A recent case from the First Circuit Federal Court of Appeals demonstrates that an overly-aggressive copyright infringement plaintiff may find itself paying not only his own attorney’s fees, but also the defendant’s. In T-Peg, Inc., et al. v. Vermont Timber Works,Inc., et al., the Circuit Court upheld District Judge Steven J. McAuliffe’s award of $35,000 in fees to Defendants.  The case is a recent reminder to parties in copyright infringement disputes to keep the extent of litigation in proportion to the value of the claims at stake.

The Copyright Act provides:

§ 505. Remedies for infringement: Costs and attorney’s fees In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided bythis title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.

 17 U.S.C. § 505.

“Prevailing party,” of course, does not always mean”plaintiff” under the Copyright Act.  Additionally, and as recognized in other cases, this section provides that the district courts have discretion in allowing attorney’s fees awards.

T-Peg involved a copyright infringement dispute between two architectural firms over design plans for a private residence.  Plaintiffs drew up the preliminary designs in 1999 and made updates with input from the homeowner.  In May 2001,

Plaintiffs registered the updated design copyright with the United States Copyright Office.  Before Plaintiffs’ copyright registration, the homeowner showed Plaintiffs’ preliminary design to Defendants to complete the plan and begin construction.  The result was a home that “apparently reflected [Plaintiffs'] registered design.”  In October 2003, Plaintiffs sued for copyright infringement.

Defendants Apply for Attorney’s Fees

The case has a long procedural history, moving between the District and Circuit courts.  Despite being filed in 2003, the case finally went to trial in September 2009. The jury rejected Plaintiffs’ claims of copyright infringement and Defendants made an attorney’s fees application.  Judge McAuliffe granted the fee application and awarded $35,000 – down from the Defendants’ $200,000 request.  The damages Plaintiffs sought for the copyright infringement only totaled $65,350, prompting a lower attorney’s fees award.

Plaintiffs appealed the fee award.  The only argument by Plaintiffs on appeal discussed by the First Circuit was the use of fee awards as a deterrent to copyright infringement plaintiffs.  Plaintiffs attempted to argue that the District Court erred in using fee awards to deter parties “from litigating in a manner greatly disproportional to the matter at stake.”  The Circuit Court, however, completely rejected this argument. Citing Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) and subsequent cases in the Fogerty line, the First Circuit acknowledged that district courts may award attorney’s fees to discourage overly aggressive litigation and ensure that the parties litigate copyright infringement disputes in a realistic manner.

Defendants also appealed, claiming that the $35,000 award was too low.  The First Circuit acknowledged that district courts are granted wide discretion under the Copyright Act in fashioning attorney’s fees awards that best fit the particular circumstances of each case.  In T-Peg, the Circuit Court held that judges are not bound by any particular method of fee calculation and affirmed the award.

One mistake copyright infringement plaintiffs make is using the Copyright Act’s damages and fees provisions under 17 U.S.C. §505 as carte blanche to over-litigate claims. Plaintiffs that use overly aggressive litigation tactics in a relatively small copyright infringement claim likely believe that they will recoup their time investment through an attorney’s fees award.  Saying that the Copyright Act’s penalties have a tendency to be harsh is probably an understatement.  However, the outer limits of damage awards and attorney’s fees are neither guaranteed nor awarded as a matter of law to a copyright plaintiff.  The damage and fee awards must still be related to the value of the infringement claim.  Plaintiffs should take heed from cases like T-Peg, lest they find themselves owing attorney’s fees for both themselves and their adversaries.