Supreme Court Makes It (Slightly) Easier To Award Attorneys' Fees For Bogus Copyright Lawsuits

from the a-little-bit dept

You may recall the Kirtsaeng case that we covered a few years back, in which a student, Sudap Kirtsaeng, had been sued for copyright infringement by publishing giant John Wiley for buying English-language textbooks in Thailand (that were cheap) and then reselling them to students in the US. It was a classic arbitrage situation. Wiley insisted that this was infringing, while Kirtsaeng pointed to the First Sale doctrine, allowing people to resell physical products they’ve legally purchased, even if they include copyright-covered content. Wiley’s argument against first sale is that it only applied to content that was “legally made under this title.” Thus, since the textbooks were made in Thailand and not under US copyright law, First Sale didn’t apply. The Supreme Court, thankfully, rejected that argument 6 to 3, and said that first sale does apply. That was good.

The case then went back to the lower courts where Kirtsaeng sought to have Wiley pay his legal fees. The lower court and the appeals court both rejected this request, arguing that the standard for assigning attorneys’ fees in copyright cases was whether or not the plaintiff bringing the case had an “objectively reasonable” argument — and noting that with 3 of the 9 Justices eventually siding with Wiley, the case was likely “objectively reasonable,” even if it failed in the end. This argument also reached the Supreme Court and on Thursday, the Justices decided to tweak the standard.

Very similar to the case it decided earlier in the week concerning patent damages (and, in fact, it cites that case in this ruling), the Supreme Court rejects the purely “objectively reasonable” standard test as being too “rigid.” It’s pretty clear that the court thinks that lower courts should have some leeway in determining the appropriate remedies, rather than sticking to a set of strict guidelines.

All of that said, objective reasonableness can be only an important factor in assessing fee applications?not the controlling one. As we recognized in Fogerty, §505 confers broad discretion on district courts and, in deciding whether to fee-shift, they must take into account a range of considerations beyond the reasonableness of litigating positions…. That means in any given case a court may award fees even though the losing party offered reasonable arguments (or, conversely, deny fees even though the losing party made unreasonable ones). For example, a court may order fee-shifting because of a party?s litigation misconduct, whatever the reasonableness of his claims or defenses…. Or a court may do so to deter repeated instances of copyright infringement or overaggressive assertions of copyright claims, again even if the losing position was reasonable in a particular case. See, e.g., Bridgeport Music, Inc. v. WB Music Corp., 520 F. 3d 588, 593?595 (CA6 2008) (awarding fees against a copyright holder who filed hundreds of suits on an over-broad legal theory, including in a subset of cases in which it was objectively reasonable). Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act?s essential goals.

Based on this, the court sent the case back down to the lower court to reconsider, since it originally rejected the request for fees by saying the original claims were “objectively reasonable.” So now the court has to consider “other stuff” not clearly laid out by the Supreme Court to see if it could award attorneys’ fees for other reasons — such as the fact that the case was useful in settling an important, but until then, unsettled bit of law: whether or not first sale applied to foreign made goods.

This is probably, mostly, a good thing. Rigid tests can fail in unique circumstances, so granting flexibility is good. But of course, there’s also a downside to flexibility, in that it leads to greater uncertainty, and that may scare off certain worthwhile activities. Either way, the court seems to have made the right decision here, and now Kirtsaeng gets another shot at getting attorneys’ fees from Wiley.

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Comments on “Supreme Court Makes It (Slightly) Easier To Award Attorneys' Fees For Bogus Copyright Lawsuits”

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12 Comments
Anonymous Coward says:

First, Tim Cushing gets this decision wrong and now Mike Masnick has fallen into that same hole? They must eat off the same plate and share the same DNA. If either of them had read the original article about this ob Arstechnica, both of them would have realized that the crap they wrote doesn’t come anywhere to helping copyright trolls.

I forgot, Mike Masnick would rather we live in a world where someone’s intellectual property can be stolen without any compensation paid out to the person who created it in the first place.

Maybe I should print up a bunch of T-Shirts and Sweaters with the “Techdirt” logo and make a lot of money selling them on my website. I bet they would have a real problem with that particular idea.

Mike Masnick (profile) says:

Re: Re:

First, Tim Cushing gets this decision wrong and now Mike Masnick has fallen into that same hole?

What did we get wrong?

both of them would have realized that the crap they wrote doesn’t come anywhere to helping copyright trolls.

I read the actual decision. And I didn’t say anything at all about copyright trolls. So not sure what you’re getting at other than a desire to attack me with ad homs.

I forgot, Mike Masnick would rather we live in a world where someone’s intellectual property can be stolen without any compensation paid out to the person who created it in the first place.

What you believe as a strawman for me is kind of pointless, don’t you think?

Maybe I should print up a bunch of T-Shirts and Sweaters with the “Techdirt” logo and make a lot of money selling them on my website. I bet they would have a real problem with that particular idea.

Nope. Go for it.

Of course, that’s a trademark issue, rather than copyright. And we’ve often talked about the key differences there, including the fact that trademark is about consumer protection, so they don’t buy one product thinking it’s something else. But, honestly, go ahead and try to sell some Techdirt gear. You wouldn’t be the first. I doubt anyone would actually buy it, because the people who do buy it tend to want to support us which is why they buy from us. But go ahead. We would not have a problem with you trying. In fact, if your site were big enough, it might even help get us some attention.

That One Guy (profile) says:

A small improvement, but an improvement nonetheless

Anything that makes copyright trolling a more risky venture is a good thing, and lowering the bar to make it easier to recover legal fees for defending yourself from shakedown lawsuits will certainly do that.

They’re in in for a quick buck, increasing the possibility that they’ll actually have to pay out if the judgement goes against them and they can’t just move on to the next mark is likely to make them ever so slightly hesitant to file lawsuits unless they believe they have a good chance of winning on the merits.

DB (profile) says:

For anyone not paying attention, Kirtsaeng was a very important case. It reaffirmed the first sale doctrine, specifically including items made abroad.

This should have been obvious from the outset. In the pursuit of controlling the resale of books, the publisher wanted to completely gut the first sale doctrine. They wanted to take advantage of global low-cost manufacturing, yet use government enforcement to block cross-market sales and resale that bypassed their wildly different pricing for different markets.

Destroying the first sale doctrine certainly qualified as a novel legal theory. Novel theories shouldn’t be made excessively difficult, but those pursing them should be at risk of paying all of the legal costs.

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