Opinion
94 Civ. 9144 (LAP)
July, 2000
MEMORANDUM AND ORDER
Prevailing defendant Paramount Pictures Corporation ("Paramount") has moved, pursuant to 17 U.S.C. § 505 and Fed.R.Civ.P. 54(d)(2), to recover the attorneys' fees and costs it incurred in defending against the copyright infringement action brought by plaintiff Annie Leibovitz.
I. Background.
Leibovitz, a well-known photographer, shot a photograph of actress Demi Moore for the 1991 cover of Vanity Fair magazine. In this photograph, Ms. Moore was eight months pregnant and nude. In 1993, Paramount used a similar photograph to advertise the release of its film, Naked Gun 33 1/3: The Final Insult ("Naked Gun"). In the Paramount photograph, however, the face of actor Leslie Nielsen appeared on top of the body of an eight-month pregnant nude model.
Subsequently, Leibovitz filed suit in this Court charging that the advertisement infringed her copyright in the Moore photograph, and I granted summary judgment for defendant, finding that the advertisement was a parody of the Moore photograph protected by the fair use defense. See Leibovitz v. Paramount Pictures Corp., 948 F. Supp. 1214 (S.D.N.Y. 1996), aff'd, 137 F.3d 109 (2d Cir. 1998). Presently, Paramount has moved to recover the attorneys' fees and costs it incurred in defending this matter.
II. The Legal Standard for Awarding Attorneys' Fees.
The Copyright Act of 1976 (the "Copyright Act") provides that "in any copyright infringement action `the court may . . . award a reasonable attorney's fee to the prevailing party as part of the costs.'" Fogerty v. Fantasy, Inc., 510 U.S. 517, 519 (1994) (quoting 17 U.S.C. § 505); see also Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1011 (2d Cir. 1995). Courts considering fee applications under the Copyright Act must follow what has been termed the "evenhanded" approach. See Knitwaves, 71 F.3d at 1011. Under this approach, the prevailing party in a copyright infringement action is treated the same for purposes of an award of attorneys' fees, regardless of whether that prevailing party is a plaintiff or a defendant. See Fogerty, 510 U.S. at 534; Littel v. Twentieth Century-Fox Film Corp., No. 89 Civ. 8526, 1996 WL 18819, at *1 (S.D.N.Y. Jan. 18, 1996), aff'd, DeStefano v. Twentieth Century-Fox Film Corp., 100 F.3d 943 (2d Cir. 1996). District courts must use "equitable discretion" in awarding attorneys' fees and costs. See Fogerty, 510 U.S. at 534.
In Fogerty v. Fantasy, Inc., the Supreme Court set forth a non-exclusive list of factors to guide the exercise of discretion in awarding fees. 501 U.S. 517. "These factors include `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.'" Id. at 533 n. 19 (quoting Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir. 1986)).
Courts in this district applying Fogerty have awarded attorneys' fees to prevailing defendants simply upon a showing that plaintiff's position was objectively unreasonable — neither bad faith nor frivolousness need be found. See Adsani v. Miller, No. 94 Civ. 9131, 1996 WL 531858, at *13 (S.D.N.Y. Sept. 19, 1996) (collecting cases); Littel, 1996 WL 18819, at *3; Screenlife Establishment v. Tower Video, Inc., 868 F. Supp. 47, 52 (S.D.N.Y. 1994).
Granting summary judgment in favor of a defendant is "not the equivalent of a finding that plaintiff's claims are objectively unreasonable." Littel, 1996 WL 18819, at *3. Thus, Paramount's fee request will not be granted simply because it prevailed on summary judgment.
Courts have also considered the relative financial strength of the parties, see Littel, 1996 WL 18819, at *1, and the purposes of the Copyright Act, see Fogerty, 510 U.S. at 527-28. Specifically, fees must be granted in accordance with the idea that
[T]he primary objective of copyright is not to reward the labor of authors, but "[t]o promote the Progress of Science and useful Arts." To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work.
Id. at 527 (quoting Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349-50, 111 S.Ct. 1282, 1289-1290, 113 L.Ed.2d 358 (1991)).
III. Analysis. A. Objective Unreasonableness of Plaintiff's Position
In this case, Paramount does not argue that Leibovitz acted frivolously or in bad faith. Rather, it argues that Leibovitz's factual and legal arguments and her refusal to settle the case were objectively unreasonable. Accordingly, I consider whether Leibovitz acted in an objectively unreasonable manner.
