Review of Supreme Court Copyright & Trademark Cases in 2019
In its current term, the U.S. Supreme Court took on three copyright and trademark cases. One reason this term has been noteworthy so far is because for the first time in over 100 years, the Court issued two copyright decisions on the same day (Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC and Rimini Street, Inc. v. Oracle USA, Inc. on March 4, 2019). The third decision, Mission Product Holdings Inc. v. Tempnology, LLC, is still pending. Here are summaries and commentary on the implications of each case.
Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC
The Court’s Fourth Estate decision resolved a long-simmering circuit split that was watched by this blog for years. At issue was whether 17 U.S.C. § 411(a) allows plaintiffs to file copyright infringement suits only after the Copyright Office has acted upon an application (i.e., either issued a certificate or rejected it) , or if merely filing an application, submitting deposit materials, and paying the required fee would suffice to comply with the statute. The former, known as the “registration approach,” was followed by the 10th and 11th Circuits, while the latter, known as the “application approach,” was followed by the 5th and 9th Circuits.
The Court, with Justice Ginsburg rendering the opinion in a unanimous decision, held that “…registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” The distinction between the accrual of rights, which occurs under copyright law upon “fixation” of a work in a “tangible medium of expression,” and the ability to enforce those rights, was noted by the Court in the beginning of its analysis. On this point the Court said, “registration is akin to an administrative exhaustion requirement that the owner must satisfy before suing to enforce ownership rights.”
The Court honed in on the second sentence of §411(a), which says that when the “deposit, application, and fee . . . have been delivered to the Copyright Office…[and] registration has been refused,” the claimant “[may] institute a civil action, if notice thereof . . . is served on the Register.” Looking to the plain meaning of the statute, the Court reasoned that “[i]f application alone sufficed to ‘ma[ke]’ registration, §411(a)’s second sentence—allowing suit upon refusal of registration—would be superfluous.” Driving the point home, the Court asked rhetorically, “[w]hat utility would [the second sentence] have if a copyright claimant could sue for infringement immediately after applying for registration without awaiting the Register’s decision on her application?”
Implications of Fourth Estate
With the Court’s holding that the “registration approach” is the law of the land, the onus is now clearly on copyright claimants (such as individual authors or employers who are considered authors under work made for hire rules) to register early and regularly, particularly if publication has already occurred for their works. Now, without the leeway inherent in the “application” approach, plaintiffs will have to either register diligently before any infringement has occurred, or wait until a certificate is received before filing suit.
However, diligent registration should already be ingrained in content creators’ best practices, because if an infringement occurs soon after a work is published, plaintiffs lose the right to statutory damages and attorney’s fees and costs if they do not register within three months of publication under 17 U.S.C. §412.
The Fourth Estate decision will also likely bring the Copyright Office’s “Special Handling” procedures (which cost $800 in addition to regular filing fees) into greater use. “Special Handling” expedites the processing of a copyright registration application in the event of prospective or pending litigation, thus reducing the time to issue a certificate from months to 1-2 weeks.
Rimini Street, Inc. v. Oracle USA, Inc.
Rimini Street involved high-stakes copyright infringement litigation that Oracle emerged victorious from. The Ninth Circuit, using its discretion under 17 U.S.C. § 505 to award “full costs” to the successful litigant, allowed the recovery of $12.8 million in litigation expenses in addition to $3.4 million in costs and $28.5 million in attorney’s fees. Rimini Street challenged whether “full costs” included the $12.8 million in litigation expenses.
Oracle sought to recover costs such as expert witness, discovery, and jury consultant fees it paid during litigation. The Court again adhered to a strict interpretation of statutory language and held that because § 505 did not specifically identify what costs it covers, only the categories of expenses listed under the general federal statutes regarding litigation costs (28 U.S.C. §§1821 and 1920) could be awarded. These expenses only include categories such as:
- Fees of the clerk’s and marshal’s offices;
- Fees for printed or electronically recorded transcripts;
- Fees and disbursements for witnesses, including per diem and mileage expenses; and
- Compensation for court-appointed experts, interpreters and salaries, fees, expenses and costs of special interpretation services.
Justice Kavanaugh, writing for a unanimous court, interpreted the term “full” as denoting quantity or amount rather than an expansion of the types of costs available to a plaintiff beyond those in the general federal statutes. The Court explained that the general federal “taxable costs” statutes “in essence define what the term “costs” encompasses in the subject-specific federal statutes that provide for an award of costs.” The Copyright Act’s separate attorney’s fees award section was also cited by the Court as support for its position that if Congress had intended to include categories of costs above and beyond those in the general statutes, it would have said so by naming specific costs to be awarded under § 505.
Implications of Rimini Street
The Rimini Street decision and stakeholders in the issue could put pressure on Congress to amend § 505 to include a more expansive list of costs. But until that happens, district courts will not have the authority to award prevailing parties in copyright cases any litigation expenses outside of those in §§1821 and 1920. Going forward, plaintiffs will need to adjust their expectations and their litigation budgets to account for the new, more restrictive interpretation of what they can recover.
Mission Product Holdings Inc. v. Tempnology, LLC
The Court in Mission Product Holdings Inc. is considering a unique question blending trademark licensing and bankruptcy law that had split the circuits. The question is specifically whether, under § 365 of the Bankruptcy Code, a debtor-licensor’s repudiation of a license agreement terminates the licensee’s rights, or whether the licensee can elect to continue paying royalties and go on using the licensed trademark rights.
The problem lies in the fact that the Bankruptcy Code does not provide any protection for trademark licensees in cases of rejection by a trademark licensor. Notably, Congress intentionally omitted trademarks from the definition of “intellectual property” under the existing statutory scheme. The case was argued February 20th, so a decision is imminent. If the Rimini Street decision is any indication, the Court will likely reject any interpretation that attempts to “read in” remedies conspicuously omitted by Congress, which would allow a debtor-licensor to repudiate pre-bankruptcy trademark licenses with no recourse to licensees.
Photo by Wikiwopbop at English Wikipedia (transferred from en.wikipedia) and used under CC BY-SA 2.5-2.0-1.0 or CC-BY-SA-3.0, via Wikimedia Commons.
