In the
`United States Court of Appeals
`For the Seventh Circuit
`
`No. 00-3286
`
`HARBOR MOTOR COMPANY, INCORPORATED, d/b/a
`HARBOR OLDSMOBILE-GMC TRUCK, an
`Indiana Corporation,
`
`Plaintiff-Appellant,
`
`v.
`
`ARNELL CHEVROLET-GEO, INCORPORATED,
`an Indiana Corporation, d/b/a ARNELL CHEVROLET,
`and POST-TRIBUNE PUBLISHING COMPANY,
`INCORPORATED, d/b/a POST-TRIBUNE NEWSPAPER,
`an Indiana Corporation,
`
`Defendants-Appellees.
`
`Appeal from the United States District Court
`for the Northern District of Indiana, Hammond Division.
`No. 97 C 379--Allen Sharp, Judge.
`
`ARGUED APRIL 2, 2001--DECIDED September 17, 2001
`
` Before RIPPLE, MANION and KANNE, Circuit
`Judges.
`
` RIPPLE, Circuit Judge. Harbor Motor
`Company, Inc. ("Harbor") brought suit
`against Arnell Chevrolet-Geo, Inc.
`("Arnell") and Post-Tribune Publishing
`Company, Inc. ("Post-Tribune"), alleging
`copyright infringement. Arnell and the
`Post-Tribune tendered to Harbor an offer
`of judgment for $20,100, which Harbor
`rejected. The case proceeded to trial
`and, at the close of Harbor’s case-in-
`chief, both Arnell and the Post-Tribune
`moved for judgment as a matter of law.
`The district court granted the motion as
`to the Post-Tribune but permitted the
`claims against Arnell to go to the jury.
`The jury found in favor of Harbor and
`awarded Harbor $12,500 in damages.
`
` The district court then awarded
`attorney’s fees as follows: (1) the Post-
`Tribune received over $104,000 in costs
`and attorney’s fees as a prevailing party
`under the Copyright Act, 17 U.S.C. sec.
`101 et seq.; (2) Arnell received more
`than $71,000 in costs and attorney’s fees
`pursuant to Federal Rule of Civil
`
`

`
`Procedure 68 because Harbor’s $12,500
`judgment against Arnell was less than the
`$20,100 joint offer of judgment; and (3)
`Harbor’s request for costs and attorney’s
`fees was denied. Harbor now appeals both
`the district court’s decision to grant
`the Post-Tribune’s motion for judgment as
`a matter of law and the court’s award of
`costs and attorney’s fees. For the
`reasons set forth in the following
`opinion, we reverse the judgment of the
`district court and remand for further
`proceedings.
`
`I B
`
`ACKGROUND
`
`A.
`
`1.
`
` Harbor and Arnell are competing
`automobile dealerships located in
`northwest Indiana. From 1994 to 1997,
`Harbor conducted more than a dozen tent
`sales in the parking lot of a SuperK
`store in Portage, Indiana./1 To
`advertise its tent sales, Harbor
`principally relied on newspaper
`advertising, particularly full-color
`Sunday ads published in the Post-Tribune
`newspaper. The design of the ads is
`disputed and is sketched in brief here.
`
` Harbor explains that its ads were
`designed by Gino Burelli, one of its co-
`owners and operators, with assistance
`from David Lawson, Harbor’s other co-
`owner. Burelli designed the ads by hand
`on a piece of paper, then met with Karen
`Johnson of Lighthouse Media, Harbor’s
`advertising agency. Burelli directed
`Johnson to adapt his designs to a
`newspaper-friendly format. Johnson did so
`using computer software and then
`delivered the proofs to Burelli for
`editing before they were submitted to the
`newspaper for publication. For each tent
`sale, Burelli took Harbor’s previous tent
`sale advertisement and made changes to
`the pre-existing text and design. All the
`ads were similar to one another; each
`successive ad was "tweaked" to improve
`upon the earlier ads, although the
`overall "look" of the ads was preserved.
`Tr.II at 86 & 117.
`
` Arnell and the Post-Tribune, however,
`claim that Johnson, and not Burelli, is
`
`

