Litigation can be very costly, and the ability to recoverattorney's feescan mean the difference between bringing a lawsuit (or defending against one) and not (or settling).
On Thursday, June 16, the Supreme Court issued itsopinion inKirtsaeng v. John Wiley & Sons, articulating the proper standard courts should use when deciding whether to award attorney fees in copyright cases. Writing for a unanimous majority, Justice Kagan said that courts should put substantial weight on the objective reasonableness (or unreasonableness) of a party's litigating position but take into account other relevant factors to determine whether an award of attorney fees is warranted.
If the parties in this suit sound familiar, it's not because you're experiencing déjà vu. This is the second timeKirtsaengv. John Wiley & Sonshas reached the Supreme Court.Petitioner Supap Kirtsaengran a business buying English language textbooks manufactured in Thailand, importing them into the US, and reselling them for a profit. Textbook publisher John Wiley & Sons suedKirtsaengfor violating its exclusive right of distribution. Kirtsaengargued he was permitted to resell foreign-made textbooks under the first sale doctrine (17 USC§ 109); Wiley argued that the Copyright Act's importation provisions (17 USC§ 602)prohibited the importation into the US of books manufactured abroad without the copyright owner's authorization. That issue previously divided the Supreme Court 4-4 inCostco Wholesale v. Omega,562 U. S. 40 (2010) (percuriam). But whenKirtsaengreached the Supreme Court the first time, in 2013, the Court settled the issue, holding that the first sale doctrine permitted the resale of works manufactured outside the US.
Having prevailed,Kirtsaengsought attorney's fees in the District Court. The District Court deniedKirtsaeng'smotion, Opinion and order, John Wiley & Sons v. Kirtsaeng, No. 08–cv–07834 (SDNY, Dec. 20, 2013). It put substantial weight on the objective reasonableness of Wiley's position, and held that it was reasonable. Several courts, including the District Court and Second Circuit in this litigation, sided with Wiley on the merits; it wasn't until the Supreme Court ruled in favor ofKirtsaengthat the law was firmly established againstWiley(and even then, the Court split 6-3).Kirtsaengappealed the denial of attorney fees but the Second Circuit affirmed the District Court, John Wiley & Sons v. Kirtsaeng, 605 Fed. Appx. 48 (2nd Cir. 2015). SoKirtsaengappealed to the Supreme Court, which granted cert.
Crafting the Standard
Section 505 of Title 17 provides that courts“may ... award a reasonable attorney’s fee to the prevailing party.” It provides no further guidance. Previously,inFogertyv. Fantasy, 510 US517 (1994),the Court provided three directives to lower courts: it held that courts should not award attorney's fees "as a matter of course", courts must not treat prevailing plaintiffs and prevailing defendants differently, and courts may consider "several nonexclusive factors", including "frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.”
Since then, the standard for awardingattorney fees has evolved differently in the various Circuits. Some place greater weight on certain factors, others have created certain presumptions. Justice Kagan writes that the Court granted cert here inorder to resolve this disagreement among the lower courts.She notes that, while Section 505 affords courts discretion, "discretion is rarely without limits."
To determine these limits, Kagan begins with the overall goals of the Copyright Act."AsFogertyexplained," she says, "'copyright law ultimately serves the purpose of enriching the general public through access to creative works.'The statute achieves that end by striking a balance between two subsidiary aims: encouraging and rewarding authors’ creations while also enabling others to build on that work." Attorney's fees should encourage litigation that furthers this goal.
The approach Wiley advanced, which focuses on the objective reasonableness of a party's litigation position, does just that. As the Court explains, parties with strong claims or defenses will be encouraged to litigate if there is the possibility of winning attorney fees, while parties with weak or unreasonable claims or defenses will decline to bring suit or seek to settle quickly to avoid paying the other side's fees.
Kirtsaeng'sapproach, which would place substantial weight on a "lawsuit's role in settling significant and uncertain legal issues", does not further the goals of the Copyright Act. While the Court agreedwithKirtsaengthat close cases should be litigated to ensure the boundaries of copyright law are clearly demarcated, it disagreed with his assertion that attorney's fees would encourage such litigation. The likelihood of attorney's fees in such cases would raise the stakes, providing a disincentive to litigate them.As Kagan notes, "Kirtsaeng offers no reason to think that serious gamblers predominate."
Having said that, the Court adds that "objective reasonableness can be only an important factor in assessing fee applications—not the controlling one." Courts should consider additional factors such asa "party's litigation misconduct" or the presence of "repeated instances of copyright infringement or overaggressive assertions of copyright claims" when determining whether or not to award attorney's fees.
The Court recognizes that the Second Circuit's emphasis on objective reasonableness is largely consistent with the approach it has outlined but worried that its approach may cross from placing "substantial" weight on that factor over to placing "dispositive" weight on it. So it vacated the decision below to let the District Court reconsider Kirtsaeng's application for attorney's fees—though in doing so, it "do[es] not at all intimate that the District Court should reach a different conclusion."
Justice Kagan's brief opinion, written in her trademark clear and conversational style, does not break much new ground. It is more an iteration of the Court's 1994Fogertyopinion, fleshing out how lower courts should exercise their discretion under Section 505. It also accomplishes some ground clearing, removing the presumptions and other bright-line rules that lower courts have placed on what is intended to be an open-ended, discretionary standard.
With this decision, the Court hopes to providethe lower courts with a nationally consistent standard for determining when to award attorney's fees and additional guidance for applying that standard. It should also reassure litigants and defendants who take reasonable positions that they won't be on the hook for attorney's fees should they lose.
Finally, this case provides a great opportunity to remind creators of copyrighted works that attorney's fees are only available if the work is registered with the US Copyright Office either before the infringement occurs or, if the work has been published, within three months of publication(17 USC§ 412).
* Disclaimer: My organization the Copyright Alliance filed an amicus brief in support of John Wiley & Sons at the Supreme Court.