Supreme Court Clarifies Meaning of ‘Full Costs’ in Section 505 of Copyright Act

In Rimini Street, Inc. v. Oracle USA, Inc.,[1] a unanimous Supreme Court recently held that 17 U.S.C. § 505’s award of “full costs” is limited to the specific categories of costs defined in 28 U.S.C. §§ 1821 and 1920, which exclude expert witness fees, e-discovery expenses and jury consultant fees. “A statute awarding ‘costs’ will not be construed as authorizing an award of litigation expenses beyond the six categories listed in §§ 1821 and 1920, absent an explicit statutory instruction to that effect.”[2] This decision effectively limits the costs recoverable by a successful litigant as a matter of course in copyright litigation and in “exceptional” trademark and patent cases.[3]

Oracle originally sued Rimini Street in the District of Nevada, alleging that Rimini’s software support services for Oracle customers wrongly copied Oracle’s software without licensing it. The jury agreed and awarded Oracle $35.6 million in damages for copyright infringement and $14.4 million for Oracle’s state law claims.[4] The district court also ordered Rimini Street to pay roughly $28.5 million in attorney’s fees and $4.95 million in taxable costs.[5] Rimini Street was further ordered to pay approximately $12.8 million for nontaxable litigation expenses such as expert witnesses, additional e-discovery fees, contract attorney services and jury consulting.[6]  Continue Reading

The Scope of CDA and DMCA Protection for Online Services Continues to Evolve

Section 230 of the Communications Decency Act (CDA, codified 47 U.S.C. § 230) and the Safe Harbor provisions of the Digital Millennium Copyright Act (DMCA, codified 17 U.S.C. § 512) provide certain protections for operators of online services from some, but not all, third-party claims arising out of user content posted on those services. These protections are essential for the survival of services that host user content. However, there are many limitations to the scope of protection and conditions on what is required to be eligible for those protections. The law in this area continues to evolve, so we have summarized recent notable cases and legislation that publishers should consider in operating their user content programs.

CDA Updates

 Section 230 of the CDA protects providers of interactive computer services from liability from suits that may arise when other internet users post material to a provider’s platform, except for infringement of intellectual property rights (which in some circuits has been held to include publicity rights), or violation of federal criminal law or certain other narrow carve-outs. 47 U.S.C. § 230(c)(1).

  • Can’t Avoid CDA Immunity Through Indirect Action:

The anticipated case Hassell v. Bird holds true to this. In this case, the California Supreme Court concluded that ordering a third-party platform owner to assist in removing defamatory content (posted to Yelp) would undermine the purpose of the CDA. 5 Cal. 5th 522 (2018). The California Supreme Court reversed the Court of Appeal’s reasoning that by not suing Yelp directly, plaintiff could effectively sidestep the CDA, and held that plaintiff’s litigation strategies could not overcome CDA immunity for a platform provider. The California Supreme Court further reasoned that a platform simply failing to remove reviews from a website, after an order was obtained against the user, did not constitute “aiding and abetting” under California law, and CDA immunity continued to apply. The Supreme Court of the United States declined to take up an appeal in this case. Continue Reading

Application Rejected: Supreme Court Requires Registration to Commence Copyright Infringement Suit

In Fourth Estate Public Benefit Corp. v., the Supreme Court settled the long unresolved question of whether registration or simply the application for registration is required to commence a suit for copyright infringement. In a unanimous decision authored by Justice Ginsburg, the high court ruled that a copyright owner cannot pursue infringement claims in court until the Copyright Office has registered the work at issue.

The decision resolves a long-standing circuit split over the meaning of the Copyright Act’s “registration” requirement. Some courts, notably in the Fifth and Ninth Circuits, permitted copyright owners to sue for infringement as soon as the application for registration (along with the appropriate fee and deposit copy of the work) was filed with the Copyright Office. Other courts, however, like those in the Tenth and Eleventh Circuits, relied on the plain language of the Copyright Act to hold that the Copyright Office must determine that copyright protection is warranted before registration occurs under the Copyright Act. Continue Reading

Copyright Office Eliminates Three-Month Filing Requirement for Newspapers

A close up of the word copyright from a dictionaryCo-authored by: Savannah Merceus

On Feb. 13, 2019, the U.S. Copyright Office amended its rule governing group registration of newspapers by eliminating the requirement that claims be submitted within three months after publication of the earliest issue in the group.[1] In its new amendment, the Office noted that several newspaper publishers reported issues with complying with the three-month deadline and found a “legitimate need to make this change effective immediately.”[2]

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Important Copyright Protections for Software to be Addressed in Pending Federal Circuit Appeal

In December 2014, Cisco Systems, Inc. sued rival ethernet switch provider Arista Networks, Inc., for more than $300 million because it allegedly infringed Cisco’s copyrights in operating system software that manages Cisco switches. Curiously, Cisco did not claim that Arista infringed the copyright in the software’s source code, which many understand to be the subject of computer program copyright. Rather, Cisco claimed that Arista infringed portions of the user interface of the software –specifically by copying more than 500 multiword command expressions.

