Tag Archives: litigation costs

Supreme Court Hands Down Critical Decisions in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLCand Rimini Street, Inc. v. Oracle USA, Inc.,Resolving Circuit Splits Over Interpretation of Copyright Act Provisions

It was an eventful day for copyright law on Monday, March 4, as the Supreme Court of the United States issued two unanimous opinions, both involving provisions of the Copyright Act.  The decisions were fittingly both issued on the 110th anniversary of the 1909 Copyright Act.

In the first case, Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC,No. 17–571, the Court, in an opinion authored by Justice Ginsburg, resolved a long-standing circuit split over whether a copyright owner can sue in federal court with only a copyright application in hand, or whether a completed registration is necessary.  The Court held that “registration . . . has been made” under Section 411(a) of the Copyright Act—and thus an infringement suit may be instituted—when the Copyright Office grants or denies registration after evaluating the copyright application (coined the “registration approach”) rather than when a copyright owner merely submits the application, materials, and fee required for the registration to begin processing (the “application approach”).

In the second case, Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625, Justice Kavanaugh delivered the option for the Court, holding that Section 505 of the Copyright Act, which allows a party to recover “full costs,” does not authorize appellate courts to award litigation costs beyond the categories enumerated by Congress in the general costs statute codified at 28 U.S.C. § 1821 and § 1920.  Such “costs” are limited to fees for the clerk and marshal; transcript, copyright, and docketing fees; disbursements for printing and witnesses; and the compensation of court-appointed experts and certain special interpretation services. The Court rejected Oracle’s position that “full costs” under Section 505 included expert witness fees, electronic discovery expenses, and jury consultant fees.

Both of the Court’s determinations are instructive, as they clarify the legal landscape for copyright litigants who have been grappling with inconsistent applications of the Copyright Act for years.

The “registration approach” adopted in Fourth Estateincentivizes copyright owners—more than ever—to register works with the Copyright Office and will likely incite an uptick in registrations. While there were many benefits to registration prior to this decision, now, if a copyright owner fails to register works prior to discovering an infringement, she will have to wait an average of seven months to sue (the Copyright Office’s average processing time), and the work may continue to be infringed without recourse in the interim.  There is, of course, the option of invoking the Copyright Office’s Special Handling process, but it comes with a $800 special handling fee, which may not be an attractive or feasible alternative for some.

Furthermore, creators who have yet to register works and are running up against the three-year statute of limitations for infringement may be out of luck if they file an application and the Copyright Office does not process it in time.  The best practice for content owners is to apply for registration as soon as possible, even before infringement is anticipated or suspected.  Those who have filed lawsuits based on applications that have not yet been processed should take advantage of the Special Handling process, if possible, otherwise the claim may ultimately be dismissed as untimely.

The limitation on recoverable fees fashioned by the Rimini Street decision may also have far-reaching implications, especially for individual creators and litigants who cannot bear high litigation costs without the chance for recovery.  The ruling sounded a death knell for a copyright litigant’s ability to recover fees for expert witnesses, electronic discovery platforms, and jury consultants, which have become increasingly prevalent in copyright cases in the digital age.

For example, while music and software cases have almost always involved experts, matters involving “viral” infringements often call for specialized experts to address novel copyright issues.  In such highly technical cases, retention of a knowledgeable expert may make or break the case, making the choice of whether to hire without the option for recovery of those fees all the more difficult, especially for those unable to afford the costs.  Additionally, as the use of e-discovery platforms has become nearly ubiquitous, payment for such services has become a necessity for a litigant to maintain an equal footing with their opponent.

The Rimini Street ruling will certainly force copyright litigants to face difficult decisions in how they want to proceed with their case, especially if they are facing an opponent with deep pockets who can afford to hire numerous experts, pay for e-discovery platforms, and retain jury consultants.  Clients should discuss their financial limitations with counsel before deciding to commence a copyright action or how to defend against a copyright action, as they may have to bear the burden of certain unrecoverable costs to prevail.