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Reed v. Ezelle Investment Properties Inc.

United States District Court, D. Oregon, Portland Division

April 2, 2019

AARON C. REED, an individual, Plaintiff,
v.
EZELLE INVESTMENT PROPERTIES INC., doing business as ezelleinvestmentproperties.com, GLENN D. EZELLE JR., an individual, DOES 1-10 INCLUSIVE, Defendants.

          OPINION AND ORDER

          YOULEE YIM YOU, UNITED STATES MAGISTRATE JUDGE

         Plaintiff Aaron C. Reed (“Reed”) prevailed in this action for copyright infringement against defendants Glenn D. Ezelle Jr. (“Ezelle”) and Ezelle Investment Properties Inc. (collectively “defendants”). Opinion and Order, ECF #39. This court awarded statutory damages of $1, 500. Judgment, ECF #40. Reed now moves for costs and attorney's fees of $11, 255 under 17 U.S.C. § 505. The court finds the motion appropriate for decision without oral argument. See FRCP 78(b); LR 7-1(d)(1). For the reasons set forth below, the motion (ECF #41) is granted, and costs and attorney's fees are awarded in the amount of $10, 539.20.[1]

         DISCUSSION

         I. Discretion to Award Fees

         The court, “in its discretion, ” may allow the recovery of full costs and award reasonable attorney's fees as part of those costs to the prevailing party in an action for copyright infringement. 17 U.S.C. § 505; Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1985 (2016) (“§ 505 grants courts wide latitude to award attorney's fees based on the totality of circumstances in a case”). “[F]ee awards under § 505 should encourage the types of lawsuits that promote . . . encouraging and rewarding authors' creations while also enabling others to build on that work.” Kirstaeng, 136 S.Ct. at 1985. “When a litigant-whether plaintiff or defendant-is clearly correct, the likelihood that he will recover fees from the opposing (i.e., unreasonable) party gives him an incentive to litigate the case all the way to the end.” Id. Thus, “[t]he holder of a copyright that has obviously been infringed has good reason to bring and maintain a suit even if the damages at stake are small. . . .” Id.

         Supreme Court and Ninth Circuit precedent guide this exercise of discretion. Id. at 1984-85; Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1037 (9th Cir. 2018) (explaining that the court's “discretion must remain tethered to judicial guideposts”). To determine whether to award fees, courts consider “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.” Glacier Films, 896 F.3d at 1037 (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)). Substantial weight should be accorded to the reasonableness of the losing party's legal and factual arguments. Shame On You Prods., Inc. v. Banks, 893 F.3d 661, 666 (9th Cir. 2018). Courts also should consider the “degree of success obtained in the litigation, the purposes of the Copyright Act, and ‘whether the chilling effect of attorney's fees may be too great or impose an inequitable burden on an impecunious litigant.'” Id. (citing Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 675 (9th Cir. 2017) (alteration omitted).

         A. Degree of Success Obtained

         Plaintiff obtained total success on the merits. See Glacier Films, 896 F.3d at 1038 (quoting Maljack Prods., Inc. v. GoodTimes Home Video Corp., 81 F.3d 881, 890 (9th Cir. 1996)). While the court awarded $1, 500 in statutory damages, only about ten percent of the amount plaintiff sought (see Opinion and Order 6, 19, ECF #39), any award of statutory damages is a complete victory as “[a]ctual success in an infringement action involves establishing the defendant's liability.” Glacier Films, 896 F.3d at 1038 (citing Wall Data Inc. v. Los Angeles Cty. Sheriff's Dep't, 447 F.3d 769, 787 (9th Cir. 2006)). Defendants stipulated to facts conclusively establishing their liability for direct copyright infringement and offered no substantive affirmative defenses to the infringement (e.g., fair use, exhaustion, de minimis use). Resp. 4-5, ECF #31. Unless the court found that the parties had entered into a binding settlement agreement, plaintiff was entitled to prevail.

         Defendants argue not only that plaintiff's motion for fees should be denied, but that they should be awarded fees because the amount of statutory damages awarded more closely aligns with their value of the case. Defs' Resp. to Mot. for Attorney's Fees 5, ECF #42 (“Defs' Resp.”). Indeed, defendants made a Rule-68 offer of $1, 100, only $400 less than the judgment awarded, while plaintiff demanded up to $20, 000 before litigation ensued and $40, 000 after that to settle the case. Decl. of David Brown ¶ 6, ECF #43. However, despite plaintiff's purported overvaluation, success depends on liability, not the amount of statutory damages recovered. Glacier Films, 896 F.3d at 1038.

         B. Need to Advance Compensation and Deterrence

         Defendants' assertion that “Ezelle has had a painful education” is well taken. Defs' Resp. 6, ECF #42. The $1, 500 award of statutory damages is enough to deter defendants from additional infringement.

         However, this amount is insufficient to compensate Reed for his legitimate efforts in enforcing his valid copyrights. Reed has incurred attorney's fees and costs to recover statutory damages. See Assessment Techs. of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 437 (7th Cir. 2004) (“[A]n award of attorneys' fees may be necessary to enable the party possessing the meritorious claim or defense to press it to a successful conclusion rather than surrender it because the cost of vindication exceeds the private benefit to the party.”); Oracle USA, Inc. v. Rimini St., Inc., 324 F.Supp.3d 1157, 1170 (D. Nev. 2018) (“Without a fee award, the court finds that [plaintiff's] investment in its intellectual property and its incentive to create future [works] would not be appropriately protected or compensated.”). Thus, while an award of attorney's fees is not needed to deter Ezelle from further copyright infringement, it is necessary to compensate Reed for pursuing a meritorious claim.

         C. Objective Unreasonableness and Frivolousness

         This lawsuit is not frivolous. Ezelle conceded liability to copyright infringement at the outset. His only arguments to the contrary were premised on the notion that the parties had entered into a binding settlement agreement for $1, 000. As discussed in this ...


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