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Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 1 of 18
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF NEW YORK
`
`
`NXIVM CORPORATION formerly known
`as EXECUTIVE SUCCESS PROGRAMS,
`INC.; and FIRST PRINCIPLES, INC.,
`
`Plaintiffs,
`
` v.
`
`ROSS INSTITUTE; RICK ROSS, also
`known as RICKY ROSS; STEPHANIE
`FRANCO; MORRIS SUTTON; and
`ROCHELLE SUTTON,
`
`Defendants.
`
`
`
`NXIVM CORPORATION formerly known
`as EXECUTIVE SUCCESS PROGRAMS,
`INC.; and FIRST PRINCIPLES, INC.,
`
` 1:03-CV-0976 (lead)
` (GLS/DRH)
`
` v.
`
`Plaintiffs,
`
` 1:03-CV-1051 (member)
` (GLS/DRH)
`
`PAUL MARTIN; and WELLSPRING
`RETREAT INC.,
`
`
`
` Consolidated Defendants.
`
`
`APPEARANCES:
`
`OF COUNSEL:
`
`

`
`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 2 of 18
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`FOR THE PLAINTIFFS:
`
`Berstein Law Firm
`1790 Broadway
`New York, New York 10019
`
`FOR THE DEFENDANTS:
`
`FRANCO
`Riker, Danzig Law Firm
`Headquarters Plaza
`One Speedwell Avenue
`P.O. Box 1981
`Morristown, New Jersey 07962
`
`
`
`Hinman, Howard Law Firm
`700 Security Mutual Building
`80 Exchange Street
`P.O. Box 5250
`Binghamton, New York 13902
`
`ROSS DEFENDANTS
`
`Martland & Brooks Law Firm
`60 State Street
`37th Floor
`Boston, Massachusetts 02109
`
`Gleason Dunn Law Firm
`40 Beaver Street
`Albany, New York 12207
`
`Gary L. Sharpe
`U.S. District Judge
`
`JUDD BERSTEIN, ESQ.
`
`ANTHONY J. SYLVESTER, ESQ.
`
`LINDA B. JOHNSON, ESQ.
`
`
`
`DOUGLAS M. BROOKS, ESQ.
`
`THOMAS F. GLEASON, ESQ.
`
`MEMORANDUM-DECISION AND ORDER
`
`2
`
`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 3 of 18
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`I. Introduction
`
`In this motion, defendant Stephanie Franco (Franco) seeks an award
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`of attorney’s fees pursuant to 17 U.S.C. § 505 (Copyright Act). For the
`
`following reasons, the motion is DENIED.
`
`II. Background
`
`The facts and procedural history underlying this litigation are
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`comprehensively stated in NXIVM Corp. v. Ross Institute, 364 F.3d 471
`
`(2d Cir. 2004) and the transcript of this court’s March 30, 2005 hearing,
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`which is incorporated herein by reference. See Tr.1 pp. 4-14, Dkt. No.134.
`
`However, a brief procedural recitation is necessary to lay the foundation for
`
`the pending motion.
`
`NXIVM sued Franco and various co-defendants for copyright
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`infringement under 17 U.S.C. §§ 106 and 106A, trademark disparagement
`
`under the Lanham Act, 15 U.S.C. § 1125(a), and for other state law claims
`
`under two separately-filed complaints.2 See 03-cv-976 (976), Compl., Dkt.
`
`No. 1; 03-cv-1051 (1051), Compl., Dkt. No. 1. In response, Franco filed a
`
`1“Tr.” refers to the hearing transcript of this court’s March 30, 2005 decision. See Dkt.
`No. 134.
`
`2Both cases and the complaints were subsequently consolidated by the court under the
`lead case, 03-cv-0976, for all purposes. See Tr. at 66, Dkt. No. 134. Unless otherwise noted,
`all citations and references to the docket sheet pertain to the lead case, 976.
`
`3
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 4 of 18
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`motion to dismiss the copyright infringement claim of the member
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`complaint, 1051, pursuant to FED. R. CIV. P. 12(b)(6).3 See Dkt. Nos. 48,
`
`81. NXIVM cross-moved, seeking leave to file an amended complaint.
`
`See Dkt. No. 80. However, NXIVM retained new counsel and requested to
`
`supplement the cross-motion to amend with an entirely new proposed
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`complaint to consolidate both actions and to retract certain claims against
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`Franco and the other defendants. See 12/15/04 Minute Entry.
