United States District Court, S.D. New York
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
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
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'
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
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 issues were eventually determined in the Church's favor and the
copyright was rendered invalid. See Penguin II at 547, 558.
Under these circumstances, there is nothing to suggest that Plaintiffs'
claim was so objectively unreasonable as to justify an award of
Nor do the cases cited by the Church compel a contrary result. The
Church points to several cases in which attorneys' fees were granted on
the basis of the objective unreasonableness of a party's claim. In each
of the cases cited, however, the party seeking attorneys' fees had
prevailed on a motion for summary judgment. See Arclightz and Films
Pvt., 2003 WL 22434153, at *5; Torah Soft Ltd. v. Drosnin, No. 00 Civ. 5650 (JCF), 2001
WL 1506013, at *1 (S.D.N.Y. Nov. 27, 2001); Viacom Int'l Inc.* v.
Fanzine Int'l Inc., No. 98 Civ. 7448 (RCC), 2001 WL 930248, at *6
(S.D.N.Y. Aug. 16, 2001); Earth Flag Ltd. v. Alamo Flag
Company, 154 F. Supp.2d 663, 665 (S.D.N.Y. 2001); Tuff `N'
Rumble Management. Inc. v. Profile Records. Inc. No. 95 Civ. 0246
(SHS), 1997 WL 470114, at *1 (S.D.N.Y. Aug. 15, 1997). The Church cites
no precedent for the proposition that a plaintiff's claim may be deemed
objectively unreasonable after the plaintiff's claim has survived a
motion for summary judgment and proceeded to trial, as occurred in this
C. Plaintiffs Were Not Motivated By
The Church argues that Plaintiffs' conduct both before and during the
litigation evidences Plaintiffs' bad faith. The Church claims, inter
alia, that Plaintiffs made mis-representations with regard to the
discovery of evidence and acted in bad faith when they challenged
audiotape evidence on its authenticity and failed to produce certain
materials during discovery. The Church further claims that Plaintiffs
wrongfully obtained their original injunction against the Church.
Finally, the Church argues that Plaintiffs' motives in pursuing the
litigation were improper because Plaintiffs sought to quash the use of
the Course for religious purposes. In reply, Plaintiffs deny the Church's allegations and argue that it
was the Church which acted unreasonably and in bad faith throughout the
course of litigation through various discovery abuses, among other
things. Plaintiffs also claim that the Church misrepresents key facts
regarding Plaintiffs' conduct during the litigation and state that the
Church's claim that Plaintiffs attempted to restrict the Church's
exercise of religion is delusional fantasy." (Pl. Reply Mem. at 13.)
"In an appropriate case, the presence of other factors might justify an
award of fees despite a finding that the non-prevailing party's position
was objectively reasonable." Matthew Bender & Co., 240
F.3d at 122 (citing Matthews v. Freedman 157 F.3d 25, 29 (1st
Cir. 1998)). Such factors may include a party's bad faith conduct.
See Matthew Bender & Co., 240 F.3d at 125 ("[B]ad faith in
the conduct of the litigation is a valid ground for the award of fees.");
Elements/Jill Schwartz, Inc. v. Gloriosa Co., No. 01 Civ. 904
(DLC), 2002 WL 31133391, at *2 (S.D.N.Y. Sept. 26, 2002) (same).
Although this Court may, in its discretion, award attorneys' fees when
there is sufficient evidence of bad faith conduct even absent a showing
that the claim was objectively unreasonable, this is not an appropriate
case in which to do so. The Court finds no egregious misconduct by either
Plaintiffs or the Church, nor sufficient evidence to establish that
Plaintiffs brought their case in bad faith. In light of this, the behavior
alleged by both parties may not be said to rise to the level of `bad
faith action warranting attorneys' fees.
D. An Award of Attorneys Fees Would Not Be
in Furtherance of the Purpose of the Copyright Act
The Second Circuit has made clear that the emphasis on objective
reasonableness is "firmly rooted in Fogerty's admonition that any factor
a court considers in deciding whether to award attorneys' fees must be
"faithful to the purposes of the Copyright Act.'" Matthew Bender
& Co., 240 F.3d at 122 (quoting Fogerty 510 U.S. at 534 n.19).
As the Supreme Court itself has explained:
Because copyright law ultimately serves the
purpose of enriching the general public through
access to creative works, 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.
Fogerty, 510 U.S. at 527. Therefore, it will generally not
promote the purposes of the Copyright Act to impose a fee award against a
purported copyright holder when that copyright holder has not taken an
objectively unreasonable litigation position. See Matthew Bender
& Co., 240 F.3d at 122 (citing Mitek Holdings, Inc. v. Arce
Eng'g Co., 198 F.3d 840
, 842-43 (11th Cir. 1999) ("The touchstone of
attorney's fees under § 505 is whether imposition of attorney's fees will further the interests of the Copyright Act,
i.e., by encouraging the raising of objectively reasonable
claims `and defenses, which may serve not only to deter infringement but
also to ensure `that the boundaries of copyright law [are] demarcated as
clearly as possible' in order to maximize the public exposure to valuable
works.") (quoting Fogerty, 510 U.S. at 526-27)).
