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Defending Swamp Rock Fogerty's Impact on Attorney Fee Awards in ...

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In general, litigation is time consuming, expensive, and unpredictable. Prudent attorneys must therefore inform clients about litigation risks, which include potentially paying the prevailing party's attorney fees. Today, prevailing plaintiffs and prevailing defendants in copyright infringement lawsuits are potentially entitled to attorney fee awards, and such fees often exceed damage awards. In the 1994 case Fogerty v. Fantasy,1 the Supreme Court determined what standards govern attorney fee awards to prevailing defendants in copyright infringement lawsuits. This paper will review standards governing attorney fee awards to prevailing parties before and after Fogerty . This paper hopefully will assist attorneys to better understand litigation risks.
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Defending Swamp Rock
Fogerty’s Impact on Attorney Fee Awards in Copyright Infringement Lawsuits



















Buzzy Trusiani
University of Maine School of Law
May 2005










Introduction

In general, litigation is time consuming, expensive, and unpredictable. Prudent
attorneys must therefore inform clients about litigation risks, which include potentially
paying the prevailing party’s attorney fees. Today, prevailing plaintiffs and prevailing
defendants in copyright infringement lawsuits are potentially entitled to attorney fee
awards, and such fees often exceed damage awards. In the 1994 case Fogerty v.
Fantasy,1 the Supreme Court determined what standards govern attorney fee awards to
prevailing defendants in copyright infringement lawsuits. This paper will review
standards governing attorney fee awards to prevailing parties before and after Fogerty.
This paper hopefully will assist attorneys to better understand litigation risks.
This paper begins with a review of 17 U.S.C.A. § 505,2 the provision of the 1976
Copyright Act authorizing attorney fee awards to a prevailing party in a copyright
infringement lawsuit, and then compares 17 U.S.C.A. § 505 to § 706(k) of Title VII
of the 1964 Civil Rights Act.3 The statutes’ similar wording is contrasted with their
differing policy interests that ultimately shape the Supreme Court’s rationale in its
Fogerty decision. This paper examines the pre-Fogerty circuit courts’ split regarding

1. Fogerty v. Fantasy, 510 U.S. 517 (1994).

2. Section 505 states in full: “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 in this title, the court may also award a reasonable attorney’s fee to the prevailing
party as part of the costs.” 17 U.S.C.A. § 505.

3. Section 706(k) provides in full: “in any action or proceeding under this title the court, in its discretion,
may allow the prevailing party, other than the Commission or the United States, a reasonable attorney's fee
as part of the costs, and the Commission and the United States shall be liable for costs the same as a private
person.” 78 Stat. 261, 42 U.S.C. § 2000e-5(k).




1

17 U.S.C.A. § 505. It then analyses Fogerty, focusing on the Court’s rationale for
adopting an “evenhanded” approach to attorney fee awards in copyright infringement
suits. This paper concludes with a post-Fogerty review of the 2004 Seventh Circuit
Assessment Technologies v. Wiredata, Inc.4 decision that refined the Fogerty holding.
Statutory Provisions

Section 505 of the 1976 Copyright Act provides in relevant part that in a
copyright infringement suit “the court may . . . award a reasonable attorney’s fee to the
prevailing party as part of the costs.”5
Section 706(k) of Title VII of the 1964 Civil Rights Act provides in relevant part:
“in any action or proceeding under this title the court, in its discretion, may allow the
prevailing party . . . a reasonable attorney's fee.”6
These two provisions are similar in wording. One strictly adhering to the plain
meaning of the statutes likely would conclude that the standards courts use to govern
Title VII suits should also govern § 505 suits. However, as we will see, the Supreme
Court has interpreted these similarly worded statutes in different ways.
In Christiansburg Garment Co. v. E.E.O.C.,7 the Supreme Court held that

4. Assessment Technologies of WI, LLC, v. Wiredata, Inc., 361 F.3d 434 (7th Cir. 2004)

5. 17 U.S.C.A. § 505.

