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Datacarrier S.A. v. Woccu Services Group, Inc.

United States District Court, W.D. Wisconsin

June 25, 2018

DATACARRIER S.A., Plaintiff,
v.
WOCCU SERVICES GROUP, INC., Defendant.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE.

         Plaintiff Datacarrier S.A. sued WOCCU Services Group, Inc. for copyright infringement of Datacarrier's software. (The parties refer to the defendant as WSG, so the court will do the same.) The court concluded that Datacarrier's claim failed as a matter of law and granted WSG's motion for summary judgment. Dkt. 134. Now WSG seeks attorney fees under 17 U.S.C. § 505. Dkt. 138.[1] For the reasons stated below, the court will grant WSG's motion.

         ANALYSIS

         The Copyright Act allows district courts to “award a reasonable attorney's fee to the prevailing party.” 17 U.S.C. § 505. The Supreme Court has provided guidance regarding the meaning of that broad language in two cases. In Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), the Court set forth two general principles: (1) the district court must make particularized, case-by-case assessment rather award fees as a matter of course to the prevailing party, id. at 533; and (2) a court may not treat prevailing plaintiffs and prevailing defendants any differently, id. at 527. The Court also listed “several nonexclusive factors” that a may inform a decision under § 505: “frivolousness, motivation, objective unreasonableness[, ] and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 534 n.19.

         In Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1983 (2016), the Court held that district courts “should give substantial weight to the objective reasonableness of the losing party's position” while “also giv[ing] due consideration to all other circumstances relevant to granting fees.” The Court gave two examples of such other circumstances: litigation misconduct and a history of raising unsuccessful claims or defenses in other copyright cases. Id. at 1988- 89.

         For its part, the Court of Appeals for the Seventh Circuit has added its own gloss to the standard, stating that “the two most important considerations in deciding whether to award fees are the strength of the prevailing party's case and the amount of damages or other relief the party obtained.” Klinger v. Conan Doyle Estate, Ltd., 761 F.3d 789, 791 (7th Cir. 2014) (internal quotations omitted). In other words, if the losing party had a weak claim or defense but the prevailing party doesn't obtain any relief, there is a “compelling” case for awarding fees. Id. Because a defendant generally cannot obtain any relief other than dismissal of the case, “the defendant is entitled to a very strong presumption in favor of receiving attorneys' fees, in order to ensure that an infringement defendant does not abandon a meritorious defense in situations in which the cost of vindication exceeds the private benefit to the party.” Id. (internal quotations omitted).

         The court of appeals has not revisited its standard since Kirtsaeng. And there is a plausible argument that any reliance on presumptions is inconsistent with that case. Kirtsaeng, 136 S.Ct. at 1989 (rejecting presumption against awarding fees when the losing party's position is reasonable because a presumption “goes too far in cabining how a district court must structure its analysis and what it may conclude from its review of relevant factors”). But even if a presumption is not appropriate, the lack of any other remedy for a defendant is still a relevant consideration because it is part of the broader concern of providing incentives to parties to litigate strong claims and defenses.

         WSG says it is entitled to fees under § 505 for the following reasons:

• it is the prevailing party;
• it is the defendant and did not obtain a remedy;
• the court concluded that Datacarrier's software either was not protected by copyright or was not sufficiently similar to WSG's software;
• the court concluded that Datacarrier's experts were difficult to understand and relied on inadmissible evidence;
• WSG asserted other affirmative defenses, such as fair use and fraud on the copyright office, that the court did not consider but that WSG “pursued by necessity”;
• Datacarrier engaged in “gamesmanship” by initially suggesting that Ecuadorian government officials would testify on Datacarrier's behalf but then ...

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