For the Cynics, an Antidote: The Order in Capitol v. Foster

By Pamela Jones
Groklaw

February 08 2007

This order has to do with a woman who was not rich or powerful. A single mom. She started with no important friends to pull strings for her. What she had was innocence, a willingness to fight to prove it, and an unwillingness to give up and settle with the music industry, thus admitting to something she said she had not done. Indignation can be empowering, like a wave you can ride a long way, indeed. She also had an attorney willing to work, I gather, for maybe next to nothing, if necessary, Marilyn Barringer-Thomson.

As a result, the music industry, which has been suing the poor and powerless -- some believe so as to build a body of one-sided case law around US Copyright Law -- has been told where the line in the sand is. The plaintiffs who massed against this defendant -- Capitol Records, UMG Recordings, Maverick Recording Company, BMG Music, Arista Records, Sony BMG Music Entertainment, and Warner Bros. Records -- have been told they will have to pay a reasonable amount, yet to be determined, of this vindicated defendant's legal fees, because she has been ruled the prevailing party, against all odds.

It's not the money. Or more accurately, it's not just the money, although surely the music industry will now be more careful who they sue, so as to avoid another outcome like this. It's the precedent that really matters. The music industry's attempt to establish that an Internet account holder is responsible for any copyright infringement that occurs using it, whether or not the person knows about it or approves it, has bitten the dust in a courtroom in Oklahoma:

The Copyright Act does not expressly render anyone liable for infringement committed by another. Rather, the doctrine of secondary liability emerged from common law principles.... Under those common law principles, one infringes a copyright contributorily by intentionally inducing or encouraging a direct infringement. The elements of a claim for contributory copyright infringement are: (1) direct infringement by third party; (2) knowledge by the defendant that third parties were directly infringing; and (3) substantial participation by the defendant in infringing activities.... Merely supplying means to accomplish infringing activity cannot give rise to imposition of liability for contributory copyright infringement.... One infringes a copyright vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.

That's it. Simple fairness.

I hand typed the order out for you, because it is, in my opinion, that important that you read it, and I know you pretty well by now, and if I put up a PDF, some of you won't actually bother. And I know some of you seriously thought that the RIAA owned the courts and that their lawyers knew no bounds.

You can see a picture of the gutsy judge here [ http://blog.wired.com/music/2007/02/scoop_label_mus.html ], along with Wired's account:

This is a significant development; the landmark case could have dramatic repercussions for the RIAA's legal campaign against file sharers, since a precedent now exists for the RIAA to compensate wrongfully-sued defendants for their legal costs. (Capitol Records' mistake was to claim Debbie Foster was liable for any infringement occuring on her internet account, regardless of who actually downloaded and subsequently shared the files.)...

Update: I just spoke with Marilyn Barringer Thomson, Debbie Foster's attorney, who told me that she and her client are "pleased with the outcome," and explained that the judge granting attorneys' fees under the specific Copyright Act was preferable to him granting the fees under the more general 1927 statute (essentially, Thomson's main legal theory triumphed, and her back-up/alternate was denied). Finally, Thomson said that the label will likely owe Foster more than $50,000, since today's Order allows her to supplement the attorneys' fees total to include additional time spent on the case.

The defendant from the beginning declared that she had never file shared. She wasn't "fflygirl11," who the plaintiffs said had downloaded copyrighted music inappropriately using the defendant's account. She acknowledged that her estranged husband and adult daughter did have access to her account, but she herself had never downloaded anything. Eventually, the daughter was, by default, found guilty. But that wasn't the end. The plaintiffs didn't drop the matter against the mother.

"The plaintiffs represented to Ms. Foster that regardless whether she had directly participated in the downloading of their works, she would be liable as the owner of the Internet account," the judge writes. They claimed that she had "contributorily and/or vicariously infringed Plaintiffs' Copyrighted Recordings, including, but not limited to the extent that one or more members of their household engaged in copyright infringement."

