Today the U.S. Supreme Court issued its unanimous opinion in the Kirtsaeng case, concerning the standards that govern the award of attorneys’ fees to the prevailing party as an element of “costs” under the Copyright Act.
The statute itself does not give guidance on when fees should be awarded. Prior Supreme Court case law was vague, identifying non-binding factors but giving no guidance on how to apply them. Today, the Court reiterated those factors ( “frivolousness, motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence”), but endorsed the Second Circuit’s approach that courts “should give substantial weight to the objective reasonableness of the losing party’s position…. No matter which side wins a case, the court must assess whether the other side’s position was (un)reasonable…. Courts every day see reasonable defenses that ultimately fail (just as they see reasonable claims that come to nothing); in this context, as in any other, they are capable of distinguishing between those defenses (or claims) and the objectively unreasonable variety. And if some court confuses the issue of liability with that of reasonableness, its fee award should be reversed for abuse of discretion.”
This ruling was meant to resolve a conflict between the various circuits, some of which have articulated approaches to the award of fees that many interpret as more or less generous than the Second Circuit’s. To the extent that Kirtsaeng is interpreted as stricter than existing standards, today’s decision may result in fewer awards of fees, which, in turn, may decrease the incentive that copyright owners have to bring suit.
At the same time, though, today’s opinion is qualified. “All of this said,” the opinion continues, “the court must also give due consideration to all other circumstances relevant to granting fees; and it retains discretion, in light of those factors, to make an award even when the losing party advanced a reasonable claim or defense.” In light of this qualification, the real import of the decision remains ambiguous.
As with most Supreme Court decisions, therefore, the ultimate impact of today’s decision will be determined by the lower courts who must now apply it.