IP Law News

Oracle’s Legal Fee Reimbursement Fight Heads to Supreme Court

Jan. 11, 2019, 6:25 PM

A dispute between two computer technology companies that could affect litigants’ decision-making on whether and for how long they pursue claims is set for oral argument at the U.S. Supreme Court Jan. 14.

Rimini Street Inc., ordered to pay for infringing Oracle’s copyright with its software, is likely to tell the justices that copyright law isn’t special and doesn’t let Oracle Corp. recoup $12.8 million in a category of litigation expenses generally barred from cost awards.

Oracle, awarded a total of $74 million in the dispute, will defend an appellate decision that Copyright Act language expands the definition of costs to include any litigation expenses. The possibility of post-victory reimbursement can influence how much either side wants to invest in a case.

“I can make a very good argument as to either interpretation,” copyright lawyer Sam P. Israel of Sam P. Israel PC told Bloomberg Law. He said the court may “reluctant to be overly generous to the victor of a copyright case,” based on the ambiguity of the language and his own experience arguing copyright attorney fees before the Supreme Court.

Copyright and software organizations argued in amici briefs that copyright litigation expenses already inhibit parties with legitimate infringement claims from enforcing their rights. Cases often extend through discovery and to trial because courts often wrestle with complex questions about similarity and fair use.

The U.S. government is backing Rimini’s interpretation that “full costs” in the Copyright Act excludes some of the costs that Rimini was ordered to pay. The American Intellectual Property Association is also siding with Rimini, arguing that unconstrained cost-shifting authority could create legal uncertainty.

Justice Samuel A. Alito, who had listed Oracle stock in a prior financial disclosure, originally recused himself from the case, but has since said he will participate in the oral argument.

Nontaxable Costs

Oracle sued Rimini for copyright infringement in 2010. Rimini said it permissibly provided Oracle software customers aftermarket updates and support. But after long-winding litigation that included a sanction against Rimini for destroying evidence, Oracle convinced a jury that the way Rimini copied and used its software violated licensing terms.

The court awarded Oracle $35.6 million for infringement. Various costs, attorney fees, and interest drove the initial total award to $124 million. The U.S. Court of Appeal for the Ninth Circuit affirmed the infringement award but trimmed other areas to lower the total to $74 million, including $12.8 million for “nontaxable costs.”

Federal law generally bars courts from awarding nontaxable costs, such as expert witness and electronic discovery expenses. But the Ninth Circuit previously held that the Copyright Act allows courts to award infringement victim to recoup the “full cost” of litigation, including non-taxable costs.

Oracle noted that Congress knew about had been fully aware of the “taxable” distinction when it left “full costs” remain in an 1976 overhaul of the Copyright Act, one of multiple overhauls since “full costs” first appeared in the act in 1831.

Rimini said in its reply brief that courts have “routinely equated” full costs with taxable costs. It said Oracle failed to cite a single award of nontaxable costs in a copyright case, despite Oracle’s claims that the law has allowed it for more than a century.

Oracle told the high court in its own brief that if “full cost” meant only taxable costs, the word “full” adds no meaning. It added that the entire section of the Copyright Act authorizing fee-shifting would be a pointless restatement of the default standard.

‘Precise Meaning’

But Rimini attorney Mark Perry of Gibson Dunn & Crutcher LLP called Oracle’s focus on giving “full” meaning “something of a distraction” that glosses over the definition of “costs.”

“There are 208 federal statutes that authorize costs; 207 of them don’t reference” the broader law defining taxable costs, Perry told Bloomberg Law. “The Supreme Court has said costs are limited to taxable costs.”

Rimini cited brief cites three Supreme Court cases in its brief, starting with Crawford Fitting Co. v. J.T. Gibbon Inc. in 1987, that hold untaxable costs unavailable absent “explicit” statutory authority. Oracle cited no Supreme Court rulings finding costs to have a plain ordinary meaning rather than a term of art consistent with broader law, Perry said.

Oracle’s attorney did not respond to Bloomberg Law requests for comment.

Rimini also has argued that if “full costs” includes any conceivable costs, the section of the Copyright Act that also allows attorney fees would be unnecessary. Oracle argued the section’s actual phrasing—courts can award attorney fees “as part of the costs”—reflects Congress’ decision to add that part in 1909 amid broader confusion about whether “costs” in fee-shifting law included attorney fees.

Oracle has said “full costs” provided just the statutory authority required by Crawford Fitting, and said the other two cases Rimini cited—which cite Crawford Fitting—merely found attorney fees separate from witness fees. None of the cases to define costs involve the term “full costs,” Oracle argued, adding that federal law doesn’t treat costs as a consistent term of art.

“Fees, costs, and expenses are used interchangeably, with the precise meaning depending on context,” Oracle said in its Supreme Court brief.

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.