Section 505 of the Copyright Act provides that “a court may… award a reasonable attorney’s fee to the prevailing party as part of the costs” in a copyright case. Ever since this somewhat ambiguous fee-shifting provision was enacted as part of the Copyright Act of 1976, the federal courts have been striving to delineate under what circumstances a fee award, or “fee-shifting,” may be appropriate. Unfortunately, a split among the federal courts of appeal as to the appropriate test to be applied has led to uncertainty among litigants and practitioners about whether an award of attorney’s fees is likely in a particular case.
On January 15, 2016, the United States Supreme Court agreed to consider the appropriate standard for awarding attorney’s fees to a prevailing party under Section 505. The question arises in Kirtsaeng v. John Wiley & Sons, Inc., a case discussed on this blog back in 2013 involving the reselling of college textbooks manufactured and purchased abroad. In its previous decision, the Supreme Court ruled in favor of Kirtsaeng, finding the “first sale” doctrine protects the right to resell copyrighted works legally produced abroad in the United States, even by an individual or entity without express permission to do so. After prevailing in the earlier decision, Kirtsaeng moved for an award of attorney’s fees pursuant to Section 505. The District Court denied Kirtsaeng’s motion, and the Second Circuit Court of Appeals affirmed.
As explained in Kirtsaeng’s Supreme Court petition, there is a split among the federal circuit courts of appeal concerning the appropriate standard for awarding attorney’s fees under Section 505. For example, the Ninth and Eleventh Circuits consider whether the prevailing party’s successful claim or defense advanced the purposes of the Copyright Act. The Fifth and Seventh Circuits employ a presumption in favor of attorneys’ fees for a prevailing party that the losing party must overcome. Other courts of appeals employ several “nonexclusive factors” the Supreme Court identified in dicta in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994). Finally, the Second Circuit, as it did in the Kirtsaeng case, places “substantial weight” on whether the losing party’s claim or defense was “objectively unreasonable.”
Although receiving significantly less attention than some of the more “substantive” copyright cases before the Court, the Court’s decision to revisit, and hopefully clarify, the test for fee-shifting under Section 505 could have far-reaching implications and should be monitored accordingly.