Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-03274/USCOURTS-ca10-90-03274-0/pdf.json

Parties Involved:
Larry R. Harris
Appellee
Harris Market Research, Inc.
Appellee
Marshall Marketing and Communications, Inc.
Appellant

Document Text:

PUBLISH 

FILED 

United States Court qf Appealll Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

NOVO 7 1991 

ROBERT L. HOECKER 

Clerk 

HARRIS MARKET RESEARCH, ) 

) 

Plaintiff & Counterclaim Defendant-Appellee, ) 

) 

v. ) Nos. 90-3144 

) & 90-3274 

MARSHALL MARKETING AND COMMUNICATIONS, INC., ) 

) 

Defendant & Third-party Plaintiff-Appellant, ) 

) 

V • ) 

) 

LARRY R. HARRIS, ) 

) 

Third-party Defendant-Appellee. ) 

ON APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF KANSAS 

(D.C. No. 86-2491-S) 

Anthony F. Jeselnik of Laubach, Fulton, Jeselnik & Delaney, 

Pittsburgh, Pennsylvania (James F. Davis of Lewis, Rice & 

Fingersh, Overland Park, Kansas, with him on the briefs), for 

Appellant. 

David M. Harding (Jeffrey S. Bay with him on the briefs) of Van 

Osdol, Magruder, Erickson & Redmond, Kansas City, Missouri, for 

Appellee. 

Before HOLLOWAY, BARRETT and BRORBY, Circuit Judges. 

BRORBY, Circuit Judge. 

Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 1 
In this contracts case Harris Market Research, Inc. 

(hereinafter "Harris Market") sued Marshall Marketing & 

Communications, Inc. (hereinafter "Marshall") for breach of a 

license agreement and copyright infringement. Marshall 

counterclaimed for breach of the same agreement, misappropriation 

of proprietary information, interference with sublicense 

agreements and malicious prosecution of the copyright infringement 

claim. The jury returned verdicts for both parties. Marshall 

appeals asserting irreconcilable verdicts, evidentiary errors, 

improper instructions, and error in awarding attorneys' fees and 

expenses. We affirm. 

BACKGROUND 

Marshall gathers marketing information for television and 

radio stations. Harris Market developed a customized software 

program for Marshall to assimilate this information for easier 

analysis. Marshall and Harris Market entered into a License and 

Operating Agreement (License Agreement) which allowed Marshall to 

enter into sublicense agreements for the computer program with 

television and radio stations. Marshall was to pay licensing and 

processing fees for the use of the computer program and Harris 

Market would allow use of the software and would also process 

information. 

Marshall failed to make all payments so Harris Market sent 

Marshall notice of its intent to terminate. After Marshall orally 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 2 
agreed to cure its payment default, Harris Market sent a letter on 

July 15, 1986, agreeing to hold termination in abeyance if certain 

conditions set forth in the letter were met. Harris Market 

contended the conditions were not met and contacted the television 

stations directly for payment. Harris Market asked Marshall to 

return the software disks in September 1986 and received only 

twenty-four of seventy-five disks in November 1987. Harris Market 

was concerned because it was not immediately receiving a copy of 

the sublicense agreements and the payment schedule was based upon 

the information contained in those agreements. When it finally 

received the agreements, Harris Market concluded it had not billed 

Marshall the correct amount, sent another notice of termination 

and refused to undertake any new performance under the agreement. 

Marshall contends Harris Market's notice of termination was 

inadequate. It presented evidence Harris Market breached the 

License Agreement by contacting the stations directly and by 

refusing to process information as agreed. Marshall introduced 

testimony Harris Market did not present any evidence at a 

preliminary injunction hearing on the copyright infringement 

claim. Marshall asserted it never agreed to the conditions Harris 

Market imposed in its July 15 letter. Marshall sent Harris Market 

a revised agreement which Harris Market refused to execute. 

