EXECUTIVE SUMMARY

In many ways, copyright jurisprudence in 2019 was a study in contrasts. While certain cases represented a “back to basics” approach, answering fundamental questions such as “When can a copyright owner sue for copyright infringement?” and “What costs can a prevailing copyright owner recover?,” others addressed thorny issues involving fair use and the first sale doctrine.

In the wake of several pivotal copyright decisions involving the music industry in 2018, such as the watershed “Blurred Lines” verdict, disputes involving music continued to provide fuel for the courts to weigh in on copyright this year. As we look to 2020, all eyes will be on the Supreme Court and its decision in the epic battle between Google and Oracle and the protectability of software. This report provides a summary of 2019’s important copyright decisions with the hopes of assisting those navigating copyright infringement and enforcement issues in the coming year.

COPYRIGHTS

COPYRIGHT REGISTRATION – A PREREQUISITE TO A COPYRIGHT INFRINGEMENT SUIT

In 2019, a unanimous Supreme Court resolved a longstanding circuit split on whether a copyright claimant must have registered its copyright with the US Copyright Office before filing an infringement action in federal court. The Supreme Court held that a copyright infringement action may only be brought after the copyright is registered. Fourth Estate v. Wall-Street.com (IP Update Vol. 22, No. 3).

The Copyright Act states that “no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made[.]” 17 U.S.C. § 411. Despite this straightforward language, federal courts were divided on the interpretation of “registration.” The Fifth and Ninth Circuits had adopted an “application approach,” holding that a copyright owner needed only to file an application, deposit the work and pay the fees to the US Copyright Office before initiating an infringement suit. Meanwhile, the Tenth and Eleventh Circuits had adopted a “registration approach,” holding that a copyright owner may only bring an infringement suit after the US Copyright Office had registered the copyright.

The issue presented to the Supreme Court was whether “registration . . . has been made” when the copyright owner delivers the required application, deposit and fee to the US Copyright Office, or only once the US Copyright Office registers the copyright. Reviewing the language of Section 411, Justice Ginsburg explained that while an author has rights in their work immediately upon creation and may recover for infringements occurring both before and after registration, the copyright owner must register the work before filing an infringement action.

Since this decision was issued, lower courts have grappled with an issue not squarely addressed by the Supreme Court’s opinion: whether a copyright owner may amend its complaint to include works registered after the filing of the complaint. Courts in California and New York have held that Fourth Estate bars the addition of infringement claims relating to copyrighted material registered after the commencement of the lawsuit. See Izmo, Inc. v. Roadster, Inc., No. 18-CV-06092-NC (N.D. Cal. June 4, 2019); Malibu Media, LLC v. Doe, No. 18-cv-10956-JMF (S.D.N.Y. Apr. 2, 2019). Given the registration requirement and the refusal by courts to allow amendment of infringement claims based on subsequent registration, it is imperative that copyright owners timely seek registration of their works to ensure protection.

COPYRIGHT INFRINGEMENT – COSTS AND DAMAGES

In 2019, the courts also clarified the costs and damages available under the Copyright Act.

The US Supreme Court also interpreted the meaning of “full costs” as used in 17 U.S.C § 505. The Court determined that Section 505 has no special, expansive meaning, but is limited to the costs specified in the general costs statutes codified at 28 USC §§ 1821 and 1920. Rimini Street Inc. v. Oracle USA Inc. (IP Update Vol. 22, No. 3).

The Copyright Act allows for the recovery of “full costs” by or against any party, other than the United States or an officer thereof. The Supreme Court decided that the term “full” does not expand the meaning of recoverable costs beyond those specified in the general costs statutes of 28 U.S.C. §§ 1821 and 1920. Those statutes specify seven categories of litigation expenses that a federal court may award as costs:

• Fees of the clerk and marshal;

• Fees for transcripts necessarily obtained for use in the case;

• Fees and disbursements for printing and witnesses;

• Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

• Docket fees under 28 U.S.C. § 1923;

• Compensation of court appointed experts; compensation of interpreters; and salaries, fees, expenses and costs of special interpretation services under 28 U.S.C. § 1828; and

• Per diem and mileage expenses for witnesses

The Supreme Court held that its precedents “establish a clear rule” that “[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.”

The federal appeals courts also addressed the scope and procedure of a statutory damages award under the Copyright Act. Under the Copyright Act, a plaintiff may choose to recover actual damages and an infringer’s profits, or statutory damages.

The Sixth Circuit rejected a procedural challenge to a statutory damages award, finding that the plaintiff had properly elected to recover such an award in lieu of actual damages or profits. Smith v. Thomas (). The Court reasoned that there is no “magic words” requirement for electing such a remedy, and the plaintiff had sufficiently informed the court and the opposing party of its choice of remedy.

The Seventh Circuit considered what constitutes “one work” for purposes of calculating statutory damages when multiple works are registered in a single copyright application. Amy Lee Sullivan, dba Design King v. Flora Inc. ().

The Copyright Act authorizes a prevailing plaintiff to recover statutory damages of up to $30,000 for each work infringed (and up to $150,000 per work in an instance of willful infringement). Thus, statutory damages are based on the number of protected works infringed, not the number of times each work is infringed. But what happens when an artist registers their illustrations, or individual “works,” as a compilation? Should each part of the compilation be considered a separate work eligible for separate statutory damages awards, or is the compilation itself considered one work?

Under the Copyright Act, Congress imposed the limitation that each part of a compilation was considered “one work” when awarding statutory damages. The Seventh Circuit noted that it is essential to determine what constitutes “one work” when there are multiple works combined to form a “compilation.” After examining decisions from other circuits, the Seventh Circuit determined that Section 504 requires a court to determine whether the protected works had value only in and through their composite whole or rather had standalone value at the level of “one work.” The Court held that the district court erred by failing to make that determination and remanded for further proceedings. The case remains pending.

MUSIC - FIRST SALE DOCTRINE, FAIR USE AND PROTECTABILITY

From the first sale doctrine to fair use to protectability, music provided plenty of copyright fodder for the courts this past year.

Commonly known as the “first sale” doctrine, 17 U.S.C. § 109(a) permits a lawful purchaser of a copy of a work to resell, give, or transfer that copy without violating a copyright owner’s right to exclusive distribution. The Second Circuit confronted the issue of whether an Internet marketplace designed to allow users to resell their digital music purchased from iTunes was permitted under the first sale doctrine. Capitol Records, LLC, et al. v. ReDigi. (IP Update Vol. 22, No. 1).

When a digital music file was uploaded to ReDigi’s servers, a copy of the digital music file was created. The Second Circuit reasoned that those unauthorized copies violated a copyright owner’s right to exclusive control of reproduction. Unauthorized copies are not protected under the first sale doctrine. Weighing the statutory factors, the Court further determined that ReDigi’s actions were not protected under the doctrine of fair use, particularly in light of the negative impact ReDigi’s use would have on the market for music. With no available first sale or first use defense, the Second Circuit affirmed the district court’s determination that ReDigi was liable for copyright infringement.

The Second Circuit again addressed the issue of fair use in Abiodun Oyewole v. Rita Ora, Case No. 18-1311 (2d Cir. Sept. 4, 2019). There, the plaintiff alleged exclusive rights in the phrase “party and bullshit” based on his use in a prior song in the 1960s. The phrase was later used by the late rapper Notorious B.I.G. and licensed by the rapper’s estate to singer Rita Ora.

After a thorough analysis of the statutory fair use factors, the district court determined that the fair use doctrine applied and dismissed the copyright infringement complaint against Ora. The district court determined that the newer use of the works had transformed the phrase into something entirely new: the original use of the phrase had a negative connotation, whereas Notorious B.I.G. and Ora had used it positively.

The Second Circuit, on appeal, affirmed the lower court’s fair use analysis in all respects, finding that Ora’s use of “party and bullshit” constituted fair use and was thus not infringing.

GOOGLE V. ORACLE – COPYRIGHT BATTLE OF THE TECH TITANS

Later this year, the US Supreme Court will decide a longstanding dispute between two tech giants, Google and Oracle. Google LLC v. Oracle America, Inc. No. 18-956. The Court will consider two (1) whether copyright law protects an application programming interface (API); and (2) whether Google’s use of Oracle’s APIs in creating a new computer program constitutes fair use.

The “copyright case of the decade” concerns Google’s use of APIs from Oracle’s Java programming language in Google’s Android operating system. In 2005, licensing negotiations between Google and Sun Microsystem, then the owner of Java, broke down. Google later used Java API names in its Android operating system, but in such a way that referred to their own methods and not the licensed Java SE methods. Oracle, the current owner of Java, sued Google. At the first jury trial, the jury found that Google infringed Oracle’s copyrights, but deadlocked on whether the fair use defense applied. The court entered a judgment as a matter of law that Oracle’s APIs were not protected and entered judgment for Google. The Federal Circuit later determined that the APIs were copyrightable and remanded for a new trial. On remand, the jury ruled in favor of Google by finding that its use of the APIs was fair use. Oracle appealed to the Federal Circuit. The Federal Circuit reversed the jury’s verdict, finding that Google’s use was not fair use because Google’s use of the APIs was not transformative and harmed the software market and therefore constituted copyright infringement. Google filed a cert petition in January 2019 and asked the Court to review both Federal Circuit decisions. On November 15, 2019, the Supreme Court granted Google’s cert petition. The Supreme Court will hear oral argument in March.

Those criticizing the Federal Circuit’s decision contend that upholding copyright protection in Oracle’s APIs threatens software compatibility, while those in support of the Federal Circuit’s decision argue that to hold otherwise would remove economic incentives for software innovation. Regardless of the outcome, the Supreme Court’s decision will have significant ramifications for the software industry.

2020 OUTLOOK

As we look to 2020, we expect that, in addition to the Supreme Court’s hotly anticipated decision in Google v. Oracle, software and technology disputes will continue to yield decisions on such important issues as licensing and the first use doctrine.

In addition to Google v. Oracle, the Supreme Court is poised to weigh in on two other copyright cases involving state sovereign immunity and whether state and local governments may charge fees for access to legal texts. Finally, in the age of mashups and memes, we expect courts to continue to wrestle with when use is “transformative” and thus protected under the doctrine of fair use.