Copyright infringement lawsuits can be time-consuming, which not surprisingly, means they can also become very expensive. Attorney’s fees often pile high, and while millions of people across the world own copyrights, a remarkable few can afford to defend their rights in court. Most of the time, when visual artists find their images used without permission, the artist can’t realistically sue because the cost of the attorney’s fees will likely exceed the money they might receive from a successful lawsuit. That’s one of the reasons why the Copyright Act empowers courts to award attorney’s fees to successful litigants: if artists can have some hope that their attorney’s fees will be covered (sometimes called “fee shifting”) the artists would be better able to defend their works.
For a plaintiff to receive attorney’s fees however, a few things must happen. First, the Copyright Act requires that a copyright be registered with the Copyright Office before the infringement took place (or within 3 months of publishing the work) to be eligible to receive statutory damages. Unfortunately, very few visual artists register their works so legal fees would be unavailable. (Click here to learn more about how to register your works with the Copyright Office). With a registration though, judges usually will award attorney’s fees as a matter of course, even though they have discretion, because the government wants to encourage registrations.
However, what happens if you are the winning defendant? You have been sued by a person or company for copyright infringement yet you did nothing wrong. The court rules in your favor but you spent a lot of money on lawyers to defend yourself. The attorney’s fees provision in the Copyright Act represents a balance Congress struck between encouraging artists to enforce their rights, while protecting the public from unreasonable litigation.
On the one hand, we want to encourage copyright registrations so there is a record of artistic works and their owners. When someone infringes on a copyrighted work, the copyright owner may use the courts to stop the infringement and receive just compensation for the money they lost (and take away any profits that the infringer might have made on the artist’s work). Unfortunately, litigation is so expensive that many copyright holders cannot afford to sue.
So, when it wrote the Copyright Act, Congress included a minimum monetary award structure (called “statutory damages”), as well as the prospect of receiving compensation for attorney’s fees, but those are only available for copyright owners who register their works. It’s a carrot and stick game: to encourage registration, Congress provided copyright owners with the prospect of enhanced monetary damages in the event of an infringement.
However, if left unchecked, copyright owners might indiscriminately file cases of questionable merit, just on the chance that they may obtain a statutory damages award. So as a counterweight, Congress included the fee shifting provision, which allows courts to shift the burden of defending a lawsuit onto the person bringing the suit, if appropriate. The possibility of having to pick up the tab for the other side’s lawyers is intended to make plaintiffs think carefully about their case before bringing litigation.
Back in 1994, in a case involving John Fogerty of Creedence Clearwater Revival (Fogerty v. Fantasy, Inc.), the Supreme Court laid out rules for when defendants could receive attorney’s fees. The Supreme Court required that courts consider four non-exclusive factors when deciding whether to award attorney’s fees in copyright cases. The Court also explained that the law does not require an attorney’s fee award, but instead empowers judges to make a case-by-case assessment, and cautioned courts not to jump to conclusions simply because one party or the other won the case. The factors the Court considered are:
- The need to advance considerations of compensation and deterrence
- Objective reasonableness
How do we break these factors down? A frivolous lawsuit is one that is filed with the intention of harassing, annoying, or disturbing the opposite party, or one in which the plaintiff knows that there is little or no chance of winning. Motivation might question why a party chose to litigate or continue to litigate the matter in the first place. For example, if one side were to file motions merely for the sake of agitating the other side. Courts must also consider the need to deter or advance instances of future copyright lawsuits. After all, if copyright holders who sue for infringement would be prohibited from doing so because they thought they wouldn’t be able to pay their legal costs, then the entire system may break down. The final factor is objective reasonableness, which looks at the reasonableness of the losing parties position.
The result of the Fogerty case has been a bit messy, however, as different courts developed different approaches as to how these factors should be weighted, leading to wildly different results in different cases and different courts around the country. When that happens, the Supreme Court will often take a case that attempt to clarify or give guidance as to how courts should conduct their analysis in the future.
And that is what the U.S. Supreme Court did this past June when it considered Kirtsaeng v. John Wiley & Sons, Inc.
When is a Copyright Lawsuit Unreasonable for Attorney’s Fees Purposes?
Supap Kirtsaeng is a student that moved from Thailand to the U.S. to study math at Cornell. Kirtsaeng discovered that John Wiley & Sons, the publisher of one of his textbooks, sold the exact same English language textbooks in Thailand, but for a fraction of the price sold in the U.S. Kirtsaeng’s entrepreneurial spirit kicked in and he began asking family members and friends in Thailand to purchase Wiley textbooks by the truckload and ship them to the U.S., where he would then re-sell to American students at a much lower price than Wiley, while still making a healthy profit, and depressing Wiley’s
Wiley sued Kirtsaeng for copyright infringement, alleging Kirtsaeng violated its distribution rights. Wiley’s claim was rejected. Following his win, Kirtsaeng sought compensation for his attorney’s fees (totaling $2 million) under the fee shifting provision of the Copyright Act. Kirtsaeng was the prevailing party and he believed he should be reimbursed for his defense.
Kirtsaeng’s fee request also made its way all the way to the Supreme Court, which is referred to as Kirtsaeng II to differentiate it from the first sale portion of the case. In Kirtsaeng II, the Court focused most heavily on the “objective reasonableness” factor of the Fogerty analysis. The court argued that “giving substantial weight to the reasonableness of a losing party’s position will best serve the objectives of the Copyright Act because it both encourages parties with strong legal positions to stand on their rights and deters those with weak ones from proceeding with litigation.” This, in essence, asks the court to put additional emphasis on whether the losing party was unreasonable in bringing their claim about in the first place. However, the Court was quick to point out that it wasn’t trying to establish a bright-line rule – the lower courts still have the discretion to decide for themselves. More importantly, though, there is no presumption of fees when a losing party has made an objectively unreasonable argument, nor does a losing party with an objectively reasonable copyright claim always mean that they never pay the other side’s attorney’s fees. Objective reasonableness of a claim or defense should be an important, but not controlling, factor for a court to consider when determining whether to award attorney’s fees. Courts should also be free to consider other relevant factors in a given case.
In Kirtsaeng II, the court paved the way for the decision of the lower court to stand. If the lower court decides again, as it did before, that Wiley’s claim was sufficiently reasonable he’ll still need to fork up the bill to defend himself. While it’s easy to be angry with this resolution, the ruling is actually good news for empty-pocketed copyright holders. Why? Imagine you are an artist and the owner of a copyright, and you sue an infringer. You lose the case, and now the infringer is asking for attorney’s fees on top of his victory. As long as you made your claim in good faith and comport with the new weighting of the four factors discussed above, you shouldn’t be deterred from staking your copyright claim.
In general, the Kirtsaeng II ruling is a good thing for copyright holders. It further defines what can be expected in copyright cases, and adds a level of risk for would-be infringers. Ultimately, though, a re-definition of attorney’s fee shifting in copyright cases, coupled with some clarity on the purpose of copyright statutes, will likely limit costly, unnecessary litigation.
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