6. 42 U.S.C.A. § 2000e-5(k).

7. Rosa Helm filed a racial discrimination charge against Christainsburg Garment Company. She
subsequently dropped the matter after the Equal Employment Opportunity Commission informed her that
its conciliation efforts had failed. Two years later, after Congress amended Title VII, the Commission sued
Christiansburg Garment, alleging that it had engaged in unlawful employment practices under the amended
Act. The company was granted summary judgment by the District Court and subsequently sought
reasonable attorney fees under § 706(k) of Title VII. The District Court found that an attorney fee award
was not warranted because the plaintiff’s suit could not be characterized as “unreasonable or meritless.” A
divided Ninth Circuit Court of Appeals affirmed. Christiansburg Garment Co., v. Equal Employment
Opportunity Commission, 434 U.S. 412, 414-415 (1978).


2

prevailing defendants and prevailing plaintiffs in Title VII cases should be treated

differently regarding attorney fee awards. The Court noted: “It is the general rule in the

United States that in the absence of legislation providing otherwise, litigants must pay
their own attorney’s fees.”8 The Court established that under § 706(k) of Title VII a
“prevailing plaintiff ordinarily is to be awarded attorney’s fees in all but special
circumstances.” It highlighted that plaintiffs in Title VII cases, similar to plaintiffs in
Title II cases, are acting as private attorneys general and are often individuals challenging
large organizations. The court viewed this as a “David v. Goliath” situation, and sought
to empower smaller and weaker plaintiffs challenging bigger and stronger defendants.
The issue was whether prevailing Title VII defendants should be held to a higher attorney
fee award standard, and the Court affirmatively concluded that a “dual standard” should
be adopted. The Court held that “a district court may in its discretion award attorney's
fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff’s action
was frivolous, unreasonable, or without foundation, even though not brought in
subjective bad faith.” 9

The Christainsburg decision was extended by some circuit courts, which held that
a “dual standard” should govern attorney fee awards in copyright infringement suits as
well as Title VII suits because the language of the two statutes is so similar.10 However,
other circuit courts rejected the “dual standard” approach in favor of an “evenhanded”
approach. Circuit courts favoring an “evenhanded” approach argued that policy interests

8. Id. (citing Alyeska Pipeline Co., v. Wilderness Society, 421 U.S. 240 (1975)).
9. Id. (citing Newman v. Piggie Park Enterprises, 390 U.S. 400 (1968)).

10. See Video Views, Inc. Studio 21, Ltd., 925 F.2d 1010, 1022 (1991).

3

served by copyright law differ substantially from civil rights law and that the meaning of
the statutes should be construed with these policies in mind.11 These circuit courts argue
that copyright infringement lawsuits are often the reverse of Title VII lawsuits because
plaintiffs are often heavy hitters challenging smaller and weaker defendants. Therefore,
defendants may need the added protection that prevailing attorney fee awards provide by
creating incentives for attorneys to bear the expenses required to represent smaller and
weaker defendants.12
“Dual Standard” Approach

The pre-Fogerty “dual standard” approach was articulated by the Second Circuit
in Diamond v. Am-law Publishing Corp. 13 In Diamond, an attorney alleged that a
magazine editor wrongfully misappropriated his copyrighted letter to the editor by
publishing an edited version of it after the attorney had specifically instructed the
magazine to only publish it unedited. The United States District Court for the Southern
District of New York granted summary judgment for the defendant magazine, and the
lawyer, John Diamond, appealed. On appeal, the Second Circuit held that the magazine’s
publishing of a “substantial excerpt” from the lawyer’s letter did not violate copyright
law despite the lawyer’s demands because the editing did not unfavorably portray the
letter or mislead the public.14

11. See Sherry Manufacturing Co. v. Towel King of Florida, Inc., 822 F.2d 1031, 1034-1035 (CA11 1987).
12. See Cohen v. Virginia Electric & Power Co., 617 F. Supp 619, 622 (1985).

