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Sixth Circuit: Partial fees to copyright defendant affirmed given plaintiff's litigation tactics
April 01, 2008

In a decision last week, the Sixth Circuit affirmed an award of partial attorney fees to a defendant in a copyright case. The plaintiff sued multiple defendants, alleging copyright infringement under numerous theories. One such theory was that receipt of royalties from the sale of infringing music rendered a party liable for the underlying infringement. This theory was rejected by the court when it granted summary judgment in favor of some of the defendants. Even though it had been rejected, the plaintiff continued to pursue the theory in this case against the remaining defendant. When the last defendant prevailed on summary judgment, the district court awarded the defendant its attorney fees incurred after the first summary judgment decision. In a previous appeal, the Sixth Circuit vacated the award, noting that the theory of recovery did not become objectively unreasonable by virtue of the decision regarding the other defendants' summary judgment motion, and remanded the issue for redetermination in light of additional factors. On remand, the district court awarded the same amount, noting the plaintiff's overly aggressive litigation tactics. Such tactics included needlessly requiring the defendant to prepare for an unnecessary trial (rather than stipulating to the same decision regarding the "royalty receipt" theory of recovery and addressing the issue on appeal), filing a single complaint over 900 pages long with hundreds of separate claims and defendants, engaging in discovery abuses, abusing the summary judgment process by submitting massive statements of disputed facts which included legal conclusions and immaterial and argumentative assertions, and engaging in sharp pre-trial practices. The court also sought to deter the plaintiff from similar litigation tactics, given the plaintiff's pattern of litigation.The Sixth Circuit affirmed. The court noted that while the "royalty receipt" theory of liability had been rejected by the court, it was not objectively unreasonable. However, the district court's assessment of the various factors was not an abuse of discretion, and the court therefore affirmed the award.More detail of Bridgeport Music, Inc. v. WB Music Corp. after the jump.

Plaintiff Bridgeport Music filed an original complaint with nearly 500 counts against approximately 800 defendants for copyright infringement of a song, alleging that the accused song sampled the opening three-note chord from the musical composition, "Get Off Your Ass and Jam," written and recorded by George Clinton, Jr. and the Funkadelics in the mid-1970s. This case had multiple defendants: Universal-Polygram International Publishing (UPIP) and the so-called "Warner Defendants," a group of related companies. UPIP did not record or perform the accused song, "99 Problems," but rather merely collected royalties for its performance. Bridgeport notified UPIP of its infringement claim and demanded a 33.3% ownership interest in the song. UPIP did not respond. More than three years later, Bridgeport filed suit against UPIP and the Warner Defendants.The district court granted summary judgment to the Warner Defendants based in part upon a novel question of law, that the receipt of income from the sale of the infringing music by a party who does not manufacture, distribute, or sell the infringing music, does not constitute direct or contributory infringement. UPIP also moved for a summary judgment, in part, based upon the three-year statute of limitations. While the summary judgment motion was pending, UPIP wrote to Bridgeport suggesting that in view of the court's ruling in the Warner Defendants' summary judgment, Bridgeport should stipulate to judgment in favor of UPIP so as to preserve that the parties and the court's resources can avoid unnecessary expenditure of time and expense. Bridgeport did not respond to the letter. The court granted summary judgment for UPIP based upon Bridgeport's failure to demonstrate infringement within the statute of limitations.UPIP moved for an award of fees and costs exceeding $300,000 as prevailing party under 17 U.S.C. § 505. The court granted approximately $82,000 in fees and costs, reasoning that even though Bridgeport's theory of infringement based upon receipt of royalties was objectively reasonable when asserted, this theory became objectively unreasonable once the district court rejected it in the Warner Defendants' summary judgment ruling.Bridgeport appealed the award of attorney fees and costs, and the Sixth Circuit vacated and remanded because of an erroneous determination that the receipt of royalties theory had become unreasonable, even though it was originally reasonable. On remand, the district court considered other factors, and again, made the same award of fees and costs, which was again appealed by Bridgeport. The district court concluded that the novelty of Bridgeport's theory and the contentiousness of both sides throughout the litigation weighed against a full award of fees and costs to UPIP. However, other factors weighed in favor of a partial award of fees and costs to UPIP, including Bridgeport's pursuance of its claims against UPIP after September 16, 2002 (the date the district court granted summary judgment to the Warner Defendants) without any new facts to offer which might cast doubt upon the outcome, such that Bridgeport's theory was futile and factually frivolous. Also, the court noted Bridgeport's pressing of a futile claim as only one example of the overly-aggressive litigation tactics and the forcing of additional, fruitless expenditure of efforts and fees in preparing for trial, which was evidence of Bridgeport's motive of retribution and/or an effort to extract settlement dollars without any basis for doing so. Bridgeport appealed again.On the second appeal, the Sixth Circuit distilled the question on appeal to "despite the objective reasonableness of Bridgeport's royalty-receipt theory, are there other factors that are sufficiently weighty to justify the award against Bridgeport?" The Supreme Court in Fogerty v. Fantasy, Inc. outlines several nonexclusive factors to weigh when considering a request for fees and costs, including frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case), and a need in particular circumstances to advance considerations of compensation and deterrence. The Sixth Circuit noted the district court's discussion of Bridgeport's pressing a futile claim was part of a pattern of an overly-aggressive litigation tactics. Other facts, include filing a single complaint over 900 pages long with hundreds of separate claims and defendants, engaging in discovery abuses, abusing the summary judgment process by submitting massive statements of disputed facts which included legal conclusions and immaterial and argumentative assertions, and engaging in sharp pre-trial practices, further showed the need for deterrence. The court also noted that it had approved prior awards of fees and costs against Bridgeport in companion cases for similar reasons. As stated by the court:

Recognizing that the royalty-receipt theory was, is, and will remain objectively reasonable regardless of the ultimate outcome, however, does not mean that Bridgeport’s continued reliance on the theory in this instance was necessarily nonsanctionable. Objective reasonableness is not an impenetrable shield against fees and costs. As the district court noted, once it had rejected the theory under similar factual circumstances in a companion case, it was fruitless in a practical sense for Bridgeport to pursue that same theory before the same judge and thereby force UPIP to incur expenses preparing for trial.
The court noted that it is improper to sanction a party simply for electing to await decision on a pending motion. However, when viewed as part of the larger landscape of Bridgeport's litigation strategy, an award here was justified, particularly when the unique posture of this case as one of hundreds is brought in the same matter and asserting parallel claims makes deterrence a particularly relevant and appropriate consideration. Therefore, the court concluded it was not an abuse of discretion for the district court to award fees and costs against Bridgeport "in the hope of motivating it to litigate in a more responsible, realistic manner and to deter it from continuing to engage in questionable litigation tactics."The court also affirmed the amount of the award, particularly in light of the fact that the district court significantly reduced the requested amount, both in time (to after the ruling on the Warner Defendants' summary judgment motion) and in amount (reducing the rates for counsel and paralegal work).To read the full decision in Bridgeport Music, Inc. v. WB Music Corp., click here.
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