Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-18-20615/USCOURTS-ca5-18-20615-0/pdf.json

Parties Involved:
Energy Intelligence Group (UK) Limited
Appellant
Energy Intelligence Group, Incorporated
Appellant
K.A. Fund Advisors, L.L.C.
Appellee
Kayne Anderson Capital Advisors, L.P.
Appellee

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-20350

ENERGY INTELLIGENCE GROUP, INCORPORATED; ENERGY 

INTELLIGENCE GROUP (UK) LIMITED, 

 Plaintiffs - Appellants Cross-Appellees

v.

KAYNE ANDERSON CAPITAL ADVISORS, L.P.; K.A. FUND ADVISORS, 

L.L.C., 

 Defendants - Appellees Cross-Appellants

************************************

cons w/18-20615

ENERGY INTELLIGENCE GROUP, INCORPORATED; ENERGY 

INTELLIGENCE GROUP (UK) LIMITED, 

 Plaintiffs - Appellants

v.

KAYNE ANDERSON CAPITAL ADVISORS, L.P.; K.A. FUND ADVISORS, 

L.L.C., 

 Defendants - Appellees

Appeals from the United States District Court 

for the Southern District of Texas

United States Court of Appeals

Fifth Circuit

FILED

January 15, 2020

Lyle W. Cayce

Clerk

Case: 18-20615 Document: 00515272644 Page: 1 Date Filed: 01/15/2020
No. 18-20350

2

Before KING, HIGGINSON, and DUNCAN, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

Plaintiffs Energy Intelligence Group, Inc. and Energy Intelligence Group 

(UK) Limited (“EIG”) collectively publish information and news relevant to the 

global energy industry. One of EIG’s publications is Oil Daily, a daily 

newsletter that provides news and analysis about the North American 

petroleum industry. 

Defendants Kayne Anderson Capital Advisors, LP and Kayne Anderson 

Fund Advisors, LLC (“KA”) collectively are a boutique investment firm. Energy 

securities make up a substantial part of KA’s business. In 2004, KA began 

purchasing an annual Oil Daily subscription for KA partner James Baker. 

Between 2004 and 2014, Baker routinely shared his Oil Daily access with 

fellow KA employees and other third parties in violation of his subscription 

agreements and copyright law. KA attempted to keep EIG from discovering 

these activities, including by saving and sending Oil Daily as a file named 

“123.” 

In July 2014, EIG filed suit alleging numerous instances of copyright 

infringement and violations of the Digital Millennium Copyright Act 

(“DMCA”). As relevant to this appeal, KA’s defense rested on two theories: (1) 

EIG learned of KA’s infringement in 2007 but did nothing to investigate or 

dissuade KA; and (2) EIG knew that many of its subscribers improperly 

distributed its newsletters but consciously declined to crack down on such 

sharing because litigating copyright claims against large clients was more 

profitable. The district court rejected KA’s equitable estoppel and unclean 

hands defenses at summary judgment but allowed KA to proceed with a 

mitigation defense. The district court held that “a reasonable fact-finder could 

infer . . . that the subsequent alleged infringement could have been avoided.” 

In March 2017, EIG confirmed to KA that it would seek statutory 

Case: 18-20615 Document: 00515272644 Page: 2 Date Filed: 01/15/2020
No. 18-20350

3

damages on all claims. EIG then filed a pretrial memorandum arguing that 

KA could not invoke mitigation as a complete defense—in other words, 

regardless of whether EIG could reasonably have avoided or prevented KA’s 

acts, EIG should receive damages within the mandated ranges for each 

infringed work and each DMCA violation.1 On December 6, 2017, during trial, 

the district court orally overruled EIG’s argument. In May 2017, KA moved for 

referral to the Copyright Office, alleging that EIG’s copyright registrations 

were based on inaccurate applications. In July 2017, the district court denied 

KA’s referral motion after finding no inaccuracies in EIG’s applications.

At trial in December 2017, KA persuaded the jury that EIG could 

reasonably have avoided almost all the copyright and DMCA violations at 

issue. EIG took nothing for those violations and received $15,000 in statutory 

damages for 39 infringed works, which amounted to approximately half a 

million dollars. Based on the Copyright Act’s and DMCA’s fee-shifting 

provisions, as well as KA’s Rule 68 motion, the district court awarded EIG $2.6 

million in attorney’s fees and $21,000 in costs.2 Both parties timely filed notices 

of appeal and their appeals were consolidated.

The issue presented in EIG’s appeal is one of first impression: whether 

failure to mitigate is a complete defense to liability for statutory damages 

under the Copyright Act and the DMCA. The parties agree that EIG’s failure 

to mitigate is a relevant factor in deciding what statutory damages ought to be 

imposed, but they disagree over whether failure to mitigate can preclude 

 

1 See 17 U.S.C. § 504(c) (infringement damages “in a sum of not less than $750 or more 

than $30,000 as the court considers just”); 17 U.S.C. § 1203(c)(3)(B) (DMCA damages “in the 

sum of not less than $2,500 or more than $25,000”).

2 Prior to trial, KA offered to settle the lawsuit for $5 million. EIG rejected this offer. 

Because EIG was ultimately the prevailing party, the district court calculated costs and 

attorney’s fees by awarding EIG pre-offer costs and attorney’s fees. The district court then 

subtracted KA’s post-offer costs from EIG’s award. 

Case: 18-20615 Document: 00515272644 Page: 3 Date Filed: 01/15/2020
No. 18-20350

4

liability altogether. EIG says it cannot and urges the court to instate an award 

of $25,752,500 ($15,000 for each of 1,646 works infringed plus $2,500 for each 

of 425 DMCA violations) in EIG’s favor. KA counters that mitigation is a 

complete defense to liability and that the district court’s award of $585,000 in 

statutory damages was appropriate. 

Two other issues are raised in KA’s appeal. First, KA contends that the 

district court erred in denying its § 411 motion for referral to the Copyright 

Register. Second, KA argues that it should have received post-offer attorney’s 

fees under Rule 68.

We hold that failure to mitigate is not a complete defense to copyright or 

DMCA claims for statutory damages; the district court properly denied KA’s 

referral motion; and the district court properly denied KA’s post-offer 

attorney’s fees under Rule 68. Remand is necessary to determine copyright 

damages because we cannot determine whether the jury intended to award

EIG $15,000 per infringed work. Remand is also necessary to re-calculate 

appropriate awards, attorney’s fees, and costs. If total damages ultimately 

amount to more than $5 million (KA’s Rule 68 offer), KA may no longer be 

eligible to recover post-offer costs. 

We AFFIRM the district court’s denial of KA’s § 411(b) referral motion.

We VACATE the judgment in full and instate an award of $1,062,500 for EIG’s 

DMCA claims. We REMAND as to copyright damages, attorney’s fees, and 

costs, with the clarification that non-prevailing copyright and DMCA 

defendants may not recover post-offer attorney’s fees under Rule 68.

I.

A. Pre-Suit Factual Background

Baker started working for KA in 2004 and began subscribing to Oil Daily 

shortly thereafter. At the time, approximately four other professionals worked 

in Baker’s office. Baker initially accessed Oil Daily by logging in to EIG’s 

Case: 18-20615 Document: 00515272644 Page: 4 Date Filed: 01/15/2020
No. 18-20350

5

website with a username and password, which he shared with his co-workers 

so that they could also access the publication.

Oil Daily was always marked with copyright notices and warnings 

compliant with the notice requirements of 17 U.S.C. § 401. Each newsletter 

contained a copyright notice on the front cover and masthead.

