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Rimini Street, Inc. v. Oracle USA, Inc.

| Category: Intellectual Property News

            On March 4, 2019, the U.S. Supreme Court unanimously decided Rimini Street, Inc. v. Oracle USA, Inc., holding that under the “full costs” provision provided by 17 U.S.C. § 505 (“§ 505”) of the Copyright Act, a court cannot award litigation expenses beyond the six categories of “costs” outlined by Congress in 28 U.S.C. §§ 1821 and 1920 (“§§ 1821 and 1920”).

            Oracle USA, Inc. (“Oracle”) develops and licenses software programs that manage data and operations for businesses, and also offers its customers software maintenance services. Rimini Street, Inc. (“Rimini”), a direct competitor of Oracle, sells third-party software maintenance services to Oracle customers. In 2010, Oracle sued Rimini in U.S. district court for copyright infringement, alleging that Rimini copied Oracle’s software without licensing it. After the jury found for Oracle, the judge ordered Rimini to pay Oracle $12.8 million for litigation expenses, which included expenses outside the six categories of §§ 1821 and 1920. Rimini subsequently appealed to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”).

            On appeal, the Ninth Circuit also found Rimini was liable for copyright infringement. When determining the appropriate award for litigation expenses, the Ninth Circuit noted the district court included expenses not covered by the six categories provided by Congress in §§ 1821 and 1920. However, the Ninth Circuit, relying on its decision in Twentieth Century Fox v. Entertainment Distributing, found the “full costs” provision of § 505 did not limit litigation expenses to the six categories identified in §§ 1821 and 1920. Accordingly, the Ninth Circuit affirmed the district court’s $12.8 million award for litigation expenses. Next, Rimini filed a petition for a writ of certiorari in the Supreme Court to address the meaning of “full costs” as used in the Copyright Act. The Supreme Court granted certiorari.

            The Supreme Court first acknowledged that § 505 provides that a district court in a copyright case has discretion to “allow the recovery of full costs….” However, the Supreme Court further noted that Congress had specified six categories of litigation expenses that a federal court may award as costs. Relying on Supreme Court precedent, the Supreme Court determined that absent express authority by Congress, ‘costs’ are limited to the categories set forth by statute.  Upon review of the Copyright Act, the Supreme Court found the Copyright Act did not expressly authorize the award of litigation expenses beyond the six categories specified in §§ 1821 and 1920.

            First, the Supreme Court found the term “full” simply permitted federal courts to award all expenses available under law, not other expenses. For example, the Supreme Court noted “a ‘full moon’ means the moon, not Mars,” and “a ‘full breakfast’ means breakfast, not lunch.” Therefore, the Supreme Court concluded that the term “full costs” encompassed all costs generally available under §§ 1821 and 1920.

            Second, the Supreme Court found the historical definition of “full costs” only covered costs under the relevant costs statutes. More specifically, the Supreme Court recognized that in the over 800 Copyright cases to date, only the Ninth Circuit in Twentieth Century Fox interpreted “full costs” to encompass expenses outside the six categories specified in §§ 1821 and 1920.

            Accordingly, the Supreme Court concluded that under the Copyright Act, the maximum award amount a court can give to the prevailing party is limited to the six categories of expenses specified under §§ 1821 and 1920. Therefore, potential copyright litigants should be aware that not all expenses that are incurred during trial are recoverable. For example, “non-taxable costs” such as electronic discovery expenses and expert fees, cannot be recovered because they fall outside the six categories.

 

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