United States: Supreme Court Throws Copyright Owners Curveballs

It is weeks away from opening day, yet the United States Supreme Court had its own pre-season double header of sorts this past Monday. The United States Supreme Court issued unanimous decisions in two copyright cases on March 4, 2019. Both cases have implications for litigants. The first decision confirms that the copyright owner must have registered the copyright claim prior to bringing suit for infringement. The second decision confirms that the only costs available to a prevailing party in a copyright infringement case are the costs identified in the federal general cost statute.

Fourth Estate Public Benefit Corp. v. Wall-Street.com

The wait is over . . . or is it? This week the Supreme Court resolved a long-standing debate among the circuits over whether a copyright registration must be issued before a claimant can bring an infringement action to enforce rights in that registration. The high court ruled in Fourth Estate Public Benefit Corp. v. Wall-Street.com that a copyright owner must wait: copyright owners cannot file an infringement lawsuit until the Copyright Office has issued a registration for the work at issue. Justice Ruth Bader Ginsburg drafted the unanimous ruling, which resolves a long-time split amount the circuits over the interpretation of 17 U.S.C. § 411(a), which states:

No civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.

The circuits have been split as to whether the submission of an application for registration to the United States Copyright Office is sufficient to comply with the statute; some circuits have held that submission of an application is sufficient, while others have held that the issuance of a registration is sufficient.

In 2016, Fourth Estate filed a lawsuit against Wall-Street.com, alleging that it had published articles without permission. The district court dismissed the case, saying that Fourth Estate had filed its lawsuit before the copyright registrations were issued. This decision was affirmed by the Eleventh Circuit last May. The Supreme Court agreed.

While ruling that infringement lawsuits cannot be filed until the Copyright Office issues a copyright registration, Justice Ginsburg noted that the Copyright Office may take months to process an application. Fourth Estate argued that a copyright owner may lose its ability to enforce its copyright if the three-year statute of limitations runs out before the Copyright Office acted on an application for registration. Blaming staffing issues and budgetary shortages for the delay, Justice Ginsburg noted that infringement may continue for some time before a copyright owner can stop the infringement, but noted that Fourth Estate's fear was overstated, since the average processing time for copyright applications is currently 11 months.

As Wall-Street.com and the United States, which filed an amicus brief in support of Wall-Street.com's position argued, applicants have options to avoid waiting 7-9 months for the Copyright Office to examine applications for registration. These avenues include pre-registering a work or seeking expedited review of the application.

This opinion confirms that copyright owners should register their copyrights promptly to avoid striking out when it's time to enforce them.

Rimini Street v. Oracle

While the first copyright case the Supreme Court decided Monday pertained to an issue faced by litigants at the outset of a case, the second case pertained to an issue faced by the prevailing party towards the end of a case.

The Copyright Act gives district courts discretion to allow recovery of "full costs" by or against a party in a civil action. 17 U.S.C. §505. In Rimini Street v. Oracle., the Supreme Court unanimously held that this section of the Copyright Act allows a district court discretion to award no more than the costs specified in the general costs statute codified at 28 U.S.C. §§1821 and 1920.

Oracle, which had prevailed in its copyright infringement case against Rimini, a provider of support and maintenance services for third party software, sought to protect the District Court's award of $12.8 million of litigation expenses such as expert witnesses, e-discovery, and jury consulting services. The U.S. Court of Appeals for the Ninth Circuit affirmed the award as consistent with precedent in that circuit, which had interpreted the phrase "full costs" as used in 17 U.S.C. §505 to include expenses in addition to the items identified in the general costs statute. The Supreme Court granted certiorari in order to resolve a split among the circuit courts on this point.

In reaching its conclusion that the only costs available to a prevailing party under the Copyright Act are the costs specified in the general costs statute, the Supreme Court pointed out that three Supreme Court cases clearly indicate that discretion to award "costs" under a statute refers only to the costs itemized in the general costs statute unless Congress has provided explicit authority for the district court to award more. Where there is no such explicit authority, the district court's discretion is limited to those categories set forth in the general costs statute.

Oracle argued that the phrase "full costs" indicated something beyond the categories of costs identified in the general cost statute, that the phrase is a term of art that historically has referred to more than the categories of costs identified in the general cost statute, and to limit the discretion to costs itemized in the general cost statute would be to render the term "full" as used in the statute unnecessary surplusage. The Court was unpersuaded by these arguments, noting that "full" means no more than the entire amount of the costs identified in the general cost statute, that under the Court's precedent the general cost statute applies regardless of when subject specific statutes were enacted, and that if Oracle's interpretation were accepted, a different redundancy problem would be created.

Thus Rimini persuaded the Supreme Court to reverse the relevant part of the judgment of the Court of Appeals and remand the case for further proceedings consistent with the opinion. This means Rimini will not have to pay the $12.8 million in expenses awarded to Oracle, and will only have to pay the $81.9 million in damages, attorneys' fees, and costs.

While Oracle struck out on receiving compensation for expenses, Oracle still hit a grand slam in its recovery of damages, attorneys' fees, and costs.

The Supreme Court is just getting warmed up for its season of opinions. Stay tuned for more updates as the high court gets into full swing.

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