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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PageID.9298 Page 16 of40
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`Clerk granted Defendant Storix taxable costs pursuant to 28 U.S.C. § 1920 amounting to
`
`$11,414.64. (Doc. No. 178.)
`
`On January 4, 2016, Defendant Storix filed a motion pursuant to 17 U.S.C. § 505
`
`seeking costs not taxable under 28 U.S.C. § 1920 as well as attorneys’ fees.
`
`(Doc. No.
`
`165 .) On January 29, 2016, Plaintiff Johnson opposed Defendant Storix’s motion for costs
`
`and fees.
`
`(Doc. No. 180.) On February 12, 2016, Defendant Storix replied to Plaintiff
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`Johnson’s opposition.1 (Doc. No. 184.) On February 23, 2016, the Court held a hearing
`
`on the motion. Andrew Skale and Anne—Marie Dao appeared for Plaintiff Johnson, and
`
`Paul Tyrell and Sean M. Sullivan appeared for Defendant Storix.
`
`At the request of the parties, on February 25, 2016, the Court permitted mediation
`
`before a magistrate judge. (Doc. No. 194.) The parties participated in mediation sessions
`
`on March 29, 2016 and April 4, 2016.
`
`(Doc. Nos. 202, 204.) On May 5, 2016, the
`
`magistrate judge issued a minute entry indicating that the parties were unable to reach a
`
`settlement. (Doc. No. 213.)
`
`On June 16, 2016, the Supreme Court issued an Opinion in Case No. 15-375,
`
`Kirtsaeng v. John Wiley & Sons, Inc. At the Court’s request, each party filed a
`
`memorandum explaining how that decision should impact
`
`the Court’s analysis of
`
`Defendant’s motion for costs and fees on July 18, 2016. (Doc. Nos. 217, 218.) Each party
`
`filed a response to the other party’s memorandum on August 1, 2016.
`
`(Doc. Nos. 223,
`
`224.) On August 2, 2016, Plaintiff Johnson objected to Defendant Storix’s response
`
`memorandum.2 (Doc. No. 227.) On August 15, 2016, the Court heard supplemental
`
`On January 29, 2016, Defendant Storix filed a supplement to its motion for fees and costs. (Doc.
`1
`No. 179.) On February 3, 2016, Plaintiff Johnson objected to the supplement.
`(Doc. No. 181.) On
`February 19, 2016, Plaintiff Johnson opposed the supplement.
`(Doc. No. 188.) On February 19, 2016,
`Defendant Storix filed a second supplement to its motion for fees and costs. (Doc. No. 189.) On February
`22, 2016, Plaintiff Johnson objected to the second supplement.
`(Doc. No. 190.) On February 22, 2016,
`the Court granted Plaintiff Johnson until March 4, 2016, to file a response to the second supplement, but
`Plaintiff did not file a response.
`(Doc. No. 191.)
`2
`The Court has considered all of the objections raised by the parties in connection with this motion.
`To the extent the objections are valid, the Court sustains them. To the extent the objections are invalid,
`the Court overrules them.
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`Page A27
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`argument on the motion. Andrew Skale and Ben Wagner appeared for Plaintiff, and Paul
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`Tyrell and Sean Sullivan appeared for Defendant. For the reasons that follow, the Court
`
`grants in part and denies in part the motion” for costs and fees.
`
`Discussion
`
`1.
`
`Legal Standards
`
`The Copyright Act states, “In any civil action 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 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.”
`
`17
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`U.S.C. § 505. In its recent opinion in Kirtsaeng v. John Wiley 8: Sons, Inc., the Supreme
`
`Court confirmed that there are a number ofnonexclusive factors that courts may consider
`
`in determining whether a proposed award “advances the Copyright Act’s goals” of
`
`“encouraging and rewarding authors’ creations while also enabling others to build on that
`work.” 136 S. Ct. 1979, 1986 (2016). These factors include motivation, the objective
`
`unreasonableness of the losing party’s factual and legal arguments, the degree of success
`
`obtained, the need, in particular circumstances, to advance considerations of compensation
`
`and deterrence, and frivolousness. Li. at 1985; Fogerty v. Fantasy. lnc., 510 US 517, 534
`
`
`
`n.19 (1994); Omega SA. v. Costco Wholesale Com., 776 F.3d 692, 695—96 (9th Cir. 2015).