In January 2007, KA employee Ron Logan had trouble accessing Baker’s 

EIG account. On January 3, 2007, Baker’s assistant Diana Lerma emailed EIG 

representative Deborah Brown for assistance, forwarding a KA internal email 

stating, “Ron . . . was not able to access your [Baker’s] oil daily.” Brown noticed 

the reference to “Ron” accessing Baker’s account. She testified in her deposition 

that this “would send up a red flag that more than the authorized user was 

accessing it” and recalled that she “probably escalated the issue” to her 

supervisors at EIG. 

Just a few hours later that day, EIG employee Peter Buttrick called 

Lerma to discuss KA’s subscription. After the call, Buttrick indicated by email 

to Mark Hoff, EIG’s Vice President of Sales, that he had just spoken with 

Lerma “[o]n the copyright issue – I discussed the severity of the issue and 

advised her to schedule a call with her boss, Jim Baker[,] . . . and I as soon as 

possible to discuss options.” On KA’s side, Lerma emailed Baker:

One hiccup: they want to know how many users we have. They said 

that we need to confirm that you’d be the only [sic] accessing the 

information; otherwise we would be “sharing” and that is against 

their policy. Each additional user is $1554 annually. They have 

recently found multiple users on one account and then gone back 

to charge that company for the excess. So they want to give us a 

heads up to avoid this happening to us. What do you propose? Say 

3 users so that you can continue your access and then add myself 

and Ron? Or just you and I and just tell the others not to go online 

to avoid tracking anything back to us via the email addresses.

Baker instructed Lerma to “[h]ave them [EIG] email the document to me 

on a daily basis. No web-based access. Please forward the document to the rest 

Case: 18-20615 Document: 00515272644 Page: 5 Date Filed: 01/15/2020
No. 18-20350

6

of the group.” Thereafter, Baker began receiving Oil Daily as an emailed PDF, 

which his assistants regularly forwarded to other KA employees.

KA upgraded its subscription in 2013 to allow five authorized users and 

continued subscribing to Oil Daily through 2014. However, the number of KA 

employees accessing Oil Daily far exceeded five. By 2014, 20 people in the office 

regularly received the newsletter. 

Besides sharing Oil Daily internally within KA, Baker’s assistants also 

sometimes forwarded Oil Daily to third party non-subscribers. For example, 

KA employee Jennifer Rodgers regularly emailed copies of Oil Daily to a 

company called Crestwood Midstream Partners. In doing so, she named each

file “123,” seemingly at both Lerma’s instruction and Crestwood’s request to 

avoid detection by EIG.3 By contrast, when EIG emails Oil Daily as a PDF to

its subscribers, the PDF is named in the format “DE” followed by the date in 

YYMMDD format. At trial, EIG identified 425 instances where KA had sent 

Oil Daily files named “123” to other entities.

On February 5, 2014, in response to a request for information by EIG, 

KA employee Ana Pope ingenuously informed EIG Account Manager Derrick 

Dent, 

The Oil Daily is sent to one person in the office, Jim Baker. He 

usually gets it the night before it is published for and forwards it 

to me that night. When I get into the office that next morning the 

first thing I do, around 7:40am, is email it out to the 20 or so people 

in the office who have elected to receive the oil daily every morning.

EIG did not immediately reply. On February 21, 2014, Pope emailed 

 

3 Lerma was questioned about her instruction to “save [Oil Daily] as PDF 123 and email it to . . . Crestwood” and Crestwood emailed KA saying “just for future reference, name 

this doc 123 so that it hopefully can’t be traced”. Rodgers agreed that “123 was a code to refer 

to Oil Daily,” and that she did not use the “123” naming convention when circulating Oil 

Daily within KA. Rodgers also testified that she would download, print, scan, and re-name 

the Oil Daily document. 

Case: 18-20615 Document: 00515272644 Page: 6 Date Filed: 01/15/2020
No. 18-20350

7

Dent again, requesting, “Would you mind sending the oil daily that usually 

goes to James Baker directly to me today? James is out of town on the Pacific 

coast and probably won’t wake up for another few hours.” Dent then responded, 

According to Kayne Anderson’s site license agreement, only five 

employees are granted access to Oil Daily as Authorized Users. 

The agreement states that it is not permissible to forward our 

publications to anyone who is not an Authorized user. This kind of 

activity is in violation of our license agreements and of our 

copyrights.

KA continued its normal practice of sharing Oil Daily until May 2014, 

when EIG formally sent KA’s general counsel a letter complaining of 

infringement. 

B. Relevant Pre-Trial Motions

EIG filed suit against KA for copyright infringement on July 8, 2014. 

After filing suit and obtaining discovery, EIG learned of KA’s practice of 

sending Oil Daily as a file named “123” to third parties. EIG amended its 

complaint in October 2015 to add allegations that KA had altered Oil Daily’s 

“copyright management information” (“CMI”) in violation of the DMCA, 17 

U.S.C. § 1202(b).

KA’s answer to the operative complaint asserted various affirmative 

defenses, including that EIG’s claims were barred in whole or in part by its 

failure to mitigate damages, equitable estoppel, and unclean hands or 

entrapment. In January 2017, the district court granted EIG summary 

judgment on KA’s defenses of equitable estoppel and unclean 

hands/entrapment, but denied EIG summary judgment on KA’s mitigation 

defense. KA does not directly appeal the dismissal of its other defenses.4

 

4 However, KA argues that if the court finds mitigation is not a complete defense to 

EIG’s claims, KA should have an opportunity to present the same arguments about EIG’s 

conduct through a defense of unclean hands. KA cites no relevant authority to support its 

assertion that a reasonable jury could find unclean hands on EIG’s part. KA relies on two 

Case: 18-20615 Document: 00515272644 Page: 7 Date Filed: 01/15/2020
No. 18-20350

8

Under each defensive theory, KA argued that EIG pursued a litigious 

business strategy of waiting for infringements to pile up and then seeking 

outsized statutory damages. The district court concluded that such conduct 

could support an affirmative defense of mitigation, but not of equitable 

estoppel or unclean hands.

In March 2017, EIG confirmed to KA that it would seek statutory 

damages on all claims. In April 2017, EIG filed a pretrial memorandum 

arguing that KA could not rely on mitigation as a complete defense. As jury 

instructions were being finalized, EIG conceded that mitigation could be a 

“limiting factor” in assessing statutory damages, but continued to argue that 

mitigation should not be submitted as an “absolute defense” to liability for 

statutory damages. The district court orally overruled EIG’s objection and 

decided that the verdict form would include questions about whether EIG had 

failed to mitigate its damages, and if so, how many acts of infringement EIG 

could have avoided. 

Registration of a copyright is a prerequisite to obtaining statutory 

 

Design Basics cases, but neither is on point. In Design Basics, LLC v. Lexington Homes, Inc., 

858 F.3d 1093, 1097 (7th Cir. 2017), the Seventh Circuit criticized those who “bring[] strategic 

infringement claims of dubious merit in the hope of arranging prompt settlements with 

defendants who would prefer to pay modest or nuisance settlements rather than be tied up 

in expensive litigation.” Id. But the decision itself is not about the unclean hands defense at 

all; rather, the circuit court affirmed the grant of summary judgment to the defendant based

on the plaintiff’s failure to prove infringement. In Design Basics, LLC v. Petros Homes, Inc.,

240 F. Supp. 3d 712, 721 (N.D. Ohio 2017), the district court found a basis for a misuse of

copyright defense, based primarily on defendants’ contention that plaintiffs were asserting

copyright “protection over things not able to be copyrighted.” Id. at 720. KA, however, never

asserted any such theory of unclean hands to the district court. In Petros Homes, the district 

court did note defendants’ complaint that plaintiffs used a litigious business model, but only 

in connection with defendants’ core allegation that plaintiffs were misrepresenting the scope 

of their rights.

