Source: https://copyrightlitigation.blogspot.com/
Timestamp: 2019-04-21 00:28:32+00:00

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Can a "prevailing party" in a copyright or trademark action obtain attorneys fees even if the victory had nothing to do with the Copyright Act or Lanham Act? The Second Circuit, in a pair of recent decisions involving alleged infringement of test preparation materials, says "yes."
In Manhattan Review LLC v. Yun - 2019 WL 1319813 and 2019 WL 1326528 the Second Circuit divided its opinion into two decisions, one of precedential value limited to the question of whether a "prevailing party" could collect attorneys fees and one by summary order dealing with the questions of whether attorneys fees were appropriate under the Copyright Act and Lanham Act. This federal action arose in the wake of a failed state action. In the state action based on various state law claims, the litigation turned on the corporate status of Manhattan Review LLC because its corporate status had been cancelled by the State of Delaware. Manhattan Review's loss of corporate status led to dismissal of copyright and trademark claims brought derivatively on its behalf. Manhattan Review's principal obtained a certificate of good standing and moved to vacate the dismissal. The state court denied the motion to vacate.
Manhattan Review LLC and its principal filed the federal action for copyright and trademark infringement, failing to mention the state court action. The court found the certificate of good standing did not nullify Delaware's cancellation and ruled against the plaintiffs on the grounds of collateral estoppel, finding that plaintiffs had received a full and fair opportunity to litigate.
The defendants sought, and were awarded attorneys fees and costs pursuant to section 505 of the Copyright Act and section 35(a) of the Lanham Act. Plaintiff objected, arguing that the copyright and trademark claims had not been considered on the merits, making statutory awards of attorneys fees inapplicable.
The Second Circuit rejected the argument as foreclosed by the U.S. Supreme Court's 2016 decision in CRST Van Expedited, Inc. v. EEOC which decided that the "defendant may prevail even if the court's final judgment rejects the plaintiff's claim for a non-merits reason."
The Second Circuit's summary order dealt with the questions of whether attorneys fees were properly assessed under the Copyright Act and Lanham Act which afford district court judges discretion - and boundaries on their discretion - in awarding attorneys fees. The Second Circuit affirmed the finding that plaintiffs' litigation positions were "objectively unreasonable and frivolous" and that "the failure to mention a relevant prior action indicates a lack of candor". Accordingly, the Second Circuit concluded that approximately $49,000 in attorneys fees were appropriately awarded under the Copyright Act and as an "exceptional case" under the Lanham Act.
Chapter 18 of Copyright Litigation Handbook covers Attorneys Fees and Costs. This decision illustrates that persisting in pursuing unsuccessful theories in copyright and trademark matters can be a dangerous pursuit.
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New York Court of Appeals' decision in Matter of Flamenbaum, 22 NY3d 962 (2013).
Watch the October 15, 2013 argument at the Court of Appeals here.
While Hans Christian Anderson explained an emperor wearing no clothes, SCOTUS just gave us the full monty on costs in copyright litigation. On March 4, 2019 Justice Kavanaugh delivered a unanimous opinion for the U.S. Supreme Court in Rimini Street, Inc. v. Oracle USA, Inc. Rimini Street decided the issue of whether a winning copyright litigant could recover "full costs" of the litigation as the Copyright Act's section 505 specifically provides or something less. The issue arose where a successful copyright litigant sought to recover costs (litigation expenses) related to discovery and expert witness fees.
In a lot of semantic silliness over the meaning of the word "full," SCOTUS completely eliminated a district court's discretion to award non-taxable costs as part of "full costs." This means the next bartender serving Justice Kavanaugh a "full" beer will leave that frosty mug mostly empty. Let's figure out how we got here.
Section 505 has made many copyright litigants thirsty for a win. For many years we understood that Congress wished to encourage copyright litigants to pursue rights as a matter of policy, and Congress understood that the costs of litigation, including attorneys fees, often outweighed the benefits of a particular case.
A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.
Section 1920 was passed in 1948. Because taxable "costs" are generally so low and routinely awarded by the Clerk of the Court, there is very little litigation over the meaning of costs. In a spirited and interesting oral argument, on behalf of Oracle, Paul Clement argued that reading the word "full" out of Section 505 and reading 1920's cramped view of "costs" (ie taxable costs) as "full costs" would do "carnage" to the statute and common grammar. Clement pointed out that Congress revisited Section 505 in 1984 and made it clear that "full costs" in Section 505 of the Copyright Act clearly meant non-taxable costs based on a plain reading of the English language.
Oracle argues that the word “full” authorizes courts to award expenses beyond the costs specified in §§1821 and 1920. We disagree. “Full” is a term of quantity or amount. It is an adjective that means the complete measure of the noun it modifies. See American Heritage Dictionary 709 (5th ed. 2011); Oxford English Dictionary 247 (2d ed. 1989). As we said earlier this Term: “Adjectives modify nouns—they pick out a subset of a category that possesses a certain quality.” Weyerhaeuser Co. v. United States Fish and Wildlife Serv., 586 U. S. ___, ___ (2018) (slip op., at 8).The adjective “full” in §505 therefore does not alter the meaning of the word “costs.” Rather, “full costs” are all the “costs” otherwise available under law. The word “full” operates in the phrase “full costs” just as it operates in other common phrases: A “full moon” means the moon, not Mars. A “full breakfast” means breakfast, not lunch. A “full season ticket plan” means tickets, not hot dogs. So too, the term “full costs” means costs, not other expenses. The dispute here, therefore, turns on the meaning of the word “costs.” And as we have explained, the term “costs” refers to the costs generally available under the federal costs statute—§§1821 and 1920. “Full costs” are all the costs generally available under that statute.
