### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 1 4

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L ESLIE S. K LINGER , Plaintiff

- Appell ee ,

v.

C ONAN D OYLE E STATE , L TD

. , Defendant

- Appell ant

.

____________________ Motion for Award of Attorneys’ Fees in an Appeal f rom the United States Di s trict Court for the Northern District of Illinois, Eastern Division. No. 13 C 1226

— Rubén Castillo
, Chief Judge

.

____________________
S UBMITTED J ULY 15 , 2014

— D ECIDED A UGUST 4, 2014

____________________

Before P OSNER , F LAUM , and M ANION , Circui t Judges

. P OSNER , Circuit Judge

. This opinion is a sequel to Klinger v. Conan Doyle Estate, Ltd. , 2014 WL 2726187 (7th Cir. June 16, 2014), where we held that Leslie Klinger was entitled to a declaratory judg ment that he w ould not be infringing cop yrights on fiction al works published by Arthur Conan Doyle before 1923 by anthologizing stories written long after Doyle’s death in 1930 that feature Sherlock Holmes and ot h-2 No. 14

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er cha r acters depicted in Doyle’s pre

- 1923 fiction. Even though the modern (post

- Doyle ) She rlock Holmes stories copy copyrightable material in the pre

- 1923 fiction, the cop yrights on that fiction , which cover copyrightable elements in it that include original depictions of characters (like Holmes and Dr. Watson), have expired. We rejected the Do yle e state’s argu ment that because stories published by Doyle b etween 1923 and his death

— and still under copyright

— depicted those chara c ters in a more “rounded form” than found in the pre

- 1923 fiction, the “flat” characters of the ea rlier stories were pr o t ec t ed by the copyrights still in force on the “rounded” cha r acters of the later stories. Once the copyright on a work expires, the work becomes a part of the public domain and can be copied and sold without a license from the holder of the e x pired copyrigh t. So when Klinger published his first anthology of modern Sherlock Holmes stories he didn’t think he needed a license. But t he Doyle e s tate told Random House , which had agreed to publish Klinger’s book, that it would have to pay the e state $5 , 000 for a co pyright license

. Random House yielded to the demand , obtained the license, and pu b lished the book

. Klinger arranged for a sequel to the anthology to be pu blished by Pegasus Books and distributed by W.W. Norton & Company to booksellers

. When the Doyl e estat e learned of this project, it told Pegasus , as it had told Random House , that Pegasus would have to obtain a $5,000 license from the

e s tate in order to be legally authorized to publish the new book. The estate didn’t explicitly threaten to sue Pegasus for copyright infringement if the publisher didn’t obtain a l icense, but did explicitly threaten to prevent distrib u tion of the book. It did not mince words. It told Pegasus : “If youNo. 14

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proceed

... to bring out [the sequel] unlicensed , do not e xpect to see it offer ed for sale by Amazon, Barnes & Noble, and similar retailers. We work with those compan[ ies ] ro utinely to weed out unlicensed uses of Sherlock Holmes from their o f ferings, and will not hesitate to do so with your book as well.” There was also a latent thre at to sue Pegasus for copyright infringement if it pub lished Klinger‘s book wit hout a license , and to sue Internet service providers who di stribute d it. See Digital Millennium Cop y right Act, 17 U.S.C. § 512(i)(1)(A). Pegasus yielded to the threat , as Rando m House had done, and r e fused to publish the anthology until Klinger obtain ed a l i cense from the Doyle estate

. I nstead of obtaining a license Klinger sued the estate , seeking declaratory relief against being adjudged an i n frin ger of any valid copyrights of the estate

— and won , both in the di s trict court and, on the estate’s appeal, in this court

. We could find no basis in statute or case law for extending a copyright beyond its expiration. When a story falls into the public domain , story elements

— including c haracters co vered by the expired cop y right

— become fair game for follow

on authors . There is no ground known to American law for extending copyright protection beyond the limits fixed by Congress . T he estate’s appeal bor dered on the qui x otic

. Now Klinger a sks us to order the Doyle estate to rei mburse the attorneys’ fees he incurred in the appeal , amoun ting to $30,679.93

. ( He has filed a separate petition for fees and related costs incurred in his litigation in the di s trict court , totaling $39,123.44. That p etition is not b e fore us. ) The estate opposes Klinger’s request on the same hop e less grounds that it had urged in its appeal, but does not que s-4 No. 14

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tion the amount of fees as distinct from Klinger’s ent i tlement to an award of any amount of fees in this case.
Th e Copyright Act authorizes the “award [of] a reaso n able atto r ney’s fee to the prevailing party as part of the costs.” 17 U.S.C. § 505. We said in Assessment Technologies of Wisco nsin, LLC v. WIREdata, Inc. , 361 F.3d 434, 436

– 37 (7th Cir. 2004) (and reaffir med in DeliverMed Holdings, LLC v. Scha l tenbrand , 734 F. 3d 616, 625

– 26 (7th Cir. 2013)) that the two most i mportant considerations in deciding whether to award fees “are the stren g th of the prevailing party’s case and the amount of damages or other relief the party o b t ained. If the
case was a toss

