Zilyen, Inc. v. Rubber Mfrs. Ass'n

• Decision Date: 02 August 2013
• Docket Number: Civil Action No. 12–0433 (RBW).
• Citation: 958 F.Supp.2d 215
• Parties: ZILYEN, INC., Plaintiff, v. RUBBER MANUFACTURERS ASSOCIATION, Defendant.
• Court: U.S. District Court — District of Columbia

958 F.Supp.2d 215

ZILYEN, INC., Plaintiff,

v.RUBBER MANUFACTURERS ASSOCIATION, Defendant.

Civil Action No. 12–0433 (RBW).

United States District Court, District of Columbia.

Aug. 2, 2013.

Rachel L. Tripp Rodriguez, Richard S. Toikka, Farkas & Toikka, LLP, Washington, DC, for Plaintiff.

John J. Hathway, Whiteford, Taylor & Preston, LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

REGGIE B. WALTON, District Judge.

The plaintiff, ZilYen, Inc., brought this action against the defendant, Rubber Manufacturers Association, asserting claims of breach of contract and copyright infringement under the Copyright Act, 17 U.S.C. § 501 (2006). First Amended Complaint (“Am. Compl.”) ¶¶ 38–55. This Court subsequently granted the defendant's motion to dismiss the plaintiff's copyright infringement claim and dismissed the breach of contract claim over which it had only supplemental jurisdiction. ZilYen, Inc. v. Rubber Mfrs. Ass'n, 935 F.Supp.2d 211, 224–25, 2013 WL 1302012, at *11 (D.D.C.2013). The defendant now asks the Court to award it attorneys' fees pursuant to 17 U.S.C. § 505. Motion for Award of Attorneys' Fees (“Def.'s Mot.”) at 1. After considering the submissions of the parties,¹ the Court concludes that it must deny the defendant's motion.

I. BACKGROUND

The facts and analysis of the merits of the plaintiff's claims are set forth in this Court's earlier Memorandum Opinion and will only be summarized here.

This litigation arises from a dispute between the parties regarding a contract under which the plaintiff was to “design, produce, and deliver” 200,000 compact discs (“CDs”) to the defendant “for distribution among its members.” Am. Compl. ¶ 6. When a portion of the total number of CDs was delivered to the defendant, the defendant's employees “ran the CD software on their computers,” which “require[d] a copy to be made on the random access memory ... of the user's computer in order to properly run the application.” Id. ¶ 54. Thereafter, the defendant contacted the plaintiff “alleging that the CDs as delivered contained an error in the link to the Adobe Reader X software on the CD.” Id. ¶ 31. The defendant therefore refused to pay the plaintiff the remaining balance due under the contract. Id. ¶¶ 29, 30, 37.

The plaintiff then brought suit alleging breach of contract and copyright infringement of the CD software. Id. ¶¶ 38–55. The defendant responded with a motion to dismiss the plaintiff's copyright infringement claim, asserting an affirmative defense under 17 U.S.C. § 117, an implied license to use the CDs, and joint authorship of the copyrighted software. See Further Motion to Dismiss Statutory Copyright Infringement Count (“Def.'s Mot. to Dismiss”) at 1–2. This Court agreed that the defendant's actions did not amount to an infringement under § 117 of the Copyright Act and that the defendant had an implied license to use the CD software in the manner challenged by the plaintiff, and did not address the defendant's final argument regarding joint authorship. See ZilYen, 935 F.Supp.2d at 224 & n. 6, 2013 WL 1302012, at *10 & n. 6. The Court sua sponte dismissed the remaining state law breach of contract claim pursuant to 28 U.S.C. § 1367(c). Id. at 224–25, *11. The defendant now requests an award of attorneys' fees pursuant to 17 U.S.C. § 505. Def.'s Mot. at 1.

II. ANALYSIS

The relevant provision of the Copyright Act provides the following:

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or any officer thereof. Except as otherwise provided by this title, the court may award a reasonable attorney's fee to the prevailing party as part of the costs.

17 U.S.C. § 505 (emphasis added). Section 505 thus does not provide for automatic recovery of attorneys' fees by the prevailing party. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Rather, fees are to be awarded “only as a matter of the court's discretion.” Id. While “[t]here is no precise rule or formula for making these determinations,” id. (citation omitted), courts typically consider factors such as “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,” id. at 534 n. 19, 114 S.Ct. 1023 (citation omitted). The application of these factors must be “faithful to the purposes of the Copyright Act” and “applied to prevailing plaintiffs and defendants in an evenhanded manner.” Id.

