Supreme Court: Courts Must Take into Account “Relevant Factors” Before Awarding Fees in Copyright Cases

Supap Kirtsaeng realized he could buy cheaper, identical textbooks in Thailand and resell them for a profit in the U.S. John Wiley & Sons, the publisher of some of these textbooks, sued him for copyright infringement.  Kirtsaeng prevailed on his fair use defense, but the court denied him attorney’s fees under § 505 of the Copyright Act, because Wiley’s claim was not “objectively unreasonable.”  Kirtsaeng appealed to the Supreme Court.

A unanimous Court agreed with Wiley that this was not the kind of “objectively unreasonable” case that warranted attorney’s fees, particularly because the fair use issue resulted in a previous Supreme Court opinion.  But the Court ultimately vacated the Second Circuit’s decision because it focused too much on whether the case was “reasonable,” without giving weight to other factors.

Section 505 states that a court “may . . . award a reasonable attorney’s fee to the prevailing party,” which the Court interpreted in 1994, in Fogerty v. Fantasy, Inc. The Court held there is “no precise rule,” but listed four “non-exclusive factors” courts should consider: frivolousness, the loser’s motivation, objective unreasonableness, and considerations of compensation and deterrence.  A circuit split developed with some courts weighing factors evenly, others emphasizing “objective unreasonableness” (like the Second Circuit), and others trying to focus on the “purposes of the Copyright Act.”

The Court held that courts should give “substantial weight to the objective reasonableness of the losing party’s position.”  But that is not sufficient to award attorney’s fees.  Courts “must also give due consideration to all other circumstances relevant to granting fees; and it retains discretion, in light of those factors, to make an award even when the losing party advanced a reasonable claim or defense.”  The Court remanded the case because it was “not certain that the lower courts here understood the full scope of that discretion.”  The Second Circuit did not analyze all the “relevant factors.”

Support for this somewhat formulaic approach is interesting from a Court that has eschewed specific tests and rigid standards when a statute gives courts discretion “without specifying standards that courts should adopt, or guideposts they should use” (see here, here, and here).  Under Kirtsaeng—which is not a patent case over which the Federal Circuit has exclusive appellate jurisdiction—a court has “discretion” to deny fees because a case is “objectively reasonable,” but only if it first takes “into account all other relevant factors.”