Frivolous copyright claims don’t automatically merit fee awards

The New York Law Journal reports that my old friend Southern District Judge Denise Cote has turned down Fox Entertainment Group’s attempt to recoup almost $280,000 in attorney’s fees (pursuant to the copyright statute) it spent staving off a copyright suit that Fox had demonstrated was frivolous (it involved an allegation that a Fox TV program was a “ripoff” of another program). Judge Cote has an interesting take on the issue:

Although both sides agreed that the U.S. action should be dismissed with prejudice, Fox moved for an award of attorney’s fees, arguing that Ninox sued even though it knew that “The Complex: Malibu” was not substantially similar to “Dream House.”

“A compensatory fee award in these circumstances also encourages the defense of future meritless actions,” attorneys for Fox wrote in a letter to Judge Cote. “Like the gambler who raises the stakes in poker while holding no face cards, a litigant who loses this type of bet should bear the expenses incurred by the adversary in calling the bluff.”

Most IP litigators, especially those of us, ahem, “involved” in the defense side, recognize those cases that, once their merits, or outcome, are resolved, still chug along, powered solely by the gleam in someone’s eyes (woe to the ‘s attorney who puts it there!) that there could be an attorney’s fee award at the end of the rainbow. Judge Cote isn’t going to encourage that.

I’m not sure I get the next part, however. Judge Cote also writes,

“[A]lthough Ninox’s copyright claim is frivolous under the prevailing law, because this litigation would have applied copyright principles to a relatively new field of intellectual property, format licensing, as a matter of discretion, the Court will refrain from awarding attorney’s fees.”

Which is odd, because that sounds like whatever finding of frivolousness was made — the Court calls the claims “frivolous and objectively unreasonable” — is pretty much being taken back and defrivolized by that last quoted bit. What is it, exactly, that judges want?

UPDATE: The decision is here. A chilling excerpt from the lawyering point of view:

When the parties submitted the Stipulation to the Court for endorsement, they advised the Court by letter of their disagreement as to whether a plaintiff’s dismissal of its action with prejudice rendered the defendant a prevailing party and of Fox’s intention to move for an award of attorney’s fees…. Delivering on its promise, Fox now moves for attorney’s fees … A dismissal of an action with prejudice “has the effect of a final adjudication on the merits favorable to defendant and bars future suits brought by plaintiff upon the same cause of action.” Thus, with the parties’ stipulation of dismissal with prejudice, Fox has become a prevailing party and is entitled to move for an award of attorney’s fees. As Fox points out, as a matter of policy, requiring a defendant to reject a plaintiff’s offer to dismiss its claims with prejudice in order to preserve its right to obtain attorney’s fees would burden courts with the necessity of resolving unnecessary summary judgment motions.

It’s hard to believe that the attorneys for Ninox didn’t know this — I know them, and I’m sure they knew the law. I imagine they were hoping against hope, given where the case had gone, that Judge Cote wouldn’t buy it. Happily for them and for their client, while she did rule that a stipulation without prejudice did result in the making of a “prevailing party” — make a note of that one, attorneys! — she didn’t accept Fox’s invitation for a massive fee shifting ruling. Whew.

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Author:Ron Coleman

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