Offers of Judgment in Copyright Disputes—FRCP 68 vs. Copyright Act Fee Shifting

If a copyright plaintiff declines a settlement offer, then later prevails and is awarded an amount lower than that offer, does Federal Rule of Civil Procedure 68 shift the defendant’s attorneys’ fees to the prevailing plaintiff?  No, the Southern District of New York recently found, acknowledging a circuit split on the issue.

Many years ago, Helyane Seidman took a picture of a mask sculpture at an art show, which she later licensed to the New York Post.  In 2010, the Post published the picture in an article.  In 2012, Authentic Brands Group (“ABG”), a company operating Shaquille O’Neal’s Facebook page, allegedly used the picture in a Facebook post without Seidman’s consent.  Seidman sued the company in 2019 seeking statutory damages for copyright infringement.  After Seidman declined ABG’s settlement offer, ABG moved for a bond to cover its post-offer attorneys’ fees.  Because the court found that Rule 68 and the Copyright Right would not support awarding a non-prevailing party’s attorneys’ fees, it denied ABG’s motion.

The court began by considering Rule 68.  The rule provides that if an offeree obtains a judgment which is more favorable than an unaccepted offer, she must pay any costs incurred after the offer was made.  The Supreme Court has specified that the only costs to be considered under that Rule are those costs which are “properly awardable” under the relevant underlying statute.  Under the Copyright Act, a court may award reasonable attorneys’ fees to the prevailing party under certain circumstances.  17 U.S.C. § 505.

Courts are split on the interaction between Rule 68 and the Copyright Act.  Some circuits—including the 7th and 9th—have held that only prevailing parties, i.e., those who receive a court order in their favor, may receive attorneys’ fees under the Copyright Act.  To these circuits, because a losing party may not recover attorneys’ fees under the Copyright Act, it similarly cannot recover post-offer attorneys’ fees under Rule 68.  Other courts—including the 11th Circuit and several district courts in the 2nd Circuit—have allowed non-prevailing offerors to receive compensation for post-offer attorneys’ fees in copyright cases. 

The Seidman court broke with its sister district courts within the 2nd Circuit, finding that post-offer attorneys’ fees are not recoverable by a non-prevailing party in a copyright case.  The court considered the policy behind the Copyright Act, including its deterrent effects against litigating a weak case.  Those deterrents, the court found, “do not include the risk that a prevailing plaintiff will have to pay the attorneys’ fees of the losing defendant.”  Instead, the intended risks of the Copyright Act include the possibility that the plaintiff bringing a weak case may not be able to recoup her own fees, the court found.

That’s the risk that the Seidman plaintiff took in bringing her case, the court said.  ABG argued that the photograph’s value was less than $300 and was used only once.  If those facts are true, the court noted, Seidman would recover only a legal victory, not a monetary one.  While the legal victory would be sufficient to prevent an attorneys’ fees award to ABG, Seidman would “be entitled to little, if anything, in statutory damages.” 

The case is Seidman v. Authentic Brands Group LLC, No. 19-cv-8343 (LJL) (S.D.N.Y. Apr. 21, 2020).