Court Opinion

ID: 622985
Source: CourtListenerOpinion
Date Created: 2012-02-16 20:19:26+00
Date Added: 2024-06-11T17:51:03.046243
License: Public Domain

United States Court of Appeals
                       For the First Circuit

Nos. 10-2234 and 10-2300

                 T-PEG, INC.; TIMBERPEG EAST, INC.,

               Plaintiffs, Appellees/Cross-Appellants,

                                  v.

           VERMONT TIMBER WORKS, INC.; DOUGLAS S. FRIANT,

               Defendants, Appellants/Cross-Appellees.

                        STANLEY J. ISBITSKI,

                              Defendant.

            APPEALS FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF NEW HAMPSHIRE

           [Hon. Steven J. McAuliffe, U.S. District Judge]

                                Before
               Torruella and Thompson, Circuit Judges,
                     and Saris,* District Judge.

     William E. Whittington, with whom Whittington Law Associates,
PLLC was on brief, for appellants/cross-appellees.
     Daniel E. Will, with whom Jonathan M. Shirley and Devine,
Milliment & Branch, P.A. were on brief, for appellees/cross-
appellants.

                           February 16, 2012

     *
         Of the District of Massachusetts, sitting by designation.
          THOMPSON, Circuit Judge.     Architectural firms T-Peg1 and

Vermont Timber Works2 (VTW) both appeal the district court's award

of fees to VTW following a jury's denial of T-Peg's copyright

claim.   T-Peg says the award is too high — the court should have

awarded nothing at all rather than risk deterring future copyright

claimants.   VTW says the award is too low — the court should have

simply applied the lodestar method rather than imposing a reduced

award.   We think the award is just right — the district court has

broad discretion to fashion an appropriate fee award under the

Copyright Act, and its reasoned conclusion here was far from an

abuse of that discretion.    We therefore affirm.

          Because this is an appeal from a fee award, we present

only enough discussion of the underlying facts to provide the

reader with some context.3

          Stanley Isbitski wished to build his dream house on a

plot of land he owned in Salisbury, New Hampshire.    To this end, he

consulted with both T-Peg and VTW.      T-Peg drew up a preliminary

design in 1999 and then worked with Isbitski to refine the design.

     1
      There are actually two related entities, T-Peg and Timberpeg
East, Inc., but we refer to the entities collectively as "T-Peg"
for convenience.
     2
      Both Vermont Timber Works, Inc. and its president Douglas S.
Friant are parties, but we refer to them collectively as "VTW" for
convenience.
     3
       Those craving more detail are directed to our earlier
decision addressing the merits of the case, T-Peg, Inc. v. Vt.
Timber Works, Inc., 459 F.3d 97 (1st Cir. 2006).

                                 -2-
In May 2001, T-Peg registered its updated design with the Copyright

Office.    Meanwhile, in 2000, Isbitski showed T-Peg's unregistered

preliminary design to VTW, which began working on its own design.

VTW completed its plan in 2002 with significant, minutely detailed

input from Isbitski.         Construction began not long thereafter but

was only completed after the property had been sold to a Mr. Dupee;

at that point, the home apparently reflected T-Peg's registered

design.

            On October 23, 2003, T-Peg sued VTW and Isbitski for

copyright infringement.          On February 9, 2005, the district court

granted summary judgment for VTW and Isbitski, concluding inter

alia that no reasonable jury could find that T-Peg's and VTW's

designs   were    substantially        similar.      T-Peg    appealed,    and    we

reversed.   T-Peg, Inc. v. Vt. Timber Works, Inc., 459 F.3d 97, 102

(1st Cir. 2006).         Interpreting the Architectural Works Copyright

Protection Act (Pub. L. No. 101-650, §§ 701-706, 104 Stat. 5089,

5133-34 (1990)) for the first time, we held that a jury could find,

whether by direct or indirect evidence, that VTW had copied T-Peg's

design.    Id. at 111-16.        Accordingly, we remanded for trial.             Id.

at 116.

            After       considerable    delay     involving   more   dispositive

motions, some mediation efforts, and an attempt at an interlocutory

appeal, the case went to trial on September 17, 2009.                     Six days

later,    the    jury    found   in    VTW's    favor   and   rejected     T-Peg's

                                        -3-
infringement claims.        VTW moved for fees that the district court,

in its discretion, may grant the prevailing party in a copyright

claim.    17 U.S.C. § 505.             VTW voluntarily deducted certain fees

from its request but still sought over $200,000, a steep sum for a

case involving only $66,350 in damages.                T-Peg opposed the motion,

arguing that equitable principles (e.g., the absence of any bad

faith on T-Peg's part) called for the court to exercise its

discretion to deny any fee award entirely.