When settlement talks broke down, because the defendant refused to give up her counterclaim requesting a declaratory judgment that she was not guilty of infringement, the plaintiffs moved to dismiss their claims against Ms. Foster with prejudice. They won that motion, and both their claims and her counterclaim were dismissed. But there was a boomerang for the plaintiffs they didn't expect, I'm guessing: the court ruled that since the claims were dismissed, Ms. Foster was the prevailing party and hence entitled to attorneys' fees. The plaintiffs didn't like that and argued against it. But the judge has concluded the plaintiffs were stretching Copyright Law and even Grokster too far, calling the contributory infringement theory "untested and marginal" although not willing to quite call it "frivolous or objectively unreasonable".

The court's analysis goes like this: ordinarily a court has discretion to award fees or not, and some of the factors it will consider will be such things as frivolousness. Other factors, Judge West states, are "motivation, objective unreasonableness of the non-prevailing party's case, and need in particular circumstances to advance considerations of compensation and deterrence." In the US, fees are not normally granted if a case is dismissed with prejudice. But in exceptional circumstances, it can happen, such as "where a plaintiff makes a practice of repeatedly bringing claims and then dismissing with prejudice 'after inflicting substantial litigation costs on the opposing party and the judicial system.'"

But that's not the situation here, the court had already ruled. It wasn't an exceptional circumstance like that. But under Copyright Law, this order says, there is no such restriction:

While awards for attorneys' fees are not granted to the prevailing party automatically under the Copyright Act, neither are they confined to "exceptional circumstances." Rather they are to be granted when equity and the ends of the Copyright Act are advanced. In fact, district courts within this circuit have observed that "though said to be a matter within the court's discretion, attorney's fees are awarded more often as the rule than the exception."...

Copyright law "ultimately serves the purpose of enriching the general public through access to creative works." ... Because that end is served by delineating the boundaries of copyright law as clearly as possible, both plaintiffs and defendants should be encouraged to litigate their meritorious claims and defenses.

Stop and realize what just happened: A judge has noticed that the purpose of Copyright Law isn't just to protect the music industry. The purpose of the law is to enrich the public by access to creative works. That judicial insight led this judge to think about the defendant's situation, what she had been through, what she was facing, and what Copyright Law would end up like if he didn't make it a little bit less one-sided in his courtroom, I gather. Under Copyright Law, the order states, plaintiffs and defendants are equal in that whoever prevails can be awarded attorneys' fees. Why? The order explains:

The United States Supreme Court has recognized that "it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible. To that end, defendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement."...

"[W]ithout the prospect of such an award, the party might be forced into a nuisance settlement or deterred all together from exercising his rights." Id. The Court finds that this case presents a situation where considerations of compensation under Fogerty weigh in favor of the Court's award of attorneys' fees to Ms. Foster. Her only alternative to litigating the plaintiffs' contributory or vicarious liability claim was to capitulate to a settlement for a violation she insists she did not commit. Such capitulation would not advance the aims of the Copyright Act as the plaintiffs' untested theory would remain untested. The Court concludes that under the facts of this case, the prevailing defendant is entitled to an award representing her reasonable attorneys' fees and costs pursuant to § 505 of the Copyright Act.

It is a big win, as EFF correctly calls it [ http://www.eff.org/deeplinks/archives/005114.php ], for this single mom, who has been going through this since 2004 and whose legal bills are in the tens of thousands of dollars already, with more discovery to go. And EFF, Public Citizen, the ACLU, and the American Association of Law Libraries filed an amicus brief [ http://www.eff.org/legal/cases/Capitol_v_Foster/amicus_in_support_of_fees.pdf ] last August supporting Ms. Foster's motion for attorneys' fees.

There can be appeals and who knows what to come. The amount is yet to be determined, but the attempt to enlarge copyright's reach with this "marginal" theory of contributory infringement failed. A court has said that the prevailing party in a copyright case can be awarded attorneys' fees, that it's "a matter left to the Court's discretion" and it doesn't matter if the prevailing party is the plaintiff, that is the music industry, or the defendant. In this, they must be "treated alike". Is that not refreshing?

