Opinion
99 Civ. 59 (RCC)
October 30, 2001
OPINION AND ORDER
Plaintiff Lois B. Morris, a columnist for Allure Magazine, filed this action against defendants Business Concepts, Inc., James J. Maher and Petrea A. Maher (collectively. "defendants") pursuant to the Copyright Act of 1976, 17 U.S.C. § 101 et seq., and the Lanham Act, 15 U.S.C. § 1125 (a), alleging that defendants improperly reproduced twenty four of her Allure articles in their newsletter without her authorization. This Court granted summary judgment to defendants on the copyright claim, holding that the Court lacked subject matter jurisdiction over that cause of action because plaintiff had failed to register copyrights in the articles as required to maintain an infringement suit. Morris v. Business Concepts, Inc., No. 99 Civ. 59 (RCC), 2000 WL 323118, at *4 (Mar. 28, 2000). The Court further determined that the collective work registrations held by the magazine did not satisfy plaintiff's registration requirement because plaintiff had retained her independent ownership rights in the articles. Id.
Summary judgment also was granted to defendants on the Lanham Act claim because plaintiff failed to oppose defendants' motion. Id. at *5.
Plaintiff appealed, arguing that the magazine's registrations extended to her work based on the magazine's status as an exclusive licensee of the articles. The Second Circuit, noting that no court had yet addressed the issue, concluded that an exclusive licensee is not a "copyright owner" so as to allow the collective work registrations to cover plaintiff's articles. Morris v. Business Concepts, Inc., 259 F.3d 65, 69 (2001). The Second Circuit therefore affirmed the grant of summary judgment. Id. at 73. Now that the appeal is resolved, defendants renew their previously submitted motion to recover costs and attorneys' fees pursuant to the Copyright Act, 17 U.S.C. § 505, and Rule 68 of the Federal Rules of Civil Procedure.
DISCUSSION
Section 505 of the Copyright Act allows the Court to award the prevailing party its attorneys' fees and costs. 17 U.S.C. § 505. The Supreme Court has set forth a number of non-exclusive factors to guide the Court's discretion in making such awards, including "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in the particular circumstances to advance considerations of compensation and deterrence."Matthew Bender Co. v. West Publ'g Co., 240 F.3d 116, 121 (2d Cir. 2001) (citing Fogerty v. Fantasy, Inc., 510 u.s. 517, 534 n. 19 (1994)). This standard applies regardless of whether the prevailing party is the plaintiff or the defendant. Id.
Of the aforementioned considerations, courts place the greatest emphasis on "objective unreasonableness." Id. at 121-22 (collecting cases). This emphasis is "firmly rooted in the admonition that an award of attorneys' fees must comport with the purposes of the Copyright Act."Earth Flag Ltd. v. Alamo Flag Co., 154 F. Supp.2d 663, 666 (S.D.N.Y. 2001). Therefore, because the principal purpose of the Act "is to encourage the origination of creative works by attaching enforceable property rights to them," a court should not impose a fee award against a copyright holder with an objectively reasonable litigation position.Matthew Bender, 240 F.3d at 122 (citing Diamond v. Am-Law Publ'g Corp., 745 F.2d 142, 147 (2d Cir. 1984)).
In the same vein, a court generally should not award fees where the case is novel because such litigation serves an important purpose in clarifying the boundaries of copyright law. Earth Flag, 154 F. Supp. 2d at 666; see also Fogerty, 510 U.S. at 527 ("Because copyright law ultimately serves the purposes of enriching the general public through access to creative works, it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible."); Lotus Dev. Corp. v. Borland Int'l. Inc., 140 F.3d 70, 74 (1st Cir. 1998) ("[B]ecause novel cases require a plaintiff to sue in the first place, the need to encourage meritorious defenses is a factor that a district court may balance against the potentially chilling effect of imposing a large fee award on a plaintiff, who, in a particular case, may have advanced a reasonable, albeit unsuccessful, claim.").
Defendants contend that a fee award is appropriate because plaintiffs suit was objectively unreasonable. Defendants point out that under the plain language of the Copyright Act a valid registration is a prerequisite for an infringement action see 17 U.S.C. § 411 (a), yet plaintiff filed this suit despite her failure to register copyrights in the articles. Furthermore, defendants argue that plaintiff's reliance on the magazine's registrations was frivolous because it is well established that the copyright protection afforded to a compilation is distinct from that afforded to the discrete works therein. See 17 U.S.C. § 103 (b).
Here, however, plaintiff's case did not require a mere routine application of those principles but rather presented a novel issue. As the Second Circuit noted in its opinion on appeal, the law in this Circuit recognizes that "where the owner of a copyright for a collective work also owns the copyright for a constituent part of that work, registration of the collective work is sufficient to permit an infringement action under § 411(a) for the constituent part." Morris, 259 F.3d at 68 (citing cases). Therefore, the question before the Court was whether the magazine, by virtue of its exclusive license in the articles, could be considered a "copyright owner" capable of simultaneously registering both the collective works and the articles. As the Second Circuit acknowledged, it "had not addressed this issue in previous cases nor, it seems, have any other courts, for [plaintiff] does not cite any case directly on point." Id. at 69. Although the Second Circuit, like this Court, ultimately ruled against plaintiff; the novelty of the case mitigates against a finding of objective unreasonableness.
