`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge Philip A. Brimmer
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`Civil Action No. 11-cv-02891-PAB-MJW
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`DAVID M. SHELTON and
`DESIGNSENSE, INC.,
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`Plaintiffs,
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`v.
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`MRIGLOBAL, a non-profit corporation, formerly Midwest Research Institute
`its National Renewable Energy Laboratory Division, and
`ALLIANCE FOR SUSTAINABLE ENERGY, LLC,
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`Defendants.
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`ORDER
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`This matter is before the Court on Defendants’ Motion for Award of Full Costs
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`Pursuant to Fed. R. Civ. P. 54(d) and 17 U.S.C. § 505 [Docket No. 75] filed by
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`defendants MRIGlobal and Alliance for Sustainable Energy, LLC (“Alliance”).
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`I. BACKGROUND
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`Plaintiff DesignSense, Inc. entered into a subcontract with Midwest Research
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`Institute, now defendant MRIGlobal (“MRI”), relating to the U.S. Department of Energy’s
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`operation and management of the National Renewable Energy Laboratory in Golden,
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`Colorado. Plaintiffs alleged that, pursuant to that subcontract, they were to “provide
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`design-build support services including providing to MRI a derivative work of it’s [sic]
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`copyrighted and proprietary 3PQ [Request for Proposal (“RFP”)] structure.” Docket No.
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`25 at 5, ¶ 16. “The 3PQ RFP structure is a proprietary format developed by [plaintiff]
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`David M. Shelton and licensed to DesignSense to create derivative works to assist
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`owners like the Department of Energy to manage and control the design and build
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`process for buildings.” Docket No. 25 at 5, ¶ 18. Plaintiffs alleged that defendants
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`revealed the copyrighted “3PQ RFP structure” on the internet without proper attribution
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`in violation of the Copyright Act. Id. at 16-17, ¶¶ 83-91. Plaintiffs also brought a claim
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`under the Lanham Act, 15 U.S.C. § 1125, and a number of state law claims related to
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`the subcontract.
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`On February 15, 2012, defendants filed a motion to dismiss on all claims.
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`Docket No. 34. On September 28, 2012, the Court dismissed plaintiffs’ Copyright and
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`Lanham Act claims for failure to state a claim. Docket No. 63 at 7. Pursuant to 28
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`U.S.C. § 1367(c)(3), the Court declined to exercise supplemental jurisdiction over
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`plaintiffs’ state law claims and dismissed plaintiffs’ state law claims without prejudice.
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`Id.
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`On August 6, 2013, defendants filed a motion under 17 U.S.C. § 505, seeking
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`$60,733 in attorneys’ fees and $1,811.66 in costs. Docket No. 75.
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`II. ANALYSIS
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`[T]he court in its discretion may allow the recovery of full costs by or against
`any party other than the United States or an officer thereof. Except as
`otherwise provided by this title, the court may also award a reasonable
`attorney’s fee to the prevailing party as part of the costs.
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`17 U.S.C. § 505. A party in “copyright actions may be awarded attorney’s fees simply
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`by virtue of prevailing in the action: no other precondition need be met, although the fee
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`awarded must be reasonable.” Frank Music Corp. v. Metro-Goldwyn-Mayer Inc., 886
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`F.2d 1545, 1556 (9th Cir. 1989). “Prevailing plaintiffs and prevailing defendants are to
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`be treated alike,” but whether fees should be awarded to the prevailing party is left to
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`2
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`the court’s discretion. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).
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`Accordingly, where the Court granted defendants’ motion to dismiss plaintiffs’ copyright
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`claim, the Court finds that defendants are prevailing parties under § 505.
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`A. Attorneys’ Fees
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`In determining whether to award fees under § 505, the court must consider the
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`following nonexclusive factors: “frivolousness, motivation, objective unreasonableness
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`(both in the factual and in the legal components of the case) and the need in particular
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`circumstances to advance considerations of compensation and deterrence.” Fogerty,
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`510 U.S. at 534 n.19 (internal quotation marks omitted); see also Palladium Music, Inc.
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`v. EatSleepMusic, Inc., 398 F.3d 1193, 1200 (10th Cir. 2005) (approving use of Fogerty
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`factors).
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`Defendants first argue that plaintiffs’ claim was frivolous and objectively
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`unreasonable because the claim was based upon a process or set of ideas, which are
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`not protected by copyright law. Docket No. 75 at 7. A copyright infringement claim is
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`“objectively unreasonable when the claim is clearly without merit or otherwise patently
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`devoid of a legal or factual basis.” Porto v. Guirgis, 659 F. Supp. 2d 597, 617 (S.D.N.Y.
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`2009) (internal quotation marks omitted) (“similarities alleged by the plaintiff are
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`unprotectible elements”). “In no case does copyright protection for an original work of
`1
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`authorship extend to any idea, procedure, process, system, method of operation,
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`concept, principle, or discovery.” 17 U.S.C. § 102(b). As such, alleged similarities
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`Courts often consider the frivolousness and objective unreasonableness factors
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`together. See, e.g., ZilYen, Inc. v. Rubber Mfrs. Ass’n, 958 F. Supp. 2d 215, 220
`(D.D.C. 2013).