`
`the designer of the advertisements./2
`Specifically, for each tent sale, Burelli
`would take the ad Harbor used for the
`last sale and draw changes to the pre-
`existing design. He would then give the
`ideas to Johnson, who would use computer
`software to create an advertisement from
`Burelli’s ideas and rough sketches.
`
`2.
`
` In 1997, Harbor conducted a tent sale
`from June 11-14 and advertised the sale
`in the Post-Tribune the week of Sunday,
`June 8. Although Burelli did not
`copyright the advertisement at the time,
`Harbor did register the copyright for the
`June advertisement on August 25, 1997.
`
` Arnell also held a tent sale at the same
`SuperK location on July 9-12, 1997.
`Thomas Tenhove, Arnell’s sales manager,
`contacted Peg Bryan, the Post-Tribune
`sales representative who handled Arnell’s
`advertising, and asked her to duplicate
`Harbor’s ad. Bryan, however, told Tenhove
`that she could not make an exact copy of
`the Harbor ad and that changes would have
`to be made to the ad before it could be
`published as an Arnell ad. Bryan
`testified at trial that she thought the
`changes were necessary to ensure she was
`"covering" herself and the newspaper
`while at the same time doing "the job
`that Arnell wanted." Id. at 156.
`
` Bryan then gave a copy of the Harbor ad-
`-complete with Tenhove’s handwritten
`alterations--to Kim Piazza, the
`newspaper’s graphic designer, and told
`her that Arnell wanted its ad to look
`like the Harbor copy. Using the Harbor
`ad, Piazza created a "layout" for the
`Arnell version. This layout was a copy of
`the Harbor ad, with the following major
`changes: Arnell’s logo instead of
`Harbor’s appeared at the top; information
`stating that sales would benefit the Boys
`& Girls Club of Porter County was moved
`from the middle of the advertisement to
`the bottom of the page; and a notation
`was added that there would be a "Free
`Carnival Cruise with Purchase." The ad
`ran in the Post-Tribune’s Sunday edition
`on July 6, 1997.
`
` Burelli saw Arnell’s ad in the Post-
`Tribune. At first glance, he thought that
`the ad was Harbor’s own for an upcoming
`July tent sale, and he called Johnson to
`
`

`
`complain that the ad had been run on the
`wrong day. After Burelli and Johnson
`discovered that the ad was for Arnell,
`Johnson called Bryan and other Post-
`Tribune employees and demanded that the
`newspaper discontinue the ad. Bryan and
`Piazza then created a new and different
`ad for Arnell to advertise its tent
`sales.
`
` Harbor held another tent sale in July
`1997. It claims that, even though it
`conducted the sale in the same manner as
`its prior sales, it sold approximately
`sixteen fewer cars than it had averaged
`in previous sales, with a resulting loss
`of approximately $21,000./3
`
`B.
`
` Harbor filed suit in late 1997, claiming
`(1) that Arnell and the Post-Tribune
`infringed upon its copyright, in
`violation of 17 U.S.C. secs. 412 and
`501-505; and (2) that Arnell
`intentionally interfered with its
`prospective business advantage, a tort
`under Indiana law.
`
` During pretrial proceedings, Arnell
`tendered an offer of judgment to Harbor
`for $2,500, and the Post-Tribune tendered
`a separate offer of judgment for $7,500.
`Harbor did not accept either offer.
`Arnell and the Post-Tribune then tendered
`a joint offer of judgment to Harbor for
`$20,100, an unapportioned lump-sum offer
`that did not specify how much of the
`offer applied to each defendant. The
`offer provided that "the total amount of
`this offer of judgment [was to be]
`collective against both defendants, and
`not to be construed as entitling [Harbor]
`to the lump sum stated herein against one
`defendant or the other individually."
`R.142, Ex.J at 1-2. The offer further
`specified that the $20,100 was to be
`"inclusive of attorneys’ fees and costs
`up to the date of acceptance of this
`offer" and that acceptance would
`"preclude any subsequent claim for costs
`or attorney[’]s fees by plaintiff." Id.
`at 1-2. Harbor rejected this joint offer,
`and the case was tried to a jury.
`
` At the close of Harbor’s case-in-chief,
`both Arnell and the Post-Tribune moved
`for judgment as a matter of law pursuant
`to Federal Rule of Civil Procedure 50(a).
`They argued that Harbor did not own the
`
`

