Today, the U.S. Supreme Court handed down an important decision regarding when the prevailing party in a copyright lawsuit is entitled to recover attorneys’ fees and costs. The Copyright Act provides that “the court may also award a reasonable attorney’s fee to the prevailing party.” The lower federal courts developed a variety of different “tests” as to when attorneys’ fees should be awarded. Some courts required that the prevailing party must demonstrate that the losing party’s case was pursued in “bad faith.” Other courts held that the prevailing party was “presumed” to be entitled to recover attorneys’ fees.
The U.S. Supreme Court held today in Kirtsaeng v. John Wiley & Sons, Inc. that when deciding whether to award attorney’s fees under the Copyright Act, a district court should give “substantial weight” to the objective reasonableness of the losing party’s position while still taking into account all other circumstances relevant to granting fees. This is the second time that this long-running feud made its way up to the Court. The first time dealt with the issue of the first sale doctrine under Section 109 of the Copyright Act.
The key points to the Court’s decision are as follows:
- The touchstone for awarding attorneys’ fees turns, in significant part, on the strength of the losing party’s claims or defenses. The weaker those claims or defenses, the stronger the case is for an award of attorneys’ fees to the prevailing party.
- While the merits of the losing party’s claims or defenses should factor prominently into the trial court’s decision, it should also consider other factors, including such things as the losing party’s “litigation misconduct,” or whether a fee award will “deter repeated instances of copyright infringement or overaggressive assertions of copyright claims, again even if the losing position was reasonable in a particular case.
- The Court emphasized the importance of the trial court exercising its discretion. Although the objective strength of the losing party’s position carries “significant weight,” the trial court must view all the circumstances of a case and assess them in light of the Copyright Act’s essential goals.
- The Court’s emphasis on the strength of the losing party’s litigation position certainly seems consistent with the Court’s recent decision regarding the award of fees under the Patent Act in Octane Fitness. While the Copyright Act’s provision (“the court may also award a reasonable attorney’s fee to the prevailing party”) is quite different from the Patent Act’s (“the court in exceptional cases may award reasonable attorney fees to the prevailing party”), the primary factor that should be considered by a trial court in either type of a case is the reasonableness of the losing party’s position. In this sense, the Court appears to be harmonizing the analytical approach in both copyright and patent cases.