Supreme Court to Hear Rimini Street v. Oracle to Decide if Copyright Act Authorizes Non-Taxable Costs

On Thursday, September 27th, the U.S. Supreme Court granted a petition for writ of certiorari to take up Rimini Street v. Oracle on appeal from the Court of Appeals for the Ninth Circuit. The case will ask the nation’s highest court to solve a split among the Circuit Courts of appeal by determining whether the Copyright Act’s allowance of full costs to a prevailing party under 17 U.S.C. § 505 is limited to taxable costs under 28 U.S.C. § 1920 and 28 U.S.C. § 1821, as has been held in the Eighth and Eleventh Circuits, or whether the Copyright Act also authorizes non-taxable costs as the Ninth Circuit held in its ruling of this case.

As the petition for writ filed by Rimini Street discusses, this case stems from a lawsuit filed in federal district court by Oracle against Rimini, which provides aftermarket support to customers of Oracle’s enterprise software solutions, in 2010 alleging various causes for action. The suit led to a verdict in favor of Oracle granting it hypothetical license damages for innocent copyright infringement of $35.6 million and additional damages of more than $14 million for violations of state hacking statutes. After attorney’s fees, costs and prejudgment interest, the total damages award entered against Rimini totalled around $124 million; that award included $12 million worth of non-taxable costs including expert fees, consultant fees and electronic discovery costs.

Rimini Street appealed the district court’s decision to the Ninth Circuit on the basis of limiting costs awarded under the Copyright Act to taxable costs pursuant to Sections 1920 and 1821 of U.S. judiciary and judicial procedure code. Both the district court and the Ninth Circuit held that the circuit court’s 2005 decision in Twentieth Century Fox Film Corp. v. Entertainment Distributing permits a successful plaintiff to recover all costs incurred in litigation, not just taxable costs.

Rimini Street’s petition for writ notes that this holding by the Ninth Circuit creates a circuit split regarding whether the Copyright Act’s allowance for the recovery of full costs overrides Sections 1920 and 1821. The Eighth Circuit’s 1996 decision in Pinkham v. Camex relied upon Supreme Court precedent to determine that recovery of “full costs” under Section 505 did not evidence congressional intent to treat costs under the Copyright Act as different from costs authorized in other statutes which are limited by Sections 1920 and 1821. A 2001 decision in the Eleventh Circuit in Artisan Contractors Association of America v. Frontier Insurance Co. also concluded that Section 505 included no evidence that it should supersede the limitations imposed by other Congressional statutes and thus that non-taxable costs aren’t recoverable under the Copyright Act. As in the case with Rimini Street, at least part of the costs which were sought by the prevailing party were expert witness fees

Although the circuit courts are split on the issue, the Ninth Circuit is in direct conflict with Supreme Court precedent on the issue, Rimini Street argues. The Ninth Circuit’s finding that the word “full” in “full costs” overrides the Section 1920 and 1821 limitations conflicts with the ruling in cases such as Crawford Fitting v. J.T. Gibbons (1987), where the Supreme Court held that a federal court cannot assess non-taxable costs to a losing party without “plain evidence of congressional intent to supersede” Sections 1920 and 1821. This precedent was reiterated by further Supreme Court rulings in West Virginia University Hospitals v. Casey (1991) and Arlington Central School District Board of Education v. Murphy (2006). The phrase “full costs” in Section 505 does not match the specific congressional intent on shifting expert witness fees seen in statutes such as 5 U.S.C. § 504(b)(1)(A) or 54 U.S.C. § 307105.

The Ninth Circuit’s precedent in conflict with Supreme Court ruling creates a situation where exorbitant costs are available to prevailing plaintiffs in the Ninth Circuit which aren’t available to plaintiffs in other circuit courts and Rimini Street argued that SCOTUS needs to step in to establish national uniformity on the question. In its own case, the damages award entered against Rimini Street was 17 percent higher than it would have been in the Eighth or Eleventh Circuits. Citing to 2017 case statistics, Rimini Street notes that the district courts comprising the Ninth Circuit hear more intellectual property cases than the combined district courts of any other circuit. Although the issue was a recurring one, it often escapes review by appellate courts making this case a good vehicle for deciding the issue, according to Rimini Street’s petition.