`
`In weighing these factors, Courts must “give substantial weight to the objective
`
`reasonableness of the losing party’s position.” Kirtsaeng, 136 S. Ct. at 1983. An
`
`unsuccessful position is not necessarily objectively unreasonable, and courts must not
`
`“confuse[] the issue of liability with that of reasonableness.” Li. at 1988. Reasonableness
`
`or unreasonableness is not dispositive, and courts “must also give due consideration to all
`
`other circumstances relevant to granting fees.” LCL at 1983. Courts retain “discretion, in
`
`light of those factors, to make an award even when the losing party advanced a reasonable
`
`claim or defense.” 1d, “There is no precise rule or formula for making these determinations
`
`.
`.
`. .” M, 510 US. at 534. “Prevailing plaintiffs and prevailing defendants are to be
`treated alike.” Q at 534; see also Perfect 10 Inc. v. CCBill LLC, 488 F.3d 1102, 1120
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`Page R28
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`' ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PagelD.9300 Page 18 0f40
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`(9th Cir. 2007).
`
`“When calculating the amount of attorney fees to be awarded in a litigation, the
`
`district court applies the lodestar method, multiplying the number of hours reasonably
`
`expended by a reasonable hourly rate.” Ryan v. Editions Ltd. W., Inc., 786 F.3d 754, 763
`
`(9th Cir. 2015). “When a party seeks an award of attorneys” fees, that party bears the
`
`burden of submitting evidence of the hours worked and the rate paid. In addition, that party
`
`has the burden to prove that the rate charged is in line with the prevailing market rate of
`
`the relevant community.” Carson v. Billings Police Dep’t, 470 F.3d 889, 891 (9th Cir.
`
`2006) (citations and quotation marks omitted). The Court may adjust the lodestar figure in
`
`light of twelve factors:
`
`(1) the time and labor required; (2) the novelty and difficulty of the questions
`involved; (3) the skill requisite to perform the legal service properly; (4) the
`preclusion of other employment by the attorney due to acceptance of the case;
`(5) the customary fee; (6) whether the fee is fixed or contingent; (7) time
`limitations imposed by the client or the circumstances; (8) the amount
`involved and the results obtained; (9) the experience, reputation, and ability
`of the attorneys; (10) the “undesirability” of the case; (11) the nature and
`length of the professional relationship with the client; and (12) awards in
`similar cases.
`
`Carter v. Caleb Brett LLC, 757 F.3d 866, 869 (9th Cir. 2014).
`
`In addition to attorneys’
`
`fees, “district courts may award otherwise non-taxable costs, including those that lie
`
`outside the scoPe of [28 U.S.C.] § 1920, under [17 U.S.C.] § 505.” Twentieth Century Fox
`
`Film Corp. v. Entm‘t Distrib., 429 F.3d 869, 885 (9th Cir. 2005).
`
`11.
`
`Recovery of'Fees
`
`In evaluating whether to aWard attorneys’ fees,
`
`the Court considers Plaintiff
`
`Johnson’s motivations, the reasonableness of Plaintiff Johnson’s positions, the degree of
`
`Defendant Storix’s success, the need to advance considerations of compensation and
`
`deterrence, and the frivolousness of Plaintiff Johnson’s litigation positions and tactics.
`
`Kirtsaeng, 136 S. Ct. at 1985; Fogerty, 510 US. at 534 n.19; Omega S.A., 776 F.3d at 695-
`
`96.
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`Page A29
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`A. Motivation
`
`The Court first considers Plaintiff Johnson’s motivation in bringing the case.
`
`Kirtsaeng, 136 S. Ct. at 1985; Omega S.A., 776 F.3d at 695. “[A] court’s discretion may
`
`be influenced by the plaintiff’s culpability in bringing or pursuing the action, but
`
`I blameworthiness is not a prerequisite to awarding fees to a prevailing defendant.” Fantasy,
`
`94 F.3d at 558. In this case, Plaintiff Johnson took a number of actions demonstrating that
`
`his motivation was not simply to win damages fOr alleged copyright infringement. On
`
`September 26, 2015, Plaintiff Johnson sent an email to several Storix directors and
`
`' employees titled “Buckle up boys!” (Doc. No. 66-1, Huffman Decl. Ex. A, at 5—9.) The
`
`
`
`email stated in part:
`
`That means, when I win the very near copyright decision, which we all know
`I will, the company will be paying back all my legal expenses. And you will
`be paying the company back, for mine and its expenses.
