Copyright litigation often hinges on the interplay between substantive rights and procedural barriers. So among the most technically demanding areas is the statute of limitations, particularly when a defendant asserts a counterclaim for an accounting of profits. In the United States Court of Appeals for the Sixth Circuit, this intersection is governed by a specific body of precedent that distinguishes between the nature of the claim, the applicable limitations period, and the relationship between the counterclaim and the plaintiff’s original complaint. Understanding this framework is essential for practitioners navigating copyright disputes in Kentucky, Michigan, Ohio, and Tennessee Took long enough..
The Statutory Foundation: Section 507(b) and the Three-Year Rule
The starting point for any copyright limitations analysis is 17 U.S.C. § 507(b). That's why the statute provides: "No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued. " While the text refers to a "civil action," courts have uniformly applied this period to counterclaims arising under the Copyright Act Practical, not theoretical..
Quick note before moving on.
An accounting of profits is an equitable remedy codified in 17 U.Even so, § 504(b). Because of that, c. S.Here's the thing — it allows a copyright owner to recover the infringer’s profits attributable to the infringement, provided those profits are not already accounted for in actual damages. Because this remedy is statutory and arises exclusively under the Copyright Act, the Sixth Circuit treats it as a "civil action" subject to the three-year limitations window of Section 507(b) That's the part that actually makes a difference..
It is critical to distinguish this from state-law claims, such as breach of contract or unjust enrichment, which may carry different limitations periods (often four or six years depending on the state). If a counterclaim is framed purely as a federal copyright accounting, the three-year federal rule applies exclusively And that's really what it comes down to..
Accrual in the Sixth Circuit: The Discovery Rule
The Sixth Circuit follows the discovery rule for copyright claim accrual. v. This is codified in the circuit’s precedent, most notably Bridgeport Music, Inc. Practically speaking, under this rule, a claim accrues when the plaintiff discovers, or through due diligence should have discovered, the infringing act. Diamond Time, Ltd. and reinforced in subsequent decisions Practical, not theoretical..
For a defendant filing a counterclaim for accounting, the "claim" accrues when the defendant (acting as a counterclaim-plaintiff) discovers the plaintiff’s infringement. So this creates a unique tactical dynamic: the statute of limitations on the counterclaim runs independently of the plaintiff’s original complaint. If a plaintiff sues a defendant for infringement in 2024 based on acts from 2015, the defendant’s counterclaim for the plaintiff’s infringement is not automatically timely just because the main suit is pending. The defendant must prove their own discovery of the plaintiff’s infringement fell within three years of the counterclaim filing date Which is the point..
You'll probably want to bookmark this section.
The "Separate Accrual" Doctrine for Continuing Infringement
Copyright infringement is often a continuing tort. Consider this: each act of infringement—each unauthorized reproduction, distribution, or public performance—constitutes a separate claim with its own accrual date. The Sixth Circuit adheres to the "separate accrual" rule.
This means a counterclaim for accounting is not barred in its entirety simply because the infringement began more than three years ago. Instead, the counterclaim-plaintiff may recover profits attributable to infringing acts that occurred within the three-year lookback period preceding the filing of the counterclaim.
Practical Example:
- Plaintiff infringes Defendant’s copyright continuously from 2018 to 2024.
- Plaintiff sues Defendant in January 2024.
- Defendant files counterclaim for accounting in February 2024.
- Defendant can recover profits from Plaintiff’s infringing acts occurring between February 2021 and February 2024.
- Profits from 2018–2021 are time-barred, unless an exception applies.
This "rolling" limitations window is the most favorable aspect of the law for counterclaimants, but it demands precise pleading and proof regarding the dates of specific infringing acts Not complicated — just consistent..
Equitable Tolling and Estoppel: The Petrella Influence
The Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc. (2014) significantly shaped limitations defenses. While Petrella held that laches cannot bar a claim for damages brought within the three-year window, it left open the role of equitable tolling and equitable estoppel Easy to understand, harder to ignore. Which is the point..
The Sixth Circuit recognizes equitable tolling where a plaintiff has been induced or tricked by the opposing party’s misconduct into allowing the filing deadline to pass. In the counterclaim context, this arises if the plaintiff (the original infringer in the counterclaim scenario) actively concealed their infringement or made representations that led the defendant to delay filing the counterclaim.
