Home > Commerce > Legal Resources > Legal Articles > This article

Seventh Circuit Elevates Role of Attorneys’ Fees

In the U.S., the traditional rule for civil trials has always been that each party pays its own lawyers. To be sure, a plaintiff will always ask for attorney’s fees as part of his damage award. But what if the defendant wins? Or what if the plaintiff gets only a small award?

A recent case in the Seventh District pushed tradition aside in favor of a “loser pays” approach to copyright cases. The decision is binding only in Illinois, Indiana and Wisconsin, but it could influence the other circuits. Here’s what happened and what it means for photographers.

The background. The tax assessors of Wisconsin’s towns collect information about local properties and, under Wisconsin’s open-records law, they must make it available to the public. Some of those towns were using a proprietary database tool developed by Assessment Technologies (AT) to process that information. AT had registered its copyrights on both the program and the compilations of data in the databases. What’s more, its licenses had a clause forbidding its licensees from disclosing any database contents.

So when a real-estate listing service, Wiredata, requested the tax records from three of those towns, it was turned down. Wiredata then sued the towns for violating the open records law. Perhaps to protect its customers, AT reacted by suing Wiredata for infringing its copyrights, saying that Wisconsin’s open records law has an explicit exception for copyrighted data. The trial court accepted AT’s notion that the copyright for the compilation also protected the tax records within the compilation.

But the Seventh Circuit appeals court disagreed and, in fact, was quite annoyed by AT’s claims. It said that, because the tax records were gathered by public officials, they were in the public domain and nothing AT did (such as putting them in a copyrighted compilation) could change that fact. It added,

… for a copyright owner to use an infringement suit to obtain property protection, here in data, that copyright law clearly does not confer, hoping to force a settlement or even achieve an outright victory over an opponent that may lack the resources or the legal sophistication to resist effectively, is an abuse of process.

The decision emphatically cleared Wiredata of the copyright-infringement charge. But Wiredata had spent a fair amount of money defending itself, and it asked the trial court to make AT pay its legal bills. Once again, the trial court sided with AT. And once again, Wiredata appealed.

The decision. The appeals court said that AT should be required to pay Wiredata’s costs. It pointed out that the Copyright Act authorizes the award of reasonable attorney’s fees to the prevailing party in a suit, and it noted precedents which established that, in copyright suits, “prevailing plaintiffs and prevailing defendants are to be treated alike.”

The three-judge panel then offered some guidelines for applying this principle.

The two most important considerations in determining whether to award attorneys’ fees in a copyright case are the strength of the prevailing party's case and the amount of damages or other relief the party obtained. If the case was a toss-up and the prevailing party obtained generous damages, or injunctive relief of substantial monetary value, there is no urgent need to add in an award of attorneys’ fees.

But if at the other extreme the claim or defense was frivolous and the prevailing party obtained no relief at all, the case for awarding him attorneys’ fees is compelling.

When the prevailing party is the defendant, who by definition receives not a small award but no award, the presumption in favor of awarding fees is very strong. For without the prospect of such an award, the party might be forced into a nuisance settlement or deterred altogether from enforcing his rights.

[W]hen a meritorious claim or defense is not lucrative, an award of attorneys' fees may be necessary to enable the party possessing the meritorious claim or defense to press it to a successful conclusion rather than surrender it because the cost of vindication exceeds the private benefit to the party. The best illustration is in fact a case like this, where the party awarded the fees, being the defendant, could not obtain an award of damages from which to pay his lawyer — no matter how costly it was for him to defend against the suit.

The panel then pointed to its previous ruling, which was pretty hostile to AT, as the basis for granting Wiredata’s petition.

We did not reach the question whether the plaintiff’s conduct rose to the level of actual copyright misuse, but we made clear that it came close, and an award of attorneys’ fees to the defendant is an appropriate sanction.

Conclusion. This case is a two-edged sword for photographers, who are usually the plaintiffs in copyright cases. If you sue and lose — and the judge thinks your claim had little merit — you can be required to pay the defendant’s legal costs. The ruling thus makes “gray area” lawsuits more risky, because losing could now be twice as expensive.

But as the court pointed out, the same logic applies when the plaintiff wins but gets only chump change. It means that for clear-cut copyright violations, even where there’s not much prospect of getting big damages, you can punish infringers by hitting them with your attorney’s fees.

top