Opinion ID: 745282
Heading Depth: 3
Heading Rank: 1

Heading: Appropriateness of Attorney's Fees Award to Genesis

Text: 102 We have established that an award of attorney's fees to a prevailing defendant that furthers the underlying purposes of the Copyright Act is reposed in the sound discretion of district courts. Fantasy, 94 F.3d at 555. Moreover, [S]uch discretion is not cabined by a requirement of culpability on the part of the losing party. Id. 103 Within this framework, district courts are given wide latitude to exercise equitable discretion. See generally, Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Some of the factors that can affect a district court's decision are: (1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) the objective unreasonableness of the losing party's factual and legal arguments; and (5) the need, in particular circumstances, to advance considerations of compensation and deterrence. Id. at 534 n. 19, 114 S.Ct. at 1033 n. 19; see also Jackson v. Axton, 25 F.3d 884, 890 (9th Cir.1994). 104 In the instant case, the district court decided to exercise this discretion by denying recovery of attorney's fees to both Aerostar and Genesis for defending against ERG's derivative copyright claim on the ground that the legal issues were quite novel and ERG's arguments quite plausible. In direct contrast, the district court held that Genesis should be awarded attorney's fees for defending against ERG's two copyright causes of action based on the Inflatimation characters since it was objectively unreasonable for ERG to have maintained those claims for almost three years without any evidentiary basis. 105 ERG argues that the district court was incorrect to award these attorney's fees since ERG's Inflatimation claims were properly brought and since Genesis admitted to wrongdoing. The record does not support ERG's contention that Genesis admitted to wrongdoing, however. Indeed, although Genesis's opposition memorandum to ERG's September, 1992 preliminary injunction motion did acknowledge that Genesis employees had distributed advertising materials containing pictures of ERG-manufactured costumes--the basis for the Inflatimation claims--Genesis soon cleared up any confusion by stating that the only brochures it ever distributed depicting ERG costumes were done with the full authorization of Mr. Breed, the president and sole shareholder of ERG. 106 ERG's contention that Genesis was an admitted infringer is especially hard to believe given the fact that at the May 11, 1995 hearing on Genesis and Aerostar's motions for summary judgment, ERG did not even try to argue for the validity of its first and second causes of action. Quite to the contrary, ERG's counsel candidly conceded that ERG had no evidence whatsoever to substantiate its claims of copyright infringement of the Inflatimation Elf and Soldier costumes. 107 ERG attempts to justify its retention of these claims on the ground that it would have been legal malpractice for its counsel to remove such perfectly valid claims from the complaint. Given the fact that ERG had no evidence at all to support these claims--even after three years and numerous depositions--it would hardly have been legal malpractice to drop such claims. In fact, ERG's counsel really should not have even included the claims in the first place. Thus, this argument does not convince us that the award of attorney's fees was not warranted. See Hughes v. Novi American, Inc., 724 F.2d 122, 125 (Fed.Cir.1984) (stating that the fact that a plaintiff's lawyer knows that the plaintiff's copyright claims are not valid is a factor meriting an award of attorney's fees). 108 Therefore, because the evidence in the record reveals that ERG never had any evidence to support its Inflatimation claims, the district court properly found that it was objectively unreasonable for ERG to have maintained these claims. Accordingly, the district court did not err in deciding to award attorney's fees to Genesis as the prevailing party. See, e.g., Fantasy, 94 F.3d at 560 (holding that, Since the reasons given by the district court in this case are well-founded in the record and are in keeping with the purposes of the Copyright Act, the court acted within its discretion in awarding a reasonable attorney's fee); Diamond v. Am-Law Pub. Corp., 745 F.2d 142, 148 (2d Cir.1984) (holding that where the plaintiff's copyright infringement claim was without a reasonable legal basis, an award of attorney's fees to the defendants was a proper exercise of judicial discretion). 109