Plaintiffs here established a prima facie case which, by
being subject to a successful defense, helped to delineate the specific
parameters of the issue of prior publication. For this reason, the Court
does not find that awarding attorneys' fees to the Church would be in
furtherance of the Copyright Act.
E. Relative Financial Strength Is Not
A Determinative Factor
The Church argues that, although not mentioned in Fogerty,
"`the relative financial resources of the parties is an appropriate
factor to be considered in awarding fees under the Copyright Act.'" (Def.
Mem. at 20 (quoting Torah Soft. 2001 WL 1506013 at *6
(citations omitted).) While the factors listed in Fogerty are
not intended to be exhaustive, see Fogerty, 510 U.S. at 534
n.19, and the relative financial strengths of the parties may well be a
proper factor for consideration in determining whether attorneys' fees
should be granted, the cases cited by the Church do not, with certain
exceptions discussed below, stand for the proposition advanced by the
Church. Rather, when traced back to their collective point of origin in Williams v. Crichton,
stand only for the notion that financial disparities may
be a factor considered in determining the magnitude of an award once it
has been resolved that such an award is appropriate.*fn5
Williams v. Crichton, No. 93 Civ. 6829 (LMM), 1995 WL
449068, at *1 (S.D.N.Y. July 26, 1995) (taking into
consideration the relative financial strength of the parties in
"determining the amount of an award under 17 U.S.C. § 505" after a
decision to award fees had been reached) (citing Lieb, 788 F.2d at 156
("Having decided that fees should be awarded, the district court must
then determine what amount is reasonable under the circumstances. . . .
The relative financial strengths of the parties is a valid
consideration.") (citations omitted)); accord Torah Soft, 2001
WL 1506013, at *6 (acknowledging that facts establishing a party's
limited financial resources, "if fully documented, may affect the magnitude of any
award, [but] need not preclude altogether some assessment * of fees");
Tuff `N' Rumble Management, 1997 WL 470114, at *1 (granting
attorneys' fees but awarding a lower amount than requested "in
recognition of plaintiff's claimed financial instability");
Littel, 1996 WL 18819, at *3 (determining that defendants are
entitled to recover attorneys' fees but, "mindful of the likelihood of a
significant disparity between the parties' financial circumstances,"
directing the submission of further financial information before the
amount of an award is set).
Nevertheless, in recent years certain courts have treated a financial
disparity between the parties as a factor to be weighed in determining
whether an award should issue rather than simply the magnitude of such an
award. See Video-Cinema Films, Inc. v. Cable News Network.
Inc., Nos. 98 Civ. 7128 (BSJ), 98 Civ. 7129 (BSJ), & 98 Civ.
7130 (BSJ), 2003 WL 1701904, at *5 (S.D.N.Y. Mar. 31, 2003) (weighing the
parties' relative financial strength as one among several factors in
determining whether to award fees); Liebovitz v. Paramount Pictures
Corp., No. 94 Civ. 9144, 2000 WL 1010830, at *5 (S.D.N.Y. July 21,
2000) (same). To the extent these opinions were premised on mistaken or
opaque prior constructions of the holding in Williams, this
Court declines to tread that same path.
Even assuming that the parties' financial disparity were appropriate
factor to consider in determining whether an award should be granted, it would not be a dispositive factor here. The
Church claims that an award of attorneys' fees is appropriate because it
has few financial resources as compared to Plaintiffs. Plaintiffs respond
that the Church has submitted insufficient documentary corroboration to
its claim of being on the verge of bankruptcy and it is not clear whether
the Church includes the value of numerous real estate holdings in its
tabulation of assets. In post-argument filings, the Church submitted
various supporting documents, including statements from its accountant
and copies of utility bills, but failed to address all of Plaintiffs'
contentions. As a result, the Church's exact financial status remains in
dispute, precluding any final determination of whether attorneys' fees
are warranted on that basis.
In any event, financial disparity does not provide a basis to award
attorneys' fees under the Copyright Act in the circumstances of this
action. See Mitek Holdings. 198 F.3d at 842 ("It is
unsurprising that no case law supports the proposition that a difference
in financial wealth, in and of itself, is sufficient to justify
attorney's fees under § 505. "); see also Harrison Music Corp.
v. Tesfaye, 293 F. Supp.2d 80, 85 (D.D.C. 2003) ("The decision to
award attorney's fees is based on whether imposition of the fees will
further the goals of the Copyright Act, not on whether the losing party
can afford to pay the fees.") (citation omitted). As the Church has
established no additional ground for granting attorneys' fees here, an award of attorneys' fees and
costs is unwarranted.
For the foregoing reasons, the Church's motion for attorneys' fees is
denied. Submit judgment on notice on or before April 21, 2004 reflecting
the holding in Penguin II as well as the conclusion reached
It is so ordered.