Litigation Alert: U.S. Supreme Court Addresses Attorney's Fee Awards In Copyright Cases

Last week in Kirtsaeng v. John Wiley & Sons Inc., the Supreme Court held that district courts have wide discretion to grant attorney's fee awards but should give substantial weight to whether the losing party was objectively unreasonable.

Who is Kirtsaeng?

Supap Kirtsaeng won an earlier Supreme Court decision that his purchase of textbooks overseas did not infringe the 17 U.S.C. § 109 distribution right of John Wiley & Sons Inc. when he brought them to the United States for resale. His sales fell under the 17 U.S.C. § 109(a) exception to liability for copies lawfully made (commonly referred to as the "first sale doctrine"). Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013).

Fogerty and Attorney's Fees in Copyright Cases

After winning the case, Kirtsaeng sought his attorney's fees under 17 U.S.C. § 505, which states that a "court may [] award a reasonable attorney's fee to the prevailing party as part of the costs." The Supreme Court last addressed when such fees should be awarded over two decades ago in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). There, the Supreme Court instructed that a court may not award attorney's fees "as a matter of course" (id. at 533-534) and may not treat prevailing plaintiffs and prevailing defendants differently (id. at 522-525). In Fogerty the Court also cited with approval four non-exclusive factors within a Third Circuit opinion: (1) frivolousness, (2) motivation, (3) objective unreasonableness (both factual and legal), and (4) the need to compensate or deter. Id. at 534, n. 19 citing Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986). The Court stated that these factors "may be used...so long as such factors are faithful to the purposes of the Copyright Act." Id.

In the wake of Fogerty, different circuits of the U.S. Court of Appeals applied different tests to determine fee awards in copyright cases. Some circuits gave greater weight to certain factors among the four in Fogerty and other circuits considered additional factors. See Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446, 449 (9th Cir. 2014)(evaluating "the degree of success obtained"). Some even "routinely awarded" the discretionary fees. See General Universal Sys., Inc. v. Lee, 379 F.3d 131, 147 (5th Cir. 2004). Kirtsaeng sought over $2 million in attorney's fees but the district court denied fees and the Second Circuit affirmed the denial.

Objective Reasonableness Is Important but Not Determinative

In its new...