`
`Here’s your one Option. Get the f[...] out. Give your stock back to the
`company, resign your board seat, terminate your employment. Leave with
`just what you gave me. Only then your name will be removed from the
`derivative[ ]action, giving you some hope of keeping your homes and perhaps
`finding other jobs. But once this is filed, all options are off the table. The
`damages I will be granted in the copyright case will transfer from the company
`to YOU.
`
`\OOO-JQU'I-mei—I
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`(EL)
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`Plaintiff Johnson also stated in that email that he would send an announcement to
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`Defendant Storix’s customers and tell them, among other things, that the software they
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`22
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`purchased from Defendant Storix infringed on Plaintiff Johnson’s copyright.
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`(I_d_.) On
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`23
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`24
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`October 6, 2015, Plaintiff Johnson sent the announcement to Defendant Storix’ s customers
`in which he demanded that the customers cease paying Defendant Storix for the use of its
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`25
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`software. (Doc. No. 66-1, Huffman Decl. Ex. B, at 10—11.) On October 7, 2016, Plaintiff
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`26
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`27
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`Johnson sent an email to one of Defendant Storix’s employees declaring a hope that his
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`announcement to the company’s customers would result in Defendant Storix running out
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`28
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`of money so that it would be unable to continue defending the lawsuit.
`
`(Doc. No. 66-1,
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`Page A30
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`Huffman Decl. EX. D, at 16.) In that email, Plaintiff Johnson also threatened litigation that
`
`would cause the employee to lose his home.
`
`(EL)
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`“Courts have held a plaintiff demonstrates bad faith when alleging [a] copyright
`
`claim to secure benefits other than merely addressing grievances.” Brighton Collectibles,
`
`Inc. v. Padre Watch (30., No. 3: 1 1-CV-00637 AJB WVG, 2014 WL 29008, at *4 (SD. Cal.
`
`Jan. 2, 2014) (citing Maliack Prod, Inc. v. GoodTimes Home Video Con}, 81 F.3d 881,
`
`889 (9th Cir. 1996)). In this case, Plaintiff Johnson demonstrated that his motives were not
`
`merely to secure a copyright infringement judgment, but also to wrest control of the
`
`company from its majority shareholders and to force the company to “close its doors.”
`
`(Doc. No. 66-1, Huffman Decl. Ex. D, at 16.) Accordingly, Plaintiff Johnson’s motivations
`
`Weigh in favor of Defendant Storix’s request for attorneys’ fees.3
`
`B.
`
`Objective Reasonableness
`
`In considering whether to award attorney fees, the Court gives “substantial weight”
`
`to its assessment of Plaintiff Johnson’s reasonableness over the course of the litigation.
`
`Kirtsaeng, 136 S. Ct. at 1983. Plaintiff Johnson’s litigation tactics became increasingly
`
`unreasonable as the case progressed. In his September 26, 2015, “Buckle up boys!” email,
`
`Plaintiff Johnson threatened Storix employees and shareholders with ruinous litigation if
`
`they did not surrender control of the company to him and resign from their jobs. (Doc. No.
`
`66—1, Huffman Decl. Ex. A, at 5-9.)
`
`In his October 6, 2015, announcement to Storix
`
`customers, Plaintiff Johnson predicted an end to customer support for SBAdmin and
`
`The Court recognizes that Plaintiff Johnson has had a difficult time realizing that he no longer
`3
`controls Defendant Storix and its product. Plaintiff Johnson created SBAdmin, a software program for
`backing up files stored on computers, in 1998 and 1999 while he was a sole proprietor doing business as
`Storix Software. (Doc. No. 145, Trial Transcript Vol. I, at 82—90.) In 2003, Plaintiff Johnson incorporated
`Defendant Storix, and he transferred assets to Defendant Storix.
`(Doc. No. 145, Trial Transcript Vol. I,
`at 138.) From 2003 to 2011, Plaintiff Johnson was the president and sole shareholder of Defendant Storix,
`a corporation that existed primarily to sell copies of SBAdmin to customers.
`In 2011, due to illness,
`Plaintiff Johnson stepped down from his leadership position and gifted sixty percent of Defendant Storix’s
`outstanding stock to certain employees, thereby reducing Plaintiff Johnson’s ownership in Defendant
`Storix to forty percent.