            In a fifteen-page order, the district court granted VTW

a   fee   award    of   $35,000.         In   doing    so,   the    court   carefully

considered the extent to which VTW actually prevailed, weighed the

equities as urged by T-Peg, and ultimately concluded that its

"modest award" struck the "appropriate balance."                      Both parties

appealed, T-Peg challenging the grant of any award at all and VTW

challenging the award's amount.                 We have jurisdiction under 28

U.S.C. § 1291.

            The    Copyright   Act       allows    a   district      court,   in    its

discretion, to "award a reasonable attorney's fee to the prevailing

party" in a copyright-infringement case.                 17 U.S.C. § 505.          In

Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 & n.19 (1994), the

Supreme    Court    provided       a    non-exclusive        list   of   essentially

equitable factors to guide the lower courts in deciding whether or

not to award attorney's fees, and if so how much.                           See also

Matthews v. Freedman, 157 F.3d 25, 29 (1st Cir. 1998) (affirming

                                          -4-
the district court's application of the Fogerty factors as a

"rational explanation for its decision to award fees" and "equally

so as to the amount awarded — $25,000 out of the $60,000 originally

sought").       Specifically,      these    factors     are     "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."     Fogerty, 510 U.S. at 534 n.19 (internal quotation

marks omitted).

            Because    the    district    court   has   broad    discretion    to

fashion an appropriate award in line with the Fogerty factors, our

abuse-of-discretion review is "'extremely deferential.'" Airframe

Sys., Inc. v. L-3 Commc'ns Corp., 658 F.3d 100, 109 (1st Cir. 2011)

(quoting Latin Am. Music Co. v. ASCAP, 642 F.3d 87, 91 (1st Cir.

2011)). Indeed, we will set aside a fee award "'only if it clearly

appears that the trial court ignored a factor deserving significant

weight, relied upon an improper factor, or evaluated all the proper

factors (and no improper ones), but made a serious mistake in

weighing them.'" Id. at 108 (quoting Gay Officers Action League v.

Puerto Rico, 247 F.3d 288, 292-93 (1st Cir. 2001)).                 With these

principles in mind, we proceed.

            T-Peg argues that no award was appropriate because the

district court applied a factor it says was improper: whether a fee

award   would   "deter       plaintiffs    with   reasonable      claims,     and

                                     -5-
defendants with meritorious defenses, from litigating in a manner

greatly disproportional to the matter at stake."                       Although the

district court's reasoning flows directly from one of the Fogerty

factors — "considerations of compensation and deterrence," see

Fogerty, 510 U.S. at 534 n.19 — T-Peg nevertheless protests that

Fogerty does not allow a district court to use a fee award as a

mechanism for deterring certain trial strategies.4

                 T-Peg's protest is groundless.            The Copyright Act allows

the district court to impose a "reasonable" fee award. The Supreme

Court      has    said   broadly     that    a    district    court    may    consider

principles of deterrence in exercising its discretion to fashion a

reasonable award.         T-Peg cites no law for the proposition that a

district court may deter only out-of-court and bad-faith conduct.

To   the    contrary,     other courts        have   specifically      held    that   a

district court applying Fogerty and its progeny may fashion a fee

award for the purpose of discouraging "overly aggressive litigation

tactics"         and   encouraging     parties       "to    litigate    in    a   more

responsible, realistic manner." Bridgeport Music, Inc. v. WB Music

Corp., 520 F.3d 588, 595 (6th Cir. 2008); cf. Woodhaven Homes &

Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005) (remanding

      4
       T-Peg also argues that its litigation tactics were not, in
fact, "disproportional to the matter at stake." But the district
court was in the best position to assess the reasonableness of T-
Peg's litigation tactics, and we decline to reheat the by now
freezer-burnt record in order to second-guess almost a decade's
worth of motions and objections.

                                            -6-
for the imposition of an attorney-fee award with the caveat that

the requested amount, "over $220,000, seems quite excessive," given

that       the    plaintiff    "claimed    only    $55,000     in   damages").

Commentators agree.            See 4 Melville B. Nimmer & David Nimmer,

Nimmer on Copyright § 14.10[D][3][b] (2011) (noting that "hard-ball

litigation tactics . . . merit an award of fees").              Despite T-Peg's

protestations,        for     the   district    court   to   rely   on   the   same

principles here was simply not an abuse of discretion.5

                 For its part, VTW argues that by diverging from the

lodestar method for determining attorney fees, the district court

violated our "strong preference" for that method and therefore

       5
       T-Peg advances a few other arguments worth only brief
mention.
     First, it says that deterring trial tactics is unrelated to
the Copyright Act's purpose: "to encourage the production of
original literary, artistic, and musical expression for the good of
the public." Fogerty, 510 U.S. at 524. But it hardly violates
that purpose to discourage scorched-earth litigation tactics that
tie up intellectual property for years.
     Second, T-Peg says the determination of what constitutes
excessive litigation tactics is an "unworkable" exercise.       The
exercise may be unworkable in some cases, but not so here: the
district court explained its reasoning, and its explanation makes
sense.
     Finally, T-Peg says briefly that the fee award was
inappropriate because a magistrate judge had represented during
settlement negotiations that there would be no such award. T-Peg
cites no authority for this proposition, and we decline to mount an
expedition in search of any. The argument is waived. See, e.g.,
Rodríguez v. Municipality of San Juan, 659 F.3d 168, 176 (1st Cir.
2011) (citing Town of Norwood v. Fed. Energy Reg. Comm'n, 202 F.3d
392, 404-05 (1st Cir. 2000)).