I've been telling you the truth. Courts are the one place where you actually can get a fair shake, even if you are not rich or powerful. It doesn't always happen, but it can, and it's supposed to. Judges don't have to do what money or power wants. Judges are immune, if they want to be, and usually they are. This is Exhibit A.

The law isn't like a tsunami, you know. Courts don't handle new areas of law, like cyberlaw, with overnight comprehension of just what to do. It's more like a slow and methodical incoming tide, one lap, then another, then another just a bit higher on the sand, almost imperceptible, then another, then one that doesn't reach as high and may even seem to be regressing, and then another much higher, and another. Until, hopefully, you get there.

********************

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA

______________________________

Capitol Records, Inc., et al.,
Plaintiffs,

vs.

Debbie Foster and Amanda Foster,
Defendants.

Case No. Civ. 04-1569-W

___________________________

ORDER

Before the Court is the defendant Deborah Foster's application for an award of attorneys' fees (docket no. 129). The matter has been fully briefed and is ready for determination.

Background

Prior to filing this action, the plaintiffs learned from documents obtained under subpoena from Cox Communications, Inc. that an Internet user named "fflygirl11" had downloaded several of their copyrighted works utilizing an account registered to the defendant Deborah Foster. The plaintiffs, through their "settlement support center," contacted Ms. Foster regarding the alleged infringement. Although Ms. Foster never denied owning the account, she vehemently denied employing the Internet user name "fflygirl 11" or downloading the plaintiffs' works. Ms. Foster did indicate that her estranged husband and her adult daughter, Amanda Foster, had access to her account and might possibly have been responsible for the alleged infringement. The plaintiffs represented to Ms. Foster that regardless whether she had directly participated in the downloading of their works, she would be liable as the owner of the Internet account used by "fflygirl 11".

On November 18, 2004, the plaintiffs filed this action against Ms. Foster alleging that she had infringed their copyrights by unlawfully downloading musical works to which they owned the copyrights. After some initial discovery, the plaintiffs amended their complaint to name Amanda Foster as a co-defendant to the action. The First Amended Complaint, filed July 7, 2005, also added an allegation that "Plaintiffs are informed and believe that Defendants, without the permission or consent of Plaintiffs, have contributorily and/or vicariously infringed Plaintiffs' Copyrighted Recordings, including, but not limited to the extent that one or more members of their household engaged in copyright infringement." Deborah Foster answered denying that she had infringed the plaintiffs' copyrights and counterclaimed for "a declaratory judgment of non-infringement."¹ Amanda Foster failed to answer and, on December 7, 2005, the Court granted the plaintiffs' motion for a default judgment against her.

The plaintiffs continued to pursue their claims against Deborah Foster ² and, after failed attempts to resolve the matter outside of court, the plaintiffs moved to dismiss their claims against Ms. Foster with prejudice. Ms. Foster, whose litigation investment was by that point considerable, refused to dismiss her counterclaim. On July 13, 2006, the Court, upon motion by the plaintiffs, ordered that the plaintiffs' claims against Ms. Foster be dismissed with prejudice. In addition, it found that the dismissal of the plaintiffs' claims against Ms. Foster effectively resolved the controversy in her favor and negated any justiciable case or controversy between the parties. The Court, therefore, ordered that Ms. Foster's counterclaim for a declaratory judgment of non-infringement be dismissed. Finally, the Court determined that Ms. Foster was the prevailing party in the action and was thus eligible for an award of attorneys' fees pursuant to the federal Copyright Act, 17 U.S.C. § 505. The question of Ms. Foster's entitlement to such an award was reserved for adjudication upon Ms. Foster's application for attorneys' fees.

