US Supreme Court Decides Two Cases with Major Implications for Copyright Owners & Litigants
For businesses in today's digital economy, their key assets often include creative works, such as software and website content. These types of creative works are often protected against unauthorized distribution and reproduction (among other uses) by copyright law. Although authors of creative works typically acquire the copyrights to such works, they may assign or license their rights to others. This ability to assign or license rights means that copyright owners may directly monetize their copyrights, which can have tremendous commercial potential.
To fully harness that potential, copyright owners must take certain steps to protect their interests, because a copyright's value is directly related to its owner's ability to discourage and stop infringement. In the US, owners must register their copyrights with the US Copyright Office to obtain maximum protection, including the ability to sue for infringement and recover certain costs of the lawsuit. Thus, copyright registration has important consequences for an owner's ability to enforce its copyrights through litigation.
Recently, the US Supreme Court decided two cases that greatly impact a copyright owner's ability to enforce its copyrights through litigation, limiting both when a copyright owner may file an infringement suit and what types of costs it may recover in such a suit.
Case #1 – Held: a grant (or denial) of copyright registration is a prerequisite for filing an infringement suit in the typical case.
In Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, No. 17-571 (2019), the Court considered whether a copyright owner usually must wait for the US Copyright Office to grant (or deny) a copyright registration before filing an infringement suit. The Court answered "yes" to that question, holding that the owner must wait unless one of the limited statutory exceptions to the registration requirement applies.
This conclusion was based on the wording of the Copyright Act, which generally provides that a copyright infringement suit may not be instituted until "registration of the copyright claim has been made." In reading this text, the Court rejected the "application approach," which contends that the phrase "registration . . . has been made" means an applicant has submitted the statutory requirements for copyright registration. Instead, the Court adopted to "registration approach," holding that the quoted phrase meant the Copyright Office had to grant the applied for registration.
This ruling is important for copyright owners, because copyright registration usually does not occur until months after a registration application is filed. This delay is especially problematic for copyright owners who wait to register their copyrights until after they are put on notice of potential infringement. Although they may be able to eventually recover for infringement that occurs while an application is pending, the delay increases the risk that the infringer will not have sufficient assets to cover the owner's damages and may even allow the statute of limitations for infringement claims (3 years) to run out on some claims. Consequently, there is now a greater incentive for copyright owners to register their copyrights as soon as possible, and, when permissible, pay additional fees for expedited processing through the Office's special handling procedure.
Case #2 – Held: a litigant in a copyright infringement suit may not recover certain litigation expenses, including expert witness fees.
In Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625 (2019), the Court considered whether a prevailing party in a copyright infringement suit could recover certain litigation expenses, such as expert witness fees, e-discovery expenses, and jury consultant fees. The Court answered "no" to that question, holding that the party could not recover such expenses and reversing the Ninth Circuit's affirmation of a $12.8 million award to Oracle.
This conclusion was also based on the wording of the Copyright Act, which allows the court to award "costs" to a litigant. A general statute provides the default rule for costs awards in federal cases, which allows for only certain categories of costs listed in the statute. The Court held that this default rule applied to the Copyright Act's allowance of costs awards, which does not expressly provide for some of the litigation expenses awarded to Oracle. As a result, the award to Oracle for expert witness fees, e-discovery expenses, and jury consultant fees was held to be improper.
This ruling is important for copyright owners, because it limits the total amount they can recover for pursuing copyright infringers. Consequently, copyright owners will need to weigh this limitation along with other factors when developing a copyright protection strategy and deciding to pursue litigation.
In summary, two recent US Supreme Court cases have major implications for copyright owners and litigants by limiting when a copyright owner may file an infringement suit and what litigation costs it may recover. Copyright owners are encouraged to seek expert assistance when developing a plan to protect their copyrights and pursue potential infringers.