"Objective Reasonableness" is a Primary Factor, But Not the Sole Factor, When Determining a Fee Award in a Copyright Case

FACTS: John Wiley & Sons ("Wiley") filed a lawsuit against Supap Kirtsaeng ("Kirtsaeng") when it discovered that Kirtsaeng's family and friends abroad were purchasing Wiley textbooks at a discounted rate and shipping them to Kirtsaeng in the U.S., where Kirtsaeng was re-selling them for a profit. This case was before the Supreme Court previously in 2013, at which time the Court ruled in Kirtsaeng's favor, holding that the "first-sale doctrine" was a defense to Wiley's claim of copyright infringement. Following this victory, Kirtsaeng returned to the District Court seeking more than $2 million in attorney's fees under the fee-shifting provisions of the Copyright Act (the "Act"). The District Court denied Kirtsaeng's application, holding that when a losing party takes a reasonable position during litigation — as Wiley had done — a fee award is counter to the purpose of the Copyright Act. The Second Circuit affirmed the District Court's decision, noting that it was appropriate to place "substantial weight" on the reasonableness of the losing party's position.

DECISION: The Supreme Court held that the "objective reasonableness" of the losing party's position carries significant weight in determining whether to award attorney's fees, but that it cannot be the only factor considered. Rather, the Court emphasized that "courts must view all the circumstances of a case on their own terms, in light of the Copyright Act's essential goals" of enriching the general public through access to creative works, which requires a balance of encouraging and rewarding author's creations, while also enabling others to build on that work.

The Court went on to say that placing substantial weight on the "objective reasonableness" of the losing party's position furthers the purpose of the Act because it encourages those parties with strong legal positions to stand on their rights, and deters those with weak ones from proceeding with litigation. The Court saw no reason to disregard the restrictions and factors that had previously been established in its Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) decision. The restrictions from Fogerty are that (1) fees may not be awarded as a matter of course, and (2) the court may not treat prevailing plaintiffs and prevailing defendants differently. That decision also included "several nonexclusive factors" to consider in the question of awarding fees under the Act: "frivolousness, motivation, objective unreasonableness[,]" and the need to consider compensation and deterrence.

The Court remanded the case to ensure that the district court did not rely solely on the "objective reasonableness" of Wiley's position.

This decision provides further clarification on the standard that courts should apply in determining whether to award fees, but still affords district courts with wide latitude in making the ultimate decision.