Supreme Court Holding on Recoverable Costs Misses the Mark

On Monday, the Supreme Court issued a decision holding that the “full costs” available to a prevailing party in a copyright dispute are limited to those litigation expenses specified as taxable under federal law. The opinion by Justice Kavanaugh reverses a Ninth Circuit interpretation of 17 USC § 505, which held that any costs incurred in the enforcement (or defense) of a copyright claim are recoverable, including expert witness and jury consultation fees. Unfortunately, most of the twelve-page opinion is dedicated to a cursory analysis of the term “full costs” and does not consider the adverse impact the decision will have on creators and the fundamental aims of copyright law.

The holding in Rimini Street Inc. v. Oracle USA Inc. stems from a 2010 lawsuit Oracle brought against Rimini, a global provider of aftermarket support for Oracle software, for copyright infringement and various other causes of action. Following a verdict in favor of Oracle, the damages awarded included attorneys’ fees, expert fees, consultant fees, and e-discovery costs. Rimini appealed the district court’s decision to the Ninth Circuit, arguing that the Copyright Act limits costs awarded to the taxable costs laid out in 28 USC §§ 1821 and 1920. After the Ninth Circuit found that a successful plaintiff may recover any and all costs incurred in litigation, Rimini filed a petition for cert, claiming that the interpretation of § 505 was in conflict with Supreme Court precedent.

An Incomplete Assessment

Holding that the term “full costs” in § 505 of the Copyright Act means the costs specified in the general costs statutes codified in §§ 1821 and 1920, the Supreme Court focuses its opinion on a hasty statutory interpretation with little regard for the underlying purpose of the copyright law. Recognizing that the term of art “full costs” differs from the term “costs” that appears in many other federal statutes, the opinion proceeds to explore the linguistic qualities of the word “full” and concludes that it cannot be interpreted to mean anything more than the mere “costs” referred to in §§ 1821 and 1920. The opinion does not consider the reasons why the language of the Copyright Act differs from that of other statutes, and it does not address the greater issues raised by amici which explain that the Ninth Circuit’s interpretation of § 505 supports the Copyright Act’s mission to reward creators and serve the public interest.

The opinion also dismisses Oracle’s explanation of the historical context of the term “full costs,” claiming that Crawford Fitting Co. v. J.T. Gibbons, Inc., a 1987 Supreme Court case on expert witness fees, “explained that courts should not undertake extensive historical excavation to determine the meaning of costs statutes.” Curiously, just after dismissing the need for historical analysis, the Court gives credence to Rimini’s account of the term “full costs” in copyright decisions between 1831 and 1976. The opinion ends with a brief discussion of the problem of redundancy in a term like “full costs,” with the Court simply stating that “[s]ometimes the better overall reading of the statute contains some redundancy.”

Serving the Purpose of Copyright Law

Allowing parties to recover full costs encourages copyright owners to bring meritorious claims and incentivizes them to litigate a case to the end when the use of technical and specialized experts is critical. This is especially important for creators of limited means who face overwhelming litigation costs when bringing copyright infringement claims in federal court. Without the ability to recoup the non-taxable costs required of the unique challenges associated with fighting infringement in the digital age, these creators are stripped of the incentives to protect their work that copyright law is meant to provide.

But it’s not just claimants who will be disadvantaged by denying the recovery of costs outside of §§ 1821 and 1920. Parties with a meritorious defense often also need specialized experts, e-discovery, and consultants, and the inability to recover costs related to these services would just as likely eliminate incentives to defend against infringement claims. Removing incentives for both plaintiffs and defendants to pursue worthwhile claims and defenses in turn deprives courts the opportunity to develop—and the public the opportunity to understand—the distinctions of copyright law.

The Rimini v. Oracle opinion seems unconcerned with the consequences its interpretation of § 505 will likely have on copyright litigation. At a time when high costs are commonplace in the enforcement of (and defense against) copyright claims, incentivizing parties to see a case through is crucial. As individual creators and parties of limited means attempt to protect their works in the age of online infringement, courts should have the discretion to award costs based on the circumstances of the case.

Denying parties the ability to recover the significant costs will not only deter legitimate claims, but it will embolden wrongdoers who know that plaintiffs are unable to effectively enforce their rights. Removing incentives and thereby tipping the scales in favor of infringers will devalue intellectual property rights and stray from the goals of the Copyright Act. Unfortunately, the Supreme Court missed an opportunity to explore the fundamental purposes of copyright law and reinforce a system that should encourage meaningful litigation.