Federal Court changes rules for Attorney's fees awards in copyright cases.

The 9th Circuit Court of Appeals, in an unusual move, has overturned a 68 year old precedent, redifining the term “prevailing party” in copyright infringement cases.

In Cadkin v. Loose, 2009 WL 1813263 (9th Cir, 2009), the Plaintiff, after extensive settlement negotiations,  an amended complaint, and other legal maneuvering,  voluntarily dismissed its complaint.  The Defendant then moved for an award of Attorney's fees pursuant to Section 505 of the Copyright Act (17 U.S.C. 505) which authorizes a court to award such fees to a “prevailing party”.

The District Court ruled that the Defendant was, in fact, the prevailing party, even though the complaint was dismissed without prejudice, leaving the Plaintiff free to re-file the case.  The Court relied on the 1941 case of Corcoran v Columbia Broadcasting System, Inc.,  to support this ruling.

The Plaintiff appealed, and the 9th Circuit ruled in its favor, finding that the Corcoran case could no longer be relied upon as a valid precedent, referencing a U.S. Supreme Court ruling holding that “a dismissal without prejudice does not alter the legal relationship of the parties”, and thus does not enttitle the defendant to an award of attorney's fees. (see Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res. 532 U.S. 598, 604, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001).  Even though  the statute in the Buckahannon case deals with subject matter different from copyright, the fee-shifting provisions are comparable, the 9th Circuit held.

Since the plaintiffs, following their voluntary dismissal, were free to re-file their case,  the defendants were not prevailing parties, and thus not entitled to the award of attorney's fees.

What this means, then, is that a for a party to be deemed to have ‘prevailed' in  lawsuit, their relationship must have been materially changed by a court ruling.