Award of Attorneys’ Fees in Copyright Cases Not Beholden to Lodestar Method
Monday, April 2, 2012

Considering an attorneys’ fees award in a copyright infringement suit under the Architectural Works Copyright Protection Act, which created a new category of copyrightable subject matter for “architectural works,” the U.S. Court of Appeals for the First Circuit found the district court did not abuse its discretion by departing from the Lodestar method in awarding attorneys’ fees. T-Peg Inc. v. Vermont Timber Works Inc., Case Nos. 10-2234; -2300 (1st. Cir., Feb. 16, 2012) (Thompson, J.).

Stanley Isbitski wished to build his dream house. He consulted with both T-Peg and VTW. T-Peg drafted a preliminary design in 1999. After working with Isbitski to refine the design, T-Peg registered its updated design with the Copyright Office in May 2001. Meanwhile, in 2000, Isbitski showed T-Peg’s unregistered preliminary design to Vermont Timber Works (VTW), which began working on its own design. VTW completed its plan in 2002 with significant, minutely detailed input from Isbitski. Mr. Isbitski sold the property before it was completed to a Mr. Dupee. When completed, the home apparently reflected T-Peg’s registered design.

T-Peg sued for copyright infringement initially in October 2003. In February 2005, the district court granted summary judgment for VTW, concluding that no reasonable jury could find that T-Peg’s and VTW’s designs were substantially similar. T-Peg appealed, and the 1st Circuit reversed.

After considerable delay involving motion practice, mediation efforts and an attempt at an interlocutory appeal, the case went to trial in September 2009. Six days later, the jury found in VTW’s favor and rejected T-Peg’s infringement claims. VTW moved for attorneys’ fees and costs that the district court, in its discretion, may grant the prevailing party in a copyright claim under the Copyright Act. VTW sought more than $200,000 in attorneys’ fees and costs, while the case involved only $66,350 in damages. T-Peg opposed the motion, arguing that equitable principles (e.g., the absence of any bad faith on T-Peg’s part) called for the court to exercise its discretion to deny any fee award entirely.

The district court granted VTW a fee award of $35,000. Both parties appealed, T-Peg challenging the grant of any award at all and VTW challenging the award’s amount. T-Peg argued that no award was appropriate because the district court applied a factor it claimed was improper: whether a fee award would “deter plaintiffs with reasonable claims, and defendants with meritorious defenses, from litigating in a manner greatly disproportional to the matter at stake.” The 1st Circuit held that that T-Peg’s protest was groundless. The Copyright Act allows the district court to impose a “reasonable” fee award, the appeals court reasoned, and the Supreme Court has said broadly that a district court may consider principles of deterrence in exercising its discretion to fashion a reasonable award.

VTW argued that by diverging from the Lodestar method (i.e., hours productively expended and multiply that time by reasonable hourly rates) for determining attorneys’ fees, the district court violated the 1st Circuit’s “strong preference” for that method and therefore abused its discretion. Again, the appeals court disagreed, stating that district courts have discretion to fashion an appropriate award as long as they explain their reasoning in accordance with the equitable principles spelled out by the Supreme Court and that reasoning holds up to scrutiny. The 1st Circuit determined that the district court’s explanation and analysis, contained in a 15-page option, was more than sufficient and was not only reasonable but thoughtful. In any event, the district court’s reasoning certainly did not indicate an abuse of discretion. Therefore, the 1st Circuit affirmed the $35,000 award.

 

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