Double feature at the US Supreme Court clarifies the copyright litigation landscape

A single interpretation of the Copyright Act by the U.S. Supreme Court is rare enough. Yet in two separate opinions issued on March 4, a unanimous Supreme Court resolved: (1) the long-simmering "application approach" vs. "registration approach" circuit split, holding that a copyright owner must have a registration certificate (or a Copyright Office rejection) in hand before filing suit (Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019)); and (2) the meaning of "full costs" under Section 505 of the Copyright Act, holding that the term encompasses only the "costs" specifically enumerated in the general costs statute, 28 U.S.C. 1821, 1920 (Rimini Street, Inc. v. Oracle USA, Inc., 139 S. Ct. 873 (2019)). In both cases, the Supreme Court rejected the interpretation of the Copyright Act by the 9th U.S. Circuit Court of Appeals.

Taken together, the Supreme Court's resolution of circuit splits on these issues will likely deter some copyright troll litigation, while potentially imposing modestly higher litigation costs on legitimate copyright owners.

Copyright Registration: Fourth Estate v. Wall-Street.com

The Supreme Court's decision in Fourth Estate settles a circuit split that grew more pronounced following the court's 2010 decision in Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, in which the court held that registration was a mandatory requirement for filing suit, but was not jurisdictional. Following Muchnick, the 9th Circuit held that merely applying to register a work was sufficient to permit a copyright owner to file suit, while the 11th Circuit in Fourth Estate ruled that an actual registration certificate (or denial of registration by the Copyright Office) was required. Including pre-Muchnick case law, the split pitted the 5th and 9th Circuits, requiring merely an application, on the one hand, with the 10th and 11th Circuits and courts in the Southern District of New York, which required an actual determination by the Copyright Office granting or denying the application, on the other hand.

In holding that registration -- and not merely applying to register a work -- is a precondition to filing suit, the Supreme Court construed the plain language of Section 411(a) of the Copyright Act and concluded that "[t]he registration approach . . . reflects the only satisfactory reading of § 411(a)'s text," in significant part because, "[r]ead together, § 411(a)'s opening sentences focus not on the claimant's act of applying for registration, but on action by the Copyright Office -- namely, its registration or refusal to register a copyright claim." Fourth Estate, 139 S. Ct. 881.

Although the Fourth Estate decision underscores the benefits of timely registration (or preregistration) of works, its impact may be limited in practice for most copyright owners. For example, while it currently takes an average of seven months from the date of filing an application for a registration to issue, copyright plaintiffs can take advantage of the Copyright Office's expedited processing option (for a fee of $800 per application) to obtain a registration certificate in about a week (barring additional communications) if the application is filed in anticipation of litigation. And the Supreme Court's decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), holding that laches generally cannot be invoked by a defendant to bar a plaintiff's claim for damages, may mitigate the impact of any delay in filing suit because of the time needed to register a work after infringement is discovered.

In addition, though timely registration also may be important to copyright owners in circumstances where they want to seek preliminary injunctive relief, the Supreme Court's decision in eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) -- which has since been extended to copyright cases -- already raised the bar for injunctive relief, making it much more difficult to obtain an injunction absent evidence of irreparable injury. Moreover, registration of a work prior to its infringement has always been required in most cases for a copyright owner to recover statutory damages and, in the court's discretion, attorney fees; the Fourth Estate decision did not affect this prerequisite. See 17 U.S.C. 412.

In contrast, Fourth Estate should thwart at least some copyright trolls, who in recent years have filed thousands of low-value cases with the goal of extracting quick but not insignificant monetary settlements from defendants after the lawsuits are filed. While Fourth Estate is unlikely to prevent trolls from sending cease and desist letters, it should deter at least some troll litigation.

Fourth Estate ultimately provides an even stronger incentive for copyright owners to promptly register (or preregister) their works -- both to be able to file suit quickly and to recover statutory damages and attorney fees.

Full Costs: Rimini Street v. Oracle

The Rimini Street decision likewise settles a circuit split, this time clarifying the meaning of the term "full costs" in Section 505 of the Copyright Act, 17 U.S.C. 505. After a jury trial in which Rimini Street was found liable for "innocent" copyright infringement (the jury rejected Oracle's claims of willful infringement), Oracle sought to recover its fees and costs as the prevailing party in the litigation. Among its litigation expenses were millions of dollars in e-discovery, expert witness, and jury consulting fees, for which the district court had awarded Oracle $12.8 million, despite the fact that none of these litigation expenses are encompassed by the six categories of costs enumerated in the general federal statute that authorizes district courts to award costs, 28 U.S.C. 1821, 1920.

Upending 9th Circuit precedent and instead siding with the 11th and 8th Circuits, the Supreme Court held that inclusion of the term "full" before the term "costs" did not expand the categories of recoverable costs under the Copyright Act and that, instead, the "term 'full' is a term of quantity or amount," expressively explaining: "The word 'full' operates in the phrase 'full costs' just as it operates in other common phrases: A 'full moon' means the moon, not Mars. A 'full breakfast' means breakfast, not lunch. A 'full season ticket plan' means tickets, not hot dogs. So too, the term 'full costs' means costs, not other expenses." Rimini Street, 139 S. Ct. 873.

The Supreme Court thus established that, consistent with its precedents, absent explicit statutory language authorizing the recovery of additional categories of expenses (such as expert witness fees), the Copyright Act is no different from any of the other hundreds of "subject-specific federal statutes" and an award of "full costs" under the Copyright Act must be limited to the six categories specified in Section 1920 of the general costs statute: (1) clerk and marshal fees; (2) transcript fees; (3) printing and witness fees and disbursements; (4) copying costs and fees; (5) docket fees under Section 1923; and (6) interpreter and court-appointed expert compensation, as well as the salaries, fees, expenses, and costs of special interpretation services under Section 1828.

As with the Fourth Estate decision, the practical effects of the Rimini Street decision may be limited, in part because the 9th Circuit's broad interpretation of "full costs" was the minority view, with most courts already interpreting "full costs" as limited to the six categories set forth in the general costs statute.

Viewed together, the Fourth Estate and Rimini Street opinions may result in the imposition of modestly higher litigation costs on copyright owners who did not register (or preregister) their works prior to infringement -- in the form of expedited Copyright Office application fees prior to filing suit -- and on both prevailing plaintiffs and prevailing defendants, in the more limited scope of costs they can potentially recover in litigation, particularly in cases that are likely to require significant expert testimony and extensive e-discovery. Though these costs may deter some copyright plaintiffs from filing suit, their overall impact should not be significant in most cases, with both Supreme Court opinions ending the practice of forum shopping and bringing some uniformity and predictability to future copyright lawsuits. 