Hayden v. Koons: Constructive Discovery in Copyright Accrual Does Not Require “Inquiry Notice” or Actual Knowledge of Triggering Facts

1. Introduction

Parties and setting. Hayden v. Koons is a Second Circuit decision arising from a dispute between plaintiff-appellant Michael A. Hayden, an American artist who lived and worked primarily in Italy in the 1980s–2000s, and defendants-appellees Jeff Koons and Jeff Koons LLC.

Factual backdrop. Hayden created and sold (circa 1988) a large Styrofoam serpent-and-boulders sculptural structure to Italian celebrity Ilona Staller (“Cicciolina”) for use in performances. In 1989–1990, Koons photographed himself and Staller posed on that structure and used the photos to create three works in the widely publicized Made in Heaven series. Hayden asserted he did not discover Koons’s alleged use until 2019 after seeing a news article, then sued in December 2021.

Key issues on appeal. The appeal focused on (1) whether Hayden’s copyright infringement claim was time-barred under the Copyright Act’s three-year limitations period, given the Second Circuit’s “discovery rule,” and (2) whether the district court properly dismissed Hayden’s DMCA claim as moot (and whether DMCA claims could accrue independently).

2. Summary of the Opinion

The Second Circuit affirmed summary judgment for Koons.

  • Copyright claim: time-barred because, as a matter of law, a reasonably diligent copyright owner in Hayden’s position should have discovered the alleged infringement more than three years before he sued.
  • Standard clarification: the court rejected Hayden’s attempt to import a securities-law-style “inquiry notice” requirement (including “actual knowledge” of facts suggesting infringement was probable) into copyright’s constructive discovery analysis.
  • DMCA claim: the court refused to reach Hayden’s “separate accrual” theory because it was not adequately preserved in the district court and was inadequately developed on appeal (abandoned).

3. Analysis

3.1. Precedents Cited

A. Standards of review and summary judgment framing

  • Bey v. City of New York — supplied the baseline appellate posture: on summary judgment, evidence is construed in the non-movant’s favor. The court used this to underscore that affirmance still follows when only one conclusion is legally permissible.
  • Atlas Air, Inc. v. Int'l Bhd. of Teamsters and Granite State Ins. Co. v. Primary Arms, LLC — reinforced the de novo review of cross-motions for summary judgment and the requirement to evaluate each motion on its own merits.

B. The Second Circuit’s “discovery rule” for copyright accrual

  • Psihoyos v. John Wiley & Sons, Inc. — cornerstone authority adopting and articulating the discovery rule in this Circuit: claims accrue upon actual or constructive discovery of infringement.
  • Sohm v. Scholastic Inc. — reaffirmed adherence to the discovery rule and cautioned that defendants cannot establish constructive discovery by “passage of time alone.”
  • Warner Chappell Music, Inc. v. Nealy — important contextual precedent: it abrogated Sohm on a different point (damages lookback), while expressly leaving open whether the discovery rule is valid. The panel relied on the continued vitality of the discovery rule in the Second Circuit notwithstanding the Supreme Court’s reservation.
  • Michael Grecco Prods., Inc. v. RADesign, Inc. — the decision’s most immediate doctrinal scaffold. It emphasized that (i) constructive discovery is fact-intensive, (ii) there is no categorical “sophisticated plaintiff” exception, and (iii) the defendant must identify circumstances that would have led a diligent owner to discover the infringement. The panel used Grecco to reject Hayden’s proposed “heightened” trigger.
  • Merchant v. Levy — provided the broader accrual maxim (“knows or has reason to know of the injury”) that aligns with constructive discovery principles.

C. Rejecting “inquiry notice” as the governing constructive discovery standard

  • Merck & Co. v. Reynolds — the court treated Merck as instructive on the distinction between “inquiry notice” (a prompt to investigate) and “discovery” (actual or constructive discovery of the violation’s facts). Critically, the panel imported Merck’s conceptual separation to explain why inquiry notice is not the copyright standard.
  • Meyer v. Seidel and Staehr v. Hartford Fin. Servs. Grp. — cited to define inquiry notice and “storm warnings” in securities cases, largely to show what Hayden was trying (and failing) to graft onto copyright law.
  • Warren Freedenfeld Assocs., Inc. v. McTigue, William A. Graham Co. v. Haughey, and Chicago Bldg. Design, P.C. v. Mongolian House, Inc. — used to show how other courts have analogized to (or adopted) securities-style concepts when discussing copyright accrual, while highlighting that Merck clarifies inquiry notice is not “discovery.”
  • District court illustrations: Fioranelli v. CBS Broad. Inc. and McDermott v. This Dog's Life Corp. — examples within the Circuit of courts engaging with these concepts.

D. Admissions and limitations policy

  • In re Motors Liquidation Co. — supported treating Hayden’s complaint statements (about the sensational publicity of Made in Heaven) as binding judicial admissions.
  • City of Pontiac Gen. Emps.' Ret. Sys. v. MBIA, Inc. — invoked for the policy rationale against “resurrecting stale claims” after sleeping on rights, used here to rebut Hayden’s “celebrity privilege” framing and to justify diligence expectations.

