TBA Law Blog

Posted by: Tim Warnock on Mar 1, 2017

Journal Issue Date: Mar 2017

Journal Name: March 2017 - Vol. 53, No. 3

In Assessing Fee Applications, Courts Must View All Circumstances of a Case in Their Own Terms

On June 16, 2016, the Supreme Court decided that a court, in considering whether to award a reasonable attorney’s fee pursuant to the Copyright Act, “should give substantial weight to the objective reasonableness of the losing party’s position.”[1] The court further clarified its decision, holding that “the court must also give due consideration to all other circumstances relevant to granting fees; and it retains discretion, in light of those factors, to make an award even when the losing party advanced a reasonable claim or defense.”[2] The decision should guide courts in exercising discretion in all cases analyzing statutory fee claims and, in particular, distinguishing between successful litigants and unsuccessful litigants who have advanced reasonable — although ultimately unsuccessful — positions.

The petitioner in Kirtsaeng, a citizen of Thailand, “came to the United States 20 years ago to study math at Cornell University.”[3] He discovered that the textbooks in Thailand and the textbooks in the United States were virtually identical, but the textbooks sold in Thailand were substantially less expensive. The petitioner made “a tidy profit” reselling textbooks purchased in Thailand to American students.[4]

The Respondent, John Wiley & Sons Inc., filed suit alleging copyright infringement. The petitioner, Supap Kirtsaeng, claimed that the “first-sale doctrine” provided a defense. “That doctrine typically enables the lawful owner of a book (or other work) to resell or otherwise dispose of it as he wishes.”[5] Wiley responded that the doctrine did not apply to copies manufactured abroad.

The argument regarding the proper application of the first-sale doctrine to copies of works manufactured abroad was the subject of a split of authority among the Circuits. In fact, the United States Supreme Court, “in its first pass at the issue, divided 4 to 4.”[6]

Wiley prevailed both at the district court and the court of appeals, although the appellate panel was divided.[7] The United States Supreme Court “granted Kirtsaeng’s petition for certiorari and reversed the United States Court of Appeals for the Second Circuit in a 6-to-3 decision, thus establishing that the first-sale doctrine allows the resale of foreign-made books, just as it does domestic ones.”[8]

Kirtsaeng returned to the district court and sought more than $2 million in fees pursuant to § 505 of the Copyright Act. Again, both the district court and the Second Circuit found in favor of Wiley.[9] The district court concluded that awarding fees would not promote the purposes of the Copyright Act, giving substantial weight to the objective reasonableness of Wiley’s position.[10] The court of appeals affirmed, finding that the district court did not commit an abuse of discretion in finding that other factors did not outweigh the district court’s finding that Wiley’s position was objectively reasonable.[11]

The Supreme Court began its analysis by noting that the Copyright Act “authorizes fee shifting, but without specifying standards that courts should adopt, or guideposts they should use, in determining when such awards are appropriate.”[12] The court then drew upon its decision in 1994 in Fogerty v. Fantasy Inc.[13]

The court noted that Fogerty “recognized the broad leeway § 505 gives to district courts — but also established several principles and criteria to guide their decisions.”[14] The court noted that, in Fogerty, the court “established a pair of restrictions” on a district court’s discretion.[15] One, fees may not be awarded as a matter of course but must be made on “a more particularized, case-by-case assessment.”[16] Two, courts must treat plaintiffs and defendants similarly in order to encourage both plaintiffs and defendants to litigate meritorious positions.[17]

The Fogerty court also identified certain nonexclusive factors that should guide a court’s decision whether to award fees, such as “frivolousness, motivation, objective reasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence.”[18] Finally, the court in Kirtsaeng acknowledged that the court in Fogerty “left open the possibility of providing further guidance in the future, in response to (and grounded on) lower courts’ evolving experience.”[19]

The court in Kirtsaeng noted that the parties agreed that the lower courts needed additional guidance in how to exercise its “wide latitude to award attorney’s fees based on the totality of circumstances in a case.”[20] Wiley argued “that giving substantial weight to the reasonableness of a losing party’s position will best serve the Act’s objectives.”[21] Kirtsaeng, on the other hand, urged the court to give “special consideration to whether a lawsuit resolved an important and close legal issue and thus ‘meaningfully clarifie[d]’ copyright law.”[22]

The court, agreeing that further clarification was necessary, examined its treatment of “other open-ended fee-shifting statutes.”[23] The court observed that a court’s discretion ‘is rarely without limits.’”[24] The court noted that, “[w]ithout governing standards or principles, such provisions threaten to condone judicial ‘whim’ or predilection.”[25] In fact, a court’s “judgment is to be guided by sound legal principles.”[26] Finally, the court noted that “unconstrained discretion prevents individuals from predicting how fee decisions will turn out, and thus from properly making informed decisions about whether to litigate.”[27] The court concluded, based on the foregoing principles, that the court had defined limits in interpreting fee statutes that had "no explicit limit or condition" within the fee statute itself by looking to "the large objectives of the relevant Act.”[28]

