Copyright Owners May Need to Reassess Copyright Registration Strategy in Light of Supreme Court Ruling

Copyright Owners May Need to Reassess Copyright Registration Strategy in Light of Supreme Court Ruling

Mar 08, 2019

Client Alert

Brownstein Client Alert, March 8, 2019

On Monday, March 4, the United States Supreme Court clarified a narrow but significant rule governing when copyright owners can file lawsuits for infringement under the U.S. Copyright Act, resolving a long-standing split among lower courts. Some courts required a copyright owner to wait for the Copyright Office to issue a registration before initiating a lawsuit (called the “registration” approach). Others permitted an owner to file suit much earlier, when the complete application file was submitted to the Copyright Office (called the “application” approach). The court sided with the “registration” approach jurisdictions, making clear that no matter where an owner decides to file the lawsuit, he must wait for the Copyright Office to approve his copyright application and issue a registration—a process that can take months (or longer).

So, what does this mean for copyright owners who have not yet registered works that they may later need to protect? The court’s decision may impact copyright owners’ registration strategy in at least three critical ways. Each of these considerations demonstrates the need for copyright owners to reevaluate their cost-benefit analysis in pursuing early copyright registrations in light of the new decision, Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, 586 U.S. ___ (2019).

  1. Without a Copyright Registration in Hand, Pre-litigation Demands May No Longer Carry the Same Imminent Litigation Threats

Before Fourth Estate, copyright owners in some circumstances had more flexibility in deciding where and when to pursue infringers in court. By filing in “application” approach jurisdictions (including, among others, federal courts in California and Nevada), they could delay applying for copyright registrations until discovering infringement without restricting their ability to pursue prompt legal action against identified infringers. This has been an effective strategy for copyright owners with large portfolios of works, who could avoid cumulatively hefty filing and legal fees associated with registration until after the owner discovered infringement. It was also an effective strategy for copyright owners who could file in “application” approach jurisdictions, but elected to resolve copyright infringement disputes through pre-litigation demand letters before seeking a registration.

Now, all copyright owners must think critically in advance about whether and when to seek copyright registrations, given that a copyright application may remain pending for six months or more before the Copyright Office takes action. After Fourth Estate, recipients of pre-litigation demand letters sent before a registration issues may feel less pressure to resolve the dispute early, because any threat of litigation is not necessarily imminent.

The potentially diminished impact of demand letters extends to owners’ threats to seek particular types of relief in court. In some copyright cases, the availability of injunctive relief (particularly preliminary injunctions) is an effective tool in garnering a quick resolution or stopping the infringement. Now, in the absence of a prior registration, infringers do not face those risks or the associated burden of legal fees at the very outset of the dispute.

Additionally, Fourth Estate may discourage demands by some copyright claimants who have questionable rights. These claimants could previously bluff their way into prompt settlements in “application” jurisdictions by simply filing applications before sending demands. Now, those claimants must wait for the Copyright Office to declare their claimed rights to be valid for the copyright owner to pursue legal action.

  1. In Cases Not Involving Continuous Infringement, the Three-Year Statute of Limitation May Run Before the Copyright Office Issues a Registration

The “application” approach could effectively extend the statute of limitation for some infringement claims, benefitting those who lagged—by strategy or otherwise—in filing their applications until well after they discovered or should have discovered the infringement. In those cases, under the “application” approach a copyright owner nearing the limitation period could simply complete its copyright application and then sue, without worrying about the Copyright Office’s potential delay in issuing a registration. Conversely, under the “registration” approach adopted in Fourth Estate, copyright owners may unexpectedly find their claims barred by the applicable statute of limitation if they fail to register their copyrights far enough in advance.

Notably, Fourth Estate does not impact preexisting rules on the statute of limitation for continuing infringement. Several years ago, the court decided that when a party continuously infringes a work, the statute begins to run from the last infringing act. This rule effectively allows owners whose works are being continuously infringed to extend the time in which they can file suit for damages, although the owner may only seek damages for infringement that occurs within the preceding three years. Fourth Estate’s “registration” rule does not disturb these principles.

  1. Without Proper Planning, Copyright Owners Will Incur More Unnecessary Expedite Fees

For those who can afford the premium, the Copyright Act allows for expedited copyright application handling at a steep “special handling” price of $800, far more than the standard processing fee of $35. The expedite process and the high fee are often worthwhile for copyright owners whose claims might otherwise not be viable due to registration timing issues. Of course, the sting of the expedite fee increases when a copyright owner is compelled to file multiple expedited applications because an infringer has appropriated multiple unregistered works.

Fourth Estate is likely to force more copyright owners to file more expedited applications, thereby driving up the overall costs of copyright ownership. However, with proper strategic registration planning, copyright owners can avoid the need to resort to the expedite process. Also, irrespective of Fourth Estate, copyright owners should already be motivated by the Copyright Act to register their copyrights early, given that statutory damages and attorneys’ fees are unavailable to those who wait too long after infringement begins.

Contact us to discover how Fourth Estate might affect you and your copyright registration strategy.

This document is intended to provide general information about the impact of Fourth Estate Pub. Benefit Corp v. Wall-Street.com on copyright registration strategies. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice, please contact your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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