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TufAmerica, Inc. v. Diamond

United States District Court, S.D. New York

January 12, 2018

TufAmerica Inc., Plaintiff,
v.
Michael Diamond et al., Defendants.

          MEMORANDUM OPINION & ORDER

          ALISON J. NATHAN, District Judge

         In the Court's July 12, 2016 Memorandum and Order granting in part and denying in part Plaintiffs motion for reconsideration, the Court called for supplemental briefing on two issues. First, in light of the Court's decision to allow reconsideration to account for the relative financial strength of the parties, the parties were asked to submit their proposals on the appropriate amount of the fee award. Dkt. No. 136 at 6. Second, the Court called for additional briefing on the impact, if any, of the Supreme Court opinion in Kirtsaeng v. John Wiley & Sons, Inc., which was issued on the same day in which briefing of the motion for reconsideration was completed. Id.

         The Court now addresses these supplemental submissions.

         For the following reasons, the Court enters an adjusted fee award of $450, 000.

         I. Background

         The Court assumes the parties' familiarity with the facts and history of this case. For the purposes of the issues presented by this motion, the following synopsis will suffice.[1]

         Plaintiff filed this copyright infringement action on May 3, 2012. Dkt. No. 1. On September 10, 2013, the Court granted Defendants' motion to dismiss with respect to four of Plaintiffs six claims. Dkt. No. 43. On March 24, 2015, the Court granted Defendants' motion for summary judgment on Plaintiffs remaining claims. Dkt. No. 101. Shortly thereafter, Defendants Michael Diamond, Adam Horovitz, the Estate of Adam Yauch, and Brooklyn Dust Music (the "Beastie Boys Defendants") and Universal-Polygram International Publishing, Inc. and Capitol Records, LLC (the "UMG Defendants") moved for attorney's fees and costs pursuant to Section 505 of the Copyright Act and Federal Rule of Civil Procedure 54. Dkt. Nos. 103, 106.

         On March 9, 2016, the Court granted Defendants' motions, collectively awarding them approximately $845, 000 in total costs and fees. Dkt. No. 124 at 16. In that opinion, the Court held that Plaintiffs arguments with respect to standing were "objectively unreasonable." Id. at 3-5.

         Plaintiff then retained new counsel, who filed a motion for reconsideration of the Court's grant of attorney's fees. Dkt. No. 128. Plaintiff made three arguments in support of its motion for reconsideration. Dkt. No. 136 at 2-6. The Court was persuaded by one of these arguments -that the Court should reconsider the amount of its fee award based on Plaintiffs weak financial position. Id. at 4-6. The Court concluded that it will "likely adjust downward" from its previous fee award, id. at 5 (internal quotation marks and edits omitted), and called upon the parties to attempt to agree on the appropriate fee awards, or "to submit proposals to the Court on the appropriate amount of a fee award in light of the Court's decision to allow reconsideration on this point." Id. at 6. The parties submitted such proposals, see Dkt. Nos. 145-46, 150-51, 153, and these proposals are now before the Court.

         Additionally, on the same day on which the parties concluded briefing Plaintiffs motion for reconsideration, the Supreme Court issued its opinion in Kirtsaeng v. John Wiley & Sons, Inc. 136 S.Ct. 1979 (2016). Because the parties had not had the opportunity to brief the Court on Kirtsaeng's effects on the fees and costs award in this matter, the Court invited additional briefing on that question. Dkt. No. 136 at 6. The parties filed submissions on Kirtsaeng's effects, Dkt. Nos. 144, 149, 153, and this too is presently before the Court.

         II. Discussion

         a. Reconsideration Based Upon Kirtsaeng

         Plaintiffs standing to enforce the copyright in question was the central disputed issue at summary judgment, the stage of this litigation for which attorney's fees were awarded. Under the Copyright Act, holders of an exclusive license may sue for infringement, while holders of a nonexclusive license may not. 17 U.S.C. § 501(b). It is a well-established principle of copyright law that a "co-owner cannot unilaterally grant an exclusive license, " Davis v. Blige, 505 F.3d 90, 101 (2d Cir. 2007) (citation omitted), while an agreement that "transfers nothing more than a bare right to sue.. .cannot be the basis for standing under the Copyright Act." John Wiley & Sons, Inc. v. DRK Photo, 998 F.Supp.2d 262, 280-81 (S.D.N.Y. 2014) (internal quotation marks and citation omitted), appeal docketed, No. 15-1134 (2d Cir. Apr. 9, 2015). The Court granted summary judgment to Defendants based on Plaintiffs lack of standing, noting that one co-owner of the copyright was not a signatory to the agreement purporting to convey an exclusive license to Plaintiff. Dkt. No. 101 at 7. Rather, Plaintiff had a "bare right to sue" from that third co-owner, Dr. James Avery, thus vitiating an exclusive license and, in turn, Plaintiffs standing. Id. at 9-10.

         The Court found that Plaintiff acted unreasonably in bringing suit given that the "clear and unambiguous intent" of this third co-owner "to assign the bare right to sue permeates nearly every provision of the agreement." Id. at 9. In light of the well-established principle that a "right to sue" cannot be the basis for standing, the Court concluded that these apparent deficiencies rendered Plaintiffs claim "clearly without merit" and "objectively unreasonable." Dkt. No. 124 at 5 (quoting Silberstein v. FoxEntm 't ...


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