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PENGUIN BOOKS v. NEW CHRN. CHURCH FULL ENDEAVOUR LTD.

April 6, 2004.

PENGUIN BOOKS U.S.A., INC., FOUNDATION FOR "A COURSE IN MIRACLES, INC.", and FOUNDATION FOR INNER PEACE, INC., Plaintiffs, — against — NEW CHRISTIAN CHURCH OF FULL ENDEAVOR, LTD., and ENDEAVOR ACADEMY, Defendants


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

Defendants New Christian Church of Full Endeavor, Ltd., and Endeavor Academy (collectively, the "Church") have filed a motion for attorneys' fees under the Copyright Act against plaintiffs Penguin Books, USA, Inc. ("Penguin"), Foundation for Inner Peace, Inc. ("FIP"), and Foundation for "A Course In Miracles," Inc. ("FACIM"), (collectively, "Plaintiffs"). For the reasons set forth below, the Church's motion for attorneys' fees is denied.

Prior Proceedings

  The original action was commenced on June 3, 1996 by Penguin to enforce its copyright in a text entitled A Course in Miracles (the "Course" or the "Work") . On February 3, 2000, Penguin along with FIP and FACIM moved for a preliminary injunction, and the Church cross-moved for summary judgment. In an opinion of July 25, 2000, this Court held that Plaintiffs had established a prima facie case of copyright infringement in connection with the Work and dismissed the Church's Affirmative Defenses 1-6 and 8-13. Penguin Books USA, Inc. v. New Christian Church of Full Endeavor, Ltd. No. 96 Civ. 4126 (RWS), 2000 WL 1028634 (S.D.N.Y. July 25, 2000) ("Penguin I") . After a bench trial from May 19 to May 21, 2003, the copyright in the Course was held invalid due to prior publication without notice of copyright. Penguin Books USA. Inc. v. New Christian Church of Full Endeavor.Ltd., 288 F. Supp.2d 544 (S.D.N.Y. 2003) ("Penguin if") . Familiarity with these opinions is assumed.

  Penguin II granted judgment "with costs to the defendants" and directed the parties to submit judgment on notice. Penguin II at 558. The opinion did not specify whether the "costs" granted were to include attorneys' fees pursuant to 17 U.S.C. § 505, and the Church filed the instant motion for attorneys' fees on December 31, 2003. Oral arguments were heard on February 11, 2004. Due to time constraints, the parties*fn1 were not able to address all the issues they wished to reach, and the Court permitted the parties to submit additional briefs on the motion. The parties submitted additional materials, after which time the motion was deemed fully submitted.*fn2

  I. Motion for Attorneys' Fees

  The Church argues that Plaintiffs were objectively unreasonable in bringing their case and that Plaintiffs acted in bad faith during discovery as well as at trial. The Church also argues that Plaintiffs' motives in pursuing the litigation were based on an attempt to control the religious use of the Course. Finally, the Church contends that granting it attorneys' fees would be in keeping with the purposes of the Copyright Act. These factors, taken together with the relative financial strength of the parties, are the basis for the Church's application for attorneys' fees.

  A. Applicable Standard

  The Church seeks a post-judgment award of attorneys' fees pursuant to Section 505 of the Copyright Act and the inherent equitable power of the court. Section 505 of the Copyright Act provides that:
[i]n any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.
17 U.S.C. § 505.

  In Fogerty v. Fantasy, Inc. 510 U.S. 517 (1994), the Supreme Court held that the standard governing the award of attorneys' fees under Section 505 should be identical for prevailing plaintiffs and prevailing defendants. The Court noted that "[t]here is no precise rule or formula for making [attorneys' fees] determinations, but instead equitable discretion should be exercised," id. (internal quotation marks and citation omitted), and then proceeded to list several nonexclusive factors courts should consider when exercising this discretion: "`frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.'" id. at 534 n.19 (quoting Lieb v. TOPstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986)). The Court cautioned, however, that such factors may be used only "so long as [they] are faithful to the purposes of the Copyright Act." Fogerty, 510 U.S. at 534 n.19.

