Following summary judgment in favor of defendants on plaintiff’s claims of copyright infringement and violations of the Digital Millennium Copyright Act (DMCA) relating to plaintiff’s copyrighted residential building plans, the district court granted defendants’ motion for attorneys’ fees as the prevailing party under the DMCA and denied their motion for attorneys’ fees under the Copyright Act.
At the outset, the court noted that defendants were the prevailing parties and therefore met the threshold requirement for receiving attorneys’ fees under the DMCA. The court then considered the four factors weighing on whether defendants were entitled to an award of attorneys’ fees – plaintiff’s motive, the reasonableness of the fee, deterrence and compensation, and the ability of the nonmoving party to pay – and concluded that all four factors supported an award of attorneys' fees.
With respect to plaintiff’s motive, the court noted that plaintiff had established no evidence whatsoever to support its allegation that defendants removed copyright information from plaintiff's plans in an attempt to pass off the plans as their own. Plaintiff’s DMCA claims rested solely on its contention that the plans were substantially similar and the only plausible explanation was that defendants used plaintiff's plans and removed the copyright information. In granting summary judgment, however, the court not only that the two sets of plans were not substantially similar, but that the “myriad differences" between the two established that the defendants had not removed copyright information from the plaintiff’s plans.
The court also found that an award of attorneys’ fees would support the goals of deterrence and compensation. Plaintiff’s DMCA claim was frivolous and should not have been brought, and an award of attorneys’ fees would deter future plaintiffs from bringing similar claims where they had no evidence that the defendants had removed copyright information. With respect to the issue of compensation, the court focused on the relative size of the parties, noting that one defendant was owned and operated by an individual, who was the company's sole employee and who performed all of its residential design work. Defendant received $4,000 for the design of the home and carried no insurance to cover the expenses associated with defending a copyright suit. In comparison, while plaintiff was not a large entity, it employed seven full-time employees and appeared to have resources that appear to substantially exceed those of either defendant. The court also noted that while it asserted claims under the DMCA against two defendants, plaintiff's complaint failed entirely to mention the second defendant in its allegations in support of those claims.
While the court concluded that defendants were entitled to an award of attorneys’ fees under the DMCA, it rejected defendants’ request for a similar award under the Copyright Act. Under Fourth Circuit precedent, courts consider four sets of factors in determining whether to award attorneys’ fees: the motivation of the parties, the objective reasonableness of the legal and factual positions advanced, the need to advance considerations of compensation and deterrence, and any other relevant factors presented.
The court agreed with plaintiff’s argument that no evidence existed that it acted in bad faith by bringing its copyright action. Noting that a more appropriate action might have been to contact the defendants and to attempt to resolve the matter prior to filing suit, the court concluded that plaintiff had no legal obligation to do so. Without more, its actions in filing suit did not amount to bad faith. Acknowledging that the Supreme Court has expressly held that the absence of bad faith is not dispositive to an attorneys’ fee award, the court considered the additional factors and concluded that they did not support defendants’ fee request.
The court found that plaintiff’s claims were not objectively unreasonable. Plaintiff's position is frivolous and therefore objectively unreasonable where the court finds the issue of substantial similarity not to be a close or complex question. The court concluded that its determination that most of the elements of plaintiff's design were either in the public domain and not protected, or entitled only to "thin" protection, entitling the defendants to prevail on summary judgment, did not render plaintiff's claims patently unreasonable. At the time the court granted summary judgment, the Fourth Circuit had not squarely addressed certain issues raised by plaintiff's copyright suit, and even assuming that it knew or should have known that copyright protection for its plans was limited, plaintiff was entitled to some protection, and its action to enforce the limits of that protection was not unreasonable. The court also noted that, in “stark contrast” to its DMCA claims, plaintiff had an adequate factual basis for its copyright claims and the fact that it ultimately did not prevail on those claims did not render them frivolous or objectively unreasonable. Although it ultimately found that plaintiff's copyright claims lacked merit, the court concluded that the claims were not so utterly lacking in foundation or legal basis that plaintiffs should never have brought its case.
Acknowledging that an of award attorneys’ fees to prevailing defendants may deter copyright holders from filing suits without first attempting to resolve the matter outside of court, the court concluded that plaintiff's copyright claims were not such a flagrant attempt to abuse copyright law that they merited the “strong medicine” of an award of attorneys’ fees. Such an award, without evidence of bad faith or frivolity, would pave the way for granting fees as a matter of course whenever a copyright holder is defeated on summary judgment, which could potentially chill litigation properly brought to enforce copyright protections. Finally, the court rejected defendants’ argument that it should award attorneys' fees because defendants lacked the resources to cover the costs of litigation, holding that while it weighed in defendants’ favor, this factor did not tip the scale heavily enough, in light of the other considerations weighing against defendants.