UMG v. Veoh

The Ninth Circuit just affirmed on Veoh's DMCA defense.  While there are many things to say about the DMCA analysis (primarily: good job!) I will point out one thing that the vast majority of courts have, in my opinion, gotten wrong: the role of Rule 68 offers in copyright (and similar) cases.  The Rule 68 offer of judgment allows a defendant to recover its post-offer "costs" if it makes an offer of judgment and the plaintiff refuses and subsequently recovers less than what was offered.  Do costs include fees, the major component of actual litigation costs?  The weight of authority in copyright cases is "no," but I think that has to be wrong.
Consider the inherent conflict in the two things the court of appeals says in this case:

(1) A defendant has to be a prevailing party to be entitled to fees as part of Rule 68 "costs" where the relevant statute awards attorneys' fees to be a prevailing party.  (slip op. at 46)
(2) A defendant can recover Rule 68 costs only if it is not a prevailing defendant; Rule 68 doesn't apply when the defendant obtains judgment in its favor.  (slip op. at 47-48)

See the problem? (Other precedent establishes that Rule 68 "costs" include fees only when the underlying statute defines costs to include fees, so there's no way out of this trap by looking for a statute that doesn't mention fees, especially since there is as far as I know no such thing as a statute that awards fees to the non-prevailing party, though I'd be happy to be educated to the contrary.)  It seems to me that the only coherent way to deal with the Supreme Court precedent is to say that one looks to the underlying statute to figure out whether fees are defined as part of costs, but not to figure out who gets them, since if you did that the theoretical availability of fees would be a logical impossibility--jam tomorrow, and jam yesterday, but never jam today.

What's particularly notable about this analysis is that it happens right after the court has interpreted the DMCA to avoid self-contradiction/nullifying its provisions, particularly by interpreting "right and ability to control" to mean something more than "ability to take down after notice."

So, I'm left wondering: what's up with Rule 68 jurisprudence?