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Supreme Court Takes up Attorney's Fees in Copyright Cases

By Casey C. Sullivan, Esq. on April 25, 2016 3:53 PM

It was a very techie day in the Supreme Court today, as the Court heard oral arguments in the only two tech-related cases of the year. In the first, Kirtsaeng v. John Wiley and Sons, the Court debated whether attorney's fees in copyright litigation should be awarded when a prevailing defendant has advanced the interests of the Copyright Act, or more restrictively, when they have resisted unreasonable litigation.

Let's take a look at how the arguments went.

The Attorney Fee Copyright Split

Supap Kirtsaeng was just a grad student at the University of Southern California when the publisher John Wiley and Sons sued him for copyright infringement. While studying math, Kirtsaeng was also operating a business selling Asian-produced versions of American textbooks -- at a steep mark down from what publishers would charge for them in the U.S.

John Wiley sued and Kirtsaeng's case made it all the way to the Supreme Court, where the Court ruled that Kirtsaeng's business was perfectly legit, given the Copyright Act's "first sale" doctrine.

As the victor in that case, Kirtsaeng could have been entitled to attorney's fees. Section 505 of the Copyright Act allows district courts, in their discretion, to award attorneys fees. How that discretion operates varies by circuit. In many circuits, courts look at whether the party "advanced the purposes" of the act. In the Second Circuit, where Kirtsaeng's case took place, courts place substantial weight on whether the losing party's claim or defense was "objectively unreasonable."

What About the Starving Artists (and Their Defense Attorneys)?

That means that copyright defendants like Kirtsaeng almost never win attorney's fees in the Second Circuit. (Kirtsaeng, unsurprisingly, didn't win fees after winning in the Supreme Court, bringing him back to the Court for a second time.)

At oral arguments, Kirtsaeng's attorney argued that, under the 178 cases decided under the Second Circuit standard, a defendant has never received attorneys' fees unless the plaintiff had been unreasonable. In other circuits "plaintiffs show up, starving artists show up, and starving artists defend."

(When pressed, softly, by Chief Justice Roberts, Kirtsaeng's attorney admitted that "the truth is there are very few starving artists in any copyright litigation.")

Kirtsaeng Faces Skepticism

But Kirtsaeng faced skepticism from most of the justices, particularly when arguing that the relative financial position of each party should play a large role in the attorney's fee award.

"It does sound like," Justice Ginsburg analogized, "that your rule is if David faces Goliath and David wins, David gets fees no matter how reasonable Goliath's position was."

Justice Kagan argued that a rule focused on advancing the act's interests could make it less likely for starving artists, or just text-book-importing grad students, to show up in court. "It's very hard for people to make judgments ex ante and to figure out what their chances are," she explained.

Lies, Damned Lies, and Statistics

But, it wasn't all tears and heartache for the Kirstaengs of the world. When it came turn for Wiley to argue, Justice Sotomayor pulled out some numbers she'd come up with on her own. In the Ninth Circuit, prevailing defendants get fees about half the time. In the Second, prevailing defendants almost never get fees. In both, prevailing plaintiffs are much more likely to win fees.

Doesn't that give some strength, Justice Sotomayor asked, to the argument that tests are "unfair to defendants and to the purposes of the copyright law?"

Would that disparity be enough to sway the justices? It didn't seem like it. Indeed, Wiley's attorney even circled back to that disparity at the end. Attorney's fees are awarded to plaintiffs more often because defendants are more likely to simply not show up, resulting in numerous, small default judgments. That's because plaintiffs decide to sue; defendants are just caught infringing.

"It doesn't mean that the standard is unfair or is anything else less than even-handed," Wiley concluded.

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