Courts have recognized unclean hands when a party makes serious

misrepresentations—for instance, by “falsifying a court order, by falsifying evidence, or by

misrepresenting the scope of his copyright to the court and opposing party,” or by

perpetuating a “fraud on the Copyright Office.” 4 Nimmer on Copyright § 13.09[B] (2019) 

[hereinafter Nimmer]. KA has not pointed to such evidence on EIG’s part.

Case: 18-20615 Document: 00515272644 Page: 8 Date Filed: 01/15/2020
No. 18-20350

9

damages for infringement. 17 U.S.C. §§ 411(a), 412. EIG’s original and 

amended complaints attached the copyright registrations for the Oil Daily 

works at issue. In April 2017, after being notified by email of EIG’s intent to 

seek statutory damages, KA stipulated to the validity of EIG’s copyright 

registrations in the parties’ joint pretrial order. However, in May 2017—nearly 

three years after EIG filed suit, one week before the final pretrial hearing 

scheduled for May 11, 2017, and six weeks prior to the June 19, 2017 trial 

date—KA moved for a referral to the Copyright Office and a stay of district 

court proceedings, arguing under § 411(b) that EIG’s copyright registrations 

were invalid. The district court postponed trial to consider the motion. Relying 

on DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 625 (7th Cir. 

2013), the district court found no referral was needed because KA failed to 

establish that EIG knowingly included inaccurate information in its 

registration materials. 

C. Jury Trial

The district court presided over a four-day jury trial from December 4 to 

7, 2017. In its opening statement, EIG argued that KA had a “systematic” 

practice of sharing Oil Daily internally and with other companies, and had 

wrongfully shared at least 1,646 separate issues. KA’s opening conceded that 

KA had improperly shared Oil Daily and concealed its sharing from EIG. But, 

over the course of trial, KA argued that EIG had a “wait, don’t warn” business 

model. KA argued that EIG knew in January 2007 that Baker was sharing his 

EIG credentials, yet sat on its hands by conducting no investigation and by 

failing to warn Baker of the Copyright Act’s hefty statutory damages provision. 

KA admitted evidence that made it difficult for EIG witnesses to dispute that 

copyright litigation is an important component of EIG’s overall business 

strategy. For example, KA elicited an admission from EIG’s Director for Sales 

and Marketing that he had written in 2014, “My number one priority [is] 

Case: 18-20615 Document: 00515272644 Page: 9 Date Filed: 01/15/2020
No. 18-20350

10

contributing to litigation efforts.” 

At the close of trial, the district court instructed the jury to set statutory 

damages in light of factors including (1) benefits obtained by KA from 

infringement, (2) EIG’s lost revenues, (3) the difficulty of proving EIG’s actual 

damages, (4) the circumstances of KA’s infringement, (5) deterrence, and (6) 

the actions taken by EIG to mitigate their damages. Separately, the district 

court instructed the jury that EIG had a duty “to use reasonable diligence to 

mitigate its damages, that is, to avoid or minimize those damages,” and could 

“not recover for any item of damage that they could have avoided through 

reasonable effort.” 

The jury was presented with a special verdict form consisting of fifteen 

questions. The key takeaways from the jury verdict are:

(1) KA infringed 1,646 individual Oil Daily works between December 29, 

2004 and July 8, 2014 and should pay $15,000 in statutory damages for each 

work infringed. 

(2) EIG knew or should have known of KA’s infringement before July 8, 

2011. However, KA fraudulently concealed its copying of Oil Daily and EIG 

failed to discover the copying despite exercising due diligence.

(3) EIG failed to mitigate its copyright damages and could have avoided 

1,607 acts of infringement through reasonable diligence.

(4) KA intentionally altered copyright management information for Oil 

Daily 425 times, while having reasonable grounds to know that this would 

induce, enable, facilitate, or conceal copyright infringement. The amount of 

$2,500 in statutory damages for each DMCA violation was appropriate. 

(5) EIG failed to mitigate its DMCA damages and could have avoided all 

425 violations if it had exercised reasonable diligence.

D. Post-Trial Motions

After trial, EIG filed a Rule 59 motion renewing its argument that 

Case: 18-20615 Document: 00515272644 Page: 10 Date Filed: 01/15/2020
No. 18-20350

11

mitigation could not serve as an absolute defense to liability for statutory 

damages under the Copyright Act or DMCA. The district court denied the 

motion.

The district court noted a lack of binding precedent and a lower court 

“split on whether failure to mitigate damages is available as a defense when, 

as here, plaintiff seeks only statutory damages.” After reviewing this lower 

court authority, the district court stated its agreement with cases like Malibu 

Media, LLC v. Guastaferro, No. 1:14-CV-1544, 2015 WL 4603065, at *5 (E.D. 

Va. July 28, 2015). The district court appeared to adopt that court’s reasoning 

that although mitigation is “typically only applied to claims for actual 

damages, the defense may be relevant to claim[s] requesting statutory 

damages because one purpose of statutory damages is to approximate actual 

damages that are difficult to prove.” Id. (internal quotation marks omitted).

The district court therefore awarded EIG $585,000 for the 39 infringed works 

that EIG could not have reasonably avoided. The district court awarded EIG 

nothing for 1,607 infringed works and nothing for all 425 DMCA violations.

Both parties claimed to be the prevailing party and sought attorney’s 

fees and costs under the fee-shifting provisions of the Copyright Act and 

DMCA. KA sought $4.4 million in attorney’s fees and $60,000 in costs; EIG 

sought $6.5 million in attorney’s fees and $640,000 in costs. The district court 

concluded that EIG was the prevailing party because EIG’s $585,000 award 

would “modify Kayne’s behavior for EIG’s benefit forcing Kayne to pay an 

amount of money that Kayne otherwise would not pay.” The district court 

initially awarded EIG $4.2 million in attorney’s fees and $75,000 in costs.

Because KA had extended a Rule 68 offer of settlement for $5 million, 

KA then moved to modify EIG’s award of attorney’s fees and costs. Under Rule 

68(d), because “the judgment that the offeree [EIG] finally obtain[ed was] not 

more favorable than the unaccepted offer, the offeree [EIG] must pay the costs 

Case: 18-20615 Document: 00515272644 Page: 11 Date Filed: 01/15/2020
No. 18-20350

12

incurred after the offer was made.” Fed. R. Civ. P. 68(d). All parties agreed that 

EIG was responsible for its own post-offer costs and attorney’s fees and that 

EIG had to cover KA’s post-offer costs. EIG argued, however, that under Rule 

68, EIG did not have to pay for KA’s post-offer attorney’s fees. The district court 

agreed with EIG and ultimately awarded EIG $2.6 million in attorney’s fees 

and $21,000 in costs. 

II.

We conclude that statutory damages under § 504(c) may not be remitted 

based on a plaintiff’s unreasonable failure to prevent copyright infringement. 

For similar reasons, statutory damages under § 1203 may not be remitted 

based on a plaintiff’s unreasonable failure to prevent alteration of CMI. The 

district court properly denied KA’s motion for referral to the Copyright Office. 

