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 âthe court in its discretion may . . . award a reasonable attorneyâs fee to the prevailing party.â Because the law gives courts the discretion to award attorneysâ 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 âdual standardâ of awarding generous fees to prevailing plaintiffs, while only awarding fees to prevailing defendants in extraordinary circumstances, such as when the plaintiffâs claim is deemed âfrivolousâ or in âbad faith.â The Court instead endorsed the three-factor analysis which looks to the âfrivolousness, 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.â
Following the Fogerty case, courts began to award attorneysâ fees to defendants as well as plaintiffs which some say has been a deterrent to plaintiffâs initiating copyright cases against defendants for fear of losing and incurring the expense of attorneyâs 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 attorneysâ fees. The Second Circuit Court of Appeals affirmed the district courtâs decision to deny the motion for fees by focusing on the âobjective reasonablenessâ of John Wiley & Sonsâ 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 attorneysâ fees to a prevailing party.
As the issue of attorneyâs 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.