1

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

ELECTRONIC CITATION: 2004 FED App. 0181P (6th Cir.)

File Name: 04a0181p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

BRIDGEPORT MUSIC, INC.;

WESTBOUND RECORDS, INC.,

Plaintiffs-Appellants,

SOUTHFIELD MUSIC, INC.;

NINE RECORDS, INC.,

Plaintiffs,

v.

DIAMOND TIME, LTD.,

Defendant-Appellee,

IRVING LORENZO, d/b/a DJ Irv

Music; TVT MUSIC, INC.;

TVT RECORDS, INC., a/k/a

Tee Vee Toons,

Defendants.

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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 Time, et al.

Nos. 03-5003/5656

*

The Honorable Judith M. Barzilay, Judge for the United States Court

of International Trade, sitting by designation.

Before: GUY and GILMAN, Circuit Judges; BARZILAY,

Judge.*

_________________

COUNSEL

ARGUED: Richard S. Busch, KING & BALLOW,

Nashville, Tennessee, for Appellants. R. Horton Frank III,

STEWART,ESTES&DONNELL, Nashville, Tennessee, for

Appellee. ON BRIEF: Richard S. Busch, D’Lesli M. Davis,

KING & BALLOW, Nashville, Tennessee, for Appellants.

R. Horton Frank III, STEWART, ESTES & DONNELL,

Nashville, Tennessee, for Appellee.

_________________

OPINION

_________________

RALPH B. GUY, JR., Circuit Judge. Plaintiffs, Bridgeport

Music, Inc., and Westbound Records, Inc., appeal from the

decision granting summary judgment to defendant Diamond

Time, Ltd., a copyright clearance company, on their claims of

common law negligence and copyright infringement

involving the use of samples in the rap release “4 My Click.”

Plaintiffs argue that the district court erred both in finding

these claims were barred by the applicable statutes of

limitations and in rejecting equitable estoppel as a basis to

avoid the limitations bar. In a separate appeal, plaintiffs

challenge the post-judgment award of attorney fees and

nontaxable costs to Diamond Time as a prevailing defendant

under 17 U.S.C. § 505. No other parties or claims are before
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

3

1

Southfield Music and Nine Records do not appeal. In the wake of

a settlement with TVT Music and TVT Records, Bridgeport and

Westbound voluntarily dismissed the appeal against all defendants except

Diamond Time.

2

Although it appears that the district court only partially resolved

questions concerning the ownership interests of Bridgeport and

W estbound Records, we assume for purposes of this appeal that

Bridgeport and Westbound hold the copyrights they claim in “The Most”

us.

1

 After review of the record and the applicable law, we

find no error and affirm.

I.

The claims against Diamond Time, a copyright clearance

company, were initially asserted in a complaint filed May 4,

2001. That original complaint alleged nearly 500 counts

against approximately 800 defendants for copyright

infringement and other state law claims based on music

sampling. “Sampling,” common in rap, hip-hop, and urban

music, typically involves making a digital copy from a master

sound recording and using a piece in the making of a new

work. Sound recordings and their underlying musical

compositions are separate works with their own distinct

copyrights. Bridgeport Music, Inc. 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 complaint, filed after the district court

severed the initial pleading into 476 separate actions, alleged

that the rap CD single “4 My Click” sampled from the

composition “The Most Beautifullest Thing In the World

(Green Eyed Remix)” (“The Most”), and from both the

composition and sound recording“FunkyWorm.” Bridgeport

Music claims to own copyrights in both music compositions,

while Westbound Records claims to hold a copyright in only

the sound recording “Funky Worm.”2

4 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

and “Funky Worm.”

Diamond Time’s business included sample clearance

services, which refers to the process of obtaining permission

to use a sample in a new musical work. According to

Diamond Time’s website, it offered sample clearance services

in two phases. The first included locating the copyright

owners, requesting permission to use the sample, and

negotiating the fees for its use. The second phase, called

“Licensing/Contract Administration,” included negotiating

agreeable terms with the copyright holders; issuing a Usage

Report confirming the terms and requesting a formal written

agreement; and overseeing the trafficking, execution, and

payment of those agreements.

Catherine Carapella, Diamond Time’s representative,

testified that when engaged to perform clearance services,

Diamond Time’s practice was to contact the proprietor or

owner of the copyrights in the material its client wanted to

use, identify itself and the client on whose behalf it was

acting, describe the proposed use and ask for terms on which

it would permit the use. The owner would normally advise

Diamond Time of its terms and Diamond Time would seek

the consent of its client. This would end phase one, at which

time Diamond Time’s client would decide how it wanted to

proceed. The client then dictated what phase two services, if

any, it would have Diamond Time undertake.

