Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC

• Docket Number: 23-12563
• Decision Date: 30 July 2024
• Citation: Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, 108 F.4th 1358 (11th Cir. 2024)
• Parties: AFFORDABLE AERIAL PHOTOGRAPHY, INC., Plaintiff-Appellee, v. PROPERTY MATTERS USA, LLC, Defendant-Appellant, Home Junction Inc., Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

108 F.4th 1358

AFFORDABLE AERIAL PHOTOGRAPHY, INC., Plaintiff-Appellee, v. PROPERTY MATTERS USA, LLC, Defendant-Appellant,Home Junction Inc., Defendant.

No. 23-12563

United States Court of Appeals, Eleventh Circuit

Filed: July 30, 2024

Appeal from the United States District Court for the Southern District of Florida, D.C. Docket No. 2:22-cv-14296-AMC

Daniel DeSouza, DeSouza Law, PA, Coral Springs, FL, James D'Loughy, Advisorlaw PLLC, Palm Beach Gardens, FL, for Plaintiff-Appellee.

Andrew D. Lockton, Edward F. McHale, McHale & Slavin, PA, Palm Beach Gardens, FL, for Defendant-Appellant.

Before Wilson, Grant, and Lagoa, Circuit Judges.

Lagoa, Circuit Judge:

Property Matters USA, LLC, one of the defendants in this copyright infringement case, appeals the district court's denial of its motion for attorney's fees under 17 U.S.C. § 505. After carefully considering the parties' arguments and with the benefit of oral argument, we conclude that a defendant is not the prevailing party under § 505 when a plaintiff's action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i) and affirm the district court's order.

I. FACTUAL AND PROCEDURAL BACKGROUND

Affordable Aerial Photography, Inc. ("AAP"), was incorporated in Florida in 2005. Robert Stevens, AAP's owner, is a real estate photographer who specializes in aerial photography and exterior and interior shots. He offers slide shows, virtual tours, and stock photography to luxury real estate companies. AAP owns all the photographs Stevens takes and licenses them for limited use by their customers.

Property Matters USA, LLC ("Property Matters") is a real estate brokerage in Boca Raton, FL. Home Junction Inc. ("Home Junction") is a real estate marketing solutions and services provider who designed and maintained Property Matters's website.

In 2010, AAP created the photograph at issue, titled "PRESIDENTIAL PLACE FRONT AERIAL 2010 AAP" ("the Work"), which provides an aerial view of a residential condominium complex. In the bottom left corner, AAP included its copyright management information: "© AAP 2010 all rights reserved." AAP also registered the Work with the Register of Copyrights on April 6, 2018.

On or before April 30, 2017, the Work appeared on Property Matters's website. While AAP used various techniques to search for copyright infringement of the Work at least once per year from 2017 to 2022, it did not discover the alleged infringement until February 21, 2022.

In August 2022, AAP filed a complaint in the Southern District of Florida, which included one count of copyright infringement with respect to both Home Junction and Property Matters. AAP sought, among other things, a declaration that both Home Junction and Property Matters willfully infringed on AAP's copyright; actual damages and disgorgement of profits or, in the alternative, statutory damages; costs and attorney's fees; and a permanent injunction prohibiting infringement of AAP's exclusive rights in the Work under copyright law.¹

Property Matters subsequently filed a motion to dismiss—raising among other issues the statute of limitations set out in 17 U.S.C. § 507(b), which provides that no civil action may be maintained under Title 17 of the U.S. Code "unless it is commenced within three years after the claim accrued." Property Matters argued that the limitations period begins to run when the infringement occurs—here April 2017—and thus AAP's action was untimely by over two years. The district court denied this motion without prejudice for failure to comply with the district court's administrative order governing responsive filings in multiple-defendant cases. AAP then filed a notice of voluntary dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A)(i) with respect to its action against Property Matters, and the district court entered an order pursuant to AAP's notice dismissing the action without prejudice. Soon after, AAP and Home Junction filed a joint notice of settlement, and the district court closed the case.²

Property Matters then moved for attorney's fees under 17 U.S.C. § 505, seeking $22,650 in fees already incurred along with any fees that would result from litigation of its motion. Section 505 provides that, in any civil action under Title 17, "the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof," and, except as otherwise provided by Title 17, "the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." The district court assigned the issue to a magistrate judge. Although AAP's action against Property Matters was voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i), Property Matters argued that AAP is nevertheless barred from reasserting its infringement claim in a new proceeding because of the statute of limitations found in 17 U.S.C. § 507(b). Thus, according to Property Matters, it is the "prevailing party" as a matter of law. In response, AAP argued among other things that Property Matters is not the prevailing party because the voluntary dismissal was without prejudice and the limitations period has not yet expired. The parties, however, agreed that if claims of copyright infringement accrue when the act of infringement occurs, then AAP could not refile its claim and Property Matters would be the prevailing party.

