A New Business Strategy for Copyright Owners: Filing Suit for Copyright Infringement

What the Supreme Court’s Fourth Estate v. Wall-Street Ruling Means for Businesses

On Monday March 4th, 2019, the Supreme Court ruled that a copyright owner cannot file suit for copyright infringement until the work in dispute has been granted a copyright registration by the U.S. Copyright Office.  This ruling is significant because in many areas of the country—including Texas and California—a copyright owner could bring suit for copyright infringement immediately upon filing an application for registration.  Now, a copyright owner must have a registration in hand before running to the courthouse.

What this means for copyright owners is that they need to be more proactive in seeking registrations for their works.  In the time it takes to get a registration—right now about seven months—an infringer could divert sales away from the legitimate owner of an otherwise protected work at the most critical time after entry into market.  And while the Copyright Office does have a mechanism in place to expedite registrations within weeks for an additional special handling fee of $800, that process may begin to take longer as a result of increased volume due to this ruling.  A copyright owner is still entitled to damages for past infringements but cannot file suit for copyright infringement or seek an injunction to stop infringing acts until it has the registration in hand.

Background: Filing Suit for Copyright Infringement

There had been a split between various U.S. Circuits about how to interpret the portion of the Copyright Act that barred a copyright owner from filing suit for copyright infringement until “registration . . . has been made.”  The core issue in dispute was whether or not a registration was “made” upon application or when the registration issued from the Copyright Office.  Some of the Circuit Courts of Appeal had held that a registration was made when the application was filed, and others had required that the registration actually issue prior to the right to filing suit for copyright infringement.  While there were many good policy arguments for and against each position, none of that really matters now because the High Court has decided once and for all that registration must come first.

The Bottom Line for Your Business

Copyright law has many benefits for business owners who do not necessarily rely on copyright registration as a core business operation.  For businesses that sell products, copyright law has several advantages that work in conjunction with trademarks—particularly in policing unauthorized sales on the Internet.  Any company with a product should consider seeking registrations for their packaging materials and advertisements.  It is not unusual to see companies that sell knock-off products “borrow” the product pictures and advertising copy of their competitors.  When these materials are registered as copyrights, enforcement through the Copyright Act can be far swifter than relying on trademark, unfair competition, trade secret, or other business law.

Read more here, for an article posted before the ruling, on registration approach v. application approach and background on this issue.

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software & copyrights

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Klemchuk LLP is a litigation, intellectual property, transactional, and international business law firm dedicated to protecting innovation. The firm provides tailored legal solutions to industries including software, technology, retail, real estate, consumer goods, ecommerce, telecommunications, restaurant, energy, media, and professional services. The firm focuses on serving mid-market companies seeking long-term, value-added relationships with a law firm. Learn more about experiencing law practiced differently and our local counsel practice.

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