Electro Records, Samplers and Lots of Cocaine

A seminal electro track from 1984 is at the center of the latest copyright-related ruling by the Supreme Court.

In a 6-3 ruling, the Supreme Court affirmed an 11th Circuit court ruling in favor of a man named Sherman Nealy in his lawsuit against Warner Music’s publishing subsidiary, Warner Chappell, among others.

The case revolves around “Jam The Box,” an electro track released by artist “Pretty” Tony on Music Specialists, Inc. in 1984.

“Jam The Box” is particularly well-regarded as a certain kind of secret weapon for a certain kind of DJ — a nodding, powder-on-the-floor jam. Like acid house, electro records like these were never in short supply and the supply was still never enough.

Sherman Nealy’s partner, Tony Butler, created a new entity that allowed Artist Publishing Group to administer Music Specialists, Inc.’s back catalog. Among the artists that licensed “Jam The Box” was rapper Flo Rida, who sampled portions of it on “In the Ayer” featuring will.i.am, which reached #9 on the Billboard charts in 2008. Other tracks from the Music Specialists catalog were licensed for use in new tracks by Black Eyed Peas, Kid Sister and other artists.

Under US copyright law, the victim of copyright infringement has a three year window to file suit for redress. One interpretation says the clock starts ticking on that statute of limitations when an infringing act occurs. A second interpretation of the law which is in wider use invokes the so-called “discovery rule,” which states the clock starts ticking on the three year window only when the victim “discovers, or with due diligence should have discovered” the infringing act. So it’s a question of when it happened vs. when you found out about it.

According to court documents, Nealy only filed for copyright infringement regarding this 40 year old electro monster in 2018. It was for good reason, though: Sherman Nealy was convicted of dealing cocaine, and was incarcerated from 1989 to 2008 and again from 2012 to 2015. He claimed to have discovered Butler’s deal in 2016, along with the infringement, and filed suit in 2018 — within the three year window, per the “discovery rule.”

‘Jam The Box’ is available for about $25 on Discogs but will cost you a lot more money in the 11th Circuit Court

The Supreme Court is also deliberating whether to hash out the discovery rule vs. the infringing act dispute in a separate case. They decided to hear an appeal to the 11th Circuit Court’s ruling, however, on the issue of whether Nealy could recover damages only within the three year window from when he discovered the infringement, or if he could get paid for older acts of infringement too — most notably, in regard to a cash cow named “In the Ayer.”

Warner Chappell (which accepted the “discovery rule” in the district court) argued with some predictability that allowing past infringement would open a Pandora’s Box to an endless array of claims.

In a 6-3 judgment, the Supreme Court disagreed and sided with Nealy, stating that “there is no time limit on monetary recovery. So a copyright owner possessing a timely claim is entitled to damages for infringement, no matter when the infringement occurred.”

This ruling over a 40 year old breakdancer’s delight is at least a temporary victory for artists, as Warner Chappell’s argument that damages should also be limited to a three year window would logically grant infringers a blanket amnesty on copyright violations going back decades. The majority decision by Justice Elena Kagan stated the justices siding with Nealy operated with the assumption that the “discovery rule” made Nealy’s claim timely — this interpretation of the law, as mentioned, may be up for Supreme Court review in another case.

What Nealy vs. Warner Chappell decided, then, is that if the discovery rule is legitimate and the three year window starts when the artist discovers infringement (rather than the date from which the act is committed), the victim can then pursue damages and monetary claims going back decades, as far back as the first act of infringement. The three dissenting justices simply objected to “playing along with these particular parties” about the finer details of a rule which may be overturned in a coming decision.