`
`copyright in the advertisement and that
`they had not willfully infringed Harbor’s
`copyright. Arnell also moved for judgment
`as a matter of law on the intentional
`interference with business advantage
`claim.
`
` The district court granted Arnell’s
`motion on the state-law claim and granted
`both the Post-Tribune’s and Arnell’s
`motions with respect to willful
`infringement./4 The court also dismissed
`the Post-Tribune from the case entirely,
`ruling that:
`
` I must confess to you in complete
`candor--and I am well aware that the
`First Amendment has not been argued here.
`It is a rare newspaper case that that
`isn’t argued, but it hasn’t been.
`
` But there are some values involved that
`I think are implicit in the way in which
`newspapers should or are supposed to act-
`-and granted that they, like many other
`of the powerful forces in our society,
`are far from perfect--I have a lot of
`problem--and I am going to lay this out
`with great candor--I have a great deal of
`problem, especially with the one witness,
`of imposing an obligation on this
`newspaper under the circumstances of this
`case to hold them responsible for any
`improper dealing with regard to the
`copyright involved.
`
` I am going to let them out. I am going
`to grant their motion for directed
`verdict. . . .
`
` So I am not going to--I am excusing the
`newspaper on different grounds than the
`validity of the copyright.
`
`Tr.II at 280-81.
`
` The jury subsequently returned a verdict
`in Harbor’s favor against Arnell on
`Harbor’s copyright claim and awarded
`Harbor statutory damages of $12,500. Each
`party then filed motions to recover costs
`and attorney’s fees; the district court
`referred the motions to a magistrate
`judge. The magistrate judge recommended
`(1) that the Post-Tribune be awarded over
`$104,000 in costs and attorney’s fees as
`a prevailing party under the Copyright
`Act; (2) that Arnell be awarded more than
`$71,000 in costs and attorney’s fees,
`finding that Federal Rule of Civil
`
`

`
`Procedure 68 required it to do so because
`Harbor’s $12,500 judgment against Arnell
`was less than the $20,100 joint offer of
`judgment; and (3) that Harbor’s request
`for costs and attorney’s fees as the
`prevailing party be denied. The district
`court adopted the magistrate judge’s
`recommendation in its entirety, and
`Harbor now appeals.
`
`II
`
`ANALYSIS
`
`A. Judgment as a Matter of Law for the
`Post-Tribune
`
` Harbor contends that the district court
`erroneously granted the Post-Tribune’s
`motion for judgment as a matter of law
`because it improperly determined that the
`First Amendment shielded the newspaper
`from liability. The Post-Tribune, in
`contrast, argues (1) that Harbor only
`sued the Post-Tribune for contributory,
`and not direct, infringement, and a prima
`facie case of contributory infringement
`was not made out; and (2) that the
`district court did not base its ruling on
`First Amendment grounds.
`
` We first must determine the cause of
`action on appeal. Despite the Post-
`Tribune’s assertion to the contrary in
`its brief, we believe that all parties
`proceeded in the district court under a
`direct infringement claim. In both its
`motion for summary judgment and its trial
`brief, for example, the Post-Tribune
`centered its analysis on a direct
`infringement claim and made no mention of
`contributory infringement. Likewise, the
`Post-Tribune did not refer to
`contributory infringement in its motion
`for judgment as a matter of law. Harbor
`also based its pleadings on a direct
`infringement claim; in paragraph one of
`its complaint, it alleged copyright
`infringement under 17 U.S.C. secs.
`412, 501-505, all relating to direct
`infringement./5 The Post-Tribune points
`to various pieces of the district court’s
`language in an effort to support its
`theory that the court granted its motion
`on a contributory infringement basis, but
`we are not persuaded by those citations.
`The cited references do not relate to
`contributory infringement but instead are
`taken from the court’s discussion of
`Arnell’s motion on the willful
`
`