To avoid giving the winning party full costs, SCOTUS looked to Section 1920 - a 1948 statute giving a judge or a clerk the power to tax certain items as costs. The court also created a new category of costs - "litigation expenses" -- that Congress had supposedly forgotten to mention in drafting Section 505.
Acknowledging the flaw in the Court's approach, the opinion concludes: "Sometimes the better overall reading of the statute contains some redundancy."
Chapter 18 of my book Copyright Litigation Handbook (2018-2019) Thomson Reuters, available on Westlaw, is titled Attorneys Fees and Costs (full table of contents here. This year, I will write a full update of that chapter over a full breakfast following a full moon for those of you who have purchased a full season ticket plan.
On March 4, 2019, in Fourth Estate Pub. Benefit Corp. v. Wall Street.com, (No. 17-571), a unanimous Supreme Court decided that copyright registration is necessary before bringing an infringement action in a U.S. district court. Opinion here and oral argument here courtesy SCOTUS blog. Justice Ginsburg, the opinion's author, was in the hospital during the oral argument.
Fourth Estate sued Wall Street.com for copyright infringement shortly after applying to the Copyright Office for a copyright registration, rather than waiting the estimated seven months for the Copyright Office to issue a registration certificate. In some parts of the country, courts permitted a plaintiff to commence a lawsuit where an application to register a copyright claim had been filed with the Copyright Office - the "application approach." In other jurisdictions, including in the Second Circuit, federal judges dismissed cases where a plaintiff could not show a copyright registration certificate (or a refusal of the Register to issue a registration) prior to the lawsuit's commencement - the "registration approach."
Fourth Estate resolves a rather unsexy issue dividing the federal courts since I wrote Copyright Litigation Handbook over a decade ago. The case is important to lawyers and copyright owners commencing copyright infringement lawsuits in federal court, but is not likely of interest to a broader audience. The case relates only to a narrow administrative issue: how and when to sue in federal court in light of administrative delays in registration at the Copyright Office that have grown from one to two weeks in 1956 to seven months today. Because many federal courts had already required action by the Register as a precondition of suit, as a practical matter this decision, will only change things for copyright owners in a hurry to sue in parts of the United States where Circuit Courts had adopted the "application approach." For years, copyright owners in "registration approach" jurisdictions have been well-advised to use the Copyright Office's "Special Handling" procedure that is available in cases involving potential litigation. Special Handling has, according to the Copyright Office, a five-day turnaround (I would allow a few extra days). Unfortunately, the Special Handling procedure comes with an $800 fee. By comparision, a basic electronic copyright registration runs $35-55 according to the latest Copyright Office Circular 4.
(a) Except for an action brought for a violation of the rights of the author under section 106A(a), and subject to the provisions of subsection (b), no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register’s failure to become a party shall not deprive the court of jurisdiction to determine that issue.
A unanimous Supreme Court concluded that "registration ...has been made" "when the Register has registered a copyright after examining a properly filed application." under 17 U.S.C. 411(a). The opinion noted that copyright "registration is akin to an administrative exhaustion requirement that the owner must satisfy before suing to enforce ownership rights." In practical terms, this means that a copyright owner suing for infringement must have a copyright registration certificate in hand before commencing an action in federal court (or a refusal of registration by the Register).
Paying an $800 fee for Special Handling is an unfair annoyance. This case means that, in emergency situations where litigation is necessary, copyright owners throughout the nation will have to obtain a copyright registration certificate (or a refusal) following the Special Handling procedure where waiting for the Copyright Office to issue a registration certificate is not an option.
Oral argument in the case contains a lot of interesting information on copyright registration history, policy and arguments relating to how many registrations are rejected and how many involve correspondence with the Copyright Office. A footnote to the decision notes that Fourth Estate's check to the Copyright Office bounced. During oral argument it was argued that Congress had recently increased staffing budgets by 60% to reduce the registration time lag. In the end, the Supreme Court found the administrative time lag to be "unfortunate" but that the lag did not justify a rewrite of Section 411's requirement of registration by the Register of Copyrights prior to commencement of a lawsuit.
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Ray Dowd, author of West’s acclaimed Copyright Litigation Handbook and a partner in Dunnington Bartholow & Miller LLP in New York City will take us through the ethical pitfalls facing legal practitioners tackling copyright litigation. Appropriate for inhouse counsel, and private practitioners both seasoned and novice.
Professional responsibility issues arise early in copyright litigation.
The disciplinary rules of each jurisdiction impose a duty of professional competence. The combination of Rule 11 of the Federal Rules of Civil Procedure requiring attorneys to investigate and warrant the viability of claims and defenses with the Copyright Act’s potential awards of attorneys fees as costs to the prevailing party, make the attorney litigating copyright claims a potential target throughout the litigation. In this age of sanctions being imposed on copyright trolls and overaggressive copyright enforcement, what are the ethical takeaways attorneys representing content owners and distributors? Is it a breach of ethics to send a cease-and-desist letter to a jurisdiction in which an attorney is not admitted? Has your client registered materials with the Copyright Office you need to support your claims or defenses?
Dowd, a seasoned litigator, takes us through a pre-flight litigation checklist designed to avoid sanctions in copyright cases. What are your ethical obligations? Copyright litigation has exploded as the world has become digitized. This course will assist you in understanding how to avoid potential minefields.

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