In Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. __ (2016), the Supreme Court provided important new guidance on the availability of attorney's fees in copyright litigation. The case involved the denial of an award of attorney's fees to a prevailing defendant in a copyright infringement case concerning the domestic resale of textbooks that were manufactured and marketed outside the United States. The US Disctrict Court for the Southern District of New York denied the prevailing defendant's fee request, and the Second Circuit affirmed.
The Copyright Act provides little guidance on the availability of attorney's fees, simply stating that courts "may . . . award a reasonable attorney's fee to the prevailing party." The Supreme Court previously ruled that this statutory language "connotes discretion," and, in the absence of clearer guidance, the courts of appeal developed their own multi-factor tests for evaluating fee requests under the Copyright Act. In the Second Circuit, the most important factor is the objective reasonableness of the losing party's position; the more reasonable that position, the less likely an award of attorney's fees is appropriate.
In Kirtsaeng, the prevailing defendant argued that the proper test should be whether the litigation "resolved an important and close legal issue and thus 'meaningfully clarified' copyright law" – if so, the prevailing party should be entitled to attorney's fees. The Supreme Court rejected this argument, finding that it would be impractical to ask district courts to evaluate the likely impact of their own rulings on clarifying copyright law. The Court explained that the objective reasonableness test "encourages parties with strong legal positions to stand on their rights . . . . When a litigant . . . is clearly correct, the likelihood that he will recover fees from the opposing (i.e., unreasonable) party gives him an incentive to litigate the case all the way to the end."
Nevertheless, the Court went on to rule that the Second Circuit had placed too much emphasis on the objective reasonableness factor, explaining that it should only be "an important factor . . . not the controlling one" and that the Second Circuit's decisions at times suggested there was a presumption against fees where the losing party's position was determined to be reasonable. The Court remanded for further consideration of "other relevant factors."