`
`infringement claim. Accordingly, we shall
`examine the elements of direct
`infringement to determine whether the
`Post-Tribune’s case should have been
`submitted to the jury.
`
` To make out a prima facie claim of
`direct infringement, Harbor must show (1)
`that it owned a valid copyright in the
`advertisement and (2) that the Post-
`Tribune copied constituent elements of
`the work that were original. See Wildlife
`Express Corp. v. Carol Wright Sales,
`Inc., 18 F.3d 502, 507 (7th Cir. 1994)
`(quoting Feist Publ’ns, Inc. v. Rural
`Tel. Serv. Co., 499 U.S. 340, 361
`(1991)); see also 3 Melville B. Nimmer,
`Nimmer on Copyright, sec. 13.01[A], at
`13-6 (1993). Harbor contends that it made
`out a prima facie case against the Post-
`Tribune, evidenced by the jury’s decision
`in favor of Harbor against Arnell on the
`same evidence. We agree.
`
` As an initial matter, we review de novo
`a district court’s grant of judgment as a
`matter of law. See Bruso v. United
`Airlines, Inc., 239 F.3d 848, 857 (7th
`Cir. 2001). We ask whether the evidence
`presented, combined with the reasonable
`inferences permissibly drawn therefrom,
`is sufficient to support the verdict when
`viewed in the light most favorable to the
`party against whom the motion is
`directed. See Lane v. Hardee’s Food Sys.
`Inc., 184 F.3d 705, 707 (7th Cir. 1999).
`We shall reverse the judgment "only if
`enough evidence exists that might sustain
`a verdict for the nonmoving party." Id.
`(quoting Continental Bank N.A. v.
`Modansky, 997 F.2d 309, 312 (7th Cir.
`1993)). In deciding this question, we may
`not substitute our view of contested
`evidence for the jury’s. See Place v.
`Abbott Labs., 215 F.3d 803, 809 (7th Cir.
`2000), cert. denied, 121 S. Ct. 768
`(2001).
`
` We conclude that the district court’s
`decision to grant the Post-Tribune’s
`motion for judgment as a matter of law
`was in error. The court in granting the
`Post-Tribune’s motion indicated only that
`it did not believe that liability could
`be imposed on the Post-Tribune consistent
`with the First Amendment because "there
`are some values involved that I think are
`implicit in the way in which newspapers
`should or are supposed to act." Tr.II at
`280./6 The court explained that it had
`
`

`
`the "private feeling" that "this is not
`the kind of case that the copyright act
`was really all about." Id. at 281.
`Nowhere in its ruling did the district
`court articulate a basis, grounded in the
`Copyright Act, for granting the Post-
`Tribune’s motion for judgment as a matter
`of law. It simply noted that it was
`"excusing the newspaper on different
`grounds than the validity of the
`copyright." Id.
`
` In our view, the evidence, viewed in the
`light most favorable to Harbor, could
`support a verdict in its favor on direct
`infringement grounds. First, the jury
`verdict against Arnell demonstrates (1)
`that Harbor owned a valid copyright in
`the advertisement and (2) that Arnell
`infringed Harbor’s copyright. Harbor
`asserts the same ownership rights in the
`copyright against the Post-Tribune/7 and
`appears to have an even stronger case
`because it was the newspaper that copied
`the advertisement. The Post-Tribune’s own
`ad representative and graphic designer
`created the offending ad, and the paper
`published it. Because enough evidence
`exists to sustain a verdict for Harbor,
`we conclude that the district court erred
`in granting judgment as a matter of law
`to the Post-Tribune on a direct infringe
`ment claim.
`
` Therefore, the judgment as a matter of
`law in favor of the Post-Tribune is
`reversed. The order granting the Post-
`Tribune costs and attorney’s fees as a
`prevailing party is likewise reversed./8
`
`B. Rule 68
`
` 1. Prevailing Party
`
` Arnell and the Post-Tribune made a joint
`offer of judgment to Harbor in the amount
`of $20,100. Harbor rejected the offer
`and, at trial, obtained a judgment
`against Arnell for $12,500. The district
`court then permitted Arnell to recover
`its fees and costs pursuant to Federal
`Rule of Civil Procedure 68, a decision
`Harbor contends was in error.
`Specifically, because Arnell was not a
`prevailing party under the Copyright Act,
`Harbor claims that Arnell could not
`receive the fees under Rule 68’s
`mandatory fee-shifting provision. Arnell
`argues in response that it was not
`
`