`(Doc. No. 145, Trial Transcript Vol. I, at 159-71.) Now a minority shareholder,
`Plaintiff Johnson desires to exert majority control over the company, but this desire does not reflect the
`reality of his current business situation.
`
`Page A31
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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PageID.9303 PageZl of40
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`demanded that the customers cease paying Defendant Storix for the use of its software.
`
`(Doc. No. 66-1, Huffman Decl. Ex. B, at 10-11.) In his October 7, 2016, email to one of
`
`Defendant Storix’s employees, Plaintiff Johnson declared an intention to force Defendant
`
`Storix to “close its doors” and threatened litigation that would cause the employee to lose
`
`his home. (Doc. No. 66—1, Huffman Decl. Ex. D, at 16.)
`
`The parties went to trial to determine whether Plaintiff Johnson transferred his
`
`copyright in SBAdrnin to Defendant Storix in 2003 at the time of Defendant Storix’s
`incorporation. The Ninth Circuit recently held that, “[i]f a plaintiff has a claim that hinges
`
`on disputed facts sufficient to reach a jury, that claim necessarily is reasonable because a
`jury might decide the case in the plaintiff’s favor.” VMG Salsoul, LLC v. Ciccone, 824
`
`F.3d 871, 887 (9th Cir. 2016). Other courts, however, have noted that a “‘claim that is not
`
`‘objectively unreasonable’ at the outset can become so if the litigant continues to pursue it
`
`when the litigant knew or should have known that the chance of success was slim to none. ’ ”
`
`Erickson Prods. Inc. v. Kast, No. 5:13—CV—05472—I-IRL, 2016 WL 3951659, at *2 (ND.
`
`Cal. July 22, 2016) (quoting Frost-Tsuii Architects v. Highway Inn, Inc., No. 13-00496
`
`SOM/BMK, 2015 WL 5601853, at *5 (D. Hawaii, Sept. 23, 2015)). And, in Kirtsaeng, the
`
`Supreme Court noted that an attorneys’ fees award in a copyright case is meant to give a
`
`litigant with a meritorious case “an incentive to litigate the case all the way to the end.”
`
`136 S. Ct. at 1986.
`
`Applying these legal standards, the Court evaluates the objective reasonableness of
`
`Plaintiff Johnson’s positions. On March 15, 2004, Plaintiff Johnson signed an annual
`
`report (the “Annual Report”) that stated, “2003 represented the first 10 months in the life
`
`of Storix as a Corporation. Prior to 2003, Storix Software was a sole proprietorship. All
`
`assets from Storix Software were transferred to Storix Inc, as of its incorporation of
`
`February 24, 2003.” (Doc. No. 165—5, Trial Exhibit CD, at 35.) Plaintiff Johnson survived
`
`summary judgment by arguing that the Annual Report did not memorialize his intent to
`
`transfer the c0pyright in SBAdmin to Defendant Storix.
`
`(Doc. Nos. 56 at 12; 84 at 5-7.)
`
`& Radio Television Esganola SA. v. New World Entrn’t, Ltd, 183 F.3d 922, 927 (9th
`
`1 2 3 4 5 6 7 8 9
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`Page A32
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` ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PageID.9304 Page22 of40
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`Cir. 1999) (“[T]he parties’ intent as evidenced by the writing must demonstrate a transfer
`
`of the copyright”) (citing Melville B. Nimrner & David Nimmer, Ninnner on Copyright,
`
`§ 10.03[A][2] at 10—37 (“As with all matters of contract law, the essence of the inquiry
`
`here is to effectuate the intent of the parties.”)); Provenz v. Miller, 102 F.3d 1478, 1489
`
`(9th Cir. 1996) (“Cases where intent is a primary issue generally are inappropriate for
`
`summary judgment .
`
`.
`
`. .”).
