United States: Ninth Circuit Considers Damages Awards in Copyright Cases

The U.S. Court of Appeals for the Ninth Circuit has issued two rulings addressing the scope of damages and attorney’s fees awardable in copyright infringement cases. L.A. News Service v. Reuters Television International Limited, Case No. 02-56956, 2003 U.S. App. LEXIS 17177 (9th Cir. Aug. 21, 2003); Traditional Cat Association v. Gilbreath, Case No. 01-56595, 2003 U.S. App. LEXIS 16906 (9th Cir. Aug. 19, 2003).

In L.A. News Service, the Ninth Circuit held that where acts of copyright infringement occur mostly was outside the United States, a copyright holder is entitled to recovery of the infringer’s profits attributable to the extraterritorial infringement, but not actual damages for injuries the infringements caused overseas. The court reasoned that no rational deterrent function, consistent with the enforceable scope of U.S. copyright, would be served by making an infringer, whose de minimus domestic act of infringement leads to widespread extraterritorial infringement, liable for the copyright owner’s entire loss of value or profit from the non-actionable overseas activities. The court further recognized that the resulting over-deterrence might chill the fair use of copyrighted works in close cases. Accordingly, the court carved out a narrow exception to the general rule against extraterritorial application by allowing recovery of the infringer’s extraterritorial profits, but disallowing recovery of actual damages resulting from the infringement.

In Traditional Cat Association, the Ninth Circuit held that under the Copyright Act, a prevailing defendant is entitled to recover attorney’s fees incurred in defending against copyright claims and any other "related" claims. The Ninth Circuit explained that the first step in calculating a reasonable attorney’s fee award should be to decide if the copyright and non-copyright claims are related. If the claims are not related, the defendant is entitled to recover only those fees attributable to the copyright claims, and a fair apportionment between the copyright and non-copyright claims must be determined. The Ninth Circuit reversed the district court’s order denying the defendants’ fee request and remanded the case for further proceedings, finding that the district court’s failure to make any attempt to apportion the fees or to otherwise calculate a reasonable fee award based on the information in the district court’s possession was an abuse of discretion.

PRACTICE NOTE: Traditional Cat Association provides guidance as to the types of documentation that must be submitted in support of a request for an award of attorney’s fees and apportionment. In Traditional Cat Association, the defendants submitted billing records showing the total number of billable hours per attorney and the rates charged, as well as declarations from the attorneys who worked on the case attesting to the reasonableness of the rates charged, identifying more specifically the tasks completed and stating that 80% would be a fair apportionment for their work attributable to the copyright infringement claim. The Ninth Circuit noted that this evidence "provided the court with a significant amount of information" and was sufficient to make the district court’s summary denial of a request for apportionment inappropriate.