Discouraging Frivolous Copyright Infringement Claims: Fee Shifting Under Rule 11 or 28 U.s.c. § 1927 as an Alternative to Awarding Attorney's Fees Under Section 505 of the Copyright Act

• Publication year: 2016

Discouraging Frivolous Copyright Infringement Claims: Fee Shifting under Rule 11 or 28 U.S.C. § 1927 as an Alternative to Awarding Attorney's Fees under Section 505 of the Copyright Act

David E. Shipley

University of Georgia School of Law, shipley@uga.edu

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DISCOURAGING FRIVOLOUS COPYRIGHT INFRINGEMENT CLAIMS: FEE SHIFTING UNDER RULE 11 OR 28 U.S.C. § 1927 AS AN ALTERNATIVE TO AWARDING ATTORNEY'S FEES UNDER SECTION 505 OF THE COPYRIGHT ACT

David E. Shipley^*

Table of Contents

I. Introduction.............................................................................................34

II. Awarding Attorney's Fees to 'Prevailing' Alleged Infringers....................................................................................................37

A. THE COPYRIGHT ACT'S FEE SHIFTING PROVISION...........................37
B. FEE SHIFTING UNDER RULE 11............................................................44
C. FEE SHIFTING UNDER 28 U.S.C. § 1927 OR INHERENT AUTHORITY..............................................................................................50

III. Similarities Between Awards Under Section 505, Rule 11 and Section 1927..................................................................................53

A. FEES UNDER 17 U.S.C. § 505..................................................................53
B. FEES UNDER RULE 11.............................................................................60

IV. Choosing Between the Alternative Bases for Fees................67

V. Conclusion..................................................................................................73

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I. Introduction

Sir Arthur Conan Doyle's Sherlock Holmes, Mattel's Barbie, and the Perfect 10 website share several characteristics. The famous literary character, the iconic doll, and the adult website are each protected by copyright, their copyright owners have been litigious, and each has been involved in an infringement suit that resulted in the award of attorney's fees to the prevailing party.¹ These fee awards served similar purposes, such as deterring frivolous infringement claims and compensation for warding off those claims. The courts, however, relied on different sources of authority to justify the awards; the Sherlock Holmes and Perfect 10 decisions turned to the Copyright Act's provision on attorney's fees, 17 U.S.C. § 505,² while the court in the Barbie litigation turned to Rule 11 of the Federal Rules of Civil Procedure.³ The courts might also have supported the fee awards by turning to 28 U.S.C. § 1927 under which a court may require an attorney who unreasonably and vexatiously multiplies a proceeding to personally satisfy attorney's fees.⁴ Another option, albeit rarely invoked, is to rely on their inherent equitable powers.⁵

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The U.S. Supreme Court's 2016 decision in Kirtsaeng v. John Wiley & Sons, Inc.⁶ resolved "an interesting disagreement" over when it is appropriate to award attorney's fees to a prevailing defendant under Section 505 of the Copyright Act⁷ and ended a perceived 'venue advantage' for losing plaintiffs in some jurisdictions.⁸ The Court ruled unanimously in Kirtsaeng that courts correctly give substantial weight to the question of whether the losing side had a reasonable case to fight, but that the objective reasonableness of the losing side's position does not give rise to a presumption against fee shifting. It said that other factors should also be taken into account, beyond the reasonableness of litigating positions, when a court exercises its discretion to award fees under the Copyright Act.⁹ This decision underscores that the courts have broad discretion in making fee awards.¹⁰ This Article will touch on some aspects of the Kirtsaeng attorney's fees decision; but focuses primarily on alternative bases for awarding attorney's fees to prevailing defendants in copyright infringement cases: Rule 11, 28 U.S.C. § 1927 and a federal court's inherent equitable powers.