Copyright may extend to these “command line interfaces” by virtue of a feature of copyright law that has gained more attention in recent years. Known as the “non-literal elements” of a computer program, copyright protection can extend to not only the “literal elements” of a program’s source code or object code, but to the nontextual expression of the code such as user interfaces and the sequence, structure and organization of the program. To help the software industry grapple with this nuanced and abstract concept, BakerHostetler has created the Beyond Source Code web resource. Beyond Source Code digests the cases addressing protection of non-literal elements of computer programs. It organizes the decisions by whether they extended or rejected such protection, and includes a section identifying cases based on the type of non-literal element at issue. Continue Reading

2017 – The Year in Which Copyright Went Beyond Source Code

2017 was a big year for raising the profile of copyright in protecting computer programs. Two cases in particular helped bring attention to a myth that was addressed and dispelled some time ago but persists in some circles nonetheless. Many lawyers hold on to the notion that copyright protection for software is weak because such protection inheres in the source code of computer programs. Because most companies that generate code take extensive (and often successful) measures to keep source code out of the hands of third parties, the utility of copyright protection for code is often viewed as limited. However, copyright also extends to the “non-literal elements” of computer programs, such as their sequence, structure and organization, as well as to things such as screen displays and certain user interfaces. In other words, copyright infringement can occur when copying certain outputs of the code without there ever having been access to the underlying code itself.

Two jury verdicts, one in late 2016 and one in early 2017, helped emphasize just how valuable copyrights can be in the protection of software. On December 14, 2016, Cisco Systems Inc. lost a case to Arista Networks Inc. for alleged copying of the command line interfaces of Cisco software used to manage ethernet switches. Although Cisco did not prevail, the case, Cisco v. Arista, Case No. 5:14-cv-5344-BLF (N.D. Cal. NC), is noteworthy in that Cisco claimed more than $300 million in damages and proceeded to a jury verdict in a software copyright case that did not involve copying of code. The verdict is on appeal, with multiple amici filing supporting briefs. By contrast, on February 1, 2017, in the case of Zenimax v. Oculus, Case No. 3:16-mc-00098 (N.D. Tex.), virtual reality video game publisher ZeniMax Media Inc. obtained a $500 million verdict against Facebook subsidiary Oculus VR Inc., $50 million of which has been attributed to the copying of software architecture.

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Spanski Enterprises, Inc. v. Telewizja Polska, S.A.: How Far Is Too Far When It Comes to the Extraterritorial Reach of US Copyright Law?

As a general matter, acts of copyright infringement that occur outside the jurisdiction of the United States are not actionable under U.S. copyright law. “The Copyright Act, it has been observed time and again, does not apply extraterritorially.” Kirstaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351, 1376 (2013) (Ginsburg, J. dissenting). The general prohibition against the extraterritorial application of U.S. copyright law has been interpreted to mean that (1) purely extraterritorial conduct is not actionable in U.S. courts, but (2) extraterritorial conduct that crosses international borders and results in infringing conduct within the United States remains actionable under U.S. copyright laws. M. Nimmer & D. Nimmer, Copyright § 17.02 p. 17-28 (2015).

In Spanski Enterprises, Inc. v. Telewizja Polska, S.A., (Case No. 17-7051), the Court of Appeals for the District of Columbia will have to determine whether U.S. copyright law extends to situations in which the entirety of the defendant’s conduct occurred outside the territorial limits of the U.S., and the only allegedly infringing conduct occurring in the U.S. resulted from activities undertaken by plaintiff’s own lawyers.

