by Nancy Wolff, DMLA Counsel
The U.S. Supreme Court has agreed to hear a case concerning when a prevailing party in a copyright case is entitled to recover its costs of litigation. Section 505 of the Copyright Act states that in copyright cases “the court in its discretion may . . . award a reasonable attorney’s fee to the prevailing party.” Because the law gives courts the discretion to award attorneys’ fees, over time several different standards have developed in the federal court system.
The Supreme Court has not considered this issue since 1994, when in Fogerty v. Fantasy, Inc. it rejected the tendency of some lower courts to engage in the “dual standard” of awarding generous fees to prevailing plaintiffs, while only awarding fees to prevailing defendants in extraordinary circumstances, such as when the plaintiff’s claim is deemed “frivolous” or in “bad faith.” The Court instead endorsed the three-factor analysis which looks to the “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence. . . . so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner.”
Following the Fogerty case, courts began to award attorneys’ fees to defendants as well as plaintiffs which some say has been a deterrent to plaintiff’s initiating copyright cases against defendants for fear of losing and incurring the expense of attorney’s fees, particularly in hard cases involving fair use.
The present case, Kirtsaeng v. John Wiley & Sons, Inc., was before the Supreme Court only three years ago, albeit for an entirely different issue. In 2013, Supap Kirtsaeng, who had built a successful eBay business selling textbooks that he bought overseas, prevailed against a copyright infringement claim by the publisher John Wiley & Sons, Inc., and then sought to recover his attorneys’ fees. The Second Circuit Court of Appeals affirmed the district court’s decision to deny the motion for fees by focusing on the “objective reasonableness” of John Wiley & Sons’ pursuit of the case. Kirtsaeng, recognizing inconsistency among the circuit courts concerning the application of the three Fogerty factors, petitioned the Supreme Court to consider the appropriate standard for awarding attorneys’ fees to a prevailing party.
As the issue of attorney’s fees is significant in determining whether to bring copyright litigation or whether to settle a copyright infringement case, having guidance on this important issue from the Supreme Court and will be helpful to plaintiffs and defendants alike.