Sunday, March 31, 2019

Copyright Law: A "Full" Beer For Justice Kavanaugh? SCOTUS Stiffs Intellectual Property Owners

While Hans Christian Anderson explained an emperor wearing no clothes, SCOTUS just gave us the full monty on costs in copyright litigation.  On March 4, 2019 Justice Kavanaugh delivered a unanimous opinion for the U.S. Supreme Court in Rimini Street, Inc. v. Oracle USA, Inc.   Rimini Street decided the issue of whether a winning copyright litigant could recover "full costs" of the litigation as the Copyright Act's section 505 specifically provides or something less.  The issue arose where a successful copyright litigant sought to recover costs (litigation expenses) related to discovery and expert witness fees.

In a lot of semantic silliness over the meaning of the word "full," SCOTUS completely eliminated a district court's discretion to award non-taxable costs as part of "full costs."  This means the next bartender serving Justice Kavanaugh a "full" beer will leave that frosty mug mostly empty.   Let's figure out how we got here.

17 U.S. Code § 505. Remedies for infringement: Costs and attorney’s fees
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.

Section 505 has made many copyright litigants thirsty for a win.  For many years we understood that Congress wished to encourage copyright litigants to pursue rights as a matter of policy, and Congress understood that the costs of litigation, including attorneys fees, often outweighed the benefits of a particular case.

The oral argument is found here.   Essentially the Court limited the meaning of "full costs" to "taxable costs" (which are in most cases more than half a pint short of a pint glass of costs) that are found in

A judge or clerk of any court of the United States may tax as costs the following:
(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.

Section 1920 was passed in 1948. Because taxable "costs" are generally so low and routinely awarded by the Clerk of the Court, there is very little litigation over the meaning of costs.   In a spirited and interesting oral argument, on behalf of Oracle, Paul Clement argued that reading the word "full" out of Section 505 and reading 1920's cramped view of "costs" (ie taxable costs) as "full costs" would do "carnage" to the statute and common grammar.   Clement pointed out that Congress revisited Section 505 in 1984 and made it clear that "full costs" in Section 505 of the Copyright Act clearly meant non-taxable costs based on a plain reading of the English language.

Here is the grammar lesson from the full SCOTUS opinion:

Oracle argues that the word “full” authorizes courts to award expenses beyond the costs specified in §§1821 and 1920. We disagree. “Full” is a term of quantity or amount. It is an adjective that means the complete measure of the noun it modifies. See American Heritage Dictionary 709 (5th ed. 2011); Oxford English Dictionary 247 (2d ed. 1989). As we said earlier this Term: “Adjectives modify nouns—they pick out a subset of a category that possesses a certain quality.” Weyerhaeuser Co. v. United States Fish and Wildlife Serv., 586 U. S. ___, ___ (2018) (slip op., at 8).The adjective “full” in §505 therefore does not alter the meaning of the word “costs.” Rather, “full costs” are all the “costs” otherwise available under law. 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. The dispute here, therefore, turns on the meaning of the word “costs.” And as we have explained, the term “costs” refers to the costs generally available under the federal costs statute—§§1821 and 1920. “Full costs” are all the costs generally available under that statute.

The flaw in the argument is that "full costs" have been in copyright statutes since the Statute of Anne.   Lawyer are always shot down by clerks for including non-taxable costs.  A full moon means the full moon because the meaning hasn't changed since Galileo looked at it.  A full breakfast means you get to eat ALL of your eggs and sausages.  A full season ticket plan means ALL tickets.  A full beer means....

To avoid giving the winning party full costs, SCOTUS looked to Section 1920 - a 1948 statute giving a judge or a clerk the power to tax certain items as costs.   The court also created a new category of costs - "litigation expenses" -- that Congress had supposedly forgotten to mention in drafting Section 505.

Acknowledging the flaw in the Court's approach, the opinion concludes:  "Sometimes the better overall reading of the statute contains some redundancy."

