart was registered with the Copyright Office. In 2003, the updated chart, “Aligning for Success,” was registered individually.

In 2016, McConnell used Lippitt’s chart in a YouTube video presentation. McConnell titled the chart “Lippitt/Knoster Change Model,” added supplementary information and made stylistic changes. When Lippitt found out that McConnell used her chart, she sent cease-and-desist letters. After McConnell refused to stop using the chart, Lippitt sued.

Following discovery, McConnell moved for summary judgment, which the district court granted in part and denied in part. The district court ruled that Lippitt failed to show that she had registered the “Managing Complex Change” chart because she did not present evidence that the chart was included in the “Transition: Accomplishing Organization Change” material registered in 1987. The district court also denied the motion for summary judgment with respect to Lippitt’s claim that McConnell infringed the “Aligning for Success” chart because there was a genuine issue of material fact as to whether McConnell had copied it. Based on these rulings, the district court issued a pretrial order precluding Lippitt from basing any argument on her alleged ownership of the copyright in the “Managing Complex Change” chart, including any argument that McConnell infringed the “Aligning for Success” chart by copying elements from the “Managing Complex Change” chart. At trial, the jury returned a verdict for McConnell. The district court subsequently granted McConnell’s motion for attorneys’ fees. Lippitt appealed.

The Ninth Circuit first addressed whether Lippitt raised a genuine issue of material fact that she registered the “Managing Complex Change” chart by including it in the “Transition: Accomplishing Organization Change” materials. The Ninth Circuit explained that the district court’s ruling was partially based on the fact that the copyright for Lippitt’s original [...]

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Serving a Perfect 10: No Protection for Embedding

by and | Jul 27, 2023 |

The US Court of Appeals for the Ninth Circuit found that a photo- and video-sharing social networking service could not be liable for secondary copyright infringement because embedding a photo does not “display a copy” of the underlying image. Hunley v. Instagram, LLC, Case No. 22-15293 (9th Cir. July 17, 2023) (Bybee, Bumatay, Bennett, JJ.)

Embedding is a method of displaying images on a website by directing a browser to retrieve an image from the host server. Instead of hosting an image file on a home server, a website merely pulls the image, along with any other content, from an external server and displays it.

Alexis Hunley and Matthew Brauer are photographers who brought a class action lawsuit against Instagram on behalf of copyright owners whose work was “caused to be displayed via Instagram’s embedding tool on a third party website without the copyright owner’s consent.” Hunley alleged that Buzzfeed News and Time embedded Hunley’s Instagram posts (copyrighted photos and videos) within news articles. Hunley also alleged that Instagram’s embedding tool violated her exclusive display right under the Copyright Act by enabling third-party websites to display copyrighted photos posted to Instagram.

Hunley’s argument was unsuccessful, and the district court granted Instagram’s motion to dismiss. The district court determined that the Ninth Circuit’s 2007 holding in Perfect 10 precluded relief to Hunley. The court explained that under the “server test” set forth in Perfect 10, embedding websites that do not store an image or video does not “communicate a copy” of the image or video and therefore does not violate the copyright owner’s exclusive display right. The court explained that because Buzzfeed News and Time do not store images and videos, they do not “fix” the copyrighted work in any “tangible medium of express” (a copy), and therefore when they embed the images and videos on a website, they are not displaying “copies” of the copyrighted work. Hunley appealed.

Hunley argued that Perfect 10 was inconsistent with the Copyright Act, but the Ninth Circuit declined to consider the argument in detail as the proper procedure was to seek a rehearing en banc. While the Court was sympathetic to policy arguments advanced by Hunley (as well as other amici), the Court stated it was not its place to create a policy solution. Hunley’s final major argument questioned the validity of Perfect 10 in light of the Supreme Court’s 2014 decision in American Broadcasting Co. v. Aereo, but this too was rejected. The Ninth Circuit failed to see sufficient similarities between the performance and display rights, holding them as two distinct rights with few parallels.

Applying the server test to the facts presented, the Ninth Circuit found that Instagram could not be found secondarily liable for displaying images on third-party sites. Since Buzzfeed News and Time embedded the images and no copy was stored, they could not be liable for direct infringement. Because there was no direct infringement, there could be no secondary infringement, and the Court found that the district court properly [...]

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The Game of Life: Winner Gets Everything Except Attorneys’ Fees

by | Jul 13, 2023 |

The US Court of Appeals for the First Circuit agreed with the trial court regarding the reasonableness of the plaintiff’s legal positions and found that the trial court did not abuse its discretion in denying the defendants, as the prevailing party, attorneys’ fees. The First Circuit determined that the positions advanced by the unsuccessful plaintiffs were not objectively unreasonable. Markham Concepts, Inc. v. Hasbro, Inc., Case Nos. 19-1927; 21-1957; -1958 (1st Cir. June 22, 2023) (Kayatta, Lipez, Thompson, JJ.)

The underlying case involved a copyright action concerning ownership rights to The Game of Life, a board game that has been widely popular since its launch in 1960. The Game of Life became the center of a long-standing dispute between its creators, Reuben Klamer and Bill Markham. Klamer, a toy developer, conceived the initial idea for the game and enlisted Markham to design and create the game prototype. Markham believed he deserved greater recognition for his contribution and felt the royalty he received was unfairly low.

In its previous ruling on the merits, the First Circuit affirmed the district court’s decision in favor of the Hasbro defendants (including Klamer). The Hasbro defendants then sought attorneys’ fees, which the district court denied. Hasbro appealed and moved for appellate attorneys’ fees.

Although both the district court and the First Circuit examined various factors, such as Markham’s motivations and the need for compensation or deterrence, the key factor for both courts in determining whether to award legal fees hinged on the reasonableness of Markham’s litigation arguments.

The merits of the underlying case revolved around the termination right provided by the Copyright Act of 1976 (1976 Act), which allows authors to terminate copyright grants after a certain period and thereby disentangle themselves from agreements made before the true value of their work became apparent. This right does not apply to works made for hire. In this instance, the issue of whether The Game of Life qualified as a work made for hire was determined under the Copyright Act of 1909 (1909 Act), as the game was created long before the 1976 Act took effect. Under the 1909 Act, Markham had to meet the “instance and expense” test, which treats contractors as employees of the party commissioning the work, thereby presuming copyright ownership in the latter. The district court held that The Game of Life was a work for hire because it was created at Klamer’s instance and expense.

Markham’s primary argument relied on the 1989 Supreme Court decision in Reid, which interpreted “employee” for purposes of the work-for-hire test as being defined according to “the general common law of agency.” Although Markham acknowledged that Reid was directed to the 1976 Act, he contended that the logic of Reid should extend to the 1909 Act, thereby nullifying the “instance and expense” test in favor of the general common law of agency.

Four years after the Supreme Court’s decision in Reid, however, the First Circuit applied the “instance and expense” test in Forward to a work covered [...]

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‘Show Me The Money’ Isn’t Enough: Disproportionate $1.7M Attorneys’ Fees Rejected

by and | Jun 22, 2023 |

The US Court of Appeals for the Ninth Circuit reversed and remanded a $1.7 million award of attorneys’ fees, finding the amount unreasonable compared to the benefit the plaintiffs received. Lowery v. Rhapsody International, Inc., Case No. 22-15162 (9th Cir. June 7, 2023) (Smith, Collins, Lee, JJ.)

Streaming music providers such as Apple Music, Spotify and Napster (formally Rhapsody International) have fundamentally changed the way we enjoy music. Gone are the days of the mixtape. But to bring these services, providers must license the copyrighted music and pay royalties to the owners. At the time this case was filed, the two main licensing paths available to streaming music providers required either direct negotiations with the owners or compulsory licensing by serving a notice of intent to each owner. These paths were unworkable and antiquated given the millions of songs that the providers were playing.

David Lowery and others sued Rhapsody in 2016 on behalf of a putative class of copyright owners. They claimed Rhapsody had infringed their copyrights by reproducing and distributing their musical compositions through its platform without a license. The parties eventually reached a settlement. Rhapsody agreed to pay a maximum of $20 million to the class members, but because an earlier argument effectively decimated the putative class, the actual payout to the class was just over $50,000.

