IP Law Daily, COPYRIGHT NEWS: Are attorney fees the rule in copyright cases? The High Court won’t decide, (Mar 5, 2024)

By Matthew Hersh, J.D.

The court declines to weigh in on a continuing split among circuits.

Prevailing parties in copyright litigation will still have to check the map before deciding whether to ask for attorney fees after the Supreme Court declined to resolve a circuit split over the standard for granting those fee requests. The refusal of the petition leaves the circuit courts “hopelessly divided,” as the petition had asserted, over whether attorney fees in copyright cases should be, in effect, the rule rather than the exception.

The case at issue involves The Game of Life, the highly popular board game that debuted in 1960 and is now marketed by toymaking giant Hasbro. Toy developer Reuben Klamer came up with the idea for the game, and game designer Bill Markham was engaged to design and build it. But the two collaborators—and decades later, their heirs—came to disagree over who owned the rights. In 2019, the district court ruled in favor of the game developer and Hasbro, finding that the game was created as a work for hire on behalf of the game developer. The First Circuit affirmed in 2021.

The game makers then moved for attorney fees under Section 505 of the Copyright Act, but the district court denied their request for fees. The First Circuit, finding the designer’s case to have been objectively reasonable even if unsuccessful, affirmed the district court’s decision. The court of appeals acknowledged that “circuits have disagreed” over whether attorney fees should be the rule rather than the exception, but found “no reason to depart from our approach of applying the factors without a predisposition toward granting fees.” The decision led to the certiorari petition which the Court just denied.

A hearing on the case, if the Court had agreed to one, would have been the Court’s third brush with attorney fees in recent decades. The first came in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). There, the Court listed some factors that courts should consider in making awards of attorney fees, including frivolousness, motivation, objective unreasonableness, and considerations of compensation and deterrence. The Court also emphasized that the same standard should be applied equally to any prevailing party, whether plaintiff or defendant. (The case had unusual facts. John Fogerty wrote Run Through the Jungle for Creedence Clearwater Revival, but then sold it to a music publisher. After CCR broke up, Fogerty embarked on a solo career—but was promptly sued by the publisher for allegedly infringing on his own song! He prevailed, but it took the Supreme Court decision for him to get his fees back).

The Court’s pronouncement did not help to achieve uniformity among the courts of appeals, however. Several circuits, led perhaps most strongly by the Second Circuit, emphasized that “objective reasonableness is a factor that should be given substantial weight in determining whether an award of attorneys' fees is warranted.” In practice, that meant that courts in that circuit routinely denied fee petition where it found a reasonable losing case. But other courts, notably the Fifth Circuit and the Seventh Circuit, reaffirmed their pre-Fogerty caselaw that fee awards should be the rule rather than the exception.

Then came Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. 197 (2016). There, the Court ostensibly took review of the case “to resolve disagreement in the lower courts about how to address an application for attorney's fees in a copyright case.” The Court joined both parties in “seeing a need for some additional guidance” respecting the application of the attorney fee statute. The Court even dropped a footnote expressly acknowledging the split over whether a prevailing party should be “presume[ed]” to receive fees. But the Court’s opinion, in the end, did not address the split. Instead, it focused on the rather more arcane question of whether special consideration should be given weight to “whether a lawsuit resolved an important and close legal issue and thus meaningfully clarified copyright law.” (It should not, the Court found.) The Court also emphasized that the “objective reasonableness” factor was “important” but not “controlling.” But beyond that, the Court did not go.

That, as it turned out, largely resolved nothing. The Second Circuit, ordered to rethink the weight it put on the “objective reasonableness” factor, made no change at all in its approach. (For that reason, awards of attorney fees are far less likely in that circuit—at least where the losing party has made a reasonable argument.) Nor did any other court. The Fifth Circuit has continued to hold that “an award of attorney's fees to the prevailing party in a copyright action is the rule rather than the exception and should be awarded routinely.” Digital Drilling Data Sys., L.L.C. v. Petrolink Services, Inc. , 965 F.3d 365 (5th Cir. 2020). The Seventh Circuit has done the same—and has even emphasized that the presumption in favor of attorney fees is “very strong.” Timothy B. O'Brien LLC v. Knott , 962 F.3d 348 (7th Cir. 2020). Other circuits have held to their own positions. So at least for now, copyright attorneys will still need an atlas along with a casebook in order to properly advise their clients.

The Case is Dkt No. 23-565.

Attorneys: Peter K. Stris (Stris and Maher LLP) for Hasbro, Inc. Kevin K. Russell (Goldstein, Russell & Woofter LLC) for Markham Concepts, Inc.

Companies: Hasbro, Inc.; Markham Concepts, Inc.

News: Copyright GCNNews