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March 4, 2019

Supreme Court Settles Two Circuit Splits About Copyright Litigation



In two decisions issued on March 4, 2019, the United States Supreme Court settled circuit court splits in copyright infringement cases. One case pertains to initiating an infringement action, and the other addresses the scope of costs that can be awarded at the end of a case.

In Fourth Estate Public Benefit Corp v. WallStreet.Com, LLC (No. 15-571), the Court held that a copyright claimant cannot commence an infringement lawsuit before the Copyright Office acts on a copyright application and either registers or refuses the copyright. The Court rejected the Ninth Circuit's approach, which permitted an infringement lawsuit upon the completion of a copyright application.

In Rimini Street Inc. et al. v. Oracle USA Inc. (No. 17-1625), the Court concluded that "full costs" provided by the Copyright Act do not include costs for e-discovery vendors, experts, and other litigation expenses. The decision could affect the decision-making process for litigants deciding whether to take a copyright case to trial. This decision also reversed a ruling from the Ninth Circuit.

Fourth Estate Public Benefit Corp v. WallStreet.Com, LLC, (No. 15-571):

In Fourth Estate Public Benefit Corp v. WallStreet.Com, LLC. (No. 15-571), in an unanimous decision authored by Justice Ginsburg, the Supreme Court held that, for purposes of Section 411(a) of the Copyright Act, "registration" occurs, and a copyright claimant may commence an infringement lawsuit, only after the Copyright Office acts on a copyright application by registering or refusing to register the copyright. In reaching that holding, the Supreme Court affirmed the 11th Circuit's ruling and rejected the 9th Circuit's "application approach," which interpreted "registration" as occurring when a claimant's completed application for registration has been received by the Copyright Office and allowed plaintiffs to file infringement claims immediately upon submitting an application.

Fourth Estate, a news organization, licensed its online content to Fourth Estate initiated a copyright infringement claim against Wall-Street when it failed to take down Fourth Estate's content after the termination of the parties' agreement. The District Court dismissed Fourth Estate's complaint because while Fourth Estate had filed applications to register copyrights in the articles licensed to Wall-Street, the Copyright Office had not yet acted on Fourth Estate's applications. The 11th Circuit affirmed.

The Supreme Court held that the 11th Circuit's "registration approach" is the "only satisfactory reading of Section 411(a)'s text." Id. at *4. First, it explained that when read together, Section 411(a)'s first two sentences focus on the action taken by the Copyright Office, namely, its registration or refusal to register a copyright claim, and not the applicant's submission of an application. It further noted that the 9th Circuit's "application approach" would render the second sentence of Section 411(a), which permits a copyright claimant to file suit when the Copyright Office has refused her application, superfluous, noting that a "copyright claimant would need no statutory authorization to sue after refusal of her application if she could institute suit as soon as she has filed the application." Id. at *5. Similarly, it explained that §411(a)'s third sentence, which authorizes the Copyright Office to "become a party to the action with respect to the issues of registrability of the copyright claim," would also be rendered meaningless if an infringement suit could proceed before the Copyright Office acted on an application.

It is now clear that a copyright owner must apply for registration and receive the Copyright Office's decision on the application before initiating suit. Upon registration of the copyright, a copyright owner can recover damages for infringement that occurred both before and after registration. Once the Copyright Office grants or refuses registration, the copyright owner may also seek an injunction barring the infringer from continued violation of the registered right.

Rimini Street Inc. et al. v. Oracle USA Inc. (No. 17-1625):

Earlier today, in Rimini Street Inc. et al. v. Oracle USA Inc. (No. 17-1625), the Supreme Court resolved a circuit split over the meaning of "full costs" awarded under the Copyright Act. Writing for a unanimous Court, Justice Kavanaugh concluded that "full costs" do not include costs for e-discovery vendors, experts, and other litigation expenses.

In the underlying dispute, Oracle USA Inc. largely prevailed in an infringement action against Rimini Street, Inc., a company that provided software support services for Oracle's products. The district court awarded Oracle $12 million in "nontaxable costs" that it incurred in the litigation, including fees Oracle paid to e-discovery vendors, expert witnesses, and jury consultants.

Under 28 U.S.C. §§ 1821 and 1920, six specific categories of costs are taxable against the losing party and recoverable by the prevailing party in federal court; all other expenses are "non-taxable" and generally non-recoverable. See 28 U.S.C. §§ 1821, 1920 (allowing recovery of court filing fees, transcript fees, printing fees, costs for interpreter services, and witness per diems/mileage). Section 505 of the Copyright Act states that courts may issue a discretionary award of "full costs" to any party. Both the district court and the Ninth Circuit held that the Copyright Act's provision that allows for an award of "full costs" was controlling and more expansive, such that Oracle could recover for costs that fell outside of the categories listed in §§ 1821 and 1920.

The Court rejected this reading of the Copyright Act, holding instead that the word "full" in the Copyright Act simply refers to all "costs" available under §§ 1821 and 1920. Without some express indication from Congress, Justice Kavanaugh wrote, a statute awarding "costs"—even if the statute awards "full costs," like the Copyright Act—will not be construed as awarding litigation expenses beyond the six categories listed in §§ 1821 and 1920. The Court also emphasized that certain federal statutes do provide for the recovery of expert witness fees, but unlike the Copyright Act, do so explicitly.

The Court declined to read the word "full" in the Copyright Act as authorizing an award of costs beyond those specified in §§ 1821 and 1920. Rather, the Court reasoned that the word "full" is an adjective that means the complete measure of the noun it modifies: "costs." Justice Kavanaugh explained that the word "full" is similarly used as an adjective in other common phrases; for example, the term "full season ticket plan" refers only to tickets, not to hot dogs. Similarly, in the Copyright Act, "full costs refers only to costs expressly provided by §§ 1821 and 1920, not to other litigation expenses beyond those costs.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.