Womack+Hampton Architects, L.L.C. v. Metric Holdings Ltd. Partnership

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT June 22, 2004
_______________________
Charles R. Fulbruge III
No. 03-50549 Clerk
_______________________
WOMACK+HAMPTON ARCHITECTS, L.L.C.,
Plaintiff-Appellant
v.
METRIC HOLDINGS LIMITED PARTNERSHIP; CHILES ARCHITECTS, INC.;
TRAMMEL CROW RESIDENTIAL COMPANY; CHRIS WHEELER; TCR OPERATING
COMPANY, INC.; TCR METRIC, LP; SOUTH CENTRAL RS, INC.; TCR SOUTH
CENTRAL, INC.; TCR SOUTH CENTRAL 1995, INC.; TCR SOUTH CENTRAL
DIVISION LP; TCR METRIC CONSTRUCTION LIMITED PARTNERSHIP; GARY
CHILES; ROBERT BUZBEE; LEWIS BUNCH; KENNETH J. VALACH; PERRY
WILSON; J. RONALD TERWILLIGER,
Defendants-Appellees
_________________________________________________________________
WOMACK+HAMPTON ARCHITECTS, L.L.C.,
Plaintiff-Appellant
v.
TRAMMEL CROW RESIDENTIAL; TCR LOS RIOS LIMITED PARTNERSHIP
COMPANY; TCR SOUTH CENTRAL 1995, INC.; SDT ARCHITECTS, INC.;
LEWIS BUNCH; KENNETH J VALACH; THOMAS STOVALL; JOHN ZELEDON; TIM
HOGAN; JERRY DANIELS; PERRY K WILSON,
Defendants-Appellees
_________________________________________________________________
CONS. W/ CASE NO. No. 03-50859
WOMACK+HAMPTON ARCHITECTS, L.L.C.,
Plaintiff-Appellee
v.
1
METRIC HOLDINGS LIMITED PARTNERSHIP; CHILES ARCHITECTS, INC.;
TRAMMEL CROW RESIDENTIAL COMPANY; CHRIS WHEELER; TCR OPERATING
COMPANY, INC.; TCR METRIC, LP; SOUTH CENTRAL RS, INC.; TCR SOUTH
CENTRAL, INC.; TCR SOUTH CENTRAL 1995, INC.; TCR SOUTH CENTRAL
DIVISION LP; TCR METRIC CONSTRUCTION LIMITED PARTNERSHIP; GARY
CHILES; ROBERT BUZBEE; LEWIS BUNCH; KENNETH J. VALACH; PERRY
WILSON; J. RONALD TERWILLIGER,
Defendants-Appellants
_________________________________________________________________
WOMACK + HAMPTON ARCHITECTS, L.L.C.,
Plaintiff-Appellee
v.
TRAMMEL CROW RESIDENTIAL; TCR LOS RIOS LIMITED PARTNERSHIP
COMPANY; TCR SOUTH CENTRAL 1995, INC.; LEWIS BUNCH; KENNETH J
VALACH; JOHN ZELEDON; TIM HOGAN; JERRY DANIELS; PERRY K WILSON,
Defendants-Appellants
--------------------
Appeals from the United States District Court
for the Western District of Texas
A-01-CV-591-JN
A-02-CV-793-JN
--------------------
Before DAVIS, BENAVIDES and PRADO, Circuit Judges.
PER CURIAM:*
Appellant Womack+Hampton Architects, L.L.C. (“WHA”) appeals
from the district court’s grant of summary judgment against it on
its copyright infringement claims. Two of the defendants below
cross-appeal from the district court’s refusal to grant them
attorney’s fees. We affirm both decisions.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
2
Background Facts and Procedural History
From 1996 to 1998, WHA designed five different apartment
projects for Appellee/Cross-Appellant Trammell Crow Residential
(“TCR”).1 For each project, WHA and TCR signed Owner/Architect
Agreements (“Agreements”) that provided the terms under which WHA
would work. Two paragraphs of these agreements are at the center
of the parties’ dispute:
IX. OWNERSHIP AND RE-USE OF DOCUMENTS
A. The Drawings, Specifications, and other documents
prepared by the Architect for this project are the
instruments of the Architect’s service for use solely
with respect to this project and the Architect shall be
deemed the author of these documents and shall retain all
common law, statutory, and other reserved right [sic],
including copyright.
. . .