`
`required to be a prevailing party to
`recover its attorney’s fees.
`
` Rule 68 permits a defendant to serve on
`a plaintiff "an offer to allow judgment
`to be taken against the [defendant] for
`the money or property or to the effect
`specified in the offer." Fed. R. Civ. P.
`68. If the plaintiff does not accept the
`offer of judgment within ten days and
`then obtains a judgment against the
`defendant that is less favorable than the
`offer, the plaintiff "must pay the costs
`incurred after the making of the offer."
`Id. Thus, the plaintiff is precluded from
`recovering his costs incurred after the
`making of the offer. See Marek v. Chesny,
`473 U.S. 1, 10 (1985)./9 Rule 68 also
`requires the plaintiff to pay any costs
`the defendant incurs after making the
`offer if the plaintiff’s judgment is less
`favorable than the offer. See Gavoni v.
`Dobbs House, Inc., 164 F.3d 1071, 1075
`(7th Cir. 1999). We review the district
`court’s underlying factual findings for
`clear error, but to the extent a party’s
`entitlement to costs rests on an
`interpretation of Rule 68, we review the
`district court’s legal conclusions de
`novo. See id.
`
` Although Rule 68 by its terms only
`applies to costs, the Supreme Court has
`held that attorney’s fees are included
`within the definition of "costs" for
`purposes of Rule 68 when the underlying
`statute includes attorney’s fees in its
`definition of costs. See Marek, 473 U.S.
`at 9. Section 505 of the Copyright Act
`defines costs to include attorney’s fees,
`but only the prevailing party is entitled
`to their award. See 17 U.S.C. sec. 505
`("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.").
`This appeal thus asks us to determine
`whether Arnell must be a prevailing party
`under the Copyright Act in order to
`recover attorney’s fees pursuant to Rule
`68.
`
` Courts that have addressed whether a
`non-prevailing party can nevertheless
`obtain attorney’s fees under Rule 68 have
`expressed differing views. In Crossman v.
`Marcoccio, 806 F.2d 329 (1st Cir. 1986),
`cert. denied, 481 U.S. 1029 (1987), the
`First Circuit held that a losing
`defendant could not recover post-offer
`
`

`
`attorney’s fees because it was not the
`prevailing party. See Crossman, 806 F.2d
`at 334. ("Although appellants’ attorney’s
`fees were ’properly awardable’ costs
`under section 1988, appellees’ attorney’s
`fees were not. The statute awards costs
`only to a ’prevailing party.’") (emphasis
`in original); see also O’Brien v. City of
`Greers Ferry, 873 F.2d 1115, 1120 (8th
`Cir. 1989)./10
`
` The First Circuit in Crossman rejected
`the same argument that Arnell makes here,
`explaining that the effort to dismiss the
`"prevailing party" language in Marek
`
`distorts the law governing the
`relationship between Rule 68 and [the
`substantive statute] by ignoring the two
`crucial words that serve to qualify the
`holding of the Marek case. Marek states
`that "the term ’costs’ in Rule 68 was
`intended to refer to all costs properly
`awardable under the relevant substantive
`statute or other authority." . . . The
`Court stresses the importance of the two
`emphasized words by repeating them in the
`next sentence of the opinion: "In other
`words, all costs properly awardable in an
`action are to be considered within the
`scope of Rule 68 ’costs.’"
`
`Crossman, 806 F.2d at 333 (emphasis in
`original).
`
` The Eleventh Circuit, however, has
`determined that a Rule 68 award of costs
`includes attorney’s fees even if the
`defendant is not the prevailing party.
`See Jordan v. Time, Inc., 111 F.3d 102,
`105 (11th Cir. 1997). There, the
`courtdetermined that the plaintiff was
`required to pay the defendant’s costs
`incurred after the making of the offer,
`simply stating that "Rule 68 ’costs’
`include attorneys’ fees when the
`underlying statute so prescribes. The
`Copyright Act so specifies." Id./11
`The court in Jordan, however, did not
`confront squarely the requirement in
`section 505 of the Copyright Act that a
`party seeking attorney’s fees must be a
`prevailing party; the Eleventh Circuit
`read Marek to mean that the underlying
`statute, the Copyright Act, simply must
`define costs to include attorney’s fees
`for the fees to be properly awardable
`under Rule 68. See id.
`
` We agree with the analysis in Crossman
`
`

