Legal Alert

Supreme Court Allows Copyright Actions Only After Office Acts on Application and Limits Recovery of Costs

March 5, 2019

In two unanimous opinions, the Supreme Court on March 4, 2019, clarified two important issues under the Copyright Act—in both cases, based on a strict reading of the relevant text. First, the Court held in Fourth Estate Public Benefit Corp. v., LLC that a registration is "made" under the Act only when the Copyright Office registers a copyright, not when an application is submitted, and therefore most copyright claimants must wait for the Copyright Office to issue a registration (or otherwise act on their application) before bringing suit. Second, the Court ruled in Rimini Street, Inc. v. Oracle USA, Inc. that the "full costs" available to a prevailing party under the Copyright Act are limited to those codified in the general cost-shifting statutes, and, therefore, do not include such expenses as expert witness fees, jury consultants, or e-discovery costs.

Under Section 411(a) of the Copyright Act, a civil action for copyright infringement may not be instituted until "registration of the copyright claim has been made." In Fourth Estate, the Court was required to resolve whether a registration is "made" under the statute when a claimant merely submits the application for registration with the Copyright Office or only when the Register of Copyrights acts on the application and registers a copyright. The circuit courts were divided on the question, with the U.S. Courts of Appeals for the Fifth and Ninth Circuits holding that the filing of a complete application was sufficient and the U.S. Courts of Appeal for the 10th and 11th Circuits requiring registration. The U.S. Court of Appeals for the Second Circuit had not reached the issue, though district courts in that circuit had at least largely followed the registration approach.

Writing for the Court, Justice Ruth Bader Ginsburg ruled that suit may be instituted only after a copyright is registered (or the Copyright Office explicitly refuses to do so). Her opinion largely focused on the text of Section 411, noting that the first sentence of the section allows a claimant to file suit if registration has been made and the second sentence allows for suits if registration has been refused. The Court observed that "[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." If an application was sufficient to "make" a registration, Justice Ginsburg continued, the second sentence would be superfluous, as there would be no reason to allow suit upon refusal of registration "if a copyright claimant could sue for infringement immediately after applying for registration without awaiting the Register's decision on her application." The Court noted that other provisions of the Act also supported this reading of Section 411, and that Congress repeatedly had rejected efforts to eliminate Section 411 and its registration requirement.

Fourth Estate argued that requiring the Copyright Office to have acted on a claimant′s application before that person may bring suit would have two negative consequences: (1) a copyright owner would be unable to act to preserve his or her rights during the review period, and (2) the statute of limitations could expire before registration is complete.

Regarding the first concern, the Court found that Congress had acted to protect certain works "particularly susceptible to prepublication infringement" by explicitly carving them out from the registration requirement, but not others. Respecting the statute of limitations, Justice Ginsburg bemoaned the fact that average processing times have increased over the years, but found that even the current processing period of seven months still left "ample time to sue" and, regardless, "[u]nfortunate as the current administrative lag may be, that factor does not allow [the Court] to revise §411(a)'s congressionally composed text."

The second case involved Section 505 of the Act, which permits a court in its discretion to "allow the recovery of full costs." In Rimini, the Court was faced with the question of whether the reference to "full" costs in Section 505 authorizes the recovery of something more than the limited categories of costs contained in 28 U.S.C. §§ 1821 and 1920, which include minor expenses such as clerk fees, printing costs, and transcripts, but not the substantial expenses associated with modern litigation. The Ninth Circuit awarded $12.8 million in costs to Oracle after finding that costs, such as those for expert witness fees, jury consultant fees, and e-discovery expenses, were recoverable under Section 505, in conflict with decisions from the U.S. Courts of Appeals for the Eighth Circuit and the 11th Circuit, which limited recovery to the categories specified in the general fee-shifting statutes.

Justice Brett Kavanaugh wrote for the Court. He began by noting that in a series of earlier cases, the Court had "establish[ed] a clear rule: A statute awarding 'costs' will not be construed as authorizing an award of litigation expenses beyond the six categories listed in §§1821 and 1920, absent an explicit statutory instruction to that effect." Justice Kavanaugh rejected Oracle′s argument that the reference to "full" costs in the Act was such an instruction, finding that "full" did not alter than meaning of the word "costs" but rather was intended to indicate merely "all the costs generally available" under the cost-shifting statutes. The Court also rejected the argument that "full costs" was a historical term of art that encompasses more categories of costs. Finally, Justice Kavanaugh found that Oracle′s arguments about surplusage and redundancy in the Act were unpersuasive, stating, "[s]ometimes the better overall reading of the statute contains some redundancy."

Note: In Fourth Estate Public Benefit Corp., Amicus Curiae, The International Trademark Association was represented by Ballard Spahr attorney Lawrence Nodine from the firm′s Intellectual Property Litigation Group.

Attorneys in Ballard Spahr's Media and Entertainment Law Group are dedicated to supporting the free press and the First Amendment rights of groups and individuals. The Group helps clients navigate challenging media law issues across all platforms and industries. Ballard Spahr's Intellectual Property Department is home to more than 50 attorneys with extensive experience in IP litigation, strategic brand management and enforcement, and patent prosecution and counseling. They work nationally and globally to identify, secure, and protect innovations and brands.

Copyright © 2019 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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