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IP/Entertainment Case Law Updates

Warren Publishing Co., et al. v. Spurlock

District court grants in part and denies in part defendant’s motion for attorney’s fees following summary judgment decision in favor of defendant on the basis of fair use, holding that, although plaintiffs advanced an objectively reasonable legal claim, plaintiffs’ improper motivation and assertion of several objectively unreasonable arguments and litigation positions warranted a grant of compensation under the Copyright Act.

Plaintiffs published several magazines and comic books in the horror and monster film genre, and commissioned several artists, including Basil Gogos, to design cover art for the magazines. Defendant sold a book entitled Famous Monster Movie Art of Basil Gogos, which displayed fourteen reproductions of original Gogos art used by plaintiffs as background illustrations for their magazines, and ten exact reproductions of plaintiffs’ magazine covers that used Gogos’s art and added text. Plaintiffs commenced an action against defendant for copyright infringement and common law unfair competition, and the district court granted summary judgment in favor of defendant on the basis of fair use. Defendant subsequently filed a motion for attorney’s fees pursuant to Section 505 of the Copyright Act.

The court began by noting that, in Fogerty v. Fantasy, 510 U.S. 517 (1994), the U.S. Supreme Court directed courts to look to the list of “nonexclusive factors that courts should consider in making awards of attorney’s fees” which the Third Circuit enunciated in Lieb v. Topstone Industries, Inc., 788 F.2d 151 (3d Cir. 1986): frivolousness, motivation, objective unreasonableness (both in the factual and the legal components of the case) and the need in particular circumstances to advance consideration of compensation and deterrence. The court stated that defendant need not establish bad faith on the part of plaintiffs or “exceptional circumstances” to be entitled to fees, observing that, post-Fogerty, courts have increasingly awarded attorney’s fees to prevailing defendants. However, the court went on to state that attorney’s fee awards for prevailing parties are by no means “the rule or presumed,” and that this is especially true when a defendant prevails on the basis of the fair use defense, which cannot be resolved by bright-line rules and necessarily requires a case-by-case analysis. The court cited two cases —Williamson v. Pearson Educ., Inc., 60 U.S.P.Q. 2d. 1723 (S.D.N.Y. 2001), and Leibovitz v. Paramount Pictures Corp., 55 U.S.P.Q. 2d 1598 (S.D.N.Y. 2000)— in which defendants who had stronger fair use defenses than the present case were denied attorney’s fees. The court declined to presume that Spurlock was entitled to attorney’s fees. However, mindful that numerous other courts have awarded attorney’s fees to prevailing defendants in cases involving fair use, the court conducted a case-specific analysis of the Lieb factors.

Regarding the first Lieb factor—frivolousness and objective unreasonableness—defendant’s counsel conceded at oral argument that plaintiffs’ claim was likely not frivolous, and the court concluded that, although it determined that the fair use factors weighed in defendant’s favor, this was not an “easy” case and plaintiffs’ fair use positions were not objectively unreasonable or frivolous. However, defendant urged that plaintiffs took several factual and legal positions during the course of the litigation that were frivolous and objectively unreasonable. The court agreed that plaintiffs’ punitive damages claim, although not rising to the level of frivolousness, was objectively unreasonable, because punitive damages are generally not recoverable in federal copyright suits. The court further concluded that plaintiffs’ request for expedited proceedings, based on one plaintiff’s self-serving personal medical diagnosis, coupled with such plaintiff’s less than truthful testimony that he made substantial efforts to produce a book similar to defendant’s book, were objectively unreasonable in fact and therefore weighed slightly in favor of awarding attorney’s fees. Conversely, the court rejected defendant’s argument that other litigation positions asserted by plaintiffs were objectively unreasonable, including plaintiffs’ assertion of an unfair competition claim under Pennsylvania common law, plaintiffs’ initial assertion of fifteen copyrights that they did not in fact own, plaintiffs’ rejection of defendant’s settlement offers, and other purportedly unreasonable litigation tactics.

Turning next to the second factor—plaintiffs’ motivation—the court concluded that plaintiffs were improperly motivated by a desire to impugn and harm their hated competitor. Parties are improperly motivated, the court instructed, if they do not have a good faith intent to protect a valid interest, but rather a desire to discourage and financially damage a competitor by forcing it into costly litigation. The court found sufficient evidence of plaintiffs’ improper motivation on record where one plaintiff testified that he repeatedly impugned defendant within the industry, and plaintiffs demonstrated “sheer neglect” of their copyright and failed to assert their purported copyrights for twenty-two years.

Regarding the third factor—compensation and deterrence—the court was persuaded by defendant’s argument that the primary goals of the Copyright Act outweighed any risk of litigation that defendant needed to assume by appropriating another’s work. According to the court, plaintiffs’ decision to file suit in spite of their “complete failure to exploit [the] copyrights for approximately 22 years,” coupled with their questionable strategy in litigating their case, including asserting objectively unreasonable factual positions, constituted behavior that warrants deterrence.

After balancing all of the factors, the court concluded that, while several of plaintiffs’ claims and arguments were not unreasonable, based in large part on plaintiffs’ improper motivation the Lieb factors as a whole weighed in favor of defendant, albeit only for litigation stemming from plaintiffs’ claims and positions identified above as being objectively unreasonable. Plaintiffs’ bad faith, along with several objectively unreasonable claims and litigation positions, and the corresponding need to deter such behavior and to compensate defendant for opposing such claims and positions, warranted a partial fee award, and the court determined that defendant was entitled to 35% of his total attorney’s fees.

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