Opinion
02 cv 8187 (GBD)
June 3, 2003
MEMORANDUM OPINION ORDER
Plaintiff brought suit against defendant on October 16, 2002, alleging violations of the Copyright Act, 17 U.S.C. § 101, et seq., in connection with a "Beaver Cartoon" to which plaintiff claimed that all rights, including copyright, had been transferred and assigned to her by the cartoon's creator, Ron Szafarczyk. Plaintiff sought monetary damages and a declaratory judgment that, subject to certain limited privileges granted to defendant's predecessor in interest, she was the sole and exclusive owner of the copyright to the "Beaver Cartoon." Plaintiff then filed a Notice of Voluntary Dismissal without prejudice on January 29, 2003. This court so ordered that Notice of Voluntary Dismissal without prejudice on January 31, 2003. Defendant now moves for attorney's fees pursuant to 17 U.S.C. § 505 and Fed.R.Civ.P. 54. For the following reasons, defendant's motion is denied.
The Copyright Act provides that a court, in its discretion, may award attorney's fees to a prevailing party. See 17 U.S.C. § 505. "Generally, the prevailing party is one who succeeds on a significant issue in the litigation[.]" Warner Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir. 1989). A party's success on a claim that is "purely technical or de minimus' does not qualify him as a `prevailing party.'" Id.
Where the case terminates because the plaintiff filed a Notice of Voluntary Dismissal a court must examine the circumstances surrounding the voluntary dismissal to determine if the defendant may properly be considered a "prevailing party:"
Certainly, it cannot be said that a defendant always prevails when a plaintiff voluntarily dismisses his lawsuit without prejudice. It would be incorrect and illogical, however, to hold that a defendant never prevails upon such a voluntary dismissal. The answer, we believe, lies in examining the circumstances surrounding the voluntary dismissal. For example, where the complaint is clearly frivolous or there have been proceedings on the merits or substantial discovery, defendants have a stronger argument that they prevail when plaintiff voluntarily discontinues suit. On the other hand, where it has not been shown that the complaint is frivolous and there have been no proceedings on the merits nor substantial pre-trial proceedings, the argument must necessarily be less persuasive.Great Am. Fun Corp. v. Hosung N.Y. Trading, Inc., No. 96 cv 2986, 1997 WL 129399, at *2 (S.D.N.Y. March 21, 1997), quoting Fernandez v. Southside Hosp., 593 F. Supp. 840, 843 (E.D.N.Y. 1984). A defendant is not considered a "prevailing party," where for example, the plaintiff voluntarily dismissed because, for tactical reasons, it chose to bring its claims in state court rather than federal court, or where discovery of adverse facts or a change in the law caused the plaintiff to voluntarily dismiss. See Espada v. Rosado, No. 00cv6469, 2001 WL 1020549, at *2 (S.D.N.Y. Sept. 5, 2001). "Where, however, a `calculating' plaintiff obtains a dismissal in order to avoid an adverse ruling on the merits, the case for the defendant becomes more compelling. . . . [A] plaintiff should not be able to avoid paying attorney's fees by bringing a frivolous claim and then obtaining a dismissal before a ruling on the merits." Id.
The Silberstein action is the third of three related actions filed in this Court alleging copyright infringement with respect to the "Beaver Cartoon." The second action, Szafarczyk v. Digital Art Solutions, Inc., 02 cv 5481 (GBD), was filed on July 16, 2002 against defendant Digital by the original creator and owner of the copyright, Ron Szafarczyk. In the Szafarczyk action, Szafarczyk alleged that Digital infringed upon his copyrights to 100 illustrations, including the "Beaver Cartoon." Digital filed a motion to stay, transfer venue, or in the alternative to dismiss. Defendant Digital argued in the motion that Szafarczyk had assigned his copyrights to the illustrations, including the "Beaver Cartoon," to Digital's predecessor in interest pursuant to an agreement dated July 27, 1994. On August 15, 2002, two months after Szafarczyk filed his suit, Digital commenced arbitration proceedings in Arizona against Szafarczyk pursuant to an arbitration clause in the July 27, 1994 agreement to determine the validity of the purported assignment to Digital's predecessor in interest.