B. The Owner agrees not to use, copy or cause to have
copied, the drawings and specifications prepared for this
project on subsequent phases or other sites without
proper compensation to the Architect, which shall be
based upon a mutually agreed upon of [sic] $150.00 per
unit (base architectural fee), plus engineering services,
plus contingent hourly charges and expenses for plan
modifications necessary to adapt these plans and
specifications to other sites.
Each agreement contained identical provisions, except that the
stated base architectural fee for one of the projects was $250.
After all five projects were completed, TCR hired two
different architecture firms, Chiles Architects, Inc. and SDT
Architects, to design two projects – one in Austin (called The
North Bend) and one in Plano, Texas (called Los Rios). In
1
WHA sued several related Trammell Crow entities. We will
refer to all the entities collectively as TCR.
3
designing The North Bend, Chiles used some of WHA’s schematics.
Similarly, in designing Los Rios, SDT used WHA’s schematics from
an earlier project.
On September 30, 1998, after discovering TCR’s actions, WHA
sent TCR a letter demanding that TCR pay the reuse fee set forth
in the Agreement. The letter began:
As you know, Chiles Architects, Inc. has prepared,
without our knowledge, Construction Documents for
Trammell Crow Residential utilizing plans which are
copyrighted property of Womack+Hampton Architects. In
the past, on another development in Austin, an agreement
was reached between Womack+Hampton Architects, Trammell
Crow Residential and Chiles Architects allowing him to
utilize our designs on that development for a Use Fee
which is common in this industry. Unfortunately, no such
agreement was requested nor exists for the use of our
Windfern designs.
In an effort to rectify what is an improper use of our
work product, we have contacted Mr. Chiles to reach a
settlement agreement. We would like your cooperation and
agreement to this offer of settlement . . .
(4) Our original agreement with Trammell Crow
Residential, Houston, for Windfern calls for a $150.00
per unit Re-Use fee for future use of our plans. Because
of our long relationship with your company, and the fact
that the plans were redrafted by Mr. Chiles, we are
willing to accept one half of that amount, i.e. $75.00
per unit for a total Use Fee of $27,450.00. Any future
reuse of this product will be priced per the original
written agreement.2
TCR replied by asking WHA to waive the base architectural
fee of $150 per unit. TCR never paid any fee and contends that
because it did not hear back from WHA, it understood that WHA had
2
No party objected to using this settlement offer as
evidence. In fact, all the parties cite it as evidence.
4
agreed to waive the fee.
WHA originally sued TCR and Chiles and Chiles’s principal3
for copyright infringement in the Western District of Texas. WHA
filed an additional suit against TCR, SDT, and SDT’s principals,4
based on essentially the same issues, in the Southern District of
Texas. The second case was transferred to the Western District
and then consolidated with the original Western District case.
Neither suit contained a claim for breach of contract, and WHA
has repeatedly stated that it did not bring a contract claim.
TCR filed two motions for summary judgment. In the first
motion, TCR argued that WHA’s damages were limited to the reuse
fee contained in the Owner/Architect Agreements. The district
court referred this motion to the magistrate judge, who
recommended granting it. After the cases were consolidated, the
magistrate issued an amended report and recommendation which
expanded the same conclusion to the claims related to SDT’s use.
WHA filed objections, but the district court accepted the
magistrate’s recommendation.
Shortly after the district court’s summary judgment order,
TCR, Chiles, and SDT filed additional motions for summary
judgment seeking dismissal of all of WHA’s claims. These motions
3
We will collectively refer to the company and its principal
as “Chiles.”
4
We will collectively refer to the company and its principal
as “SDT.”
5
contended that the contract permitted the reuse and that TCR’s
failure to pay the reuse fee was only a breach of contract, not
copyright infringement. The magistrate recommended granting this
motion. The district court accepted the magistrate’s
recommendation over WHA’s objections and granted summary judgment
on all of WHA’s claims. WHA timely filed a notice of appeal.
TCR and Chiles also moved for attorney’s fees. The district
court denied these motions. TCR and Chiles cross-appeal from the
denial.
We review the district court’s grant of summary judgment de
novo. Hanks v. Transcon. Gas Pipe Line Corp., 953 F.2d 996, 997
(5th Cir. 1992). The district court’s decision concerning
attorney’s fees is reviewed for an abuse of discretion. Bridgmon
v. Array Sys. Corp., 325 F.3d 572, 577-78 (5th Cir. 2003).
