On June 16, 2016, the Supreme Court held Kirtsaeng v. John Wiley & Sons, No. 15-375, that when deciding whether to award attorney’s fees under the Copyright Act’s fee-shifting provision, a district court should give substantial weight to the objective reasonableness of the losing party’s position, while still taking into account “all other circumstances relevant to granting fees.” The Supreme Court pointed to “several nonexclusive factors” that may be used to guide the lower courts’ discretion, including “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.”
The Court’s decision stems from an earlier case in which Kirtsaeng, a Thai-born U.S. student was sued by Wiley over a business he’d started to help finance his education costs: buying books in Thailand and re-selling them for a profit in the U.S. (via eBay and other Web sites). Wiley alleged that Kirtsaeng’s actions violated copyright law. In 2013, the Supreme Court held that Kirtsaeng’s activities did not constitute copyright infringement.
Kirtsaeng returned to the District Court to seek attorney’s fees from Wiley under the Copyright Act’s fee-shifting provision, which requires that a “court may … award a reasonable attorney’s fee to the prevailing party.” 17 U.S.C. § 505. The District Court denied Kirtsaeng’s petition, noting that “the imposition of a fee award against a copyright holder with an objectively reasonable litigation position will generally not promote the purposes of the Copyright Act.” The Second Circuit affirmed.
The Supreme Court unanimously vacated and remanded. The Supreme Court agreed that giving “substantial weight” to the reasonableness of a losing party’s position when deciding whether to award attorney’s fees was a proper test for fees, since it would “encourage parties with strong legal positions to stand on their rights and deter those with weak ones from proceeding with litigation.” However, the Court emphasized that fee award should advance the aims of the Copyright Act’s by encouraging and rewarding authors’ creations while also enabling others to build on that work. Therefore, “reasonableness can be only an important factor in assessing fee applications—not the controlling one.” The Court also concluded that fees should be awarded on a case-by-case basis and not “as a matter of course.”
While the Supreme Court made no mention of its approach on attorney’s fees in patent cases, the Court’s ruling in Kirtsaeng is consistent with its recent ruling in Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513, which is concerned with award of damages to patent holders. As in Halo, the Court rejected overly rigid rules that limited a trial court’s discretion in deciding issues related to fee awards. As a result of the Supreme Court’s holding in Kirtsaeng to leave the question of attorney’s fees up to the Court’s discretion, it may be more difficult to predict whether fees will be awarded in a particular case.
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