United States District Court, D. Arizona
Honorable Diane J. Humetewa United States District Judge
matter is before the Court on Defendant McGraw-Hill
Global Education Holdings LLC's
(“McGraw-Hill”) Motion for Attorney's Fees
(Doc. 72). Plaintiff DRK Photo (“DRK”) filed a
Response (Doc. 78), and McGraw-Hill filed a Reply (Doc. 84).
DRK also filed a Motion to Seal an unredacted copy of
DRK's Response to Defendant's Motion for
Attorney's Fees and related exhibits. (Doc. 80).
McGraw-Hill did not file a Response to the Motion to Seal and
the time to do so has expired. See LRCiv. 7.2(c).
was a copyright suit filed by DRK, a stock photo agency,
against McGraw-Hill, a textbook publisher for allegedly
infringing on DRK's copyright by exceeding the scope of
license restrictions pertaining to certain photographs or
failing to obtain permission to use the photographs. (Doc.
27). This was not DRK's first copyright suit in which DRK
asserted that it had standing to bring the action pursuant to
the “Representation Agreements” and
“Transfer Agreements” between DRK and the
photographers. In 2012, DRK filed suit against McGraw-Hill in
the District Court of Arizona (“2012 Action”), in
which the Court granted partial summary judgment in favor of
McGraw-Hill finding that DRK lacked standing under 17 U.S.C.
§ 501(b) for the majority of its claims (June 10, 2014
Order”). DRK Photo v. McGraw-Hill Companies,
Inc., 2014 WL 2584811, at *8 (D. Ariz. June 10, 2014),
aff'd sub nom. DRK Photo v. McGraw-Hill Glob. Educ.
Holdings, LLC, 870 F.3d 978 (9th Cir. 2017). In the 2012
Action, the Court held that neither the Representation
Agreements nor the Assignment Agreements transferred legal
ownership to DRK; therefore, as DRK was not the legal or
beneficial owner of an exclusive right under a copyright, DRK
did not have standing to sue for infringement of that right.
Id. DRK appealed the June 10, 2014 Order.
the ongoing 2012 Action appeal, DRK filed this current suit,
again relying on the Representation Agreements and Assignment
Agreements to provide standing, even though in the 2012
Action the Representation Agreements and Assignment
Agreements had been deemed ineffectual to confer standing
under the Copyright Act. (Docs. 72 at 8-9, 78 at
On April 5, 2017, the parties filed their Joint Case
Management Report, in which DRK stated that it would opposes
a stay of this case pending the outcome of the 2012 Action
appeal. (Doc. 37 at 7). In the course of this litigation
McGraw-Hill filed multiple motions, including a Motion for
Summary Judgment (Doc. 45) and a Motion to Disqualify
Counsel. (Doc. 49). On April 16, 2018, McGraw-Hill filed a
notice of supplemental authority, which provided that on
September 12, 2017, the Ninth Circuit had upheld the June 10,
2014 Order in the 2012 Action and the U.S. Supreme Court had
denied DRK's Petition for Writ of Certiorari. (Doc. 67).
Before the Court issued an Order on McGraw-Hill's Motion
for Summary Judgment, on May 11, 2018, the parties filed a
Stipulation of Dismissal with Prejudice. (Doc. 69).
after the Court approved the parties' stipulation and
dismissed the case with prejudice (Doc. 71), McGraw-Hill
filed the instant Motion for Attorneys' Fees. (Doc. 72).
Along with filing their Response (Doc. 78), DRK filed the
Motion to Seal an unredacted copy of the Response and
Exhibits 1 and 2 to the Declaration of Daniel Krasemann in
Support of DRK's Response. (Doc. 80). DRK lodged the
proposed sealed Unredacted Response and Exhibits 1 and 2.
(Docs. 81, 82). McGraw-Hill filed a Reply in Support of its
Motion for Attorneys' Fees, but did not file a Response
to DRK's Motion to Seal. (Doc. 84).
MOTION FOR ATTORNEYS' FEES
argues that as the prevailing party it is entitled to an award
of attorneys' fees because: (1) DRK's pursuit of this
lawsuit was objectively unreasonable and frivolous as a
matter of law, (2) DRK and its counsel acted in bad faith in
bringing this lawsuit, and (3) a fee award to McGraw-Hill
would serve the interests of the Copyright Act by deterring
future improper litigation tactics. (Doc. 72). Additionally,
McGraw-Hill argues that the amount of fees sought is
reasonable. (Id. at 20). DRK disputes whether any
award is warranted, but in any event, claims that McGraw-Hill
has not demonstrated that the fee award requested is
reasonable. (Doc. 78 at 16).
Entitlement to Fees
requests attorneys' fees pursuant to 17 U.S.C. § 505
of the Copyright Act. Under the Copyright Act, a court may
“award a reasonable attorney's fee to the
prevailing party.” 17 U.S.C. § 505. “Fees
are proper under this statute when either successful
prosecution or successful defense of the action furthers the
purposes of the Copyright Act.” Perfect 10, Inc. v.
CCBill LLC, 488 F.3d 1102, 1120 (9th Cir. 2007). Whether
to award attorneys' fees is in the district court's
discretion. See Fogerty v. Fantasy, Inc., 510 U.S.