`
`and, therefore, hold that only prevailing
`parties can receive attorney’s fees
`pursuant to Rule 68. Our conclusion is
`compatible with the language in Marek
`that ties the award of Rule 68 fees to
`only those costs that are properly
`awardable under the substantive statute
`at issue. See Marek, 473 U.S. at 9
`(concluding that the term "costs" in Rule
`68 was "intended to refer to all costs
`properly awardable under the relevant
`substantive statute or other authority. .
`. . Thus, absent congressional
`expressions to the contrary, where the
`underlying statute defines ’costs’ to
`include attorney’s fees, we are satisfied
`such fees are to be included as costs for
`purposes of Rule 68."). The authority
`holding to the contrary does not, in our
`view, adequately address the Copyright
`Act’s mandate that only the prevailing
`party is permitted to recover its
`attorney’s fees.
`
` A prior case from this circuit, Poteete
`v. Capital Engineering, Inc., 185 F.3d
`804 (7th Cir. 1999), supports our
`analysis. In that case, dealing with
`ERISA, we held that the defendants were
`not entitled to attorney’s fees under
`Rule 68. See Poteete, 185 F.3d at 807.
`"The statutes and common law principles
`that sometimes entitle a party to recover
`his attorneys’ fees limit that
`entitlement to prevailing parties . . .,
`and any defendant who is entitled to
`invoke Rule 68 is by definition not a
`prevailing party." Id. at 807-08. Thus,
`Poteete indicates that defendants who are
`not prevailing parties cannot recover
`attorney’s fees under Rule 68. This
`conclusion is applicable to other
`statutes, including the Copyright Act.
`
` In sum, we conclude that a non-
`prevailing party cannot, under the
`Copyright Act, receive post-offer
`attorney’s fees pursuant to Rule 68.
` 2. Apportionment
`
` Harbor also argues that the $20,100
`joint offer of judgment from the Post-
`Tribune and Arnell was not comparable to
`the judgment obtained at trial only
`against Arnell. Thus, Harbor contends,
`Rule 68’s cost-shifting provision was not
`triggered, and Harbor is not responsible
`for Arnell’s fees and costs. Arnell
`maintains, however, that multiple
`defendants may make a joint offer of
`
`

`
`judgment and that the two figures in this
`case--the amount of the judgment and the
`settlement offer--are easily comparable.
`
` Generally, plaintiffs face "serious
`consequences in either accepting or
`rejecting a Rule 68 offer." Gavoni, 164
`F.3d at 1076. As we indicated earlier, a
`judgment less favorable than the offer
`requires that a plaintiff pay the
`defendant’s post-offer costs and forego
`entitlement to its own attorney’s fees.
`There must, therefore, "be a clear
`baseline from which plaintiffs may
`evaluate the merits of their case
`relative to the value of the offer." Id.
`We have explained that an
`
`ambiguous offer places the plaintiff in
`an uncomfortable position. Not knowing
`the actual value of the offer, he can’t
`make an intelligent choice whether to
`accept it--and there are consequences
`either way. For unlike the case of an
`ordinary contract offer, the offeree
`cannot reject it without legal
`consequences, since if he rejects it and
`then doesn’t do better at trial he has to
`pay the defendant’s post-offer costs.
`
`Nordby v. Anchor Hocking Packaging Co.,
`199 F.3d 390, 392 (7th Cir. 1999).
`
` In this case, the parties dispute
`whether the baseline was sufficiently
`clear. Harbor contends that it was not;
`the joint offer was from both defendants,
`but unapportioned, with no indication as
`to the amount for which each defendant
`was liable. Arnell, however, claims that
`Harbor possessed all the information it
`needed to decide whether to accept the
`offer.
`
` Ambiguity in an offer of judgment is to
`be construed against the defendant that
`makes the offer; a "plaintiff should not
`be left in the position of guessing what
`a court will later hold the offer means."
`Webb v. James, 147 F.3d 617, 623 (7th
`Cir. 1998). Accordingly, the burden is on
`the defendant-offeror to demonstrate that
`its "offer was more favorable than the
`judgment and that the mandatory cost-
`shifting provision was therefore
`triggered." Gavoni, 164 F.3d at 1075-76.
`The defendant "bear[s] the burden of
`precision." Id. at 1076 n.1. He should
`"state his intentions clearly, and any
`failure to do so will be at his peril."
`
`