The district court properly refused to award post-offer attorney’s fees to KA 

under Rule 68. The following sections explain the bases for our holdings.

A. Mitigation of Copyright Damages

EIG contends that the district court erred by declining to award any 

damages for the 1,607 works that EIG could reasonably have protected from 

infringement. Because this ruling relied on legal conclusions, we review the 

district court’s decision to preclude recovery for those works de novo. BWP 

Media USA, Inc. v. T & S Software Assocs., Inc., 852 F.3d 436, 438 (5th Cir. 

2017). As all parties agree, this issue is a matter of first impression

unaddressed by any appellate court.

i. Petrella v. Metro-Goldwyn-Mayer, Inc.

“Congress is understood to legislate against a background of commonlaw adjudicatory principles. Thus, where a common-law principle is well 

established, . . . the courts may take it as given that Congress has legislated 

with an expectation that the principle will apply except when a statutory 

purpose to the contrary is evident.” Astoria Fed. Sav. & Loan Ass’n v. Solimino, 

Case: 18-20615 Document: 00515272644 Page: 12 Date Filed: 01/15/2020
No. 18-20350

13

501 U.S. 104, 108 (1991) (internal quotation marks and citations omitted). The 

viability of KA’s mitigation defense therefore turns on (1) the nature of the 

common-law principle of mitigation, and (2) whether the Copyright Act 

contains a statutory purpose to the contrary.

These two factors—statutory purpose and the nature of the common-law 

defense asserted—were central to Petrella v. Metro-Goldwyn-Mayer, Inc., 572 

U.S. 663, 668 (2014), which held that Congress precluded the equitable defense 

of laches in copyright cases by providing a three-year statute of limitations. In 

Petrella, the accused work was MGM’s 1980 film Raging Bull. Id. at 673. 

Plaintiff Petrella contended that Raging Bull was derivative of a 1963 

screenplay written by her father. Id. Petrella had acquired the rights to the 

screenplay in 1991. Id. Yet she waited until 1998 to contact MGM and did not 

file suit until January 2009. Id. at 674. When Petrella did file suit, she sought 

damages only for infringement beginning three years prior in January 2006. 

Id. at 675–76. The trial court granted summary judgment for MGM on its 

laches defense, finding both unreasonable delay and prejudice, and the Ninth 

Circuit had affirmed. Id. at 675. Both courts below took note of MGM’s 

“significant investments” in exploiting the film (e.g., marketing, converting to 

modern DVD and Blu-Ray formats), as well as Petrella’s candid admission that 

she delayed suit because the film hadn’t made much money in earlier years.

Id. at 676–77. 

The Supreme Court reversed. Id. at 688. On statutory purpose, the Court 

found that “the copyright statute of limitations, § 507(b), itself takes account 

of delay.” Id. at 677. The statute of limitations, in combination with the “widely 

recognized” rule of separate accrual for copyright claims,5 meant that Petrella 

 

5 The rule of separate accrual, as discussed in Petrella, takes as given that a copyright 

claim accrues when an infringing act occurs (the “incident of injury” rule) and treats each 

Case: 18-20615 Document: 00515272644 Page: 13 Date Filed: 01/15/2020
No. 18-20350

14

was foreclosed from seeking damages for any acts completed before January 

2006. Id. at 671, 675. Because the Copyright Act already “secured to authors a 

copyright term of long duration, and a right to sue for infringement occurring 

no more than three years back from the time of suit,” the Court perceived 

“‘little place’ for a doctrine that would further limit the timeliness of a 

copyright owner’s suit.” Id. at 685 (citing 1 D. Dobbs, Law of Remedies § 2.6(1), 

p. 152 (2d ed. 1993)). 

The Court’s reading of the Copyright Act was informed by its concern 

that “[i]nviting individual judges to set a time limit other than the one 

Congress prescribed . . . would tug against the uniformity Congress sought to 

achieve when it enacted § 507(b).” Id. at 680–81. The Court also noted that a 

plaintiff’s delay can be accounted for at the remedial phase, because an 

infringing defendant may “retain the return on investment shown to be 

attributable to its own enterprise, as distinct from the value created by the 

infringed work.” Id. at 677–78. 

Thus, on the nature of the common law defense, the Court declared that 

laches is “gap-filling, not legislation overriding.” Id. at 680. Historically, 

“laches is a defense developed by courts of equity; its principal application was, 

and remains, to claims of an equitable cast for which the Legislature has 

provided no fixed time limitation.” Id. at 687 (citing Dobbs at § 2.4(4), p. 104).6 

 

successive infringing act as a new, independent wrong with its own limitations period. 572 

U.S. at 670–71. 

6 The Court distinguished laches from the common-law doctrines of equitable tolling 

and estoppel, which do apply to copyright suits. Recognizing that “equitable tolling is read 

into every federal statute of limitation,” the Court explained that whereas tolling is a “rule 

of interpretation tied to” a statute of limitations, laches “originally served as a guide when 

no statute of limitations controlled the claim; it can scarcely be described as a rule for 

interpreting a statutory prescription.” Id. at 681–82 (internal quotation marks omitted). As 

for estoppel, “[t]he test for estoppel is more exacting than the test for laches,” and “[t]he 

gravamen of estoppel . . . is misleading and consequent loss.” Id. at 684. Estoppel, the Court 

recognized, could serve as a complete defense “when a copyright owner engages in 

intentionally misleading representations concerning his abstention from suit, and the alleged 

Case: 18-20615 Document: 00515272644 Page: 14 Date Filed: 01/15/2020
No. 18-20350

15

Two additional features of the Petrella decision are relevant to this 

appeal. First, the Court indicated that Petrella should not be faulted for 

“sitting still, doing nothing, waiting to see what the outcome of an alleged 

infringer’s investment will be.” Id. at 682 (discussing MGM’s contention that 

“Petrella conceded that she waited to file because ‘the film was deeply in debt 

and in the red and would probably never recoup’”). Second, the Court 

recognized that prejudicial delay could, in “extraordinary circumstances,” 

result in “curtailment of the relief equitably awardable” “at the very outset of 

the litigation.” Id. at 685 (emphasis added).7

With Petrella in mind, we consider the Copyright Act’s statutory purpose

and the nature of the mitigation defense. 

ii. Statutory damages under the Copyright Act

As described below, the modern Copyright Act’s statutory damages 

regime has a significant deterrent and potentially punitive purpose.

Compensation is a relevant purpose but not the sole purpose. In its current 

form, the Copyright Act allows a copyright owner to recover either “actual 

damages and any additional profits of the infringer,” or “statutory damages,” 

but not both. 17 U.S.C. § 504(a). A copyright owner may choose statutory 

damages “regardless of the adequacy of the evidence offered as to his actual 

damages and the amount of defendant’s profits, and even if he has 

 

infringer detrimentally relies on the copyright owner’s deception.” Id. at 684. Delay is not an 

element of an estoppel defense, whereas for laches, “timeliness is the essential element.” Id.

at 684–85. And a plaintiff’s timeliness is already accounted for by the three-year statute of 

limitations.

7 For example, in a case where plaintiffs alleged infringement of their architectural 

designs after defendant-developers had already built 168 units (109 of which were occupied), 

the plaintiffs properly were denied “an order mandating destruction of the housing project.” 

Id. at 686. Although Petrella’s lawsuit did not present such extraordinary circumstances, the 

Court noted that her conduct “may or may not (we need not decide) warrant limiting relief at 

the remedial stage, but they are not sufficiently extraordinary to justify threshold dismissal.” 