`
`At trial, Defendant Storix adduced overwhehning evidence demonstrating that the
`
`Annual Report did in fact memorialize Plaintiff Johnson’s intent to transfer the Copyright
`
`in SBAdmin. For example, shortly after the 2003 incorporation, the “clickwrap” license
`
`for SBAdmin stated, “Copyright (c) 1999—2003 Storix, Inc.” (Doc. No. 165-5, Trial Exhibit
`
`BQ, at 9.) On January 29, 2004, Plaintiff Johnson sent an email insisting that a distributor
`
`refrain from suppressing a copyright statement in the software reading, “Copyright (c)
`
`1999-2003 Storix, Inc.” (Doc. No. 165—5, Trial Exhibit BY, at 17.) On February 17, 2004,
`
`and on March 7, 2007, Plaintiff Johnson signed distribution agreements that stated,
`
`“STORIX shall retain and own all right, title and interest in the Software and
`Documentation, and each copy thereof, and all intellectual property rights
`with respect thereto without limiting the generality of the foregoing, STORIX
`claims and reserves to itself all right in the Software and any associated
`documentation and all benefits afforded under US. copyright
`law, all
`international copyright conventions, and US. and international intellectual
`property law.”
`
`(Doc. No. 165-5, Trial Exhibits CC, DL, at 20, 54.)
`
`Significantly, on January 24, 2006, Plaintiff Johnson stated in an email to a German
`
`lawyer who was advising Storix in a trademark dispute, “It is not entirely possible for us
`
`to completely abolish the use of STORIX with our product, as it is the company that owns
`
`the copyright to the product, documentation, web site and support.” (Doc. No. 165-5, Trial
`
`Exhibit CQ, at 45.) Plaintiff Johnson did not state that Defendant Storix was using the
`
`copyright pursuant to a license. (83 Doc. No. 223 at 4.)
`
`Similarly, on March 26, 2007, Plaintiff Johnson sent an email to his employees
`
`instructing them to include language on the Storix website and software documentation
`
`
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`\DOOQGLII-Q-UJNH
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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PagelD.9305 Page 23 of40
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`that read, “Copyright Storix, Inc. 1999—2007 USA.” (Doc. No. 165—5, Trial Exhibit DQ, at
`
`69.) On August 20, 2010, Plaintiff Johnson sent an email to the Oracle Corporation that
`
`stated, “The company acquiring Storix will gain the most comprehensive disaster recovery
`
`product available for any operating system on the market.” (Doc. No. 165-5, Trial Exhibit
`
`FP, at 71.) On August 26, 2010, Plaintiff Johnson made a submission to the IBM
`
`Corporation in which he proposed selling Storix to IBM and stated, “IBM would gain the
`
`most comprehensive disaster recovery product available for any UNIX or Linux operating
`
`system on the market. .
`
`. .” (Doc. No. 165-5, Trial Exhibit FQ, at 76.) In summary, over
`
`the course of many years, Plaintiff Johnson repeatedly and consistently stated to third
`
`parties that Defendant Storix owned the copyright in SBAdmin, which was the company’s
`
`most significant asset.
`
`When confronted at trial with the representations he made to third parties when he
`
`sought to sell Storix, Inc., Plaintiff Johnson stated, “Yeah, and I lied.
`
`I admit it.
`
`I lied.”
`
`(Doc. No. 146, Trial Transcript Vol. H, at 203). The evidence Defendant Storix adduced
`
`confirmed that the Annual Report meant what it said: when Plaintiff Johnson said he was
`
`
`transferring “all assets,” he meant “all assets,” including the copyright. E Radio
`
`Television, 183 F.3d at 927.
`
`In the face of this overwhelming evidence,
`
`it was
`
`unreasonable for Plaintiff Johnson to maintain that he did not intend to transfer the
`
`copyright. Nevertheless, the Ninth Circuit has stated that, for purposes of awarding
`
`attorneys’ fees, claims such as Plaintiff Johnson’s are necessarily reasonable if they hinge
`
`on disputed facts sufficient to reach a jury. VMG Salsoul, 824 F.3d at 887. Accordingly,
`
`the Court concludes the Plaintiff Johnson’s position was objectively reasonable, at least
`
`through the conclusion of trial, and the Court gives “substantial weight” to this assessment.4
`
`Kirtsaeng, 136 S. Ct. at 1983; VMG Salsoul, 824 F.3d at 887.
`
`The Court notes the tension between the Ninth Circuit’s holding that cases that proceed to trial are
`4
`objectively reasonable, VMG Salsoul, 824 F.3d at 887, and the Supreme Court’s observation that an
`attorneys’ fees award in a copyright case is meant to give a litigant with a meritorious case “an inCentive
`to litigate the case all the way to the end.” Kirtsaeng, 136 S. Ct. at 1986.