Thereafter, Marshall sent Harris Market its own notice of 

termination. 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 3 
Following a trial, the jury returned a special verdict 

finding Marshall liable for breach of the License Agreement and 

for copyright infringement, and Harris Market liable for breach of 

the License Agreement, interference with the sublicense 

agreements, misappropriation of proprietary information, and 

malicious prosecution of the copyright infringement claim. 

I. IRRECONCILABLE VERDICTS 

Marshall contends the verdicts are irreconcilable and the 

trial court should have granted its motion for a new trial. The 

trial court submitted a special verdict form to the jury at 

Marshall's request. The jury found both parties liable for breach 

of the License Agreement and also found Marshall liable for 

copyright infringement and Harris Market liable for malicious 

prosecution of the copyright infringement claim. 1 

1 The Verdict Form reads: 

We, the jury, duly empaneled and sworn, upon our 

oaths, present the following answers to the questions 

submitted by the court: 

1. Do you find Marshall Marketing and 

Communications, Inc. liable to Harris Market Research, 

Inc. for breach of the license agreement? 

YES X 

NO 

2. Do you find Marshall Marketing and 

Communications, Inc. liable to Harris Market Research, 

Inc. for copyright infringement? 

YES X 

NO 

[NOTE: If you answered all of the above questions 

"NO" proceed to Question No. 4. If you answered 

"YES" to Question Nos. 1 and/or 2, proceed to 

Question No. 3.] 

3. What amount of actual damages do you find was 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 4 
The district court found evidence supporting the jury's 

verdicts and further found no inconsistency with the verdicts that 

sustained by plaintiff? 

$ 220,000.00 

4. Do you find plaintiff, Harris Market Research, 

Inc., liable to defendant for breach of the licensing 

agreement? 

YES 

NO 

X 

5. Do you find Harris Market Research, Inc. 

liable to Marshall Marketing and Communications, Inc. 

for interference with defendant's sublicense agreements? 

YES X 

NO 

6. Do you find Larry R. Harris liable to Marshall 

Marketing and Communications, Inc. for interference with 

defendant's sublicense agreements? 

YES X 

NO 

7. Do you find Harris Market Research, Inc. 

liable to Marshall Marketing and Communications, Inc. 

for misappropriating defendant's proprietary 

information? 

YES 

NO 

X 

8. Do you find Larry R. Harris liable to Marshall 

Marketing and Communications, Inc. for misappropriating 

defendant's proprietary information? 

YES X 

NO 

9. 

defendant 

copyright 

Is Harris Market Research, Inc. liable to 

for maliciously prosecuting the plaintiff's 

infringement action against defendant? 

10. Is 

maliciously 

infringement 

[NOTE: 

through 

YES X 

NO 

Larry R. Harris liable to defendant for 

prosecuting the plaintiff's copyright 

action against defendant? 

YES X 

NO 

If you answered "NO" to Question Nos. 4 

10, your deliberations are complete. If 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 5 
would warrant a new trial. "We review the trial court's denial of 

[a] Motion for a New Trial under an abuse of discretion standard." 

Harvey ex rel. Harvey v. General Motors Corp., 873 F.2d 1343, 1346 

(10th Cir. 1989). We grant the district court broad discretion 

and limit our review only to whether "the district court's refusal 

to set aside the jury's verdict constituted a manifest abuse of 

its discretion." A new trial will only be granted upon "a 

'showing of a clear abuse of discretion.'" Trujillo v. Goodman, 

825 F.2d 1453, 1461 (10th Cir. 1987) (citation omitted). 

If any view of the case makes the jury's answers to special 

interrogatories consistent, they must be resolved that way. 

Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 

355, 364 (1962). The trial court has a duty to try to reconcile 

the jury's verdicts to avoid a retrial. Harvey, 873 F.2d at 1347. 

you answered "YES" to any of Question Nos. 4 

through 10, proceed to Question No. 11.] 

11. What amount of actual damages, if any, do you 

find was sustained by defendant? 

$ 75,000.00 

[NOTE: If you answered Question Nos. 5, 6, 9 and/ 

or 10 "YES", proceed to Question No. 12. If you 

answered "NO" to each of Question Nos. 5, 6, 9, and 

10, your deliberations are complete.] 