Id. at 687 (emphasis added).

Case: 18-20615 Document: 00515272644 Page: 15 Date Filed: 01/15/2020
No. 18-20350

16

intentionally declined to offer this evidence, although it was available.” 4 

Nimmer § 14.04[A]; see, e.g., Sony BMG Music Entm’t v. Tenenbaum, 660 F.3d 

487, 507 (1st Cir. 2011) (“[T]he availability of statutory damages is not 

contingent on the demonstration of actual damages.”); Superior Form Builders, 

Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488, 496–97 (4th Cir. 1996) 

(upholding maximal copyright statutory damages award of $400,000 where 

gross revenue from infringement was $10,200).

The modern statutory damages regime set forth in § 504(c) arose with 

the Copyright Act of 1976.8 See 4 Nimmer § 14.01[B]. Before the 1976 Act 

created Section 504(c), statutory damages for copyright were described in 

Section 101(b) of the 1909 Act. Id. Statutory damages could be awarded “in lieu 

of actual damages and profits” and “shall not be regarded as a penalty.” 17 

U.S.C. § 101(b) (1909). “The 1909 Act itself was silent as to whether and when 

such ‘in lieu’ statutory damages were mandatory and/or permissive.” 4 Nimmer 

at § 14.04[F][1]. 

The Supreme Court regarded statutory damages as appropriate only 

where it was not possible to reliably measure “actual damages and profits.” See 

Douglas v. Cunningham, 294 U.S. 207, 209 (1935) (statutory damages were 

adopted “to give the owner of a copyright some recompense for injury done him, 

in a case where the rules of law render difficult or impossible proof of damages 

or discovery of profits”); F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 

U.S. 228, 232–33 (1952) (holding that whether trial court’s “discretionary 

resort to estimation of statutory damages is just should be determined by 

taking into account . . . the difficulties in the way of proof of either” actual 

 

8 The Copyright Act of 1976 originally provided for a default statutory damage range 

of $250 to $10,000. 17 U.S.C. § 504(c) (1976). Since 1976, the statutory damage range has 

been updated several times. See, e.g., Digital Theft Deterrence and Copyright Damages 

Improvement Act of 1999, Pub. L. No. 106–160, 113 Stat. 1774 (1999). 

Case: 18-20615 Document: 00515272644 Page: 16 Date Filed: 01/15/2020
No. 18-20350

17

damages or lost profits and that “[l]ack of adequate proof on either element 

would warrant resort to the statute in the discretion of the court.”). However,

under the 1909 Act, if statutory damages were appropriately granted, the trial 

court’s discretion in setting damages was extremely broad. The Act’s statutory 

damages regime did “not merely compel[] restitution of profit and reparation 

for injury but also [was] designed to discourage wrongful conduct. . . . Even for 

uninjurious and unprofitable invasions of copyright the court [could], if it 

deem[ed] it just, impose a liability within statutory limits to sanction and 

vindicate the statutory policy.” Woolworth, 344 U.S. at 233 (emphasis added). 

As noted, the 1976 Act revised the 1909 Act by establishing an 

unequivocal right on the part of copyright owners to opt for statutory damages 

at any time before final judgment. The 1976 Act also eliminated § 101(b)’s nopenalty provision.9 In light of these revisions, modern statutory damages are 

even more clearly “designed to discourage wrongful conduct” and may be 

imposed to “sanction and vindicate” the statutory policy against copyright 

infringement. Cf. Woolworth, 344 U.S. at 233. Modern appellate decisions 

continue to emphasize this deterrence purpose, particularly where the 

defendant’s infringement was willful, as KA’s was here. See, e.g., Yellow Pages 

Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255, 1271 (11th Cir. 2015) (“The 

Copyright Act’s statutory damages provision is designed to discourage 

wrongful conduct.”); Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 

1011 (9th Cir. 1994) (discussing “punitive and deterrent purposes” of statutory 

damages for willful infringement and noting that “statutory damages may 

serve completely different purposes than actual damages”); Chi-Boy Music v. 

 

9 For further discussion and scholarly criticism of the statutory damages provisions of 

the 1976 Act, see Pamela Samuelson & Tara Wheatland, Statutory Damages in Copyright 

Law: A Remedy in Need of Reform, 51 WM. & MARY L. REV. 439, 451–63 (2009), and Roger D. 

Blair & Thomas F. Cotter, An Economic Analysis of Damages Rules in Intellectual Property 

Law, 39 WM. & MARY L. REV. 1585, 1653–72 (1998).

Case: 18-20615 Document: 00515272644 Page: 17 Date Filed: 01/15/2020
No. 18-20350

18

Charlie Club, Inc., 930 F.2d 1224, 1229–30 (7th Cir. 1991) (holding that the 

district court calculation of statutory damages could consider “efficacy of the 

damages as a deterrent to future copyright infringement,” and where 

infringement is willful, “the statutory damages award may be designed to 

penalize the infringer and to deter future violations” (internal quotations 

omitted)). Thus, under Woolworth, and in light of the revisions made by the 

1976 Act, statutory damages are intended not only to compensate copyright 

owners but also to deter copyright infringers.10 We additionally note that the 

Copyright Act itself embeds statutory protections against manipulation. Thus, 

Section 401 requires that a plaintiff give notice and, correspondingly, Section 

507(b) applies a strict limitations period. 17 U.S.C. §§ 401, 507.

iii. Mitigation and post-injury consequential damages

Mitigation applies to post-injury consequential damages. The doctrine of 

mitigation provides little support for KA’s contention that EIG could not 

recover statutory damages for infringement that EIG failed to reasonably 

prevent. As explained below, the “duty to mitigate” refers to methods of 

apportioning damages in light of a plaintiff’s reasonable efforts to reduce loss 

after an injury occurs, not before. Further, authorities indicate that mitigation 

rules apply to consequential damages.11 Actual damages and defendant’s 

profits under the Copyright Act are a form of consequential damages, but EIG

did not seek such damages. Statutory damages under the Copyright Act, as 

discussed above, are not solely intended to approximate actual damages. They 

serve purposes that include deterrence. Statutory damages under the 

 

10 See, e.g., 4 Nimmer § 14.04[A] (noting that since 1976, Congress has repeatedly 

increased the statutory damages range to account for both inflation and deterrence). 

11 Dan B. Dobbs & Caprice L. Roberts, Law of Remedies: Damages-Equity-Restitution 

(3d ed. 2018) [hereinafter Dobbs]. An older edition of the same treatise was cited and relied 

upon by the Supreme Court in Petrella. 

Case: 18-20615 Document: 00515272644 Page: 18 Date Filed: 01/15/2020
No. 18-20350

19

Copyright Act are therefore distinct from the type of damages that are typically 

calculated according to rules of mitigation. 

The duty to mitigate arises after an injury occurs, not before. In 

Tennessee Valley Sand & Gravel Co. v. M/V Delta, 598 F.2d 930, 932 (5th Cir. 

1979), we explained that mitigation is a method of apportioning damages 

where the party, “subsequent to infliction of the harm,” fails to reasonably 

avoid loss. Other circuits agree that the “duty” arises only after injury.12 Cf.

Nilson-Newey & Co. v. Ballou, 839 F.2d 1171, 1175 (6th Cir. 1988) (“[T]he duty 

to mitigate arises only after the defendant’s tortious conduct, not before it.”). 

KA appears to recognize that the doctrine of mitigation is concerned with 

post-injury conduct. KA argues that the “harm,” for purposes of its mitigation 

defense, was KA’s “continuing infringing conduct over a long period of time.” 

