IP Law Daily Justices hear arguments on scope of Copyright Act’s ‘full costs’ recovery provision
Tuesday, January 15, 2019

Justices hear arguments on scope of Copyright Act’s ‘full costs’ recovery provision

By Thomas Long J.D.

The U.S. Supreme Court heard arguments on January 14 in Rimini Street, Inc. v. Oracle USA, Inc., a case dealing with the question of what "costs" are available for recovery under the Copyright Act’s provision authorizing court’s to award "full costs" to a party. Rimini Street, Inc.—a provider of software support services that was found liable for copyright infringement for making unauthorized copies of enterprise software products developed and made by Oracle USA, Inc.—asked the Court to decide whether the "full costs" language in the Copyright Act authorizes a prevailing party to recover costs that are non-taxable under 28 U.S.C. §1920. The Justices seemed reluctant to embrace Oracle’s position in favor of an expansive view of "costs" allowable under the Copyright Act.

Section 505 of the Copyright Act provides:

In any civil action under [the Copyright Act], 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.

In contrast, 28 U.S.C. §1920 identifies only six categories of costs that are taxable against the losing party: fees for the clerk and marshal; transcript fees; disbursements for printing and witnesses; fees for making copies; docketing fees; and the compensation of court-appointed experts and certain special interpretation services. In addition, 28 U.S.C. §1821 allows recovery of witness attendance rates ($40-per-day) and provides per diem rules for witness travel expenses. All other cost categories or amounts in excess of the fixed rates are considered "non-taxable."

At issue is a decision of the U.S. Court of Appeals in San Francisco, holding that Oracle could recover non-taxable costs incurred in successfully pursuing its copyright claims. After prevailing on its copyright infringement claims in a jury trial, Oracle moved for recovery of its attorney fees and costs. Oracle’s initial request for costs consisted of $7,820,091.36 in "Expert Fees," $314,838.09 in "Consultant Fees," $8,271,552.59 in "Electronic Discovery Costs," and $1,230,273.64 in "Other Non-Taxable Costs," for a total of $17,636,755.68 in "Non-Taxable Costs." The district court applied a 25% across-the-board reduction and a 50% reduction for the costs associated with one particular expert, making the total amount awarded $12,774,550.26. Rimini Street appealed to the Ninth Circuit, arguing that non-taxable costs could not be recovered under Section 505.

The Ninth Circuit pointed out that it had held in Twentieth Century Fox v. Entertainment Distribution, 429 F.3d 869, 885 (9th Cir. 2005) that, because 17 U.S.C. §505 permits the award of full costs, the award of costs under Section 505 is not limited to the categories of costs described in 28 U.S.C. §1920. Relying expressly on Twentieth Century Fox, the district court had awarded Oracle $12,774,550.26 in non-taxable costs. The Ninth Circuit stated that Twentieth Century Fox remained good law and was the binding precedent in the circuit. Therefore, the award of non-taxable costs was affirmed.

Petitioner’s argument. Mark Andrew Perry, of Gibson Dunn & Crutcher, LLP, argued on behalf of Rimini Street. According to Perry, the term "costs" was a term of art in federal law, with its definition in Section 1920. Chief Justice Roberts asked Perry what was the meaning of "full costs," as that phrase appeared in the Copyright Act. According to Perry, "full" meant "all" or "all that can be contained" or "complete," but the phrase "full costs" said nothing about fees and expenses. Other statutes, Perry said, such as the Individuals with Disabilities Education Act, specifically contrasted the word "costs" with the more open-ended term "expenses."

Justice Sotomayor pointed out that the Copyright Act predated the definitions of "costs" in federal statutes, and suggested that the term had an independent meaning under that Act. Perry replied that courts had not awarded any non-taxable expenditures in earlier cases. "From 1831 to 1976, there are 858 copyright cases awarding costs," Perry said. "Not one case has ever awarded any cost not on a statutory schedule under either state law or federal law."

The Chief Justice asked Perry whether there were any cases in which the court had awarded costs but not "all" costs incurred by the party. Perry stated that he had none. The Chief Justice then asked why Congress would be worried about saying "full costs" when no one had awarded less than full costs. Perry opined that the term was derived from the English copyright statute and was a historical artifact.

Responding to a question by Justice Kagan, Perry argued that Section 505’s costs provision was not redundant of Section 1920 because Section 505 took the unusual step of allowing courts, in their discretion, to award costs to non-prevailing parties. In addition, Perry said, Section 505’s further provision for attorney fee awards indicated that "full costs" did not include such fees, meaning that there were limits to the scope of "full costs." In Perry’s view, things like expert witness fees also would need to be separately provided for in the statute to be recoverable. According to Perry, no statute in the U.S. Code provides for recovery of all expenses of litigation, and contravention of the standard "American rule"—which provides that, in general, each party bears its own fees and costs—must be clear and unmistakable.

Respondent’s argument. Paul D. Clement, of Kirkland & Ellis LLP, argued on behalf of Oracle. "The authorization in Section 505 of the Copyright Act for the recovery of full costs means what it says and authorizes the recovery of full costs, not just a narrow subset of costs set forth in Section 1920 as limited by Section 1821," Clement said. "The contrary reading not only renders the word ‘full’ completely superfluous, but it also effectively renders the first sentence of Section 505 without any meaning and renders three other federal statutes that authorize the discretionary award of full costs meaningless the day they were enacted."

Responding to a question from Justice Kagan, Clement agreed that the respondent would lose the case but for the word "full" in Section 505 of the Copyright Act. Pointing out that the Court had decided a case recently on the basis of the legal proposition that adjectives modify nouns, Justice Kagan asked why that didn’t defeat the respondent in this case, given that "full" can only modify costs as defined in Section 1920. In Clement’s view, the adjective "full" helped the respondent because it modified the word "costs" in Section 505 and indicated the intention of the Copyright Act’s costs provision as being more expansive than those of other federal laws. Justice Kagan expressed skepticism toward Clement’s position because Clement had conceded that if Section 505 had said "costs" alone, the Section 1920 meaning would apply, suggesting that "full" just meant the full amount of Section 1920 costs, rather than some reduced amount. Clement responded by contending that the respondent’s interpretation put forth the ordinary meaning of "costs" rather than the narrower, more specific "taxable costs." Clement also pointed out that the use of "full costs" in copyright law dated back to 1831, before the definition of Section 1920 had been established, and that Congress had used the term in its ordinary sense, to cover all costs of litigation. Congress retained the term in the 1909 and 1976 Copyright Acts. Clement also told the Court that the 1909 Act used the term "taxable costs" in some provisions regarding the recovery of certain royalties, in contradistinction to the term "full costs," indicating that the terms had distinct meanings.

Government’s argument. Allon Kedem, Assistant to the Solicitor General, appeared as amicus curiae on behalf of the United States. According to Kedem, the Supreme Court had treated "costs" as a term of art defined by the list in Section 1920, helping courts and litigants interpret more than 200 statutes that use the term. Kedem also argued that the term "full costs" in did not have a separate understood meaning in Anglo-American law.

This case is Dkt. No. 17-1625.

Attorneys: Mark Andrew Perry (Gibson Dunn & Crutcher, LLP) for Rimini Street, Inc. Paul D. Clement (Kirkland & Ellis LLP) for Oracle USA, Inc., Oracle International Corp., and Oracle America, Inc. Allon Kedem, Assistant to the Solicitor General, for the United States.

Companies: Rimini Street, Inc.; Oracle USA, Inc.; Oracle International Corp.; Oracle America, Inc.

MainStory: TopStory Copyright TechnologyInternet

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