There are scores of reported decisions and considerable commentary on awarding fees to prevailing defendants under the Copyright Act, and many of the cases awarding fees emphasize that the losing party pursued the claim in bad faith, that the claim was frivolous or objectively unreasonable, that the losing party delayed a hearing on the merits in order to run up the opposing party's costs, or that the losing party had no reasonable grounds for the position it took during the litigation.¹¹ Although there are fewer reported decisions where Rule 11, Section 1927, or inherent authority were used to justify awarding fees to a prevailing defendant, the courts awarding attorney's fees often describe the same kind of litigation misconduct which warrants fees under Section 505 of

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the Copyright Act.¹² In short, in some infringement cases there can be substantial overlap in the factors pertinent to Rule 11, Section 1927, inherent authority, and Section 505; the Copyright Act's fee shifting provision. This helps explain similarities between the attorney's fees which may be assessed under each authority.¹³

This Article concentrates on analyzing the Rule 11, Section 1927 and inherent authority decisions in which attorney's fees were awarded in copyright infringement actions¹⁴ in order to provide some guidance on what constitutes a frivolous claim, an objectively unreasonable claim, or a claim inconsistent with the purpose of the Copyright Act. Most importantly, the article explains when a prevailing defendant might seek sanctions under Rule 11, Section 1927 or inherent power in lieu of, or in addition to, seeking fees under Section 505 of the Copyright Act. It first summarizes how Section 505 of the Copyright Act, Rule 11 of the Federal Rules of Civil Procedure, 28 U.S.C. § 1927, and inherent authority to sanction have been interpreted and applied to justify awarding attorney's fees to prevailing defendants. It then discusses the similarities and differences between these bases for shifting fees and offers guidance for selecting a particular basis, or perhaps seeking fees under several bases simultaneously.¹⁵

This Article acknowledges that many cases in which attorney's fees are awarded under Section 505 will not support an award of fees under Rule 11, Section 1927 or inherent authority. It asserts, however, that in those instances

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in which a court can conclude that a plaintiff's copyright claim is frivolous or objectively unreasonable to justify a fee award under Section 505, there might well be significant overlap with the standard justifications for awarding fees under Rule 11 and/or Section 1927, and sometimes under inherent authority. In these 'overlap' cases, if the prevailing party and the court want to punish and deter opposing counsel instead of visiting his or her sins on the plaintiff, then it would be appropriate to turn to Rule 11 and its provisions on sanctions, or to 28 U.S.C. § 1927, both of which support imposing the fees on counsel, instead of relying on Section 505 of the Copyright Act, which imposes the fees on the losing party. Moreover, if the misconduct is serious enough the court might be able turn to Rule 11, Section 1927 or inherent powers along with Section 505 to hold the losing counsel and his or her client jointly and severally liable for attorney's fees and costs.¹⁶

II. Awarding Attorney's Fees to 'Prevailing' Alleged Infringers

A. THE COPYRIGHT ACT'S FEE SHIFTING PROVISION

Section 505 of the Copyright Act provides:

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.¹⁷

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This fee-shifting statute overcomes the American rule that each party in litigation pays their own attorney's fees.¹⁸ The statute does not contain a list of factors a judge should consider in exercising discretion to award fees to the prevailing party, and Congress did not explain why a fee-shifting provision was included in the current statute or in the 1909 Copyright Act.¹⁹ In any event, fee awards play a part in making sure all litigants have access to the courts to vindicate their rights under the Copyright Act: they prevent infringements from going unchallenged when there is otherwise little economic incentive to litigate, they penalize the losing party, and they compensate the prevailing party.²⁰ The fee award is paid by the party; not his or her attorney.²¹

The Copyright Act's fee shifting provision restricts awards to the "prevailing party" but does not provide a definition.²² The Supreme Court helped somewhat by stating that a prevailing party is one that succeeds "on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit."²³ Notwithstanding the lack of a precise rule for making fee determinations, courts routinely awarded attorney's fees to prevailing plaintiffs.²⁴ However, for many years when the prevailing party was

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the alleged infringer some courts tended to award attorney's fees only after determining that the plaintiff brought the action in bad faith or that the claim was frivolous.²⁵ This difference in approaches presented a dilemma for persons threatened with a suit, or actually sued. If the defendant had a meritorious defense to what appeared to be a non-frivolous claim, should the alleged infringer defend vigorously and possibly have to absorb his or her attorney's fees even if he wins, or would it be wiser to settle?²⁶ This more favored treatment status for prevailing plaintiffs on the recovery of attorney's fees was overruled in 1994 by the U.S. Supreme Court in Fogerty v. Fantasy, Inc.²⁷

John Fogerty, the lead singer and songwriter for Creedence Clearwater Revival, allegedly infringed his own song Run Through the Jungle when he...