This argument is not convincing because, as explained above, Petrella

unequivocally approved the rule of separate accrual and held that every act of 

copyright infringement is an independently actionable legal wrong. See, e.g., 

Media Rights Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 1023 (9th Cir. 

2019). 

Again, mitigation typically applies to consequential damages. As 

described in the Dobbs treatise, mitigation rules “apply in all kinds of cases. . 

. . But they do not apply to every kind of damages measurement. In general, 

avoidable consequences rules apply to require plaintiff to minimize special or 

consequential damages.” Dobbs at § 3.9, p. 273. The basic rule of avoidable 

 

12 Mitigation, as KA acknowledges, is also referred to as the “doctrine of avoidable 

consequences.” In tort law, the doctrine of avoidable consequences provides in relevant part 

that “one injured by the tort of another is not entitled to recover damages for any harm that 

he could have avoided by the use of reasonable effort or expenditure after the commission of 

the tort.” Restatement (Second) of Torts § 918 (1979) (emphasis added); see also Prosser & 

Keeton on Torts § 65, at 458 (5th ed. 1984) (“The rule of avoidable consequences comes into 

play after a legal wrong has occurred.”) (emphasis added).

Case: 18-20615 Document: 00515272644 Page: 19 Date Filed: 01/15/2020
No. 18-20350

20

consequences is that a “[d]efendant is entitled to a credit against liability for 

any consequential damages plaintiff could have avoided or minimized by 

reasonable effort or expense.” Id. “Consequential damages” are “damages 

consequent upon but distinct from harm to plaintiff’s entitlement.” Id. at § 

3.3(4), p. 231. In general, “the consequential measure attempts to protect 

plaintiff’s income by awarding damages for losses of that income or, what is 

the same thing, for increases in expenses.” Id. Thus, lost profits and collateral 

expenses are common forms of consequential damages. 

Under the framework set forth in Dobbs, it is not surprising that district 

courts consider mitigation relevant to infringement claims. See, e.g., Interplan 

Architects, Inc. v. C.L. Thomas, Inc., No. 4:08-CV-03181, 2010 WL 4366990, at 

*47–*48 (S.D. Tex. Oct. 27, 2010). “Actual damages” under the Copyright Act 

arise after each separate infringing act and are properly classified as 

consequential damages. That is because the “basic rule” for computing actual 

damages in copyright “is to inquire what revenue would have accrued to 

plaintiff but for the infringement.” 4 Nimmer § 14.02[A][1]. 

Furthermore, the district court observed that a plaintiff’s consequential 

damages may be relevant to the amount of statutory damages that are 

appropriate. Courts have considered, inter alia, the conduct of parties when 

setting the amount of statutory damages. See Bryant v. Media Right Prods., 

Inc., 603 F.3d 135, 144 (2d Cir. 2010). Hence, the district court appropriately 

instructed the jury to consider EIG’s lost revenues and mitigation in 

determining the amount of statutory damages. But, as described above,

statutory damages do not only approximate a copyright owner’s consequential 

damages. Statutory damages also serve an independent deterrent purpose; 

therefore, mitigation rules do not wholly preclude recovery of statutory 

damages. Cf. Moothart v. Bell, 21 F.3d 1499, 1506–07 (10th Cir. 1994) (holding 

that the “mitigation of damages” is inapplicable to the disclosure provisions of 

Case: 18-20615 Document: 00515272644 Page: 20 Date Filed: 01/15/2020
No. 18-20350

21

ERISA that were intended to “punish noncompliance . . . and not to compensate 

the participant” (internal quotation marks omitted)); 6 Patry on Copyright § 

22:192.25, Westlaw (updated Mar. 2019) (“In the numerous troll infringement 

suits brought by Malibu Media, the argument has been often made that there 

was a failure to mitigate damages. Where plaintiff seeks only statutory 

damages, such a defense is meritless and should be struck since there is no 

requirement that statutory damages be pegged to actual damages.”).

We hold that mitigation is not an absolute defense to statutory damages 

under the Copyright Act and the district court erred when it ruled otherwise. 

B. Mitigation of DMCA Damages

The jury concluded that KA’s alteration of Oil Daily’s PDF filename 

(“DE” followed by the date of the newsletter) violated the DMCA’s prohibitions 

on altering CMI. See 17 U.S.C. § 1202. The jury found 425 alterations, imposed 

statutory damages of $2,500 for each alteration (the minimum amount the jury 

was permitted to award), and concluded that EIG could reasonably have 

avoided all 425 alterations. Based on the jury’s mitigation findings, the district 

court awarded EIG nothing on its DMCA claims. 

For the same reasons that mitigation is not a complete defense to 

copyright statutory damages, mitigation is not a complete defense to DMCA 

statutory damages. 

i. Background on the DMCA and § 1202

Enacted in 1988, the Digital Millennium Copyright Act “backed with 

legal sanctions the efforts of copyright owners to protect their works from 

piracy behind digital walls such as encryption codes or password protections.” 

Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 458 (2007) (internal quotation

marks omitted). In short, the DMCA was enacted primarily to address longCase: 18-20615 Document: 00515272644 Page: 21 Date Filed: 01/15/2020
No. 18-20350

22

standing concerns about technological circumvention of copyright protection.13

Section 1201 prohibits “circumvention” of any “technological measure 

that effectively controls access to” a protected work. 17 U.S.C. § 1201. Section 

1201 is narrower in scope than § 1202, the provision at issue in this case. 

Though discussions of the DMCA’s legislative history typically focus on 

Congress’s concern about circumvention of copyright protection technologies, 

§ 1202 does not express any focus on digital technology. Rather, § 1202 protects 

the “integrity of copyright management information” by prohibiting any person 

from intentionally removing or altering CMI if he or she knows or has 

reasonable grounds to know it would “induce, enable, facilitate, or conceal” 

copyright infringement. 17 U.S.C. § 1202(b). 

ii. Mitigation does not apply to DMCA statutory damages

A person who violates §§ 1201 or 1202 is subject to the civil remedies set 

forth in § 1203. Section 1203 has notable parallels and divergences with § 504. 

Under both provisions, the plaintiff may seek either actual damages and 

defendant’s profits, or statutory damages. At any time before final judgment, 

the plaintiff may elect to recover statutory damages. Unlike § 504, however, 

under § 1203, the trial court, in its discretion, may “reduce or remit the total 

award” if the defendant proves her violations were innocent. 17 U.S.C. 

§ 1203(c)(5)(A).14

While noteworthy, these differences do not indicate that mitigation 

should be available as an absolute defense in DMCA claims. Like statutory 

 

13 For more general background on the DMCA, see Steve P. Calandrillo and Ewa M. 

Davison, The Dangers of the Digital Millennium Copyright Act: Much Ado About Nothing?, 

50 WM. & MARY L. REV. 349 (2008). 

14 Unlike § 504(c), § 1203(c) also does not increase maximum statutory damages based 

on “willful” violations. However, as noted above, it does authorize up to treble damages for a 

defendant whose violations took place “within 3 years after a final judgment was entered 

against the person for another such violation.” 17 U.S.C. § 1203(c)(4). Finally, unlike the 

Copyright Act, the DMCA does not encourage injured parties to provide notice before suit.

Case: 18-20615 Document: 00515272644 Page: 22 Date Filed: 01/15/2020
No. 18-20350

23

damages under § 504(c), the structure of statutory damages under § 1203 

indicates an intent to deter, not just compensate. The court may treble 

damages, including statutory damages, if the defendant is a repeat offender. 