517, 535 n.19, (1994). In deciding whether to award
attorneys' fees under the Copyright Act, courts may
consider multiple nonexclusive factors, including: (1) the
degree of success obtained on the claim, (2) frivolousness,
(3) motivation, (4) objective reasonableness of factual and
legal arguments, and (5) need for compensation and
deterrence. Jackson v. Axton, 25 F.3d 884 (9th Cir.
1994), overruled on other grounds by Fogerty, 510
U.S. 517. Blameworthiness, including a finding of bad faith
or frivolousness, can be an influential consideration, is not
a a prerequisite to awarding fees to a prevailing defendant,
and these nonexclusive factors “need not all be
met.” Fantasy, Inc. v. Fogerty, 94 F.3d 553,
558 (9th Cir. 1996). Weighing each of these factors, and
taking into account other relevant considerations as set
forth below, the Court finds that all five factors weigh in
favor of awarding McGraw-Hill's attorneys' fees.
Degree of Success Obtained
McGraw-Hill was the prevailing party, at no point did the
Court issue a ruling on the merits of the litigation. Thus,
the Court finds that McGraw-Hill “obtained a relatively
small degree of success for the purposes of determining a fee
award.” Nutrivita Labs., 160 F.Supp.3d at
1190; see also Bridgeport Music, Inc. v. London Music,
U.K., 345 F.Supp.2d 836, 843 (M.D. Tenn. 2004)
(“[A] stipulation of dismissal with prejudice is
clearly a much lesser degree of success than a judicial
vindication of the defendants' position.”),
aff'd, 226 Fed.Appx. 491 (6th Cir. 2007). Thus,
the degree of success factor weighs minimally in favor of a
fee award to McGraw-Hill.
Frivolousness and Objective
McGraw-Hill avers that DRK choose to litigate this case on a
standing theory that the Court in the 2012 Action and another
federal district court had already determined did not convey
DRK standing under the Copyright Act. (Doc. 72 at 13);
see also 2012 Action, 2014 WL 2584811, at *8;
John Wiley & Sons, Inc. v. DRK Photo, 998
F.Supp.2d 262, 276 (S.D.N.Y. 2014), aff'd, 882
F.3d 394 (2nd Cir. 2018). DRK claims that, while its standing
theory was ultimately unsuccessful, it was not objectively
unreasonable.(Doc. 78 at 6).
action was objectively unreasonable because at the time this
action was filed, two federal courts, including the Court in
the 2012 Action, had previously held that DRK did not have
standing to bring these claims under the Copyright Act.
See 2012 Action, 2014 WL 2584816; John
Wiley, 998 F.Supp.2d 262 (S.D.N.Y. 2014). Although, in a
Ninth Circuit concurrence and Second Circuit dissent, there
is some support for DRK's position, those decisions both
are not controlling and were not issued until after DRK filed
this suit, thus those opinions could not have been the basis
for DRK's decision to pursue this action. See DRK
Photo, 870 F.3d at 990 (Berzon, J. concurring); John
Wiley & Sons, Inc. v. DRK Photo, 882 F.3d 394, 415
(2d Cir.) (Parker, J. dissenting). Moreover, DRK refused to
stay this litigation even though it had pending appeals in
the Ninth and Second Circuits regarding it standing theory.
Thus, the Court finds it was objectively unreasonable for DRK
to file this suit after two federal courts had held that the
Representation Agreements and Transfer Agreements did not
provide DRK standing to maintain a copyright infringement
action. See Stan Lee Media, Inc. v. Walt Disney Co.,
2014 WL 3767191, at *2 (D. Colo. July 31, 2014) (“The
Court, finds that it was objectively unreasonable for
Plaintiff to pursue its copyright claims under the 1998
Agreement after three District Courts had previously found
that it had no basis for asserting ownership of any of the
claimed copyrights.”); see also Yue v. Storage
Tech. Corp., 2008 WL 4185835, at *4 (N.D. Cal. Sept. 5,
2008) (awarding fees because no objectively reasonable claim
presented where “the same basic claims had already been
previously rejected by the District Court”);
Contractual Obligation Productions, LLC v. AMC Networks,
Inc., 546 F.Supp.2d 120, 128 (S.D.N.Y. 2008) (holding
that plaintiff's legal theories concerning its standing
to pursue a copyright infringement claim are objectively
unreasonable because the plaintiff was notice that the courts
had already determined that plaintiff did not have standing
to assert a claim under the Copyright Act).
as previously discussed, the Court finds that DRK was on
notice that it did not have standing to bring the copyright
claims; therefore, the claims were also frivolous. See
Goldberg v. Cameron, 2011 WL 3515899, at *4 (N.D. Cal.
Aug. 11, 2011) (holding that the continued litigation of
claims that plaintiff knew were barred by statute of
limitations were frivolous); Scott v. Meyer, 2010 WL
2569286, at *3 (C.D. Cal. June 21, 2010) (holding that the
connotations of frivolity are difficult to escape when
considering a plaintiff's continued pursuance of
objective unreasonable claims in spite of notice that her