ANALYSIS

Under the Copyright Act, a prevailing party's entitlement to an award of attorneys' fees is a matter left to the Court's discretion. Fogerty v. Fantasy, Inc., 510 U.S. 517, 533-34 (1994). However, prevailing plaintiffs and prevailing defendants must be treated alike. Id. While there is no "precise rule of formula" for the court to employ when determining a party's entitlement to an award of attorneys' fees, factors the court may consider include frivolousness, motivation, objective unreasonableness of the non-prevailing party's case, and need in particular circumstances to advance considerations of compensation and deterrence. Palladium Music, Inc. v. Eatsleepmusic, Inc., 398 F.3d 1193 (10th Cir. 2005). These factors may be used "to guide courts' discretion, so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner." Id. quoting Fogerty at 534 n. 19.

The plaintiffs argue that it would be inappropriate to grant Ms. Foster an award for attorneys' fees in this case. First, they point to the fact that the Court previously determined that it was improper to condition dismissal of the plaintiffs' claims against Ms. Foster on an award of attorneys' fees under Rule 41(a)(2) of the Federal Rules of Civil Procedure. In its July 13, 2006 order, the Court noted that when a plaintiff dismisses an action with prejudice, attorneys' fees are usually not a proper condition of dismissal because the defendant cannot be made to defend again. See Aero Tech. Inc. v. Estes, 110 F. 3d 1523, 1528 (10th Cir. 1997). It is only in exceptional circumstances that a court may condition a dismissal with prejudice upon the plaintiffs' payment of the defendant's attorneys' fees. Id. Exceptional circumstances include such situations as where a plaintiff makes a practice of repeatedly bringing claims and then dismissing with prejudice "after inflicting substantial litigation costs on the opposing party and the judicial system." Id.

The Court concluded there was no evidence that the plaintiffs engaged in any practice that would constitute exceptional circumstances justifying an award of attorneys' fees under the provisions of Rule 41(a)(2). The plaintiffs contend that this finding is dispositive of the issue of Ms. Foster's entitlement to attorneys' fees under the Copyright Act. It is not. While awards for attorneys' fees are not granted to the prevailing party automatically under the Copyright Act, neither are they confined to "exceptional circumstances." Rather they are to be granted when equity and the ends of the Copyright Act are advanced. In fact, district courts within this circuit have observed that "though said to be a matter within the court's discretion, attorney's fees are awarded more often as the rule than the exception." Walden Music, Inc. v. C.H.W., Inc., 1996 WL 254654 (D. Kan.) at *6, quoting Big Tree Enterprises, Ltd. v. Mabrey, 1994 WL 191996 (D.Kan), aff'd 45 F.3d 439 (10th cir. 1994); see also Frank Music Corp. v. Sugg, 393 F.Supp.2d 1145, 1147 (W.D. Okla. 2005). Furthermore, although there is some overlap in the factors considered in their application -- notably, in both instances the court is to consider whether the claims at issue were "frivolous" -- the underlying aims of Rule 41(a)(2) and the Copyright Act are dissimilar. Rule 41(a)(2) aims primarily to thwart a claimant's abuse of his opponent and the judicial process. Copyright law "ultimately serves the purpose of enriching the general public through access to creative works." Fogerty at 527. Because that end is served by delineating the boundaries of copyright law as clearly as possible, both plaintiffs and defendants should be encouraged to litigate their meritorious claims and defenses. Id.

Because the Court's denial of Ms. Foster's request for attorneys' fees pursuant to Rule 41(a)(2) does not resolve the question of her entitlement to fees under the Copyright Act, the Court will next consider whether the plaintiff claims were frivolousness, improperly motivated, or objectively unreasonably as outlined in Fogerty.

The plaintiffs' claims against Ms. Foster were for direct, as well as contributory or vicarious copyright infringement. The plaintiffs appear to base their secondary liability claims against Ms. Foster solely on the fact that she maintained an Internet account which a member of her household utilized to infringe the plaintiffs' copyrights. The Copyright Act does not expressly render anyone liable for infringement committed by another. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, (2005). Rather, the doctrine of secondary liability emerged from common law principles. Id. Under those common law principles, one infringes a copyright contributorily by intentionally inducing or encouraging a direct infringement. The elements of a claim for contributory copyright infringement are: (1) direct infringement by third party; (2) knowledge by the defendant that third parties were directly infringing; and (3) substantial participation by the defendant in infringing activities. SeeNewborn v. Yahoo!, 391 F.Supp.2d 181, 186 (D.D.C. 2005); see alsoNewborn v. Yahoo! Inc., 437 F.Supp.2d 1 (D.D.C.2006)(finding defendant was entitled to an award of attorneys' fees after prevailing upon plaintiff's frivolous and objectively unreasonable contributory copyright claim). Merely supplying means to accomplish infringing activity cannot give rise to imposition of liability for contributory copyright infringement. Id.; see also A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). One infringes a copyright vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it. Grokster, 545 U.S. 913.

