A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Denies Attorneys' Fees to Successful Defendant in Copyright Infringement Claim

In a November 12, 2013 ruling, Judge John G. Koetl denied the parties' cross-motions for attorneys' fees after the dismissal of plaintiff Overseas Direct Import Co.'s copyright infringement claim against defendant Family Dollar Stores Inc. and another.  Before the trial of the copyright infringement claim, Family Dollar Stores made an offer of judgment under Rule 68, which Overseas Direct rejected.  The jury, however, returned a verdict for Family Dollar Stores and Overseas Direct took nothing.  Family Dollar Stores moved for fees under the Copyright Act, 17 U.S.C. § 505 and Rule 68.  Overseas Direct cross-moved for its fees in defending the motion.

The Court explained that a plaintiff that recovers less than an offer of judgment can be liable for costs under Rule 68, and that those costs can include attorneys' fees where the underlying statute allows them, as the Copyright Act does here.  Family Dollar Stores argued that the verdict of $0 for Overseas Direct was less than the offer of judgment, so it is entitled to costs.  Judge Koetl ruled that "this argument is squarely foreclosed by the Supreme Court's holding in Delta Air Lines, Inc. v. August that the costs provision of Rule 68 is 'simply inapplicable' when the defendant has 'obtained the judgment.'"

 With regard to an award of fees under the Copyright Act, the Court cited the Supreme Court's Fogerty decision that "courts look to 'frivolousness, motivation, objective unreasonableness (both factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.'"  Judge Koetl noted that "claims that survive summary judgment are unlikely to be objectively unreasonable," and that he had previously denied Family Dollar Stores' summary judgment motion on the copyright claim.  Family Dollar Stores nevertheless argued that Overseas Direct's inflated damages demand and refusal to settle amounted to objective baselessness.  The Court conceded that those circumstances can amount to baselessness, but only if there are "aggravating circumstances, such as indicia of improper motivation."  Judge Koetl found that there "is no indication that [Overseas Direct] pursued its copyright claim in bad faith or for any prupose other than to vindicate its alleged right to its copyrighted work," and declined to grant fees.

Judge Koetl also denied Oversea Direct its fees in resisting Family Dollar Stores' motion for fees, relying principally on the contention that controlling Supreme Court precedent foreclosed Federal Dollar Stores' attempt to collect fees under Rule 68.  The Court noted that Overseas Direct nevertheless would had to defend a claim for fees under the Copyright Act, and found that at "most, [Family Dollar Stores'] error in relying on Rule 68 was a good faith error of law."
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