With respect to the Copyright Act, the court noted that “[t]hose objectives are well settled.”[29] “Copyright law ultimately serves the purpose of enriching the general public through access to creative works.”[30] The Act “achieves that end by striking a balance between two subsidiary aims: encouraging and rewarding authors’ creations while also enabling others to build on that work.”[31]

The question became whose view, Kirtsaeng’s or Wiley’s, advanced the purposes of the Copyright Act? “The contested issue is whether giving substantial weight to the objective (un)reasonableness of a losing party’s litigating position — or, alternatively, to a lawsuit’s role in settling significant and uncertain legal issues — will predictably encourage such useful copyright litigation.”[32]

The court found that Wiley’s objective-reasonableness approach was the better-reasoned view.[33] First, the objective-reasonableness approach “encourages parties with strong legal positions to stand on their rights and deters those with weak ones from proceeding with litigation.”[34] For instance, a defendant with a clearly meritorious defense is encouraged to defend even if fees will likely exceed the cost of a settlement, and plaintiffs with meritorious positions are encouraged to litigate even when the amount of actual damages is small.[35] Conversely, plaintiffs and defendants will be less likely to pursue positions that lack merit based on the risk of having “to pay two sets of fees.”[36]

The court then examined Kirtsaeng’s position and concluded that his position yielded no “sure benefits.”[37] The court did not agree with Kirtsaeng that fee shifting in difficult cases would encourage parties to litigate those cases to judgment. “[T]he hallmark of hard cases is that no party can be confident if he will win or lose,” which could “just as easily discourage as encourage parties to pursue the kinds of suits that ‘meaningfully clarif[y]’ copyright law.”[38]

Moreover, the court reasoned a district court will easily know whether a party has advanced an unreasonable position, but a district court may not know the effect of a newly decided issue.[39] Thus, Wiley’s view was more capable of consistent and accurate application.

Nevertheless, “objective reasonableness can only be an important factor in assessing fee applications — not the controlling one.”[40] The court found that lower courts treated an analysis of objective reasonableness not as a substantial consideration but as a “dispositive” consideration.[41] The court cautioned that a court assessing a fee application “must view all the circumstances of a case on their own terms,” such that “a court may award fees even though the losing party offered reasonable arguments (or, conversely, deny fees even though the losing party made unreasonable ones).”[42]

The court vacated the judgment of the court of appeals for further proceedings.[43] The court cautioned, however, that “we do not at all intimate that the district court should reach a different conclusion.”[44]


  1. Kirtsaeng v. John Wiley & Sons Inc., 579 U.S. __, 136 S. Ct. 1979, 1983 (2016).
  2. Id.
  3. Id.
  4. Id.
  5. Id. at 1984.
  6. Id. (citing Costco Wholesale Corp. v. Omega S.A., 562 U.S. 40 (2010) (per curium)).
  7. Id. (internal citation omitted).
  8. Id. (citing Kirtsaeng v. John Wiley & Sons Inc., 568 U.S. _, _ (2013)).
  9. Id. at 1984.
  10. Id.
  11. Id.
  12. Id. at 1984 – 1985.
  13. Id. at 1985 (citing Fogerty v. Fantasy Inc., 510 U.S. 517 (1994)).
  14. Id. (citing Fogerty, 510 U. S. at 519).
  15. Id. (citing Fogerty, 510 U. S. at 533).
  16. Id.
  17. Id. (citing Fogerty, 510 U. S. at 527).
  18. Id. (citing Fogerty, 510 U. S. at 534, n.19).
  19. Id. at 1985.
  20. Id.
  21. Id.
  22. Id.
  23. Id.
  24. Id. (quoting Flight Attendants v. Zipes, 491 U.S. 754, 758 (1989)).
  25. Id. at 1986 (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 139 (2005)).
  26. Id. (quoting United States v. Burr, 25 F. Cas. 30, 35 (No. 14,692d) (CC Va. 1807) (Marshall, C. J.)).
  27. Id. at 1986.
  28. Id. (internal citations omitted).
  29. Id.
  30. Id. (quoting Fogerty, 510 U.S. at 527).
  31. Id. at 1986.
  32. Id.
  33. Id.
  34. Id.
  35. Id.
  36. Id.
  37. Id. at 1987.
  38. Id.
  39. Id. at 1987 – 1988.
  40. Id. at 1988.
  41. Id. at 1989.
  42. Id.
  43. Id.
  44. Id.

Tim Warnock TIM WARNOCK is a member of Riley Warnock & Jacobson PLC. He is certified in Tennessee as a civil trial specialist by the National Board of Trial Advocacy and is a member of the American Board of Trial Advocates. Warnock graduated from the University of Tennessee College of Law. He has served as chair of the Federal Practice and Sports and Entertainment Sections of the Tennessee Bar Association and has served as a member of the Steering Committee for the Tennessee Bar Association’s Leadership Law Program.