On January 24, 1995, TVT Records released the CD single

containing three versions of “4 My Click” by the rap artists

known as Cash Money Click. TVT Records owned the sound

recording “4 My Click,” while TVT Music and DJ Irv Music

each held a 50% interest in the composition “4 My Click.”

TVT Records had a policy of requiring clearance of all

samples in its releases and depended on the “creative types”

to identify any samples in a new recording. TVT Records

hired Diamond Time to handle clearance of the sample from
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

5

3

Peterer was authorized to negotiate and agree to terms on which

permission to use Bridgeport’s copyrighted material would be granted.

“The Most” in “4 My Click.” Diamond Time maintains that

it was not asked to obtain clearance for use of any other

sample in “4 My Click.”

In January 1995, on the same day that “4 My Click” was

released, TVT Records obtained permission to use the sample

“The Most” in “4 My Click” from Songs of Polygram. On

October 3, 1995, Diamond Time representative Drea Kaplon

wrote to Jane Peterer, the administrator for Bridgeport Music,

seeking permission from Bridgeport to use the sample from

the composition “The Most.”3 The letter states that she was

unaware, until this matter was well into the licensing

process, that Zomba Music could only give clearance on

the “green-eyed” version of “The Most Beautifullest

Thing In The World” and that Bridgeport Music was a

co-publisher on this song along with Zomba Music and

PolyGram Music.

Accordingly, enclosed please find a cassette of both the

new and sampled song for your review. We would like

to obtain clearance for the use of “The Most Beautifullest

Thing In The World (Green-eyed version)” in “4 My

Click” from Bridgeport Music on a pro-rata basis with

both Zomba and PolyGram Music as per the

writer/publisher splits listed in the draft of the Zomba

Publishing Agreement.

Jane, I look forward to your response so that we may

finalize this in a timely manner. Please call me should

you have any questions.

On November 20, 1995, Kaplon made a handwritten note

on a copy of this letter and faxed it to Peterer. Kaplon’s note

6 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

4

Peterer claimed that if she had been aware of the alleged sample

from “Funky Worm,” she would have demanded a higher percentage of

ownership in “4 My Click” for Bridgeport as well as payment to

Westbound for use of the sound recording. Plaintiffs indicate that, despite

having been provided a tape of “4 My Click,” they only discovered the

alleged sample from “Funky Worm” in preparing to file this action.

stated: “Jane: Joan @ PolyGram has quoted 50% © pro-rata

with Bridgeport. Is this o.k. with you? Please advise so we

can wrap this matter up quickly. Zomba Music (who has

some publishing on this as well) has agreed to go pro-rata.

Thanks! Drea.” Under this, also handwritten, is Peterer’s

response: “Ok, Jane Peterer, 11-20-95.”4 On November 27,

1995, Kaplon sent Peterer a Usage Report confirming the

terms offered; indicating that Diamond Time’s client, TVT

Records, was proceeding in reliance on the quote; and

requesting that Peterer prepare and forward a formal

agreement directly to TVT Records.

On December 10, 1995, Peterer sent a formal agreement,

called a Release and Agreement, directly to TVT Records for

signature by TVT Music and DJ Irv Music. Under that copublishing agreement, Bridgeport would receive an 8.33%

interest in the composition “4 My Click.” Peterer sent

Kaplon a copy of the cover letter relating to this agreement on

the belief that Diamond Time would continue to participate

until the formal agreement and mechanical licenses were

signed. Peterer placed a copy of that letter in a file of

“pending matters,” where it remained until her deposition in

June 2002.

On the same day that the Release and Agreement was sent

to TVT Records, Peterer faxed a separate request to Kaplon

asking for information that was needed to prepare the

mechanical license for TVT Records. Kaplon did not respond

to that request. Diamond Time maintains that its involvement

in the clearance process for “4 My Click” ceased once the

Usage Report had been sent. Plaintiffs dispute this, arguing
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

7

5

Carapella testified that TVT Records had a modified arrangement

with Diamond Time under which Diamond Time would provide phase

one sample clearance services for a fee of $200 and would end its phase

two work with the issuance of the Usage Reports for a fee of $40 each.

She conceded, however, that she had no personal knowledge of the

clearance work done on “4 My Click.” In addition, when Kaplon left

Diamond Time in 1997, no one took over her responsibilities until

sometime in 1999. Diamond Time’s physical file concerning “4 My

Click” was destroyed in September 2000, along with other files from

sample clearances from 1991 through 1995, to save on storage costs.