  In evaluating a motion for attorneys' fees, the Second Circuit has directed that "objective reasonableness is a factor that should be given substantial weight in determining whether an award of attorneys' fees is warranted." Matthew Bender & Co., Inc. v. West Pub. Co., 240 F.3d 116, 122 (2nd Cir. 2001). The mere fact that a defendant prevailed, however, "does not necessarily mean that the plaintiff's position was frivolous or objectively unreasonable." Arclightz and Films Pvt. Ltd. v. Video Palace, Inc., No. 01 Civ. 10135 (SAS), 2003 WL 22434153, at *3 (S.D.N.Y. Oct. 24, 2003); cf. Littel v. Twentieth Century-Fox Film Corp., No. 89 Civ. 8526 (DLC), 1996 WL 18819, at *3 (S.D.N.Y. Jan. 18, 1996), aff'd sub nom. DeStefano v. Twentieth Century Fox Film Corp. 100 F.3d 943 (2d Cir. 1996). "To hold otherwise would establish a per se entitlement to attorney's fees whenever [issues pertaining to judgment] are resolved against a copyright plaintiff." CK Co. v. Burger King Corp., No. 92 Civ. 1488 (CSH), 1995 WL 29488, at* *1 (S.D.N.Y. Jan. 26, 1995). In any event, attorneys' fees should not be awarded to the prevailing party "as a matter of course," but as a matter of the court's discretion. Fogerty 510 U.S. at 533-34; accord Matthew Bender & Co. 240 F.3d at 121-22.

 
B. Plaintiffs' Claim Was Not Objectively Unreasonable
  The Church argues that the "Plaintiffs knew they had a factually weak claim and yet they pursued it . . . ." (Def. Mem. at 7.) The Church further asserts that because Plaintiffs pursued a claim that they knew to be without merit based on their own knowledge of the facts, the claim was objectively unreasonable.

  "[N]ot all unsuccessful litigated claims are objectively unreasonable." CK. 1995 WL 29488, at *1; see also Ann Howard Designs. L.P. v. Southern Frills. Inc. 7 F. Supp.2d 388, 390 (S.D.N.Y. 1998) ("[A]lthough courts have recognized that costs and fees can be awarded where one pursues a claim unreasonable on its face, an unsuccessful claim does not necessarily equate with an objectively unreasonable claim.") (citation omitted). Rather, the courts of this Circuit have generally concluded that only those claims that are clearly without merit or otherwise patently devoid of legal or factual basis ought to be deemed objectively unreasonable. See, e.g. Littel, 1996 WL 18819, at *2-3 (deeming plaintiffs' claims objectively unreasonable where plaintiffs "`as much as concede [d] `" that the book and movies at issue bore' no resemblance at all apart from their titles and the case presented no novel or complex issues of law or fact) (citation omitted); Screenlife Establishment v. Tower Video, Inc. 868 F. Supp. 47, 52 (S.D.N.Y. 1994) (deeming plaintiff's pursuit of its claim for actual damages unreasonable where the claim of actual damages was, at best, speculative and remote). In other words, the question "is not whether there was a sufficient basis for judgment in favor of defendants, but whether the factual and legal support for plaintiff's position was so lacking as to render its claim . . . objectively unreasonable." Proctor & Gamble Co. v. Colgate-Palmolive Co., No. 96 Civ. 9123 (RPP), 1999 WL 504909, at *2 (S.D.N.Y. July 15, 1999); see also CK, 1995 WL 29488, at *1 ("The infirmity of the claim, while falling short of branding it as frivolous or harassing, must nonetheless be pronounced [to be deemed objectively unreasonable].")

  Here, the Church has not demonstrated that Plaintiffs' claim was so lacking in legal or factual support as to be objectively unreasonable. Plaintiffs owned a purportedly valid copyright, and the Church published Plaintiffs' copyrighted material. See Penguin I at *15-16. These facts alone were enough to establish a prima facie case and support an objectively reasonable legal claim to protect that copyright. See id. at *16; Penguin II at 547. While Plaintiffs' suit was ultimately unsuccessful, a preliminary injunction against the Church was obtained, Plaintiffs' claim withstood summary judgment, `and Plaintiffs were able to eliminate twelve of the thirteen affirmative defenses asserted by the Church. See Penguin II at 547, 558; see also Penguin I at *22 (noting that "while Plaintiffs' likelihood of success on the merits of the action is unclear, the discussion of the summary judgment motions demonstrates beyond doubt that there are sufficiently serious questions going to the merits to make them a fair ground for litigation."). It was only after a three-day trial that certain complex factual ...


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