1. Plaintiff's Factual and Legal Arguments
Throughout this case, Leibovitz argued that Paramount copied the Moore photograph and, in doing so, failed to satisfy the four requirements of the fair use defense set forth in section 107 of the Copyright Act. (See Pl.'s Mem. Supp. Part. Summ. J. at 7 ("Pl.'s Mem.").) An allegedly infringing work which meets the fair use test set forth in section 107, will not be deemed to infringe the copyrighted work. Section 107 sets out the following four factors to be used by the courts in determining whether a work constitutes a fair use:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.17 U.S.C. § 107. Because resolution of the underlying action turned on the viability of Paramount's fair use defense, I turn to the reasonableness of plaintiff's arguments under each prong of the defense.
a. Element One: Purpose and Character of the Use
Leibovitz argued that Paramount's advertisement did not constitute a parody of the Moore photograph, and, therefore was not a fair use, because it did not directly comment upon or criticize the Moore photograph. (See Pl.'s Mem. at 9.) While Leibovitz was correct in asserting that a work that is not referential to the original work does not qualify as a parody and is not entitled to a fair use defense, see Campbell v. Cuff-Rose Music, Inc., 510 U.S. 569, 580, 114 S.Ct. 1164, 1172 (1994); Leibovitz v. Paramount Pictures Corp., 948 F. Supp. at 1220, she may have misapplied the facts of this case.
Leibovitz relied largely on easily distinguishable cases. In virtually every case she cited, the court found that the allegedly infringing work was not meant to satirize the original directly and, thus, was not a parody. See, e.g., MCA, Inc. v. Wilson, 677 F.2d 180 (2d Cir. 1981); United Feature Syndicate, Inc. v. Koons, 817 F. Supp. 370 (S.D.N.Y. 1993); Steinberg v. Columbia Pictures Indus., Inc., 663 F. Supp. 706 (S.D.N.Y. 1987). Here, in contrast, Leibovitz testified that the advertisement was a parody. (See Zavin Aff. Ex. J at 38 (Leibovitz Dep. Tr., dated Feb. 28, 1996).) Because "[t]he threshold question when fair use is raised in defense of parody is whether a parodic character may reasonably be perceived," see Campbell, 510 U.S. at 582, 114 S.Ct. at 1173 (emphasis added), Leibovitz apparently ignored her own conclusion that the advertisement was a parody.
Leibovitz also argued that the advertisement was not a parody "as a matter of law" because it was used to promote an unrelated commercial product, the movie Naked Gun. (See Pl.'s Mem. at 12.) Leibovitz contended that "[u]nder the authorities in the Second Circuit and elsewhere, advertisements used to promote a product, as in this case, are not parodies and are entitled to no indulgence. . . ." (See id. at 13.) This argument, however, relies largely on pre-Campbell case law which held that every commercial use was presumptively unfair. See, e.g., Tin Pan Apple, Inc. v. Miller Brewing Co., Inc., 737 F. Supp. 826 (S.D.N.Y. 1990); D.C. Comics Inc. v. Crazy Eddie, Inc., 205 U.S.P.Q. 1177 (S.D.N.Y. 1979).
Leibovitz asserts that she did not rely solely on pre-Campbell cases. However, the single post-Campbell case she cited relied on several factors, including "commercial use," in making its determination. See Metro-Goldwyn-Mayer, 900 F. Supp. at 1299-1300. Indeed, Metro-Goldwyn-Mayer recognized that promotional material may be "parody" and be entitled to some, albeit "less," indulgence under the fair use inquiry. See id. at 1300.
In Campbell, the Supreme Court abandoned the presumption that commercial works are not entitled to the fair use defense. Rather, the Court emphasized the importance of determining whether the work is "transformative", i.e., whether its alteration of an original work "adds something new, with a further purpose or different character, altering the first with new impression, meaning or message." See Campbell, 510 U.S. at 579, 114 S.Ct. at 1171. Thus, the Court stated, "the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use." Id.
Courts, therefore, face the difficult task of balancing the transformative character of the new work against its commercial nature. See, e.g., Leibovitz, 948 F. Supp. at 1223 ("the purposes of copyright are best served by a finding that the highly transformative character of the Nielsen ad trumps its admittedly commercial purpose and that the first fair use factor therefore weighs in favor of the defendant, albeit perhaps by only a slight margin"). I find that because the Nielsen photograph was clearly a transformation of the Moore photograph, Leibovitz was unreasonable in asserting that the Paramount advertisement's commercial character alone stripped it of any fair use protection as a matter of law. (See Pl.'s Mem. at 12.) However, plaintiff did argue alternatively that if the Paramount photograph was a parody, and therefore entitled to "less indulgence" because of its commercial nature, it could not meet the fair use test. (See Pl.'s Mem. at 15.) Thus, when viewed on the whole, plaintiff's argument that defendant's advertisement was not entitled to the fair use defense may not have been completely unreasonable, despite its reliance on mostly pre-Campbell cases. In any event, it is a close call.
b. Element Two: Nature of the Copyrighted Work
It is well-established that the second factor — the nature of the copyrighted work — is not very important to the fair use analysis. For instance, in Campbell, the Court held that a determination that a copied work is highly creative and, thus, worthy of copyright protection is not very helpful "in separating the fair use sheep from the infringing goats in a parody case, since parodies almost invariably copy publicly known, expressive works." 510 U.S. at 586, 114 S.Ct. at 1175. Consequently, I will not tarry on the nature of the copyrighted work.
c. Element Three: The Amount and Substantiality of the Taking
Paramount does not argue that Leibovitz was objectively unreasonable in arguing that Paramount copied too much of the Moore photograph.
d. Element Four: The Effect on the Potential Market for or Value of the Copyrighted Work
Paramount does not challenge Leibovitz's argument regarding the lack of evidence of market harm.