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`Specifically, NXIVM withdrew its claim of copyright infringement against
`
`Franco in the proposed amended complaint. See Prop. Am. Compl., Dkt.
`
`No. 116.
`
`On March 30, 2005, the court addressed all the motions in sequential
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`order.4 As a result, Franco’s motion to dismiss the copyright infringement
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`claim under FED. R. CIV. P. 12(b)(6) was granted. See 03/30/05 Minute
`
`Entry. Specifically, the court dismissed the copyright infringement claim
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`against Franco in the 1051 complaint based upon its legal deficiencies and
`
`3Franco also moved to dismiss other claims in the 1051 complaint and filed a motion for
`summary judgment in the 976 complaint. See Dkt. No. 126. Since Franco’s application for
`attorney’s fees relates only to the dismissal of the copyright infringement claim in the 1051
`complaint, it is unnecessary for the court to address the disposition of the other motions.
`
`4Franco’s motion to dismiss under FED. R. CIV. P. 12(b)(6) was filed before NXIVM’s
`cross-motion to amend the complaint. See Dkt. Nos. 48, 80.
`
`4
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 5 of 18
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`upon NXIVM’s apparent withdrawal of this claim in the proposed amended
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`complaint. See Tr. at 20, Dkt. No. 134; see Prop. Am. Compl., Dkt. No.
`
`116. Franco now moves for attorney’s fees associated with the dismissal
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`of the copyright infringement claim under the Copyright Act. See Dkt. No.
`
`52. On May 24, the court issued a text order directing Franco to submit its
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`application in compliance with the lodestar method for the Northern District
`
`of New York. See 5/24/05 Text Order Entry. On May 26, Franco amended
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`her invoices for attorney’s fees in compliance with this district’s lodestar
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`rate.5 See Dkt. No. 150. NXIVM opposes the motion. See Dkt. No. 135.
`
`III. Discussion
`
`“Section 505 of the Copyright Act provides that: ‘[i]n any civil action
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`under this title, the court in its discretion may allow the recovery of full
`
`costs by or against any party other than the United States or an officer
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`thereof. Except as otherwise provided by this title, the court may also
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`award a reasonable attorney’s fee to the prevailing party as part of the
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`costs.’” Crescent Publ’g Group, Inc. v. Playboy Enters., Inc., 246 F.3d
`
`5Initially, Franco submitted invoices for attorney’s fees in the amount of $26,216.78 for
`her defense of NXIVM’s copyright infringement claim. See Dkt. No. 28. The court then
`directed Franco to comply with the lodestar rates for the Northern District of New York, thereby
`reducing the requested attorney’s fees to $19,404.00. See 5/24/05 Text Order; Dkt. No. 150.
`
`5
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 6 of 18
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`142, 147 (2d Cir. 2001) (quoting 17 U.S.C. § 505).
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`Here, NXIVM challenges the application for attorney’s fees under the
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`Copyright Act based on two arguments: 1) Franco fails to satisfy the
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`prevailing party requirement under the Copyright Act and, 2) NXIVM was
`
`not objectively unreasonable in asserting a copyright infringement claim
`
`against Franco. The court addresses these issues seriatim.
`
`A.
`
`Prevailing Party Status
`
`It is well established that “a ‘prevailing party’ is one who has been
`
`awarded some relief by the court.” Buckhannon Bd. & Care Home, Inc. v.
`
`W. Va. Dep’t. of Health and Human Res., 532 U.S. 598, 603 (2001). “The
`
`standard to apply when deciding whether a party has ‘prevailed’ is the
`
`same for plaintiffs and defendants.” Boisson v. Banian Ltd., 280 F. Supp.
`
`2d 10, 15 (E.D.N.Y. 2003) (citing Fogerty v. Fantasy, Inc., 510 U.S. 517,
`
`534 (1994); Earth Flag, Ltd. v. Alamo Flag Co., 154 F. Supp. 2d 663, 665
`
`(S.D.N.Y. 2001)). “A party need not be successful on all claims to be
`
`deemed the ‘prevailing party’ under the Copyright Act.” Id. “Instead, a
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`party may be deemed prevailing if it succeeds on a significant issue in
`
`litigation that achieves some benefits that the party sought in bringing suit.”
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`Id. (citing Screenlife Establishment v. Tower Video, Inc., 868 F. Supp. 47,
`
`6
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 7 of 18
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`50 (S.D.N.Y. 1994)).
`
`In other words, to satisfy the definition of a “prevailing party” under a
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`fee shifting provision of a statute, one must either secure a judgment on
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`the merits or be a party to a settlement agreement that is expressly
`
`enforced by the court through a consent decree. See Buckhannon, 532
`
`U.S. at 603-04. “[R]esults obtained without such an order d[o] not supply a
`
`basis for an award of attorneys’ fees because ‘[a party’s] voluntary change
`
`in conduct ... lacks the necessary judicial imprimatur’ to render [someone]
`
`a prevailing party.” J.C. v. Reg’l School Dist. 10, Bd. of Educ., 278 F.3d
`
`119, 123 (2d Cir. 2002) (quoting Buckhannon, 532 U.S. at 605).
`
`NXIVM first argues that Franco cannot satisfy the “prevailing party”
`
`status requirement under the Copyright Act since the court did not make a
`
`determination on the merits to dismiss the copyright infringement claim
`
`against Franco. See Pl.’s Br. p. 4, Dkt. No. 135. Rather, NXIVM contends
`
`that the court’s dismissal was based entirely on NXIVM’s decision to
`
`voluntarily withdraw that claim from the proposed amended complaint. See
`
`id. As such, NXIVM claims that the necessary “judicial imprimatur” as
`
`required by the Supreme Court’s holding in Buckhannon is lacking. 532
`
`U.S. at 603.
`
`7
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 8 of 18
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`NXIVM also argues that the 1051 complaint did not contain a direct
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`copyright infringement claim against Franco even though that specific
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`cause of action refers to all the “[d]efendants.” See Pl.’s Br. p. 3, Dkt. No.
`
`135; 1051 Compl., Dkt. No. 1. Instead, NXIVM argues that its intention
`
`was to assert a claim for contributory copyright infringement against
`
`Franco. See Pl.’s Br. p. 4, Dkt. No. 135. To support this argument, NXIVM
`
`refers to the briefs that were previously submitted in its application for a
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`temporary restraining order and preliminary injunction against the
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`defendants. See id. at 3. However, these arguments are unavailing for the
`
`following reasons.
`
`First, the record is clear that this court issued an order pursuant to
`
`FED. R. CIV. P. 12(b)(6) dismissing the copyright infringement claim against
`
`Franco. See 3/30/05 Oral Order; see also Dkt. No. 126. Secondly, NXIVM
`
`never made any arguments at the March 30, 2005 hearing or offered any
`
`facts in their opposition papers to indicate that this claim was anything
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`other than a direct copyright infringement claim against Franco.6 See Tr.,
`
`6Although both parties argue about the presence of a contributory copyright
`infringement claim in the initial proposed amended complaint, these arguments are meritless.
`See Dkt. No. 80. This initial proposed complaint was withdrawn and superseded by a
`subsequent proposed amended complaint at the request of NXIVM’s newly retained counsel.
`See 12/15/04 Minute Entry; Dkt. No. 116.
`
`8
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 9 of 18
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`Dkt. No. 134. Moreover, NXIVM’s reliance on Buckhannon7 for the
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`proposition that there was no judicial imprimatur is both misplaced and
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`distinguishable from the present case. See Pl.’s Br. p. 4, Dkt. No. 135.
`
`In Buckhannon, the plaintiffs brought suit against the defendants
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`based on their claim that a provision of the West Virginia code had violated
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`federal law. 532 U.S. at 600. After a brief discovery period, the West
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`Virginia Legislature eliminated the provision that was at issue in the
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`litigation. Id. at 601. Plaintiffs then sought attorney’s fees as the prevailing
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`parties under a “catalyst theory”8 which was rejected by both the District
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`Court and the Fourth Circuit. Id at 602. Plaintiffs appealed and the
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`Supreme Court affirmed the denial of attorney’s fees. Id. Specifically, the
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`Court held that attorney’s fees could not be awarded since there was “no
`
`judicially sanctioned change in the legal relationship of the parties” and that
`
`7Despite the fact that the Buckhannon plaintiffs had sought attorney’s fees pursuant to
`the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3601 et seq., and the Americans with
`Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Second Circuit has interpreted the
`standards used to interpret the term “prevailing party” as applying to any given fee-shifting
`statute in which Congress has authorized an award of fees to a prevailing party. See J.C., 278
`F.3d at 123 (citing Hensley v. Eckerhart, 461 U.S. 424 (1983)).
`
`8Under the “catalyst” theory, a plaintiff was deemed to be a prevailing party under a
`fee-shifting provision statute despite the absence of a formal judgment in his favor and as long
`as the litigation led to a favorable result. See Marbley v. Bane, 57 F.3d 224, 233-34 (2d Cir.
`1995). However, this interpretation was subsequently overruled by the Supreme Court. See
`Buckhannon, 532 U.S. at 605.
`
`9
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 10 of 18
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`defendant’s voluntary change in conduct lacked the “necessary judicial
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`imprimatur on the change.” Id. at 605.
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`Here, the court issued an oral order dismissing the copyright
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`infringement claim. See 3/30/05 Oral Order. This judicial determination
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`was made on the merits due to the obvious pleading deficiencies in the
`
`complaint. See Pl.’s Br. p. 3, Dkt. No. 135; 1051 Compl., Dkt. No. 1.
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`Therefore, Franco was the prevailing party inasmuch as her motion to
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`dismiss resulted in a judicially sanctioned material alteration of the legal
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`relationship between the parties. Although the court based its decision in
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`part on NXIVM’s voluntary withdrawal of that claim, the complaint clearly
`
`failed to assert any facts or allegations to support a copyright infringement
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`claim against Franco.9 See Tr. p. 20, Dkt. No. 134; Dkt. No. 126. A
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`conclusion that NXIVM concedes by its present argument that there was
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`no copyright infringement claim against Franco in the original member
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`complaint. See Pl.’s Br. p. 3, Dkt. No. 135; 1051 Compl., Dkt. No. 1.
`
`9To establish such infringement, a plaintiff must prove two elements: “(1) ownership of
`a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist
`Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). NXIVM could not prevail on its
`claim of copyright infringement for the simple reason that it failed to present any meaningful
`facts or allegations against Franco for any acts of copying or inferences of such copying in the
`1051 complaint. See e.g., Oriental Art Printing Inc. v. GS Printing Corp. 34 Fed. Appx. 401,
`402 (2nd Cir. 2002) (unpublished opinion).
`
`10
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 11 of 18
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`Moreover, the court was required to exercise a high degree of judicial
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`oversight and involvement in addressing the numerous motions in this
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`case, including NXIVM’s motion for leave to amend. See Tr. pp.19-67,
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`Dkt. No. 134. Similarly, NXIVM’s reliance on Chambers v. Time Warner,
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`Inc., 279 F. Supp. 2d 362 (S.D.N.Y. 2003) is inapposite because that case
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`did not involve a judicial determination on the merits.10
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`Accordingly, Franco is a “prevailing party” under the Copyright Act.
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`The court now moves to address the factors involving the court’s equitable
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`discretion in awarding fees under the Copyright Act.
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`B.
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`Equitable Discretion in Awarding Attorney’s Fees
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`It is well settled that “[a]ttorneys’ fees are available to prevailing
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`parties under [the Copyright Act] but are not automatic.” Medforms, Inc. v.
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`Healthcare Mgmt. Solutions, Inc., 290 F.3d 98, 117 (2d Cir. 2002) (citing
`
`Fogerty, 510 U.S. at 534). “While ‘[t]here is no precise rule or formula for
`
`10In Chambers, the district court initially dismissed the complaint under FED. R. CIV. P.
`12(b)(6). The district court’s decision was then reversed by the Second Circuit and remanded
`for further proceedings. See id. at 364-65. On remand, plaintiffs moved to file a second
`amended complaint which withdrew all the copyright infringement claims. See id. The parties
`also entered into a stipulation of dismissal which was approved by the court. See id. at 364.
`Defendant then sought attorney’s fees as the prevailing party under the Copyright Act. See id.
`However, the court denied the application and held that there was no longer a judicial
`determination on the merits of the copyright infringement claim since the Second Circuit
`reversed its original judgment. See id. The court also noted that the judicial oversight involved
`in permitting the amendment did not meet the degree of judicial oversight as set forth in
`Buckhannon. See id.
`
`11
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 12 of 18
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`making these determinations ... equitable discretion should be exercised.’”
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`Id. (quoting Hensley, 461 U.S. at 436).
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`The Supreme Court has set forth, albeit in dictum, a non-exclusive
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`list of factors to guide the court’s exercise of discretion, “includ[ing]
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`‘frivolousness, motivation, objective unreasonableness (both in the factual
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`and in the legal components of the case) and the need in the particular
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`circumstances to advance considerations of compensation and
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`deterrence.’” Fogerty, 510 U.S. at 533 n.19 (quoting Lieb v. Topstone
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`Indus., Inc., 788 F.2d 151, 156 (1986)); see also Crescent, 246 F.3d at
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`147. However, “such factors may be used only ‘so long as [they] are
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`faithful to the purposes11 of the Copyright Act.’” Matthew Bender & Co.,
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`Inc. v. West Publ’g. Co., 240 F.3d 116, 121 (2d Cir. 2001) (quoting
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`Fogerty, 510 U .S. at 534 n.19).
