Attorney’s Fees in Copyright Cases – Set by Defendant’s Objective Reasonableness

The Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375 (Supreme Court, June 2016) (Available Here), held that the “objective reasonableness” of an unsuccessful litigant’s position should be accorded “substantial weight” when awarding attorneys’ fees in copyright cases, while still taking into account all other relevant circumstances.

Kirtsaeng bought John Wiley & Sons, Inc.’s (herein “Wiley”) textbooks in Thailand for significantly less then they were sold in the United States and resold the books in the United States himself for a profit.  Wiley sued Kirtsaeng for copyright infringement.  Kirtsaeng invoked the first sale doctrine.  At the time, the courts were in conflict on whether the first sale doctrine applied to foreign-made books.

The first case Kirtsaeng case went to the Supreme Court where it decided that first-sale doctrine allows the resale of foreign-made books, just as it does domestic ones.  

In this second trip to the Supreme Court, Kirtsaeng appealed the trial court’s refusal to give Kirtsaeng $2 million in attorneys’ fees from Wiley.  The lower court denied Kirtsaeng’s request for fees and gave substantial weight to the objective reasonableness of Wiley’s infringement claim.  The Court of Appeals affirmed.  The Supreme Court granted certiorari to resolve the disagreement in the lower courts about how to address attorneys fees in a copyright case.

Section 505 of the Copyright Act, 17 U.S.C. sec.  505, authorizes fee shifting, but without specifying the standards.  In Fogerty v. Fantasy, Inc., 510 US 517 (1994), the Supreme Court established restrictions.  First, a district court may not award attorney’s fees as a matter of course.  Second, a court may not treat prevailing plaintiffs and prevailing defendants any differently.  The court may consider several nonexclusive factors: frivolousness, motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.

The Court’s focus in Kirtsaeng was to decide what approach best advances the well-settled objectives of the Copyright Act, which are to enrich the general public through access to creative works by striking a balance between encouraging and rewarding authors’ creations and enabling others to build on that work.  That approach that puts substantial weight on the reasonableness of a losing party’s position best serves both creators and users.  Parties with strong positions are encouraged to stand on their rights, given the likelihood that they will recover fees from the losing party.  Parties with weak positions are deterred by the likelihood of having to pay two sets of fees.

The Supreme Court vacated the judgment of the Court of Appeals and the case was remanded for further proceedings consistent with the Supreme Court’s opinion.

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