240 F.3d 116 (2nd Cir. 2001), 00-7029, Matthew Bender & Co. v West Publ'g

Docket Nº:Docket Nos. 00-7029(L), 00-7070(XAP)
Citation:240 F.3d 116
Party Name:MATTHEW BENDER & COMPANY, INC., Plaintiff, HYPERLAW, INC., Intervenor-Plaintiff-Appellee Cross-Appellant, v. WEST PUBLISHING CO. AND WEST PUBLISHING CORPORATION, Defendants Appellants-Cross-Appellees.
Case Date:January 23, 2001
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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240 F.3d 116 (2nd Cir. 2001)

MATTHEW BENDER & COMPANY, INC., Plaintiff,

HYPERLAW, INC., Intervenor-Plaintiff-Appellee Cross-Appellant,

v.

WEST PUBLISHING CO. AND WEST PUBLISHING CORPORATION, Defendants Appellants-Cross-Appellees.

Docket Nos. 00-7029(L), 00-7070(XAP)

United States Court of Appeals, Second Circuit

January 23, 2001

Argued: November 8, 2000

Appeal from a judgment of the United States District Court for the Southern District of New York (John S. Martin, Jr., Judge), awarding the intervenor-plaintiff attorneys' fees under the Copyright Act, 17 U.S.C. § 505. Cross-appeal from the same judgment.

We hold that the District Court erred in awarding attorneys' fees based on the defendants' "violation" of 17 U.S.C. § 403, the defendants' refusal to cooperate with the intervenor-plaintiff prior to the initiation of the action, and the defendants' filing of a motion to dismiss the intervenor-plaintiff's complaint on justiciability grounds. We thus vacate the award, but remand to the District Court because it is not clear whether the court relied on additional factors in awarding fees.

Vacated and remanded.

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[Copyrighted Material Omitted]

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CARL J. HARTMANN, III, New York, NY (Paul J. Ruskin, Douglaston, NY, on the brief, Alan D. Sugarman, New York, NY, of counsel), for Intervenor-Plaintiff-Appellee-Cross-Appellant.

JAMES F. RITTINGER, Satterlee Stephens Burke & Burke (Joshua M. Rubins, on the brief), New York, NY, for Defendants-Appellants-Cross-Appellees.

CHARLES D. OSSOLA, Arnold & Porter (Carol Lally, on the brief, Keith Kupferschmid, of counsel), Washington, DC, for Amicus Curiae Software & Information Industry Association.

Before: STRAUB and SOTOMAYOR, Circuit Judges, and SPATT, District Judge.[*]

STRAUB, Circuit Judge:

Defendants-Appellants-Cross-Appellees West Publishing Co. and West Publishing Corp. (collectively "West") appeal from a judgment of the United States District Court for the Southern District of New York (John S. Martin, Jr., Judge), ordering them to pay the attorneys' fees of Intervenor-Plaintiff-Appellee Cross-Appellant HyperLaw, Inc. ("HyperLaw"), after HyperLaw prevailed in a declaratory judgment action under the Copyright Act, 17 U.S.C. § 101 et seq. HyperLaw cross-appeals, challenging the District Court's calculation of the fee amount. The District Court found that West violated 17 U.S.C. § 403 by failing to delineate the portion of its works for which copyright protection was claimed. The court also found that West's conduct of the litigation was in bad faith, citing West's refusal to cooperate with HyperLaw before the initiation of suit and West's filing of a motion to dismiss HyperLaw's complaint on justiciability grounds. The District Court thus ordered West to pay HyperLaw $813,724.25 in attorneys' fees, pursuant to 17 U.S.C. § 505.

For the reasons given below, we hold that the District Court exceeded its allowable discretion in awarding attorneys' fees based on its determinations (i) that West "violated" section 403, and (ii) that West's conduct of the litigation was in bad faith. Accordingly, we vacate the award. However, we remand for clarification, because the District Court's opinion does not allow us to conclude with certainty whether there were additional instances of bad faith conduct upon which the court relied in awarding fees. Because we vacate the award, we do not address West's remaining arguments or HyperLaw's cross-appeal, all of which challenge the amount of fees awarded.