And textually, nothing in § 1203 requires statutory damages to be linked to 

actual damages. Therefore, mitigation is not an absolute defense to DMCA 

claims.

iii. PDF file names can be CMI

KA also argues that as a matter of law, a PDF filename is not CMI 

because it is not listed in § 1202(c) and because downloading and renaming 

files is a common practice in the modern Internet era. Neither of these 

contentions has merit.15

CMI is defined broadly. It is “any of the following information conveyed 

in connection with copies . . . of a work,” including “[t]he title and other 

information identifying the work,” 17 U.S.C. § 1202(c)(1); “[t]he name of, and 

other identifying information about,” the author, copyright owner, or 

performer, Id. § 1202(c)(2)-(4); or “[s]uch other information as the Register of 

Copyrights may prescribe by regulation,” id. § 1202(c)(8). Nothing in § 1202 

indicates that a digital file name cannot be CMI. Rather, a PDF’s file name 

may be CMI if it is “conveyed in connection with copies” of the underlying work 

and contains a “title and other information identifying the work.” See 17 U.S.C. 

§ 1202(c)(1). EIG presented evidence at trial indicating that the “DE” naming 

 

15 The parties dispute whether KA has waived this argument on appeal by not 

renewing its motion for judgment as a matter of law after the verdict. “Technical 

noncompliance with Rule 50(b) may be excused in situations in which the purposes of the 

rule are satisfied.” Scottish Heritable Tr., PLC v. Peat Marwick Main & Co., 81 F.3d 606, 610 

(5th Cir. 1996). The purpose of a post-verdict Rule 50(b) motion is to allow the district court 

to “re-examine the question of evidentiary insufficiency as a matter of law if the jury returns 

a verdict contrary to the movant.” Id. (internal quotation marks omitted). The district court 

was able to do that here because in post-trial briefing, KA renewed its argument that the 

DMCA claims failed as a matter of law. KA has not waived this challenge. 

Case: 18-20615 Document: 00515272644 Page: 23 Date Filed: 01/15/2020
No. 18-20350

24

convention was “information identifying” each Oil Daily newsletter.16

Therefore, the PDF file names of Oil Daily were CMI.

C. Section 411 Referral

KA contends that the district court erred in denying its late-filed motion 

for referral to the Copyright Office. KA’s contention has two parts, one legal 

and one factual. First, KA argues that § 411 mandates referral whenever a 

party alleges that inaccurate information was knowingly included on an 

application for copyright registration. The district court’s interpretation of 

§ 411 is reviewed de novo. 

Second, KA objects to the district court’s conclusions that Oil Daily was 

accurately registered because it was not a compilation and that EIG had not 

knowingly included inaccuracies in its applications. These findings of fact are 

reviewed for clear error. DeliverMed, 734 F.3d at 622–23; Fed. R. Civ. P. 

52(a)(6). “A finding is ‘clearly erroneous’ when, although there is evidence to 

support it, the reviewing court on the entire evidence is left with the definite 

and firm conviction that a mistake has been committed.” Three Expo Events, 

L.L.C. v. City of Dallas, 907 F.3d 333, 338 (5th Cir. 2018) (quotation omitted).

We hold that § 411(b) does not require immediate referral to the 

Copyright Office to determine the materiality of alleged inaccuracies. We also 

hold that the district court did not clearly err when it concluded that EIG did 

not knowingly include inaccuracies in its copyright registration applications.

Therefore, we AFFIRM the district court’s dismissal of KA’s motion for referral 

 

16 KA’s policy concerns are exaggerated and unrealistic. Liability under § 1202(b) 

requires knowledge. Section 1202(b) states in relevant part, “No person shall, without the 

authority of the copyright owner or the law intentionally remove or alter any copyright 

management information . . . knowing, or, with respect to civil remedies under section 1203, 

having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an 

infringement of any right under this title.” 17 U.S.C. § 1202(b) (emphasis added). At trial, 

EIG presented evidence of KA’s knowledge: KA employees believed that by renaming the Oil 

Daily newsletters “123,” they would be able to avoid detection of illicit sharing. 

Case: 18-20615 Document: 00515272644 Page: 24 Date Filed: 01/15/2020
No. 18-20350

25

to the Copyright Office.

i. The trial court has discretion, prior to referral, to determine whether 

inaccuracies were knowingly included in copyright registrations

To recover statutory damages, a copyright owner must have registered 

his works prior to infringement. 17 U.S.C. § 412. A copyright registration is 

invalid under § 412 if (A) the applicant knowingly included inaccurate 

information, and (B) the inaccurate information was material. 17 U.S.C. 

§ 411(b)(1).

Section 411(b)(2) provides, “In any case in which inaccurate information 

described under paragraph (1) is alleged, the court shall request the Register 

of Copyrights to advise the court whether the inaccurate information, if known, 

would have caused the Register of Copyrights to refuse registration.” KA 

contends that because it alleged inaccurate information, the court was required 

to seek a finding of materiality from the Register. In our view, the most 

reasonable reading of § 411(b) is that trial courts may, in their discretion, 

determine inaccuracy before making a referral to the Register. 

The Seventh Circuit is the only appellate court to have spoken on this 

issue, and it ruled that 

[I]nput [from the Register] need not be sought immediately after a 

party makes such a claim. Instead, courts can demand that the 

party seeking invalidation first establish that the other 

preconditions to invalidity are satisfied before obtaining the 

Register’s advice on materiality. . . . Once these requirements are 

met, a court may question the Register as to whether the 

inaccuracy would have resulted in the application’s refusal.

DeliverMed, 734 F.3d at 625. In DeliverMed, the Seventh Circuit noted that its 

interpretation of § 411 was in accord with the Register’s own views. Id. (citing 

Register’s statement that “a court should feel free to determine whether there 

is in fact a misstatement of fact”). Because this interpretation and approach 

are persuasive, the district court did not err in denying KA’s motion for referral 

Case: 18-20615 Document: 00515272644 Page: 25 Date Filed: 01/15/2020
No. 18-20350

26

to the Copyright Office.

ii. The trial court did not clearly err in finding that Oil Daily is not a 

compilation

KA makes a cursory argument on appeal that EIG’s copyright 

registrations were inaccurate because EIG “concealed the fact that its works 

were compilations” subject to the registration requirements of 17 U.S.C. § 

409(9) (requiring “in the case of a compilation or derivative work, an 

identification of any preexisting work or works that it is based on or 

incorporates, and a brief, general statement of the additional material covered 

by the copyright claim being registered”). The Act defines “compilation” as “a 

work formed by the collection and assembling of preexisting materials or of 

data that are selected, coordinated, or arranged in such a way that the 

resulting work as a whole constitutes an original work of authorship.” Id.

§ 101.

As the district court observed, “the majority of the content contained in 

Oil Daily consists of previously unpublished articles created by reporters and 

editors employed by Plaintiffs.” Although Oil Daily typically included some 

preexisting materials (e.g., Reuter’s articles) or foreign materials from Russia 

and Singapore over which EIG could not claim authorship as a matter of 

foreign law, including a few non-authored articles in an otherwise original 

work does not transform the work into a “compilation.” Therefore, the district 

court did not clearly err when it found that there were no inaccuracies in EIG’s 

registration applications.