Despite the low amount paid to the class, the plaintiffs’ counsel requested $6 million in attorneys’ fees. The request was based on a “lodestar” calculation, where the number of hours reasonably spent on the case is multiplied by a reasonable hourly rate, then adjusted up or down as called for by the peculiarities of the case. The plaintiffs’ counsel estimated its fees to be around $2.1 million, with a proposed 2.87 multiplier due to the “exceptional” results in a “complex” case.

The magistrate judge disagreed and recommended reducing the lodestar to $1.7 million because one-fifth of the hours spent were either unreasonable or improperly blocked billed. The judge also recommended further reducing the lodestar value with a negative multiplier in light of the limited benefit actually paid out. The district court took issue with the magistrate judge’s cross-checking of the lodestar value against the amount paid. The court noted that there was “no bright-line rule” to cross-check a lodestar value either against the claimed amount ($50,000 in this case) or the possible recovery ($20 million). However, the district court agreed with the magistrate judge’s lodestar calculation and awarded $1.7 million in attorneys’ fees. Rhapsody appealed.

The Ninth Circuit rejected the award, concluding that the $1.7 million award was unreasonable given the small benefit to the class members. The Court explained that the actual benefit to the class must be considered when assessing the value of a class action settlement. Here, the Court pointed out that the district court should have cross-checked any lodestar calculations to ensure that there was a reasonably proportional benefit to the class members. The district court also should have disregarded the $20 million settlement cap when [...]

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A Single Picture Database Is Worth a Thousand Statutory Damages Awards

by | Jun 22, 2023 |

In the latest appeal of a copyright infringement dispute, the US Court of Appeals for the Ninth Circuit upheld the lower court’s finding that the copyright owner’s photographs were not part of a single compilation for purposes of awarding statutory damages. VHT, Inc. v. Zillow Grp., Inc., Case Nos. 22-35147; -35200 (9th Cir. June 7, 2023) (McKeown, Fletcher, Gould, JJ.)

VHT is a professional real estate photography studio that real estate brokerages and listing services hire to photograph properties. VHT retouches the photographs, saves them in its photo database and licenses them to its clients for marketing purposes. In 2015, VHT sued Zillow for copyright infringement based on Zillow’s display of VHT photographs on its real estate listing website and on its Digs home design website. The district court found that Zillow was not liable for displaying VHT photographs on its real estate listing website or for displaying untagged, unsearchable VHT photographs on its Digs home design website. However, the district court found that Zillow’s display of tagged, searchable VHT photographs on Digs constituted infringement and that the searchability functionality was not fair use.

The parties cross-appealed, and the Ninth Circuit considered the issue of infringement in a 2019 decision (Zillow I). In this prior appeal, the Ninth Circuit agreed that Zillow’s display of VHT photographs on its real estate listing website was not copyright infringement, while Zillow’s display of searchable VHT photographs on its Digs home design website constituted infringement and was not fair use. The Ninth Circuit also reversed the jury’s finding that Zillow had willfully infringed 2,700 searchable VHT photographs displayed on Digs and remanded for consideration of whether the searchable photographs were a compilation for purposes of awarding statutory damages. On remand, the district court found that the photographs were not a compilation and awarded statutory damages of $200 for each innocently infringed photograph and $800 for each remaining photograph.

The district court also considered the impact of the Copyright Act’s preregistration requirement and Fourth Estate v. Wall-Street (Supreme Court, 2019) on VHT’s ability to sue. In accordance with Ninth Circuit precedent holding that registration is made when the Copyright Office receives a completed registration application, VHT had sued Zillow for copyright infringement after applying for copyright registration. However, the works were not registered until after the suit was filed. Just 11 days before Zillow I was decided, in Fourth Estate, the Supreme Court held that registration is made when the Copyright Office has registered a copyright after examination—not when the application is filed. Zillow argued that VHT’s claims should be dismissed because VHT did not satisfy the preregistration requirement. The district court excused the exhaustion requirement because dismissal would result in a massive waste of resources. The parties again cross-appealed.