Equitable estoppel may apply if the plaintiff’s conduct—such as promising a license settlement or threatening retaliatory litigation—caused the defendant to refrain from asserting the counterclaim promptly. The burden of proof for these doctrines rests heavily on the counterclaimant, requiring clear evidence of misleading conduct and reasonable reliance It's one of those things that adds up..
Compulsory vs. Permissive Counterclaims: Rule 13 and Relation Back
A frequent procedural question is whether a copyright accounting counterclaim is compulsory under Federal Rule of Civil Procedure 13(a) or permissive under Rule 13(b). This classification impacts the "relation back" doctrine under Rule 15(c) But it adds up..
- Compulsory Counterclaims: Arise from the same transaction or occurrence as the plaintiff’s claim. If compulsory, the counterclaim relates back to the date of the original answer (or the original complaint filing date for statute of limitations purposes in some circuits, though the Sixth Circuit focuses on the pleading date).
- Permissive Counterclaims: Do not share the same transaction/occurrence. They are treated as independent lawsuits for limitations purposes.
In the Sixth Circuit, the "logical relationship" test determines compulsory status. If the plaintiff sues for infringement of Work A, and the defendant counterclaims for infringement of Work B (a completely different work), the counterclaim is likely permissive. The statute of limitations runs from the date the counterclaim is filed, not the date the original complaint was filed Simple, but easy to overlook..
Even so, if both parties are fighting over the same work (e.g., co-ownership disputes, competing registrations, or mutual allegations of infringing the same underlying composition), the counterclaim is likely compulsory. In this scenario, the Sixth Circuit may allow the counterclaim to relate back to the filing of the answer, potentially saving claims that would otherwise be time-barred if filed as a separate suit Worth keeping that in mind. That alone is useful..
Strategic Note: Defendants should always plead alternative theories (compulsory and permissive) and explicitly argue the "logical relationship" in the answer to preserve relation-back arguments Which is the point..
The "Accounting" Distinction: Damages vs. Profits
A nuanced issue in Sixth Circuit practice is the distinction between a claim for actual damages and a claim for infringer’s profits (accounting). While both fall under § 504, they have different proof requirements.
- Actual Damages: The copyright owner’s lost revenue. Subject to the three-year lookback.
- Infringer’s Profits: The defendant’s gross revenue minus deductible expenses. Subject to the three-year lookback.
The statute of limitations applies identically to both. Still, the calculation of the lookback period differs slightly in practice. In real terms, for actual damages, the plaintiff proves lost sales during the window. For an accounting counterclaim, the defendant must prove the plaintiff’s gross revenue attributable to the infringement during the window.
The Sixth Circuit requires the counterclaimant to meet the burden of proof for profits: establishing gross revenue. The burden then shifts to the plaintiff (the infringer in this context) to prove deduct
ible expenses. This creates a unique strategic dynamic in counterclaims And that's really what it comes down to..
When a defendant files a counterclaim for an accounting, they are not merely seeking to offset the plaintiff's damages; they are attempting to reclaim their own property. The plaintiff, now cast in the role of infringer, must open its financial records to prove what it spent to generate the profits the defendant seeks. This can be a powerful discovery tool for the defendant, forcing the plaintiff to disclose sensitive business information that might otherwise remain private.
This burden-shifting mechanism makes an accounting counterclaim a potent offensive weapon. Even if the defendant cannot prove they suffered direct lost sales (actual damages), they may still secure a significant award by demonstrating the plaintiff's ill-gotten gains. The strategic calculus for a defendant therefore involves weighing the potential recovery from an accounting against the cost and complexity of the required financial discovery.
Pulling it all together, mastering the intricacies of the statute of limitations in the Sixth Circuit is not merely an academic exercise but a critical component of litigation strategy. Navigating the distinction between compulsory and permissive counterclaims to preserve the vital relation-back doctrine is the first line of defense against time-barred claims. For the defendant, understanding this doctrine is essential to transforming a defensive posture into an offensive one, potentially salvaging claims that would otherwise be lost to the clock. What's more, appreciating the distinct burdens of proof for damages versus profits in an accounting counterclaim provides a powerful lever, forcing an adversary to reveal the financial fruits of their alleged infringement. When all is said and done, a sophisticated grasp of these procedural nuances empowers litigants to shape the entire course of a copyright dispute from its very inception And it works..
Some disagree here. Fair enough.
