March 5, 2019
Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC,No. 17-571, 586 U.S. ___ (2019)
Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625, 586 U.S. ___ (2019)
The United States Supreme Court settled two areas of uncertainty in copyright law on March 4. The Rimini Street and Fourth Estate decisions resolved a split among appeals courts regarding whether a copyright owner can bring a lawsuit before obtaining a copyright registration, and clarified the types of “costs” that can be awarded to a prevailing party. Content creators and other copyright owners should take note of these decisions in devising a copyright protection and enforcement strategy.
Fourth Estate requires copyright owners to register their copyright before filing suit.
The copyright laws grant an author exclusive rights in a work as soon as it is created. The copyright must be registered, however, before the author can bring an infringement suit. Prior to the Supreme Court’s ruling in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, courts were divided as to whether a copyright owner can initiate a lawsuit once it has filed a copyright application, or if it must wait for the registration to actually issue. While copyright registration is viewed as a clerical process at the Copyright Office, it can take months or years to complete. The Copyright Act allows for the filing of a lawsuit once “registration of the copyright claim has been made.” But given the three-year statute of limitations for bringing a copyright case, the interpretation of that phrase has important implications.
Fourth Estate was appealing the dismissal in the Eleventh Circuit of its infringement action, which it brought after filing a copyright application but before the registration issued. It argued, as several other circuit courts have found, that “registration of the copyright claim has been made” upon the filing a complete application, since registration is retroactive to the application date. Justice Ginsberg, writing for a unanimous Court, disagreed, noting that such a reading of “registration” was inconsistent with other provisions, and would render superfluous a provision excepting the registration requirement if registration is refused by the Copyright Office. The Court downplayed concerns that the registration process could run longer than the statute of limitations, and in any event noted that backlogs at the Copyright Office did not allow it to rewrite the statutory text. Furthermore, the Court observed that because copyright vests at the creation of the work, the copyright owner could recover for damages predating the registration. It therefore affirmed the dismissal of Fourth Estate’s case.
Rimini Street limits the types of costs recoverable by the prevailing party.
The prevailing party in a copyright action may recover its attorneys’ fees and certain costs incurred during the litigation. In Rimini Street, Inc. v. Oracle USA, Inc. the Supreme Court limited recovery of costs to six categories of “taxable” costs defined in 28 U.S.C. § 1920, including court clerk and marshal fees, printing and witness costs, and compensation for court-appointed experts and interpreters.
The parties agreed that “costs” refers to the six categories of Section 1920. At issue was whether the Copyright Act’s award of “full costs” to the prevailing party extended beyond those categories. The Court held that it did not. Writing for the Court, Justice Kavanaugh observed that “‘full moon’ means the moon, not Mars,” and that “a ‘full breakfast’ means breakfast, not lunch.” Thus, he reasoned, “the term ‘full costs’ means costs [as defined in Section 1920], not other expenses.”
The Court therefore reversed a $13.4 million award to Rimini Street for its non-taxable costs such as expert witnesses, e-discovery costs, and jury consultants. (By way of comparison, the taxable cost award was only $3.4 million.)
The lesson from the Supreme Court’s copyright decisions is that content creators and other copyright owners should plan ahead to protect and enforce their rights. The process of registering works can drag on for many months, and should be started as early as possible where enforcement may be necessary. If time is of the essence, the Copyright Office offers an expedited (though relatively expensive) process for obtaining a registration within a week or so. Those who are contemplating or in the middle of litigation should take into account that–win or lose–some of the bigger ticket costs in litigation, such as expert witness fees and jury consultants, may not be recoverable.