United States: Awarding Attorneys' Fees In Copyright Cases

Kirtsaeng v. John Wiley & Sons, Inc.—currently before the Supreme Court to determine the appropriate standard for awarding attorneys' fees in copyright cases—arises from a lengthy dispute between plaintiff John Wiley & Sons, a domestic book publisher, and defendant Supap Kirstaeng, an importer and reseller of Wiley's foreign edition textbooks, over Wiley's exclusive rights to import and distribute certain of its copyrighted books.

This is the second time the case has been before the Supreme Court. In the first go-round, Kirstaeng argued that he was not liable for copyright infringement under the "first sale" doctrine because he lawfully obtained the copyrighted books abroad, and subsequently imported and sold those lawfully-obtained books in the United States. In Kirstaeng's view, his initial lawful purchase exhausted Wiley's rights, and he was then free to do with the books as he pleased. The district court and Second Circuit rejected Kirstaeng's argument, finding that the first sale doctrine did not apply to foreign-manufactured goods (even if made abroad with the copyright owner's permission).1 The Supreme Court—resolving a circuit split—reversed and found that the first-sale doctrine has a "non-geographical interpretation," and, thus, a seller is not liable for copyright infringement in the U.S. where the seller "lawfully obtained" its copies abroad. 2

After winning at the Supreme Court, on remand, Kirtsaeng moved for attorneys' fees as the prevailing party. 3 The district court considered the attorneys' fees factors laid out in the Supreme Court's Fogarty decision:

"[1] frivolousness, [2] motivation, [3] objective unreasonableness (both in the factual and in the legal components of the case) and [4] the need in particular circumstances to advance considerations of compensation and deterrence" . . . may be used to guide courts' discretion [in determining whether to award attorney's fees under Section 505], so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner. 4

However, pursuant to the Second Circuit's Bender decision, the district court "emphasized . . . the importance of the objective unreasonableness factor in guiding the court's discretion . . . ." 5 The district court denied Kirtsaeng's motion, because (1) neither the factual allegations nor Wiley's legal theory (which the court noted "persuaded this Court, the Court of Appeals, and three Justices of the Supreme Court") were "objectively unreasonable," and (2) "no other equitable consideration weighs in favor of [Kirtsaeng's] request." 6 In a three-sentence opinion, the Second Circuit affirmed. 7 Kirstaeng petitioned the Supreme Court.

On January 15, 2016, the Supreme Court granted certiorari to address what constitutes the appropriate standard for awarding attorneys' fees to a prevailing party under 17 U.S.C. § 505 of the Copyright Act. 8 Section 505 recites that, "[i]n 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."9

Kirstaeng submitted his opening brief on February 22, 2016. He argues that the Second Circuit's "rigid" standard is wrong because it places "substantial weight" on the "objectively unreasonable" factor, and improperly favors plaintiffs over defendants. 10 Instead, Kirstaeng seeks a flexible standard in which the district court has discretion to balance the relevant factors, and analogizes the Second Circuit's standard to those like the "rigid" two-part test for determining attorney's fees in patent cases recently rejected by the Supreme Court. 11 Wiley responded on March 23. Wiley emphasizes that the Second Circuit's standard properly follows Fogerty and requires assessing all relevant factors on a case-by-case basis; that objective reasonableness has been at the core of attorney's fee awards in copyright cases for over a century; and that Kirstaeng's argument improperly elevates "jurisprudential importance" to the forefront. 12

A Supreme Court reversal would likely make attorney's fees easier to obtain in copyright cases. On the one hand, it may encourage some smaller, relatively poorly-funded parties (such as Kirstaeng) to fight, rather than settle, lawsuits it believes are without merit. On the other hand, it may have the unintended consequence of causing such a party to settle out of fear of having to pay potentially large attorneys' fees of its a large, well-funded adversary.

A decision is expected by the end of June.

Footnotes

1 Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1357 (2013).

2 Id. at 1358–59.

3 John Wiley & Sons, Inc. v. Kirtsaeng, No. 08-cv-07834, 2013 WL 6722887, at *1 (S.D.N.Y. Dec. 20, 2013).

4 Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19 (1994).

5 Wiley, 2013 WL 6722887, at *2 (citing Matthew Bender & Co. v. West Publ'g Co., 240 F.3d 116, 121–22 (2d Cir. 2001)). 

6 Wiley, 2013 WL 6722887, at *1–2.

7 John Wiley & Sons, Inc. v. Kirtsaeng, No. 14-344-CV, 605 Fed. Appx. 48 (2d Cir. 2015).

8 Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375.

9 17 U.S.C. § 505 (emphasis added).

10 Brief for Petitioner, at 4–5, 12–17.

11 Id. at 12 (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014)).

12 Brief of Respondent, at 19–24. 

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