Diamond Time was able to produce a computer-generated tracking grid

for “4 My Click” which noted that Zomba had “waived phase two,” but

did not note as to Bridgeport or Polygram either that phase two was

“waived” or that the job was “done.”

that Diamond Time “dropped the ball” and failed to complete

its assignment from TVT Records to oversee the trafficking

and execution of the formal agreement. The district court did

not attempt to resolve this dispute.5

Whatever the extent of the services Diamond Time had

been engaged to provide in this case, Peterer admitted that she

had no further written correspondence about “4 My Click”

with either TVT Records or Diamond Time. The only contact

Peterer claimed to have had occurred in several telephone

conversations with Kaplon relating to “4 My Click” and other

matters, during which Peterer urged Kaplon to see that the

Agreement was signed. 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.

On September 5, 1996, TVT Records 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 received by TVT

Records no later than January 10, 1997. The profit and loss

8 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

statement for the artist Cash Money Click was prepared

through December 31, 1998, in order to be sure that it

included all sales and returns. TVT Records stated, however,

that it did not receive any returns or unsold copies after April

1997. Plaintiffs argued that there must have been sales

because the online 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 plaintiffs had failed to present evidence that any sales

or returns had occurred after May 4, 1998. Plaintiffs’ appeal

from that decision was voluntarily dismissed as a result of a

settlement reached between plaintiffs and the TVT

defendants.

Diamond Time sought summary judgment on the grounds

that it committed no acts of direct or contributory

infringement, that it owed no duty on which the negligence

claim could be based, that the negligence claim was

preempted by the Copyright Act, and that both the copyright

infringement and negligence claims were barred by the

respective three-year statutes of limitations. Over plaintiffs’

opposition, the district court granted summary judgment to

Diamond Time on statute of limitations grounds.

Judgment was entered November 5, 2002, and plaintiffs

appealed. On March 26, 2003, the district court granted

Diamond Time’s post-judgment motion for attorney fees and

costs as a prevailing defendant under 17 U.S.C. § 505.

Bridgeport Music, Inc. v. Irving Lorenzo, 255 F. Supp.2d 795

(M.D. Tenn. 2003). Plaintiffs appealed from that order as

well.

II.

The district court’s decision granting summary judgment is

reviewed de novo. Smith v. Ameritech, 129 F.3d 857, 863

(6th Cir. 1997). Summary judgment is appropriate when

there are no genuine issues of material fact in dispute and the
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

9

moving party is entitled to judgment as a matter of law. FED.

R. CIV. P. 56(c). In deciding a motion for summary

judgment, the court must view the evidence and reasonable

inferences in the light most favorable to the nonmoving party.

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.

574, 587 (1986). The nonmoving party may not rest on his

pleadings, but must come forward 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 Infringement

Plaintiffs disavowed any claim that Diamond Time

committed direct acts of infringement, but argued that

Diamond Time was liable instead as a contributory infringer

because its failure to shepherd the clearance process through

execution of the written Release and Agreement materially

contributed to the direct infringement by the TVT defendants.

The district court did not determine whether the evidence

could support a finding that Diamond Time was a

contributory infringer, concluding instead that any such claim

was barred by the statute of limitations because “there [was]

no evidence in the record that defendant Diamond Time

engaged in any acts whatsoever regarding ‘4 My Click’ after

May 4, 1998.”

A civil action under the Copyright Act must be

“commenced within three years after the claim accrued.”

17 U.S.C. § 507(b). A cause of action accrues when a

plaintiff knows of the infringement or is chargeable with such

knowledge. Roley v. New World Pictures, Ltd., 19 F.3d 479,

481 (9th Cir. 1994). Because each act of infringement is a

distinct harm, the statute of limitations bars infringement

claims that accrued more than three years before suit was filed

but does not preclude infringement claims that accrued within

the statutory period. Id; Stone v. Williams, 970 F.2d 1043,

1049-50 (2d Cir. 1992); Hoste v. Radio Corp. of Am., 654

10 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

F.2d 11, 11 (6th Cir. 1981) (per curiam); Mount v. Book-ofthe-Month Club, Inc., 555 F.2d 1108, 1110-11 (2d Cir. 1977).

Contributory infringement occurs when one, “with

knowledge of the infringing activity, induces, causes or

materially contributes to the infringing conduct of another.”

Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443

F.2d 1159, 1162 (2d Cir. 1971); see also Ellison v. Robertson,

357 F.3d 1072, 1076 (9th Cir. 2004). Liability for

contributory infringement is based on the defendant’s

relationship to the direct infringement. Ez-Tixz, Inc. v. HitTix, Inc., 919 F. Supp. 728, 732-33 (S.D.N.Y. 1996). There

can be no contributory infringement without a direct

infringement. Matthew Bender & Co. v. West Publ’g. Co.,

158 F.3d 693, 706 (2d Cir. 1998); Subafilms, Ltd. v. MGMPathe Communications Co., 24 F.3d 1088, 1092 (9th Cir.

1994).

