Supreme Court Issues Two Decisions Clarifying the Copyright Act's Impact on Litigation

March 25, 2019

Earlier this month, the Supreme Court issued two decisions of interest to copyright holders considering, or involved in, litigation.

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Registration is Now a Prerequisite to Commencing a Copyright Suit

First, in Fourth Estate Public Benefit Corp v. Wall-Street.com LLC, the Supreme Court has resolved the long-standing question of whether a party must hold a copyright registration, or merely have an application pending, before commencing a lawsuit. At issue in Fourth Estate was whether Section 411(a) of the Copyright Act required a copyright holder to register a copyright, or merely submit an application for copyright protection, prior to initiating a lawsuit.

Prior to this decision, there was a federal circuit split between the so-called “registration approach” and “application approach.” In circuits adopting the registration approach, courts relied on the “plain language” of the Copyright Act to hold that registration is not “made” until a copyright registration is accepted and granted.  However, other circuits have adopted the“application approach” in holding that the Copyright Act does not impose prerequisites to registration other than a completed application, which is backdated to the date an application is submitted. The Second Circuit adopted neither approach, leaving the district courts to their own devices on this threshold consideration of copyright litigation.

Writing for a unanimous Court, Justice Ginsburg handed down the Supreme Court’s decision adopting the registration approach. As explained by Justice Ginsberg, the plain text of the Copyright Act requires a holder to complete the registration process before commencing a lawsuit; it would make little sense to allow the application for such a registration to satisfy the precondition. Furthermore, the application approach would render the preregistration option that is available for works at risk of prepublication infringement (such as feature films) unnecessary.

The Fourth Estate decision highlights the importance for authors to timely register their works to be able to enforce their rights under the Copyright Act. While it was always important to register prior to the commencement of an infringement action, or within three months of first publication to obtain statutory damages and attorneys’ fees, now a registration is an explicit prerequisite to litigation, including seeking injunctive relief. Fortunately, the Copyright Office provided an expedited (and expensive) registration option, which just became much more attractive to authors in jurisdictions which adopted the “application approach.”

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The Copyright Act Does Not Enlarge the Usual Costs Available to a Victor

Second, the Supreme Court also clarified that the Copyright Act’s authorization that “full costs” may be awarded to a winning party under § 505 extends only as far as the general costs available to all civil litigants. Items typically of much more significant cost in a copyright litigation are not available to a judgment holder.

Rimini St., Inc. v. Oracle USA, Inc. has its genesis in a successful copyright infringement case brought by Oracle. As part of a contentious litigation, Oracle incurred a great deal of expert and e-discovery costs related to evidence of Rimini’s use of infringing software that Rimini destroyed around the time Oracle filed suit. As the prevailing party, Oracle petitioned for, and was awarded, more than $12.7 million in costs, much of which related to the aforementioned e-discovery. The Ninth Circuit affirmed.

The Supreme Court reversed, holding that recoverable costs – even in Copyright Act cases – are limited to the six costs enumerated in §§ 1821 and 1920 (e.g., deposition transcript fees, filling fees, and printing costs) absent further specificity from Congress. The Court, through Justice Kavanaugh, explained that the term “full,”  as used in the Copyright Act, refers to the “quantity or amount” of the enumerated categories of costs recoverable, not additional categories such as e-discovery costs.

This decision is an instructive warning to litigants involved in costly discovery disputes not to wait until the conclusion of a lawsuit to seek costs related to discovery malfeasance it believes are recoverable. Although the decision is limited to the Copyright Act, it reflects broader challenges litigants face in seeking recovery of costs incurred attempting to discover relevant information in the face of an obstructionist adversary. Where motions to compel or for protective orders are necessary, and particularly where malfeasance by the other side is suspected, Federal Rule of Civil Procedure 37 provides a mechanism with a greater likelihood of recovering the discovery and motion costs associated with a meritorious motion to compel discovery.  

If you have questions concerning this topic or would like to discuss in further detail, please contact the authors, Jeffrey Harradine or William Leinen.