Interpreting the Agreements
The parties agree that the reuse provision provides a
copyright license. They disagree, however, about the scope and
meaning of that license, as well as when it arose. Generally,
licensing agreements, like other contracts, are interpreted under
state law. Fantastic Fakes, Inc. v. Pickwick Int’l, Inc., 661
F.2d 479, 483 (5th Cir. Unit B 1981) (applying Georgia law to a
license agreement and noting that “application of Georgia rules
to determine parties’ contractual intent is not preempted by
either copyright act nor does their application violate federal
6
copyright policy”); see also Kennedy v. Nat’l Juvenile Detention
Ass’n, 187 F.3d 690, 694 (7th Cir. 1999) (“[n]ormal rules of
contract construction are generally applied in construing
copyright agreements”).
When interpreting unambiguous contracts,5 Texas courts “give
terms their plain, ordinary, and generally accepted meaning
unless the instrument shows that the parties used them in a
technical or different sense,” in order to “enforce the
unambiguous document as written.” Heritage Res., Inc. v.
NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). The goal of
interpretation is to give effect to the parties’ intentions as
expressed in the contract. Sun Oil Co. (Del.) v. Madeley, 626
S.W.2d 726, 727-28 (Tex. 1981). Thus,“[i]n the ordinary case,
the writing alone will be deemed to express the intention of the
parties.” Id. at 728. “Only where a contract is first found to
be ambiguous may the courts consider the parties’
interpretation.” Id. at 732. Texas courts read the contract as
a whole and give each part of the contract meaning. Forbau v.
Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994).
Interpretation of unambiguous contracts is a question of law.
5
All parties agree that the Agreements are unambiguous.
Under Texas law, if a contract “is so worded that it can be given
a certain or definite legal meaning, it is not ambiguous.” Sun
Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 732 (Tex. 1981).
Parties’ disagreement about how to interpret a contract does not
make it ambiguous. Forbau v. Aetna Life Ins. Co., 876 S.W.2d
132, 134 (Tex. 1994)(“not every difference in the interpretation
of a contract or an insurance policy amounts to an ambiguity”).
7
DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex.
1999).
Does the reuse provision permit TCR to hire architects other than
WHA?
Under WHA’s interpretation, the reuse provision requires TCR
to hire WHA on any subsequent project for which TCR wanted to
reuse the plans. WHA bases this reading on the reuse section’s
inclusion of engineering fees, hourly charges, and expenses along
with the $150 (or $250) reuse fee. Specifically, this language
provides that, upon reuse, TCR must pay:
proper compensation to the Architect,6 which shall be
based upon a mutually agreed upon of [sic] $150.00 per
unit (base architectural fee), plus engineering services,
plus contingent hourly charges and expenses for plan
modifications necessary to adapt these plans and
specifications to other sites.
According to WHA, reading the Agreements to permit anyone
other than WHA to reuse and modify the plans would render
meaningless the contract provision about paying for engineering
services, hourly charges, and expenses. WHA concludes that
because of this, the entire provision can only apply to WHA.
In contrast, Appellees argue that this clause means that
they had the right to reuse WHA’s designs; in return, they only
had to pay the base reuse fee. Appellees argue that the reuse
clause would be meaningless (and pointless) if it limited the
6
The Agreements identify WHA as “the Architect.”
8
reuse to WHA; WHA already had the right to reuse. According to
Appellees, such an interpretation runs afoul of the Texas
contract rule that all terms of a contract should be given
effect, the same rule that WHA cites when discussing the
engineering fees and other costs.
At issue, then, is the scope of the reuse provision and the
meaning of the right to use. WHA analogizes to, and the district
court distinguished, a Ninth Circuit case interpreting the extent
of a right to use, S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081
(9th Cir. 1989). In that case, S.O.S., which provided computer
hardware and software for payroll companies, entered into a
license with Payday, a payroll services company. Id. Under this
agreement, Payday would use S.O.S. software on Payday’s
independent accountant’s computer, rather than installing a
computer in its office. Id. The agreement provided that Payday
“is acquiring the right of use, SOS retains all rights of
ownership.” Id. Payday later hired former S.O.S. employees to
create programs derived from S.O.S.’s program and install those
programs on Payday’s computer. S.O.S sued for copyright
infringement, among other things. Id. at 1084. The Ninth
Circuit concluded that the license’s right of use did not cover
S.O.S.’s conduct:
In the context of the parties’ entire agreement, it is
clear that the ‘right of use’ was not intended to refer
to copyright use. The contract does not refer explicitly
to copyright or to any of the copyright owner’s exclusive
rights. Payday clearly was concerned solely with
9
obtaining output in the form of processing payroll
information for its customers.