Chapter 18 of my book Copyright Litigation Handbook (2018-2019) Thomson Reuters, available on Westlaw, is titled Attorneys Fees and Costs (full table of contents here.  This year, I will write a full update of that chapter over a full breakfast following a full moon for those of you who have purchased a full season ticket plan.
 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd
 Copyright Litigation Handbook on Westlaw

Sunday, March 10, 2019

Finally! SCOTUS Addresses Copyright Registration Requirement For Infringement Actions In Federal Court

On March 4, 2019, in Fourth Estate Pub. Benefit Corp. v. Wall, (No. 17-571), a unanimous Supreme Court decided that copyright registration is necessary before bringing an infringement action in a U.S. district court.  Opinion here and oral argument here courtesy SCOTUS blog. Justice Ginsburg, the opinion's author, was in the hospital during the oral argument.

Fourth Estate sued Wall for copyright infringement shortly after applying to the Copyright Office for a copyright registration, rather than waiting the estimated seven months for the Copyright Office to issue a registration certificate.   In some parts of the country, courts permitted a plaintiff to commence a lawsuit where an application to register a copyright claim had been filed with the Copyright Office - the "application approach."  In other jurisdictions, including in the Second Circuit, federal judges dismissed cases where a plaintiff could not show a copyright registration certificate (or a refusal of the Register to issue a registration) prior to the lawsuit's commencement - the "registration approach."

Fourth Estate resolves a rather unsexy issue dividing the federal courts since I wrote  Copyright Litigation Handbook over a decade ago.   The case is important to lawyers and copyright owners commencing copyright infringement lawsuits in federal court, but is not likely of interest to a broader audience.  The case relates only to a narrow administrative issue: how and when to sue in federal court in light of administrative delays in registration at the Copyright Office that have grown from one to two weeks in 1956 to seven months today.   Because many federal courts had already required action by the Register as a precondition of suit, as a practical matter this decision, will only change things for copyright owners in a hurry to sue in parts of the United States where Circuit Courts had adopted the "application approach."    For years, copyright owners in "registration approach" jurisdictions have been well-advised to use the Copyright Office's "Special Handling" procedure that is available in cases involving potential litigation.  Special Handling has, according to the Copyright Office, a five-day turnaround (I would allow a few extra days).  Unfortunately, the Special Handling procedure comes with an $800 fee.  By comparision, a basic electronic copyright registration runs $35-55 according to the latest Copyright Office Circular 4.

The Supreme Court's decision turned on the language of Section 411(a) of the Copyright Act:

(a)  Except for an action brought for a violation of the rights of the author under section 106A(a), and subject to the provisions of subsection (b),[1] 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. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register’s failure to become a party shall not deprive the court of jurisdiction to determine that issue.

A unanimous Supreme Court concluded that "registration ...has been made" "when the Register has registered a copyright after examining a properly filed application." under 17 U.S.C. 411(a).  The opinion noted that copyright "registration is akin to an administrative exhaustion requirement that the owner must satisfy before suing to enforce ownership rights."  In practical terms, this means that a copyright owner suing for infringement must have a copyright registration certificate in hand before commencing an action in federal court (or a refusal of registration by the Register).  

Paying an $800 fee for Special Handling is an unfair annoyance.  This case means that, in emergency situations where litigation is necessary, copyright owners throughout the nation will have to obtain a copyright registration certificate (or a refusal) following the Special Handling procedure where waiting for the Copyright Office to issue a registration certificate is not an option.

Oral argument in the case contains a lot of interesting information on copyright registration history, policy and arguments relating to how many registrations are rejected and how many involve correspondence with the Copyright Office.   A footnote to the decision notes that Fourth Estate's check to the Copyright Office bounced.   During oral argument it was argued that Congress had recently increased staffing budgets by 60% to reduce the registration time lag.  In the end, the Supreme Court found the administrative time lag to be "unfortunate" but that the lag did not justify a rewrite of Section 411's requirement of registration by the Register of Copyrights prior to commencement of a lawsuit.
 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd