US Copyright Law Update March 2020

There were a number of federal copyright cases over the past year that made clear the importance of timely registering works with the US Copyright Office.

In Fourth Estate v. Wall-Street.com (https://www.supremecourt.gov/opinions/18pdf/17-571_e29f.pdf), a unanimous US Supreme Court held that that a copyright infringement action may only be brought after the copyright is registered. And, the key point here is that “registered” means that the Copyright Office has registered the copyright, not simply that the claimant has submitted the work for registration. There are certain statutory exceptions that can be found at 17 USC 411(c). And, since the Copyright Office typically takes several (many) months to issue the registration, copyright owners should register their works with the Copyright Office as soon as possible.

One issue not addressed in the Fourth Estate case is whether a copyright owner may amend a complaint to include works registered after the filing of the complaint. Courts in California and New York have decided that a copyright owner may not do so. The Southern District of New York ruled in Malibu Media, LLC v. Doe (https://casetext.com/case/malibu-media-llc-v-doe-216),  that a suit alleging copyright infringement that was filed prior to the Copyright Office registering the work cannot be amended once the work has been registered and, instead, must be dismissed though the court did rule that the dismissal was without prejudice, thus allowing the plaintiff to re-file the suit. The Malibu Media case was cited with approval by the United States District Court for the Northern District of California in Izmo, Inc. v. Roadster, Inc. (https://www.govinfo.gov/content/pkg/USCOURTS-cand-5_18-cv-06092/pdf/USCOURTS-cand-5_18-cv-06092-0.pdf), which reached a similar conclusion as the Malibu Media court.
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The Copyright Act allows for court to grant the prevailing party “full costs” (17 USC 505) in an action. The US Supreme Court last year ruled in Rimini Street Inc. v. Oracle USA Inc. (https://www.supremecourt.gov/opinions/18pdf/17-1625_lkhn.pdf) that “full costs” means only those specific costs specified in 28 USC 1920 and the per diem and mileage expenses set forth in 28 USC 1821. Those costs are the following:

• 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 USC 1923;
• Compensation of court appointed experts; compensation of interpreters; and salaries, fees, expenses and costs of special interpretation services under 28 USC1828; and
• Per diem and mileage expenses for witnesses (28 USC 1821)

Under section 504 of the Copyright Act (https://www.law.cornell.edu/uscode/text/17/504) a prevailing plaintiff may elect to recover actual damages or statutory damages of up to $30,000 for each work infringed (up to $150,000 per work in an instance of willful infringement). Note that said damages are on a per work basis, not per infringement basis. But what is the appropriate analysis where a compilation is infringed? Since the compilation is, by definition, comprised of multiple works, for purposes of statutory damages, is that one work or multiple works? Last year the Seventh Circuit weighed in on that question in Amy Lee Sullivan, dba Design King v. Flora Inc. (https://law.justia.com/cases/federal/appellate-courts/ca7/17-2241/17-2241-2019-08-21.html).  The Seventh Circuit reviewed existing law from several districts including the Second District (NY) and the Ninth District (CA) and followed the reasoning of the Ninth Circuit (and declined to follow the reasoning of the Second Circuit) when ruling that  Section 504 of the Copyright Act 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.” That is, if the components of the compilation have their own economic value (as songs on an album, for example), then each component should be considered a separate work, entitled to its own statutory damages.

And, speaking of statutory damages, the Copyright Act states that that an infringing party is not liable for statutory damages or attorney fees if the infringement was made prior to registration of the work in question (178 USC 412). In Southern Credentialing Support Services, L.L.C. v. Hammond Surgical Hospital, L.L.C. (https://law.justia.com/cases/federal/appellate-courts/ca5/18-31160/18-31160-2020-01-09.html), the Fifth Circuit reiterated that section 412 bars statutory damages even for a defendant’s post-registration infringement if the same infringement also occurred before registration. The Court went on to rule that the same bar also applies when the defendant engages in a different type of infringement after registration such as, for example, a defendant that distributes the work after registration but copied the work pre-registration.

What does all of this mean? For a business that distributes copyrighted works it is important to register the works with the Copyright Office as soon as possible, particularly when one considers that the backlog of registration is about six months or more. For a company that acquires exclusive rights under copyright (for example, licenses the right to distribute a motion picture for a period of time), it is important to confirm that the licensed work was registered with the Copyright Office and, if not, to do so. While not addressed above, such a party should also timely record the documentation that shows such party having licensed the exclusive rights from the copyright holder.

Feel free to call or email Eisen Law PC to discuss any of the above.