Kirtsaeng v. John Wiley & Sons, Inc.: Supreme Court holds district courts should weigh all factors in determination of awarding attorney’s fees for copyright infringement and give substantial weight to reasonableness of losing party’s litigation position

June 22, 2016

The Supreme Court’s recent decision in Kirtsaeng v. John Wiley & Sons, Inc., clarified the proper analysis for awarding attorney’s fees in copyright infringement cases.[1]

Supap Kirtsaeng (Kirtsaeng) came from Thailand to the United States to study math at Cornell University. He asked family and friends to buy foreign editions of textbooks in Thai bookstores and ship them to him in New York so he could resell the foreign editions at a lower price than that of the analogous American editions and thereby reap a profit.[2] John Wiley & Sons (Wiley), the textbook publisher, sued Kirtsaeng for copyright infringement, claiming that Kirtsaeng’s activities violated Wiley’s exclusive right to distribute the textbooks.[3] Kirtsaeng invoked the “first-sale doctrine” as a defense, claiming that as a lawful owner of a textbook he should be able to resell it. After the district court and the Second Circuit held in favor of Wiley, the Supreme Court reversed the Second Circuit by a 6-3 vote and held that the first-sale doctrine allows for the lawful resale of foreign-made books.[4]

Following the favorable ruling at the Supreme Court, Kirtsaeng returned to the district court to seek attorney’s fees from Wiley under §505 of the Copyright Act.[5] The district court denied the motion, relying on Second Circuit precedent to hold that imposing a fee award against a copyright holder with a reasonable litigation position does not promote the purposes of the Act.[6] The Second Circuit affirmed the decision, holding that the district court was correct in giving “substantial weight” to the reasonableness of Wiley’s litigation position and that the district court did not abuse its discretion in holding that the other factors for awarding attorney’s fees did not outweigh the reasonableness of Wiley’s position.[7]

The United States Supreme Court granted certiorari to hear the case and subsequently vacated and remanded the Second Circuit’s decision. In a unanimous decision written by Justice Kagan, the Court relied on existing precedent to clarify the proper manner of analyzing an application for attorney’s fees while emphasizing the policy considerations of the Act that should undergird such an analysis. The Court in Fogerty v. Fantasy, Inc. established guiding principles and criteria for analyzing whether to award attorney’s fees and recognized the discretionary authority granted to district courts under §505.[8] Such fees should be awarded on a case-by-case basis and not “as a matter of course.” Several factors should be used by lower courts in making this assessment, including “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.”[9] The Fogerty Court also insisted that prevailing plaintiffs and defendants be treated equally since each position could further the policies of copyright law.[10]

Using the Fogerty holding as a basis, the Court reviewed each party’s position for how to best clarify the analysis for awarding attorney’s fees under §505, in light of the aims of the Act. As interpreted by the Court, the Act’s main purpose is to benefit the general public by enabling access to creative works. [11] This objective is achieved by “encouraging and rewarding authors’ creations while also enabling others to build on that work.”[12] Wiley argued that giving substantial weight to the reasonableness of a losing party’s position would best serve the Act’s purposes. The Court agreed, noting that giving more weight to reasonableness encourages parties with strong legal positions to pursue litigation while discouraging those who may have a weaker case from proceeding with a suit. Over the long-term, this expedites litigation and allows copyright owners and users to benefit from the Act’s protections. [13] Wiley’s proposal also treats plaintiff and defendant equally, which aligns with the foundational decision in Fogerty.[14] Kirtsaeng proposed giving additional consideration to whether a lawsuit decided a threshold or difficult legal issue and helped clarify copyright law. The Court did not agree with this approach, highlighting its lack of feasibility compared to that of Wiley’s approach while also observing the lack of foresight that district courts have in determining the long-term significance of each decision.[15] It was also unclear to the Court whether Kirsaeng’s proposal would further incentivize parties to bring either frivolous claims or suits with merit that would “meaningfully clarify” copyright law.[16]

In spite of favoring Wiley’s proposal, the Court held that objective reasonableness of a losing litigant’s position was an “important factor” and has “significant weight”, but that it was not the “controlling (factor).”[17] Lower courts must also consider the totality of the circumstances from each case in light of the Act’s aims when making an assessment for awarding attorney’s fees.[18] It appeared to the Court that district courts in the Second Circuit were viewing objective reasonableness as dispositive to the fee-shifting analysis, rather than affording such reasonableness substantial weight.[19] The Court vacated the Second Circuit’s judgment and remanded the case so the district court could properly consider all of the relevant factors in reviewing Kirtsaeng’s application for attorney’s fees.[20]

[1] 579 U.S. ___, 2016 WL 3317564 (2016).

[2] Kirtsaeng, slip op. at 1-2.

[3] 17 U.S.C. §§106(3), 602(a)(1).

[4] Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1355-56 (2013)

[5] 17 U.S.C. §505.

[6] Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375, slip op. at 3 (2016).

[7] Id.

[8] 510 U.S. 517 (1994).

[9] Id. at 534, n. 19.

[10] Id. at 527.

[11] Kirtsaeng, slip op. at 6 (quoting Fogerty, 510 U.S. at 527).

[12] Fogerty, 510 U.S. at 526.

[13] Kirtsaeng, slip op. at 7.

[14] See supra note 10.

[15] Kirtsaeng, slip op. at 7-8.

[16] Id., slip op. at 8.

[17] Id., slip op. at 10.

[18] Id., slip op. at 11.

[19] Id.

[20] Id., slip op. at 12.