Copyright Fee Awards Clarified

Today, the Supreme Court issued a unanimous opinion addressing the standards for awards of attorneys’ fees under the Copyright Act.

The case, Kirtsaeng v. John Wiley & Sons, Inc., was before the Supreme Court for the second time.  The first time, the Court addressed the underlying copyright claim by Wiley that Kirtsaeng’s purchase of its textbooks overseas and sale of them in the U.S. for a profit constituted copyright infringement.  Kirtsaeng claimed that the “first sale doctrine” protected his activities.  At the time, whether the first sale doctrine protected overseas purchases was an unsettled question with the Circuit Courts of Appeals split on the issue.  The Supreme Court determined that the first sale doctrine applied, and ruled in Kirtsaeng’s favor.  Kirtsaeng then moved for attorneys’ fees in the district court under the Copyright Act’s fee shifting provision.

The district court denied Kirtsaeng’s fee application, and the Second Circuit affirmed that ruling. The Supreme Court granted review to “resolve disagreement in the lower courts about how to address an application for attorneys’ fees in a copyright case.”

While the Supreme Court set out standards for such awards previously, in Fogerty v. Fantasy, Inc., and stated that factors to consider included “‘frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence,’” it left open the possibility of further guidance.  In Kirtsaeng, the Court provided further guidance.

The Court ruled that in deciding to award fees to prevailing parties, objective reasonableness is a substantial, but not controlling, factor in the determination (subsequently noting that, in the Second Circuit at least, it seemed to be the controlling factor). The Court further stated that decisions on a fee award should also consider other factors including litigation misconduct, repeated infringement, and overaggressive copyright assertions.  As the Court stated:

Courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.

In making this ruling, the Court rejected Kirtsaeng’s argument, which would substantially benefit his claim for attorneys’ fees, that whether the litigation “resolved an important and close legal issue and this ‘meaningfully clarifie[d] copyright law” should also be considered. The Court stated that such a factor did not support the goals of the Copyright Act, would not necessarily encourage the litigation of close questions to better define the boundaries of Copyright law, and was inherently unworkable.

The Court returned the case to the district court to ensure it analyzed all of the factors with the guidance given by the Supreme Court.

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