12. Do you find that defendant is entitled to an 

award of punitive damages? 

YES X 

NO 

[NOTE: If your answer is "NO" to Question No. 12, 

your deliberations are complete. If you answered 

"YES" to Question No. 12, proceed to Question No. 

13.] 

13. What amount of punitive damages do you find 

defendant is entitled to receive? 

$ 500.00 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 6 
A verdict that resolves separate and distinct causes of action in 

favor of both parties is not inconsistent on its face. Diamond 

Shamrock Corp. v. Zinke & Trumbo, Ltd., 791 F.2d 1416, 1424 (10th 

Cir.), cert. denied, 479 U.S. 1007 (1986). 

The trial court did not abuse its discretion by finding the 

jury verdicts are not inconsistent. Upon the facts presented, a 

jury could reasonably find both Marshall and Harris Market 

breached the License Agreement. Likewise, a jury could find the 

letter from Harris Market to Marshall dated July 15, 1986 

constituted a second agreement implied from the conduct of the 

parties. Even though Marshall denied accepting the conditions of 

the letter, it nonetheless made payments under the schedule 

outlined in the letter. A jury, therefore, could find Marshall 

breached the terms of the letter and Harris Market breached the 

terms of the original agreement. Alternatively, a jury could 

reasonably conclude both parties breached the same agreement. 

Marshall breached the agreement first, but Harris Market held its 

termination in abeyance and continued to perform because under the 

agreement either party could delay enforcement of a provision in 

the agreement without waiving that party's right. Subsequently, 

Harris Market could have breached the agreement. 

The copyright infringement liability and malicious 

prosecution claims can also be reconciled. Each was presented to 

the jury as a distinct claim. Jury Instruction 12 states: "If 

you find that the plaintiff had a valid copyright and you find 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 7 
that the copyright was infringed by the defendant, then you should 

find for the plaintiff." Jury Instruction 5 states: "Marshall 

has also filed a counterclaim against Harris Market and Larry R. 

Harris for malicious prosecution for their failure to present any 

evidence of copyright infringement at the preliminary injunction 

hearing conducted on November 14, 1986." Whether evidence was 

presented at the preliminary injunction hearing is a different 

question than whether Harris Market's copyright was infringed. 

These two verdicts are not inconsistent. 

We find a view of the case which supports the verdicts; 

therefore, the trial court did not abuse its discretion by denying 

Marshall's motion for a new trial. 

II. ERRORS IN ADMISSION OF EVIDENCE 

Harris Market presented damage- evidence for two theories of 

recovery: contract breach and copyright infringement. Harris 

Market prepared a summary of the costs it incurred developing its 

computer program. Marshall objected to this evidence as 

irrelevant because the damages could not be recovered under either 

contract or copyright law. The court overruled the objection 

without discussion. 

Harris Market also prepared two summaries of licensing and 

processing fees due under the sublicense agreements in effect when 

the License Agreement was terminated. Harris Market prepared 

these summaries using Marshall's own documents which detailed 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 8 
payments Marshall received under the sublicense agreements. 

Marshall objected to this evidence as speculative and without 

foundation. The court admitted both exhibits without comment. 

Harris Market offered a letter it sent Marshall on July 15, 

1986, restating a telephone conversation held the previous day. 

Marshall moved in limine to exclude evidence of the letter as a 

new contract between the parties. Marshall claims the existence 

of a second contract was not set out in the pleadings or the 

pretrial order. The trial court denied the motion in limine. At 

trial, Marshall renewed its objection to admission of the letter. 

The trial judge received the letter into evidence. 

Marshall asserts: (1) development costs were not recoverable 

and therefore inadmissible; (2) licensing and processing fees were 

too speculative and therefore inadmissible; (3) the summaries were 

inadmissible hearsay; and (4) the letter of July 15 was unfairly 

prejudicial and should not have been admitted. 