`
`Page A34
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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PagelD.9306 Page24 of40
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`C.
`
`Degree of Success
`
`The Court next considers “the degree of success obtained” by Defendant Storix.
`
`Omega S.A., 776 F.3d at 695. According to the jury’s special verdict, Plaintiff Johnson
`
`proved that “he obtained a valid copyright for an original work of authorship relating to
`
`SBAdmin.” (Doc. No. 160 at 2.) The jury answered in Defendant Storix’s favor on
`
`Plaintiff Johnson’s claim for copyright infringement and found that Defendant Storix
`
`“owns all rights to the copyrights to all versions of SBAdmin.” (Doc. No. 160.) This was
`
`not a case in which the prevailing party achieved only a limited degree of success or won
`
`on a technicality.
`
`_S_ee_ Entm’t Research g}_rp., Inc. v. Genesis Creative Gm, Inc, 122 F.3d
`
`1211, 1231 (9th Cir. 1997) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436-37 (1983));
`
`Fantasy, Inc. v. Fogerty, 94 F.3d 553, 560 (9th Cir. 1996). On the contrary, as the Court
`
`stated in its judgment, the verdict was in Defendant Storix’s favor.
`
`(Doc. No. 164 at 2.)
`
`Accordingly, the degree of success factor weighs in favor of Defendant Storix.
`
`D.
`
`Considerations of Compensation and Deterrence
`“E
`
`The Court next considers
`
`the need in particular circumstances to advance
`9”
`
`considerations of compensation and deterrence.
`
`Kirtsaeng, 136 S. Ct. at 1985 (quoting
`
`m, 510 U.S. at 534 n.19). Plaintiff engaged in a variety of behavior that should be
`
`deterred. On January 16, 2016, a month after the jury returned its verdict against him,
`
`Plaintiff Johnson sent an email to a Storix employee asking the employee to secretly
`
`communicate with him about what was happening inside the company and to delete their
`
`correspondence.
`
`(Doc No. 216-2, Bonert Decl. Ex. 1, at 3-4.) That email also indicated
`
`that Plaintiff Johnson had been working on revising the SBAdmin software and that he had
`
`a marketable product. (1; at 3.) Additionally, the email stated, “[Storix’s leadership] tell
`
`you they now own the copyright, but they don’t.” (E) In light of the jury’s verdict stating
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`that Defendant Storix owns all COpyrights t0 SBAdrnin, Defendant Storix sent a cease and
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`desist
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`letter to Plaintiff Johnson demanding that he cease copying, distribution,
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`modification, or sale of any version of SBAdmin. (Doc. No. 216-4, Tyrell Decl. EX. 5, at
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`26—27.) On January 22, 2016, Plaintiff Johnson stated that he would not return materials
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`ase 3:14-cv-01873-H—BLM Document299 Filed 08/07/18 PagelD.9307 Page 25 of40
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`related to SBAdmin and declined to respond to the demand that he cease copying,
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`distribution, modification, or sale of SBAdmin.5 (Doc. No. 2164, Tyrell Decl. Ex. 8, at
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`31-32.)
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`Plaintiff Johnson’s pre-judgment litigation tactics should also be deterred.
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`It was
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`inappropriate for Plaintiff Johnson to tell Defendant Storix’s shareholders to “get the
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`[expletive] out” and to attempt to coerce them into surrendering control of the company.
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`(Doc. No; 66-1, Huffman Decl. Ex. A, at 59.) It was inappropriate for Plaintiff Johnson
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`to demand that Defendant Storix’s customers stop paying for the use of its software in an
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`attempt to prevent Defendant Storix from having enough money to continue defending the
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`lawsuit. (Doc. No. 66-1, Huffman Decl. Ex. B, at 10—11, Huffman Decl. Ex. D, at 16.) It
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`was also inappropriate for Plaintiff Johnson to threaten Defendant Storix’s directors with
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`the loss of their homes while he was telling the customers to stop paying Storix to
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`undermine the company. (Doc. No. 66-1, Huffman Decl. Ex. A, at 5—9, Huffman Decl. Ex.
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`D, at 16.) This inappropriate conduct should be deterred. See Omega S.A., 776 F.3d at
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`695-96.
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`An award of attorneys’ fees is justified to deter litigants in copyright cases from
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`interfering with the rights of a copyright holder. Scorpio Music (Black Scorpio) S.A. v.
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`Willis, No. 3:11-CV-1557 BTM RBB, 2015 WL 5476116, at *3 (SD. Cal. Sept. 15,2015).
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`An award is also justified-when a party’s actions unnecessarily expand another party’s
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`work. Love v. Mail on Sunday, No. CV05—7798 ABC (PJWX), 2007 WL 2709975, at *5
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`(CD. Cal. Sept. 7, 2007), aff’d sub nom. Love v. Associated Newspapers, Ltd, 611 F.3d
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`601 (9th Cir. 2010).
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`“[T]he need in [these] particular circumstances to advance
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`considerations of. .
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`. deterrence” is strong, fl Kirtsaeng, 136 S. Ct. at 1985, and this factor
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`weighs in favor of Defendant Storix’s request for attorneys’ fees.
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`//I
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`5
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`As a result of Plaintiff Johnson’s refusal, Defendant Storix has filed a motion for further relief
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`pursuant to 28 U.S.C. § 2202, which remains pending. (Doc. No. 216.)
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`Page A36
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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PageID.9308 Page 26 of40
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`E.
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`Frivolousness
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`KDOO‘JQUl-b-UJNi—A
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`Finally,
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`the Court considers whether Plaintiff Johnson’s case was frivolous.
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`Kirtsaeng, 136 S. Ct. at 1985. “[A] frivolous claim under the Copyright Act is one that, in
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`either the factual or legal assertions, is clearly baseless, involving fantastic or delusional
`scenarios.” Perfect 10, Inc. v. Giganews, Inc., No. CV 11-07098-AB SI-IX, 2015 WL
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`1746484, at *8 (CD. Cal. Mar. 24, 2015) (citations and quotation marks omitted); see also
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`Perfect 10 Inc. v. Visa lnt’l Serv. Ass’n, No. C 04-00371 JW, 2005 WL 2007932, at *4
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`(N.D. Cal. Aug. 12, 2005) (citing Neitzke v. Williams, 490 US. 324, 325-328 (1989)).
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`Plaintiff Johnson ultimately lost, but his claims did not rise to the level of fantasy or
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`10
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`delusion. _Se_e Bisson-Dath v. Sony Computer Entm’t Am. Inc, No. CV-08-1235 SC, 2012
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`WL 3025402, at *2 (ND. Cal. July 24, 2012) (“A claim is not frivolous merely because it
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`is unsuccessful”).
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`Indeed, the Court previously stated that the case was not frivolous.
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`(Doc. No. 214, February 23, 2016 Hearing Transcript, at 42.)
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`Although Plaintiff Johnson’s case was not frivolous, this factor’s weighing in his
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`favor is not dispositive as to Defendant Storix’s request for attorneys’ fees. It used to be
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`that “a copyright defendant had to show that the plaintiff’s claim was frivolous or made in
`bad faith in order to be entitled to fees,” but this is no longer the rule. Mattel Inc. v. MGA
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`Entm’t Inc, 705 F.3d 1108, 1111 (9th Cir. 2013). Rather, frivolousness is one of many
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`factors the Court weighs in determining whether to award attorneys’ fees. Kirtsaeng, 136
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`S. Ct. at 1985.
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`F.
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`Award of Attorneys’ Fees
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`The Court concludes that, under Ninth Circuit precedent, Plaintiff Johnson’s position
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`was objectively reasonable on the grounds that the case proceeded to trial.6 S_ee VMG
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`Salsoul, 824 F.3d at 887. The Court gives “substantial weight” to this assessment,
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`6
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`This precedent may conflict with the Supreme Court’s statement in Kirtsaeng that an attorneys’
`fees award in a copyright case is meant to give a litigant with a meritorious case “an incentive to litigate
`the case all the way to the end.” 136 S. Ct. at 1986. But the Court leaves it to the Ninth Circuit to resolve
`this potential issue.
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`Page R37
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`ase 3:14-cv-01873-H-BLM Document299 Filed 08/07/18 PagelD.9309 Page 27 of40
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`Kirtsaeng, 136 S. Ct. at 1983, and this factor counts in Plaintiff Johnson’s favor.
