News & Insights

Does a “Full Moon” Mean Mars too?: Supreme Court Issues a Pair of Copyright Decisions Limiting Litigation Options

March 6, 2019

By: Brian T. Moriarty and Timothy J. Meagher

• Supreme Court resolves conflicting decision by lower courts in copyright cases
• A plaintiff may not file a copyright litigation until the U.S. Copyright Office registers the copyright
• Reimbursable costs to a prevailing party are limited and do not include expensive items such as expert and e-discovery costs

In the first of a pair of Supreme Court rulings, Fourth Estate Public Benefits Corp v. Wall-Street.com, the plaintiff was a news organization providing online journalism content. When it learned that Wall-Street.com, a news website, had used its work in an unauthorized manner, it filed a copyright infringement action. As noted in the complaint, Fourth Estate filed an application for copyright registration of the work before the suit was filed, but the Copyright Office had not reviewed that application and registered the copyright before the suit was filed. The practice of filing a copyright suit after a registration application is filed but before the work is registered is a common practice that had been acceptable in many circuits, but not all circuits. Wall-Street.com moved to dismiss on the ground that the suit was premature given that under 17 U.S.C. Section 411(a) “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 district court agreed and the ruling was affirmed by the Eleventh Circuit.

The Court granted certiorari to resolve a split in the Circuits on this issue.

The Court interpreted the statute based on plain meaning: a lawsuit for copyright infringement cannot be filed until the plaintiff files for a copyright registration and the Copyright Office grants that copyright registration. Presently, it takes approximately seven months from filing the registration material and paying the fee to obtain a copyright registration. This ruling may impose a significant time lag between the time a plaintiff discovers infringement and files suit where the plaintiff has not previously sought copyright registration. The Court noted that there were two statutory exceptions to the ruling: preregistration for works vulnerable to redistribution before a registration can be obtained and for certain live broadcasts, neither of which applied to plaintiff.

Copyright owners can no longer file a suit before registration is obtained. This may add costs and delay to an infringement action. Thus, it may be important for content producers to takes steps to register their most valuable copyrights before infringement is first detected to eliminate the delay between the first discovery of infringement and the filing of a lawsuit.

In the second case, Rimini Street, Inc. v. Oracle USA, Inc., the Supreme Court considered the meaning of the statutory words “full costs” for the prevailing party in a copyright litigation. The question presented was whether the word “full costs” meant all costs associated with a litigation or simply the full amount of the specific categories of costs allowed by the general litigation costs statute. Again, the Court considered this as a question of statutory interpretation.

Under the Copyright Act, a court may grant “full costs” to a successful litigant which costs are separate and apart from its discretion to award reasonable attorney fees. The statute provides as follows: “In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” The general costs statute applicable to all litigation matters (28 USC §§ 1821 and 1920) allows for only six very limited categories of costs to be awarded: (1) clerk fees; (2) transcript fees; (3) witness fees; (4) photocopy charges; (5) docket fees; and (6) compensation for court appointed experts and interpreters.

In this case, Oracle prevailed in a copyright action against Rimini. The district court awarded Oracle $28.5 million in attorney’s fees, $4.95 million in costs, and $12.8 million for litigation expenses “such as expert witnesses, e-discovery and jury consulting.”  The Ninth Circuit affirmed, reasoning that the phrase “full costs” allowed for costs beyond the six allowed categories in the general costs statute.

The Supreme Court reversed solely on the issue of whether the litigation expenses could be considered “full costs.” The Court reasoned that Congress had mandated that the six categories of “costs” were the default for all litigation awards of costs. With some statutes, Congress chose to alter the default standard and add additional compensable costs and expenses as part of a remedy for winning a case. In the Copyright Act, it expanded the compensable source of expenses by allowing for an award of attorney fees, but did not otherwise broaden the category of “full costs.”

Thus, the Court interpreted “full costs” to mean the full amount of the specified costs, not the specified costs plus other non-specified costs. Indeed, as the Court noted, a “Full Moon” means the Moon, not Mars, and a “full breakfast” means breakfast, not lunch.

The Court’s decision eliminates the possibility of a prevailing party recouping costs beyond the default standard, such as discovery and expert witness costs. These very high-cost items have been available to successful copyright litigants in some circuits, but not others.