1. Statute of Limitations

Conceding that Diamond Time took no actions within the

period, plaintiffs argue for the first time on appeal that their

claims against Diamond Time are not time-barred because

TVT Records committed acts of direct infringement within

the limitations period to which Diamond Time’s earlier

conduct materially contributed. The short answer is that the

district court found plaintiffs had failed to present evidence of

any direct infringement by TVT within three years preceding

the filing of the complaint. Without proof of direct

infringement, there can be no liability for contributory

infringement.

Even if there was evidence of direct infringement within the

period, however, plaintiffs may not “piggy back” Diamond

Time’s conduct from outside the period onto the alleged

direct infringement of another within the period. Just as

claims against a direct infringer who commits no acts within

the three-year limitations period are time barred, claims
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

11

against a contributory infringer who commits no acts within

the limitations period are also time barred. This is not a new

proposition, as the discussion in Mount v. Book-of-the-Month

Club makes clear.

There, the publisher of the plaintiff’s book sent proof

copies to the defendant Book-of-the-Month Club so it could

decide if it wanted to adopt the work for the club. The

defendant gave the copy to someone it hired to read incoming

work, who turned it over to a friend, David McKibbin.

McKibbin, in turn, allegedly infringed the copyright in the

book by copying material in a pamphlet he wrote on the same

subject. The pamphlet continued to be sold within the

limitations period. The Second Circuit concluded that claims

against the book club were barred by the statute of

limitations, explaining:

We need not consider whether defendant could escape

liability simply because the reader to whom it sent the

proofs of plaintiff’s work was an independent contractor.

In any case the claim is foreclosed by limitations. Even

if defendant participated in an infringement through the

sending on of the proofs to McKibbin, that event

occurred in the Fall of 1955, almost twenty years before

this action was begun. There is no proof or allegation of

any further connection of Book-of-the-Month with

McKibbin’s pamphlet. Unless the statute’s running has

been tolled or prolonged, the claim is undoubtedly long

since time-barred.

555 F.2d at 1110.

Although plaintiffs deny it, their argument rests essentially

on a “continuing wrong” theory. That is, they argue that the

defendant’s conduct outside the limitations period contributed

to direct infringement by another party within the limitations

period. The Fifth Circuit rejected a similar argument in

Makedwde Publishing Co. v. Johnson, 37 F.3d 180, 182 (5th

12 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

Cir. 1994), and declined to follow the lead of the Seventh

Circuit in Taylor v. Meirick, 712 F.2d 1112, 1118-19 (7th Cir.

1983). The defendant in Makedwde, Lyman Jones,

participated in the alleged copyright infringement but

completely terminated his connection to the infringing

defendants outside the three-year limitations period. The

plaintiff reasoned that claims against Jones should not be time

barred because his actions outside the period 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 before suit was filed. Makedwde, 37 F.3d at 182.

Similarly, we find no error in the district court’s

determination that the copyright infringement claims are

barred by the statute of limitations absent a showing that

defendant should be equitably estopped from relying on the

limitations bar.

2. Equitable Estoppel

Equitable estoppel, sometimes referred to as fraudulent

concealment, is invoked in cases where the defendant takes

active steps to prevent the plaintiff from suing in time, such

as by hiding evidence or promising not to plead the statute of

limitations. 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. 1996); Cada v. Baxter

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

Application of equitable estoppel “‘should be premised on a

defendant’s improper conduct as well as a plaintiff’s actual

and reasonable reliance thereon.’” Hentosh, 167 F.3d at 1174

(citation omitted).

In the district court, plaintiffs asserted fraudulent

concealment as the basis 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 Time, et al.

13

6

At one point, plaintiffs seem to argue that the “Funky Worm”

sample was fraudulently concealed. The claims against Diamond Time,

however, rest on its failure to get the agreement signed concerning the use

of the sample from “The Most” in “4 My Click.” Plaintiffs, who bear the

burden of proof, presented no evidence that could lead one to conclude

Diamond Time either knew of, or unde rtook to clear, any sample other

than “The Most” in “4 My Click.”

1995); Prather v. Neva Paperbacks, Inc., 446 F.2d 338, 340-

41 (5th Cir. 1971). On appeal, however, plaintiffs have

shifted their equitable estoppel claim to argue that defendant’s

misconduct “lulled [them] into believing that it was not

necessary for [them] to commence litigation.” Cerbone v.

ILGWU, 768 F.2d 45, 50 (2d Cir. 1985). See also 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

Specifically, plaintiffs contend that they were lulled into

delaying suit by the assurances Peterer received during

several telephone conversations with Kaplon at unspecified

times after December 10, 1995. To invoke equitable estoppel,

a plaintiff must “demonstrate that his ignorance is not

attributable to a lack of diligence on his part.” Netzer, 963 F.

Supp. at 1316. Accepting for purposes of this appeal that

Kaplon said more than once that she would see the written

agreement was signed, 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

these empty assurances to forego litigation until more than

five years after 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 equitable estoppel because plaintiff had unreasonably

relied on an “unexceptional string of empty promises” to

remedy infringements and protracted negotiations to

implement those promises). Accordingly, plaintiffs failed to

demonstrate that DiamondTime should be equitably estopped

14 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

from relying on the limitations period as a bar to their claims

of copyright infringement.

B. Negligence

The parties agree that New York law applies to plaintiffs’

common law negligence claim against Diamond Time. The

statute of limitations for negligence claims under New York

law is three years from accrual of the cause of action. N.Y.

C.P.L.R. § 214 (McKinney 1996). Without deciding whether

there was a duty or whether such a claim would be preempted

by the Copyright Act, the district court found any such claim

was long barred by the statute of limitations.

This negligence claim rested on the theory that Diamond

Time owed a legal duty to plaintiffs that arose from a “dual

agency” relationship analogous to that of a real estate agent

working for both buyer and seller, or an insurance broker

working for both the insurer and the insured. Out of this

alleged “dual agency” relationship, plaintiffs argue, arose a

legal duty, owed to the copyright holders, to complete the

clearance process and to notify the copyright holders when its

involvement in the clearance process concluded. Plaintiffs

assert that the following passage represents an implicit

finding that such a duty arose in this case.

The plaintiffs allege that Ms. Peterer contacted Diamond

Time on or about December 10, 1995, requesting specific

information needed to prepare the mechanical licenses

for use of “Most,” and that Diamond Time never

responded. The Court finds that Bridgeport’s cause of

action accrued shortly thereafter. Bridgeport was clearly

put on notice that Diamond Time was no longer working

on its behalf to procure the signed agreements when

Diamond Time failed to respond to its request for

necessary information. Adding a generous period of time

for Diamond Time to respond, the Court finds that the

negligence claim accrued on or about January 10, 1996,
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Diamond Time, et al.

15

and that the limitations period for the negligence claim

expired January 10, 1999.

The only fair reading of this discussion is that the district

court assumed without deciding that a duty could be

established, and found that any negligence claim based on

such a duty would be barred by the statute of limitations.

This conclusion is further supported by the district court’s

observation in the order awarding attorney fees and costs that:

“The plaintiffs have never cited any case law with analogous

facts from which the Court could conclude that any legal duty

of care was owed to the plaintiffs by the defendant, who was

hired by a third party to perform its clearance work.”

Bridgeport, 255 F. Supp.2d at 798 n.2.

Similarly, we need not decide whether New York law

would recognize a legal duty owed to plaintiffs in this case.

Whether or not plaintiffs could ultimately prevail on their

negligence claim against Diamond Time, such a claim would

be barred because it was filed more than three years after it

would have accrued. In the alternative, plaintiffs again rely

on equitable estoppel to argue that the representations

allegedly made by Kaplon “induced” or “lulled” them into

believing that litigation was not necessary. For the same

reasons discussed earlier, we find that plaintiffs failed to

demonstrate thatDiamond Time should be equitably estopped

from asserting the statute of limitations with respect to their

claim of negligence. Accordingly, we affirm the district

court’s grant of summary judgment to Diamond Time.

III.

Having affirmed the district court’s decision on the merits,

we turn to plaintiffs’ further appeal from the decision

awarding $64,371.23 in attorney fees and $963.00 in

nontaxable costs in favor of Diamond Time and against

Bridgeport and Westbound, jointly and severally. The district

court’s decision to award costs and fees is reviewed for abuse

16 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

7

“In any civil action under this title, the court in its discretion may

allow the recovery of full costs by or against any party other than the

United States or an officer thereof. Except as otherwise provided by this

title, the court may also award a reasonable attorney’s fee to the

prevailing party as part of the costs.” 17 U.S.C. § 505.

of discretion. Coles v. Wonder, 283 F.3d 798, 804 (6th Cir.

2002); Murray Hill Publ’ns, Inc. v. ABC Communications,

Inc., 264 F.3d 622, 639 (6th Cir. 2001). A district court

abuses its discretion when it relies on clearly erroneous

factual 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 reasonable attorney fees to

the prevailing party in civil suits under the Act. 17 U.S.C.