- up and the prevailing party o b tained gene rous damages, or injunctive relief of substantial monetary value, there is no urgent need to add an award of attorneys’ fees. But if at the other extreme the claim or d e fen se was frivolous and the prevailing party obtained no r e lief at all, the case for awarding attorneys’ fees is compe l ling” (cit ations omitted). We said that as a cons e quence of the succes sful de fense of an infringement suit the defendant is entitled to a “v ery strong” presumption in favor of recei v ing atto rneys’ fees , in order to ensure that an infringement defendant does not abandon a meritorious defense in situ a tions in which “the cost of vindication exceeds the pr i vate benefit to the party .” 361 F.3d at 4 37. “ For without the pro s pect of such an award, [an infringement defe n dant] might be forced into a nuisance settlement or deterred alt o gether from exercising [its] rights.” Id

. We’re not alone in expressing these concerns. See M ichael J. Meurer, “ Controlling Opportunistic and Anti

– Competitiv e Intellectual Property Litigation, ” 44 Boston Co llege L. Rev. 509, 521 (2003) . See also Ben D e poorter & RobertNo. 14

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Kirk Walker, “ Copyright False Positives , ” 89 Notre Dame L. Rev. 319, 343

- 45 (2013), where we read that many persons or firms a c cused of copyrig ht infringement find that “it is more cost

- effective to simply capitulate ” than to fight , even when the alleged claim is of dubious merit . C opyright holders , the authors explain, have larger potential u p sides and smaller downside risks to filing suit, sinc e if they win they obtain damages but if they lose they don’t have to pay damages (a l though a loss, especially if recorded in a published opi nion as in this case, may make it more difficult for them to play their extortionate game in future cases). So copi ers or alleged copiers may be “ induced into licensing [that is, pa ying a fee for a license to reproduce] the underlying work, even if this l i cense is unnecessary or conveys non

- existent rights." Id

. at 345. Depoorter and Walker ( id. at 345 n. 172) give the exa m ple o f the Summy

- Brichard Company, a su bsidiary of Wa r ner Music Group, which “ receives approx imately $2 million per year in royalty payments for li censes to the song ‘Happy Birthday to You,’ despite the fact that the song is most likely in the public domain ,” as argued in Ro bert Bra u neis, “ Copyright and the World’ s Most Popular Song, ” 56 J. Cop y right Society U.S.A. 335, 338

– 40 (2009)

. This case illustrates the concerns expressed both in the articles we’ve just cited and in our opinio ns in Asses s ment Technologies and DeliverMed Holdings . Unless Klinger is awarded his attorneys’ fees, he will have lost money

— to be precise, $25, 679.93 ($30,6 79.93

– $5,000)

— in winning a n a ppeal in which the defendant’s only de fense bordered on the frivolo us: a Pyrrhic victory if ever there was one. It’s irrel evant that in Asses s ment Technologies and DeliverMed Holdings , the alleged infringer was the d e fendant, and in this case it’s the plaintiff; a declaratory

- judgment plaintiff in a copyright6 No. 14

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case is in e ffect a defendant permitted to pre cipitate the i nfringement suit. The Doyle estate’s business strategy is plain: charge a modest license fee for which there is no legal basis, in the hope that the “rational” writer or publisher asked for the fee will pay i t rather than incur a greater cost, in legal e x penses, in challenging the legality of the demand. The stra t egy had worked with Ra n dom House ; Pegasus was ready to knuckle under ; only Klinger (so far as we know) resisted. In effect he was a private attorney general, combating a di s reputable business practice

— a form of extortion

— and he is see k ing by the presen t motion not to obtain a reward but merely to avoid a loss. He has performed a public service

— and with substantial risk to hi m self , for had he lost he wo uld have been out of pocket for the $ 69,803.37 in fees and costs i ncurred at the trial and appellate levels ($30,679.93 + $39,123.44 )

. The willingness of someone in Klinger’s pos i tion to sue rather than pay Doyle’s estate a modest license fee is important because it injects risk into the estate’s business model. As a result of losing the suit, the e s tate has lost its claim to own copyrights in characters in the Sherlock Holmes stories published by Arthur Conan Doyle before 1923. For exposing the estate’s un lawful business strategy, Klinger deserves a r e ward but asks only to break even. We note finally that the estate was playing with fire in asking Amazon and other booksellers to cooperate with it in enforcing its nonexistent copyright claim s against Klinger

. For it was enlisting those sellers in a boycott of a competitor of the estate, and boycotts of competitors violate the ant itrust laws. The usual boycott is of a purchaser by his suppl iers, induced by a competitor of the pu r chaser in order toNo. 14

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eliminate co mpetition from that purchaser, as in the lea d ing case (old as it is) of Eastern States Retail Lumber Dea l ers’ Ass’n v. United States , 234 U.S. 600 ( 1914 ); see also JTC Petr o leum Co. v. Piasa Motor Fuels, Inc. , 190 F.3d 775, 777

– 79 (7th Cir. 1999). This cas e is different, in its facts but not in ec o nomic substance or legal relevance, because the boycot t ers enlisted by the Doyle estate were buyers from the victim, rather than sellers to it. But functionally they were suppl i ers

— suppliers of essential distr i but ion services to Klinger. It’s time the estate, in its own self

- interest, changed its bus i ness model. Klinger’s motion is granted and the Doyle estate order ed to pay him $30, 679.93 for the legal fees that he incurred in his successful defense of the distric t court’s judgment in his favor.