Does the phrase “full cost” as used in the Copyright Act and codified at 17 U.S.C. § 505 encompass non-taxable litigation expenses, including expert witness expenses and e-discovery fees beyond the statutorily enumerated taxable costs and rate setting prescribed in 28 U.S.C. §§ 1920 and 1821?
This case asks the Supreme Court to interpret Section 505 of the Copyright Act and to decide whether it authorizes courts to award litigation costs that are non-taxable as specified in 28 U.S.C. § 1920. Specifically, Section 505 of the Copyright Act states that “the court in its discretion may allow the recovery of full costs,” and the dispute hinges on the meaning of “full costs.” The lower court determined that Rimini Street Inc. (“Rimini”) and its CEO, Seth Ravin (“Ravin”), infringed copyrights held by Oracle USA, Inc. (“Oracle”), and the court ordered Rimini and Ravin to recompense Oracle for certain litigation costs that are not taxable. The parties’ arguments draw on the structure of the statutes and historical practice. The Supreme Court’s decision could have a meaningful impact on future copyright infringement litigation because the available awards could alter parties’ incentives to sue.
Questions as Framed for the Court by the Parties
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 U.S. Court of Appeals for the Eighth and Eleventh Circuits have held, or whether the act also authorizes non-taxable costs, as the U.S. Court of Appeals for the Ninth Circuit holds.
In 2010, Oracle USA, Inc. et al. (“Oracle”) commenced suit against Rimini Street, Inc. (“Rimini”) and Rimini’s CEO, Seth Ravin (“Ravin”), in the United States District Court for the District of Nevada, alleging infringement of the Copyright Act and violation of certain state laws against computer-based fraud. After a jury trial, the district court entered judgment against Rimini on the copyright infringement claims and against both Rimini and Ravin on the state law claims.
Thereafter, Rimini appealed to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit affirmed the judgment against Rimini regarding the copyright infringement claims but reversed the judgment against Rimini and Ravin regarding the state law claims.
The district court affirmed a jury award of $35,600,000 in damages for copyright infringement and $14,427,000 in damages for state law violations against Rimini. The Ninth Circuit reduced the damage awards by $14,427,000 because Rimini did not violate the relevant state laws.
The district court awarded Oracle $22,491,636.16 in prejudgment interest under the copyright infringement claims and $5,279,060.12 in prejudgment interest under the state law claims. The Ninth Circuit affirmed the $22,491,636.16 under the copyright infringement claims but reversed the $5,279,060.12 under the state law claims because Rimini and Ravin did not violate the relevant state laws.
Even though Ravin was not liable for copyright infringement, the district court held Ravin and Rimini “severally and equally” liable for $28,502,246.40 in attorney’s fees pursuant to the fee-shifting provisions of the Copyright Act and the relevant state laws. The Ninth Circuit reversed Ravin’s liability for attorney’s fees because Ravin was not liable under either the copyright infringement claims or the state law claims. As to Rimini, because the district court did not allocate the award for attorney’s fees to the copyright infringement claims as well as the state law claims and because Rimini is only liable for copyright infringement, the Ninth Circuit vacated the award for attorney’s fees and remanded for reconsideration.
The district court awarded Oracle $4,950,566.70 in taxable costs against Rimini and Ravin. The Ninth Circuit reduced this award to $3,435,281.25 to remedy a technical error in the district court’s calculation. This adjusted award still includes both deposition costs of $192,999,70 and production fees of $3,242,281.55.
The district court awarded Oracle $12,774,550.26 in non-taxable costs against Rimini and Ravin, which included expert witness fees, e-discovery fees, contract attorney services, jury consulting, and other non-taxable costs. The Ninth Circuit affirmed the award of non-taxable costs. Two statutes were relevant to the Ninth Circuit’s decision: 17 U.S.C. § 505, which authorizes a court to award the recovery of “full costs,” and 28 U.S.C. § 1920, which enumerates only six categories of costs taxable against the losing party. In reaching its holding, the Ninth Circuit relied on its decision in Twentieth Century Fox v. Entertainment Distribution, which held that the permitted costs under 17 U.S.C. § 505 are not limited to the taxable costs identified in 28 U.S.C. § 1920. Rimini contended that a later Supreme Court case, Marx v. General Revenue Corp., abrogated the Ninth Circuit precedent and that the non-taxable costs were thus awarded in error. The Ninth Circuit, however, disagreed because Marx was not interpreting 17 U.S.C. § 505 or 28 U.S.C. § 1920.