In sum, I do not find plaintiff's factual and legal arguments sufficiently objectively unreasonable so as to weigh in Paramount's favor. Rather, the combination of the then-relatively new state of fair use law, the amount of Paramount's taking of Leibovitz's work and the commercial purpose of Paramount's work favors Leibovitz.
2. Rejection of Settlement Offer
Paramount also argues that Leibovitz should pay its attorneys' fees and costs because she was objectively unreasonable in refusing to accept Paramount's offer and in demanding a "six-figure" settlement. (See Def.'s Mem. Supp. Mot. Attorneys' Fees and Costs ("Def.'s Fee Mem.") at 12-13.) On or about February 10, 1995, in an attempt to settle this case, Paramount filed a Rule 68 Offer of Judgment offering to enter judgment against Paramount in the amount of $10,000, together with attorneys' fees and costs up to $5,000, and to enjoin Paramount from making any further use of the Nielsen ad or otherwise using the Moore photo. (See Zavin Aff. Ex. D (Offer of Judgment, dated Feb. 10, 1995).) Paramount argues that this settlement should have been satisfactory because (1) it would satisfy Leibovitz's stated desire to prevent the copying of her work, and (2) she had not suffered any economic harm from the advertisement. (See Def.'s Fee Mem. at 12-13.) Leibovitz, however, claims that her "six-figure" demand was reasonable in that it "represented what Annie Leibovitz would have charged for the use of her photograph, had she been willing to license its use for an advertising purpose" and "represented a figure that plaintiff could have been awarded for a willful infringement. . . ." (Schad Aff. ¶ 5.)
On a motion requesting fees, a rejection of a settlement offer is not dispositive, since the court must consider the overall reasonableness of plaintiff's case. Nonetheless, an "unreasonable rejection of a serious settlement offer might under some circumstances be a factor which could be considered in assessing the reasonableness of a fee request." Harris Custom Builders, Inc. v. Hoffmeyer, 140 F.3d 728, 731 (7th Cir. 1998).
Settlement, of course, is compromise; it is not obtaining all one could obtain by prevailing in a litigation. Both parties seem to have forgotten this important principle in this litigation; Leibovitz continued to insist on a "six-figure" amount, while Paramount made its Offer of Judgment but never moved off that number, perhaps because of Leibovitz's inflexibility. Thus, this factor is close to equipoise.
B. Financial Disparity Between Plaintiff and Defendants
Courts addressing fee applications have considered the relative financial strength of the parties. See, e.g., Littel, 1996 WL 18819, at *1. Although Paramount is a large corporation, Leibovitz is also extremely wealthy and successful. At her deposition, she testified that her gross income in the years 1992, 1994 and 1995 was an amount such that she did not know it to the nearest million dollars and she did not know whether or not it was more than $3 million (or $5 million) in each of those years. (See Zavin Aff. Ex. J at 54-56.) Because paying defendant's fees and costs of approximately $120,000 would not unreasonably burden Leibovitz, this factor is also in equipoise.
C. Promoting the Objectives of the Copyright Act
Permitting defendant to recover its attorneys' fees and costs would conform with the objectives of the Copyright Act. Despite plaintiff's argument that granting defendant's request will burden artists and invite others to "borrow" copyrighted works, (see Pl.'s Mem. Opp. Mot. Attorneys' Fees and Costs at 16), the Copyright Act clearly protects creative endeavors of all parties. The Supreme Court has recognized that "a successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright." Fogerty, 510 U.S. at 527.
Indeed, in granting summary judgment to Paramount, I recognized that Paramount's advertisement promoted the Copyright Act: "the fundamental purposes of copyright are best served by a finding that defendant's use of the Moore photograph is a fair one." Leibovitz, 948 F. Supp. at 1226. Furthermore, granting defendant's fee request would encourage similar defendants to produce original literary, artistic, and musical expression for the good of the public, thus furthering the primary objective of the Act. See Fogerty, 510 U.S. at 524. Thus, this factor favors Paramount.
IV. Conclusion.
Weighing all of the above factors, I decline to award fees in this action. The infirmity of the claim was not so pronounced as to merit such an award. See CK Co. v. Burger King Corp., No. 92 Civ. 1488, 1995 U.S. Dist. LEXIS 823 (S.D.N.Y. Jan. 26, 1995), aff'd, 122 F.3d 1055 (2d Cir. 1995).
Accordingly, Paramount's motion for attorneys' fees is denied.
SO ORDERED: