Oracle Corp. didn’t have the U.S. government on its side Monday when it asked the Supreme Court to take an expansive view of cost shifting in copyright cases.
It did, however, claim the support of the U.S. Patent and Trademark Office.
Oracle is trying to preserve a $20 million cost award in its battle with third-party software developer Rimini Street Inc., some $12.8 million of which is for nontaxable costs such as expert witness fees and e-discovery. The U.S. Court of Appeals for the Ninth Circuit OK’d the award because Section 505 of the Copyright Act says district judges may allow the recovery of “full costs by or against any party.”
Gibson, Dunn & Crutcher partner Mark Perry argued for Rimini Street that the mere use of the word “full” could not override longstanding limits on taxable costs in 28 USC 1920 and 1821. Those include transcript fees, printing costs and reimbursement for court-appointed experts.
Perry had the full support of Assistant to the Solicitor General Allon Kedem, who cited special education and civil rights cases where the court held those limits cannot be exceeded absent explicit statutory authority. “If it didn’t carry the day in that case and in those contexts, then certainly it shouldn’t win here in the copyright context,” Kedem said.
But Kirkland & Ellis partner Paul Clement, representing Oracle, said the government is talking out of both sides of its mouth.
Clement noted that the government filed a cert petition last month on behalf of the U.S. Patent and Trademark Office in NantKwest v. Iancu, in which the PTO is seeking its attorneys fees in a civil action filed by a patent applicant. The government’s authority is a statutory provision that says it may recover “all the expenses” in such a proceeding.
“The ordinary meaning of the phrase ‘[a]ll the expenses of the proceedings’ is all the expenditures ‘of money, time, labor, or resources’ through which a participant in the proceeding seeks to attain its desired result,” the solicitor general’s office and the PTO argue in their cert petition.
“Now, I couldn’t agree more,” Clement told the justices Monday. “I don’t know why they are not on our side of this case. I couldn’t agree more that a word like ‘all’ or a word like ‘full’ is a clear textual indicator that Congress does not want you to look to a subset of costs or expenses, whatever the case may be.”
Tueday’s arguments in Rimini Street v. Oracle stem from a 2015 jury verdict that Rimini infringed Oracle’s copyright and violated anti-hacking statutes while performing third-party maintenance for Oracle enterprise software. Jurors awarded $35.6 million for infringement and $14 million for violations of California computer hacking statutes. U.S. District Judge Larry Hicks of Nevada tacked on $28 million in attorney fees, $20 million in costs—including the $12 million in nontaxable costs—and $22 million in post-judgment interest. The Ninth Circuit reversed the computer crimes verdict and threw out that portion of the award. It also instructed Hicks to reconsider the fee award.
But the Ninth Circuit upheld the costs, citing its 2005 opinion in Twentieth Century Fox v. Enter Distributing. The Eighth and Eleventh circuits have gone the other way, limiting copyright awards to taxable costs.
Chief Justice John Roberts and Justice Stephen Breyer seemed somewhat incredulous Monday that the combined costs and attorneys fees matched the infringement award.
“The costs and expenses asserted by Oracle in this case were greater than the damages awarded by the jury, that is correct,” Perry said.
But Roberts and a few other justices were clearly uncomfortable with the idea of “full” playing no role in the statute. “Why would Congress be worried about saying ‘full costs’?” Roberts asked Perry. “Nobody’s ever apparently ever awarded … less than full costs.”
Perry suggested that the statute intends to make properly taxable costs an all-or-nothing decision for district judges.
Meanwhile, Justice Sonia Sotomayor suggested to Clement that the Ninth Circuit’s approach is too open-ended. “Under your definition of ‘full costs,’ I’m assuming the babysitter for the witness who has to come to court is covered. I’m assuming experts, which could include experts like a body language reader” would be covered.
Breyer said he’d made what he thought was a fabulous argument for Clement’s position in the special education case. “But, unfortunately, it wasn’t fabulous enough, because I was writing a dissent,” he said. “So am I stuck with that?” he asked Clement, noting that it’s a common predicament in a lengthy judicial career.
“Well, Justice Breyer, far be it from me to give you career advice,” Clement replied, prompting laughter in the courtroom.
“No, no, that’s what I’m asking for,” Breyer insisted.
Clement advised Breyer never to abandon his basic approach to statutory construction. “I mean, Justice Scalia, God rest his soul, was in dissent in a lot of cases, insisting on the plain meaning,” Clement said. “He never turned around and said, well, I’m tired; I’m going to look at the legislative history this time around.”
“Pity,” Breyer replied, evoking more laughter.