To be admissible, damage evidence must be recoverable as 

contract or copyright damages. By its own terms, the License 

Agreement is governed by Kansas law. We look to Kansas law to 

determine what damages are available for a breach of contract 

claim. Federal law governs recoverable damages for copyright 

claims. See 17 u.s.c. § 504. 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 9 
"Damage awards in contract cases attempt to place the parties 

in the same financial position they would have occupied had the 

contract terms been fulfilled." Republic Nat'l Life Ins. Co. v. 

Red Lion Homes, Inc., 704 F.2d 484, 488 (10th Cir. 1983); accord A 

to Z Rental, Inc. v. Wilson, 413 F.2d 899, 908 (10th Cir. 1969); 

Vanderpool v. Higgs, 10 Kan. App. 2d 1, 690 P.2d 391, 393 (1984). 

Ordinarily, a party's damages recoverable for 

breach of contract are limited to those which may fairly 

be considered as arising in the usual course of things 

from the breach itself, or as may reasonably be assumed 

to have been within the contemplation of the parties as 

the probable result of such a breach. 

Whiteley v. O'Dell, 219 Kan. 314, 548 P.2d 798, 802 (1976). 

The copyright owner is entitled to recover the actual damages 

suffered as a result of infringement, as well as any profits 

realized by the offending party and not computed in the actual 

damages. 17 u.s.c. § 504(b); Frank Music Corp. v. Metro-GoldwynMayer, Inc., 772 F.2d 505, 512, 514 (9th Cir.1985). Actual 

damages are not defined. Deltak, Inc. v. Advanced Sys., Inc., 767 

F.2d 357, 361 (7th Cir. 1985) (quoting 3M. Nimmer, Nimmer on 

Copyright§ 14.02 at 14-6 (1984)). 

"We are generally reluctant to overturn evidentiary rulings 

of the trial court," Messina v. Kroblin Transp. Sys., Inc., 903 

F.2d 1306, 1310 (10th Cir. 1990), and "we may not reverse in the 

absence of an abuse of discretion," Rainbow Travel Serv., Inc. v. 

Hilton Hotels Corp., 896 F.2d 1233, 1242 (10th Cir. 1990); accord 

Boren v. Sable, 887 F. 2d 1032, 1033 ( 10th Cir. 1989) . "An abuse 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 10 
of discretion is defined in this circuit as a judicial action 

which is arbitrary, capricious, or whimsical." Pelican Prod. 

Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir. 1990) 

omitted). 

(citation 

The trial court did not abuse its discretion by admitting 

evidence of Harris Market's development costs. These damages are 

recoverable as copyright damages. In Jury Instruction 12 

explaining copyright damages, the court stated: 

Basically, the law allows a successful plaintiff to 

recover the actual damages suffered as a result of the 

infringement, including unrecovered costs and lost 

profits, and also any profits of the defendant 

attributable to the infringement which you have not 

already taken into account or properly covered in 

figuring the plaintiff's lost profits. 

(Emphasis added.) Marshall did not object to Jury Instruction 12. 

Harris Market expected to retrieve license fees over seven years 

to amortize its investment but was unable to recover its 

development costs. Accordingly, the trial court properly admitted 

Harris Market's development costs as evidence of actual damages 

recoverable for copyright infringement. 

Nor did the trial court abuse its discretion by admitting 

evidence of Harris Market's licensing and processing fees due 

under the sublicense agreements. 

under either theory of recovery. 

These damages are admissible 

Marshall argues contract damages are only recoverable until 

the time one party unilaterally terminates the contract. See 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 11 
International Bhd. of Elec. Workers v. A-1 Elec. Serv., 535 F.2d 

1, 3-4 (10th Cir.) cert. denied, 429 U.S. 832 (1976). The latest 

possible date of contract termination in this case is November 

1986. Marshall contends Harris Market cannot recover damages 

beyond that date because damages after that date were not 

contemplated or foreseen and therefore evidence of the licensing 

fees from 1987 and 1988 is inadmissible. We disagree. 

