WASHINGTON (CN) - In a case that refuses to die, the Supreme Court heard arguments Monday about what standards to apply in awarding attorney's fees to the winning party in copyright cases.
The original case emerged in 2008 when major academic publisher John Wiley & Sons caught wind that Thai national Supap Kirtsaeng was reselling its books, which his family purchased in Thailand and then shipped to the U.S., to finance his doctorate in mathematics at the University of Southern California.
Kirtsaeng earned about $1 million from eBay sales, which the federal Copyright Act would normally exempt. However, a federal court slapped Kirtsaeng with $600,000 in damages, ruling that the "first-sale doctrine" does not apply to imported books printed or sold abroad.
The Second Circuit upheld the ruling on appeal, but the U.S. Supreme Court reversed in 2013, and said the doctrine does apply to foreign works, after which the Second Circuit tossed out the $600,000 judgment.
A federal judge then refused to award Kirtsaeng attorney's fees, which brought the case back to the Supreme Court again this week.
"When a defendant is trying to decide whether to fight for a principle, the availability of attorney's fees can make all the difference in that decision, and in turn can make all the difference in whether the public's rights are vindicated," Kirtsaeng's attorney, Joshua Rosenkranz, said at Monday's hearing.
The statute as it stands is vague, but the Second Circuit has developed a framework of objective reasonableness as the primary determining factor to guide it in awarding enhanced damages.
That contrasts with the Supreme Court's 1994 ruling on this issue in Fogerty v. Fantasy Inc., which rejected automatically awarding attorney's fees to prevailing plaintiffs, adopting instead a more flexible approach that would consider a wider variety of equitable factors.
U.S. District Judge Donald Pogue, however, found that Wiley's suit was not unreasonable, and denied Kirtsaeng's request for attorney's fees on that basis.
Kirtsaeng argues that the prevailing framework of the Second Circuit is too narrow and should be expanded to consider the totality of the circumstances, including a party's financial resources - factors that would be considered under Fogerty.
District courts should analyze "what would have been the right economic incentives for this plaintiff and this defendant," in deciding whether to award attorney's fees, Rosenkranz said.
The John Wileys of the world - those running multi-billion-a-year businesses - do not need to worry about attorney's fees in deciding whether to proceed with litigation, he added. But the Kirtsaengs of the world do.
"In a standard where he stands to gain attorney's fees for defending, that would have been an important incentive to encourage him to soldier on," Rosenkranz said.
The Second Circuit framework "does nothing to encourage a defendant who has a good defense but is facing off against a powerful adversary armed with a reasonable position," Kirstsaeng's attorney said.
"That encouragement has not happened once in the last 15 years" in 187 cases, except when a plaintiff had been involved in unreasonable conduct, Rosenkranz added.