Preregistration and Fourth Estate

Addressing the preregistration issue, the Ninth Circuit agreed that dismissal was not required. The decision to excuse compliance with a non-jurisdictional exhaustion requirement is based on whether the claim is wholly collateral to the substantive [...]

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Lanham Act Liability May Apply to Copyrighted Material

by | Jun 8, 2023 | ,

The US Court of Appeals for the Ninth Circuit found that liability under the Copyright Act and liability under the Lanham Act are not mutually exclusive and that liability under the Copyright Act does not negate trade dress damages under the Lanham Act. Jason Scott Collection, Inc. v. Trendily Furniture, LLC, Case No. 21-16978 (9th Cir. May 30, 2023) (Wardlaw, Bumatay, Schreier (sitting by designation), JJ.)

Jason Scott Collection (JSC) and Trendily Furniture are high-end furniture manufacturers that sell their products in the Texas market. In 2016, Trendily intentionally copied three unique furniture designs by JSC and sold them to Texas retailers. Both collections featured heavy carved wood pieces with detailed embellishments and metal elements. The record showed that Trendily’s collection had been based on photographs of the preexisting JSC collection. The Trendily pieces were so similar that even JSC had initially mistaken the furniture as its own when confronted by a retailer. After JSC filed suit, the district court granted summary judgment to JSC on its copyright claim. Following a bench trial, the district court held Trendily liable on the trade dress claim. On that claim, the district court awarded almost $133,000 in prospective lost annual profits over a period of three years, which amounted to about six times the almost $20,000 in retrospective gross profits awarded on JSC’s copyright claim. Trendily appealed.

To obtain a judgment for trade dress infringement, a plaintiff must prove that the claimed trade dress is nonfunctional, the claimed trade dress serves a source-identifying role because it is either inherently distinctive or has acquired a secondary meaning and the defendant’s product creates a likelihood of confusion. Trendily argued that JSC had not adequately established a secondary meaning (for trade dress the parties stipulated was not inherently distinctive) or likelihood of confusion. The Ninth Circuit, however, found that the district court found adequate evidence of secondary meaning through copying and through confusion by retailers and consumers in the high-end furniture market. The Ninth Circuit also found that the district court had correctly found likelihood of confusion, putting special emphasis on Trendily’s intentional and precise copying of the JSC pieces leading to retailer confusion.

Turning to the damages award, Trendily argued that because copying is a commercially acceptable and necessary act in terms of competition, Trendily should only be held liable under the Copyright Act, rather than for trade dress infringement under the Lanham Act. However, the Ninth Circuit affirmed that liability under the Copyright Act and liability under the Lanham Act are not mutually exclusive and that liability under the Copyright Act did not negate the judgment against Trendily for trade dress damages under the Lanham Act. The Court then affirmed the trade dress damages award, finding that the prospective damages incurred when one of JSC’s business relationships fell apart because of Trendily’s copied furniture were reasonably foreseeable and had been “satisfactorily demonstrated.” The Court emphasized that the law only required “crude measures of damages in cases of intentional infringement.”

Finally, the Ninth Circuit affirmed [...]

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First Circuit: Claim Preclusion Shouldn’t Apply to Bar Claims Under VARA

by | May 25, 2023 |

Addressing for the first time whether federal res judicata law recognizes the alternative determinations doctrine, the US Court of Appeals for the First Circuit determined that a plaintiff’s claims under the Visual Artists Rights Act (VARA) were not precluded by a previous action in which she brought a federal copyright claim against the defendant. Foss v. Eastern States Exposition, Case No. 22-1313 (1st Cir. May 10, 2023) (Barron, Howard, Montecalvo, JJ.)

Cynthia Foss previously brought a federal copyright action against Eastern States Exposition that was dismissed. The previous action did not involve any claim under VARA. Eastern argued that claim preclusion should apply to bar the claim, and the district court agreed. Foss appealed.

To establish federal claim preclusion, a party must establish that there is a final judgment on the merits in an earlier suit, sufficient similarity between the causes of action asserted in the earlier and later suits, and sufficient identicality between the parties in the two suits. Foss did not dispute that the first and third requirements were satisfied, and thus the First Circuit’s decision turned on whether the second requirement was met.