Id. at 1088. The court emphasized that this determination was
based on the facts and noted that “[w]ere this a license between
S.O.S. and another software writer, ‘right of use’ might be more
properly construed to include uses, such as modification of the
software, otherwise reserved to the copyright holder.” Id. at
1088 n.8; see also Kennedy, 187 F.3d at 695 (license granting a
client “the right to use, duplicate and disclose, in whole or in
part, such materials in any manner for any purpose whatsoever”
gave client the right to create derivative works from the
copyrighted work).
Unlike the use in S.O.S., here it is clear that the reuse
provision anticipates copyright use, specifically use of the
copyrighted plans for other projects. Unlike the contract in
S.O.S., the Agreement refers to copyright, and the parties were
addressing reuse of the plans themselves, not of the information
derived from a copyrighted work.
Additionally, both sides cite evidence outside the contract
to show the existence of earlier dealings and the parties’
interpretation of the contracts.7 Initially, the parties refer
to the September 30, 1998 letter that WHA sent to TCR. In
particular, WHA points to the section of the letter referring to
7
As noted earlier, Texas law does not permit courts to
consider parties’ interpretations of unambiguous contracts. Sun
Oil, 626 S.W.2d at 732.
10
a past occurrence to support its argument that no other
architects were permitted to use its design:
In the past, on another development in Austin, an
agreement was reached between Womack+Hampton Architects,
Trammell Crow Residential and Chiles Architects allowing
[Chiles] to utilize our designs on that development for
a Use Fee which is common in this industry.
Unfortunately, no such agreement was requested nor exists
for the use of our Windfern designs.
In contrast, however, another part of this letter, cited by
Appellees, suggests that the reuse fee covered exactly this
situation:
Our original agreement with Trammell Crow Residential,
Houston, for Windfern calls for a $150.00 per unit Re-Use
fee for future use of our plans. Because of our long
relationship with your company, and the fact that the
plans were redrafted by Mr. Chiles, we are willing to
accept one half of that amount, i.e. $75.00 per unit for
a total Use Fee of $27,450.00. Any future reuse of this
product will be priced per the original written
agreement.
Thus, the same letter supports both interpretations of the
agreement. As additional outside evidence of interpretation, WHA
cites the previous agreement referred to in the letter. The
record contains only one other agreement. This agreement is
between TCR and Chiles and relates to a project that TCR had been
working on “for several months” and that Chiles took over, using
WHA’s design concepts. Thus, this is not necessarily a situation
where the reuse provision would apply; it was not clearly another
site or subsequent phase. Under the WHA/Chiles agreement, Chiles
could not reproduce the designs on other projects without WHA’s
approval and provided that WHA was to receive credit as the
11
“Building Design Architect.” The agreement did not require
Chiles to pay WHA for using the design concepts on that project,
but it provided that “if Chiles chooses to re-use the plans and
designs prepared for this Project on subsequent projects, Chiles,
or Chiles’s Client, shall pay [WHA] the sum of $75.00 for each
unit to be placed on the site. The base re-use architectural
design fee shall not be less than $10,000.00 for the use of the
designs.” The contract indicates that WHA would enter into a
separate agreement with TCR, but no agreement is in the record.
In sum, the outside evidence is of limited use. The
previous agreement is distinguishable from the situation here,
and the September 1998 letter supports both interpretations.
Because this evidence does not help us, we end up relying on the
contract language itself. And like the district court, we
conclude that the language permitted the use.
Even construed narrowly, the contract language does not
support WHA’s interpretation that TCR was required to use WHA on
any future reuse of the plans. The Agreements provided that TCR
could reuse the work and also required it to pay WHA a fee to do
so. TCR’s reuse appears to be consistent with that anticipated
under the contract.
Condition Precedent
WHA also argues that the district court erred when it
refused to construe payment of the reuse fee as a condition
12
precedent to TCR’s right to reuse. Texas law disfavors
interpreting a contract provision as a condition precedent, and
“forfeiture by finding a condition precedent is to be avoided
when another reasonable reading of the contract is possible.”
Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d
945, 948 (Tex. 1990). The Texas Supreme Court described the
usual situation in which a court will interpret a provision as a
condition precedent:
In order to make performance specifically conditional, a
term such as "if", "provided that", "on condition that",
or some similar phrase of conditional language must
normally be included. Landscape Design v. Harold Thomas
Excavating, 604 S.W.2d 374, 377 (Tex.Civ.App.--Dallas
1980, writ ref'd n.r.e.). If no such language is used,
the terms will be construed as a covenant in order to
prevent a forfeiture. While there is no requirement that
such phrases be utilized, their absence is probative of
the parties intention that a promise be made, rather than
a condition imposed. See Hohenberg Bros. Co. v. George E.
Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976).
Criswell, 792 S.W.2d at 948.
Similarly, when analyzing copyright licenses, many courts
have refused to interpret payment as a condition precedent.
I.A.E., Inc. v. Shaver, 74 F.3d 768, 778 (7th Cir. 1996); Effects
Assoc., Inc. v. Cohen, 908 F.2d 555, 559 n.7 (9th Cir. 1990)
(“[n]or can we construe payment in full as a condition precedent
to implying a license.”); Irwin v. Am. Interactive Media, Inc.,
1994 WL 394979 at *4, 1994 U.S. Dist. LEXIS 16223 (C.D. Cal.
April 14, 1994); cf. Graham v. James, 144 F.3d 229, 237 (2d Cir.
1998) (payment of royalties not a condition precedent). WHA has
13
not cited any cases in which payment under a license was found to
be a condition precedent.
Despite the lack of caselaw involving payment, WHA contends
that because the general conveyance was limited to the individual
projects, the reuse right only arose after TCR paid a fee. WHA
does not, however, cite specific language in the Agreements that
would indicate that the reuse fee was a condition precedent and
not merely a promise to pay.
Instead, WHA relies on McRoberts Software, Inc. v. Media
100, Inc., No. IP99-1577-C-M/S, 2001 WL 1224727(S.D. Ind. Aug.
17, 2001). McRoberts involved a software licensing agreement;
the question was whether the defendant could use the plaintiff’s
software without using a particular kind of hardware, called
Media 100. 2001 WL 1224727 at *10. In other words, the parties
argued over whether use of Media 100 hardware was a condition of
the license. The relevant language authorized the defendant to,
among other things, “distribute executable code versions of
[modified] CG Option 2.0 when integrated with DTI’s Media 100
hardware and software . . . and such versions shall be licensed
only for use on such hardware.” Id. (emphasis omitted). Reading
this language, the court concluded that without the integration
with the Media 100 hardware, the defendant never obtained a
license to use plaintiff’s software. Id.
As WHA concedes, much of the McRoberts decision depends on
the conditional language in the license – in particular, the use
14
of the word “when.” Thus, McRoberts resembles the other cases
involving conditions precedent. WHA argues that although its
contract does not contain conditional language, its case is
stronger than the McRoberts plaintiff’s case because the
McRoberts contract was a conveyance, whereas the reuse section
consisted of words of reservation with a conditional exception.
WHA contends that reservations are more narrowly construed than
conveyances. Despite WHA’s claims, this distinction cannot
override the absence of language in the Agreements suggesting
that payment is a condition precedent.
In short, WHA has not cited specific language in the
Agreements that would suggest that the fee is a condition
precedent. Although it argues that dealings outside the contract
indicate the existence of a condition precedent, these dealings
are not persuasive, particularly in light of the cases finding a
payment term merely to be a promise. The district court, thus,
did not err in refusing to read payment of the reuse fee as a
condition precedent.
Did the reuse license extend to Chiles and SDT?
Lastly, WHA argues that, even if a reuse license existed,
this license was personal to TCR and non-transferable without
WHA’s consent. In support, WHA cites a case that holds that non-
exclusive patent licenses are non-transferrable. In re CFLC,
Inc., 89 F.3d 673, 679 (9th Cir. 1996). Based on an analogy to
15
patent law, the Ninth Circuit has also indicated that copyright
licenses are not transferrable. Harris v. Emus Records Corp.,
734 F.2d 1329 (9th Cir. 1984); see also SQL Solutions, Inc. v.
Oracle Corp., No.C-91-1079, 1991 WL 626458,(N.D. Cal. Dec. 18,
1991). Thus, WHA argues that Chiles’s and SDT’s use gives rise
to a separate infringement claim.
