1 RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Six

th Circuit Rul e 206

ELECTRO NIC CIT

ATION: 2004 FED App . 0181P (6th C ir.) File Name: 04a01 81p.06



### UNITED STATES COURT OF APPEALS

FOR THE SIXT H CIR CUIT

_________________
B RI DGEPO RT M USIC , I NC .; W ESTBOUND R ECORDS , I NC ., Plaintiffs- Appellant s,

S OUTHFI ELD M USIC , I NC .; N INE R ECORDS , I

NC ., Plaintiffs,

v.

D IAMOND T IME , L TD ., Defendant-Appellee,

I RVIN G L ORENZO , d/b/a DJ Irv Music; TVT M USIC , I NC .; TVT R ECORDS , I

NC ., a/k/a Tee Vee Toons, Defenda nts. X - - - -
> , - - - - - - - - - - - - - - - N Nos. 03-5003/5656

Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 01-00702—Thomas A. Higgins, District Judge.

Argued: April 28, 2004
Decided and Filed: June 18, 2004 2 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

* The Honorab le Judith M. Barzilay, Judge for t he United St ates Court of Internati onal Trade, sitti ng by designation. Before: GUY and GI

LMAN, Circuit Judges; BARZI LAY, Judge. *

_________________ COUNSEL

ARGUED: Richard S. Bu sc h, KI NG & BAL LO W, Nashville, Tennessee, for Appellants. R. H orton Fra nk III, STEWA RT, ESTES & DON NELL , Nashville, Tennessee, for Appellee. ON BRI EF: Richard S . Busch, D’Le sli M. Davi s, KING & BAL LOW, N ashville, Tenness ee, for Appell an ts. R. Hor to n Fr ank III, STEW ART , ES TES & DO NNE LL, Nashville, Tennessee, for Appellee.

_________________ OPINION

_________________ RALPH B. GUY, JR., Circuit Judge. Plaintiffs, Bridgeport Music, Inc., and Westboun d Recor ds, Inc., appeal fr om the decision granting summary judgment

to defendant Diamond Time, Ltd., a

copyrig ht clearance company, on their claims of
commonlaw neg ligenc e and co pyr ight i nfr ingement involving the use of

samples in the rap release “4 My Click.” Plainti ffs argue that the district court erred both in finding theseclai ms were barred by the applicable statutes of limitations and in re

jecting equitabl e estoppe l as a bas is to avoid the limitations bar. In a separate a ppeal, plaintiffs chall enge the post-judgment award of attorn ey fees and nontaxable

costs to Diamond Time as a prevailing defendant under 17 U.S.C. § 505. No other parties or claims are beforeNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 3

1 Sou thfield Music a nd Nine Records do not a ppeal. In t

he wak e of

a settl ement

wit h TVT M usi c and TVT Rec ords, Bridgeport and W estbound voluntarily dismissed the ap peal against all defe ndant s exc ept Diamond Time.

2 Altho ugh it appe ars that the district co urt only p artially reso lv e d questions con cernin g the ownership int erests of Bridgeport and W e stbound Records , we assume for purpos es of

thi s appe al tha t Bridgeport and W estbo und h old the cop yrights they c laim in “T he M ost” us. 1 After review of the record a nd t he ap plicable law, we find no er ror and a ffirm.

I.

The claims against Diamond Time, a cop yri ght clearance company , were in itially asserte d ina complaint filed May 4, 2001. T hat original comp laint alle ged ne arly 500 count s agains tap pr ox im at el y 8 0 0 defendants for copy right infring eme nt andother sta te law cl aims base d on music sampl ing. “Sampling,” common i n rap, hip-hop, and urban music, typically

involves making a digitalcopy from a master sound recording and using a piec e in the making of a new work. Sound recordings and their underly ing musical compositions are separate works with t heir own distinct copy rights. Bridgeport Music, I nc. v. Still N The Water Publ’g
, 327 F.3d 472, 475 n.3 (6th Cir.), cert. denied
, 124 S. Ct. 399 (2003).

The amended

complain

t, filed after the

dist r ict court severed the initial pleading

into 476 separate actions, alleged that the rap CD single “4 My Click” sampled f

rom the composition “The Most Beautif ullest Thin

g I n the World (Green Eyed R emix)” (“The Most”), and from both the composition and sound r ecording “Funky Wo rm.” Bridgeport Music claims to own copy rights in both music comp ositions, while Westbound Records claims to hold acopy right in only the sound recording “Funky Worm.” 2 4 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

and “Funk y W orm .” Diamond Time’s business includ ed s ample clearance service s, whichrefers to the process of obtaining permission to use a sample in a

new music al work. Accord ing to Diamond Time’s webs ite, it offere d sample clearance services intwo phases. The firs t i ncluded locating the copy right owners, requesting permission to use the sample, and

n egotiating

the fees for its use. The second phas e, calle d “Licensing/ContractAdministration,” included negotiating agree able terms with t he cop yright hol ders; issu ing a Us age Report confirmingthe terms and requesting a formal written agree ment; and overseeing the trafficking , execution, and pay ment of tho se agr

eements

. Catherine Carapella, Diamond Time’s representative, testifi ed that when

engag ed to per

form cle arance

service s, Diamond Time’s pr

actice was to co nta c t the proprietor or
o wner of the copy

rights in the mater

ial its clie nt wanted to use, identify

itself and the client on whose behalf it was actin g, describe the proposed use and ask for terms on whic h it would permit the use. The owner would norm al ly a dvise Diamond Time of its te rms and Diamond Time would seek the consent of its client. This would end phase one, at which time Diamond Ti me’s cl ient would decide how it want

ed to proceed. The client then dictated what phase two service s, if any, it would have Dia

mond Time undertake.