                                          -7-
abused its discretion.6        True, the lodestar method provides "the

conventional framework that courts use in fashioning fee awards .

. . ."   Spooner v. EEN, Inc., 644 F.3d 62, 67 (1st Cir. 2011).                But

that does    not   mean   it   is    the    only   method.     See   Hensley    v.

Eckerhart,   461   U.S.   424,      433,    436-37   (1983)    (describing     the

lodestar method as a "useful starting point" but eschewing any

"precise    rule   or   formula,"     and    reaffirming      district   courts'

"discretion in making th[e] equitable judgment" of what fees to

award)7; see also Fogerty, 510 U.S. at 534 (quoting Hensley's

rejection of any "precise rule or formula" and again reaffirming

the importance of "equitable discretion").                   Instead, district

courts have discretion to fashion an appropriate award as long as

they explain their reasoning in accordance with the equitable

principles spelled out by the Supreme Court and that reasoning

holds up to scrutiny.      Fogerty, 510 U.S. at 534 & n.19; see also

Matthews, 157 F.3d at 29; Bridgmon v. Array Sys. Corp., 325 F.3d

572, 577-78 (5th Cir. 2003) (affirming award of $50,000 out of a

requested $177,507 because the district court based the award's

     6
       In brief, the lodestar method "requires the district court
to ascertain the number of hours productively expended and multiply
that time by reasonable hourly rates." Spooner v. EEN, Inc., 644
F.3d 62, 68 (1st Cir. 2011).
     7
       Although Hensley involved an attorney-fee award under the
Civil Rights Act, "[t]he standards [it] set forth . . . are
generally applicable in all cases in which Congress has authorized
an award of fees to a 'prevailing party'" — as in the Copyright
Act. Hensley, 461 U.S. at 433 n.7.

                                       -8-
amount on the Fogerty factors).        Indeed, the cases VTW relies on

stand not for the principle that a district court's failure to

apply the lodestar method is an abuse of discretion, but rather

that a court's failure to provide an adequate explanation for a fee

award is such an abuse.      Janney Montgomery Scott LLC v. Tobin, 571

F.3d 162, 166 (1st Cir. 2009) ("the district court's lack of

explanation ma[de] it impossible to assess" the fee award); Coutin

v. Young & Rubicam P.R., Inc., 124 F.3d 331, 336 n.2, 342 (1st Cir.

1997)    (the   district   court   based   its   award   on   "the   equities

involved" but did not elaborate on what that phrase meant, and

"offered no plausible reason for eschewing the lodestar method").

            Here, the district court provided plenty of reasoning in

support of its award.      It faithfully applied the Fogerty factors —

again, "frivolousness, motivation, objective unreasonableness[,] .

.   . and . . . compensation and deterrence," Fogerty, 510 U.S. at

534 n.19 (internal quotation marks omitted) — one by one. First it

determined that "plaintiffs' copyright infringement claim was a

reasonable and viable one" (and therefore neither frivolous nor

unreasonable)8; next it "reject[ed] the notion that the plaintiffs'

pursuit of their claim was motivated by any improper purpose"; and

finally it carefully considered principles of "compensation and

     8
       In fact, in a show of evenhandedness, the court credited
plaintiffs with the "noteworthy success" of having "obtained an
extensive and detailed explication and clarification of the law —
one largely favorable to their own general interest," even though
their particular claims here failed to win the day.

                                    -9-
deterrence," concluding that a $35,000 award would be "sufficient

to both encourage innocent defendants to (reasonably) present and

pursue meritorious defenses, without discouraging copyright owners

from (reasonably) seeking to enforce their rights when a sound

basis to assert a claim exists . . . ."     And the district court

elaborated on its decision to invoke deterrence, expressing its

intent "to deter plaintiffs with reasonable claims, and defendants

with meritorious defenses, from litigating in a manner greatly

disproportional to the matter at stake . . . ."        The district

court's explanation and analysis were more than sufficient under

Fogerty, were not just reasonable but thoughtful, and, in any

event, certainly do not indicate an abuse of discretion.

          For the foregoing reasons, we affirm the district court's

attorney-fee award.     VTW seeks a further attorney-fee award on

appeal, but it supplies no clear reason for us to grant this

request and we can discern none.       We think $35,000 seems "an

adequate sum . . . for the litigation as a whole . . . ."

Matthews, 157 F.3d at 29.   We therefore decline to make any further

award of fees, and likewise order that each party shall bear its

own costs.

          So ordered.

                                -10-