The magistrate concluded, however, that the reuse provision
specifically anticipated that third parties would be involved in
the reuse. Specifically, the magistrate pointed to the phrase
“cause to have copied” and noted that reuse on another site would
require third-party involvement. TCR, too, provides evidence
that to “use . . . the drawings and specifications prepared for
this project on subsequent phases or other sites” would
necessarily require TCR to hire an architect to adapt the plans
to fit the other site. Use consistent with a license is a
defense to an infringement claim. Lulirama Ltd., Inc. v. Axcess
Broadcast Svs., Inc., 128 F.3d 872, 879 (5th Cir. 1997).
Further, TCR’s hiring of Chiles and SDT does not appear to
be a transfer of the rights contained in the license. Cf. Hogan
Sys., Inc. v. Cybresource, Int’l, 158 F.3d 319, 323 (5th Cir.
1998) (bank’s use of independent contractors to work on licensed
software not a transfer of license to contractor because “all of
the work being done inures to the benefit of [the bank]”). The
use here is consistent with the license and is not an
impermissible transfer.
16
Cross-Appeal on Attorney’s Fees
TCR and Chiles appeal the district court’s denial of their
motions for attorney’s fees. A court may award attorney’s fees
to a prevailing party under the Copyright Act. 17 U.S.C. § 505.
Although routinely awarded, these fees are discretionary. Hogan,
158 F.3d at 325. That these fees are routinely awarded, however,
does not mean that they are automatically awarded. See, e.g.,
Creations Unlimited, Inc. v. McCain, 112 F.3d 814, 817 (5th Cir.
1997) (noting that the Supreme Court “repudiated the ‘British
Rule’ for automatic recovery of attorney’s fees by the prevailing
party” and holding that the district court did not abuse its
discretion in denying fees). The Supreme Court has listed
several non-exclusive factors that are relevant to the fee
determination: “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components
of the case) and the need in particular circumstances to advance
considerations of compensation and deterrence.” Fogerty v.
Fantasy, Inc., 510 U.S. 517, 535 n.19 (1994) (quoting Lieb v.
Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir. 1986)). In
Fogerty, the Supreme Court determined that these fees should be
awarded evenhandedly to both prevailing plaintiffs and
defendants. Id. at 534. The district court’s decision
concerning attorney’s fees is reviewed for an abuse of
discretion. Bridgmon v. Array Sys. Corp., 325 F.3d 572, 577-78
17
(5th Cir. 2003).
In this case, the district court accepted the magistrate’s
report and recommendation that contained a thorough analysis of
the above factors. First, the magistrate determined that WHA’s
claim was not frivolous, citing three reasons for this
conclusion. The magistrate determined that WHA’s claims had some
case law support, specifically S.O.S., Inc. v. Payday, Inc., 886
F.2d 1081 (9th Cir. 1989). The magistrate also noted that the
sheer number of hours TCR’s lawyers claimed to have spent argued
against frivolousness.8 Finally, in response to TCR and Chiles’
arguments that WHA had requested frivolously large amounts of
damages, the magistrate noted that WHA’s method of calculating
damages was permissible under the Copyright Act. Based on the
same factors, the magistrate concluded that WHA’s claims were not
legally or factually objectively unreasonable.
Examining motivation, the magistrate also concluded that
Chiles presented no evidence that the suit was improperly
motivated; Chiles only cited WHA’s three-year delay in bringing
suit. Although Chiles argued that WHA’s purpose was “to recover
as much money as possible and punish the Crow defendants,” the
magistrate noted that “[a]s even the Chiles Defendants concede,
the desire to recover damages underlies the vast majority of
8
The magistrate cited Christian v. Mattel, Inc., 286 F.3d
1118, 1132 n.12 (9th Cir. 2002) for the idea that defending a
frivolous case should not require an excessive amount of fees.
18
lawsuits.”
Finally, the magistrate concluded that awarding TCR and
Chiles fees would not advance considerations of compensation and
deterrence. In fact, TCR has essentially conceded that it did
something wrong – it did not pay the required reuse fee. It is
difficult to see how rewarding a company that breached its
contract to pay an author could advance the Copyright Act’s
purposes. In light of its analysis of these factors, the
district court did not abuse its discretion in declining fees,
despite the rule that fees are routinely granted in copyright
cases.
For these reasons, we affirm the decisions of the district
court granting summary judgment on WHA’s copyright infringement
claims and denying TCR and Chiles’s requests for attorney’s fees.
AFFIRMED.
19