E. Preservation/abandonment on appeal (DMCA issue)

  • Allianz Ins. Co. v. Lerner — general rule: appellate courts do not consider issues raised for the first time on appeal.
  • Doe v. Trump Corp. — sharpened the preservation requirement: “incanting” keywords without developed argument is insufficient.
  • State St. Bank & Tr. Co. v. Inversiones Errazuriz Limitada, In Re Philip Morris Int'l Inc. Sec. Litig., and Tolbert v. Queens Coll. — enforced abandonment where appellate briefing is perfunctory or undeveloped.

F. DMCA separate-accrual discussion (left unresolved)

  • Petrella v. Metro-Goldwyn-Mayer, Inc. — cited by Hayden for a separate-accrual concept in copyright infringement, but the court noted he did not meaningfully analyze whether it extends to DMCA claims.
  • Media Rts. Techs., Inc. v. Microsoft Corp. — noted as taking the position (in a § 1201 context) that there is no parallel separate-accrual rule for DMCA claims.
  • Trombetta v. Novocin — cited to illustrate the uncertainty and that some courts have not found authority rejecting separate accrual for § 1202 specifically; the panel treated the issue as open but not properly presented.

3.2. Legal Reasoning

A. The rule the court applied (and clarified)

The court reaffirmed that, in the Second Circuit, copyright claims accrue under the discovery rule: they accrue upon actual discovery or constructive discovery—i.e., when “the copyright holder discovers, or with due diligence should have discovered, the infringement.” The panel then made the decision’s central clarifying move: constructive discovery does not require “inquiry notice” and does not require that a plaintiff have actual knowledge of “triggering facts” suggesting infringement is probable.

The court’s rationale was structural: requiring actual knowledge as part of constructive discovery would collapse constructive discovery into actual discovery and “render the latter prong of the discovery rule a nullity.”

B. Applying constructive discovery to Hayden’s circumstances

The panel held that undisputed facts compelled the conclusion that Hayden should have discovered the alleged infringement earlier. The court did not rest on Koons’s “fame alone”; it treated fame and publicity as circumstantial evidence relevant to what diligence would have uncovered. Key facts included:

  • Hayden’s long residence in Italy and deep immersion in Italian culture and media (language fluency; regular news consumption).
  • Hayden’s direct connection to Staller and the Italian art/performance environment in which she was prominent.
  • The timing overlap between Hayden’s Italy residency and the premiere-era media “sensation and scandal” of Made in Heaven, including major publications featuring images of the works incorporating the structure.
  • The decades of continued public exhibition and publicity surrounding the works and Koons/Staller.
  • Hayden’s own pleaded description of Koons and the series, treated as binding judicial admissions.

On this record, the court concluded that a reasonable factfinder could only find that, with due diligence, Hayden would have discovered the alleged infringement before the three-year pre-suit window (before December 2018), making the December 2021 filing untimely.

C. DMCA claim: forfeiture and inadequate briefing

The panel did not decide whether a DMCA § 1202 claim can accrue independently (for example, based on later website publications) once the underlying infringement claim is time-barred. Instead, it held Hayden could not obtain appellate review because:

  • He did not adequately raise the specific “separate accrual” DMCA theory in the district court (issue not preserved).
  • His appellate presentation was conclusory and failed to grapple with the legal question or the conflicting authorities (argument abandoned).

3.3. Impact

  • Doctrinal clarification within the discovery rule. The decision strengthens defendants’ ability to argue constructive discovery without meeting an “inquiry notice/actual knowledge” threshold, while still requiring identification of concrete circumstances indicating what diligence would have uncovered.
  • Publicity and context matter more than any “celebrity” label. The opinion signals that widespread, long-running, accessible publicity—especially when coupled with a plaintiff’s proximity to the relevant milieu—can establish constructive discovery as a matter of law.
  • Procedural discipline on DMCA theories. Litigants seeking to decouple DMCA accrual from infringement accrual must develop the issue in the trial court and brief it substantively on appeal; otherwise, the Second Circuit will dispose of the argument on preservation/abandonment grounds.
  • Interaction with Warner Chappell Music, Inc. v. Nealy. After Nealy, damages may not be confined to a three-year lookback if a claim is timely, increasing the stakes of timeliness fights. Hayden underscores that constructive discovery can still bar claims entirely.

4. Complex Concepts Simplified

  • Discovery rule (copyright accrual): the statute of limitations clock starts when the plaintiff discovers infringement, or when a reasonably diligent owner should have discovered it.
  • Actual vs. constructive discovery: actual means the plaintiff truly knew; constructive means the law treats the plaintiff as knowing because reasonable diligence would have uncovered it.
  • Inquiry notice / storm warnings: securities-law concepts referring to information that should prompt an investigation. The court said these concepts may be “useful” descriptively, but they are not the governing test for copyright constructive discovery.
  • Judicial admission: a factual statement in a pleading that binds the party who made it; Hayden’s own description of the series’ “media sensation and scandal” could be used against him.
  • Issue preservation and abandonment: appellate courts typically will not consider arguments not clearly presented to the trial court, and they will treat arguments as abandoned if briefing is perfunctory and lacks developed analysis.

5. Conclusion

Hayden v. Koons affirms dismissal of a decades-late copyright claim by applying—and materially clarifying—the Second Circuit’s discovery rule: constructive discovery turns on reasonableness and due diligence, not on “inquiry notice” or a requirement of actual knowledge of triggering facts. The opinion also serves as a procedural warning: novel accrual theories for DMCA claims must be properly preserved and meaningfully argued, or the court will decline to reach them.