`
`Id. at 1076 (quoting Chambers v. Manning,
`169 F.R.D. 5, 8 (D. Conn. 1996)).
`
` This circuit--and others--already have
`held that various joint offers do not
`trigger the fee-shifting provisions of
`Rule 68. In Gavoni, 164 F.3d at 1077, for
`example, we determined that an
`unapportioned offer given to multiple
`plaintiffs did not permit the plaintiffs
`to "independently evaluate" the offer.
`More specifically, an unapportioned offer
`of $10,000 to three plaintiffs could not
`be compared to the judgment finally
`obtained; the jury returned a verdict in
`favor of each plaintiff individually in
`the amounts of $2,000, $2,000, and
`$2,500. See id. at 1076-77. Because it
`was impossible to tell whether the amount
`each plaintiff received from the jury was
`less favorable than what each would have
`received from the unapportioned $10,000
`offer divided among them in an
`undetermined manner, we determined that
`the offer of judgment had no effect. See
`id. at 1076.
`
` In Johnston v. Penrod Drilling Co., 803
`F.2d 867, 870 (5th Cir. 1986), the Fifth
`Circuit similarly concluded that Rule 68
`did not apply to an unapportioned joint
`offer from two defendants, explaining
`that the "figure represented by the joint
`offer of [the two defendants] on the one
`hand and the dollar judgment obtained
`only against [one defendant] on the other
`are not comparable figures." In that
`case, however, the plaintiff settled with
`one of the two defendants prior to trial.
`The court found that the judgments were
`not comparable because the settlement may
`have had an effect on the damage award.
`See Johnston, 803 F.2d at 870. "The
`character and dynamics of a trial often
`are drastically changed when one or more
`parties are dismissed." Id. If the jury
`had found both defendants at fault, it
`likely "would have reduced the extent of
`[the plaintiff’s] contributory
`negligence." Id.
`
` Here, we see no way to compare the
`$20,100 offer of judgment made jointly by
`the Post-Tribune and Arnell with the
`$12,500 judgment that Harbor obtained
`against Arnell alone. For example, did
`the parties intend to apportion the offer
`equally? Or did they envision another
`division, one more commensurate with
`their varying degrees of responsibility?
`
`

`
`The Post-Tribune’s initial, individual
`offer of judgment for $7,500 was three
`times that of Arnell’s $2,500 offer of
`judgment. As we noted in Gavoni, "varied
`constructions of the single offer only
`underscore its fatal problem:
`imprecision." Gavoni, 164 F.3d at 1076.
`
` Arnell submits that Harbor had all the
`information it needed to make an informed
`decision to accept the offer. More
`specifically, Arnell maintains that
`Harbor knew that the maximum recovery
`available to it on the single claim of
`non-willful copyright infringement was
`$20,000, a hundred dollars less than the
`offer of judgment./12 However, this
`argument does not take into account that,
`at the time the offer of judgment was
`made, Harbor was pursuing a claim for
`willful infringement, which at the time
`carried a maximum statutory recovery of
`$100,000. The willful infringement claim
`was not dismissed until after Harbor
`presented its case-in-chief at trial,
`well after the expiration of the ten days
`Harbor had in which to accept the offer.
`The Post-Tribune, notably, was the entity
`that had designed and published the
`infringing ad.
` In conclusion, courts require "easily
`comparable sums," Gavoni, 164 F.3d at
`1076, and these were not. The ambiguous
`nature of the offer of judgment is
`another reason why Arnell should not have
`received a fee award under the auspices
`of Rule 68. An offeree must know what is
`being offered before being held
`responsible for refusing the offer.
`
` We need not go so far as to conclude,
`however, that Rule 68 always requires an
`exact delineation of the manner in which
`damages are to be apportioned among
`multiple parties. There might be
`circumstances where it would be clear to
`the district court how a settlement is to
`be shared among offerors and/or offerees.
`This, however, is not such a case./13
`
`Conclusion
`
` The order granting judgment as a matter
`of law to the Post-Tribune is reversed;
`therefore, the order of attorney’s fees
`to the Post-Tribune as a prevailing party
`also must be reversed. The order awarding
`Arnell costs and attorney’s fees under
`Rule 68 is reversed. The order denying
`Harbor its costs and attorney’s fees is
`
`

