IP Law Daily Supreme Court to decide whether Copyright Act authorizes recovery of ‘non-taxable’ costs
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Friday, September 28, 2018

Supreme Court to decide whether Copyright Act authorizes recovery of ‘non-taxable’ costs

By Thomas Long, J.D.

The U.S. Supreme Court has granted a petition by Rimini Street, Inc.—provider of software support services that was found liable for copyright infringement for making unauthorized copies of software developer and manufacturer Oracle’s enterprise software products—asking the Court to decide whether the Copyright Act authorizes a prevailing party to recover costs that are non-taxable under 28 U.S.C. §1920.

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 had 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.

In its petition for certiorari, Rimini Street points out that Congress can choose to expand the universe of recoverable costs, but the Supreme Court has cautioned that courts should not presume Congress has done so without explicit statutory authorization. Rimini Street asserts that the Ninth Circuit’s holding is in conflict with decisions in the Eighth and Eleventh Circuits, Pinkham v. Camex, Inc., 84 F.3d 292 (8th Cir. 1996) and Artisan Contractors Ass’n of Am., Inc. v. Frontier Ins. Co., 275 F.3d 1038 (11th Cir. 2001), in which those courts held that non-taxable costs were not recoverable under the Copyright Act. In Pinkham, the Eighth Circuit held that the words "full costs" in Section 505 did not clearly, explicitly, or plainly evidence the intention of Congress to treat Section 505 differently from other statutes on the scope of recoverable costs. In Artisan Contractors, the Eleventh Circuit held that Section 505 made no clear reference to witness fees and did not otherwise show a clear congressional intent to supersede the limitations imposed by Congress’s comprehensive fee-shifting regime. In addition, according to Rimini Street, the Ninth Circuit’s rule contradicted precedent of the Supreme Court indicating that Sections 1920 and 1821 "define the full extent of a federal court’s power to shift litigation costs absent express statutory authority to go further," e.g.West Virginia University Hospitals, Inc. v. Casey, 499 U.S. 83 (1991), although the Ninth Circuit had rejected this argument because the High Court decisions cited by Rimini Street did not concern the Copyright Act.

Rimini Street presents the following question for review:

Whether the Copyright Act’s allowance of "full costs" (17 U.S.C. § 505) to a prevailing party is limited to taxable costs under 28 U.S.C. §§ 1920 and 1821, as the Eighth and Eleventh Circuits have held, or also authorizes non-taxable costs, as the Ninth Circuit holds.

The petition in Rimini Street, Inc. v. Oracle USA, Inc., Dkt. No. 17-1625, was filed on May 31, 2018. The petition was granted September 27, 2018. Justice Alito took no part in the consideration or decision of the petition.

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.

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

MainStory: TopStory Copyright TechnologyInternet

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