A Guide to Fourth Estate v. Wall-Street.com

Via Cyberlaw Clinic 

Source: Pixabay

By: Sylvia Zhang, J.D. ’19

Section 411(a) of the Copyright Act states that “no civil action for [copyright] infringement…shall be instituted until preregistration or registration of the copyright claim has been made.”[1] In other words, copyright owners must “register” their copyrights before suing for copyright infringement. In Fourth Estate v. Wall-Street.com, decided in March 2019, the Supreme Court clarified that “registration” for the purposes of Section 411(a) occurs only when the Copyright Office registers a copyright and provides a certificate of registration and not when an applicant files for copyright registration.[2] Under this decision, copyright owners must wait for the Copyright Office to decide on their registrations before they are allowed to sue others for infringement. This decision could potentially create a substantial time lag during which copyright owners, especially those with limited budgets, are able to enforce their copyrights. This blog post summarizes the Fourth Estate case and its reasoning, the implications of the new rule, and some ways for copyright owners to respond, including how to register for copyright.

Summary of the Case

Fourth Estate is a news organization that licensed journalistic works to Wall-Street.com, a news website. Wall-Street eventually canceled the licenses but continued to display Fourth Estate’s works on its website without Fourth Estate’s consent. Fourth Estate then submitted copyright registration applications for these works and immediately sued Wall-Street for infringement. Wall-Street moved to dismiss the suit because the Copyright Office had not yet acted on Fourth Estate’s applications. The key dispute of this case is whether the Section 411(a) requirement of “registration” was met when Fourth Estate submitted a completed registration application or would only be met when the Copyright Office actually acted on the application. The Supreme Court sided with Wall-Street, holding that registration only occurs when the Copyright Office acts.

Circuit Split

Before the Fourth Estate decision, there existed a circuit split on this question. Some courts in the Fifth, Eighth, and Ninth Circuits followed the “application approach,” where the submission of a completed application to the Copyright Office was sufficient to meet the Section 411(a) requirement that “registration…has been made.”[3] Fourth Estate was a proponent of the “application approach.”

On the other hand, the Tenth and Eleventh Circuits followed the “registration approach,” which required the Copyright Office to make a decision on the application to meet the Section 411(a) requirement.[4] Wall-Street was a proponent of the “registration approach.” Because the Fourth Estatecase was originally brought in the Eleventh Circuit, the trial court and court of appeals both followed the “registration approach” and ruled in favor of Wall-Street.[5]

Supreme Court’s Reasoning

In Fourth Estate, the Supreme Court resolved the circuit split in favor of the “registration approach.” In a unanimous opinion authored by Justice Ginsburg,[6] the Court’s reasoning focused primarily on the statutory interpretation of Section 411(a) and the legislative history of the Copyright Act.

First, the Court focused on the basic statutory interpretation principle of keeping definitions consistent within a single statutory provision. The first sentence of Section 411(a) prohibits the initiation of an infringement suit until “registration…has been made.” The second sentence of Section 411(a) allows for the copyright applicant to initiate an infringement suit even if “registration has been refused” as long as the applicant serves notice to the Copyright Office.[7] In the second sentence, registration can only be refused if the word “registration” refers to a decision by the Copyright Office. Therefore, consistent with the principle that words within a single statutory provision should retain the same meaning, the Court reasoned that “registration” in the first sentence of Section 411(a) mustrequire a registration decision by the Copyright Office, and cannot refer to the mere submission of a registration application.[8] The Court also looked to other Copyright Act provisions that use the term “registration” to support its interpretation and applied the principle of avoiding statutory interpretations that create superfluous language.[9]

Second, the Court looked to legislative history. It found that, when Congress revised the Copyright Act in 1976, it endorsed the rule that an action by the Copyright Office is required to trigger a copyright applicant’s entitlement to sue.[10] Specifically, the addition of the second sentence of Section 411(a) in the 1976 revisions would be unnecessary if Congress meant to allow copyright owners to sue upon submitting an application. In addition, in 1993, Congress considered but declined to adopt a change that would allow a copyright applicant to sue immediately after submitting a registration application.[11] These pieces of legislative history supported the Court’s decision in favor of Wall-Street.com

The Court also dismissed Fourth Estate’s policy arguments. It found that waiting for registration from the Copyright Office would not deprive copyright owners of their rights, because once the Copyright Office decided on the application the applicant could still win damages for past infringements that occurred before registration.[12] The Court also pointed to preregistration (discussed in more detail below) as a way for time-sensitive works to acquire more protection.[13] Lastly, the Court noted that the long registration processing times at the Copyright Office cannot be a reason to interpret §411(a) differently. It said that the backlog is due to “staffing and budgetary shortages that Congress can alleviate, but courts cannot cure.”[14]

In sum, the Supreme Court adopted the “registration approach,” which means that copyright owners do not automatically have the right to sue once they submit a completed registration application but, rather, must wait until the Copyright Office actually provides a certificate of registration (or denial thereof).[15]