§ 505.7 Plaintiffs argue at the outset that Diamond Time is

not a prevailing party because it did not “prevail” on the issue

of preemption or the question of duty with respect to the

common law negligence claim. First, when a defendant

succeeds in having summary judgment entered in its favor on

the copyright infringement claims asserted against it, that

defendant can only be described as having “prevailed.”

Second, the district court properly deducted 20% of the

reasonable attorney fees incurred in this action to account for

fees incurred in defense of the common law negligence claim.

Finally, as noted earlier, the district court did not decide the

issues of preemption or duty in granting summary judgment

to Diamond Time.

The discretion to grant attorney fees in copyright

infringement cases is to be exercised in an evenhanded

manner with respect to prevailing plaintiffs and prevailing

defendants, and in a manner consistent with the primary

purposes of the Copyright Act. Fogerty v. Fantasy, Inc., 510

U.S. 517 (1994). The Supreme Court squarely rejected what
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

17

8

Those considerations include: the primary objective of the

Copyright Act to “encourage the production of original literary, artistic,

and musical expression for the good of the public”; the fact that

defendants as well as plaintiffs may hold copyrights and run the gamut

from large corporations to “starving artists”; the need to encourage

“defendants who seek to advance a variety of meritorious copyright

defenses . . . to litigate them to the same extent that plaintiffs are

encouraged to litigate meritorious claims of infringement”; and the fact

that “a successful defense of a copyright infringement action may further

the policies of the Copyright Act every bit as much as a successful

prosecution of an infringement claim by a holder of a copyright.” Id. at

524 and 527.

it called the “dual standard” under which prevailing plaintiffs

recovered attorney fees as a matter of course but prevailing

defendants were required to show the claims were frivolous

or were brought in bad faith. Id. at 534. At the other

extreme, the Court also rejected the view that § 505 was

intended to enact the “British Rule” of automatic recovery of

attorney fees by the prevailing party. Id. Thus, the Court

explained that “‘[t]here is no precise rule or formula for

making these determinations,’ but instead equitable discretion

should be exercised ‘in light of the considerations we have

identified.’” Id. (quoting Hensley v. Eckerhart, 461 U.S. 424,

436-37 (1983)).8

In closing, the Fogerty Court identified several

nonexclusive factors that may be considered in making

awards to prevailing parties, as long as the factors are

“faithful to the purposes of the Copyright Act and are applied

to prevailing plaintiffs and defendants in an evenhanded

manner.” Id. at 534 n.19. Those factors include

“frivolousness, motivation, objective unreasonableness (both

in the 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 Time, et al.

Nos. 03-5003/5656

A. Decision to Grant Attorney Fees

The district court in this case correctly observed that

because the Fogerty factors are nonexclusive, not every factor

must weigh in favor of the prevailing party and other factors

may be considered as well. Concluding that attorney fees and

costs should be granted to Diamond Time “in the interest of

justice and in furtherance of the objectives of the Copyright

Act,” the district court explained that:

the following factors . . . weigh in favor of an award:

(1) the plaintiffs’ litigation strategy that resulted in suing

defendants against which they had little hope of

recovering; (2) the plaintiffs’ motivation for failing to

dismiss stale claims; (3) the interest in deterring further

litigation of stale claims; and (4) the inherent weakness

in the plaintiffs’ copyright claims against this defendant.

These factors dictate that the plaintiffs should be made to

answer for litigating this action, and the original action

from whence it spawned, in a fashion that contributed to

the multiplication of fees amongst all the parties and

resulted in an administrative morass for the Court.

One of the consequences of the plaintiffs’ choice to sue

hundreds of defendants all at the same time, regardless of

the strength of the individual claims, was that the

plaintiffs’ dragnet inevitably swept up parties against

whom they had little or no chance of succeeding. Such

is the case here. While the ultimate decision to dismiss

the claims against this defendant rested on the statute of

limitations, the plaintiffs’ claims for contributory

infringement and negligence were based on shaky facts

and even shakier legal arguments. In response to the

defendant’s motion for summary judgment, the plaintiffs

conceded that they had no claim for direct infringement.

Their claim for contributory infringement rested on few

facts and on case law that was not factually analogous.
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

19

While the Court did not reach the merits of the

contributory infringement claim, the significance of the

statute of limitations defense to this and numerous other

Bridgeport cases must be underscored. Many of the

songs in question were released in the early and mid

1990's. Many of these cases involve license agreements

that were initially negotiated between the plaintiffs and

defendants during this same time period. Yet the

plaintiffs waited long after the three-year statute of

limitations to bring suit. The Court found in this case

that the last contact between Diamond Time and the

plaintiffs was in December 1995, more than five years

before the plaintiffs brought suit. This is not the only

Bridgeport case where the plaintiffs’ claims were

defeated by their failure to act promptly to protect their

rights.

