Copyright “Teeth” Neither Sharpened Nor Dulled by SCOTUS Fee Decision

In a post from February I pointed out that the "teeth" of copyright law as represented by attorney's fees awards were going to get attention this year in Kirtsaeng II. On June 16, 2016 the Supreme Court decided the case, and while prevailing parties in copyright cases will not be "gumming" their vanquished rivals for attorney's fee awards, they will not have their canines sharpened either in the wake of the Court's rare unanimous decision.

17 U.S.C. § 505 says that a “court may...award a reasonable attorney’s fee to the prevailing party.” Under its reading of the intent of § 505, the Court noted that "a court may not treat prevailing plaintiffs and prevailing defendants differently," and reaffirmed the “wide latitude to award fees” afforded federal courts under Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). No bright line rules were given, but Justice Kagan stressed that the "objective reasonableness of the losing party's position" should be given "substantial weight." However, although objective reasonableness can be an important factor, the Court said that it should not be "the controlling one"  if other considerations predominate in a particular case.

The Court did not adopt Kirtsaeng's suggestion that the "precedent-setting, law-clarifying value of a decision" (i.e., his case) needs consideration as an attorney's fee award factor. On this issue, the Court said the significance of a case "may become apparent only in retrospect—sometimes, not until many years later," and that "district courts are not accustomed to evaluating in real time either the jurisprudential or the on-the-ground import of their rulings."

The Court did not decide if Mr. Kirtsaeng should recover his attorney’s fees, which amounted to over $2 million incurred over an eight year period while succesfully defending the suit and ultimately receiving a favorable precedent-setting decision. Despite remanding, the Court may have tipped its hand about how it felt on the issue. The eight justices clearly favored Wiley's "objective reasonableness" approach because it "advances the Copyright Act’s goals" by encouraging parties "with strong legal positions to stand on their rights and deters those with weak ones from proceeding with litigation."

Based on this decision and the fact that the losing party/copyright owner put forward reasonable, nonfrivolous, legally tenable arguments, it is likely Kirtsaeng will be on the hook for his attorney's fees despite his victory in the underlying case, but that will be up to the district court to decide.

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