OnJanuary

24, 1995, TVT Records releas ed the CD s ingle containing three ve

rsi ons of “ 4 My

Click” by

the rap a rtists knownas Cash Money

Click. TVT Records owned the sound recording “4 My Click,” w

hile TVT Music and

DJ Irv Music each he ld a 50% interest in the composition “4 My Click.” TVT Records had a policy of re quiring

cleara nce of a ll samples in its releases and depended on the “creative typ es” to identify any

samples in a new recording. TVT Rec ord s hired Diamond T ime to handle c learance of the samplefromNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 5

3 Pe terer was aut

horized t o negoti ate and agr ee to t erms on whi ch permi ssi on to u se Bri dgeport ’s copyr igh ted mat eri al wou ld be g rant ed. “The Most” in “4 My Click.” Diamond Time maintains that it was not a sk ed to obtain clearance for use of a ny other sample in “4 My Click.”

I n January 1995, on the same day that “4 My Click” was released, TVT Records obtai ned perm ission to use the sample “The Most” in “4 My Click” from Song s of Polygram. On October 3, 1995, Diamond Time representative Drea Kaplon wroteto Jane Peterer, the administrator for Bridgeport Music, seekingper

missio n from Bridgeport to use the sample from the composition “The Most.” 3 The letter states that she was

unaware, until this ma

tter was well into the lic ensing process , that Zom

ba Music could only give

clearance on the “g re en -e ye d” v ersion of “The Mos t Beauti fullest Thing In The Wo rld” and that Bri dgepor

t Music wa s a co-pu blish er on this song along with Zomba Music and PolyGram Music.

Ac co rd in gl y, enclosed please find a casse tte of both

the
newand sampled

song for your revie

w. We would like to obtain cleara nce for the use of “The Most Bea utifulles t Thing In The World (Green- eyed ve rsion) ” in “4 My Click” from Br idgeport Music on a pro-r ata basi s with both Zomba and Pol yGr am Music as per the write r/publisher

splits liste d in the dr

aft of the Zomb a Publishing

Agree ment. Jane, I look f

or ward to your r

esponse so that we may f inali ze this in a time ly ma nner. Ple ase cal l me should you have an y qu estions.

OnNovember 20, 1995, Kaplon made a handwritten n ote
ona copy of this let ter and f axed it to Peterer. Kaplon’ s note 6 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

4 Petererclaimed that if sh e had been aware of the alle ged samp le from “Funky Wo rm,” she would have demanded a hi gher percen tage of

owne rsh ip in “4 M y Click” for B ridge por t as well as p ayme nt to W estbound for use of t

he sound reco rding . Plaintiffs ind icate tha t, desp ite having been pro vided a t ap e of “4 My Click,” they only discovered the alleged sample from “Funky Worm” in preparing to fi le this action. stated: “Jane: Joan @ PolyGram has quoted 50% © pro-ra ta with Bridgeport. I s this o.k. with you? P lease advise so we
can wr ap th is ma tt er up qu ic kl y. Zomba Music (who has
some publishing on this as well) has agreed to g o pro-rata. Thanks! Drea.” Under this, also handwritten, is Pet erer ’s response: “Ok, Jane Peterer, 11-20-95.” 4 On November 27, 1995, Kaplon sent

Pete rer a Usage Report conf irming the terms offere d; indica

ting tha t Diamond T im e ’s client, TVT Records
, was proceeding in reliance on t he quote; and requestingthat Peterer prepare a nd forward a formal agree ment dire ctly

to TVT Rec ords.

OnDe cembe r 10, 1995 , Petere r sent a f ormal ag reemen t, called a Release and Agreeme

nt, directly to TVT Recor

ds for signature by TVT Music and DJ I rv Music. Under

tha t copublishing agreement, Bridg eport wo uld receive an 8.33% interest in the com

positio n “4 My Click.” Petere r sent Kaplona copy of the

cover letter relating to this agreement on the b e lief that

Diamond T ime would c ontinue to particip ate until the formal agreement and mec hanical licenses wer e signed. Peterer placed a copy of that lett er in a file of “pending matters,” where it remained until her

deposition in June 2002.

Onthe same day

that the Release and Agreement wa s sent to TVT Records , Peterer faxed a separate reque st to Kaplon asking for information that was n eed ed to prepare the mechanical license

for TVT R

ecords. Kaplon di d

not respond to that req uest. Diamond Time maintains that its involvement inthe clearance pro cess for “4 My Click” c eased once the Usage Report had been

sent. Plaintiffs dispute this, arguingNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 7

5 Car ape lla te sti fied that TV T Rec ords had a mod ifi ed arrangement with Diamo nd T ime unde r which Diam ond T ime would provide phase one sample cl earance s ervice s for a fee of $2 00 a nd wo uld end its phase two work wit

h the i ssuance of th e U sag e Re ports for a fee of $40 each. She conceded, however, that she had no personal knowledge of the clearan ce work don e on “4 M y Click.” In add ition, whe n Ka plon left Dia mond Tim e in 19 97, n o on e too k ove r her re spo nsibilities un til

some ti me i n 19 99

. Di am on d T i me ’ s ph y s i ca l f i l e c on ce r ni ng “ 4 My Click” was destroyed in September 2000 , al ong wi th ot her f il es f rom samp le cle aranc es f

rom 1991 t hroug h 1995, t o save on sto rage costs. Di amond Tim e was a ble to pro duc e a co mpu ter-gene rated tracking grid for“4 My Click” whi ch not ed that Zomba had “waived phase two,” but did not no te as to B ridge por t or P oly gram eith er tha t phase t wo was “waive d” o r that the jo b wa s “do ne.” that Diamond Time “dropped the ball” an d failed to complete its assignment from T

VT Recor

ds to oversee th e trafficking and execution of the formal agreement. The districtcourt did not attempt to resolve this dispute. 5

Whatever t he ext ent of the services Diamond Time had been engaged to provide in this case, Peterer admitted that she had no further written correspondence a bout “4 My Click” with either TVT Records or Diamond Time. The only contact Peterer claimed to have had occurred in sever al telephone conversations with Kapl on relat ing to “4 My Click” and other

m atters, during which Peterer urge d Kaplon to see that the Agreement

was sig ned. Peterer claims that she relied on Kaplon’s assurances that she would “get the deal finalized.” There is, however, no indication of when these conversations took place.

