IP Law Daily, COPYRIGHT NEWS—Supreme Court review sought over entitlement to attorney fees in copyright cases, (Sep 11, 2024)

By Brian Craig, J.D.

A new petition seeks clarification on the qualification as a “prevailing party” entitled to fees under the Copyright Act’s fee shifting provision after involuntary dismissal.

Arguing that a split exists that will lead to further confusion, a real estate agency that defended a copyright infringement case has asked the U.S. Supreme Court to clarify when a prevailing party is entitled to attorney fees under the Copyright Act. The real estate agency seeks to reverse a decision by the U.S. Court of Appeals for the Eleventh Circuit holding that a defendant in a copyright infringement action is not the prevailing party for purposes of the attorney fee provision where the plaintiff has voluntarily dismissed its case without prejudice—even if that plaintiff would be barred by the statute of limitations from refiling the lawsuit (Abdelsayed v. Affordable Aerial Photography, Inc., No. 24-267 (U.S. filed Sept. 5, 2024)).

The lawsuit was brought by Affordable Aerial Photography, a real estate photography company, against a real estate agency in Palm Beach County, Florida. The real estate photography company brought an action for copyright infringement alleging that the real estate agency and its president reproduced, distributed, and publicly displayed copyrighted photographs. After litigation spanning approximate one year—including an abandoned third-party complaint and counterclaim, multiple dispositive motions, motions for sanctions, and requests to reopen discovery and amend pleadings—the photography company filed a motion for involuntary dismissal without prejudice contingent on not paying the defendants’ attorney fees. The district court granted the motion for dismissal and denied the real estate agency’s motion for attorney fees. On February 28, 2024, the Eleventh Circuit affirmed the denial of the request for attorney fees, holding that a defendant in a copyright infringement action is not the prevailing party for purposes of Sections 505 and 1203(b) of the Copyright Act where the plaintiff has voluntarily dismissed its case without prejudice. The real estate agency and its president filed a petition for writ of certiorari with the U.S. Supreme Court.

Circuit split. The petition argues that circuits are split on whether a defendant is a is a “prevailing party” when an action is dismissed without prejudice. Both the Fourth and Eleventh Circuits have recognized the existence of a circuit split. The majority rule is that defendants cannot be prevailing parties when a plaintiff voluntarily dismisses the action without prejudice. The minority view is that if a lawsuit ends without the plaintiff altering its legal relationship with the defendant, the defendant has prevailed in the action.

The petition contends that the majority view adopted by the Eleventh Circuit is ahistorical, atextual, and inconsistent with the Copyright Act. The petition argues that the majority view discourages defendants from standing on meritorious defenses while encouraging plaintiffs to file unreasonable infringement claims. The rule also defies common sense because defendants are never immunized from being forced to defend even barred suits, according to the petitioners. Furthermore, the petition asserts that the circuits are divided on whether a Rule 41(a)(2) judgment has judicial imprimatur.

Recurring issues. The petition also argues that the questions presented are important and recurring issues on which both plaintiffs and defendants need guidance. Many fee-shift and cost-shifting statutes exist. Often, cases end without a preclusive judgment. The petition asserts that confusion among the district and circuit courts about whether a defendant prevails when a case ends without a preclusive judgment has substantial practical importance to civil litigants well beyond copyright. This case is representative of thousands of suits abandoned by plaintiffs without a preclusive judgment. Copyright infringement cases in particular are some of the rarest cases to reach trial, just 0.2 percent in 2023, while also having one of the highest rates of resolution without any court action at 42.8 percent. Among those cases terminated without court action, nearly 11 percent are voluntarily dismissed without prejudice, and less than one percent reach a merits outcome either at trial or through pre-trial disposition motions. The issue of prevailing party status for defendants, as well as accurately anticipating that status by plaintiffs, is important and recurring. If the U.S. Supreme Court grants review, the case could have broad implications on copyright infringement cases and other litigation.

Questions presented. The questions presented by the petition are: (1) Does a dismissal without prejudice that reestablishes the pre-suit status quo make a defendant the "prevailing party" under 17 U.S.C. §§ 505 and 1203(b)(5)? and (2) Is a final judgment of voluntary dismissal without prejudice, entered in response to a plaintiff’s request under Rule 41(a)(2), a "judgment that [a plaintiff] finally obtains" for purposes of Rule 68?

The Case is Dkt. No. 24-267.

Attorneys: Griffin Clayton Klema (Klema Law, PL) for John Abdelsayed.

Companies: Affordable Aerial Photography, Inc.

News: Copyright TechnologyInternet