What does it mean to register a copyright?

When I discuss copyright registration with clients, I like to point out that a United States copyright registration application, currently priced at $55 (and in some cases $35) is one of the last great bargains of the federal government.

For that modest sum, the Copyright Office, a division of the Library of Congress, will assign an examiner to the application, which must include a completed application form, deposit copy of the work, and the required fee. If the application meets various statutory standards, the Register of Copyrights will issue a Certificate of Registration that comes with important legal benefits. First and foremost is enforcement. While federal district courts have original jurisdiction over all copyright matters, procedurally an action over a United States work cannot proceed unless the plaintiff pleads that registration of the disputed work at the Copyright Office has taken place. Actual damages, lost profits, statutory damages, injunctive relief and compliance with the statute of limitations all depend on this threshold of registration to commence an action.

Even outside the litigation context, copyright registration carries enormous benefits for owners because a registration of a valuable work is legal proof of its status as a valuable asset in mergers and acquisitions, with schedules of registered works often seen as exhibits to such documents documenting the intellectual property being bought and sold. In addition, public records of transfers of copyright ownership, known as "recordation," are effective only if the recorded work is also registered, and play a role in financing of entertainment transactions via the recordation of security interests in registered copyrights.

In 2016, the latest year for which we have a Copyright Office annual report, 533,606 registration applications were received by the Copyright Office, of which only 12,656, or about 2 percent, were rejected, and potentially subject to an administrative appellate process. Copyright registrations generated $29,611,370 in fees for the Copyright Office in 2016. According to the 2016 Annual Report, in the period 1790-2016, the Copyright Office (or in the early years, district courts which had that responsibility) has processed 37,301,162 registrations. And because registration applications require two copies of published works as mandatory deposits, in 2016 the Copyright Office forwarded more than 635,000 copies of published works with a net value of $35.6 million to the Library of Congress for the public benefit.

With such a robust administrative apparatus, important ownership and financial implications, a history going back to 1790, and legal benefits revolving around copyright registration, it may come as a surprise to learn that the U.S. Supreme Court is about to decide for the first time, in the context of copyright litigation, what the word "registration" in the Copyright Act actually means.

More specifically, if a plaintiff needs to plead they registered their copyright in order to commence an infringement lawsuit, is it enough for the plaintiff to plead they successfully filed the application? Or must the plaintiff plead that the application was filed, and ultimately reviewed and accepted by the Copyright Office with a Certificate duly issued.

The difference is important because copyright registration is permissive, and while it is very good practice to file registrations "early and often," it is fairly common for a plaintiff to discover an alleged infringement for a work that has not yet been registered. The plaintiff's practical choice is to either file a registration application with an additional $800 expedited fee per application, which will ensure full completion in about two weeks, or just file a "regular" application with will take between four and 12 months to process thus delaying otherwise urgent matters such as injunctive relief and potentially lowering damages via expiration of the statute of limitations applicable to damages.

While it may seem an attractive recommendation that plaintiffs in a hurry should just pay the extra $800 expedited processing fee, the real issue to be decided is that there is a split in the circuit courts of appeal over the definition of "registration" for purposes of initial pleading to commence a case.

The current situation is that the 5th and 9th Circuits allow suits to commence if the plaintiff merely pleads they filed the application (the "Application Approach,") while the 10th and 11th Circuits have concluded that a plaintiff must plead that they have completed the registration process, and the Copyright Office has issued a Certificate of Registration (the "Registration Approach").

Because at least two circuits disagree with each other on this matter of statutory interpretation, at least two circuits must be interpreting the Copyright Act incorrectly. This is the pure matter of law now before the Supreme Court, with practical implications for every copyright case filed.

The case is Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC and Jerrold D. Burden, 15-571. The parties filed their Supreme Court briefs in December 2017, and on Jan. 8, 2018, the Supreme Court invited the solicitor general to file a brief in the case expressing the views of the United States.

One remarkable aspect of the case is how little the actual underlying facts matter, because this case is about a split in the circuits on a matter of statutory interpretation that has almost nothing to do with the original district court facts, other than the one paragraph in the complaint pleading "registration" had taken place prior to filing. In that case, a non profit distributor of news articles (Fourth Estate) claimed that their licensee, a financial news web site (Wall-Street.com), failed to remove news articles after a license agreement expired, and thus morphed from a licensee to an infringer.

In their complaint in the Southern District of Florida filed March 11, 2016, Fourth Estate plead as follows regarding copyright registration: "Fourth Estate owns the copyright in thousands of copyrighted articles, including hundreds of articles first published in the three months since the filing of Fourth Estate's applications to register these articles with the Register of Copyrights immediately prior to the filing of this case." [sic].

There was an exhibit listing the titles of 244 news articles, but the exhibit did not include information on how many applications were filed, or the application numbers assigned by the Copyright Office as part of its online application process, or dates of submission.

The district court granted the defendant's FRCP Section 12(b)(6) motion to dismiss based on Section 411(a) of the Copyright Act which states "No civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title." The court applied the "Registration Approach" stating "because a plaintiff must first obtain registration for the work at issue prior to initiating suit, the Court must dismiss Fourth Estate's claims for copyright infringement." (In its Supreme Court brief, Fourth Estate noted that the Copyright Office did ultimately refuse its registration application, but noted that as a matter of statutory interpretation that affects all future filed copyright cases, the issue is not moot. Despite the subsequent refusal of Fourth Estate's registration application, a Supreme Court decision in favor of Fourth Estate's original "application approach" pleading might still revive the case, as Section 411 of the Copyright Act has provisions whereby a plaintiff whose registration application is examined and rejected can still initiate an action, subject to also serving the Copyright Office which can elect to become a party in the case. This and other of the several Copyright Act statements regarding registration will serve as the basis for the legal arguments over statutory interpretation at the Supreme Court.)

On appeal, the 11th Circuit affirmed, noting the current circuit splits as follows: 5th and 9th Circuits: application approach. 10th and 11th Circuits: registration approach. 8th Circuit: endorsed application approach in dicta. 1st and 2nd Circuits: both acknowledge circuit split. 856 F. 3d 1338 (11th Cir. 2017).

Here in the 9th Circuit, the case establishing the "application approach" was a case involving copyright in a jewelry design, Cosmetic Ideas, Inc. v. IAC/Interactive Corp., 606 F.3d 612 (9th Cir. 2010). The 9th U.S. Circuit Court of Appeals examined all of the sections of the Copyright Act that refer to registration, and concluded that as a policy matter the goal is to encourage registration, and promote judicial economy, which are best served under the application approach.

While the Supreme Court considers the meaning of "registration" under the Copyright Act, what is the best course for clients to pursue? Given the costs of litigation, even where multiple copyright registrations must be filed and processed quickly using the $800 expedited fee, in many cases that self-imposed "registration approach" might be preferable to the costs for a client to litigate whether they have correctly relied on the application approach. And as a matter of asset management, a regular conversation with clients regarding the cost vs. benefit of filing copyright registrations for their most important assets is important, and sometimes reveals, proactively, the need to revisit underlying copyright assignments or licenses from third parties that must be in place for the client to become the "claimant" on the registration application and thus secure ownership of the asset.

In many cases, for example unpublished works, a surprisingly large number of works can be submitted on one $55 application form, giving the client the benefits of registration relatively inexpensively. Such determinations require an experienced copyright lawyer who is familiar with the subtleties of the sometimes obscure "art" of copyright registration. With copyright registration being examined by the Supreme Court, such nuances are very likely to come to the fore in the coming months.