Implications

The Fourth Estate decision is likely to have at least five major sets of implications:

• Impact on Copyright Owners. One crucial implication of the Fourth Estate decision is that it reduces the leverage of copyright owners by taking away their ability to threaten and initiate immediate legal action if they have not yet obtained registration decisions from the Copyright Office. Currently, it takes between one and seven months, with an average of five months, for the Copyright Office to process an application.[16] Copyright owners may be unable to seek preliminary injunctions that prohibit alleged infringers from using their work during that time. However, as the Supreme Court noted, the decision does not change the ability of copyright owners to eventually recover damages from infringement that occurred before registration and from the infringer’s profits.[17]

• Inequitable Impact on Small Copyright Owners. Although the Fourth Estate rule applies to all copyright owners, the impact of the rule may disproportionately harm small copyright owners. As explained below, the Copyright Office offers an “expedited process” that costs $800 per registration and provides a registration decision much more quickly than the regular process. When faced with infringement, deep-pocketed corporate copyright owners are much more likely to be able to afford the expedited process than small and individual copyright owners. Moreover, the Fourth Estate registration rule favors copyright owners that have the resources to consistently register their works for copyright over those who would be hard-pressed to register each of their works.

• DMCA Takedowns. It may also be more difficult for copyright owners to sustain a DMCA takedown request. After a copyright owner files a DMCA takedown to remove allegedly infringing work from the Internet,[18] an alleged infringer can file a counter-notice and have the work reinstated.[19] After a counter-notice has been filed, platforms or Internet service providers may refuse to respond to a second DMCA takedown notice unless the copyright owner presents proof that it has initiated a court proceeding. If a copyright owner cannot initiate court proceedings absent a copyright registration, the intermediary may put content back up before a lawsuit can be commenced.

• More Registrations. Now that merely filing a registration application is not enough to bring suit, copyright owners are more incentivized to apply for registration as soon as possible. Before Fourth Estate, some copyright owners filed for registration only when they were planning to sue for infringement. Now, the Fourth Estate rule may cause an influx of registrations (both regular and expedited) at the Copyright Office, which could cause processing times to increase beyond the current average of five months. On the other hand, Fourth Estate has brought the issue of administrative lag at the Copyright Office to the attention of some senators, and could potentially lead to Congress’s provision of more resources to the Office and relieving some of the backlog.[20]

• Less Forum Shopping and Fewer Frivolous Claims. Under Fourth Estate, the registration rule is now consistent throughout the country, which means that plaintiffs will no longer have an incentive to bring infringement cases in circuits where the rule was favorable to them. Moreover, the higher barrier to bringing copyright infringement suits may stop plaintiffs from bringing frivolous or peripheral copyright claims in order to threaten high statutory damages.

All in all, Fourth Estate does not change the copyright landscape drastically, because copyright owners have always had to register their works before suing for infringement and they can still recover all monetary damages, even those incurred before registration. The primary difference now is that there may be a substantial delay between application for registration and filing an infringement suit.

How Should Copyright Owners React? Register for Copyright.

Under Fourth Estate, a copyright owner must have a registration decision from the Copyright Office before it can sue someone for infringing its copyrightable work. If a copyright owner applies for registration only after it finds out about the infringement, the copyright owner could be waiting five or more months before the Copyright Office registers your work.

There are three ways for copyright owners to avoid the wait.

First, a copyright owner can apply for registration as soon as its works are published, so that it will have a registration decision from the Copyright Office at the ready. Early submission of registration applications may turn out to be the best and simplest approach for copyright owners in the wake of the Fourth Estate. Although this will not necessarily decrease the copyright owner’s total wait time, it could mean that the copyright owner will have a certificate of registration ready if its work is ever infringed, and it will not feel pressured to expedite the registration process. Moreover, registration also provides other benefits. For example:

• • Registration is prima facie evidence of the validity of copyright, which means that courts will presume that that the copyright owner’s work is protected by copyright.

• • When registration is made within the first three months of publication, the copyright owner will be eligible to win statutory damages and attorneys’ fees in an infringement suit, potentially making the threat of a lawsuit more alarming for the infringer.

• • Registration creates a public notice of the fact that a work is protected and of the identity of the copyright owner. This could help people who want to license the work to find the copyright owner.[21]

Registrations can be done online through the Electronic Copyright Office Registration System (called eCO) as well as through mail-in paper applications. Electronic applications are, however, cheaper and are reviewed faster than paper applications. Currently, the most basic application, which is for a single work owned by a single claimant who is also the author of that work, costs $35. Other online filings cost $55, while paper applications cost $85 or more. Photographers may be able to register up to 750 published photographs in one application under the Group Registration for Published Photographs procedure, as long as they were created by the same author in the same calendar year. For more information on how to register copyrights, see the two following guidance documents published by the Copyright Office: “Registering a Copyright with the U.S. Copyright Office” and “Copyright Office Fees (Circular 4).”

