by Dennis Crouch
In Kirtsaeng v. John Wiley & Sons (2016), the Supreme Court has vacated the Second Circuit’s ruling denying attorney-fee awards in the copyright case – but offered a balanced opinion that places a number of limits on when fees may be awarded.
The opinion holds the reasonableness of the losing party’s position should be a substantial factor. I.e., the more reasonable that position, the less likely that fees should be awarded. However, objective reasonableness is not the ‘controlling factor.’
That means in any given case a court may award fees even though the losing party offered reasonable arguments (or, conversely, deny fees even though the losing party made unreasonable ones). For example, a court may order fee-shifting because of a party’s litigation misconduct, whatever the reasonableness of his claims or defenses. Or a court may do so to deter repeated instances of copyright infringement or overaggressive assertions of copyright claims, again even if the losing position was reasonable in a particular case. Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals.
[internal citations omitted].
The problem with the Second Circuit decision was that it appeared to allow reasonableness to be a presumptive controlling factor. “[T]hat goes too far in cabining how a district court must structure its analysis and what it may conclude from its review of relevant factors.”
The decision does not cite either of the Supreme Court’s attorney fee cases from 2014. (Octane Fitness and Highmark). However, the principles at issue here are likely to carry-over directly to patent cases – namely that although the reasonableness of a losing-party’s argument is an important factor in attorney fee awards, it should not prescriptively control the outcome. That said, the copyright statutory language for attorney fees is quite different from that of the patent statute. The major difference is that the copyright statute indicates discretionary authority for district courts in their fee awards while the patent statute limits fee awards to “exceptional cases.” That difference suggests to me that fee awards (according to the statute) should be more difficult to obtain in patent cases than in copyright cases. In both patents and copyrights, the Supreme Court has now called for a flexible analysis and has also particularly indicated that the broader purposes of the respective intellectual property laws should be considered when determining whether to award fees.
Kagan’s footnotes were fantastic. I am glad she has a sense of humor.
I suspect that the only way a patent owner can get attorneys fees against an efficient infringer is if they have no defense, or litigate abusively. The statutory framework seems to allow only an increase in damages, which may not be enough if the damages are small or nonexistent.
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