In International Brotherhood, the court had difficulty in 

determining a reasonable cutoff date for damages where a 

collective bargaining agreement contained no definite expiration 

date but was automatically renewed from year to year. The 

agreement could be terminated by written notice ninety days prior 

to the beginning of the new contract year, similar to the license 

agreement involved in this case. 

The trial judge in the instant case did not face such 

difficulty because each sublicense agreement contained a specific 

expiration date. Although the License Agreement was terminable at 

will, the sublicense agreements were not. The parties scheduled 

payment of the licensing and processing fees before the License 

Agreement was terminated. It was reasonably foreseeable Harris 

Market would have been entitled to those fees had the contract 

been performed. Furthermore, Marshall and its sublicensees 

retained possession of the software programs until November 1987, 

one year after the License Agreement was terminated. The 

projected licensing and processing fees Harris Market expected to 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 12 
earn from the software program are properly admissible under an 

actual damages claim for copyright infringement. 2 

The trial court did not abuse its discretion by admitting 

evidence of Harris Market's development costs or evidence of the 

licensing and processing fees due under the sublicense agreements. 

Marshall also objects to the summary form of the damage data 

and asserts the exhibits are inadmissible hearsay. Counsel for 

Marshall raises for the first time on appeal the objection that 

these exhibits are inadmissible hearsay. We will not consider an 

issue raised for the first time on appeal. Farmers Ins. Co. v. 

Hubbard, 869 F.2d 565, 570 (10th Cir. 1989); Cain v. Yukon Pub. 

Schools, 775 F.2d 15, 20 (10th Cir. 1985); Nulf v. International 

Paper Co., 656 F.2d 553, 559 (10th Cir. 1981). 

As to the summary form of the data, Fed. R. Evid. 1006 

clearly permits the use of a summary of business records provided 

"all of the records from which it is drawn are otherwise 

admissible." State Office Sys., Inc. v. Olivetti Corp. of 

2 Marshall also contends these licensing and processing fees 

reflect gross revenue rather than profit and argues gross revenue 

is not recoverable. Marshall objects that these numbers do not 

reflect any deductions for the cost Harris Market would have had 

to incur to earn these fees. 

Marshall does not understand the nature of these fees. Under 

the License Agreement, Marshall was obligated to pay Harris Market 

set licensing and processing fees for each of Marshall's 

sublicense agreements. Harris Market was not seeking lost profits 

but rather the actual fees due under the contract had the contract 

been performed. 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 13 
America, 762 F.2d 843, 845 (10th Cir. 1985) (citations omitted). 

The admission of summaries under Rule 1006 is within the sound 

discretion of the trial court. Gomez v. Great Lakes Steel Div. 

Nat'l Steel Corp., 803 F.2d 250, 257 (6th Cir. 1986). 

Information for the summary exhibits came from Marshall's own 

business records which were admitted into evidence without 

objection. Because these records were already received into 

evidence, the trial judge acted within his discretion by admitting 

summaries based on the information contained therein. The trial 

court did not abuse its discretion by admitting the exhibits in 

summary form. 

Marshall complains Harris Market's July 15 letter represents 

a new agreement between the parties and is therefore inadmissible 

because it is unfairly prejudicial. The terms of the July 15 

letter set out a payment schedule to enable Marshall to cure its 

default. Once the payments were complete, Harris Market would 

resume deliveries of its software. The letter notified Marshall 

that Harris Market would begin contacting the sublicensees 

directly for payment and requested Marshall to remit any license 

fees that had already been collected. Harris Market also notified 

Marshall that all new and renewal sublicense agreements would be 

licensed directly by Harris Market. The letter also listed 

stations from which Harris Market had not received signed 

sublicense agreements and requested those to be turned over. 

Additionally, the letter stated that if Marshall met the imposed 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 14 
deadlines, Harris Market's prior notice to terminate would be held 

in abeyance. 

Marshall contends the letter is unfairly prejudicial because 

it was characterized as a new agreement not listed in the 

pleadings or pretrial order. Marshall's argument is unfocused. 

However the letter is characterized, it is relevant to the actions 

of the parties under the original agreement. Admission of the 

letter did not prejudice Marshall. On cross-examination, Harris 

Market's president testified he did not consider the July 15 

letter to be a new agreement. Furthermore, Marshall cannot 

complain of surprise when it relied on the letter in support of 

its own defense. In its answer, Marshall alleged Harris Market 

waived its rights under the agreement by accepting payments made 

according to the schedule set out in the July 15 letter. The 

trial court, therefore, did not abuse its discretion by admitting 

the letter. 

III. DENIAL OF PRETRIAL DISCOVERY 

Harris Market sought a protective order from the trial court 

to prevent discovery of information concerning the internal 

workings of its computer program requested in two interrogatories. 

The trial court entered a protective order finding the information 

was irrelevant to any issues in the action and was therefore not 

discoverable. Marshall contends the denial of its pretrial 

request for discovery of information concerning Harris Market's 

computer program precluded it from being able to attack the 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 15 
validity of Harris Market's copyright. Marshall brought a motion 

in limine asking the trial court to exclude all evidence of Harris 

Market's copyright infringement claim. The court denied the 

motion without discussion. Marshall unsuccessfully renewed its 

objection to evidence of copyright infringement at trial. 

Marshall now asserts the trial judge abused his discretion by 

admitting evidence of copyright and copyright infringement. 

"We will reverse a protective order on appeal only if there 

has been an abuse of discretion." In re Standard Metals Corp., 

817 F.2d 625, 628 (10th Cir. 1987), cert. dism'd, 488 U.S. 881 

(1988) (citations omitted). "A reviewing court should not 

substitute its judgment for that of the trial court. It is the 

unusual or exceptional case where the reviewing court will vacate 

a protective order entered by a trial court under Fed. R. Civ. P. 

26(c)." In re Petroleum Prods. Antitrust Litig., 669 F.2d 620, 

625 (10th Cir. 1982). We decline to do so here. 

The Certificate of Registration issued by the United States 

Copyright Office to Harris Market constituted prima facie evidence 

of the validity of the copyright. 17 U.S.C. § 410(c); Durham 

Indus., Inc. v. Tomy Corp., 630 F.2d 908, 908, 911 (2d Cir. 1980). 

Evidence of the certificate shifted the burden of proof to 

Marshall to dispute the validity of the copyright. Hasbro 

Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 

1985). Marshall could have presented other evidence to dispute 

the claim of copyright or of the infringement. It did not. 

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Marshall admitted in its brief that it was "unable to present any 

evidence to the jury, particularly expert testimony and analysis, 

to demonstrate invalidity of the copyright." Simply because 

Marshall could not find evidence to dispute copyright validity 

does not mean its admission was unfairly prejudicial. The trial 

court did not abuse its discretion in issuing a protective order, 

nor did it abuse its discretion in admitting evidence of the 

copyright and copyright infringement. 

IV. ATTORNEYS FEES 

Following trial, Harris Market moved for a hearing to 

determine reasonable attorneys' fees allowed to the prevailing 

party under the License Agreement. Marshall did not oppose this 

motion. 

Without a hearing, the trial court determined Harris Market 

was the prevailing party and ordered it to submit a detailed claim 

for attorneys' fees and expenses, which it did. In its response, 

Marshall asserted numerous claims of error. At Marshall's 

request, the trial court reduced Harris Market's claim to reflect 

its proportional share of the jury award. 

Marshall asserts: (1) Harris Market was not the prevailing 

party; (2) the trial court failed to conduct a hearing; and (3) it 

was entitled to attorneys' fees for its successful defense of 

Harris Market's request for preliminary injunction. 3 

3 Marshall alleges the district court did not 

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have jurisdiction 

Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 17 
Marshall alleges the trial court erred in its determination 

of who is a "prevailing party." This determination is critical 

because under the License Agreement, the prevailing party in any 

litigation is entitled to attorneys' fees. The License Agreement 

is governed by Kansas law; therefore, "prevailing party" is 

defined by Kansas law. 

Appellate review of a district court determination of state 

law is de novo. Salve Regina College v. Russell, __ U.S. __ , 

111 S. Ct. 1217, 1221 (1991). We therefore apply Kansas law to 

make our own determination of who is a "prevailing party." 

Kansas has adopted Black's Law Dictionary's definition of a 

prevailing party. A prevailing party is 

[t]he party to a suit who successfully prosecutes 

the action or successfully defends against it, 

prevailing on the main issue, even though not 

necessarily to the extent of his original contention. 

The one in whose favor the decision or verdict is 

rendered and judgment entered .•.. The party ultimately 

prevailing when the matter is set at rest. 

Black's Law Dictionary 1069 (5th ed. 1979) (quoted in Szoboszlay 

v. Glessner, 233 Kan. 475, 664 P.2d 1327, 1333 (1983); accord 

Schuh v. Educational Reading Servs. of Kansas, Inc., 6 Kan. App. 

2d 100, 101, 626 P.2d 1219, 1220 (1981)). 

to award attorneys' fees because of a pending appeal in the case 

and relies on District Court Rules of Practice 219 and 220. 

Marshall's reliance is misplaced. The Tenth Circuit treats all 

motions for attorneys' fees as a procedural and ministerial 

function over which the district court retains jurisdiction even 

if an appeal is pending. Stewart v. Donges, 915 F.2d 572, 575 n.3 

(10th Cir. 1990). 

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Regarding the specific issue of attorneys' fees, "'a 

prevailing party is the person who has an affirmative judgment 

rendered in his favor at the conclusion of the entire case.'" 

Szoboszlayf 664 P.2d at 1333 (quoting Schuh, 626 P.2d at 1220). 

In Szoboszlay. a tenant was awarded $150 in small claims 

proceedings for the return of his security deposit. On appeal the 

judgment was modified to reflect additional rent still owed to the 

landlord. The tenant was found to be the prevailing party 

entitled to attorneys' fees even though the defendant 'prevailed to 

a certain extent on the counterclaim. 4 Id. The court recognized 

"there could have been only one judgment entered herein and that 

was and is the net judgment rendered in favor of plaintiff .... 

[T]he party awarded the net judgment is the prevailing party and 

thus the successful party." Id. at 1334 (quoting Moss Constr. Co. 

v. Wulffsohn, 116 Cal. App.2d 203, 253 P.2d 483, 485 (1983)). We 

find the net judgment rule to determine the prevailing party in 

litigation is the applicable rule in Kansas. 

Under Kansas law, a prevailing party may recover attorneys' 

fees if specifically authorized by statute or contract. Missouri 

Pacific R.R. Co. v. Kansas Gas & Elec. Co., 862 F.2d 796, 801 

(10th Cir. 1988); Farmers Cas. Co. (Mutual) v. Green, 390 F.2d 

188, 192 (10th Cir. 1968); Oak Park Inv. Co. v. Lundy's, Inc., 6 

4 Although Marshall asserts Szoboszlay is factually dissimilar, 

we have found no Kansas case that applies a different test than 

the net judgment rule to determine who is a prevailing party. 

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Appellate Case: 90-3274 Document: 010110096870 Date Filed: 11/07/1991 Page: 19 
Kan. App. 2d 133, 626 P.2d 1236, 1237 (1981). The License 

Agreement specifically authorizes the award of attorneys' fees and 

expenses to the prevailing party in any legal action regarding the 

agreement. Thus, the prevailing party in this litigation is 

entitled to an award of attorneys' fees and expenses. The trial 

judge entered a net judgment for Harris Market. Under the net 

judgment rule, Harris Market is the prevailing party entitled to 

attorneys' fees. 

"[A]n appellate court plays a 'limited role' in reviewing a 

district court's award of attorneys' fees and costs, and deference 

is given to a district court's judgment on the matter, since the 

court is in a better position to assess the course of litigation 

and quality of work." Duran v. Carruthers, 885 F.2d 1492, 1494 

(10th Cir. 1989). "In our role as a court of review, we will 

overturn the district court award [of-attorneys' fees] 'only if it 

represents an abuse of discretion.'" Smith v. Freeman, 921 F.2d 

1120, 1122 (10th Cir. 1990) (quoting Mares v. Credit Bur. of 

Raton, 801 F.2d 1197, 1201 (10th Cir. 1986)). 

Broad discretion is given the trial court as to how fees are 

awarded. Council for Periodical Distribs. Ass'ns v. Evans, 827 

F.2d 1483, 1487 (11th Cir. 1987). A court may decide to award 

fees in the same proportion as a jury assessed damages. Id. at 

1488. "'[D]istrict courts should make every effort to achieve the 

most fair and sensible solution that is possible.'" Id. at 1488 

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(quoting Grendel's Den, Inc. v. Larkin, 749 F.2d 945, 960 (1st 

Cir. 1984)). 

Marshall contends the trial court failed to conduct a hearing 

to determine the award of attorneys' fees. The court properly 

applied the Kansas net judgment rule to determine Harris Market 

was the prevailing party. No hearing was necessary to aid the 

trial court's determination. The court acted within its 

discretion in making a finding of the prevailing party without a 

hearing. 

In lieu of a hearing, the court requested an affidavit and an 

itemization of reasonable attorneys' fees and expenses. Marshall 

responded. The trial court itemized the expenses that were and 

were not recoverable and reduced the amount of the award to 

reflect the plaintiff's proportional share of the jury award. The 

court closely reviewed each of Marshall's claims of error. The 

award of attorneys' fees is based on reason and is not arbitrary 

or capricious. We find the trial court did not abuse its 

discretion in the amount of attorneys' fees it awarded Harris 

Market. 

Marshall also asserts the court erred in denying it 

reasonable attorneys' fees incurred in its successful defense of 

the preliminary injunction. Marshall characterizes the 

preliminary injunction as a separate proceeding from the main 

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trial. The trial court viewed the preliminary injunction as subpart of the trial. Because there can be only one prevailing party 

and one award of attorneys' fees, the trial court denied 

Marshall's motion for attorneys' fees on the basis that the jury 

ultimately found for Harris Market on its copyright infringement 

claim. Such a denial cannot be said to be an abuse of discretion. 

V. JURY INSTRUCTIONS 

Marshall alleges error in several jury instructions. 

Specifically, 

because they 

Marshall 

failed 

alleges the instructions were inadequate 

to explain the meaning of "substantial 

performance" and the trial court's refusal to clarify the term 

"cure" at the request of the jury compounded the problems created 

by the inadequate instructions. Marshall further asserts the 

court failed to instruct on waiver and claims it unsuccessfully 

urged the trial court to more fully explain "termination." It 

also asserts the court gave improper recovery standards to the 

jury and impermissibly instructed regarding contract modification 

and copyright damages. 

The admission or exclusion of a jury instruction is within 

sound the discretion of the trial court. The sufficiency of the 

instructions is not determined by isolating a particular 

instruction or omission, but rather by viewing the instructions as 

a whole. Richards v. Attorneys' Title Guar. Fund, Inc., 866 F.2d 

1570, 1575 (10th Cir.), cert. denied, 491 U.S. 906 (1989). To 

determine the sufficiency of the jury instructions, therefore, it 

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is essential we review the instructions as a whole, as they were 

given to the jury. We did not, however, receive a record of the 

entire jury instructions. We decline to consider these issues in 

the absence of a record containing those portions of the 

transcript on which the parties rely. Fed. R. App. P. 10(b)(2); 

United States v. Mobile Materials, Inc., 871 F.2d 902, 906 (10th 

Cir. 1989). 

Marshall contends the 

judgment, directed verdict 

verdict were erroneous. 

discussion. 

denial of its motions for summary 

and judgment notwithstanding the 

These contentions do not merit 

The judgment of the trial court is AFFIRMED. 

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