Copyright Lawsuits: Harder to Bring, Harder to Collect
Intellectual Property Alert 03/05/19 Jonathan Hudis
On March 4, 2019, the Supreme Court issued a pair of unanimous decisions making it more difficult to bring a U.S. copyright lawsuit; and harder for the prevailing party to collect its full expenditure of litigation costs when the case is over. Read more about these two cases and the Practice Tips you should consider as a result of them.
Copyright Registration Required to Bring Suit
Practice Tips: 1) If the U.S. copyright owner produces a few or multiple works of authorship per year warranting protection (subject to budgetary considerations), the owner should consider an ongoing copyright registration program. 2) If the U.S. copyright owner discovers that one of its valuable works, not yet registered, has been infringed, it may pay a fee (currently $800) to expedite its application with the Register upon a statement that litigation is prospective or pending (at the Copyright Office, the procedure is called a request for “Special Handling”). Expedited registration requests typically take 1-2 weeks, whereas the current processing time for a copyright application is approximately 7 months.
Supporting Supreme Court Ruling
In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, the Court held that a U.S. copyright claimant must have a registration in hand (or a refusal to register from the Copyright Office) before it can bring an infringement suit in federal court.
Fourth Estate Public Benefit Corp. (“Fourth Estate”) produces news articles for online distribution, the content of which it licenses to others for a re-distribution fee. Wall-Street.com, LLC (“Wall-Street”) was a licensee of Fourth Estate’s journalistic works, but cancelled its subscription. Notwithstanding its cancellation, Wall-Street continued to post Fourth Estate’s articles on its website. At the time Fourth Estate filed its infringement lawsuit, it had filed applications to register its articles with the U.S. Copyright Office, but the Register of Copyrights had not yet acted on the applications. Because Fourth Estate did not yet have a copyright registration in hand (or a refusal to register from the Copyright Office), the District Court dismissed the lawsuit — and the dismissal was upheld by Eleventh Circuit Court of Appeals.
The Supreme Court agreed to hear the case to decide a split in the Courts of Appeals as to whether the mere filing of the application, deposit of the work, and fee was sufficient for a U.S. plaintiff to bring a copyright infringement action (the “Application Approach”); or whether the plaintiff must wait for the Copyright Office to issue the registration (or a refusal to register the plaintiff’s work) (the “Registration Approach”). Looking at the plain language of Copyright Act Section 411(a), the Court held that the Registration Approach was proper.
Copyright Act Section 411(a) plainly requires that U.S. copyright owners obtain a registration from the Register of Copyrights before bringing suit in federal court. There are certain exceptions:
- The Copyright Office refuses registration of the work. The plaintiff may then proceed with its infringement lawsuit on notice to the Register of Copyrights, who may choose to participate in the lawsuit to defend its decision denying registration. Copyright Act Section 411(a), second sentence.
- To satisfy the United States’ obligations under the Berne Convention (dispensing with an array of formalities attendant to copyright protection), owners of foreign works of authorship are not subject to the registration requirements of the Statute. Copyright Act Sections 101 (definition of “United States work”); 411(a), first sentence.
- Pre-registration of a work vulnerable to predistribution infringement (e.g., a movie or a musical work) qualifies the owner of the work to bring suit, so long as the owner promptly files for registration after the preregistered work’s publication or infringement. Copyright Act Section 408(f)(2) and implementing regulations.
- The owner of a live broadcast may sue for infringement before registration, so long as the owner “make(s) registration for the work” within 3 months after its first transmission. Copyright Act Section 411(c).
Limitation on Allowable Copyright Litigation Expenses
Practice Tip: High stakes copyright litigation, such as the Rimini case discussed below, are attendant with significant support costs. However, not all litigation expenses are recoverable by a successful copyright litigant. Unless and until Congress enacts legislation to the contrary, copyright litigants should not expect to recover expert witness fees, e-discovery expenses, jury consulting costs, or any other expenses not specifically provided for in the general federal statutes awarding litigation costs.
Supporting Supreme Court Ruling
In Rimini Street, Inc. v. Oracle USA, Inc., the Court held that the prevailing party in a copyright infringement litigation may only collect, as part of its recoverable expenses, those expenditures specifically provided in the general litigation costs statutes, nothing more.
Oracle USA, Inc. (“Oracle”) develops and licenses computer software that manages business data and operations. It also offers customers software maintenance services. Rimini Street, Inc. (“Rimini”) sells third-party software maintenance services to Oracle customers, thus competing with Oracle in this market. Oracle sued Rimini for copying Oracle’s software without licensing it, during the course of Rimini providing its software support services. On top of the jury’s hefty copyright damages award and the trial court’s significant award of attorneys’ fees and costs, the District Court awarded Oracle additional amounts for litigation expenses such as expert witnesses, e-discovery and jury consulting. The litigation expenses award was affirmed by the Ninth Circuit Court of Appeals.
However, the general federal statutes awarding litigation costs, 28 U.S.C. Secs. 1821 and 1920, only allow reimbursement to the prevailing party for the following categories of expenses:
- Fees of the clerk’s and marshal’s offices;
- Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
- Fees and disbursements for printing and witnesses;
- Fees for exemplification and copying costs for materials necessarily obtained for use in the case;
- Docket fees under 28 U.S.C. Sec. 1923;
- Compensation for court-appointed experts, interpreters and salaries, fees, expenses and costs of special interpretation services under 28 U.S.C. Sec. 1828; and
- Per diem and mileage expenses of witnesses, 28 U.S.C. Sec. 1821.
Oracle argued that, because Copyright Act Sec. 505 provides for an award of “full costs,” successful copyright litigants should be awarded expenses above what is specifically provided in the general federal litigation cost statutes. The Supreme Court did not accept this argument. Rather, the Court held that the term “full” is a term or modifier of quantity or amount. This term does not expand the categories or kinds of expenses that may be awarded as “costs” under the general litigation costs. Additional costs may be awarded only if Congress enacts legislation so providing. The Copyright Act does not contain this additional language.
For more information on either Supreme Court ruling or issues of copyright protections and litigation procedures, please contact your Quarles & Brady attorney or:
- Jonathan Hudis: (202) 372-9528 / [email protected]