Supreme Court Weighs Meaning of ‘Full Costs’ in Rimini Street v. Oracle USA Oral Arguments

On the morning of January 14th, the U.S. Supreme Court heard oral arguments in Rimini Street v. Oracle USA, a case that asks the nation’s highest court to decide whether the recovery of full costs in a copyright infringement suit as governed by 17 U.S.C. § 505 is limited to taxable costs under 28 U.S.C. § 1920 and 28 U.S.C. § 1821 or whether non-taxable costs can also be recovered. Much of the day’s discussion centered on the meaning of full costs and how that term had evolved under various revisions of U.S. copyright law, going back to the Copyright Act of 1831.

Costs vs. Expenses

Arguing for petitioner Rimini Street was Mark Perry, Partner at Gibson Dunn. Perry argued that, although both himself and counsel for Oracle USA were in agreement on the meaning of full in full costs, “the dispute is on ‘costs’ because just as the full moon doesn’t tell us anything about Mars and Venus, ‘full costs,’ we submit, doesn’t tell the court anything about fees and expenses,” he said. Perry cited to the Supreme Court’s 2006 decision in Arlington Central School District Board of Education v. Murphy to note that SCOTUS has previously delineated between “costs,” which are outlined under Section 1920, and the more open-ended term “expenses,” which could include travel expenses or salaries.

Justice Sonia Sotomayor questioned Perry on two points: first, that the meaning of full costs in the Copyright Act had a history predating the definition of costs in Congressional statute; and whether any of the statutes containing the term full costs identified by opposing counsel gave the effect to “full” which Perry was arguing. While Perry noted that full costs under the Copyright Act was discretionary, such discretion existed under Federal Rule of Civil Procedure 54(d).

As to the historical meaning of full costs, Perry contended that, of the 858 copyright cases decided by U.S. district courts between 1831 and 1976 in which costs were awarded, costs that weren’t on a statutory schedule under either state or federal law weren’t awarded in a single case.

Justice Elena Kagan asked why Congress should have enacted Section 505 at all if full costs were already identified under Section 1920. Perry responded by noting that, of the 208 federal cost statutes, 207 make no reference to Section 1920 and many of these statutes are in a sense redundant of Section 1920. The fact that the second sentence of Section 505 provided for the award of reasonable attorneys’ fees further supported Rimini Street’s argument, Perry argued, as it showed that Congress didn’t recognize attorneys’ fees as part of the full costs. While Justice Samuel Alito noted that such fees were then recognized as part of the full costs by the statute, Perry contended that the statute made clear that other fees, such as expert witness fees, would have to be separately provided for to be counted as a cost.

“If we read full costs to not invoke those limits [set by Section 1821] but just to permit awards of what’s specified in 1920, would that take care of your problem?” Justice Sotomayor asked. Perry countered that Section 1821 would remain binding under a full costs provision, noting that Section 1821 provides for a $40 per day attendance fee for witnesses, the full cost of which must be awarded by a court. Chief Justice John Roberts asked why petitioners didn’t identify a single case where this was an issue and Perry responded that cost bills are approved as a matter of course and usually aren’t litigated because the cost of opposition is typically greater than the cost of the bill itself. The present case involves much larger costs—Rimini Street believed Oracle was entitled to about $3.5 million in costs whereas Oracle was seeking $17.6 million and had been awarded $12.8 billion in costs.

The Government View

Arguing for the United States in support of Rimini Street was Allon Kedem, an Assistant in the Office of the Solicitor General at the U.S. Department of Justice. Citing to the Supreme Court’s 1987 decision in Crawford Fitting v. J. T. Gibbons, Kedem argued that the Court’s holding showed that priority of enactment didn’t matter and that Section 1920 presumptively applies in all civil cases regardless of when various cost provisions were adopted.

Kedem also noted that the Process Act, enacted by Congress in 1789 just days after setting up the federal judiciary, which ordered federal courts to look at state fee bills to determine the costs that could be shifted between litigants. State statutes imposing either a limitation on costs or a multiplier on costs to be recovered would have made the word full in full costs necessary in the 1831 Copyright Act, Kedem argued.

Going back to Crawford Fitting, Kedem argued that one benefit of that case is that it gives Congress clear instructions on how to include costs that aren’t already listed in Section 1920. Kedem contended that the 1976 Copyright Act shifted the provision of full costs from discretionary to mandatory and that it wasn’t until the Ninth Circuit decided 20th Century Fox Film v. Entertainment Distributing in 2005 that anything beyond the items listed in Section 1920 were counted as part of full costs.

“Full” Means Full

Paul Clement, Partner at Kirkland & Ellis, argued for Respondent Oracle USA. Clement argued that Rimini Street’s interpretation of full costs renders both the word full completely superfluous and the first sentence of Section 505 without any meaning. “The better course [is] to say that ‘full’ means full, rather than nothing at all,” Clement argued.

While Clement agreed that there wasn’t a lot of case law to provide guidance on this issue, he pointed to Ferrett v. Atwill, an 1846 case decided by the Circuit Court for the Southern District of New York. Decided by Justice Samuel Nelson, the court used a federal circuit rule to address items of cost not under New York state law and it awarded taxable attorney and counsel fees for argument. According to Clement, this undermined petitioner’s argument that full costs would have been well understood after 1831 as excluding attorney and counsel fees.

Giving the word “costs” its ordinary meaning, as modified by “full,” Clement argued that Congress intended a broader reading of the term and not one limited by those taxable costs outlined in Section 1920. According to Clement, Ferrett showed that “full cost” under the 1831 Copyright Act had a broader meaning than petitioner’s counsel was arguing, and this broader meaning was carried forward by the use of the same term in the 1909 and 1976 Copyright Acts.

Regarding the argument that Oracle’s reading of ‘full costs’ renders the second sentence of Section 505 as superfluous, Clement argued that during the period between 1909 and 1976, full cost recovery was mandatory but attorneys’ fees were discretionary. In the 1976 law, the wording “except as otherwise provided by this title” found in the second sentence of Section 505 cross-referenced statutes such as 17 U.S.C. § 412 to indicate that certain remedies might not be available but that full costs were still recoverable.

Pointing to the legislative history of the Cable Communications Policy Act of 1984, Clement noted communication by the then-Chairman of the Senate Commerce Committee that the term

found in 47 U.S.C. § 605 covered investigatory costs. Whereas there wasn’t much in the history of the 1976 Copyright Act that focused on the topic of fees, the 1984 history indicated that committee’s belief that full costs covered a broad category of fees. Justice Stephen Breyer noted that his dissent in Murphy followed a similar idea but that this didn’t represent the view of the majority. Clement countered that Murphy was a spending power case and while legislative history doesn’t overcome a clear statement rule, that history can be informative for determining a statute’s meaning especially when that history avoids rendering statutory language as superfluous.

A Question of Discretion

Justice Sotomayor said that her problem with Oracle’s interpretation of full costs was that it was open-ended to the point of denying judges a way for exercising reasonable discretion. “[U]nder your definition of full costs, I’m assuming the babysitter for the witness who has to come to court is covered,” Justice Sotomayor said. “I’m assuming experts, which could include experts like a body language reader.” Clements argued that this issue existed outside of Oracle’s construction of full costs in other statutes which provide for recovery of “all expenses” in litigation. Further, judges had the discretionary ability to award a percentage of full costs, such as in the present case, where the district court judge awarded 75 percent of non-taxable costs to Oracle.

The Supreme Court returned to Perry for a rebuttal argument in which he pointed to a 1961 report from the Register of Copyrights on revisions to U.S. copyright law, which indicated that costs in copyright cases were low because they don’t include expert witness fees or rediscovery costs; this report was part of the legislative history for the 1976 Copyright Act. Other statutes enacted with the 1976 act expressly authorized expert witness fees, indicating that Congress would have mentioned such fees if they were to be included in full costs. As to Clement’s point on Ferrett, Perry countered that Rimini Street’s point wasn’t that attorneys’ fees were never awarded, but that non-scheduled fees were never included in full costs.

Perry closed by quoting from the Supreme Court’s majority opinion in Alyeska Pipeline Service Co. v. Wilderness Society (1975), a case on the recoverability of attorneys’ fees in federal litigation: “It is not for this Court to invade the legislature’s province by redistributing litigation costs in the manner suggested by Respondents and followed by the court of appeals.”

Brad Lane, Shareholder at Brinks Gilson & Lione and an intellectual property lawyer who has counseled clients on copyright matters, offered the following thoughts on the arguments:

“In the copyright context, particularly in software copyright disputes, the recovery of the types of expenses that were the subject of this Supreme Court argument is pretty meaningful. Just the recovery of expert witness fees and electronic discovery expenses can make or break a small- or medium-sized company’s decision to proceed with copyright litigation either as a plaintiff or a defendant. It seems to me that the Justices were more in favor of Rimini Street. The Solicitor General’s argument that, if Oracle wins, a second round of litigation could take place to determine the bill of costs, hits home as a practical matter. If Oracle has its way, parties would have an unlimited expense laundry list as opposed to one prescribed by Section 1920.”

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