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`3
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`between a copyrighted work and an allegedly infringing work cannot be based upon
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`unprotectible ideas. See Mallery v. NBC Universal, Inc., 2008 WL 719218, *2 (S.D.N.Y.
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`Mar. 18, 2008). In granting defendants’ motion to dismiss, the Court found: “To the
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`extent plaintiffs contend that their ‘format’ or ‘structure,’ i.e., some sort of process or set
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`of ideas, is protected by copyright, their claim clearly fails.” Docket No. 63 at 4-5.
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`However, plaintiffs’ copyright claims were dismissed pursuant to Rule 12(b)(6) based on
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`a failure to properly plead the claims. The record is insufficient for the Court to
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`conclude factually that plaintiffs’ copyright claim was wholly, or even substantially,
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`based upon unprotectible processes or ideas. See Gates Rubber Co. v. Bando Chem.
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`Indus., Ltd., 9 F.3d 823, 833 (10th Cir. 1993) (recognizing difficulty of determining which
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`elements of a computer software program are protected by copyright). Moreover,
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`defendants offer no additional facts in support of their argument. Thus, the Court lacks
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`a sufficient basis upon which to determine objective unreasonableness.
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`Second, defendants argue that plaintiff unreasonably failed to allege facts
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`indicating a substantial similarity between plaintiffs’ registered material and defendants’
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`posted material. Docket No. 75 at 7. “‘Substantial similarity’ is the operative term in
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`infringement cases, meaning a determination of ‘whether the accused work is so similar
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`to the plaintiff’s work that an ordinary reasonable person would conclude that the
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`defendant unlawfully appropriated the plaintiff’s protectible expression by taking
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`materials of substance and value.’” Home Design Services, Inc. v. Starwood Constr.,
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`Inc., 801 F. Supp. 2d 1111, 1118 (D. Colo. 2011) (quoting Country Kids 'N City Slicks,
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`Inc. v. Sheen, 77 F.3d 1280, 1288 (10th Cir. 1996)). Plaintiffs allege that the 3PQ RFP
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`4
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`structure was registered with the United States Patent and Trademark office and argue
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`that their complaint made an attempt to allege a substantial similarity between plaintiffs’
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`registered material and defendants’ posted material. See Docket No. 25 at 5-6, ¶¶ 19,
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`24-26. Although the Court found that plaintiffs failed to allege substantial similarity,
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`defendants fail to show that such failure compels a conclusion that plaintiffs’ claim was
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`frivolous or objectively unreasonable. See Jovani Fashion, Ltd. v. Cinderella Divine,
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`Inc., 820 F. Supp. 2d 569, 573 (S.D.N.Y. 2011) (“The grant of a motion to dismiss does
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`not in itself render a claim unreasonable.”). The cases that defendants rely upon were
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`based on a factual finding of dissimilarity, a state of the case not reached here. As
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`such, the Court lacks a sufficient basis upon which to conclude that plaintiffs’ deficient
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`pleading, by itself, renders plaintiffs’ copyright claim frivolous or objectively
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`unreasonable.
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`Third, defendants argue that plaintiffs’ copyright claim was objectively
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`unreasonable because the contract between the parties granted defendants “unlimited
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`rights” to plaintiffs’ work product. Docket No. 75 at 9. Upon finding that plaintiffs failed
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`to sufficiently allege substantial similarity, the Court expressly declined to reach the
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`issue of whether the subcontract granted defendants an unlimited right to use the 3PQ
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`RFP structure. Docket No. 63 at 6 n.4. Determining whether defendants had unlimited
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`rights under the subcontract would require the Court to construe the subcontract and
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`likely require the Court to reach the merits of plaintiffs’ breach of contract claim – a
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`claim the Court dismissed for lack of subject matter jurisdiction. See Bridgeport Music,
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`Inc. v. Sony Music Entm’t, Inc., 114 F. App’x 645, 652 (6th Cir. 2004) (noting that
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`material breach of a covenant could, under some circumstances, “allow the licensor to
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`rescind the license and hold the licensee liable for infringement for uses of the work
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`thereafter” (internal quotation marks omitted)). Although defendants’ interpretation of
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`the subcontract may well prevail were this issue to proceed to the merits, the Court
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`expressly declined to decide the issue in resolving defendants’ motion to dismiss and
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`will not now decide the issue in resolving defendants’ motion for attorneys’ fees.
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`Defendants argue that plaintiffs were improperly motivated to bring their
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`copyright claim. Docket No. 75 at 11. Specifically, defendants claim that plaintiffs
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`sought a “windfall in damages” and brought this suit “in an effort to obtain more than the
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`benefit of [their] bargain.” Id. Defendants fail to produce evidence in support of their
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`arguments. Thus, the Court finds no basis upon which to conclude that plaintiffs acted
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`with improper motivation or brought their copyright claim in bad faith. See Jovani
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`Fashion, 820 F. Supp. 2d at 574 (“[prevailing defendant] does not point to any direct or
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`even circumstantial evidence of [plaintiff’s] alleged ulterior motive”); Meshwerks, Inc.,
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`528 F.3d at 1270 n.11 (“Neither are we presented with evidence suggesting that
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`Meshwerks’ motivation in filing this suit was anything other than sincere.”).
