Kourtis, et al. v. Cameron, et al.

In copyright infringement suit against producer of two films in Terminator series, Ninth Circuit approves imposition of a costs bond under California law, and affirms grant of attorney’s fees and costs where plaintiffs' claims were objectively unreasonable.

In 1987, plaintiffs developed the concept for The Minotaur, a film which details the exploits of a half-man, half-bull creature that can transform itself into various human and inanimate forms. Plaintiffs registered their concept with the Worldwide Register of Copyrights and hired a writer to prepare a screenplay based on their concept.

In 1989, plaintiffs sent the screenplay to various Hollywood production companies, and a copy found its way to director James Cameron, who contacted the Kourtises and initially expressed an interest in The Minotaur, but ultimately decided not to produce the project. In 1991, Cameron released the film Terminator II: Judgment Day, which—like The Minotaur—features a character that can transform its appearance into both human and nonhuman forms. The writer filed a copyright infringement action against Cameron and various other persons, alleging that Cameron had misappropriated The Minotaur’s concept of a shape-changing character. The court in that action found that Terminator II and The Minotaur are not substantially similar and granted summary judgment.

Plaintiffs did not seek to intervene in the action brought by the writer. However, after it was dismissed, plaintiffs obtained an Australian judgment against the writer affirming their ownership of The Minotaur materials. Plaintiffs then brought an essentially identical suit against Cameron and various other individuals including defendant producer, Mario Kassar, alleging copyright infringement. After plaintiffs failed to post a costs bond, the district court dismissed their claims against Cameron without prejudice, while the litigation against Kassar continued. The district court subsequently granted summary judgment and attorney’s fees in favor of Kassar.

In their appeal to the Ninth Circuit, the plaintiffs challenged several adverse orders and rulings by the district court, including the imposition of a cost bond and the award of attorney’s fees.

The Ninth Circuit affirmed the imposition of a cost bond, explaining that federal district courts have “inherent power to require plaintiffs to post security for costs” and typically “follow the forum state’s practice.” The court instructed that under California law, costs bonds are appropriate where, as here, the plaintiffs “reside out of the state” and there is “a reasonable possibility” that the defendants would prevail. The court found that there was at least a reasonable possibility the defendants would prevail because in the prior suit brought by the writer, the district court determined that the screenplay based on the Kourtises’ concept and Terminator II were not substantially similar under federal copyright law.

The Ninth Circuit also affirmed the award of attorney’s fees, stating that the district court properly considered (1) the degree of success obtained, (2) frivolousness, (3) motivation, (4) reasonableness of the losing party’s legal and factual arguments, and (5) the need to advance considerations of compensation and deterrence. Even though the district court limited its written analysis to objective unreasonableness and frivolousness and did not expressly analyze the other factors, the Ninth Circuit stated that “we will only remand if the record does not support the district court’s decision.” Here, the district court did not abuse its discretion when it awarded fees and costs based on the objective unreasonableness of pursuing a claim for five years that was substantially identical to a claim previously denied, without any additional evidentiary basis. The Ninth Circuit also held that the attorney’s fee award, which was based on actual rates charged by Kassar’s attorneys, was reasonable, noting that the Ninth Circuit has not mandated the lodestar method or comparison to market rates in calculating attorney’s fees under the Copyright Act.