Defendants argue that plaintiff was unable to marshal any relevant authority for her position and improperly relied upon cases decided under the superseded Copyright Act of 1909. Although in some circumstances a lack of relevant citation might demonstrate unreasonableness, here the novelty of plaintiff's position necessarily assumes that plaintiff would be unable to find any case directly on point. Furthermore, plaintiff did invoke two cases decided under the current Copyright Act Curtis v. General Dynamics Corp., No. C89-566S, 1990 WL 303664, at *1 (W.D. Wash. Feb. 20, 1990) and Hilliard v. Mac's Place, Inc., No. C93-1248WD, 1994 WL 323961, at *1 (W.D. Wash. Mar. 25, 1994), which both held that registration of a collective work allows an individual author to recover statutory damages where the author registered his own copyright too late. Although both this Court and the Second Circuit determined that those cases were distinguishable, plaintiff was entitled to make an argument based on their reasoning. In the same vein, although the 1909 Act has been superseded, plaintiff properly could refer to that version in order to assist in the construction of the current Act. See e.g., Almendarez-Torres v. United States, 523 U.S. 224, 232 (1998) (examining earlier version of statute in order to interpret later text).
This Court therefore cannot conclude that plaintiff's suit was objectively unreasonable so as to support an award of fees and costs. Moreover, there is no indication that plaintiff undertook this action in bad faith, or to harass defendants in any way. Rather, it is undisputed that defendants copied plaintiff's articles over a four year period without her authorization. Although plaintiff ultimately was unable to prevail against the defendants due to her failure to register, this Court is loath to penalize plaintiff for seeking redress.
Aside from its application for attorneys' fees pursuant to the Copyright Act, defendants argue that fees are also appropriate pursuant to the Lanham Act, 15 U.S.C. § 1117 (a), or pursuant to this Court's power under 28 U.S.C. § 1927. The Lanham Act allows a Court to award attorneys' fees only in "exceptional cases." 15 U.S.C. § 1117 (a). "A case does not qualify as "exceptional' under the Lanham Act without a finding of fraud or bad faith." Gidatex, S.r.L. v. Campaniello Imports Ltd., 82 F. Supp.2d 136, 147 (S.D.N.Y. 2000); see also Twin Peaks Productions, Inc. v. Publications Int'l. Ltd., 996 F.2d 1366, 1383 (2d Cir. 1993). Although plaintiff ultimately dropped her Lanham Act claim, there is no evidence that the claim was brought in bad faith. The Lanham Act may be used to prevent the misappropriation of credit properly belonging to the original creator of the work. See Waldman Publ'g Corp. v. Landroll. Inc., 43 F.3d 775, 780 (2d Cir. 1994). Here it is undisputed that defendants used plaintiff's articles without her name, arguably passing off her work as their own. Although these allegations ultimately may have been deemed insufficient to support a Lanham Act violation, plaintiff's claim was not so clearly outside the parameters of the Act so as to demonstrate bad faith. Likewise, the absence of bad faith also prevents defendants from recovering their attorneys' fees under 28 U.S.C. § 1927. See Sakon v. Andro, 119 F.3d 109, 114 (2d Cir. 1997) ("The imposition of sanctions under § 1927 is authorized only when the court had made a finding of conduct that constitutes or is akin to bad faith.").
Moreover, even if defendants were able to demonstrate bad faith, they should not be permitted to recover their fees and costs under the Lanham Act or under 28 U.S.C. § 1927 because they failed to request that relief in their notice of motion. See e.g., Berns v. EMI Music Publ'g, Inc., No. 95 Civ. 8130 (KTD), 1999 WL 1029711, at *10 (S.D.N.Y. Nov. 12, 1999) (noting that "[i]f the relief is not requested by the notice of motion, then the movant does not get that relief" and rejecting application for sanctions raised only in the movant's affidavit).
Lastly, defendants argue, pursuant to Fed.R.Civ.P. 68, that they are entitled to their attorneys' fees incurred after July 9, 1999, when they offered to consent to the entry of judgment against them in the amount of $20,000. Rule 68 provides in pertinent part that:
At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, with costs then accrued. . . . If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.
However, Rule 68 only provides for an award of costs and not for an award of attorneys' fees. In re Water Valley Finishing, Inc., 139 F.3d 325, 328 (2d Cir. 1998) (per curiam) ("[T]he law is clear that the court does not have the power under Rule 68 to award attorneys' fees and that each party is responsible for bearing its own attorneys' fees."). Moreover, Rule 68 applies only when the offer is made by the defendant and a judgment is then obtained by the plaintiff Id. (citing Delta Air Lines. Inc. v. August, 450 U.S. 346, 350 (1981)). Because defendants here obtained a judgment in their favor, Rule 68 is wholly inapplicable.
CONCLUSION
For the foregoing reasons, defendants' motion to recover their attorneys' fees and costs pursuant to the Copyright Act, 17 U.S.C. § 505, and Rule 68 of the Federal Rules of Civil Procedure is denied in its entirety. However, defendants may seek to recover their costs other than attorneys' fees pursuant to Rule 54 of the Federal Rules of Civil Procedure and Local Civil Rule 54.1 by making the proper application to the Judgment Clerk.