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`Nevertheless, the Court awards attorneys’ fees to Defendant Storix on the basis of the
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`factors to which the Court gives normal weight. Plaintiff Johnson’s motivation, the degree
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`of Defendant Storix’s success, and the need to advance considerations of compensation
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`and deterrence all weigh heavily in Defendant Storix’s favor. The factors that count in
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`Plaintiff Johnson’s favor are his case’s lack of frivolousness and that it survived summary
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`judgment, and the Court concludes that these considerations are insufficient to overcome
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`the strength of the factors that count in Defendant Storix’s favor. §_e_§ Kirtsaeng, 136 S. Ct.
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`at 1985; Fogerty v. Fantasy, Inc., 510 U.S. 51.7, 534 n.19 (1994); Omega S.A. v. Costco
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`Wholesale Corp, 776 F.3d 692, 695-96 (9th Cir. 2015). Accordingly, the Court awards
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`attorneys’ fees to Defendant Storix.
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`III.
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`Calculation of Attorneys’ Fees and Costs
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`In calculating the fees to be awarded, the Court uses the lodestar method, and it
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`requires the prevailing party to submit evidence demonstrating that the fees sought are the
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`result of multiplying the number of hours reasonably expended by a reasonable hourly rate.
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`m, 786 F.3d at 763. Defendant Storix has adequately demonstrated that the rates its
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`attorneys charged were “in line with the prevailing market rate of the relevant community.”
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`Carson, 470 F.3d at 891. (Doc. No. 165-2, Tyrell Decl. ‘][‘I[ 20—21.) Accordingly, the Court
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`declines to adjust the lodestar factor at this time pending review of Defendant Storix’s final
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`invoices. See Carter, 757 F.3d at 869.
`In considering Defendant Storix’s request for attorneys’ fees in light of the Kirtsaeng
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`factors, the Court awards Defendant Storix with the attorneys’ fees it incurred in this case
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`on and after October 6, 2015, the date of Plaintiff Johnson’s email that sought to convince
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`customers to cease paying Defendant Storix so that Defendant Storix would have
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`insufficient funds to continue defending the lawsuit.
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`(Doc. No. 66-1, Huffman Decl. Ex.
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`B, at 10-11, Huffman Decl. Ex. D, at 16.) This award is subject to certain exceptions and
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`other applicable considerations.
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`The Court excludes from this award fees associated with opposing Plaintiff
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` ase 3:14-cv-01873—H-BLM Document299 Filed 08/07/18 PagelD.931O Page28 of40
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`Johnson’s motions in limine to preclude the testimony of Barbara Frederiksen-CroSs.7 The
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`award also excludes any fees. associated with the mediation in which the parties participated
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`before the magistrate judge in the spring of 2016 because those efforts represented the
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`parties’ good faith attempts to resolve a variety of issues? Additionally, exercising the
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`Court’s discretion, the Court excludes from the award any fees related to the briefing that
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`Defendant Storix provided regarding Kirtsaeng v. John Wiley & Sons, Inc, including
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`Defendant Storix’s response to Plaintiff Johnson’s brief and all declarations in support of
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`those briefs, because that briefing was initiated at the Court’s request and potentially
`involved a change in the law.
`(Doc. No. 215.) The Court declines at this time to award
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`fees related to Defendant Storix’s motion for further relief pursuant to 28 U.S.C. § 2202
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`because the motion is still pending.
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`Defendant Storix also seeks costs not taxable under 28 U.S.C. § 1920.
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`(Doc. No.
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`165-1 at 24-25.) E Civ. L. R. 54.1. Exercising its discretion, the Court declines to award
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`additional costs beyond those taxable under 28 U.S.C. § 1920.9 §e_e Twentieth Century
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`Eo_x, 429 F.3d at 885.
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`In light of the time that has elapsed since Defendant Storix filed its motion for
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`attorneys’ fees, the Court cannot finalize its calculation of the fee award. Plaintiff Johnson
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`has also asked for an Opportunity to file an additional opposition because briefing on this
`motion was temporarily put on hold pending the mediation.
`(Doc. No. 194.) Due to the
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`piecemeal manner in which this motion was briefed, the Court orders Defendant Storix to
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`file, within thirty days of the date of this order, a self-contained memorandum detailing the
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`The jury foUnd in Plaintiff Johnson’s favor on the issue of whether he obtained a valid copyright
`7
`in SBAdrnin Version 1.3.
`(Doc. Nos. 87, 160.)
`8
`In additio