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Supreme Court Clarifies Standards Governing the Attorneys’ Fees Awards In Copyright Litigation

This morning, the Supreme Court issued its most recent ruling in Kirtsaeng v. John Wiley & Sons, Inc., unanimously holding that the “objective reasonableness” of an unsuccessful litigant’s position should be accorded “substantial weight” when awarding attorneys’ fees in copyright cases.  The Court, however, also noted that this factor is not dispositive and district courts must examine a wide-array of other factors. 

This case first came before the Court in 2012 when the Plaintiff, Supap Kirtsaeng, petitioned the Court to reverse the Second Circuit’s holding that he had infringed John Wiley & Sons copyrights by reselling textbooks in the United States that he had purchased in Thailand.  After the Court ruled in his favor, he returned to the District Court, seeking over $2 million in fees under the Copyright Act’s fee-shifting provision, 17 U.S.C. § 505.

The District Court and the Second Circuit held that fees were inappropriate because Wiley’s position in the underlying litigation had been “objectively reasonable.”  No. 08-cv-07834 (S.D.N.Y. Dec. 20, 2013); 605 F. Appx. 48, 49, 50 (2nd Cir. 2015).  At the Supreme Court, both parties argued that the Copyright Act fee-shifting statute should be interpreted to further the overall goals of the Copyright Act, but took different positions on how that should be accomplished.  Kirtsaeng argued that fees should be awarded to successful litigants whose cases “meaningfully clarif[y]” copyright law.  Wiley, on other hand, argued that “giving substantial weight to the reasonableness of a losing party’s position” best serves those goals.

The Court agreed with Wiley.  The Court began its analysis by noting that the Copyright Act  “serves the purpose of enriching the general public through access to creative works.”  Slip Op. at 6.  Thus, the Court aimed to craft guidance that would further those goals by “encouraging and rewarding authors’ creations while also enabling others to build on that work.”  Id.  The Court reasoned that Kirtsaeng’s approach would not further the goals of the Copyright Act because it would disincentivize litigants from pursuing cases that would “meaningfully clarify” copyright law by imposing a financial penalty for losing.  It would also be difficult to implement because the long-term implications of a court’s holding are often not immediately clear.

The Court found that Wiley’s “objective reasonableness” test, on the other hand, furthers the goals of the Copyright Act by encouraging parties with strong legal positions to litigate (since they stand to recover fees) and those with weak positions to settle (since they face the potential of paying two sets of fees).  The Court reasoned that Wiley’s approach is also more administrable because a court that has ruled on the merits of a copyright case can easily assess the reasonableness of the losing party’s position.

But, while the Court held the “objective reasonableness” factor should be given “substantial weight,” it held it is not dispositive.  Instead, courts must consider other factors that further the goals of the Copyright Act, and can award fees where a losing party’s position is reasonable if doing so would further the goals of the Copyright Act and vice versa.  Slip. Op. at 10-11.  Because it was not clear if the lower courts had properly weighed factors other than objective reasonableness, the Court remanded the case to the District Court to review the fee application “giving substantial weight to the reasonableness of Wiley’s position but also taking into account all other relevant factors.”   Slip Op. at 12. 

Ultimately, consistent with its recent decisions on fee-shifting statutes related to patent law, Kirtsaeng increases the discretion district courts have in making fee award determinations in copyright cases, giving them leeway to consider the totality of the circumstances.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Allyson Madrid, Squire Patton Boggs Law Firm, Trademark Prosecution Attorney
Associate

Allyson Madrid is an associate based in the firm’s San Francisco office. She represents business entities across a variety of industries in connection with trademark prosecution, trademark portfolio management and brand protection. Allyson also advises clients in consumer protection and other advertising matters. She is a graduate of University of California, Hastings and Tulane University, B.A.

415-393-9859
Joseph Grasser IP Lawyer Squire Patton Boggs
Senior Associate

Joseph Grasser’s practice focuses on federal and state court litigation with emphasis on intellectual property matters and unfair competition claims.

Joseph also advises domestic and international clients on matters relating to trademarks, copyrights and trade secret matters. His experience includes all phases of litigation from initial motion practice through jury trial and appeal.

Prior to joining Squire Patton Boggs, Joseph served as a judicial extern for The Honorable Robert Dondero formerly of the Superior Court for the City and County of San Francisco, now with the California Court of Appeal, District 1. Before attending law school, Joseph was a paralegal with Squire Patton Boggs. As a paralegal he assisted in discovery, dispositive motion practice and trial preparation in patent infringement suits in US district courts on behalf of Japan-based and Taiwan-based manufacturers.

Joseph is listed in Northern California Super Lawyers – Rising Stars, which recognizes attorneys who are age 40 or younger, or in the practice of law 10 years or less.

Experience

  • Representing the famous Muirfield Village Golf Club, securing a TRO, preliminary injunction and, ultimately, a permanent injunction in S.D. Ohio, preventing a Texas LLC from claiming exclusive rights to Muirfield’s 40+ year old trademark for its annual PGA Tour tournament.

  • Representing Venture Corporation Ltd and Venture Design Services, Inc. Following a two-week jury trial in N.D. Cal., the jury (i) confirmed our clients’ ownership of patents that a former employee claimed to have invented before his employment commenced, and (ii) rejected the former employee’s counterclaims seeking US$52-103 million in damages. Venture Corp. Ltd v. Barrett, No. 5:13-CV-03384-PSG, 2015 U.S. Dist. LEXIS 165809, 2015 WL 8479475 (N.D. Cal. Dec. 9, 2015). After the Court of Appeals affirmed, Venture Corp. Ltd v. Barrett, Case No. 15-17439, 2017 U.S. App. LEXIS 14174 (9th Cir. Aug. 2, 2017), the district court awarded our clients more than US$1.4 million in attorneys’ fees and related expenses.

  • Representing a Korea-based maker of ramen noodle products and its US subsidiary in a class action dispute alleging violation of US antitrust laws.

  • Representing Zippo Manufacturing Co. in enforcing one of Zippo’s trademark families in an infringement action in C.D. Cal. and assisting with parallel litigation in the German Regional Court of Frankfurt am Main and in the High Court of Justice in London. All three actions resolved by settlement on the eve of trial in C.D. Cal.

  • Representing Zippo Manufacturing Co. in infringement actions in California, Colorado and Pennsylvania, enforcing Zippo’s registered trade dress that protects the shape of its famous flip-top lighter. All cases resulted in a stipulated permanent injunction or otherwise settled on Zippo’s terms.

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