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The Supreme Court limits the scope of "full costs” in the Copyright Act fee-shifting provision

Monday, March 11, 2019
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The Supreme Court limits the scope of "full costs” in the Copyright Act fee-shifting provision

Summary

The U.S. Supreme Court on Monday, March 4, 2019, held in a 9-0 decision that the term “full costs” in § 505 of the Copyright Act is limited by the general “costs” statute (28 U.S.C. §§ 1821 and 1920). For example, § 505 does not allow courts to shift expenses such as expert witness fees, e-discovery fees, or jury consulting fees. The case, Rimini Street, Inc. v. Oracle USA, Inc, now returns to the U.S. Court of Appeals for the Ninth Circuit for further proceedings. 

Background of the Case

Rimini Street and Oracle are competitors that sell software maintenance services. Oracle asserted claims under the Copyright Act against Rimini Street. A jury found Rimini Street liable for copyright infringement. In addition to awarding damages ($50 million), attorney’s fees ($28.5 million), and other “costs” ($3.4 million), the District Court ordered Rimini to pay $12.8 million for litigation expenses relating to expert witnesses, e-discovery, and jury consulting.

The dispute before the Supreme Court arose from the $12.8 million award for litigation expenses. The Copyright Act provides that a district 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.” 17 U.S.C. § 505 (emphasis added). However, in the general “costs” statute, Congress defined the term “costs” to encompass only six categories, which did not include expert witness fees, e-discovery fees, or jury consulting fees.

The Ninth Circuit Court of Appeals held that the term “full costs” in the Copyright Act was not confined to the categories defined in the general “costs” statute. The Supreme Court granted certiorari to determine whether the general “costs” statute applied to the Copyright Act’s “full costs” provision.  

Decision

In a unanimous decision, the Court held that the general “costs” statute applied to the Copyright Act and, therefore, that the $12.8 million award for other litigation expenses was improper. The Court reasoned that the general “costs” statute provides a default rule for defining the term “costs” that courts should apply in the absence of contrary and express Congressional intent. Here, the Court determined that no such intent existed.

The Court rejected Oracle’s three principal arguments. First, Oracle argued that putting the term “full” before “costs” authorizes the award of expenses beyond the categories identified in the general “costs” statute. The Court disagreed, reasoning that the term “full” is an adjective that implicates the quantity, but not the meaning, of the term “costs.” Second, Oracle argued that the phrase “full costs” has a distinct historical meaning. The Court disagreed, reasoning that not only is historical analysis improper here, but also that the historical record does not support a distinct meaning of the word “costs.” Finally, Oracle argued that limiting the meaning of the term “costs” would render the term “full” meaningless. The Court disagreed, reasoning that Oracle’s interpretation would result in redundancy because the statute awards attorney’s fees in addition to “full costs.” Furthermore, the Court reasoned that surplusage in and of itself does not make an interpretation unreasonable. Thus, the Supreme Court reversed the relevant part of the Ninth Circuit judgment and remanded the case for further proceedings.

Observations

Applying the general “costs” statute to the Copyright Act limits the discretion of district courts to shift fees in copyright cases. However, district courts retain the ability to shift a significant expense not listed in the general “costs” statute—attorney’s fees. In this case, for example, the $12.8 million award for litigation expenses was less than half of the $28.5 million award for attorney’s fees. Therefore, there is still a significant statutory basis to impose additional penalties against parties in Copyright disputes beyond the traditional categories enumerated in the general “costs” statute.

 

Meet the Knobbe Martens Attorneys

The Supreme Court limits the scope of "full costs” in the Copyright Act fee-shifting provision
Adam’s practice focuses on patent litigation and prosecution and has covered technologies relating to downhole drilling, synthetic diamond manufacturing, medical devices, consumer...
The Supreme Court limits the scope of "full costs” in the Copyright Act fee-shifting provision
Lynda Zadra-Symes is a litigation partner and co-chair of the firm’s trademark and copyright litigation practice groups. She represents clients through all stages of U.S. litigation,...
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