The magistrate judge recommended denying Property Matters's motion and the district court, over Property Matters's objections, accepted the report and recommendation. In line with how other courts have decided the issue, the district court applied the "discovery rule" to conclude that AAP's copyright infringement claim did not accrue until it discovered the alleged infringement. The district court also agreed with the magistrate judge that AAP, "who ran annual reverse image searches of the [W]ork, exercised reasonable diligence and discovered through that diligence the alleged infringement on February 21, 2022—making February 21, 2022, the date the claim accrued for purposes of 17 U.S.C. § 507." Therefore, the district court said, because AAP was not time-barred from raising its copyright infringement claim against Property Matters in a separate suit through February 21, 2025, the voluntary dismissal did not materially alter the legal relationship between the parties and Property Matters was not the prevailing party.³

Property Matters timely appealed the district court's order.

II. STANDARDS OF REVIEW

In reviewing a district court's prevailing-party determination, we review any findings of fact for clear error. Royal Palm Props., LLC v. Pink Palm Props., LLC, 38 F.4th 1372, 1375 (11th Cir. 2022). We review de novo, however, the legal question as to whether those facts render a party a "prevailing party." Id.

III. ANALYSIS

For most of this litigation, the parties' advanced an incorrect understanding about the meaning of "prevailing party" in 17 U.S.C. § 505. Before the district court, the parties stipulated that "[i]f dismissal without prejudice occurred after the Copyright Act's limitation period expired, a defendant obtains 'prevailing party' status."⁴ The district court appeared to agree with the parties. But we are "duty bound to apply the correct law," and " 'parties cannot waive the application of the correct law or stipulate to an incorrect legal test.' " Adams ex rel. Kasper v. Sch. Bd. of St. Johns Cnty., 57 F.4th 791, 816 n.8 (11th Cir. 2022) (en banc) (quoting Jefferson v. Sewon Am., Inc., 891 F.3d 911, 923 (11th Cir. 2018)). Under the precedents of the Supreme Court and this Court, a defendant is not the prevailing party when a plaintiff's action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. Therefore, to decide this case, we need not decide other issues, such as whether § 507(b) is subject to the injury rule or the discovery rule.

Section 505 authorizes a court to "award a reasonable attorney's fee to the prevailing party." "Prevailing party" is a "legal term of art." Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep't of Health & Hum. Res., 532 U.S. 598, 603, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). Congress has included it in various statutes, and the Supreme Court has "interpret[ed] the term in a consistent manner." CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419, 422, 136 S.Ct. 1642, 194 L.Ed.2d 707 (2016). The "touchstone of the prevailing party inquiry" is "the material alteration of the legal relationship of the parties," Tex. State Tchrs. Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989), and "[t]his change must be marked by 'judicial imprimatur,' " CRST Van Expedited, 578 U.S. at 422, 136 S.Ct. 1642 (emphasis in original) (quoting Buckhannon, 532 U.S. at 605, 121 S.Ct. 1835).

The prevailing-party inquiry is different with respect to plaintiffs and defendants given that they "come to court with different objectives." Id. at 431, 136 S.Ct. 1642. While a plaintiff "seeks a material alteration in the legal relationship between the parties," a defendant "seeks to prevent this alteration to the extent it is in the plaintiff's favor." Id. Given the defendant's objectives, it can attain prevailing-party status "whenever the plaintiff's challenge is rebuffed," even if for a non-merits reason. Id. But this is true only when the rejection of the plaintiff's challenge is "marked by 'judicial imprimatur.' " Id. at 422, 136 S.Ct. 1642 (emphasis in original) (quoting Buckhannon, 532 U.S. at 605, 121 S.Ct. 1835). This means that a defendant does not attain prevailing-party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the court itself must act to reject or rebuff the plaintiff's claims. See Beach Blitz Co. v. City of Miami Beach, 13 F.4th 1289, 1298 (11th Cir. 2021) ("[T]o determine whether...