`
`vacated. The case is remanded to the
`district court for further proceedings
`consistent with this opinion. Circuit
`Rule 36 shall apply. Harbor may recover
`its costs in this court.
`
`IT IS SO ORDERED
`
`FOOTNOTES
`
`/1 A tent sale is a commonly used promotional device
`where an auto dealer sells cars from a location
`other than its dealership.
`
`/2 Arnell and the Post-Tribune point out that Gino
`Burelli and Karen Johnson amended their deposi-
`tion answers by way of errata sheet to reflect
`their contention that Burelli, and not Johnson,
`designed the tent sale ads.
`
`/3 In August 1997, Harbor filed a copyright applica-
`tion for its June 1997 tent sale advertisement.
`On the application, Harbor is listed as the owner
`of a visual art entitled "Harbor Tent Sale," a
`work made for hire. Harbor did not seek copyright
`registration for any of its other tent sale ads.
`
`/4 The district court’s decision to grant a judgment
`as a matter of law on Harbor’s claim of willful
`infringement reduced Harbor’s potential statutory
`damages from $100,000 (the maximum statutory
`damages for willful infringement) to $20,000 (the
`maximum for non-willful infringement). See 17
`U.S.C. secs. 504(c)(1) & (2). We note that a
`recent change to the statute permits the recovery
`of $150,000 for willful infringement and $30,000
`for non-willful infringement.
`
`/5 The only mention of contributory infringement is
`in paragraph 21 of the complaint, which indicated
`that the "conduct of the Post-Tribune constitutes
`contributory infringement of Harbor’s copyright
`in the Harbor Advertisement." R.5 at 6.
`
`/6 The Post-Tribune never argued that its publica-
`tion of the Arnell advertisement was protected by
`the First Amendment.
`
`/7 The Post-Tribune attacks the validity of Harbor’s
`copyright in several respects, arguing on appeal
`that Harbor is not the owner of the copyright in
`its ad, that the ad is a derivative work, that
`the ad published by the Post-Tribune did not
`infringe any copyrightable elements of Harbor’s
`ad, that the Post-Tribune’s publication of the ad
`constituted fair use, and that any infringement
`was de minimus and, therefore, not actionable.
`Because the jury already decided these claims in
`Harbor’s favor when it found against Arnell on
`the copyright infringement claim, we shall not
`
`

`
`undertake here an in-depth discussion of these
`aspects of copyright law.
`
`/8 To the extent that the order denying Harbor
`attorney’s fees as a prevailing party was denied
`because of the grant of a judgment as a matter of
`law to the Post-Tribune, that order must be
`vacated.
`
`/9 In Marek v. Chesny, 473 U.S. 1 (1985), the
`Supreme Court confronted only the question of
`whether a party’s own attorney’s fees could be
`shifted back to it under Rule 68. See id. at 9
`("Since Congress expressly included attorney’s
`fees as ’costs’ available to a plaintiff in a
`sec. 1983 suit, such fees are subject to the
`cost-shifting provision of Rule 68"); see also
`Crossman v. Marcoccio, 806 F.2d 329, 333 (1st
`Cir. 1986) ("The Marek Court, however, did not
`reach the precise issue before us today [whether
`a defendant can recover attorney’s fees where he
`is not the prevailing party, but the plaintiff
`recovered less at trial than what the defendant
`offered in settlement] because the defendants in
`that case failed to appeal the portion of the
`district court’s order denying their request for
`post-offer attorney’s fees.").
`
`/10 See also Jones v. Fleetwood Motor Homes, 127 F.
`Supp.2d 958, 971 & n.12 (N.D. Ill. 2000); Doman-
`ski v. Funtime, Inc., 149 F.R.D. 556, 557 (N.D.
`Ohio 1993); 12 Wright & Miller, Federal Practice
`& Procedure, 3006.2, at 132 (2d ed. 1997) ("But
`the Supreme Court was careful to specify in Marek
`that only ’properly awardable’ costs were to be
`awarded to defendants, and the lower courts have
`properly held that this means that civil-rights
`defendants can recover their fees as a part of
`costs under Rule 68 only if they can satisfy the
`otherwise-applicable standard for recovery by
`defendants.").
`
`/11 See also Lucas v. Wild Dunes Real Estate, Inc.,
`197 F.R.D. 172, 1