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`In this regard, the Second Circuit has held that “objective
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`reasonableness is a factor that should be given substantial weight in
`
`determining whether an award of attorney’s fees is warranted.” Matthew
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`11It is well established that “[t]he two principal purposes behind the Copyright Act are
`securing a fair return for an author’s creative labor and stimulating artistic creativity for the
`general public good.” Ackoff-Ortega v. Windswept Pacific Entm’t Co. (Inc.), 99-cv-11710,
`2001 WL 225246, at *1 (S.D.N.Y. Mar. 2, 2001) (citing Fogerty, 510 U.S. at 526)).
`
`12
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 13 of 18
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`Bender, 240 F.3d at 122 (collecting cases from other Circuits applying the
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`objective unreasonableness standard to an award of attorney’s fees).
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`However, “[n]ot all unsuccessful litigated claims are objectively
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`unreasonable.” Penguin Books U.S.A., Inc. v. New Christian Church of
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`Full Endeavor, Ltd., 96-cv-4126, 2004 WL 728878, at *3 (S.D.N.Y. Apr. 6,
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`2004) (citing CK Co. v. Burger King Corp., 92-cv-1488, 1995 WL 29488, at
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`*1 (S.D.N.Y. Jan. 26, 1995); Ann Howard Designs, L.P. v. Southern Frills,
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`Inc., 7 F. Supp. 2d 388, 390 (S.D.N.Y. 1998)). “Rather, the courts of this
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`Circuit have generally concluded that only those claims that are clearly
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`without merit or otherwise patently devoid of legal or factual basis ought to
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`be deemed objectively unreasonable.” Id. “The infirmity of the claim, while
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`falling short of branding it as frivolous or harassing, must nonetheless be
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`pronounced.” CK, 1995 WL 29488, at *1.
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`Here, Franco asserts that NXIVM’s pursuit of the copyright
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`infringement claim was both objectively unreasonable and promulgated in
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`bad faith. See Def.’s Br. p. 7, Dkt. No. 128. Specifically, Franco argues
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`that NXIVM’s failure to identify any actions or facts in the member
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`complaint to support a copyright infringement claim is evidence of
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`objectively unreasonable behavior. See id. Franco cites to several cases
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`13
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 14 of 18
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`for the proposition that NXIVM acted objectively unreasonable in pursuing
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`its claim. See id. at 6. However, Franco’s reliance on those cases is
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`misplaced since they involved an award of attorney’s fees following
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`extensive discovery and the pursuit of baseless claims of copyright
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`infringement beyond the initial pleading stage. See Arclightz & Films PVT.
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`Ltd. v. Video Palace, Inc., 01-cv-10135, 2003 WL 22434153, at *5
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`(S.D.N.Y. Oct. 24, 2003) (defendant awarded $171,137 in fees following
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`summary judgment wherein evidence did not establish any claim for piracy
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`or copyright infringement); Elements/Hill Schwartz, Inc. v. Gloriosa Co., 01-
`
`cv-904, 2002 WL 31133391, at *2 (S.D.N.Y. Sep. 26, 2002) (defendant
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`awarded fees following summary judgment wherein plaintiff never identified
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`a specific instance of alleged infringement in the 21 months of litigation);
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`Beverage Mktg. USA, Inc. v. S. Beach Beverage Corp., 97-cv-4137, 2002
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`WL 31844911, at *2 (S.D.N.Y. Dec. 19, 2002) (awarding $7,500 in fees
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`following summary judgment wherein it was visibly clear that copyrighted
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`bottles were not identical).
`
`In the present case, there has been no extensive discovery. Instead,
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`the copyright claim was dismissed under FED. R. CIV. P. 12(b)(6) at the
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`initial pleading stage of this litigation. Although this case has been pending
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`14
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 15 of 18
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`for almost two years, the delay was caused by its appellate history and not
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`by any extensive period of discovery. Unlike the foregoing cases, NXIVM
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`also had a reasonable basis for asserting a copyright infringement claim
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`against Franco. Indeed, it was portions of the NXIVM manual possessed
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`by Franco that the codefendants used in publishing their articles.