Second, for certain types of time-sensitive works, a copyright owner can apply for preregistration, which allows one to sue for infringement even before the works are published. Like registration, preregistration allows a copyright owner to initiate an infringement suit.[22] But, preregistration is limited to only a few types of works that tend to be infringed prior to authorized commercial distribution—specifically motion pictures, sound recordings, musical compositions, books, computer programs, and advertising or marketing photographs.[23] Other types of works are not available for preregistration. Moreover, preregistration is not a replacement for normal registration, so a copyright owner must still complete a registration application after publication. Preregistration is only available online and currently costs $140 per application.[24] For more information on preregistration, see the Copyright Office’s webpage.

Lastly, if necessary, a copyright owner can utilize the expedited application process and obtain a decision from the Copyright Office with much less delay. Expedited registration — which the Copyright Office calls “special handling” — is available for all types of works but is only granted in some specific circumstances. One such circumstance is where there is pending or prospective litigation.[25] For a registration with a special handling request, the Copyright Office “will make every effort to complete its examination of the claim…within five working days” of the request being made. But, it cannot guarantee that every claim will be registered within that time frame.[26] A copyright owner can request special handling when it first submits an application, as well as for an application that is already submitted.[27] Special handling for registration currently costs a hefty $800 per claim in addition to the regular application fee.[28] For more information on special handling, see the guidance document “Special Handling (Circular 10)” published by the Copyright Office.

Sylvia Zhang (HLS JD 2019) was an advanced clinical student in the Cyberlaw Clinic during the spring semester 2019. Note:  This post is informational and does not constitute legal advice; if you have questions about the applicability of the Fourth Estate decision to your own copyright registration activities, please consult a lawyer.

[1] 17 U.S.C. § 411(a) (2017).

[2] 139 S. Ct. 881, 892.

[3] See, e.g., Apple Barrel Prods. v. Beard, 730 F.2d 384, 386-87 (5th Cir. 1984); Action Tapes, Inc. v. Mattson, 462 F.3d 1010, 1013 (8th Cir. 2006); Cosmetic Ideas, Inc. v. IAC/Interactive Corp., 606 F.3d 612, 621 (9th Cir. 2010).

[4] See, e.g., LaResolana Architects v. Clay Realtors Angel Fire, 416 F.3d 1195, 1200-01 (10th Cir. 2005); M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 note 4 (11th Cir. 1986).

[5] See Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, No. 16-60597, 2016 U.S. Dist. LEXIS 187499, at *3 (S.D. Fla. Mar. 23, 2016); Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, LLC, 856 F.3d 1338, 1341 (11th Cir 2017).

[6] Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 886 (2019).

[7] 17 U.S.C. § 411(a).

[8] See Fourth Estate, 139 S. Ct.at 889.

[9] See id.

[10] See id. at 890-91.

[11] Id. at 891.

[12] See id. at 891.

[13] See id. at 892.

[14] Id. at 892.

[15] If the Copyright Office refuses registration, the applicant is allowed to sue for infringement as long as it serves a copy of the complaint to the Register of Copyrights (i.e. the director of the Copyright Office). In such a suit, the presiding court will also decide on the issue of registrability. See17 U.S.C. § 411(a) (2017).

[16] Registration Processing Times, U.S. Copyright Office (2019), https://www.copyright.gov/registration/d…. See also FAQs, Copyright Office, https://www.copyright.gov/help/faq/faq-w… (last visited May 19, 2019).

[17] See Fourth Estate, 139 S. Ct. at 891; 17 U.S.C. § 504 (2017).

[18] See 17 U.S.C. § 512(c)(3) (2017).

[19] See id. at § 512(g)(3).

[20] See Steve Brachmann, Senators Tillis and Coons Express Concerns with Fourth Estate in Letter to Copyright Office, IP Watchdog (Mar. 26, 2019), https://www.ipwatchdog.com/2019/03/26/senators-tillis-coons-express-concerns-fourth-estate-letter-copyright-office/id=107697/. See also Letter from Sen. Thom Tillis and Sen. Christopher Coons to Karyn Temple, Acting Register of Copyright (Mar. 14, 2019), [21] See U.S. Copyright Office, Circular 1: Copyright Basics 5 (2017), https://www.copyright.gov/circs/circ01.pdf.

[22] 17 U.S.C. § 411(a).

[23] Preregistration, U.S. Copyright Office, https://www.copyright.gov/help/faq/faq-prereg.html (last visited May 19, 2019).

[24] U.S. Copyright Office, Circular 4: Copyright Office Fees 3 (2018), https://www.copyright.gov/circs/circ04.pdf.

[25] U.S. Copyright Office, Circular 10: Special Handling 1 (2017), https://www.copyright.gov/circs/circ10.pdf.

[26] Id. at 2.

[27] Id. at 5.

[28] Id. at 2.