Supreme Court Clarifies the Rules for Enforcing Copyrights | White & Case LLP International Law Firm, Global Law Practice

Supreme Court Clarifies the Rules for Enforcing Copyrights

White & Case Technology Newsflash

On March 4, 2019, the Supreme Court issued two unanimous opinions that clarify when copyright owners can sue for infringement and what costs they can recover from infringers. In Fourth Estate v. Wall-Street.com, the Court held that a copyright owner may file an infringement complaint when the U.S. Copyright Office registers a copyright.1 In Rimini Street v. Oracle USA, the Court held that that courts cannot make unconstrained cost awards to prevailing parties in copyright cases.2

Fourth Estate: Copyright Registration Required to File a Complaint for Copyright Infringement

Fourth Estate, an online news organization, sued Wall-Street.com for copyright infringement after the defendant canceled its license agreement but continued to display Fourth Estate's content on its website.3 Fourth Estate had applied for copyright registrations for the allegedly infringed content, but the U.S. Copyright Office had not yet acted on Fourth Estate's applications when Fourth Estate filed suit against Wall-Street.com.4 Under Section 411(a) of the Copyright Act, "no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title."5 Fourth Estate argued that it was allowed to file suit under the "application approach," under which the registration requirement of Section 411(a) is met when a copyright owner submits the application, materials, and fee required for registration.6 Wall-street.com argued that "registration approach" applied instead, under which a registration must have issued before the copyright owner files suit.[7] The Supreme Court concluded that the "registration approach . . . reflects the only satisfactory reading of §411(a)'s text" and rejected the application approach.8

The decision will affect copyright owners and potential infringers in a number of ways. In the short term:

  • Copyright owners will need to register their works (or wait for the U.S. Copyright Office reject their applications) before filing copyright infringement complaints. Lawsuits filed without a registration will be dismissed.
  • Copyright owners who have not yet registered their works and urgently need to file suit should request expedited handling of their applications with the U.S. Copyright Office.
  • Plaintiffs who filed copyright infringement lawsuits using the application approach may see their lawsuits dismissed. Similarly, defendants in cases where the copyright owners have applications and not registrations will seek to dismiss the lawsuits. Such dismissals will be, in most instances, granted without prejudice.

In the long term:

  • The U.S. Copyright Office will receive more applications to register works.  It will receive more applications with regular processing time (which will increase the already months-long Copyright Office backlog) and expedited applications (for parties seeking to litigate cases).
  • While the registration requirement makes it slightly more difficult for copyright owners to enforce their rights, copyright owners may ultimately benefit from registration approach. The rules are now clear, and copyright owners have increased incentives to timely register their works. If copyright owners register before any alleged infringement commences, they also will benefit from the ability to elect statutory damages and seek attorney's fees.

Going forward, the message is clear:  if you are a copyright owner with potentially valuable works or that wishes to enforce your rights against infringers, register your copyrights.

Rimini Street: Cost Awards Limited to Specific Categories

Rimini Street was found liable for infringing Oracle's copyrights, and the jury awarded damages and the district court awarded attorney's fees.9 The district court also awarded $12.8 million in expenses that Oracle had paid to its expert witnesses.10 Section 505 of the Copyright Act provides that "[i]n any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party . . . ."11 Rimini Street objected, arguing that "costs" are limited to the six categories specified in the general federal statute authorizing cost awards.12 Oracle argued that the term "full costs" under the Copyright Act allowed it to recover all litigation expenses, not only the six categories.13 The Supreme Court adopted the narrow reading of "full costs," holding that "full costs" means the costs specified in the general costs statute, 28 U.S.C. §§ 1821 and 1920.14

In the short term:

  • The Rimini Street decision constrains costs to a narrow set of statutorily defined categories. Litigants should not expect to obtain large, multi-million dollar cost awards in copyright infringement cases.
  • The Rimini Street decision does not affect awards of attorney's fees which a court can still order in its discretion to prevailing parties under certain circumstances. Attorney's fees can be significant.

In the long term:

  • The Rimini Street decision may cause may cause litigants to limit litigation expenses for expert witnesses and jury consultants. However, large, complex copyright litigations will continue to see substantial expert witness expenditures, given the high stakes in those cases.
  • The Rimini Street decision provides clarity that will greatly reduce variability in cost awards across courts.  This, in turn, will improve the ability for litigants to forecast likely recoveries, making it easier for parties to litigate case and negotiate settlements.

 

1 Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, No. 17-571 (U.S. March 4, 2019).
2 Rimini Street, Inc. v.. Oracle USA, Inc., No. 17-1625 (U.S. March 4, 2019).
3 Fourth Estate, slip op. at 2.
4 The Copyright Office subsequently refused copyright registration of the articles that Wall-Street.com had allegedly infringed. Fourth Estate, slip op. at 2.
5 17 U.S.C. §411(a).
6 Fourth Estate, slip op. at 4.
7 Id.
8 Id.
9 Rimini Street, slip op. at 2.
10 Id.
11 17 U.S.C. §505.
12 Rimini Street, slip op. at 6; "The six categories that a federal court may award as costs are: (1) Fees of the clerk and marshal; (2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title." 28 U.S.C. §1920. In addition, §1821 provides particular reimbursement rates for witnesses' "[p]er diem and mileage" expenses." Rimini Street, slip op. at 3 n.1.
13 Id., slip op. at 7.
14 Id., slip op. at 12.

 

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