Gayton Law

This month:

• Fourth Estate Public Benefit v. Wall-Street.com 
• Rimini v. Oracle

Intellectual Property – Copyright Registration

Fourth Estate Public Benefit v. Wall-Street.com (2019)

The United States Supreme Court was asked to resolve a split among the Courts of Appeals regarding when copyright registration occurs. The specific issue before the Court was “[has] registration been made in accordance with Title 17 as soon as the claimant delivers the required application, copies of the work, and fee to the Copyright Office or only after the Copyright Office reviews and registers the copyright.”

Background

Fourth Estate (FE) is a news organization which entered into a licensing arrangement with Wall-Street.com (WS), a news website, for “journalism works.” The license agreement, which was not at issue before the court, says Wall-Street must remove Fourth Estate content from its website before canceling the license. WS canceled the license, but continued to display FE’s articles. FE sued WS and its owner for copyright infringement in a federal district court. In its complaint, FE said that it had filed applications to the Register of Copyright, but the applications had not been acted upon and a Certificate of Copyright Registration had not been issued. The district court dismissed the complaint and FE appealed to the Eleventh Circuit, which affirmed. Later, the Register of Copyrights refused the FE’s copyright registration, however, that refusal is also not at issue before the Court.

Court Analysis

The Copyright Act of 1976 says that copyright protection attaches to “original works of authorship” which are “fixed in any tangible medium of expression.” 17 U.S.C. Section 102(a). Exclusive rights to works are secured immediately upon creation. It also says under Section 411(a) that “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.” Under Section 408(f)(2) – a copyright owner may apply for pre-registration if the work is of a “type vulnerable to predistribution infringement – notably, a movie or musical composition.” The copyright owner under this provision must subsequently file for registration. If registration is refused, even if the copyright claimant has delivered required deposit, application and fee in proper form, a civil action may be started if notice is served on the Register. The legal division at issue is that between those courts finding that the Copyright Office must register the work before an infringement action and those that say an infringement action may be made immediately so long as a proper application has been submitted without waiting for the Register’s decision.

In analyzing Section 411(a) as well as Congress’s actions related to this section specifically, the Court decided that registration of copyright claimant must be made before pursuing an infringement action. Specifically, the Supreme Court found that registration occurs and copyright claimant may commence infringement suit when the Copyright Office registers copyright. Upon registration, the copyright owner can recover for infringement occurring before and after registration.

This was a unanimous decision. The Court put responsibility for this outcome squarely on Congress’s refusal to grant the requested relief to copyright claimants in the Copyright Act. The Court explained that since 1976, Congress resisted efforts to eliminate Section 411(a). However, Congress did permit an exception to Berne Convention members’ foreign works  where claimants do not have to register – giving an advantage to foreign copyright holders. In 1993, “Congress considered, but declined to adopt, a proposal to allow suit immediately upon submission of a registration application. … Time and again, then Congress has maintained registration as a prerequisite to suit, and rejected proposals that would have eliminated registration or tied it to the copyright claimant’s application instead of the Register’s action.” With this clarification, it puts a significant burden on copyright claimants to file their works in anticipation of infringement. For those who are concerned about their works in light of this decision, please contact Gayton Law.

Intellectual Property – Copyright Litigation Costs

Rimini v. Oracle (2019)

This appeal to the Supreme Court from the Ninth Circuit, which affirmed a District Court decision in favor of Oracle, allowed Oracle to recover copyright litigation costs outside of six categories of costs articulated in the Copyright Act’s relevant statutes. The question before the Court was whether the Copyright Acts’ reference to “full costs” authorizes a district court to award litigation expenses beyond the identified six cost categories.

Background

Oracle develops and licenses software as well as offers software maintenance services. Rimini sells third party software maintenance services to Oracle customers. Oracle sued Rimini and its CEO in Nevada asserting claims under the Copyright Act that Rimini copied Oracle software without licensing it. The jury found at trial that Rimini infringed Oracle’s copyrights and that Rimini and its CEO violated California and Nevada computer access statutes and awarded Oracle $35.6 million in infringement damages and $14.4 million in damages for violations of state access laws. After judgment, the court ordered defendants to pay an additional $28.5 million in attorneys’ fees and $4.95 million in costs. The Court of Appeals reduced $4.95 million in costs to $3.4 and added $12.8 million in litigation expenses such as expert witnesses, e-discovery and jury consulting. The amount on appeal is the $12.8 million for these additional litigation expenses. In allowing these expenses, the Court of Appeals said that although the $12.8 million in services was not included within six categories, Section 505 permitted the award of full costs at its discretion.

Court Analysis

The Copyright Act gives federal district courts discretion to award full costs as they relate to copyright litigation under 17 U.S.C. Section 505 which says: “A District Court in a copyright case may at its discretion allow the recovery of full costs by or against any party other than the United States or an officer thereof.” Cost categories and payment requirements can be found under 28 U.S.C. Sections 1821 and 1920.

The Court said that while the District Court had some discretion to award full costs, that discretion does not authorize it to award expenses beyond the six categories without Congressional authority.

The Court found that the “Copyright Act authorizes federal district courts to award ‘full costs’ to a party in copyright litigation. That terms means the costs specified in the general costs statutes, Sections 1821 and 1920. Reversed in relevant part the judgment regarding subject litigation expenses and remand for further proceedings consistent with the opinion.”

This is the second case this month suggesting that the Supreme Court is very narrowly interpreting copyright-related statutes and putting the responsibility on Congress to resolve any statutory ambiguity. Statutory damages, including attorneys’ fees, is a copyright hallmark. However, this decision reins in incurred expenses created solely in anticipation of reimbursement.  

PUBLICATIONS AND EDUCATION

Publications

Legal Aspects of Engineering, Design and Innovation 10^th edition by Cynthia Gayton, February 2017.

This edition is available through the publisher, Kendall-Hunt publishers and on Amazon.com in paper and e-book form. This book is used in several engineering courses and is a useful reference for anyone interested in contracting, intellectual property, engineering practice, and other general legal issues. This new edition includes separate chapters for each intellectual property type, introduces and explanation of blockchain smart contracts, discusses trends in product liability, and has recent case law to highlight chapter topics. It also expands from a primarily engineering perspective to include design professionals and innovation-specific coverage.

Guide to Copyrights & Trademarks for CryptoCreatives by Cynthia Gayton, January 2019.

This guide is available as an e-book on Amazon.com and is intended to introduce basic contract, copyright and trademark concepts for the benefit of creatives in the crypto community. It covers the art and music market, provides an introduction to contracts and smart contracts, and briefly explains copyright and trademarks.

Education

This past October 2018, Cynthia Gayton had an opportunity to speak at the Non-Fungible Summit in San Francisco, California where she talked about how non-fungible tokens for art and copyright-related works are more properly categorized as property and how non-fungible tokens may be a useful means to broaden copyright-related digital assets to be included under the first-sale doctrine. Link to the audiovisual presentation.

Thank you for reading!

The information contained in this post is for general guidance on matters of general interest only. The application and impact of laws can vary widely based on specific facts. The information contained in this post should not be construed as a substitute for consultation with professional advisors. Certain links in this post connect to other websites maintained by third parties over whom Gayton Law has no control. Gayton Law makes no representations as to the accuracy or any other aspect of information contained in other websites.

© 2019 Gayton Law

Filed under: Contracts, Copyrights, Intellectual Property Tagged: | contracts, Copyright, Fourth Estate, IP, licensing, litigation