The Spanski Enterprises case grows out of a dispute between the creator of Polish language television programming and its exclusive U.S. licensee. The defendant is Poland’s government-owned national television network that produces and is the copyright owner of much of the programming televised over its network in Poland. The plaintiff is the exclusive U.S. distributor for various television programs produced by the defendant. In addition to televising these programs in Poland, the defendant operates a video-on-demand (VOD) website in Poland that allows viewers to stream the defendant’s programs to their computers. The parties’ distribution agreement included a provision in which the defendant agreed to impose a United States “geo-bloc” on its VOD streaming service to prevent U.S. consumers from streaming the programming appearing on the defendant’s website. In violation of this provision, the defendant used versions of its programming that did not contain any geo-blocs, thus potentially allowing viewers in the U.S. to stream the programming to their computers in the U.S. Continue Reading

UGC Uncertainty Consternation Continues

Amended 9th Circuit Decision Does Not Clarify the Extent to Which Service Providers Can Manually Screen for Inappropriate User Content

In April 2017, the 9th Circuit Court of Appeals startled online service providers that allow users to post content (known as UGC, or user-generated content), by holding that the use of moderators to screen out inappropriate UGC before the UGC becomes publicly available could cause the service provider to lose the Digital Millennium Copyright Act (DMCA) safe harbor under 17 U.S.C. Section 512(c), which insulates service providers from third-party copyright infringement claims arising out of the UGC. This is a common practice, especially for brands that run UGC contests and children’s or family sites. Service providers have long understood that, unlike the immunity granted them for most non-intellectual property claims other than certain federal law violations arising out of UGC under the Section 230(c)(1) of the Communications Decency Act (CDA), content curation would cause it to lose the DMCA safe harbor. However, they had relied on decisions like that of the 4th Circuit in the 2004 CoStar Group vs. LoopNet, which permitted cursory manual screening to weed out content that was infringing or clearly inappropriate for the venue, including content topic venue rules – in this case, that only real estate listing photos would be posted on a real estate listing service. On Aug. 30, 2017, the 9th Circuit amended its opinion in Mavrix Photographs v. LiveJournal, available here, but did not provide any more helpful guidance than did the initial April 2017 opinion on where the line should be drawn as to how much manual moderator intervention would result in the failure to meet the law’s requirement that the UGC be stored at the direction of the user, not the service provider. Continue Reading

Determining Fair Use Under the Copyright Act: Judge Versus Jury

When the Supreme Court ruled in 1998 that copyright infringement lawsuits were subject to the Seventh Amendment’s right to jury trial, the natural consequence of that ruling was that fair use would likewise become a jury issue. However, at the time Congress enacted the Copyright Act’s fair use provision, 17 U.S.C. § 107, copyright infringement lawsuits were still considered “equitable actions” and thus the exclusive province of federal judges. Indeed, Congress expressly noted that its adoption of four factors set forth in Section 107 was intended in part to reflect the criteria that courts themselves had developed under the judicial doctrine of fair use. The final result of this Congressional action was a fair use statute that vested the trier of fact with broad discretion over the circumstances under which an author’s exclusive rights must give way to other societal interests. Now that such broad discretion has been given to juries, are there any circumstances in which trial judges may overturn the jury’s fair use determination because the court would have decided the issue differently?

The district court in Nevada was confronted with precisely this issue in Donna Corbello v. Thomas Gaetano DeVito, et al., Case No. 2:08-cv-00876, a copyright infringement case involving the screenplay for the musical Jersey Boys, which is based on the lives and music of the rock and roll vocal group The Four Seasons. In an order handed down this week, the district court judge Robert C. Jones overturned a portion of a jury’s verdict for the plaintiff on the ground that the defendants were “entitled to a judgment of fair use as a matter of law.” At issue was whether those involved in the development of the screenplay for Jersey Boys had infringed the plaintiff’s unpublished manuscript about his life as a member of The Four Seasons. Following a 15-day trial, the jury found in relevant part that (1) the Jersey Boys screenplay infringed the manuscript, (2) the defendants’ use of portions of the manuscript was not fair use, and (3) the plaintiff was entitled to 10 percent of the screenplay’s profits.  Continue Reading

Started From the Bottom, Now We’re Real: Drake’s Use of Jimmy Smith’s Commentary on ‘Real Music’ Considered Fair Use

On May 30, 2017, Judge William H. Pauley III, in the Southern District of New York, ruled that rapper-singer-songwriter Drake was permitted to use a sample of jazz artist Jimmy Smith based on the fair use doctrine, even though Drake and his record label did not license the publishing rights to the song. The court found that Drake’s use of the track was “transformative” because it changed Smith’s critique that jazz is the only “real” music into a suggestion that Drake’s hip-hop music was also real.

In 2013, Drake released a track titled “Pound Cake/Paris Morton Music 2,” which includes a sample of Jimmy Smith’s spoken-word track “Jimmy Smith Rap.” Smith reminisces about “the old days,” and expresses his joy and gratitude in creating the record. The track also contains a commentary on jazz. Continue Reading