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IP/Entertainment Case Law Updates

Cadkin, et al. v. Loose, et al.

Ninth Circuit overrules its prior decision and holds that a defendant is not a prevailing party for purposes of attorney’s fees under Section 505 of the Copyright Act when a plaintiff voluntarily dismisses the action without prejudice

From about 1959 until the 1970s, plaintiff Emil Cadkin wrote thousands of musical cues, solely and with William Loose. Licensing of the cues was administered by GRH Music, a partnership formed by Cadkin and Loose.

Plaintiff alleged that defendants, Loose’s heirs, removed plaintiff’s name as an author of the works, incorporated the cues including the ones written solely by Cadkin in their own music library, and registered the works with the Copyright Office with defendant’s name as sole author, thus depriving plaintiff of receiving royalties from the licensing of the works.

Defendants moved to dismiss the second amended complaint, and plaintiffs moved for voluntary dismissal without prejudice, which the district court granted. Defendants subsequently moved for attorney’s fees under Section 505 of the Copyright Act which provides “In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party [and] . . . the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.”

The district court awarded attorney’s fees and costs to defendants, and the Ninth Circuit reversed. Ninth Circuit precedent (Corcoran v. Columbia Broadcasting System, Inc., 121 F.2d 575 (9th Cir. 1941)) held that a defendant could recover attorney’s fees under Section 505 when a plaintiff voluntarily dismissed the action without prejudice. However, the court stated that the 1941 decision was no longer good law in light of the 2001 U.S. Supreme Court decision Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598 (2001) which held in the context of the Fair Housing Amendments Act that prevailing party status turns on whether there has been a "material alteration of the legal relationship of the parties."

In Corcoran, the district court denied defendants' motion to dismiss but granted their motion for a more definite statement on a copyright claim. Rather than amending the complaint, plaintiff voluntarily dismissed without prejudice, and the district court ultimately awarded defendants attorney's fees. The Ninth Circuit rejected plaintiff's contention that dismissal without prejudice does not confer prevailing party status under the Copyright Act, stating “Where, as here, a defendant has been put to the expense of making an appearance and of obtaining an order for the clarification of the complaint, and the plaintiff then voluntarily dismisses without amending his pleading, the party sued is the prevailing party within the spirit and intent of the statute even though he may, at the whim of the plaintiff, again be sued on the same cause of action.”

In the case at hand, the court determined that Corcoran cannot be reconciled with Buckhannon's material alteration test because Corcoran focused on the expense the defendants incurred and expressly disregarded that the parties' legal relationship had not changed as a result of the voluntary dismissal, and the Corcoran court construed "prevailing party" in light of the policies underlying the Copyright Act, rather than relying on the plain meaning of the phrase, as the Supreme Court did in Buckhannon.

The court also noted that its holding is consistent with every circuit court that has considered whether Buckhannon governs prevailing party status under the Copyright Act. See, e.g., Riviera Distribs., Inc. v. Jones, 517 F.3d 926 (7th Cir. 2008) (holding voluntary dismissal with prejudice of copyright claims confers prevailing party status on defendants under Buckhannon); Torres-Negron v. J & N Records, LLC, 504 F.3d 151 (1st Cir. 2007) (holding Buckhannon material alteration test applies to copyright claims and concluding dismissal for lack of subject matter jurisdiction does not confer prevailing party status); see also Bridgeport Music, Inc. v. London Music, U.K., 226 F. App'x 491 (6th Cir. 2007) (unpublished) (applying Buckhannon to copyright claims).

The Ninth Circuit concluded “Because the plaintiffs in this lawsuit remained free to refile their copyright claims against the defendants in federal court following their voluntary dismissal of the complaint, we hold the defendants are not prevailing parties and thus not entitled to the attorney's fees the district court awarded them.”

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