Elektra Entertainment Group, Inc. v. Santangelo, 2005 WL 3199841, *3 (S.D.N.Y.). In Santangelo, the court denied the defendant's motion to dismiss the plaintiffs' direct infringement claim against her, but expressed skepticism that "an Internet-illiterate parent, who does not know Kazaa from a kazoo" could be held liable for copyright infringement committed by a child who downloads music over the Web without the parent's knowledge or permission but using the parent's Internet account. While the Court is not prepared to pronounce the plaintiffs' secondary copyright infringement claims to be frivolous or objectively unreasonable, they would certainly appear to be untested and marginal.

In addition to the weakness of the secondary copyright infringement liability claims against Ms. Foster, there is a question of the plaintiffs' motivations in pursuing them. The plaintiffs had every right to attempt to reach a settlement of their claims with a suspected infringer but there is an appeareance that the plaintiffs initiated the secondary infringement claims to press Ms. Foster into settlement after they had ceased to believe she was a direct or "primary" infringer.

The plaintiffs maintain that their litigation approach has been sanctioned by numerous courts which have refused to grant attorneys' fees awards to defendants who achieved favorable results in their copyright litigation. The Court will examine each of the unpublished opinions proffered by the plaintiffs.

Capitol Records, Inc., et al. v. O'Leary, 2006 U.S. Dist. LEXIS 5115 (C.D. Cal. Jan. 31, 2006) (attached as Exhibit G to the plaintiffs' response in opposition to the defendant's application for attorneys' fees), addresses a request for attorneys' fees not under the Copyright Act, but under Rule 41(a)(2) of the Federal Rules of Civil Procedure. It is inapposite for reasons discussed above.

In Priority Records L.L.C., et al. v. Chan, No. 2:04-CV-73645-LPZ-RSW (E.D. Mich. May 19, 2005) (attached to the plaintiffs' response in opposition as Exhibit H), upon dismissal of the plaintiffs' claims with prejudice, the court declined to find that the defendant was the prevailing party. It conjectured, however, that even were the defendant determined to be the prevailing party, she would not be entitled to an award of attorneys' fees under the Copyright Act. The Court does not find Priority to be particularly applicable to this case. There are simply too many substantial dissimilarities between Priority and the case at hand for it to be persuasive. For instance, as soon as the plaintiffs in Priority concluded that it was the defendant's children who likely infringed their copyrights, they moved to amend their complaint to name the children and to dismiss the defendant. It appears that prior to the dismissal, the defendant had filed no counterclaims and no dispositive motions. The decisive dissimilarity, however, is the fact that in Priority, the defendant had only to defend against a well-established direct infringement claim. Their was no claim against her for contributory or vicarious infringement.

Similarly, in Virgin Records America, Inc., et al. v. Darwin, No. SA CV 04-1346 AHS (ANx) Fogerty factors. The court found it was not frivolous or unreasonable for the plaintiffs to pursue a direct infringement claim against the individual with an apparent connection to the I.P. address associated with unlawful downloads of the plaintiffs' copyrighted works.

Like Priority, Darwin involves only a direct infringement claim. Once the plaintiff in Darwin determined that the defendant's former roommate was the direct infringer of their copyrights, they sought to dismiss the defendant. They did not elect instead to pursue secondary liability claims against the defendant. It is this Court's opinion that such claims veer much closer toward the boundaries of the frivolous and unreasonable than does a direct infringement claim.

