Friday, February 20, 2009

Another important attorneys fees case in the 7th Circuit

Yet another important attorneys fees decision has been handed down in the 7th Circuit, this one in Eagle Serices Corp. v. H20 Industrial Services, Inc., 532 F.3d 620 (7th Cir. July 9, 2008), in which the Court awarded attorneys fees to the defendant as a prevailing party in a copyright infringement suit:

Under the standard for such shifting in a copyright case, the defendants' entitlement is even stronger. The Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S. Ct. 1023, 127 L. Ed. 2d 455 (1994), said that, unlike the rule in an employment discrimination case, where the plaintiff is presumptively entitled to his attorney's fees if he wins but the defendant only if the suit was frivolous, in copyright suits "prevailing plaintiffs and prevailing defendants are to be treated alike." That is why we concluded in Assessment Technologies of WI, LLC v. WIREData, Inc., 361 F.3d 434, 437 (7th Cir. 2004), that "when the prevailing party is the defendant, who by definition receives not a small award but no award, the presumption in favor of awarding fees is very strong." See also Mostly Memories, Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 2008 WL 2168642, at 5 (7th Cir. 2008); Riviera Distributors, Inc. v. Jones, 517 F.3d 926, 927-29 (7th Cir. 2008); Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005). The conclusion is implicit in the Supreme Court's directive in Fogerty to treat the parties to a copyright case symmetrically. If the only thing disturbing the symmetry is that the defendant prevailed, it is presumptively entitled to an award of its reasonable attorney's fees. Here, of course, the presumption is not rebutted, but instead is reinforced, by the considerations that we have reviewed.

Yet Murray Hill Publications, Inc. v. ABC Communications, Inc., 264 F.3d 622, 640 (6th Cir. 2001), disregarding Fogarty, says (and is not alone in saying) that "because we believe the plaintiffs presented one or more colorable, albeit meritless, claims to the district court, we reverse the award of attorneys fees" to the defendant. Such decisions (criticized in 6 Patry, supra, § 22:210, pp. 469-70), by treating a copyright case as if it were an employment discrimination case, ignore the symmetry of interests in a copyright or other intel-lectual property case. In the typical copyright case a victory for the defendant enlarges the public domain by denying the plaintiff's right to prevent the de-fendant--or anyone else--from using the intellectual property alleged to infringe the plaintiff's copyright. The public domain is "an important resource for creators of expressive works and therefore there should be no thumb on the scales" in deciding whether to award attorneys' fees. Gonzales v. Transfer Technologies, Inc., 301 F.3d 608, 609 (7th Cir. 2002); see also Assessment Technologies of WI, LLC v. WIREData, Inc., supra, 361 F.3d at 436.

If there is an asymmetry in copyright, it is one that actually favors defendants. The successful assertion of a copyright confirms the plaintiff's possession of an exclusive, and sometimes very valuable, right, and thus gives it an incentive to spend heavily on litigation. In contrast, a successful defense against a copyright claim, when it throws the copyrighted work into the public domain, benefits all users of the public domain, not just the defendant; he obtains no exclusive right and so his incentive to spend on defense is reduced and he may be forced into an unfavorable settlement.
532 F.3d at 624-625.

Eagle Services is consistent with Mostly Memories, Bridgeport Music v. WB Music, and Riviera Distributors, Inc. v. Jones.

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