OnSeptember 5, 1996, T VT Rec ords issued a Deletion Notice for a number

of titles, including “4 My Click,” which meant that no further

copies would be manufactured or sold. The notice advised

that requests for return of any of the listed products had to be made in writing no later than November 4, 1996, and that the products had to be r e ceived by TV T Records no later than January 10, 1997

. The prof it and loss 8 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

statement for the a

rtist Cash M oney

Click was pre pared throu gh December 31, 1998, in order to be sure t hat it included all sales and returns. TVT Records stated, however, that it did not receive any

returns or

unsold cop ies afte

r April 1 997. Plaintiffs argued that there must have been sale s because the onl ine service All Music Guide reported that “4 My Click” was still “in print” as of August 2000. Granting summary judgment

to the TVT defendants, the district court found plaintiff s had fai led to present evidence that any sales
or returns had occurred after Ma y 4, 1998. Pla

intiffs’ appeal fromthat dec ision was voluntaril y dismissed as a result of a settlement

rea ched between plaintiffs and the TVT defenda nts.
Diamond Time sought summary judg ment on the grounds that it committed no ac ts of direct or contributory infring ement, th at it ow ed no du ty on whi ch the negligence claim could be bas ed, that the negligence claim wa s preempted

by the Copy

right Act, and that both the copy right infringement

and negligen ce cla ims were barred by the respective three-year statutes of limitati ons. Over pla intiffs’ opposition, the di s trict cou rt gra nted summa

ry judgmen t to Diamond T ime on stat

ute of limi

tations g rounds. Judgmentwas entered November 5, 2002, and pl aintiffs appealed. On March 26, 2003 , the di strict court granted Diamond Time’s post-judgment motion for attorney fees and
cos ts as a prevailing defendant under 17 U.S.C. § 50 5

. Bridgepo rt

Music, I nc. v. Ir ving Loren

zo , 255 F. Supp.2d

795 (M.D

. Te nn. 2003). Plaintiffs appealed from that order as well.

II.

The district court’s decision granting summary judgment is reviewed de no vo

. Smith v. Ameritech , 129 F.3d 857, 863 (6th Cir. 1997). Summary judgment is appr opriate when there are no genuine issues of material fact in dispute and theNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 9

moving party

is entitle d to judgment as a matter of law. F ED

. R. C IV

. P . 56(c). In deciding a motion for summar y jud gment, the court must view the evidence and reasonabl e inferences inthe light most favorable to the nonmoving pa rt y. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986). The n onmoving party may not rest on his pleading s, but must co me forwa rd with evidence from which
a rational trier of fact could find in his favor. Anderson v

. Liberty Lobby, Inc. , 477 U.S. 242, 249 (1986).

A. Copyright

Infringem ent
Plaintiffs disavowe d any claim tha

t Diamond T ime committed

direct acts of infringemen t, but argued that Diamond Time was liable instead as a contributory infringer because its failure to shepherd

the clearanceproces s thro ugh execution of the written Release and Agr eement ma

terially contributed

to the direct

infring ement by

the TVT de fendant s. The d istrict court did not determine whether the eviden c e could support a finding that Diamond T ime wa s a contributory

infringer, concluding instead that any such cla im
was barred by

the statute of

limitations

because “there [was]
no evidence in the record that defenda n t Diam ond Time engaged in any acts wha tsoever regar ding ‘4 M y Click’ after May 4, 1998.”

A civil action under the Copyrig ht Act must be “commenced

within three yea

rs after the claim accrued.” 17 U .S.C. § 507(b). A cause of action accrues whe n a plaintiff knows of the infringement or is chargea ble with such knowledge. Roley v. New World Pictures, Ltd. , 19 F.3d 479, 481 (9th C ir. 1994). Becau se each act of in fringe

ment is a distinctharm, the

statute of

limit ati ons bars infringement claims that accrued more than three y ears before suit was filed butdoes not

preclude infring ement cla ims that ac crued w

ithin the statutory period. Id ; Stone v. W il liams , 970 F.2d 1043, 1049-50 (2d Cir. 19 92); Hoste v. Radio Corp. of Am. , 654 10 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

F.2d 11, 11 (6th Cir. 1981) (per c u riam); Mount v. B ook-ofthe-Mon th Club, Inc. , 555 F.2d 1108, 1110-11 (2d Cir. 1977). Contributory

infringement occurs whe n one, “w ith knowl edge of the infringing activity , induces
, causes or materia lly contributes to the infringing conduct of another .” Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc.
, 443 F.2d 1159, 1162 (2d Cir. 19 71); see also Ellison v. Robertson
, 357 F.3d 1072 , 1076 (9th Ci r. 20 04). Liability for contributory

infringem ent i s based on the defendant’s relation ship to the dire ct i nf ringement. Ez-Tixz, I

nc. v. Hi tTix, Inc. , 919 F. Supp. 728, 732-33 (S.D.N.Y. 1996). There
can be no con tr ibutory infringe ment without a direct in fr ingeme

nt. Matthew Bender &

Co. v. West Publ’g. Co.
, 158 F.3 d 693, 706 (2d Cir. 199 8); Subafilms, Ltd. v. M GM

Pathe Communications Co. , 24 F.3d 1088 , 1092 (9th Cir. 1994).