Rimini and Ravin petitioned the Supreme Court of the United States, which granted certiorari on September 27, 2018. Rimini and Ravin are not challenging the lower courts’ judgments on the copyright infringement claims or the state law claims. Rather, they are challenging the Ninth Circuit’s award of non-taxable costs.
STATUTORY INTERPRETATION OF “FULL COSTS”
Rimini and Ravin (“Rimini”) argue that the United States Court of Appeals for the Ninth Circuit erroneously broadened the statutory text beyond its traditional scope. They contend that the plain text of the Copyright Act is unambiguous and only requires an interpretation of the terms “full” and “costs.” “Full,” according to Rimini, means either “having all that can be contained” or “complete,” and only refers to an amount. Rimini claims that the word “costs” is a term of art modified by “full,” and is the word at issue here. Rimini contends that “costs” only encompasses taxable costs normally attributed to it in federal cost- and fee-shifting statutes enumerated in 28 U.S.C. §§ 1920 and 1821.
Rimini further argues that broadening the definition of “costs” renders superfluous the second sentence of 17 U.S.C. § 505, which states that courts may award reasonable attorney’s fees to the winning party. Rimini claims that the word “full,” interpreted this way, is not meaningless because it is still given effect by allowing the district court to award the full rates established in 28 U.S.C. § 1821, versus some lesser extent. Rimini also suggests that “cost,” “fees,” and “expenses” all denote different variants of litigation expenses such as “fees” covering attorney’s fees and “expenses” covering any expenditures not included in “costs” or “fees.” Rimini also claims that Congress adheres to this taxonomy in numerous listed statutes and will specifically indicate “costs,” “fees,” or “expenses” when they seek to denote a specific litigation expense.
Oracle USA, Inc., et al. (“Oracle”) counters that the definition of the word “full” is “containing as much or as many as is possible.” Further, Oracle claims that the Cambridge English Dictionary defines “cost” as the “amount spent for something.” Oracle suggests that, with all things considered, the meaning of “full costs” is “all expenses borne”—including those beyond taxable costs. Oracle argues that the Copyright Act does not reference 28 U.S.C. § 1920 or § 1821 and that those statutes only represent a fraction of “full costs” associated with litigation expenses. Such a reading of “costs” by Rimini would, according to Oracle, render the word “full” meaningless.
Oracle further contends that the second sentence of 17 U.S.C. § 505 concerning attorney’s fees is not superfluous by the Ninth Circuit’s interpretation; rather, it is a verification that attorney’s fees are included within the costs. Oracle counters that attorney’s fees were originally included within the common-law cost adjustments until the American Rule became commonplace, which states that each party bears its own attorney’s fees. As a result, Oracle argues, Congress amended the Copyright Act’s cost-shifting provision to reiterate that full costs could be awarded, including reasonable attorney’s fees, to the prevailing party. Oracle claims that limiting “costs” to those Section 1920 expenditures would render phrases such as “taxable costs” redundant and “nontaxable costs” oxymoronic. They also contend that 28 U.S.C. § 1920 itself references “fees” in five of the six enumerated “costs,” which shows that Congress did not give “fees” and “costs” distinct meanings.
PRECEDENTIAL TREATMENT OF “FULL COSTS”
Rimini argues that three precedential decisions articulate a clear rule that no statute will authorize the taxation of litigation expenses beyond 28 U.S.C. §§ 1920 and 1821 unless explicitly articulated in the statute. Rimini attests that in Crawford Fitting v. J.T. Gibbons, the Supreme Court held that a court may not assess non-taxable costs against a defeated party unless there is evidence to suggest congressional intent to award costs beyond Sections 1920 and 1821. Rimini then argues that the Crawford Fitting rule was reinforced in West Virginia Univ. Hospitals v. Casey, where the Supreme Court denied shifting expert witness fees as attorney’s fees or costs and stated that Sections 1920 and 1821 defined the full extent of the federal courts’ power to shift costs. Rimini notes that the Court in Casey observed that Congress provided the ability to shift such expenses in other federal statutory provisions. Rimini lastly asserts that in Arlington Central School Dist. v. Murphy, the Supreme Court likewise rejected the inclusion of expert witness fees under the Individuals with Disabilities Education Act because the law did not explicitly include the awarding of expert witness fees, and such fees were not included in attorney’s fees per Crawford Fitting.
