Matthew F. Abbott
On September 27, 2018, the Supreme Court granted a petition for writ of certiorari in Rimini Street, Inc. v. Oracle USA, Inc. (No. 17-1625). At issue is whether the Copyright Act’s allowance of “full costs” to a prevailing party is limited to taxable costs, or whether the Copyright Act allows recovery of taxable and non-taxable costs, which may include a variety of significant litigation expenses, including e-discovery costs and expert witness fees.
Background
In 2010, Respondent Oracle USA Inc. (“Oracle”) filed suit against Petitioner Rimini Street, Inc. (“Rimini”) for copyright infringement and violation of California and Nevada’s computer abuse laws. The jury ultimately awarded Oracle $35,600,000 in lost licensing revenues for the copyright infringement claims, and $14,400,000 in lost profits for the state law claims. The district court further awarded Oracle $28,502,246.40 in attorney’s fees, $4,950,566.70 in taxable costs and $12,774,550.26 in non-taxable costs.
The Ninth Circuit affirmed the verdict and damages award for Oracle’s copyright infringement claims, and affirmed the awards of taxable and non-taxable costs. A request by Rimini for en banc review was denied, and Rimini filed its petition for writ of certiorari to the Supreme Court.
Interpretation of 17 U.S.C. § 505
At issue is the proper interpretation of the Copyright Act, 17 U.S.C. § 505, which provides that “the court, in its discretion, may allow the recovery of full costs by or against any party” (emphasis added). The controversy has arisen because 28 U.S.C. § 1920 provides that a court may only award “taxable” costs as specifically enumerated in six categories under the statute (such “taxable” costs include, for example, fees for printing and witnesses, costs of the production of transcripts used in the case, and costs for the copying of materials necessarily obtained for use in the case).[i] 28 U.S.C. § 1920 governs judicial procedure generally, not only copyright cases.
A split has developed among the circuit courts of appeal as to whether “full costs” in 17 U.S.C. § 505 is limited to the costs listed in § 1920, or whether § 505 allows recovery of additional, non-taxable costs. To date, the Eighth and Eleventh Circuits have limited recovery of costs under § 505 to those enumerated in 28 U.S.C. § 1920. Pinkham v. Camex, Inc., 84 F.3d 292, 295 (8th Cir. 1996) (per curiam); Artisan Contractors Ass’n of America, Inc. v. Frontier Insurance Co., 275 F.3d 1038, 1039-40 (11th Cir. 2001) (per curiam). In contrast, the Ninth, Sixth and First Circuits have held that § 505 also allows for the recovery of non-taxable costs. Twentieth Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d 869, 885 (9th Cir. 2005); Coles v. Wonder, 283 F.3d 798, 803 (6th Cir. 2002); InvesSys, Inc. v. McGraw-Hill Cos., 369 F.3d 16, 22-23 (1st Cir. 2004).
In its Petition, Rimini argues that the Eighth and Eleventh Circuits properly limited recovery under § 505 to those costs enumerated in 28 U.S.C. § 1920. Rimini adopts the reasoning of these decisions, arguing that Supreme Court precedent requires that a statute must “‘clear[ly],” “explicitly,” or “plain[ly],’ evidence [] congressional intent” to expand recovery of costs beyond the limitations of § 1920, and that 17 U.S.C. § 505 does not demonstrate such intent. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987); W. Va. Univer. Hosps. Inc., v. Casey, 499 U.S. 83, 87-88 (1991)
In response, Oracle argues that the Ninth Circuit correctly interpreted the Copyright Act where it allowed recovery of nontaxable costs under § 505, and that use of the word “full” in the Copyright Act was “clear evidence of congressional intent that non-taxable costs should be available.” Twentieth Century Fox, 429 F.3d at 885. Oracle further argues that Twentieth Century Fox is consistent with Crawford Fitting, which limited cases governed by Fed. R. Civ. P 54(d) to recovery of taxable costs under 28 U.S. § 1920, but expressly contemplated that cost recovery could be controlled by a separate statute, such as § 505.
Ramifications for Copyright Owners
The Supreme Court granted Rimini’s petition notwithstanding Oracle’s attempts to minimize the Circuit split by arguing that the Eighth and Eleventh Circuit decisions “contain about two sentences of reasoning” and “have not been followed by a single court of appeals since.” Clearly, the Court does not view the issue to be as settled as Oracle claims it to be, although it is difficult to predict any outcome at this early stage, before briefing or argument have taken place.
Copyright owners are advised to follow this case going forward, as it will very likely determine whether prevailing parties in copyright cases can expect to recover costs incurred for significant litigation expenses including e-discovery costs, expert witness and jury consultant fees and travel expenses. The outcome of this case will likely affect the inclusion of nontaxable costs in formulating settlement offers, and should also be considered carefully in connection with offers of judgment served under Fed. R. Civ. P. 68, as the shifting of post-offer non-taxable costs could result in a significant liability for a party that has rejected a proper offer of judgment.
[i] Under 28 US.C. § 1920, the following may be taxed as costs:
(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
Additionally, 28 U.S.C. § 1821 places further limitations on the per diem fees and travel and subsistence allowances payable to witnesses.