Sherry Mfg. Co., Inc. v. Towel King of Florida, Inc.
| Citation | 822 F.2d 1031 |
| Decision Date | 29 July 1987 |
| Docket Number | No. 86-5552,86-5552 |
| Parties | 1987 Copr.L.Dec. P 26,142, 3 U.S.P.Q.2d 1509 SHERRY MANUFACTURING COMPANY, INC., a Florida Corporation, Plaintiff-Appellant, v. TOWEL KING OF FLORIDA, INC., a Florida Corporation, Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Jack E. Dominik, Dominik & Saccocio, Miami Lakes, Fla., for plaintiff-appellant.
Eugene F. Malin, Malin, Haley & McHale, Edward F. McHale, Ft. Lauderdale, Fla., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Florida.
Before GODBOLD and ANDERSON, Circuit Judges, and SWYGERT, * Senior Circuit Judge.
This case returns to our court for a second time, this time to determine whether the district court properly assessed attorney's fees. Because we are unable to determine the basis for the district court's decision awarding attorney's fees of $54,500 to defendant, we vacate and remand this case to the district court to clarify the basis upon which it exercised its discretion.
Sherry Manufacturing Company ("Sherry") brought suit in federal district court against Towel King of Florida ("Towel King") alleging copyright infringement and unfair competition. In essence, Sherry's complaint alleged that Towel King had copied and distributed a beach towel which used one of Sherry's copyrighted designs. The trial court agreed and entered judgment in favor of Sherry for $87,920.20. In addition, the trial court awarded Sherry $10,000 in attorney's fees.
On appeal, a panel of this court reversed. Sherry Manufacturing Co. v. Towel King of Florida, Inc., 753 F.2d 1565 (11th Cir.1985). We concluded that Sherry's towel was not, in and of itself, copyrightable since it was merely a trivial modification of a Sherry towel design which was in the public domain. Consequently, since we concluded that Sherry could not copyright its towel design, we reversed the district court's judgment in favor of Sherry and held that, as a matter of law, judgment should be entered in favor of Towel King. 1
Upon remand the district court referred the matter to Magistrate Nimkoff. Following two lengthy hearings, Magistrate Nimkoff determined first, that attorney's fees should be awarded to defendant Towel King and, second, that a reasonable amount for the award would be $88,500. Sherry appealed this determination to the district court. Following yet another hearing, the district court agreed that the award of attorney's fees was proper but reduced the amount to $54,500. Sherry now appeals from this judgment against it.
Our review of the district court's order awarding attorney's fees is of course limited to the question of whether the district court abused its discretion. See Donald Frederick Evans & Associates v. Continental Homes, Inc., 785 F.2d 897, 916 (11th Cir.1986). Sherry contends that the district court abused its discretion by applying an incorrect standard in making its attorney's fees determination. We are unable to determine from the district court's brief order whether this is the case. 2 Moreover, in order for this court to discharge its responsibility to review the judgment of the district court, even pursuant to the limited abuse of discretion scope of review, we must be able to ascertain the basis upon which the district court exercised its discretion. Accordingly, we must vacate the order and remand this case to the district court. On remand the district court shall exercise its discretion in accord with the law of this circuit 3 and provide reasons for its decision.
In order to assist the district court, we summarize the standard which it should apply in exercising its discretion. Our rule governing the award of attorney's fees in a copyright case was first articulated in Original Appalachian Art Works, Inc. v. Toy Loft, Inc., 684 F.2d 821, 832 (11th Cir.1982). In reviewing the award of attorney's fees to prevailing plaintiff, this court concluded that the district court has discretion to award fees to any prevailing party. A prevailing party is not required, as a precondition to the award of fees, to show that the losing party has acted in bad faith or that the losing party has attempted to maintain a frivolous legal claim. Rather, the only precondition to the award of attorney's fees is that the party be a prevailing one. However, the fact that a losing party has acted in good faith or that his legal position had arguable merit will justify an exercise of the district court's discretion in deciding not to award attorney's fees.
Donald Frederick Evans, 785 F.2d at 916, applied this same rule to the award of attorney's fees to a prevailing defendant. A prevailing defendant need not, as a precondition to the award of fees, establish that the plaintiff was acting in bad faith or had brought a frivolous suit. However, the losing plaintiff's good faith is a factor which the district court can consider in its discretion to justify the denial of fees. Moreover, as the Donald Frederick Evans court emphasized, an order denying fees to a prevailing defendant who has been opposed by a good faith plaintiff is "all the more appropriate ... where the plaintiff asserted colorable copyright claims of the type which 'section 505 is intended in part to encourage.' " Id. (quoting Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2d Cir.1984)).
In the instant case, Sherry argued to the district court that its suit was brought in good faith and that consequently the district court should deny defendant's application for attorney's fees. Under our rule, a finding by the district court that Sherry brought a colorable copyright claim in good faith would amply justify a denial of fees.
On the other hand, a finding that Sherry was in good faith would not mandate a denial of fees to Towel King, since it is not a precondition to an award to show that the losing party acted in bad faith or brought a frivolous claim. Moreover, Magistrate Nimkoff, in the hearings held before him, concluded that Sherry had "initiated a predatory lawsuit for commercial gain." 4 Such a finding would, if accepted by the district court, support the award of fees to Towel King.
However, we cannot tell from the district judge's order whether he accepted the Magistrate's finding that Sherry was not in good faith, or whether he found Sherry to be in good faith but nevertheless awarded fees on some other basis. Without knowing, we cannot discharge our review function. 5
VACATED AND REMANDED.
* Honorable Luther M. Swygert, Senior U.S. Circuit Judge for the Seventh Circuit, sitting by designation.
1 By a separate order, this court denied Towel King's motion for attorney's fees on appeal in the amount of $76,488.25. Sherry argues that this court's denial of attorney's fees on appeal is...
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