BACKGROUND

This case comes to us at the attorneys' fees stage, after a long and contentious battle over West's claim that it is entitled to copyright protection with respect to judicial opinions that it publishes in its case reporters. Detailed factual accounts are set forth in two prior Second Circuit opinions: Matthew Bender & Co. v. West Publishing Co., 158 F.3d 674 (2d Cir. 1998), cert. denied, 526 U.S. 1154 (1999) ("HyperLaw I"), and Matthew Bender & Co. v. West Publishing Co., 158 F.3d 693 (2d Cir. 1998), cert. denied, 526 U.S. 1154 (1999) ("HyperLaw II"). Accordingly, we recount only the facts that bear upon the parties' claims in this appeal and that provide essential context.

I. The Underlying Action

West creates and publishes printed compilations of reports of federal and state judicial opinions. Each West report contains the text of the judicial opinion with additional features, or "editorial enhancements," HyperLaw I, 158 F.3d at 692 (Sweet, J., dissenting), inserted by West.

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The enhancements added by West include a syllabus, headnotes, key numbers, parallel or alternative citations to cases, attorney information, and data on subsequent or procedural history.1 Id. at 676. "West obtains the text of judicial opinions directly from courts. It alters these texts as described above to create a case report, and then publishes these case reports (first in advance sheets, then in bound volumes) in different series of 'case reporters.'" Id. at 677.

HyperLaw and Matthew Bender & Co., Inc. ("Bender") are publishers of compact disc-read only memory ("CD-ROM") compilations of judicial opinions. See id. HyperLaw obtains the text of most of the opinions it publishes directly from the courts. See id. However, in the early 1990s HyperLaw wished to expand its CD-ROM product to include certain cases and information that it could not obtain from the courts. See id. It hoped to achieve this expansion by copying West's case reports (after redacting the syllabi, headnotes, and key numbers)-indeed, directly scanning the cases-from West's reporters. See id. HyperLaw also sought to add "star pagination" to its reports. "Star pagination" consists of cross-reference citations (preceded by an asterisk) that show the page location of particular text in West's printed version of the opinions. See HyperLaw II, 158 F.3d at 695 & n.1. Likewise, Bender sought to insert star pagination in its CD-ROM case reports. See id. at 697-98.

Hoping to avoid claims of copyright infringement by West, in July 1991, HyperLaw contacted West to determine which aspects of West's published opinions were copyrighted and which aspects were in the public domain. HyperLaw also presented West with four alternative means of obtaining West's material, and asked West whether, in its opinion, any of the means would infringe West copyrights. West, however, refused to provide the information sought by HyperLaw, responding only that HyperLaw should "retain competent copyright counsel to give [it] the advice [it] seek[s]." What followed was an exchange of increasingly vitriolic correspondence between the two parties over the course of nearly one year. In the end, HyperLaw received no guidance from West.

As a result, HyperLaw intervened in this suit, which had been brought by Bender for a judgment declaring that Bender's insertion of star pagination in its CD-ROM version of judicial opinions did not infringe West's copyright. See HyperLaw I, 158 F.3d at 678. HyperLaw requested the same relief, and also sought a declaration that its redacted versions of West's case reports, which include certain of West's editorial enhancements, contain no copyrightable material and thus may be copied without infringement. See id. West moved to dismiss HyperLaw's complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of justiciability, arguing that HyperLaw had not yet produced a product with the West features at issue. The District Court found that there was a factual dispute over both prongs of the justiciability test-HyperLaw's intent and ability to produce the CD-ROM products, and HyperLaw's reasonable apprehension of being sued by West-and thus concluded that an evidentiary hearing was necessary. After the hearing, the District Court found that HyperLaw intended and was able to add the West features at issue and had a reasonable apprehension of suit. Accordingly, the court denied West's motion to dismiss.

Following discovery, the filing of summary judgment motions, and a hearing, the District Court in November 1996 granted summary judgment to HyperLaw and Bender with respect to the star pagination feature. The court found that the insertion of star pagination on the CD-ROM versions of the cases would not reproduce any protectable element of West's

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products. The court further ruled that star pagination would be permitted under the fair use doctrine even if West's pagination were copyrightable. West appealed to this Court, which affirmed the District Court's order, holding that "star pagination does not create a 'copy' of any protected elements of West's compilations or infringe West's copyrights" and that "[i]n any event, under a proper reading of the Copyright Act, the insertion of star pagination does not amount to infringement of West's arrangement of cases." HyperLaw II, 158 F.3d at 696. In a strong dissent, the Honorable Robert W. Sweet, sitting by designation from the United States District Court for the Southern District of New York, argued that the "West page numbers . . . result from the totality of the West compilation process which includes its concededly original and copyrightable...

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