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`The final factor is whether the award of attorneys’ fees will “advance
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`considerations of compensation and deterrence.” Fogerty, 510 U.S. at 534 n.19.
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`“‘[C]opyright assures authors the right to their original expression, but encourages
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`others to build freely upon the ideas and information conveyed by a work.’” Id. at 527
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`(quoting Feist Publ’ns, Inc. v. Rural Telephone Serv. Co., 499 U.S. 340, 349-50 (1991)).
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`“To that end, defendants who seek to advance a variety of meritorious copyright
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`defenses should be encouraged to litigate them.” Fogerty, 510 U.S. at 527.
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`Where a plaintiff continues to pursue an unreasonable claim, considerations of
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`compensation weigh in favor of compensating defendant for engaging counsel and
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`expending resources in its own defense. See Baker v. Urban Outfitters, Inc., 431 F.
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`Supp. 2d 351, 359 (S.D.N.Y. 2006). Likewise, plaintiffs should be deterred from
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`bringing unreasonable claims. Id.
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`Defendants argue that they should be compensated for their “vigorous defense”
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`of plaintiffs’ copyright claims. Docket No. 75 at 10. Plaintiffs argue that they have
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`limited means and that a full award of attorneys’ fees would put plaintiffs out of
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`business. Docket No. 78 at 7. The respective financial conditions of the prevailing and
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`losing party is not dispositive, but courts have recognized that considerations of
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`evenhandedness can be relevant. See Randolph v. Dimension Films, 634 F. Supp. 2d
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`779, 796 (S.D. Tex. 2009) (noting that where an individual songwriter sues an
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`established artist and music publishing companies, the need to compensate defendants
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`is reduced). Moreover, this is not a case where evidence suggests that plaintiffs’ lack of
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`success was a result of anything beyond a simple failure to state a copyright claim. Cf.
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`Baker, 431 F. Supp. 2d at 359 (finding the plaintiff should be deterred from bringing
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`claims motivated by a cost/benefit analysis). Although the Court recognizes the need to
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`deter plaintiffs from pursuing frivolous and unreasonable claims, the Court cannot
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`conclude, under these facts, that deterrence considerations outweigh the other Fogerty
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`factors. See Palladium Music, 398 F.3d at 1200-01 (noting district court’s consideration
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`The Court also finds no support for defendants’ argument that any failure by
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`defendants to vigorously defend this suit “could have ushered in a new era of copyright
`litigation aimed . . . at stifling the ‘competition’ upon which America thrives.” Docket No.
`75 at 10 (internal quotations omitted).
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`7
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`of “competing interests furthered by the Copyright Act” supported denying attorneys’
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`fees award to prevailing defendant). Thus, defendants have failed to provide a
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`sufficient basis for the Court to conclude that the Fogerty factors weigh in favor of an
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`award of attorneys’ fees. 3
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`The Court turns to defendants’ requests for costs under 17 U.S.C. § 505.
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`Defendants request costs for telecommunications, courier service, online legal
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`research, and online filing fees. Docket No. 75-2. Although plaintiffs brought numerous
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`claims, defendants fail to explain or indicate the portion of those costs that were
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`reasonably incurred in defending plaintiffs’ copyright claim. See Balsley v. LFP, Inc.,
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`691 F.3d 747, 773 (6th Cir. 2012) (upholding award of fees “for the portion of services
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`that [trial court] determined [were] attributable to litigating the direct copyright claim”).
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`Moreover, for the above-stated reasons, defendant has failed to show that the Fogerty
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`factors weigh in favor of awarding defendant additional costs under § 505. 4
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`III. CONCLUSION
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`For the foregoing reasons, it is
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`ORDERED that Defendants’ Motion for Award of Full Costs Pursuant to Fed. R.
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`Civ. P. 54(d) and 17 U.S.C. § 505 [Docket No. 75] is DENIED.
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`Because the Court will not award defendants attorneys’ fees under § 505, the
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`Court need not reach the merits of plaintiffs’ argument that defendants are not entitled
`to attorneys’ fees because they “held [themselves] out to be the Government in the
`Subcontract” and were “acting as an officer of the United States working as the ‘owner’
`of the RSF project.” Docket No. 78 at 3.
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`The Court need not determine whether § 505 permits the award of costs beyond
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`those costs taxable under 28 U.S.C. § 1920. See Twentieth Century Fox Film Corp. v.
`Entm’t Distrib., 429 F.3d 869, 885 (9th Cir. 2005) (noting circuit split).
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`DATED March 13, 2014.
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`BY THE COURT:
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` s/Philip A. Brimmer
`PHILIP A. BRIMMER
`United States District Judge
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`9