Oracle counters by suggesting that none of Rimini’s cited cases include the term “full costs.” Oracle argues that the Court in Crawford Fitting instead was giving effect to a statutory provision that would control in a case that involves Federal Rule of Civil Procedure 54(d) and that if there were another federally enacted statute then that would control instead of §§ 1920 and 1821. Oracle also claims that the Casey ruling only addressed “attorney’s fees” and, because experts are not considered attorneys, the associated expenditures were not included in the cost-shifting provision of 42 U.S.C. § 1988 as attorney’s fees. Oracle specifies that 17 U.S.C. § 505’s attorney’s fee-clarification clause, if alone, would limit the awarding of expert fees associated with litigation, but the first sentence’s inclusion of “full costs” broadens this to allow any or all litigation expenses. Finally, Oracle argues that the Murphy decision is similar in respects to Casey in that its holding concerned whether attorney’s fees include expert fees. Oracle contends that Murphy is less relevant to the current issue because it involved State spending power, in which case a clear statement rule is needed to give States “clear notice.”
HISTORICAL CONTEXT OF “FULL COSTS”
Rimini asserts that the phrase “full costs” has reappeared in English statutes over centuries, including the first copyright statute—the Statute of Anne. Rimini suggests that the term “full cost,” which was carried forward to the English Copyright Act of 1842, was to be narrower in scope than statutes that provided “full cost and expenses.” Rimini maintains that such a construction of “full costs” was carried into subsequent legislation, including only “ordinary costs” or those between parties, as opposed to between attorneys and clients. Rimini also argues that, following the nation’s founding, courts interpreted statutes awarding “full costs” as awarding those taxable costs between parties to their full extent as opposed to awarding one-third, double, or treble costs.
Rimini posits that after the passing of the Fee Act in 1853, courts recognized that successful parties under copyright claims would be awarded all taxable disbursements or those ordinary costs but not extraordinary costs of attorney’s fees. Rimini also claims that when 17 U.S.C. § 505 was enacted in 1831, “full costs” came with the meaning “ordinary costs” or “between party and party costs” under state statutory schedules, as set in the common law and state law precedent. Also, Rimini maintains that when Congress reenacted the Copyright Act in 1909, the House Report identified the threshold limitation of $500 rewards (which was previously a bar to cost-shifting in copyright cases) as a reason for the inclusion of “full costs” language to nullify the limitation.
Oracle counters by suggesting that “full costs” were not established as expenses “between party and party” until long after both the Copyright Act of 1842 and the Statute of Anne. Oracle argues that the Statute of Gloucester, issued in 1278, allowed recovery of full costs of litigation. This included, according to Oracle, any litigation expenses to make a party whole. Oracle additionally asserts that copyright cases followed this precedent well into the late 1800s, until 1891 when Avery v. Wood & Sons confirmed “full costs” as those “costs between party and party.” Thus, Oracle reasons, Congress did not have in mind the “party and party” framework when the Copyright Act in 1831 was drafted but, instead, included recovery of attorney’s fees as represented in the Statute of Gloucester. Oracle also argues that Congress’s traditional way of limiting costs to its listed extent (as opposed to “double” or “treble” costs), in drafting a statute, was by using the phrase “single costs” and not “full costs.”
Oracle posits that Congress did not intend to adopt states’ statutory schedules at the time of the Copyright Act’s enactment in 1831 because Congress knew how to encompass state-law cost provisions but failed to do so. Oracle contends that the fee-shifting state schedules that Rimini claims Congress sought to follow are not bound by “party and party” costs but frequently include the awarding of attorney’s fees depending on jurisdiction. Oracle also claims that the inclusion of “full costs” to displace barriers set by the First Judiciary Act would seem superfluous because the act made cost awards mandatory in all recoveries.
