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Litigation News

Litigation News | 2021

Frivolous Copyright Claims Do Not Warrant Attorney Fees

Jared Lorenz


  • Courts should weigh a range of considerations when determining an award for attorney fees in copyright cases, regardless of any strong presumption in favor of fees.
  • In upholding the lower court’s denial of fees, the appeals court explained that the fees presumption “required a fact-specific, case-by-case inquiry.”
Frivolous Copyright Claims Do Not Warrant Attorney Fees
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While a prevailing defendant under the Copyright Act has a “strong presumption” for an award of attorney fees, there are several factors that may justify a court’s decision to deny fees, according to one federal appellate court. In upholding the lower court’s denial of fees, the appeals court explained that the fees presumption “required a fact-specific, case-by-case inquiry.” ABA leaders believe that this case exemplifies the need to evaluate whether facts and case law support pursuing litigation.

Opening a Vitamin Shop Leads to Suit

The conflict in Timothy O’Brien, LLC d/b/a Apple Wellness v. Knott began when a former employee of Apple Wellness, a chain of vitamin stores, opened a competing vitamin shop. Apple Wellness and its owner, Timothy O’Brien, sued the former employee, David Knott, and his new business, Embrace Wellness, for infringing upon Apple Wellness’s trademark, trade dress, and copyrights. The plaintiff alleged that the defendants’ wellness store had similar design features, a similar store layout, and sold comparable products.

In response to the plaintiff’s allegations, the defendants filed counterclaims based on both tortious interference and retaliation. The U.S. District Court for the Western District of Wisconsin denied plaintiff’s motion for preliminary injunction, concluding there was lack of evidence supporting a likelihood of irreparable harm. Following this decision, the plaintiff moved to dismiss without prejudice. In light of the resources spent on litigation, the district court ordered the plaintiff to withdraw its motion or have its case dismissed with prejudice. The plaintiff dismissed its case with prejudice.

Subsequently, the defendants moved for fees with the understanding that the court would rule on these fees after accepting the dismissal with prejudice. However, the district court denied the defendants’ motion, explaining that there was a lack of evidence to prove the suit was filed with an improper motive or that any future frivolous suits would ensue. The defendants appealed the denial and also sought attorney fees for the appeal.

Not So Strong Presumption

The U.S. Court of Appeals for the Seventh Circuit affirmed the denial of attorney fees while recognizing that a prevailing defendant has a “very strong presumption” under the Copyright Act for a fee award. The appellate court explained that the strong presumption ensures that defendants are not compelled into a “nuisance settlement.” However, the court also explained that it has discretion in awarding fees “even when the losing party advanced a reasonable claim or defense.”

The Seventh Circuit analyzed the denial using factors from the U.S. Supreme Court’s decision in Fogerty v. Fantasy, Inc., which set forth “several nonexclusive factors” for determining whether attorney fees are appropriate in copyright cases: “‘frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.’” In addition to the Fogerty factors, the Seventh Circuit stated that while it advised courts that successful copyright defendants were “entitled to a strong presumption in favor of fees,” it “has never held that the strong presumption was insurmountable.”

 The appellate court described how the lower court applied the Fogerty factors and determined that fees were not warranted in this case. For instance, the lower court concluded that the plaintiff’s claims were “brought in good faith and that there were minimal concerns regarding compensation and deterrence.” Additionally, the district court found the purpose for the presumption did not apply because the claims were voluntarily dismissed, and the defendants were not compelled to settle. Accordingly, the Seventh Circuit held that the district court did not abuse its discretion by denying the fees because “the district court properly performed a fact-specific analysis of the case and reached a reasonable conclusion.”

The Best Advice May Be Not to Litigate

ABA leaders agree that just as courts balance factors to determine attorney fees, attorneys should also balance the risk of litigation. “Even if a court in a trademark or patent case determines that a case is ‘exceptional’—either because of willful infringement or for some other reasons—it still may decide not to award fees after reviewing all the facts and circumstances of the case,” notes Jeffrey E. Dupler, New York, NY, former cochair of the ABA Section of Intellectual Property Law’s Trademark Litigation Committee. However, “balancing that risk with the need, indeed the obligation, to be a zealous advocate for one’s client is difficult and can often be more art than science,” Dupler observes. “Sometimes a litigator’s best litigation advice is the advice not to litigate when the facts and law just do not support it—even where, and perhaps especially where, the client feels they have been personally wronged and ardently seeks some kind of judicial or legal vindication,” adds Dupler.

ABA Litigation Section leaders suggest that attorneys should evaluate fees in proportion to the case. “In determining whether to seek recovery of attorney fees in cases such as this one, attorneys need to evaluate the amount of fees in the copyright claim in relation to the proportion of the entire case. Attorneys often tend to lump together all their fees, and courts will then decline to separate out what portion of fees are related to the specific copyright claims, resulting in a blanket denial of fees,” offers Michael D. Steger, New York, NY, cochair of the Litigation Section’s Intellectual Property Litigation Committee.