The defendant argues that these factors weigh in favor of an award of attorneys' fees to compensate it for “defending against a questionable copyright infringement claim.” ² Def.'s Mot. at 4. The defendant also claims a presumptive entitlement to attorneys' fees under the “refinement of the Fogerty standard” adopted by the United States Court of Appeals for the Seventh Circuit first in Gonzales v. Transfer Techs., 301 F.3d 608, 610 (7th Cir.2002), and then expanded in Assessment Techs. of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7th Cir.2004). See Def.'s Mot. at 5–6; Def.'s Reply at 2. Pursuant to the Assessment Technologies approach, a court reviewing a request for attorneys' fees under § 505 accords a presumptive entitlement to attorneys' fees to “the prevailing party in a copyright case in which the monetary stakes are small,” a presumption considered “very strong,” when the defendant is the prevailing party. Assessment Techs., 361 F.3d at 437 (citations and quotation marks omitted). The Seventh Circuit reasoned that a presumptive entitlement was warranted because “an award of attorneys' fees may be necessary to enable the party possessing [a] meritorious claim or defense to press it to a successful conclusion rather than surrender it because the cost of vindication exceeds the private benefit to the party.” Id. at 437. The court concluded that this was particularly true when the prevailing party is the defendant because a defendant “could not obtain an award of damages from which to pay [its] lawyer no matter how costly it was for [it] to defend against the suit.” Id.

While the considerations underlying the presumptive entitlement set forth by the Seventh Circuit are certainly relevant to a court's consideration of the appropriateness of a fee award under § 505, the Court declines to adopt the presumption employed in the Seventh Circuit. In Fogerty, the Supreme Court considered a split of authority among the circuit courts of appeals regarding the proper standard for awarding attorneys' fees under § 505, under which some courts applied a standard whereby “prevailing plaintiffs are generally awarded attorneys' fees as a matter of course, while prevailing defendants must show that the original suit was frivolous or brought in bad faith,” while other courts invoked an “ ‘evenhanded’ approach” under which prevailing plaintiffs and defendants are treated equally, Fogerty, 510 U.S. at 520–21, 114 S.Ct. 1023, and concluded that the latter was the proper standard to apply, id. at 534, 114 S.Ct. 1023. Moreover, in making fee awards under § 505, the Court identified the “nonexclusive factors” set forth above, but admonished lower courts that these and any other factors must be “applied to prevailing plaintiffs and defendants in an evenhanded manner,” id. at 534 n. 19, 114 S.Ct. 1023, so that “prevailing plaintiffs and prevailing defendants are ... treated alike,” id. at 534, 114 S.Ct. 1023. These pronouncements cause this Court to find the presumptive entitlement to attorneys' fees, to the extent that it favors an award of fees to a prevailing defendant, see Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir.2005) (“In Assessment Technologies[,] ... we held that prevailing defendants in copyright cases, like [the defendant], are presumptively entitled (and strongly so) to recover attorney fees.”), to be inconsistent with Fogerty's command that prevailing plaintiffs and defendants be treated equally in determining whether to award attorneys' fees, see Jovani Fashion, Ltd. v. Cinderella Divine, Inc., 820 F.Supp.2d 569, 575 (S.D.N.Y.2011) (noting that Assessment Technologies “appears to conflict” with Fogerty's holdings that “fee-shifting is a matter for the district court's discretion, that prevailing defendants and plaintiffs are to be evaluated ‘alike’ and ‘in an evenhanded manner,’ and that the Copyright Act did not adopt ‘the British Rule for automatic recovery of attorney's fees by the prevailing party.’ ” (quoting Fogerty, 510 U.S. at 534 & n. 19, 114 S.Ct. 1023)). Accordingly, this Court will not apply a presumption in favor of an award of fees to the defendant, but will consider the concerns underlying the presumption in its analysis of the appropriateness of a fee award under § 505.

1. Frivolousness and Objective Unreasonableness

The Court finds that the plaintiff's copyright infringement claim was neither frivolous nor objectively unreasonable. The defendant did not contest the validity of the plaintiff's copyright or that the use of the CDs by its employees constituted a “copying” of original elements of the work within the meaning of 17 U.S.C. § 501, and thus, that the plaintiff had established a prima facie case of copyright infringement under 17 U.S.C. § 501. See ZilYen, 935 F.Supp.2d at 216–17, 2013 WL 1302012, at *3 (citing Def.'s Mot. to Dismiss). Thus, the plaintiff's copyright infringement claim cannot be considered frivolous. See LZT/Filliung P'ship, LLP v. Cody/Braun & Assocs., Inc., 117 F.Supp.2d 745, 753 (N.D.Ill.2000) (copyright infringement claim was not frivolous because the plaintiff genuinely thought that the defendant copied the plaintiff's building plans); Quinn v. City of Detroit, 23 F.Supp.2d 741, 752 (E.D.Mich.1998) (copyright infringement claim was not frivolous because the court found that the plaintiff held a valid copyright,...