Question for Oscar

[Helpi]

Assume innocent infringement and no defenses to the infringement claim. If it goes to judgement, presumably the court will award Getty something because there is no liability issue.

Can defendant place Getty at risk of paying costs + attorney fees by making a Rule 68 offer of say $400 ? (More than the low end $200 that could be awarded to Getty.)  

More generally can you explain how Rule 68 works in the context of infringement actions and specifically low dollar actual damages and/or innocent infringement cases ?

Thanks.

[Oscar Michelen]

OK, tough question to answer fully in a forum like this, even though I am a law professor. Simply stated Rule 68 says that if the defendant makes an offer of judgment at least 10 days prior to trial which is rejected by the plaintiff, and after the trial the plaintiff receives less than the offer, then the plaintiff must pay the defendant's costs from the point after the offer.  It sounds great but it is of limited value, which is why it was not previously discussed here. Here's why:

(1) It has to be an offer of JUDGMENT not an offer of settlement; therefore the judgment is on the record and is an admission of liability of everything in the complaint. A settlement is normally confidential and not an admission of wrongdoing.
(2) You only get your COSTS not your attorney's fees.  Attorney's fees are part of "costs" only in cases that have a "fee-shifting" section Fee-shifting means the winner gets his attorneys fees as well as damages. Two examples are civil rights cases and employment discrimination cases. Rule 68 is employed in those types of cases because if the plaintiff gets less than the offer, the plaintiff has to pay the other sides costs, which now include fees under the statute. Since the Copyright Act is NOT a fee-shifting statute, costs only include actual out of pocket expenses attributable to the case, like certain filing fees and maybe the cost of a deposition transcript. A few hundred bucks normally.

So most of the time the defendant does not feel it is worth the admission of guilt to save a  few hundred dollars. This is a very BRIEF summary of Rule 68 but I think it answers your question.  If not let me know  Thanks for the post!

[Helpi]

"You only get your COSTS not your attorney's fees."

So I took a look around.

I understand how Rule 68 isn't that helpful if the only thing at play are costs and not attorney fees. But how is your statement to that effect correct in light of this (emphasis added by me):

"In the context of copyright law, the Seventh Circuit has held that the offer of judgment does nothing to make fees payable to the defendant, while the Eleventh Circuit and a district court of the Fourth Circuit have reached the opposite conclusion. "

http://www.metrocorpcounsel.com/current.php?artType=view&artMonth=June&artYear=2004&EntryNo=1108

This author of the "Copyright Litigation handbook" cites the district court case (Lucas v. Wild Dunes Real Estate, Inc., 197 F.R.D. 172 (D.S.C. 2000)) for this "practice tip".

"Practice Tip: If you receive an offer of judgment, advise your client in writing that a failure to accept may result in a liability for attorney's fees if the recovery does not exceed the offer."

"In Lucas v. Wild Dunes Real Estate, a case involving copyright infringement of a photograph, the defendant presented an offer of judgment to the plaintiff in the amount of $15,000. The plaintiff rejected the offer. Subsequently, at trial, the jury awarded the plaintiff $4,120.40 on the copyright infringement claim. The defendant then filed a motion seeking costs, including attorney's fees. Even though the plaintiff technically “won” the copyright claim, the court refused to consider the plaintiff the “prevailing party” for purposes of awarding costs and attorney's fees because the plaintiff recovered less than the defendant's offer of judgment. Instead, the court interpreted the cost-shifting provision of Rule 68 of the Federal Rules of Civil Procedure to include attorney's fees and awarded the defendant costs, including attorney's fees. The court reasoned that the judgment for the plaintiff of $4,120.40 was less favorable than the defendant's offer, therefore the plaintiff must pay “costs” which included attorney's fee as indicated by the underlying copyright statute."

http://copyrightlitigation.blogspot.com/2010/04/umg-v-veoh-response-to-eric-goldman.html

[Oscar Michelen]

This is why I hesitated to answer your first question.  This is a very esoteric and conflicting area of law and it is nearly impossible for me to try and explain all the nuances of copyright law and federal litigation in general.  The best I can do is explain that under copyright law section 505 the "prevailing party" CAN get legal fees (for violations of registered works anyway).  So the court usually decides who is the prevailing party:  The plaintiff who won the case or the defendant who only lost less than the amount of his offer? The discrepancy between the way courts view this issue (505) and not rule 68 is normally why you see courts split on whether an offer of judgment letter is valid. I just don't have time to get further into it and hope this helps.

[Helpi]

Thanks for the reply.

I was only trying to understand whether Getty has to think at all about a risk of paying attorney fees if they reject such an offer :

""Can defendant place Getty at risk of paying costs + attorney fees by making a Rule 68 offer of say $400 ? (More than the low end $200 that could be awarded to Getty.) "

So where does this leave us ?

"No" or "maybe" or it's so uncertain I don't consider recovering attorney fees when contemplating making such an offer in an infringement suit ?