The American Intellectual Property Law Association (“Association”), in support of neither party, argues that awarding non-taxable costs in copyright cases, as the Ninth Circuit has done, would undermine the incentive mechanisms of 17 U.S.C. § 412. The Association explains that Section 412 conditions the award of certain costs—including statutory damages and attorney’s fees—upon timely copyright registration with the Copyright Office. The Association posits that timely copyright registration benefits the public because it allows the public to know what works have been copyrighted so as to avoid infringement. The Association further maintains that awarding non-taxable costs unconditioned on a timely registration, as the Ninth Circuit has done, would confer extra awards on copyright owners. And, according to the Association, because copyright owners can receive awards outside of Section 412 without registration, they would no longer feel compelled to register with the Copyright Office just to receive awards under Section 412. The United States, in support of Rimini and Ravin, stresses that awarding non-taxable costs would incentivize parties to litigate over every expense item, which would then generate “a second major litigation” solely on cost awards. Also, Professor Patrick T. Gillen cautions that awarding non-taxable costs would also increase the losing party’s potential liability, which might disincentivize meritorious claims by less wealthy parties.
Oracle contends that awarding non-taxable costs furthers the policy considerations behind the Copyright Act. According to Oracle, copyright infringement litigation has become increasingly expensive, especially due to rising discovery costs, which are non-taxable under 28 U.S.C. § 1920. Oracle points to the declining number of copyright infringement cases since 2007 and argues that limiting cost awards to taxable costs would further disincentivize meritorious copyright infringement claims and discourage innovation. Oracle argues that, unlike patent and trademark infringement cases, copyright infringement cases merit extra cost awards because copyrights “reflect the personal values of authors and artists” while patent and trademark protect “industrial property” rights. Therefore, without extra cost awards beyond compensation for lost profits in copyright infringement cases, Oracle reasons, copyright holders would lack incentives to bring suits. According to Oracle, this reasoning makes sense especially given that many copyright infringement claimants seek only injunctive relief.
The United States, in support of Rimini and Ravin, argues that the Ninth Circuit’s interpretation of “full costs” under 17 U.S.C. § 505 allows courts too much discretion in awarding costs and is thus unpredictable. The United States reasons that to achieve the Copyright Act’s goal of “stimulat[ing] artistic creativity,” rules concerning copyrights must be predictable. The United States and the Association contend that interpreting Section 505 as not limited to taxable costs under 28 U.S.C. § 1920 would open up an “unknowable . . . universe of nontaxable costs” that no clear rule exists to define what expenses fall under. Conversely, the United States explains, courts are already familiar with interpreting Section 1920, and there are clear rules that define which expenses courts can award under the authority of Section 1920. The United States further emphasizes that the interpretation of “full costs” under Section 505 should be consistent with the costs-award rules in patent and trademark cases because no sound policy dictates different treatment of copyright cases from patent and trademark cases.
Oracle counters that limiting cost awards to taxable costs under 28 U.S.C. § 1920, as Rimini and Ravin suggest, would create uncertainty. Specifically, Oracle explains, courts would have to decide which costs are taxable and what litigation misconduct warrants a court, under its inherent power, to sanction the misbehaving party by awarding the other party non-taxable costs. Conversely, Oracle argues, giving courts the discretion to award non-taxable costs, as the Ninth Circuit has done, would allow courts to “sidestep those difficult questions.” Oracle further compares the Ninth Circuit’s discretion in awarding non-taxable costs to courts’ discretion in awarding attorney’s fees and argues that because courts’ broad discretion in the latter have created no administrative difficulty, similar discretion in the former should provide no administrative difficulty either. Moreover, Oracle contends that there will always be differences between copyright laws and patent and trademark laws because they fall under different statutes and there are differences in the statutory language.
- Stephanie Condon, Rimini Street Takes Oracle to the Supreme Court Over Litigation Costs, ZDNet (Sept. 27, 2018).
- Lisa Organ, Oracle v. Rimini Street Lawsuit: A Guide, Forbes (Dec. 6, 2018).
- Steve Brachmann, Supreme Court to Hear Rimini Street v. Oracle to Decide if Copyright Act Authorizes Non-taxable Costs, IPWatchdog (Oct. 9, 2018).