Cliff Thompson, a San Antonio resident sued by the RIAA for copyright infringement, has asked the Supreme Court to decide whether the record labels should be forced to pay attorneys' fees in cases where they voluntarily dismiss copyright infringement cases. Thompson was sued by the RIAA in 2006 for allegedly using KaZaA to distribute music, but the labels dismissed their case against him once it became apparent that his adult daughter was the KaZaA user in question.
Thompson and the case of the unawarded attorneys' fees
Thompson sought an award of attorneys' fees, arguing that since he was the prevailing party in the copyright infringement lawsuit, he was entitled to have his legal bills paid for by the RIAA. The problem is that different courts do not handle attorneys' fees in copyright infringement cases uniformly. The judge in Virgin v. Thompson denied his request, citing a "purported lack of responsiveness," and Thompson was thwarted once again at the Fifth Circuit Court of Appeals.
Citing a 1997 Supreme Court ruling, the appeals court decided that attorneys' fees awards are "not automatic." Instead, courts must take a number of factors into consideration, including "frivolousness, motivation, objective unreasonableness... and the need in particular circumstances to advance considerations of compensation and deterrence," noted the opinion.
In contrast, the Seventh Circuit Court of Appeals has held that a simple "material alteration of the legal relationship of the parties" is sufficient for an attorneys' fees award. That decision, which involved a copyright infringement lawsuit between video poker game manufacturers, was based on a 2001 Supreme Court ruling.
Midwest Electronic Specialties was entitled to legal fees once the case against it was dismissed, said the appeals court. "Midwest obtained a favorable judgment," wrote the judges. "That this came about when Riviera threw in the towel does not make Midwest less the victor than it would have been had the judge granted summary judgment or a jury returned a verdict in its favor. Riviera sued; Midwest won; no more is required."
Attorney: the Supreme Court should end the recording industry's gambling
In the petition for certiorari filed with the Supreme Court, Thompson's attorney Ted Lee lays out the RIAA's legal strategy and notes what he describes as the "inherent unfairness" of the lawsuits. "Clearly, the industry has gambled that defendants will make the financially-rational decision of settling the lawsuits—regardless of culpability—rather than risk financial ruin in a knock-down, drag-out legal fight," reads Lee's petition. "More often than not this strategy works, as the vast majority of these defendants never see the inside of a courtroom in these lawsuits, simply because even if the innocent defendant were to win his case on the merits, he more than likely would lose in his pocket book."
Lee focuses on a 1994 Supreme Court decision in Fogerty v. Fantasy Inc., which appeals courts throughout the US have interpreted differently. He argues that federal courts have "latched on to one footnote" from the case and only look at "frivolousness, motivation, objective unreasonableness, and the need to advance considerations of compensation and deterrence" when making a decision on attorneys' fees. The Fogerty factors are inherently unfair to prevailing defendants, says Lee. "Simply put, it is impossible for a court to apply
the factors mentioned in Fogerty to prevailing plaintiffs and prevailing defendants in an evenhanded manner," reads the petition. "For example, the trial court's opinion gave no consideration to the merits of Thompson’s defense, but essentially concluded, contrary to the tenor of Fogerty, that because the plaintiffs' cause was not "frivolous," no attorney's fees should be awarded to Thompson."
That logic flies in the face of the Supreme Court's finding that innocent defendants should be encouraged to fight back in court, says Lee. "There is a clear and present need for this Court's intervention and guidance on this important issue of copyright law," Lee concludes. "Moreover, an absence of uniformity between the circuits, concurrent with an onslaught of litigation by the music companies against internet account holders, only serves to provide innocent defendants with even little, if any, incentive to fully litigate any meritorious defenses they may have, contrary to the policies this Court has recognized."
Obviously, no one outside of the nine justices can say whether or not the Supreme Court will hear this case. But there are some significant reasons why the Court may be interested in taking up this case. First, there is a conflict at the Appeals Court level, as at least two circuits are interpreting the same ruling and law very differently. Second, and more significantly, there's a lot at stake here. The fight between the RIAA and alleged copyright infringers is inherently unbalanced due to the vast financial resources available to the record labels. The risk-reward ratio for defendants is seriously out of kilter, and mandating that a successful defense—even if it comes from the RIAA's decision to voluntarily dismiss a case—results in the record labels picking up the tab would even things out.
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