Second Circuit - Copyright Law - Attorneys Fees To Prevailing Parties Where Copyright & Trademark Claims Not Adjudged

Can a "prevailing party" in a copyright or trademark action obtain attorneys fees even if the victory had nothing to do with the Copyright Act or Lanham Act?   The Second Circuit, in a pair of recent decisions involving alleged infringement of test preparation materials, says "yes."

Manhattan Review Test Prep

In Manhattan Review LLC v. Yun - 2019 WL 1319813 and 2019 WL 1326528 the Second Circuit divided its opinion into two decisions, one of precedential value limited to the question of whether a "prevailing party" could collect attorneys fees and one by summary order dealing with the questions of whether attorneys fees were appropriate under the Copyright Act and Lanham Act.  This federal action arose in the wake of a failed state action.  In the state action based on various state law claims, the litigation turned on the corporate status of Manhattan Review LLC because its corporate status had been cancelled by the State of Delaware.   Manhattan Review's loss of corporate status led to dismissal of copyright and trademark claims brought derivatively on its behalf.   Manhattan Review's principal obtained a certificate of good standing and moved to vacate the dismissal.  The state court denied the motion to vacate.


Manhattan Review LLC and its principal filed the federal action for copyright and trademark infringement, failing to mention the state court action.  The court found the certificate of good standing did not nullify Delaware's cancellation and ruled against the plaintiffs on the grounds of collateral estoppel, finding that plaintiffs had received a full and fair opportunity to litigate.


The defendants sought, and were awarded attorneys fees and costs pursuant to section 505 of the Copyright Act and section 35(a) of the Lanham Act.   Plaintiff objected, arguing that the copyright and trademark claims had not been considered on the merits, making statutory awards of attorneys fees inapplicable.


The Second Circuit rejected the argument as foreclosed by the U.S. Supreme Court's 2016 decision in CRST Van Expedited, Inc. v. EEOC which decided that the "defendant may prevail even if the court's final judgment rejects the plaintiff's claim for a non-merits reason."


The Second Circuit's summary order dealt with the questions of whether attorneys fees were properly assessed under the Copyright Act and Lanham Act which afford district court judges discretion - and boundaries on their discretion - in awarding attorneys fees.  The Second Circuit affirmed the finding that plaintiffs' litigation positions were "objectively unreasonable and frivolous" and that "the failure to mention a relevant prior action indicates a lack of candor".   Accordingly, the Second Circuit concluded that approximately $49,000 in attorneys fees were appropriately awarded under the Copyright Act and as an "exceptional case" under the Lanham Act.


Chapter 18 of Copyright Litigation Handbook covers Attorneys Fees and Costs.  This decision illustrates that persisting in pursuing unsuccessful theories in copyright and trademark matters can be a dangerous pursuit.


 www.dunnington.com
 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd
 

Copyright Law: A "Full" Beer For Justice Kavanaugh? SCOTUS Stiffs Intellectual Property Owners

While Hans Christian Anderson explained an emperor wearing no clothes, SCOTUS just gave us the full monty on costs in copyright litigation.  On March 4, 2019 Justice Kavanaugh delivered a unanimous opinion for the U.S. Supreme Court in Rimini Street, Inc. v. Oracle USA, Inc.   Rimini Street decided the issue of whether a winning copyright litigant could recover "full costs" of the litigation as the Copyright Act's section 505 specifically provides or something less.  The issue arose where a successful copyright litigant sought to recover costs (litigation expenses) related to discovery and expert witness fees.


In a lot of semantic silliness over the meaning of the word "full," SCOTUS completely eliminated a district court's discretion to award non-taxable costs as part of "full costs."  This means the next bartender serving Justice Kavanaugh a "full" beer will leave that frosty mug mostly empty.   Let's figure out how we got here.


17 U.S. Code § 505. Remedies for infringement: Costs and attorney’s fees

 

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.

Section 505 has made many copyright litigants thirsty for a win.  For many years we understood that Congress wished to encourage copyright litigants to pursue rights as a matter of policy, and Congress understood that the costs of litigation, including attorneys fees, often outweighed the benefits of a particular case.

The oral argument is found here.   Essentially the Court limited the meaning of "full costs" to "taxable costs" (which are in most cases more than half a pint short of a pint glass of costs) that are found in

28 U.S. Code § 1920. Taxation of costs 

A judge or clerk of any court of the United States may tax as costs the following:

(1) Fees of the clerk and marshal;

(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case;

(3) Fees and disbursements for printing and witnesses;

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

(5) Docket fees under section 1923 of this title;

(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.