1. Statute o f Limitat

ions Conceding that Diamond Time took no actions within the perio d, plaint iffs arg

ue for th e first time on appe al that the ir claims agains t Diamond T ime are n ot time-ba

rred be cause TVT Records

committed

acts of d irect in fring ement wit

hin the limi tation s period to which Diamond Time’s earlier conduct material ly

contributed. The short answer is that the districtcourt found plaintiffs had failed to present evidence of any direct infringement by

TVT within three ye ars preceding the fili ng o f

the complaint. Without proof of direct infring ement, there can be no liability for contributory infring ement.

Even if there was evidence of

direct infringement within the period, however, plaintiffs may not “ piggy

back” Diamond T ime’s conduct from outside the period onto the alleg e d direct infringement of another within the period. Just as claims agains ta direct infringer who commit s no acts w

ithin the three -year

limitations

period a re time ba

rred, c laimsNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 11

agains ta contri

butory infring er who c ommits no ac ts within the limitations period a

re also ti me barr ed. This is

not a new proposition, as the discussion in Mount v. Book- of-the-M

onth Club makes clear. There, the publ isher o f the plaintiff’s book sent proof copies to the defendant

Book-of -the-Month Club soit could decide if it wan te d to adopt the work for the club. The defendant gave the copy

to someone

it hired to read incoming work, wh o tu rned it over to a friend, David McKibbin. McKibbin, in turn, allegedly infringed the copy

right in the book by copy ing material in a

pamphlet he wrote on

the same sub ject. The pamphlet cont inued to be

sold within

th e limitations period. The Second Circuit concluded that claims agains tthe book club were barred by t he statute of limi tati ons, e xpl ainin g:
We need not consider whether defendant could escape liability simply because the r

ead e r to whom it sent the proofs of plaintiff’s work was an independent contractor. In a ny c ase the c laim is foreclosed by limitations. Even if defendant participated in an infringe ment throu gh the sending on of the proofs toMcKib bin, that event occurred in the Fall of 1 955, almos ttwenty y ears before this actionwas begun. There is no proof or allegation of any further connection of Book-of-the- Mont h with McKibbin’s pamphlet. Unless the statute’s runninghas been tolled or prolonged, the claim is undoubtedly long since time-barred.

555 F.2d at 1110.

Alth ough plaintiff

s deny it, their argument rests ess entially on a “continuing

wrong” theory . That is, they

argue that the defendant’s cond

uct outside the limitati ons period contributed to direct infringe

ment by another party within the limitations period. The Fif

th Circuit r

ejecte d a similar

argume nt in MakedwdePublishing Co. v. Johnson , 37 F.3d 180, 182 (5th 12 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

Cir. 1994), and declined to follow the lead of the Sev ent h Circuit in Taylor v. Meirick

, 712 F.2d 1112, 1118-19 (7th Cir. 1983). The defendant in Makedwde , Ly man Jon e s, participated

in the alleged copy

right infringement but complete ly

termina t ed his connection to the infringing defenda nts outside th e three -y ear limitatio ns period. The plaintiff reasone d that cla

ims aga inst Jones should not be time barred because his actions outside the perio d led to subsequent acts of infringement by others within the period. Rejecting this argument and following the lead of Hoste , Stone , and Roley , the court concluded Jones could only be held liable for his acts of

infringement committed within three years be fore suit was filed. Makedwde , 37 F.3d at 182.

Si mi la rl y, we find no error in the district court’s determination

that the copyrig

ht inf rin gement claims are barred by the statute of limitation s absen t a showing that defendant should be equ itably estopped from re lying on the limitations bar.

2. Equitable Estoppel Equita ble estoppel, sometimes referred to as fraudulent
concea lment, is invoked i n cases where the defendant takes active steps to preven t the p laintiff from suing in time, such
as by hiding evidence or promising not to plead the statute of limita tions

. Hentosh v. Herman M. Finch Univ. , 167 F.3d 1170, 1174 (7th Cir. 1999); EEOC v. Ky. State Police Dep’t
, 80 F.3d 1086, 1095 (6th Cir. 199 6 ); Cada v. Baxter Health care

Corp. , 920 F.2d 446, 450-51 (7th Cir. 1990 )

. Applicat ion of equ

itableestoppel

“‘should be premised on a def endant’s improper

conduct a s well as a

plaintiff ’s a ctua l and reasonable reliance thereon.’ ” Hentosh
, 167 F.3d at 1174 (citation omitted).

Inthe district cour

t, plaintiffs asserted fraudulent concealment

as the bas is for equitable estoppel. Hill v. United States Dep’t of Labor , 65 F.3d 1331 , 1335 (6th Cir.Nos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 13

6 At one poi nt, plai nti ff s se em to a rgue tha t t he “Fu nky Wor m ” samp le was fr audulent ly conc ealed

. The claims agains t Diamond Time, however, rest on its failure to get the agreement signed concern ing the use of the sampl e fr om “The Most” in “4 My Cli ck.” Plaintif fs, who bear the burden of p roof

, pre sent ed no evi dence t hat could lead one t o concl ude Diamond Time ei ther

knew of

, orunde rto ok to cle ar, any sample other than “T he M ost” in “4 M y Click.” 1995); Prather v

. Neva Pap erbacks

, Inc. , 446 F.2d 338, 340- 41 (5th Cir. 1971). On appeal, howev er, plai ntiffs have sh ifted thei r equitable estoppel claim to argue that defe ndant’s misconduct

“lull ed [t hem] into belie ving t hat i t was not necessary for [them] to commen ce liti gation.” Cerbone v. ILG WU , 768 F.2d 45, 50 (2d Cir. 1985). See a lso Buttry v. Gen. Signal Corp.
, 68 F.3d 1488, 1493 (2d Cir. 1995); Netzer

v. Continuity Graphic Assocs., Inc. , 963 F. Supp. 1308, 1316- 18 (S.D.N.Y. 1997). 6
Sp ec if ic al ly, plaintiff

s contend that they were lul led into delaying suit by the a ssurances Peterer received dur ing several telephone conversations with Kaplon at unspecified times after D ecembe

r 10, 1995 . To invoke

equitabl e estoppe l,
a plaintiff must “demonstrate that his ignor ance is not attributa ble to a lack of diligence on his part.” Netzer , 963 F. Supp. at 1316. Accepting for purposes of thi s appeal that Kaplonsaid more than

once that she would see the written agreemen t was s igned, nothing at all happened after the Agreement

was sent to TVT Records on December 10, 1995. Plaintiffs cannot establish that it was reasonable to rely on theseempty

assuran ces t o foreg o litigation until more than five years a

fter the Agreement

had been forwarded

to TVT for signature. See , e.g. , Buttry , 68 F.3d at 1494; Weber v. Geffen Records

, Inc. , 63 F. Supp.2d 458, 466-67 (S.D.N.Y. 1999) (no equitabl e estoppe l becaus e plaintif f had unr easonab ly relied on an “unexceptional string of empty promises”

to remedy infringements an d protracted neg otiations t o implementthose promises). Accord ingly, plaintif

fs faile d to demonstr ate that Dia

mond Time sho uld be equitably estopped 14 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

fromrelying

onthe limitations periodas a bar to their c laims of copy right in fringe

ment.

B. Negligence

The parties agree that New Yor k law applies to plaintiff

s’
commonlaw neg ligenc e claim a gainst D i amond Time. The statute of limitations for negligence claims under Ne w York l awis three yea

rs from accrual of the cause of action. N.Y

. C.P.L. R. § 214 (McKinney 1996)

. Without deciding whether there was a duty or w

hether such a claim would be preempted by the Copyright Ac

t, the district court

found an y su ch claim was long barred by t he statute of limitati ons.
This neglig ence cl aim r ested on the theory that Diamond Time owed a legal duty

to plaintiffs that arose from a “dual age nc y” relat ions hip an alogou s to t hat of a real e state age n t working for both buyer a nd seller, or an insurance brok er working for both the insurer and the insur ed. Out of this alleged “dual agency

” relationship, plaintiffs argue, aro s e a legal duty, owe d to the copyrig ht holders, to complete the clearanceprocess

and to noti fy

the copy right ho lders whe

n its involvement

in the clearance process conc luded. Plaintiffs assert that the following passage repre se nts an impli cit finding that such a duty

arose in this case.

The plaintiffs allege that

Ms. Peterer contacted Diamond Time on or abo

ut Dece mber 10, 1 995, req

uesting specific informationneeded to prepare the mechanic al licenses for use of “Most,” and that Di amond Time never responded. The Court

finds tha t Bridg eport’s cause of actionaccrued shortly

thereafter. Bridg eport wa s clear ly puton notice that Diamond Time was no longer working
onits beh alf to procure the signed agr eements when Diamond Time fail ed to res

pond to its re quest for necessary information. Adding a gene rous per iod of time for Diamond T ime to res

pond, the Court find s that th e negligence

claim accrued on or about

January 10, 1996,Nos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 15

and that the li

mitations p eriod for the neglig ence cl aim expired January 10, 1999.

The only fair re ading of this discussion i s that the district
c ourt assumed without deciding that a duty cou ld b e establ ishe d, and found that any ne gligence claim based on sucha duty

would be barred

by t he statute of limitati ons. This conclusion is further supported by the district

co urt’s observation

in the order awarding attorney fees an d costs tha

t: “The plaintiffs have never cited any case law with analogous facts from which

the Court c ould

conclude that any legal d uty of care was owed to the plaintiffs by the defe ndant, who was hired by a third party

to perform its clearance work. ” Bridgepo rt , 255 F. Supp.2d at 798 n.2.

Si mi la rl y, we need not decide wheth er New York law
wou ldreco gnize a legal duty owed to plaintiffs in this case. Whether or not pla

intif fs could ultimately

prevail on their negligence

claim against Diamond Time, such a claim wou

ld b e b arred b ecause

it was file d more tha

n three y ears af ter it would have ac crued. I

n the alte rnative , plaintif

fs again rely
onequitable estoppel to argue that the repre sentations allege dly made by Kaplon “ induced”

or “lulle d” them in

to believing that litigation was not necessar y . For the

same reasons discussed e ar lier, we find that p laintiff

s failed t o demonstr ate that Diamond

Time should be equitably estopped fromassertin

g the sta tute of lim

it at ions with r

espect t o their claim of neg ligenc e. Accordingly , we aff irm the dis tri ct court’s grant of summary judgment to Diamond Time.

III. Havingaffirmed the district court’s decision on the merits,
we turnto pla intiffs’ further appeal from the decision awarding $64,371.23 in attorney fe es a nd $963.00 in nontax able costs in fa

vor of Dia

mond Time a

nd aga inst Bridgeport

and Westbound, jointly and severally. The

district court’s decision

to award costs and fees is r eviewe d for abu se 16 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

7 “In any civil ac ti on under t his t itl e, th e court i n it s disc reti on may all ow the rec ove ry of full co sts by or a gain st any party other than the United State s or an off

icer the reof . Exce pt as othe rwi se pr ovided by this tit le, the cour

t may al so award a re asonable attorn ey’s f ee to the prevai li ng party as par

t of the cost s.” 17 U.S.C. § 505. of discretion. Coles v . Wonder , 283 F.3d 798, 804 (6th Cir. 2002); Murra

y Hill Publ ’ns, Inc . v. ABC Com municatio ns, Inc. , 264 F.3d 622, 639 ( 6th Cir. 2001). A district court abuses its discre

tion when

it relies on c learly er

roneous factu al findings, improperly applies the law, or uses an
erroneous legal standard. Adcock-Ladd v. Sec’y. of Treasury
, 227 F.3d 343, 349 (6th Cir. 2000).

The Copyright

Act provides that the court in its discretion may allow the award of

costs and rea sonable a

ttorney fees to the prevail ing par

ty in ci vil suits und

er the Ac t. 17 U.S.C. § 505. 7 Plaintiffs argue at the out set that Diamond T ime is nota prevailing party

because it did not

“preva il” on the issue of preemption or the question of duty w ith respect to the
commonlaw negligence cla im. First, when a defendant succeeds in having summary judgmen t entere d in its favor on the copyright infri ngemen t clai ms ass erted a ga in st it, that defendant can only be de sc ribed as having “prevailed.” Second, t he district court properly deducted 20% of the
reasona ble attorney

fees incurred

in this action to account for fees incurre d in defe

nse of the common

law neg ligenc e claim. Fi na ll y, as noted earlier, the dis trict court did not decide the issues of preemption or duty in g

ranting summary

judgment to Diamond Time.

The discreti on to gra

nt attorne

y f ees in co pyr ight infri nge ment

cases is to be exercised in an evenhanded
manner with respect to pre vaili ng plaintiffs and prevailing defenda nts, and in

a manner consistent with the primary purposes of the Copyrig

ht Act. Fogerty v. Fantasy, Inc. , 510 U.S. 517 (1994). The Supreme Court squarely r ejected whatNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 17

8 Tho se con sidera tions include: the primary objective of the Copyright Act t o “ encourage t he producti on of ori ginal lit erary, arti sti c, and musicalexpress ion for the good of t

he publi c”; t

he fact that defen dan ts as well as pl aintif fs may hold copyrights and run the gamu t from lar ge corporations to “starvi ng artist s”; the need to encourage “defen dan ts who see k to advance a variety of merit orious copyright defenses . . . to litigate them to th e same ext en t that plainti ffs are encouraged to li tig ate meri tori ous clai ms of i nfri ngement”; an d the f act that “a successful defense of a copyright inf ringemen t act ion may f urther the polici es of t

he Co pyr ight Act every bit as much as a successf ul prosec uti on of an infrin gem ent cla im b y a holder of a copyr ight .” Id. at 524 and 527. it called the “dual standard” under which prevailing plaintiffs
reco vered attorne y f ees as a matter of course b ut preva il in g defenda nts were re quired to

sh o w the claims were frivolous
or were brought

in bad faith. Id

. at 534. At the other extr eme, t he Court also rejected the view that § 505 was intended to enact the “British Rule” of automatic recovery of attorney fees by the

p revailing party. Id . Thus, the Court explained tha t “‘[t]here is no precise rule or formula for making these de

terminat ions,’ but in stead equitabl e dis cretion sho uld be exercised ‘in light of the considerations we have identified.’” Id . (quo ting Hensley v. Ecke rhart
, 461 U.S. 424, 436-37 (1983)). 8

In closing, the Fogerty Court identified sever a l nonexclusive factors that may be con s idered in making awards to prevailing parties, as long ast he factors are “faithful to the purposes of the Copyright Ac

t and are applied to prevailing plai ntif

fs and defendants in an evenhanded manner.” Id . at 534 n.19. Those factors include “frivolo usness, motivation , objecti ve unrea sonableness (both inthe factual and

in the legal components of the case) and the need in particular

circumstances to advance considerations of compensation

and deterrence.” Id. (quoting Lieb v. Topstone Indus., Inc. , 788 F.2d 151, 156 (3d Cir. 1986)). 18 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

A. Decision to Grant Attorney Fe es
The di st ri ct co ur t i n t hi s c as e c or re ct ly o bserved that because the Fogerty

factors are nonexclusive, not every fa ctor must weigh in favor of the prevailing party and other

factors may be considered as well. Concluding that attorney fees and costs shou

ld be granted to Diamond Time “in the interest of justice and in furtheranc e of the objectives of the Copyr ight Act,” the district c ourt expla

ined that :
the following factors . . . weigh in favor of an award: (1) the plaintiffs’ litigation strategy that resulted in suing defenda nts ag ainst

which they had little hope of
recove ring; (2) the plaintiffs’ m ot ivation for failing to dismiss stale cla

ims; (3) th e intere st in

deterring further litigat ion o f stale c laims; and (4) the in herent w eakness inthe plain

tiffs’ c opy

right c laims ag ainst thisdefenda nt. Thesefactors dictate that the plaintiffs should be made to
answer for litig ating th

is acti on, and the original action fromwhence it spawned, in a fashion t hat contr ibuted to the multiplication of fees am ong st all the parties and resulted in an admi

nistrativ e morass

for the Co

urt.
One of the consequences of th e plaintif fs’ choice to sue hundreds of

defenda nts all at t he same t ime, reg ardless

of the strength of the individu al cl aims, was that the plain tiff s’ dragnet inevita

bly swept up p arties a

gainst whomthey had little or

no chance of succeeding . Such is the ca se here. Whi le the ulti mate dec ision to dismiss the claims against thisdefendant rested on the statute of limitations
, the plain

tiffs’ c laims for contributory infringement

and negligence we

re b asedon shaky

facts and even sha kier leg al arg

ume nts. In response to the defendant’s motion for summary judgme nt, the plaintiffs conceded that they had no cla

im for dir ect infr ingeme nt. Their claim for contributory infringement

rested on few facts a nd on cas e law tha

t was not f

actually analog ous.Nos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 19

While the Court did n ot reach the merits of the contributory

in fri ngement claim, the significance of the statute of limitati ons defe

nse to this and numerous other Bridgeport

cases must be unde rscored . Many of the songs in qu estion we

re rele ased in th e early

and mid 1990's. Many of

these cases involve license agree ments that were initially negotiated betwee n the plaintiffs and defenda nts during this sam e time period. Yet the plaintiffs waited long a fter the three-y ear statute of limitations to bring

suit. The C ourt f

oun d in this ca se that the last contact between Diamon d Ti me and the plaintiffs was in De cember 1995, more

than fiv e yea

rs before the plain

tif fs broug ht suit. Thi s is not the o nly Bridgeport

case wh ere the

plaintiff s’ claims we re def eated by their failure

to act promptly to protect the i r rights.

The plaintiffs complained repeatedly that the dilatory prac tices of the mus ic industr y, r esulting in license agree ments never or be l atedly being signed and pay ments never or belatedly being made, allowed the defenda nts inthese cases to abuse the plaintiffs’ position
as a small comp any

and flag rantly use their copyr

ighted

w orks without proper compensation. The pl aintiffs clai m that they did not bring

suit in a more timely fashion becau se these practices kept them from enforcing the i r rights. The Court

sees little merit to this argument (and infact wholly re

jected in this case t

h e argument that the s e practices amounted to a legal justification for avoiding the statute of limitations).

If their copyrig

hts are as valuable as the plai ntiff s claim, then it be hoov es them to police their rights and seek legal redress in a timely

fas hio n, especially whe

re the ir opponents are huge entertainment cong lomerates that may not respond to any

other pressure than the threat of a su it. And in the case o f those de fendant s l ik e Diamond Time that have limited

operations or financial 20 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

9 P lai ntiffs complain t

hat t he harsh crit icis m makes them doubt that theyare bein g trea ted even handedly withthe def endant. Of course, Fo gerty was c oncern ed th at c ourt s be ev enhan ded in the ir t reat ment of prev ail ing plai nti ff

s and prevai li ng defendants; not l osing plainti ffs and prevailing defend ants. resources , tim ely filing of legal action against them would increase the chance

that the c ase is decided on the merits of the clai m and not subject to the vagaries of missing documents, faulty re c ol lections and absent witnesse s.
The plaintiffs’ failure to weed out stale cla ims means that there rem ain in

these cases numerous claims and defenda nts that will ne ve r make it to trial. The Court must infer from the plaintiffs’ action s th at these claims

r ema infor the sole purpose of extracting a settlement ba sedon t he cost of litigating further. This is not an objective to be promoted under the Copyright Act; to the
co nt ra ry, the Court sees an opportunity her e to deter further misuse of t

he Court’ s reso urces and encourage the promptdismissal of clea

rly stale cla ims in the hundreds of Bridgeport ca ses that r emain be fore this

Court. 255 F. Supp.2d at 798-99 (footnotes omitted).

Plaintiffs ac cu se th e d is tr ic t c ou rt of “p al pa bl e h os ti li ty” towar d the legitimate copy right claims asserted in other Bridgepo rt cases, in which no discovery ha s even been conducted, and an intention to pun ish plaintiffs for bringing all of their

claims together. While the district court ce rtainly did not mince words, the harsh criticism of the p la intiffs’ litigationstrateg

y w as clea

rly focused on the resulting failure of plaintiffs to weed

out stale claims against defendants like Diamond Time. 9
Urging that we reverse the award, plaintiff s com pare thi s caseto Murray H

ill
, where the district

court granted attorneyNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 21

10 To bolste r their challenge, plaintiffs suggest the award in this case is inconsi stent

with the deni al of a ttor

ney f ees to the prevaili ng defendant in another Brid gep ort case in which a novel cla im was foun d to be obj ectively reaso nab le. The same issue was nei ther pr esente d nor decided withrespect

to th e clai ms again st Diamond Time. fees to the prev ailing d

efenda nt becau se the pla

intiff’s claims
were “utterly

devoid of merit” and the voluminous case was burdensome to both the defendant and the court. 264 F.3d at 639. T his co urt reversed, without much discussion, concludingthat the case presented unsettled questions of law and one or mor

e colora ble claims of infringement. Id . at 640. When a plaintiff has advanced a reasonable, yet unsucce ssful position, an award

of attorney f

ees to the prevailing defendant gener ally does n o t promote the purposes of the Copyr ight Act. Matthew Bender & Co. , 240 F.3 d 116, 122 (2d Cir. 2001); Lot us Dev. Corp. v. Borland Int’l, Inc. , 140 F.3d 70, 75 (1st Ci r. 1998) (In c lose infr

ingeme nt cases , “the ne ed to
encou rage meritorious defense s is a factor that a district court may balance against the potentially chilling effect of imposing a lar

ge f ee a ward on a p laint

iff[] who . . . may have advanced a reasonable, albe it unsuccessful, claim.”).

Inthis case, however, therecan be no doubt that the district court fo un d i t w as ob

je ct iv el y u nreas onable f

or plainti ffs to have ar gued th at the cla

ims against Diamond

Time were not time barred. In co mmenting on the factual and legal weakne ss of

the plaintiff

s’ contr ibutory infring ement cla

ims, the district court clearly

criticized the plaintiff

s’ decis ion to
sue hundreds of

defendants at once without regar d to the streng th of the v arious c laims. 10

Inaddition, the district court inferred from theway the case
was commenc ed and the fact that plaintiff

s continue d to prosecu te this case

agains t Diamond T ime that th e claims remained “for the sole pur

pose of extracting a settlement based on the c ostof litigating further.” Bridgepo rt , 255 F. 22 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

Supp.2dat 799. Although plaintiffs deny such motivat ion
, the district c ourt cer

tainly had a ba si s t o infer that the litigationwas undertake n a nd prosecuted in a fashion that would mul tiply the fee s and enc ourag e nuisanc e settlement. We can find no clear error in this reg ard.

Fi na ll y, the distri ct c ourt e xplicitly relied on deterrence , a factor that has an unusual role in this case. Despite plaintiff s’ hyp erbole about th e district court’s desire to “close the courthou se door” to its legitimate, albeit nove l, copyrig ht infringement

theories, the district court was concerned with deterring misuse of the court’s resources and encouraging the pro mptdismissal of clearly stale c laims in the hundred s o f pending Br idg eport cases. Given the common origin of the pending cases and the possibility that similar strateg ies and moti vat ions may be at wor k with respect to at least some of the asserted claims, deterrence is a par ticularly rele

vant factor in this cas e weig

hing in f avor of a n award of attorn ey fees.

B. Reasonableness of Award

Finall y, having determined that an award of a ttorney fee s was warranted, the district court made an independent review of the billing statements and determined that the initial “lodestar” amount, represent ing reasonable attorney fees i ncu rred by Diamond Time in this case, wa s $80,464.04. That amount was then redu c ed by 20% to ac count for fees incurred with resp ect to the

neglig e nce cla

im only . As a result, the district court awarded $64,371.23 in attorney fees to Diamond Time.

Pl aintiffs do not cha

llenge the calc ulation of this amo unt , butargue that it i s unreasonable because it does not account for the defendant’s unwillingness to settle. The district court rejecte d this arg

ument, expl aining t

hat:

The deadline for filing dispositive motions in this case
was June 21, 200 2. The pla intiffs’ init i al settlementNos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 23

demand was not ma

de until S eptember 30, 2002. The plaintiffs cannot be heard now to complain that the defendant did not settle in a timely manner whe nthe first offer to settle was not mad

e until three months after

the dispositive motion deadline, and just two months prior to trial, at which point the d efendan t had already incurred almost two-thirds of the amount of attorney ’s fees it now seeks.

255 F. Supp.2d at 801-02. Plaintiffs contend that because this conclusionrested on incorrect or incomplete facts concerning their first offer to settle, the district court abused

its discretion in refus ing to fu

rther re duce the

amount of

attorne y f ees.
Fir s t, plaintiff

s argue that the d

istrict c ourt “obv

iously overlooked” the short

declaration

su bm it te d b y th ei r a tt or ne y, Richard Busch, i n which he

stated tha

t defend ant’s co unsel, HortonFrank, re buffed

an attempt to settle

all the cl aims agains tDiamo nd Tim e in June 2002. That declaration specific ally

states that Busch approached Frank durin g a break in deposit

ions someti

me in Ju ne 2002 a nd offer ed to dismiss the claim s f

or “ a very minimal amount of money .” Frank apparently r

eplied that plaintiffs would have to agree to dismiss the claims with prejudice and t o pay all or part of Diamond Time’s attorney fees and costs. It is true that th e districtcourt did not mention t his ora l exchang e in its opinion. The court also did not mention the letters da te d April8, 2002, and July 31, 2002, in which def en dant’s counsel asked

th at p lai nt iff

s m ake a se tt lem ent dem and . In the April letter, defendant’s counsel convey ed both that Diamond Time had limited financial resources and that it had begun incurring expenses in preparation of its dispositive motion. The

letter a lso stated that:

At the case managemen

t conference, Judge Higgins made it very clear that he expe cted y

ou to “put a

price on your horse” and to let the Defendants in the case know what the price was for purposes of settlement. If y

ou intend to 24 Bridgeport Music, Inc. v. Diamond Tim e, et al. Nos. 03-5003/5656

11 Frank respo nded i n a l engt hy l ett er dat ed October 14, 2002, explaining that Diamond Time ha d no money to pay pl aint iff s and had alr eady incur

red nearl y $60,000 in at torney fees ; tha t Di amond Time expected to pre vail on summary j udgment and woul d seek attorney fees under Fo gerty ; and that Diamond Time would settle i f plai nti ffs agreed to pay the fees incu rred in thi s case. On October 24, 2002, Busch reje cted this offer as unreal isti c and comm ent ed t hat i t “s eems tr agic t o me that th ere have been $60,00 0 worth of attorney’ s fees charged to Diamond Time for engaging in motion practice when all matt ers could hav e been sett led for

less than that

amount.” No furth er coun ter-offer w as ma de in that let ter , an d the summar

y ju dgment

or ders wer e enter ed sh ortly thereafter

. do so, I ask that you take wha t I have told y

ou in thi s letter into account. If y

ou do not intend

to do so, my client will simply

move forward and continue to defend the litigation.

Plaintiffs did not respond except by making the informal offer inJune 2002. On July 31, 2002, Frank wrot e to plain tiffs’
counse l as a “follow up” to that exchange and expres se d willingness to dis cuss settlement. On September 30, 2002, plaintiffs made its first written offer to dismiss all t

he lawsu its against Diamond Time for pay ment of $20,000. 11
Despite the failure of the district c ourt to disc uss plainti ffs’ oral offer to

settle for “a ver

y min imal amoun

t, ” we fin d no abuseof discretion in the district court’s refusal to reduce the amount of the at

torney fees to account for defendant’s unwilling ness to settle. Defendant did not display unwilling ness to discuss

settleme nt, only an unwilli

ngness to pay plaintiff s money it did not ha

ve, in order to settle cl aims it believed would be dismissed with pr ejudice , when it had already incurred significant

attorney fe es in defending itself. Cf. Diamond Star

Bldg . Co. v. Freed, 30 F.3d 503, 506-07 (4th Cir. 1994) (reversing denial of attorney fees and finding it an abuse of discretion to penalize the prevailing def endant for refusin g to admi t li abil ity and pay

to settle a frivolous action).Nos. 03-5003/5656 Bridgeport Music, Inc. v. Diamond Tim e, et al. 25

Inconcluding that the attorney fees incurred by

defendant
were reasonable, the district court noted that Diamond Time
was re pr es en te d b y on ly a si ng le co pyr i ght attorney and that Diamond Time had limited its discovery and motion practice due to its limited financial resources. Plaintiffs, on the other hand, “chose to litigate aggr essively eac

h and e very issue agains teach and every

def endant, regardless of a par ticular defendant’s resources or the strengths of the claims against it. The fee s incurred by the defendant here were justified a n d necessary to guard against the plaintiffs’ take-no-prisoners tactics.” Bridgepo rt , 255 F. Supp.2d at 802.

AFFIRMED.