The plaintiffs complained repeatedly that the dilatory

practices of the music industry, resulting in license

agreements never or belatedly being signed and

payments never or belatedly being made, allowed the

defendants in these cases to abuse the plaintiffs’ position

as a small company and flagrantly use their copyrighted

works without proper compensation. The plaintiffs claim

that they did not bring suit in a more timely fashion

because these practices kept them from enforcing their

rights. The Court sees little merit to this argument (and

in fact wholly rejected in this case the argument that

these practices amounted to a legal justification for

avoiding the statute of limitations).

If their copyrights are as valuable as the plaintiffs

claim, then it behooves them to police their rights and

seek legal redress in a timely fashion, especially where

their opponents are huge entertainment conglomerates

that may not respond to any other pressure than the threat

of a suit. And in the case of those defendants like

Diamond Time that have limited operations or financial

20 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

9

Plaintiffs complain that the harsh criticism makes them doubt that

they are being treated evenhandedly with the defendant. Of course,

Fogerty was concerned that courts be evenhanded in their treatment of

prevailing plaintiffs and prevailing defendants; not losing plaintiffs and

prevailing defendants.

resources, timely filing of legal action against them

would increase the chance that the case is decided on the

merits of the claim and not subject to the vagaries of

missing documents, faulty recollections and absent

witnesses.

The plaintiffs’ failure to weed out stale claims means

that there remain in these cases numerous claims and

defendants that will never make it to trial. The Court

must infer from the plaintiffs’ actions that these claims

remain for the sole purpose of extracting a settlement

based on the cost of litigating further. This is not an

objective to be promoted under the Copyright Act; to the

contrary, the Court sees an opportunity here to deter

further misuse of the Court’s resources and encourage the

prompt dismissal of clearly stale claims in the hundreds

of Bridgeport cases that remain before this Court.

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

Plaintiffs accuse the district court of “palpable hostility”

toward the legitimate copyright claims asserted in other

Bridgeport cases, in which no discovery has even been

conducted, and an intention to punish plaintiffs for bringing

all of their claims together. While the district court certainly

did not mince words, the harsh criticism of the plaintiffs’

litigation strategy was clearly focused on the resulting failure

of plaintiffs to weed out stale claims against defendants like

Diamond Time.9

Urging that we reverse the award, plaintiffs compare this

case to Murray Hill, where the district court granted attorney
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

21

10To bolster their challenge, plaintiffs suggest the award in this case

is inconsistent with the denial of attorney fees to the prevailing defendant

in another Bridgeport case in which a novel claim was found to be

objectively reasonable. The same issue was neither presented nor decided

with respect to the claims against Diamond Time.

fees to the prevailing defendant because the plaintiff’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. This court reversed, without much discussion,

concluding that the case presented unsettled questions of law

and one or more colorable claims of infringement. Id. at 640.

When a plaintiff has advanced a reasonable, yet unsuccessful

position, an award of attorney fees to the prevailing defendant

generally does not promote the purposes of the Copyright

Act. Matthew Bender & Co., 240 F.3d 116, 122 (2d Cir.

2001); Lotus Dev. Corp. v. Borland Int’l, Inc., 140 F.3d 70,

75 (1st Cir. 1998) (In close infringement cases, “the need to

encourage meritorious defenses is a factor that a district court

may balance against the potentially chilling effect of

imposing a large fee award on a plaintiff[] who . . . may have

advanced a reasonable, albeit unsuccessful, claim.”).

In this case, however, there can be no doubt that the district

court found it was objectively unreasonable for plaintiffs to

have argued that the claims against Diamond Time were not

time barred. In commenting on the factual and legal

weakness of the plaintiffs’ contributory infringement claims,

the district court clearly criticized the plaintiffs’ decision to

sue hundreds of defendants at once without regard to the

strength of the various claims.10

In addition, the district court inferred from the way the case

was commenced and the fact that plaintiffs continued to

prosecute this case against Diamond Time that the claims

remained “for the sole purpose of extracting a settlement

based on the cost of litigating further.” Bridgeport, 255 F.

22 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

Supp.2d at 799. Although plaintiffs deny such motivation,

the district court certainly had a basis to infer that the

litigation was undertaken and prosecuted in a fashion that

would multiply the fees and encourage nuisance settlement.

We can find no clear error in this regard.

