SUPREME COURT IN KIRSTAENG V WILEY: objective reasonableness not controlling for attorney fees
The case of Kirstaeng v. Wiley hit the headlines in 2013 when the Supreme Court held that importation and sale in the United States of books bought from the copyright owner in Thailand was not an infringement of copyright, even though a notice in the books stated ‘This book is authorized for sale in Europe, Asia, Africa and the Middle East and may not be exported out of these territories.” The Court applied the first sale doctrine to this situation and read 17 USC 109(a) which gives “the owner of a particular copy … lawfully made under this title” the right “without the authority of the copyright owner to sell or otherwise dispose of the possession of that copy” as extending to books made and sold by the copyright owner in Thailand.
Following this, Kirstaeng sought to recover his attorney fees under the provisions of 17 USC 505 which provides that a district court “may … award attorney fees to the prevailing party.” The district court and the Second Circuit Court of Appeals denied the request on the ground that, since prior to the Supreme Court’s decision in 2013 it was unclear whether the first sale doctrine applied when the initial sale was outside the United States, the defendant’s position was “objectively reasonable” and that is such situations no award of attorney fees should be made.
The Supreme Court, on June 16, 2016, in a unanimous decision authored by Justice Kagan, reversed this decision and remanded the case for further consideration. As was the case in the patent case of Halo v. Pulse decided on June 13th, the Supreme Court essentially said “may means may”. The Court had previously held in Fogerty v Fantasy that attorney fees should not be awarded as a matter of course, that in considering whether to make an award of attorney fees, courts should not discriminate between prevailing plaintiffs and prevailing defendants, and that objective unreasonableness is a further factor that might be taken into account. It now emphasized that “§505 grants the courts wide latitude to award attorney’s fees based on the totality of circumstances in a case.” Nevertheless, such discretion must be exercised “by looking to the large objectives of the relevant Act.” The objective of the Copyright Act was that it “ultimately serves the purpose of enriching the general public through access to creative works” by “striking a balance between two subsidiary aims: encouraging and rewarding author’s creations while also enabling others to build on that work.” This being the case, “objective reasonableness can only be an important factor in assessing fee applications – not the controlling one.” Therefore, courts can award attorney fees even if the losing party’s position was supported by reasonable arguments or deny fees if the losing party made unreasonable arguments, for example “because of a party’s litigation misconduct,… to deter repeated instances of copyright infringement or over aggressive assertion of copyright claims.” The Second Circuit had gone too far in effectively holding that a finding of reasonableness by the losing party raised a presumption against an award of attorney fees, and so the case should be returned to the district court for further consideration of whether attorney fees should be awarded in this case.