Saturday, October 10, 2009

No fee award in hard-fought Renoir case

Guino v. Beseder, Inc., 2009 WL 3188375 (D. Ariz.)

These guys are still fighting! So far, plaintiff won some copyright claims against defendants (totalling $125,000), and one defendant won a false advertising claim against plaintiff (totalling $45,000) plus a fee award. Plaintiff (proprietor of foreign copyrights) sought fees and costs of over $340,000 on its copyright claim.

For those who registered in time to be eligible for statutory damages and a fee award, five factors guide a court’s discretion on fees: (1) the degree of success obtained, (2) frivolousness, (3) motivation, (4) reasonableness of losing party’s legal and factual arguments, and (5) the need to advance considerations of compensation and deterrence.

Degree of success here was low. Though plaintiff technically prevailed, in the broader context of litigation its victory was pyrrhic. The jury originally awarded $120,000 on the Lanham Act claims (the court later tinkered with that number), demonstrating that the jury believed that plaintiff was only entitled to a net $5000 award for infringement of ten (registered, artistically significant) works. The case was thus a close one in the eyes of the jury and the plaintiff had little to show for years of litigation. Its copyright claims weren’t frivolous, though, weighing in favor of an award—as one presumes the frivolousness factor will always do for a prevailing party.

Parties’ motivation: there’s no evidence that either party wanted to harass the other or otherwise abuse the litigation process (hey, I remember something about that from the earlier proceedings; I might have counted naming a defendant’s mother in a copyright infringement claim in order to increase leverage against the real defendant as a strike against plaintiff).

Reasonableness of losing side’s factual and legal arguments: though defendants ultimately lost, their arguments were “well-founded and meritorious,” requiring the 9th Circuit to assess whether to adhere to a doctrine rejected by the US Copyright Office and leading treatises. Though plaintiff argued that defendants’ arguments were unreasonable because there was binding circuit precedent, the court of appeals itself said, “This was not a case of indisputable copyright infringement because of the confusion surrounding the application of Twin Brooks Corp. v. Walt Disney Co., 83 F.3d 1162 (9th Cir.1996).”

Compensation and deterrence goals: plaintiffs argued that a fee award would deter future infringements. This is always true, and therefore not specific to this case. There’s no reason in this case to send a message to potential infringers; to the contrary, because of the initial ambiguity in the law, this case is “exactly the sort where an area of law needed to be developed and where losing parties should not be subject to the additional penalty of attorneys’ fees.” The 9th Circuit has already agreed when deciding the interlocutory appeal of the copyright issue: “given the special circumstances, these types of appeals should be encouraged, and not deterred.”

Given the weight of the factors, the court didn’t need to assess the reasonability of the request, though it appeared that plaintiff failed to segregate fees incurred defending against the Lanham Act claims, which it lost, from fees incurred prosecuting the copyright claims.

Plaintiff argued that, because defendants won a fee award, it would be inequitable for plaintiff not to get an award. As the court dryly noted, whether the opposing party won fees “is not a factor identified by the Ninth Circuit as a factor that should guide the Court’s discretion.” Defendants’ fee award rested on its own foundation, and given that fee awards aren’t automatic, it will be a rare case where both sides win fees. “The fact that Defendants have already obtained a fee award thus is not a reason (let alone a compelling reason) that Plaintiff should be awarded its fees as well.”

Any bets on whether plaintiff will appeal? Any estimates on total cost of this litigation to the parties--merely an order of magnitude greater than the damages, or two orders?

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