When Does Copyright “Registration” Occur – Supreme Court Provides Clarity in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC

Authors, playwrights, painters, sculptors and other artists often consider copyright protection only after they become aware of an infringer. Unfortunately, waiting to file a copyright application can diminish an artist’s ability to file suit, recover damages and recover attorney’s fees. The Supreme Court’s recent decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U. S. ____ (2019), has now provided much needed clarity as to when an artist can file a copyright infringement lawsuit (and has reinforced the importance of securing a copyright registration as soon as possible).

Copyright Infringement Timing History:

While an artist’s copyright rights “run from the work’s creation”, Eldred v. Ashcroft, 537 U. S. 186, 195 (2003), the right to file a copyright infringement lawsuit is limited to those who have met the requirements laid out in 17 U.S.C. § 411(a) of having a “preregistration or registration of the copyright claim….” Section 411(a) goes on to explain that in cases where a copyright application has been refused registration, the applicant can still file a copyright infringement action “if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.”

Confusingly, Circuit Courts have been split over what constitutes a “registration.” For example, the Ninth and Fifth Circuits took the “application approach” – holding that it was possible to file a copyright infringement lawsuit as soon as a copyright application was filed. Other circuits such as the Eleventh and Tenth Circuits took the “registration approach” – holding that the word “registration” meant having been issued a registration, i.e., that the copyright office had to actually issue the registration (or a denial) in order to file a lawsuit for copyright infringement. Naturally, this caused forum shopping as artists who had not yet secured copyright registrations (or foresaw difficulties in doing so) could simply file lawsuits in jurisdictions which took the “application approach.”

Current Copyright Infringement Timing:

Writing for a unanimous Court, Justice Ginsburg delivered a relatively short opinion adopting the “registration approach” and finding that “registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” Importantly, however, the Court also reiterated that “[u]pon registration of the copyright…a copyright owner can recover for infringement that occurred both before and after registration.”

That being said, the Supreme Court’s holding comes with a critical caveat – understanding the distinction between: (i) actual damages and profits; and (ii) so-called “statutory damages.”

Actual Damages and Profits vs. Statutory Damages:

“Actual damages” are the quantifiable monetary damages suffered by the owner of a copyright as a result of copyright infringement, while “profits” are the quantifiable earnings the copyright infringer accrued as a result of his or her copyright infringement. As all copyright litigation attorneys know, proving actual damages can be a difficult and expensive process – often requiring the testimony of copyright expert witnesses.

Contrastingly, a copyright owner can elect to pursue “statutory damages” – “a sum of not less than $750 or more than $30,000 as the court considers just.” In extreme cases, statutory damages can be reduced to $200 per work infringed or increased to $150,000 per work infringed. In other words, under the right circumstances, a copyright owner can simply ask a court to award up to $150,000 per work infringed – without spending any money on experts or otherwise trying to prove actual damages and profit.

Current Copyright Statutory Damages Timing:

The Supreme Court’s decision in Fourth Estate correctly notes that, under 17 U.S.C. § 504 (b), the owner of a copyright registration can recover actual damages and profits for infringement that “occur[s] both before and after registration”. However, copyright owners need to read this decision in light of 17 U.S.C. § 412. Under Section 412, both statutory damages and attorney’s fees are generally only available if:

a copyright application is filed for the underlying work before the infringement starts; or

a copyright application is filed: (a) after the infringement starts; but (b) within three months of the underlying work’s first publication.

This has already become an issue in some high-profile cases. We recently wrote about several interesting lawsuits involving the Fortnite video game’s use of certain dance routines (see Protecting “The Carlton” – Is it Possible to Copyright or Trademark a Dance Move?). In light of the Supreme Court’s decision in the Fourth Estate case, sources report that these lawsuits have been temporarily withdrawn until the plaintiffs suing for copyright infringement finish navigating the copyright registration process.

Bottom line: statutory damages and attorney’s fees – arguably the two most important sources of recovery in the overwhelming majority of copyright infringement lawsuits – are only available if an artist timely files a copyright application.

Potential Pitfall – Copyright Statute of Limitations:

One final issue raised by the Supreme Court’s decision in Fourth Estate is the potential impact vis-à-vis the three-year statute of limitations for civil copyright infringement under 17 U.S.C. § 507. While the Supreme Court’s decision said that the copyright holder’s “fear is overstated” with respect to this issue, we respectfully disagree.

According to the Copyright Office’s website, the current wait time for a copyright application is:

6 months (for electronically filed applications not requiring back-and-forth with the Copyright Office);

13 months (for paper filed applications not requiring back-and-forth with the Copyright Office);

9 months (for electronically filed applications requiring back-and-forth with the Copyright Office); and

20 months (for paper filed applications requiring back-and-forth with the Copyright Office).

Such wait times can dramatically cut into a party’s ability to effectively police its rights. For example, a foreign company selling infringing products online through a site such as Amazon.com or eBay.com can often only be stopped by presenting a copyright registration certificate or a court order to such online retailers. By the time months go by, thousands of infringing units may be sold (and the foreign company – when confronted – may simply delist the products and reopen a new online store under a new name).

Once again, the bottom line is simple: artists should file a copyright application as soon as possible.

If you are an artist or other rights holder interested in filing a copyright application, call us today for a free consultation.