13. Diamond v. Am-law Publishing Corp., 745 F. 2d 142 (1984).

14. Id. at 144-146.




4

The Court stated that “a distinction exists between the award of fees to a

prevailing plaintiff and an award to a prevailing defendant.”15 The Court found that a

prevailing defendant should not be awarded attorney fees when a plaintiff puts forth a

“colorable claim” because such fee awards would provide a disincentive for plaintiffs to

enforce their rights under the copyright law.16 The Court held that only when a plaintiff’s

claims are “objectively without arguable merit” may (not shall) a prevailing defendant

recover its attorney fees.17 The Court articulated that one of the purposes of § 505 is to

deter infringement of valid copyrights. Providing prevailing plaintiffs with general

access to fee awards serves the policy of deterrence, and providing fees to prevailing
defendants would diminish a plaintiff’s incentive to bring infringement actions.18
“Evenhanded” Approach

In contrast, the pre-Fogerty “evenhanded” approach was articulated by the Third
Circuit in Lieb v. Topstone Industries, Inc.19 In Lieb, the plaintiff created, produced, and
copyrighted a recording of Halloween sounds titled, “Haunted Horror.” The plaintiff
then entered into an exclusive distribution agreement with the defendant, who later
terminated the agreement and began producing a similar product titled, “Horror Sounds

15. Id. at 148.

16. Id.

17. Id.

18. Id.

19. Lieb v. Topstone Industries, Inc., 788 F.2d 151, 153 (1986). See, also, Sherry Manufacturing Co. v.
Towel King of Florida, Inc., 822 F.2d 1031, 1034-1035 (1987).






5

of the Night.” Plaintiff filed a complaint in the United States District Court for the

District of New Jersey sounding in copyright infringement, breach of contract, and bad

faith. Plaintiff admitted during discovery that he was not alleging that any portion of the

defendant’s recording was copied from his own, therefore defendant moved for summary

judgment. The District Court granted summary judgment for the defendant, and the

Third Circuit remanded, providing factors by which the District Court could determine if

an attorney fee award was appropriate.20

The Third Circuit found requiring bad faith by the losing party in a copyright

infringement lawsuit prior to allowing an attorney fee award unduly restricts judicial

discretion under the statute. The Court stated, “Finding no indication either in statutory

language or legislative history that bad faith should be a prerequisite to a fee award, we

decline to so limit the conditions under which an assessment may be made.” The Court

also refused to “accept the double standard for plaintiffs and defendants.”21

The Court argued for an “evenhanded” approach and set forth a list of non-

exclusive factors by which a trial court may determine if an attorney fee award is

appropriate. These factors include, but are not limited to: (1) frivolousness, (2)

motivation, (3) objective factual and/or legal unreasonableness, (4) deterrence and, (5)

the need to compensate the prevailing party.22

In Cohen v. Virginia Electric & Power Co., the United States District Court for
the Eastern District of Virginia articulated the policy interest served by an “evenhanded”

20. Id. at 155.

21. Id.

22. Id. at 156.


6

approach.23
The Court stated:

Nor am I persuaded that a distinction should be made in an award because
there is some need to encourage plaintiffs to file suit which differs in
public benefit from a need to encourage defendants to defend suits.
Copyright laws are not intended for the benefit of prospective plaintiffs.
Who may be a plaintiff and who may be a defendant doesn't define the
difference between good guys and bad guys. Nor can we assume that
plaintiffs are inherently impecunious while defendants have deep pockets.
Entities which sue for copyright infringement as plaintiffs can run the
gamut from corporate behemoths to starving artists; the same is true of
prospective copyright infringement defendants. Nor can it be argued on
any principled ground that society is better off when a plaintiff files and
wins a copyright infringement suit than when a defendant defends and
wins a copyright infringement suit. Indeed, if there is any difference
between the two we must remember that it wasn't the defendant who chose
to litigate.24