Foss argued that the “alternative determinations” doctrine should apply. This doctrine strips a dismissal of claim preclusive effect if the dismissal rests on multiple grounds, not all of which would on their own render the dismissal claim preclusive. Whether the doctrine should apply was a matter of first impression in the First Circuit. Foss argued that the previous dismissal was in part based on “her failure to allege that she had satisfied the registration-related precondition to copyright infringement suits under § 411(a),” which was not a merits-based dismissal and therefore had no preclusive effect. Eastern argued that even if the First Circuit adopted the alternative determinations doctrine, the Court should limit the doctrine because the district court “rigorously considered” the merits-based rationale for dismissal in the previous action.

The First Circuit adopted the alternative determinations doctrine and rejected Eastern’s contention that the doctrine should not apply in the instant case because Eastern did not provide support for the contention that the district court in the previous action “rigorously considered” the merits-based grounds for dismissal of Foss’s federal copyright claims. The Court then remanded the case for further consideration, noting that Eastern might argue that the alternative disputes doctrine should be limited in this instance because of Foss’s failure to allege satisfaction of the precondition to suit, which might be prejudicial to Eastern.



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Same Old Story: Copyright Discovery Rule Still Applies

by | Apr 27, 2023 |

The US Court of Appeals for the Fifth Circuit affirmed a district court’s infringement determination, finding that the copyright owner’s claims were timely since they were brought within three years of discovering the infringement. Martinelli v. Hearst Newspapers LLC, Case No. 22-20333 (5th Cir. Apr. 13, 2023) (Barksdale, Southwick, Higginson, JJ.)

In 2015, Sotheby’s International Realty commissioned Antonio Martinelli to photograph an Irish estate owned by the Guinness family. Martinelli took seven photographs of the property, and the property was subsequently listed for sale. On March 7, 2017, Hearst Newspapers used those commissioned photographs in news articles discussing the sale in various Hearst publications. Over the next few years, Martinelli learned about Hearst’s use of the photographs. For instance, on November 17, 2018, Martinelli learned about the use of the photographs in the Houston Chronicle, and between September 2019 and May 2020, Martinelli learned about further use of the photographs in the San Francisco Chronicle, the Times Union, the Greenwich Time, the Middletown Press and the Elle Décor website. Based on these uses, Martinelli sued for copyright infringement on October 18, 2021—more than three years after the initial publication but less than three years after Martinelli discovered the publication.

Hearst stipulated both to infringement and that Martinelli could not have discovered the use of the copyrighted photographs at an earlier time. Instead, Hearst argued that Martinelli was too slow in bringing his infringement action since, under 17 U.S.C. § 507(b), the action must be brought within three years of the infringement, regardless of a plaintiff’s knowledge or diligence. The district court disagreed, holding that § 507(b) follows the discovery rule, which means the limitations period only begins when the plaintiff knows or has reason to know of the injury. Hearst appealed.

Hearst argued that the district court’s decision ran afoul of the Supreme Court’s 2019 decisions in Petrella v. MGM and Rotkiske v. Klemm. According to Hearst, under Petrella and Rotkiske, the discovery rule cannot apply to § 507(b) and the limitations period starts “when the plaintiff has a complete and present cause of action.” The Fifth Circuit disagreed.

The Fifth Circuit began by explaining that unless unequivocally overruled by a Supreme Court decision, an en banc court or a change in law, it was bound by its 2014 decision in Graper v. Mid-Continent Casualty, which held that the limitations period starts running “once the plaintiff knows or has reason to know of the injury upon which the claim is based.” Since neither party asserted that there had been an en banc decision or a change in the law, the only question was whether Petrella or Rotkiske overruled Granger.

Since the Supreme Court explicitly refused to address whether the discovery rule applied to § 507(b) in Petrella, the Fifth Circuit refused to read Petrella as overruling Graper. Turning to Rotkiske, the Fifth Circuit noted the Supreme Court’s statement that “[i]f there are two plausible constructions of a statute of limitations, we generally adopt the construction that starts the time limit running when the [...]

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