Finally, the district court explicitly relied on deterrence, a

factor that has an unusual role in this case. Despite plaintiffs’

hyperbole about the district court’s desire to “close the

courthouse door” to its legitimate, albeit novel, copyright

infringement theories, the district court was concerned with

deterring misuse of the court’s resources and encouraging the

prompt dismissal of clearly stale claims in the hundreds of

pending Bridgeport cases. Given the common origin of the

pending cases and the possibility that similar strategies and

motivations may be at work with respect to at least some of

the asserted claims, deterrence is a particularly relevant factor

in this case weighing in favor of an award of attorney fees.

B. Reasonableness of Award

Finally, having determined that an award of attorney fees

was warranted, the district court made an independent review

of the billing statements and determined that the initial

“lodestar” amount, representing reasonable attorney fees

incurred by Diamond Time in this case, was $80,464.04.

That amount was then reduced by 20% to account for fees

incurred with respect to the negligence claim only. As a

result, the district court awarded $64,371.23 in attorney fees

to Diamond Time.

Plaintiffs do not challenge the calculation of this amount,

but argue that it is unreasonable because it does not account

for the defendant’s unwillingness to settle. The district court

rejected this argument, explaining that:

The deadline for filing dispositive motions in this case

was June 21, 2002. The plaintiffs’ initial settlement
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

23

demand was not made until September 30, 2002. The

plaintiffs cannot be heard now to complain that the

defendant did not settle in a timely manner when the first

offer to settle was not made until three months after the

dispositive motion deadline, and just two months prior to

trial, at which point the defendant 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

conclusion rested on incorrect or incomplete facts concerning

their first offer to settle, the district court abused its discretion

in refusing to further reduce the amount of attorney fees.

First, plaintiffs argue that the district court “obviously

overlooked” the short declaration submitted by their attorney,

Richard Busch, in which he stated that defendant’s counsel,

Horton Frank, rebuffed an attempt to settle all the claims

against Diamond Time in June 2002. That declaration

specifically states that Busch approached Frank during a

break in depositions sometime in June 2002 and offered to

dismiss the claims for “a very minimal amount of money.”

Frank apparently replied that plaintiffs would have to agree to

dismiss the claims with prejudice and to pay all or part of

Diamond Time’s attorney fees and costs. It is true that the

district court did not mention this oral exchange in its

opinion. The court also did not mention the letters dated

April 8, 2002, and July 31, 2002, in which defendant’s

counsel asked that plaintiffs make a settlement demand. In

the April letter, defendant’s counsel conveyed both that

Diamond Time had limited financial resources and that it had

begun incurring expenses in preparation of its dispositive

motion. The letter also stated that:

At the case management conference, Judge Higgins made

it very clear that he expected you 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 you intend to

24 Bridgeport Music, Inc. v.

Diamond Time, et al.

Nos. 03-5003/5656

11Frank responded in a lengthy letter dated October 14, 2002,

explaining that Diamond Time had no money to pay plaintiffs and had

already incurred nearly $60,000 in attorney fees; that Diamond Time

expected to prevail on summary judgment and would seek attorney fees

under Fogerty; and that Diamond Time would settle if plaintiffs agreed

to pay the fees incurred in this case. On October 24, 2002, Busch rejected

this offer as unrealistic and commented that it “seems tragic to me that

there have been $60,000 worth of attorney’s fees charged to Diamond

Time for engaging in motion practice when all matters could have been

settled for less than that amount.” No further counter-offer was made in

that letter, and the summary judgment orders were entered shortly

thereafter.

do so, I ask that you take what I have told you in this

letter into account. If you 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

in June 2002. On July 31, 2002, Frank wrote to plaintiffs’

counsel as a “follow up” to that exchange and expressed

willingness to discuss settlement. On September 30, 2002,

plaintiffs made its first written offer to dismiss all the lawsuits

against Diamond Time for payment of $20,000.11

Despite the failure of the district court to discuss plaintiffs’

oral offer to settle for “a very minimal amount,” we find no

abuse of discretion in the district court’s refusal to reduce the

amount of the attorney fees to account for defendant’s

unwillingness to settle. Defendant did not display

unwillingness to discuss settlement, only an unwillingness to

pay plaintiffs money it did not have, in order to settle claims

it believed would be dismissed with prejudice, when it had

already incurred significant attorney fees 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 defendant

for refusing to admit liability and pay to settle a frivolous

action).
Nos. 03-5003/5656 Bridgeport Music, Inc. v.

Diamond Time, et al.

25

In concluding that the attorney fees incurred by defendant

were reasonable, the district court noted that Diamond Time

was represented by only a single copyright 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 aggressively each and every issue

against each and every defendant, regardless of a particular

defendant’s resources or the strengths of the claims against it.

The fees incurred by the defendant here were justified and

necessary to guard against the plaintiffs’ take-no-prisoners

tactics.” Bridgeport, 255 F. Supp.2d at 802.

AFFIRMED.