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`Although the complaint failed to adequately plead the facts and
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`allegations to support a copyright infringement claim, the court’s decision
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`to dismiss this claim with prejudice was not based on this deficiency alone.
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`See Tr. p. 20, Dkt. No. 134. Clearly, NXIVM realized at an early stage of
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`the litigation after retaining new counsel that the viability of its copyright
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`infringement claim against Franco was in jeopardy. See Pl.’s Br. p. 3, Dkt.
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`No. 3. A realization that may have been prompted by the Second Circuit’s
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`statement in a footnote that “a breach of a contractual duty would not ipso
`
`facto be a copyright infringement. See NXIVM, 364 F.3d at 478 n.1. Not
`
`to mention the difficulty that can be created when crossing the “murky
`
`area” between a copyright infringement and breach of contract claim.
`
`Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 347 (2d Cir. 2000)
`
`(citation omitted).
`
`Notwithstanding, the copyright infringement claim was also dismissed
`
`15
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`

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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 16 of 18
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`with prejudice based on NIXVM’s withdrawal of this claim in the amended
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`complaint in order to delineate the issues in this case. An otherwise
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`tactical or “strategic decision” that NXIVM will have to live with during the
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`pendency of this litigation. See Pl.’s Br. p. 5, Dkt. No. 135. Since
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`“objective reasonableness is a factor that should be given substantial
`
`weight in determining whether an award of attorneys’ fees is warranted,”
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`the court does not find that NXIVM acted in bad faith or in an objectively
`
`unreasonable manner in pursuing a copyright infringement claim against
`
`Franco. Accord Matthew Bender, 240 F.3d at 122. Moreover, the court
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`finds no evidence of frivolousness or bad motivation on the part of NXIVM
`
`in having pursued this claim in the initial stages of the case.
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`Finally, Franco contends that an award of attorney’s fees will deter
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`NXIVM from engaging in similar conduct in the future and also compensate
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`her for defending this lawsuit. See Def.’s Br. p. 7, Dkt. No. 128. It would
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`serve no purpose to award attorney’s fees on this basis alone. This is
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`especially true when NXIVM has not taken an objectively unreasonable
`
`litigation position in this case. See Matthew Bender, 240 F.3d at 122
`
`(citing Mitek Holdings, Inc. v. Arce Eng’g Co., 198 F.3d 840, 842-43 (11th
`
`Cir. 1999). As such, an award of fees based on this conduct would run
`
`16
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`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 17 of 18
`
`contrary to the purposes of the Copyright Act. See id.
`
`Similarly, “financial disparity does not provide a basis to award
`
`attorneys' fees under the Copyright Act in the circumstances of this action.”
`
`Penguin, 2004 WL 728878, at *5 (citing Mitek, 198 F.3d at 842). Although
`
`the relative financial strengths of the parties may well be a factor to
`
`consider in calculating the amount of attorney’s fees awarded, this step is
`
`preceded by an initial determination that a party is entitled to an award of
`
`attorney’s fees. See, e.g., Penguin, 2004 WL 728878, at *5 (emphasis
`
`added). Moreover, Franco has failed to provide this court with any
`
`evidence to support any claim of financial hardship.12
`
`
`
`Accordingly, Franco’s motion for attorney’s fees under the Copyright
`
`Act is DENIED.
`
`IV. Conclusion
`
`After carefully considering the submissions of the parties, the
`
`applicable law, and for the reasons stated herein, it is hereby ordered that
`
`12It also appears that defense counsel for Franco is also charging his client for
`attorney’s fees associated with the appeals to the Second Circuit and the Supreme Court of
`the United States. See Dkt. No. 150. However, these appeals were specifically based on
`District Judge McAvoy’s denial of a temporary restraining order and preliminary injunction
`application against the other codefendants only. See NXIVM, 364 F.3d. at 471. Although a
`preliminary injunction was issued as to Franco, she never cross-appealed the court’s decision.
`See id.; see also Dkt. No. 54. Therefore, the issues on the appeals had nothing to do with
`Franco and the costs associated with those appeals were unnecessary.
`
`17
`
`

`
`Case 1:03-cv-00976-GLS-DRH Document 163 Filed 08/02/05 Page 18 of 18
`
`Franco’s motion for attorney’s fees is DENIED.
`
`SO ORDERED.
`
`Dated: August 2, 2005
` Albany, NY
`
`18

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