Supreme Court Remands Kirtsaeng Copyright Fee-Shifting Case to New York District Court

The Supreme Court's ruling is technically a win for Kirtsaeng, but the majority opinion written by Justice Elena Kagan strikes a more nuanced balance that gives comfort to both sides in the case, copyright lawyers said in interviews. The court remanded Kirtsaeng to the New York district court because “we are not certain that the lower courts here understood the full scope of that discretion,” Kagan said in the opinion. Remand of the case doesn't “at all intimate that the District Court should reach a different conclusion,” Kagan wrote. “Rather, we merely ensure that the court will evaluate the motion consistent with the analysis we have set out -- giving substantial weight to the reasonableness of Wiley's litigating position, but also taking into account all other relevant factors.” Several justices appeared to be searching for a possible middle ground on fee-shifting factors when they heard oral argument in April (see 1604250053).

The Supreme Court believes federal courts should give “substantial weight to the objective reasonableness of the losing party’s position” but “must also give due consideration to all other circumstances relevant to granting fees,” Kagan said in the opinion: A federal court also “retains discretion, in light of those factors, to make an award even when the losing party advanced a reasonable claim or defense.” But the Supreme Court rejected Kirtsaeng's argument that a case’s advancement of the purposes of the Copyright Act should be taken into account when considering fee shifting because it would encourage litigation of such cases.

The court accepts Kirtsaeng's “premise that litigation of close cases can help ensure that 'the boundaries of copyright law [are] demarcated as clearly as possible,' thus advancing the public interest in creative work,” Kagan said. “But we cannot agree that fee-shifting will necessarily, or even usually, encourage parties to litigate those cases to judgment.” Considering the importance of the legal issues involved in a case when determining fee-shifting “would not produce any sure benefits,” Kagan said. “Fee awards are a double-edged sword: They increase the award for a victory -- but also enhance the penalty for a defeat.” Kagan said in a footnote in the opinion that Kirtsaeng's own possible risk calculations in considering whether to pursue his earlier case against Wiley to the Supreme Court could have included “six of one, half a dozen of the other” and “the higher the stakes, the greater the rush.” Such a standard is “entirely speculative,” she said.

Lawyers who filed amicus briefs for both Kirtsaeng and Wiley told us they believe the Supreme Court struck the right balance. “Both sides were treated with equanimity” in the ruling, said Constantine Cannon's Seth Greenstein, who co-drafted Public Knowledge’s amicus brief supporting Kirtsaeng. The ruling “provides district and appellate courts with an administrable standard” for evaluating all factors in copyright fee-shifting cases, he said. It “lets litigants know that even if their opponent takes a reasonable position, they still have arguments to make” on fee-shifting, Greenstein said. The Supreme Court balanced its ruling against Kirstaeng's argument for making a case's importance in changing copyright law a fee-shifting factor by also finding that “you can't constrain the district court's discretion by telling them that objective reasonableness is the most important or main factor,” he said.

Volunteer Lawyers for the Arts (VLA) counsel David Leichtman of Robins Kaplan said Kirtsaeng appeared to at least partially side with Wiley. The high court “agreed with our position that the district court should give substantial weight to the objective reasonableness factor while also taking into account the totality of circumstances,” Leichtman said. VLA, the Copyright Alliance and software support firm Rimini Street filed amicus briefs supporting Wiley. The Kirtsaeng ruling also was notable for rejecting Kirtsaeng's argument on considering a case's importance as a fee-shifting factor, Leichtman said. The court “did a good job of parsing out that argument and saying that plaintiffs and defendants should be treated in an evenhanded way,” he said.

The decision is “a definite improvement” over the existing split among the different circuit appeals courts on weighting fee-shifting factors, said Library Copyright Alliance counsel Jonathan Band. “It seems clear that different circuits were applying different tests in fee-shifting cases and that was resulting in forum-shopping” of copyright cases, Band said: “They made clear that [Copyright Act Section 505] was trying to strike a balance between” encouraging the creation of creative works and enabling others to “build on those works.” The ruling articulated Section 505's goals “a little more sharply than it did in previous cases, which I think will be an enduring legacy of this case,” Band said.

The Supreme Court's remand of the case to the New York district court doesn't automatically portend a win for either Kirtsaeng or Wiley on fee shifting, copyright lawyers told us. The district court “will probably ask for an additional briefing on the issues” in the case, given the Supreme Court's ruling, Greenstein said: “I'd expect that Kirtsaeng will say that regardless of whether either side's position was objectively reasonable, Kirtsaeng created a major shift in the law” via the Supreme Court's 2013 ruling “because he had the temerity to fight, and there should be some reward for that at the end of the day.” Leichtman said he believes it's unlikely the district court will “change its mind” on fee-shifting on remand. The district court “already walked through other permissible factors and said none of them tilted in favor of awarding fees,” Leichtman said.