The Cohen policy argument will play an important role in the Supreme Court’s
Fogerty decision, as it will counter the argument favoring a “dual standard” approach.
Fogerty
Swamp rock innovator John Fogerty wrote songs for, and was the lead singer of,
Creedence Clearwater Revival, CCR. He wrote the song “Run Through the Jungle” in
1970 and sold the exclusive publishing rights to it. Fantasy, Inc. later purchased the
copyright to the song by assignment. CCR broke up in 1972, and Fogerty began
publishing under a different recording label. In 1985, Warner Bros. Records released an

23. Cohen v. Virginia Electric & Power Co., 617 F.Supp. 619 (1985).

24. Id. at 622-623.




7

album containing the song, “The Old Man Down the Road” that was produced and
copyrighted by Fogerty. Fantasy claimed in District Court that “The Old Man Down the
Road” was simply “Run Through the Jungle” with different words, thus infringing
Fantasy’s valid copyright assignment. The case went to trial and the jury returned a
verdict for Fogerty. Fogerty then moved for reasonable attorney's fees under 17 U.S.C.A.
§ 505. The District Court found in favor of Fantasy because its cause of action was not
brought frivolously or in bad faith. The Ninth Circuit Court of Appeals affirmed.25
The Supreme Court granted certiorari in Fogerty26 to resolve the circuit courts’
split regarding the “dual standard” approach, employed by the Ninth, Seventh, Second,
and DC Circuits, and the “evenhanded” approach, employed by the Third, Fourth, and
Eleventh Circuits. Chief Justice Rehnquist delivered the opinion of the Court.
The Court identified the circuit courts’ split as follows:

Under that standard, commonly termed the “dual” standard, prevailing
plaintiffs are generally awarded attorney's fees as a matter of course, while
prevailing defendants must show that the original suit was frivolous or
brought in bad faith. In contrast, some Courts of Appeals follow the so-
called “evenhanded” approach in which no distinction is made between
prevailing plaintiffs and prevailing defendants.27

The Court next identified respondent Fantasy’s three arguments in favor of
adopting a “dual standard”: (1) the language of § 505 supports adopting a dual standard,
as in Christiansburg; (2) treating prevailing plaintiffs and prevailing defendants
differently is in keeping with the Copyright Act’s “objectives” and “equitable

25. Fogerty v. Fantasy, 984 F.2d 1524 (CA 9 1993).

26. Fogerty v. Fantasy, 510 U.S. 517 (1994).

27. Id. at 520-521.


8

considerations”; and (3) the legislative history of § 505 illustrates that Congress
intended to ratify the “dual standard” when it enacted the 1976 Copyright Act because at
the time that Congress passed the Copyright Act the “dual standard” was “uniformly”
followed by lower courts.28
The Court addressed and rejected each of Fantasy’s arguments. First, the Court
distinguished Christiansburg and argued that under the Civil Rights Act Congress sought
to enforce its policy objectives through empowering plaintiffs to act as “private
attorney[s] general”29 The Court argued that the goals and objectives of the Copyright
Act are “not completely similar” to those of the Civil Rights Act.30 The Court analyzed
the primary objective of the Copyright Act and quoted the Cohen Court’s argument that
generalizations regarding the wealth and power of copyright plaintiffs versus copyright
defendants are ill advised.31

28. Id. at 522.

29. Id. at 523.

30. The Court stated:

The goals and objectives of the two Acts are likewise not completely similar.
Oftentimes, in the civil rights context, impecunious “private attorney general” plaintiffs
can ill afford to litigate their claims against defendants with more resources. Congress
sought to redress this balance in part, and to provide incentives for the bringing of
meritorious lawsuits, by treating successful plaintiffs more favorably than successful
defendants in terms of the award of attorney's fees. Id. at 524.

31. The Court stated:

The primary objective of the Copyright Act is to encourage the production of original
literary, artistic, and musical expression for the good of the public. The Court then cites
Cohen: In the copyright context, it has been noted that “[e]ntities which sue for copyright
infringement as plaintiffs can run the gamut from corporate behemoths to starving artists;
the same is true of perspective copyright infringement defendants.” Id.





9

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