On remand from the Supreme Court, the district court denied Kirtsaeng's application for an award of attorney's fees as prevailing party under 19 U.S.C. 505, despite the fact that the Supreme Court had vindicated Kirtsaeng's "first sale" defense in the copyright infringement suit brought against him by publisher Wiley. Kirtsaeng v. John Wiley & Sons, Inc., ___ U.S. ___, 133 S.Ct. 1351 (No. 11-697, March 19, 2013). The Supreme Court held (6-3) that Kirtsaeng did not infringe Wiley's copyright by importing into the U.S. and reselling Wiley books lawfully published abroad, upholding Kirtsaeng's defense under the "first sale" doctrine in 19 U.S.C. 109(a).
On February 26, 2015, almost two years after Kirtsaeng's victory in the Supreme Court, the Second Circuit heard oral argument on Kirtsaeng's appeal from denial of attorney's fees in the case (Katzmann, Ch.J., Walker, Chin, C.JJ.).
The argument was lively, with questions from and colloquy with all three judges. Andrew Silverman, of Orrick, Herrington & Sutcliffe LLP, argued for Kirtsaeng; Paul Smith of Jenner & Block LLP, argued for John Wiley & Sons. Joshua Rosenkranz of Orrick represented Kirtsaeng in the Supreme Court; Wiley was represented by former Solicitor General Ted Olson. Both parties were initially represented by small firms in the district court and in the prior Second Circuit appeal on the merits.
It is unwise to predict the outcome of an appeal based on questions from the bench, but odds are that Kirtsaeng will have to ask the Supreme Court to again review his case if he (and his lawyers) are to obtain any attorney's fees.
The district court below rejected Kirtsaeng's motion for attorney's fees on the ground that Wiley's copyright infringement claim against Kirtsaeng "was not objective unreasonable, and ... no other factor weights against this important consideration ...." The Second Circuit has previously held that "objective reasonableness" is entitled to "substantial weight," characterizing the Supreme Court's list of other factors as "dicta," Matthew Bender & Co., Inc. v . West Publishing Co., 240 F.3d 116, 121-122 (2d Cir. 2001), but it noted the Supreme Court's emphasis on any award being "faithful to the purposes of the Copyright Act." Id. at 122. The court of appeals denied fees to the prevailing party in Matthew Bender, in part because it had won on a technical "violation" of 19 U.S.C. 403, not an act of infringement.
The panel peppered Kirtsaeng's counsel with questions and comments seemingly indicating that they thought the district court had properly applied the discretionary factors in determining whether to award fees to a prevailing party and that they were not inclined to second-guess the district court because Wiley's position on the merits was "objectively reasonable," invoking the Second Circuit's prior decision in Matthew Bender & Co., Inc. v . West Publishing Co., supra. Judge Chin asked whether it was relevant that the Orrick firm represented Kirtsaeng on a pro bono basis, but Smith conceded it was not determinative. However, he argued that this was the kind of close copyright issue that should be litigated and that Wily should not be punished for losing in a 6-3 decision of the Supreme Court.
Attorney's fees may be awarded to the prevailing party in a copyright case in the discretion of the court, but an award is not mandatory. However, the Supreme Court ruled that the same criteria must be applied whether the prevailing party is the plaintiff or the defendant in Fantasy, Inc. v Fogerty, 510 U.S. 517 (1994), rejecting the contrary rule in some circuits.
The Supreme Court in Fogerty identified "several nonexclusive factors" to be considered in deciding whether to award fees to a prevailing party, including "'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 deterence.'" Fogerty, 510 U.S. at 535 n. 19 (citation omitted).
However, the Supreme Court added the caveat that "such factors" can be used to guide discretion "so long as [they] are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner." Fogerty, 510 U.S. at 535 n. 19.
The Second Circuit panel on February 26th also seemed to be negatively impressed by Orrick's request for an award of more than $2 million in attorney's fees after representing Kirtsaeng pro bono in the Supreme Court. But, substantial fee claims will almost always be involved in a case which has been to the Supreme Court on the merits. A review of the Fogerty case on remand from his Supreme Court victory reveals that the Ninth Circuit affirmed a fee award to Fogerty of $1,347,519.15 in 1996, and remanded for a further fee award for fees incurred in that second appeal on fees. Fantasy, Inc. v. Fogerty, 94 F.3d 553 (9th Cir. 1996). Fogerty had litigated for more than eleven years, defending against a claim that he had infringed the copyright in one of his own songs (then owned by the plaintiff) in a subsequent Fogerty composition!
Here, Kirtsaeng, a native of Thailand, had resold Wiley books in the U.S., which had been lawfully published and purchased from Wiley's Asia subsidiary, to support his studies in the U.S. It appears that Kirtsaeng was one of many defendants sued by Wiley on similar claims in its enforcement "program."
Time will tell whether you can safely predict the outcome of this appeal from the colloquy with the judges at oral argument. Stay tuned.