Finally, Elektra Entertainment Group, Inc. v. Perez, Civ. No. 05-931 AA (D. Or. Oct. 25, 2006) (attached to the plaintiffs' supplemental authority to their response in opposition), involves a dismissal without prejudice. The Court is unable to accept the plaintiffs' contention that the distinction between a dismissal without prejudice and a dismissal with prejudice is one "without a difference." The dismissal of the plaintiffs' claims against Ms. Foster with prejudice served as the basis for the Court's finding that she was the prevailing party in this litigation and was thus eligible for an award of attorneys' fees. Neither can the Court agree with the plaintiffs that the facts in Perez are "virtually identical" to the facts in this case. LIke the other cases cited by the plaintiffs, Perez entails only direct infringement claims. It does not involve a claim of contributory or vicarious liability against the dismissed defendant. In fact, in direct contrast to this case, upon becoming convinced that it was other members of the defendant's family who were responsible for infringing their copyrights, the Perez plaintiffs dismissed the defendant and proceeded against their family members.

Unlike the courts in the unpublished opinions cited by the plaintiffs, this Court must consider whether a defendant should receive an award of attorneys' fees when she successfully defends against the novel application of secondary copyright infringement claims. The United States Supreme Court has recognized that "it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible. To that end, defendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement." Furthermore, when the prevailing party is the defendant, "who by definition receives not a small award but no award," awarding fees becomes particularly important. See Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824 (7th Cir. 2005), quoting Assessing Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 436-37 (7th Cir. 2004). "[W]ithout the prospect of such an award, the party might be forced into a nuisance settlement or deterred all together from exercising his rights." Id. The Court finds that this case presents a situation where considerations of compensation under Fogerty weigh in favor of the Court's award of attorneys' fees to Ms. Foster. Her only alternative to litigating the plaintiffs' contributory or vicarious liability claim was to capitulate to a settlement for a violation she insists she did not commit. Such capitulation would not advance the aims of the Copyright Act as the plaintiffs' untested theory would remain untested. The Court concludes that under the facts of this case, the prevailing defendant is entitled to an award representing her reasonable attorneys' fees and costs pursuant to § 505 of the Copyright Act.

Ms. Foster has submitted copies of her counsel's billings and affidavits as to their reasonableness. The plaintiffs have not addressed the reasonableness of the amount of fees requested by the defendant but have instead requested that the Court grant them time for discovery into the matter should the Court find Ms. Foster to be entitled to a fee award. The Court will, therefore, take up the matter of the appropriate fee award after discovery on the issue has been completed and the matter has been briefed by the parties.

Accordingly the Court:

1. GRANTS in part the defendant Deborah Foster's applicastion for attorneys' fees, finding she is entitled to an award of her reasonable attorneys' fees in this action under § 505 of the Copyright Act;

2. DENIES the defendant Deborah Foster's application for attorneys' fees under 28 U.S.C. § 1927;

3. ORDERS the plaintiffs to inform the Court on or before February 13, 2006, of the amount of time they require for discovery into the issue of the reasonableness of the defendant's fee request;

4. DENIES the defendant Deborah Foster's motion for leave to file amici brief (docket no. 132); and

5. DENIES the defendant Deborah Foster's motion for scheduling order (docket no. 131). Once the court has set a date for completion of discovery into the matter of the reasonableness of the defendant's fee request, it will establish firm dates for the defendant to supplement her application for attorneys' fees, for the plaintiffs to respond to that supplemented application, and for the defendant to reply.

ENTERED this 6th day of February, 2007.

[signature]

LEE R. WEST
UNITED STATES DISTRICT JUDGE

¹ Deborah Foster also asserted a counterclaim for prima facie tort. That counterclaim was dismissed pursuant to the Court's order entered October 5, 2005.

² The plaintiffs maintain that they were willing to dismiss their claims against Deborah Foster, but that she would not agree to resolve the matter unless she was reimbursed the amount she had incurred in attorneys' fees.

04:57 AM EST

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