D. Fee-shifting and Rule 68

Rule 68(d) provides, “If the judgment that the offeree finally obtains is 

not more favorable than [an] unaccepted [settlement] offer, the offeree must 

pay the costs incurred after the offer was made.” Fed. R. Civ. P. 68(d). The 

judgment awarded EIG only $585,000, and KA had made a Rule 68 offer of 

Case: 18-20615 Document: 00515272644 Page: 26 Date Filed: 01/15/2020
No. 18-20350

27

settlement for $5 million. Therefore, the district court found that EIG was 

responsible for paying its own post-offer costs and attorney’s fees, as well as 

KA’s post-offer costs. However, the district court, citing Marek v. Chesny, 473 

U.S. 1, 9 (1985), found that EIG was not responsible for KA’s post-offer 

attorney’s fees. KA challenges that ruling on appeal. 

The “term ‘costs’ in Rule 68 was intended to refer to all costs properly 

awardable under the relevant substantive statute or other authority.” Marek, 

473 U.S. at 9. Whether EIG must pay KA’s post-offer attorney’s fees depends

on whether KA’s attorney’s fees were “properly awardable” under the 

Copyright Act or DMCA. EIG argues that KA’s attorney’s fees are not “properly 

awardable” because the substantive statutes only allow attorney’s fees to be 

awarded to prevailing parties, and KA did not prevail. See 17 U.S.C. §§ 505 

(“the court may also award a reasonable attorney’s fee to the prevailing party 

as part of the costs”), 1203(b)(5) (the court “in its discretion may award 

reasonable attorney’s fees to the prevailing party”). KA interprets Marek more 

broadly, as allowing an offeror to recover fees so long as the substantive statute 

authorizes the district court to award fees as part of costs to some party. 

The Seventh and Ninth Circuits have distinguished or rejected KA’s 

reading of Marek in the context of the Copyright Act. See Harbor Motor Co. v. 

Arnell Chevrolet-Geo, Inc., 265 F.3d 638, 646 (7th Cir. 2001) (in copyright case, 

“only prevailing parties can receive attorney’s fees pursuant to Rule 68”); UMG 

Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1034 (9th Cir. 

2013) (“[A]ttorney’s fees may be awarded as Rule 68 costs only if those fees 

would have been properly awarded under the relevant substantive statute in 

that particular case.”). The First Circuit has also rejected KA’s interpretation 

of Marek, which it deems a “deceptively simple syllogism,” in the context of a 

claim under 42 U.S.C. § 1983. Crossman v. Marcoccio, 806 F.2d 329, 333 (1st 

Cir. 1986). “Although the logic of this syllogism is appealing,” it “distort[s] the 

Case: 18-20615 Document: 00515272644 Page: 27 Date Filed: 01/15/2020
No. 18-20350

28

law . . . by ignoring the two crucial words that serve to qualify the holding of 

the Marek case. . . . These two words—‘properly awardable’—are . . . essential 

to the holding of Marek.” Id. The Eleventh Circuit without analysis has allowed 

a non-prevailing offeror in a copyright suit to receive compensation for postoffer attorney’s fees. Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir. 1997).17

Notably, Marek limited the extent to which a prevailing plaintiff who 

rejects a Rule 68 offer of settlement can recover her own post-offer attorney’s 

fees, where the substantive statute allows prevailing parties to recover 

attorney’s fees as a part of costs. 473 U.S. at 3–5 (setting forth procedural 

history). Under Marek, attorney’s fees are not “properly awardable” to a nonprevailing party where the substantive statute only authorizes prevailing 

parties to recover fees as part of costs. See Hescott v. City of Saginaw, 757 F.3d 

518, 529 (6th Cir. 2014) (discussing Marek’s “limited holding” “that prevailing 

civil-rights plaintiffs may be forced to bear their own post-offer attorneys’ fees 

as part of the cost-shifting provisions from Rule 68”) (emphasis added).

Nevertheless, KA’s appeal on this issue is mooted by our vacatur of the district 

court’s judgment.

III.

Having determined that mitigation does not provide an absolute defense 

 

17 There is no Fifth Circuit authority directly on point. In E.E.O.C. v. Bailey Ford, Inc., 

26 F.3d 570, 571 (5th Cir. 1994), the court stated that an employer-defendant in a sex 

discrimination case would not be able to recover attorney’s fees under Rule 68 “without a 

determination that the action was frivolous, unreasonable, or without foundation.” But civil 

rights enforcement provisions are unusual; even when they contain generic fee-shifting 

provisions that do not distinguish between plaintiff and defendant, prevailing defendants 

cannot recover fees unless they demonstrate that the plaintiff’s action was “frivolous, 

unreasonable, or without foundation.” See, e.g., Christiansburg Garment Co. v. E.E.O.C., 434 

U.S. 412, 421 (1978) (enforcement action under Title VII of the Civil Rights Act of 1964); 

Hughes v. Rowe, 449 U.S. 5, 14 (1980) (42 U.S.C. §§ 1983, 1988). Moreover, the relevant 

statement in Bailey Ford was dicta because there, the defendant-offeror, as a threshold 

matter, could not even invoke Rule 68. See Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 

(1981) (holding that Rule 68 is not available to a “defendant that obtained the judgment.”). 

Case: 18-20615 Document: 00515272644 Page: 28 Date Filed: 01/15/2020
No. 18-20350

29

to copyright infringement, we move to the appropriate relief. This court “must 

vacate an award of damages if the jury charge as a whole leaves substantial 

and ineradicable doubt whether the jury has been properly guided in its 

deliberations.” Poullard v. Turner, 298 F.3d 421, 423 (5th Cir. 2002) (internal 

quotation marks omitted). Even if the jury’s intent is clear, this court can still 

remand to the trial court instead of entering judgment directly. See Carr v. 

Wal-Mart Stores, Inc., 312 F.3d 667, 670 (5th Cir. 2002) (internal quotation 

marks omitted) (noting that the trial court is “charged, in the first instance,” 

with giving effect to the jury’s intent); but see P & L Contractors, Inc. v. Am. 

Norit Co., 5 F.3d 133, 138 (5th Cir. 1993) (interpreting special interrogatories 

to reverse and render judgment on quantum meruit recovery). 

The district court incorrectly instructed the jury that EIG could “not 

recover for any item of damage that they could have avoided through 

reasonable effort.” It is difficult to ascertain from the record whether the jury 

would still have awarded $15,000 per infringed work if it had instead been 

properly instructed on the issue of mitigation. Therefore, the judgment must 

be vacated and the case remanded to determine the proper statutory damages 

for each of the 1,646 infringed works.

* * *

We VACATE the copyright infringement judgment and REMAND to the 

district court for further proceedings. The district court’s fees and costs

determinations are also VACATED.18 As noted above, we approve of the 

district court’s application of Marek to Rule 68 but cannot affirm the district 

court’s award because KA’s challenge to it is now moot.

 

18 Notably, the district court awarded substantial attorney’s fees to EIG based in part 

on its view that a judgment of $585,000 was not adequate to deter willful copyright 

infringement. Whether further deterrence is needed, as well as the Rule 28 calculation, may 

change depending on the final judgment. 

Case: 18-20615 Document: 00515272644 Page: 29 Date Filed: 01/15/2020
No. 18-20350

30

As to the DMCA violations, the parties agree that if mitigation is not a 

complete defense, the court should enter judgment for EIG. Therefore, we enter 

judgment in favor of EIG in the amount of $2,500 for each of KA’s 425 DMCA 

violations, or $1,062,500.

We AFFIRM the district court’s denial of KA’s § 411(b) referral motion.

Case: 18-20615 Document: 00515272644 Page: 30 Date Filed: 01/15/2020