The first lawsuit, Silberstein v. Fox Entertainment Group, Inc., 02 cv 1131 (GBD), was brought by Silberstein on February 13, 2002 against Fox Entertainment. In that action, Silberstein alleges that she is the lawful assignee of the copyright to the "Beaver Cartoon," and that Fox Entertainment violated her copyrights to that cartoon. That case is still pending before this Court.
In the instant action, plaintiff contends that she also has standing to pursue the copyright claim against Digital regarding the "Beaver Cartoon." Plaintiff contends that Szafarczyk authorized her to create derivative works based on the "Beaver Cartoon" in June 1999, and that they retroactively memorialized their agreement in writing on July 8, 2002. Plaintiff filed this separate lawsuit against Digital because Digital opposed her motion to intervene in the Szafarczyk action. The Arizona arbitration proceeding, therefore, will resolve the copyright issues raised in the Szafarczyk action, as well as the instant case.
The arbitrator in the Digital v. Szafarczvk arbitration issued an Order on January 30, 2003 declaring, inter alia, that: 1) the issue of copyright ownership of the "Beaver Cartoon" is subject to arbitration; and 2) pursuant to the 1994 agreement, Digital became the owner of the copyright in the "Beaver Cartoon" after July 27, 1999. However, on March 13, 2003, the arbitrator granted Szafarczvk's motion to reargue these issues. The arbitrator set a schedule for the exchange of pre-hearing memoranda, and a hearing date for June 5 and 6, 2003.
It can not be said that the complaint was frivolous because Silberstein attempted to intervene in the Szafarczyk action to preserve her rights, and arguably had a good faith basis for believing that she was the assignee of the copyrights to the "Beaver Cartoon." Further, no rulings on the merits or substantial discovery had taken place in either the instant action, the Szafarczyk action, nor the Arizona arbitration when plaintiff filed the Notice of Voluntary Dismissal without prejudice. In fact, the case had only been active for four months. Under these circumstances, it can not be said that defendant is a "prevailing party" for the purposes of an award of attorney's fees.
However, even if the defendant were a "prevailing party," this Court will not exercise its discretion to award defendant attorney's fees. An award of attorney's fees is within a court's sound discretion. See Warner Bros., Inc., 877 F.2d at 1126. "In exercising its discretion under 17 U.S.C. § 505, a court should consider factors such as 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." Ackerman v. Pascal, No. 01 cv 10791, 2002 WL 31496206, at *2, (S.D.N.Y. Nov. 7, 2002). The Second Circuit has given the "objective reasonableness" factor substantial weight in the calculus. See Matthew Bender Co., Inc. v. West Publ'g Co., 240 F.3d 116, 121 (2d Cir. 2001); Ackerman, 2002 WL 31496206, at *2.
In her complaint, plaintiff asserted that defendant violated her copyrights in the "Beaver Cartoon." It is a question of fact whether Szafarczyk validly transferred his rights to Digital's predecessor in interest pursuant to the July 27, 1994 agreement, and also whether Szafarczyk had any rights to transfer to plaintiff pursuant to their June 1999 agreement. Consequently, plaintiffs complaint was not frivolous, and it was "objectively reasonable" for her to file it to preserve her rights.
Therefore, defendant's motion for attorney's fees pursuant to 15 U.S.C. § 505 and Fed.R.Civ.P. 54 is DENIED.
In any event, defendant's motion is likely time-barred. Fed.R.Civ.P. 54 provides that: "Unless otherwise provided by statute or order of the court, the motion [for attorney's fees] must be filed and served no later than 14 days after entry of judgment[.]" FED. R. Civ. P. 54(d)(2)(B). Here, the Notice of Voluntary Dismissal without prejudice was so ordered on January 31, 2003 and docketed on February 4, 2003. However, defendant filed its motion for attorney's fees on March 12, 2003, more than 14 days after entry of judgment and without obtaining an extension of time to file from this Court.