Section 1920 was passed in 1948. Because taxable "costs" are generally so low and routinely awarded by the Clerk of the Court, there is very little litigation over the meaning of costs.   In a spirited and interesting oral argument, on behalf of Oracle, Paul Clement argued that reading the word "full" out of Section 505 and reading 1920's cramped view of "costs" (ie taxable costs) as "full costs" would do "carnage" to the statute and common grammar.   Clement pointed out that Congress revisited Section 505 in 1984 and made it clear that "full costs" in Section 505 of the Copyright Act clearly meant non-taxable costs based on a plain reading of the English language.

Here is the grammar lesson from the full SCOTUS opinion:

Oracle argues that the word “full” authorizes courts to award expenses beyond the costs specified in §§1821 and 1920. We disagree. “Full” is a term of quantity or amount. It is an adjective that means the complete measure of the noun it modifies. See American Heritage Dictionary 709 (5th ed. 2011); Oxford English Dictionary 247 (2d ed. 1989). As we said earlier this Term: “Adjectives modify nouns—they pick out a subset of a category that possesses a certain quality.” Weyerhaeuser Co. v. United States Fish and Wildlife Serv., 586 U. S. ___, ___ (2018) (slip op., at 8).The adjective “full” in §505 therefore does not alter the meaning of the word “costs.” Rather, “full costs” are all the “costs” otherwise available under law. The word “full” operates in the phrase “full costs” just as it operates in other common phrases: A “full moon” means the moon, not Mars. A “full breakfast” means breakfast, not lunch. A “full season ticket plan” means tickets, not hot dogs. So too, the term “full costs” means costs, not other expenses. The dispute here, therefore, turns on the meaning of the word “costs.” And as we have explained, the term “costs” refers to the costs generally available under the federal costs statute—§§1821 and 1920. “Full costs” are all the costs generally available under that statute.

The flaw in the argument is that "full costs" have been in copyright statutes since the Statute of Anne.   Lawyer are always shot down by clerks for including non-taxable costs.  A full moon means the full moon because the meaning hasn't changed since Galileo looked at it.  A full breakfast means you get to eat ALL of your eggs and sausages.  A full season ticket plan means ALL tickets.  A full beer means....

To avoid giving the winning party full costs, SCOTUS looked to Section 1920 - a 1948 statute giving a judge or a clerk the power to tax certain items as costs.   The court also created a new category of costs - "litigation expenses" -- that Congress had supposedly forgotten to mention in drafting Section 505.

Acknowledging the flaw in the Court's approach, the opinion concludes:  "Sometimes the better overall reading of the statute contains some redundancy."

Chapter 18 of my book Copyright Litigation Handbook (2018-2019) Thomson Reuters, available on Westlaw, is titled Attorneys Fees and Costs (full table of contents here.  This year, I will write a full update of that chapter over a full breakfast following a full moon for those of you who have purchased a full season ticket plan.

www.dunnington.com

 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd
 

Killer Copyright Trolls: Can't The Jane Does Of The World Make Them Pay?

 
If someone sues you for a copyright infringement you didn't commit and the case gets dismissed, shouldn't you get your attorneys fees?  In Killer Joe Nevada LLC v. Does 1-20, 807 F.3d 908 (8th Circuit 2015), the United States Court of Appeals for the Eighth Circuit considered a case in which a plaintiff filed a complaint identifying the defendants only by internet protocol ("IP") address that had downloaded a film using Bittorent.  Killer Joe Nevada subpoenaed the internet service providers ("ISP"s) and got defendant Leigh Leaverton's name.   Leaverton denied downloading the film Killer Joe and filed a counterclaim for a declaratory judgment that she had not infringed Killer Joe Nevada's copyright.   In response, Killer Joe Nevada voluntarily dismissed the action.


If you Google "Killer Joe Nevada LLC" you will find the website of Antonelli law, dedicated to fighting copyright trolls and offering a free consultation.


Leaverton sought her attorneys fees, which the district court denied.  In certain actions under the Copyright Act, the district court has discretion to award attorneys fees.  In denying Leaverton her attorneys fees, the Eighth Circuit found that Killer Joe Nevada had acted reasonably in suing the IP addresses and in subpoenaing the ISPs.  It is unclear from the Eighth Circuit's decision what evidence Killer Joe Nevada relied on in bringing the suit or whether Killer Joe Nevada could have given Leaverton the opportunity to respond before naming her personally in the lawsuit.


Understanding when attorney fees may be available under the Copyright Act is not a simple task, as recent litigation before the U.S. Supreme Court has shown.  My book Copyright Litigation Handbook (Thomson Reuters West 2015-2016) devotes an entire chapter to the questions of whether and when attorneys fees and costs are available in a copyright litigation.


For the Eighth Circuit's full opinion, go here.


www.dunnington.com
 Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd