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International Institute of Management v. Organization for Economic Cooperation and Development

United States District Court, D. Nevada

October 29, 2019




         Presently before the court is defendants Joseph Stiglitz and the Organization for Economic Cooperation and Development's (“OECD”) joint motion for attorney's fees and taxable and nontaxable costs. (ECF No. 67). Plaintiff International Institute of Management (“IIM”) filed a response (ECF No. 71), to which defendants replied (ECF No. 72).

         I. Background

         This was a copyright infringement action in which IIM alleged that the OECD, a Paris-based intergovernmental organization for economic research and policy, and Stiglitz, a Nobel laureate and professor of economics at Columbia University, stole credit for IIM's work on using non-GDP factors to measure the well-being of countries. (ECF No. 1).

         IIM is a small Nevada think tank that publishes economics papers on the internet. Id. In 2005, IIM published a two-page paper titled “Gross National Well-being (GNW) Index” (“2005 paper”). Id. The 2005 paper generally discusses the idea of using non-GDP factors to measure the well-being of countries and provides seven factors that such an index might use. (ECF No. 23-2). The 2005 paper does not show how to use these factors to measure a country's well-being. Id.

         In 2006, IIM published a second paper titled “The American Pursuit of Unhappiness” (“2006 paper”). (ECF No. 1). The 2006 paper is six pages long and generally discusses why a nation's happiness should be measured with non-GDP factors. (ECF No. 23-3). The paper also elaborates on non-GDP factors that various measurement approaches might use. Id. Like the 2005 paper, the 2006 paper does not provide any solution on how to measure the well-being of countries with non-GDP factors. Id.

         The OECD's Commission on the Measurement of Economic Performance and Social Progress (the “commission”) conducts research on measuring the well-being of countries. (ECF No. 1). Stiglitz, who is a resident of New York, is the chairman of the commission and substantially contributed to various reports and articles that the commission published. Id.

         In 2009, the commission published a 291-page report titled “Report by the Commission on the Measurement of Economic Performance and Social Progress” (“2009 report”). (ECF Nos. 1, 23-4). Twenty-two commissioners, five of whom are Nobel laureates, wrote the 2009 report, which discusses the limits of GDP as an indicator of economic performance. (ECF No. 23-4). The report also extensively addresses problems with various measurement techniques and how to improve upon existing methods to determine the well-being of countries. Id.

         In 2011, the OECD created the Better Life Index, which uses non-GDP factors to measure the well-being of countries. (ECF No. 23-5). The OECD published the index on the internet on an interactive website that millions of people have used to compare the well-being of countries. Id. According to the complaint, Stiglitz is also selling a book on which contains material from IIM's copyright protected works. (ECF No. 1). IIM alleges that the 2009 report, the Better Life Index, and Stiglitz' book infringe on its copyrights in the 2005 and 2006 papers. Id.

         On September 10, 2018, IIM initiated this action, asserting four causes of action: (1) copyright infringement; (2) vicarious and/or contributory copyright infringement; (3) unfair competition; and (4) false advertising in violation of the Lanham Act. Id. On June 20, 2019, the court granted defendants' motions to dismiss (ECF Nos. 19, 21) and dismissed this action without prejudice for a lack of personal jurisdiction over defendants (ECF No. 64).

         Now, defendants move for the award of attorney's fees and taxable and nontaxable costs. (ECF No. 67).

         II. Legal Standard

         The Copyright Act provides that “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.” 17 U.S.C. § 505. The court may “award a reasonable attorney's fee to the prevailing party as part of the costs.” 17 U.S.C. § 505. Section 505 grants district courts “broad leeway” in considering motion's for attorney's fees. Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1985 (2016) (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)). However, courts must employ a case-by-case analysis and encourage meritorious defenses to the same extent they encourage meritorious copyright claims. Fogerty, 510 U.S. at 518.

         In considering whether to award attorney's fees under Section 505, a district court may consider a nonexclusive list of factors, which include “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014); see also Fogerty, 510 U.S. at 539 n. 19. A district court should give substantial weight to the objective reasonableness factor. Kirtsaeng, 136 S.Ct. at 1988. Courts in the Ninth Circuit also consider “the degree of success obtained on the claim” and “whether the chilling effect of attorney's fees may be too great or impose an inequitable burden on an impecunious plaintiff.” VMG Salsoul, LLC v. Ciccone, 824 F.3d 871, 887 (9th Cir. 2016); Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763, 766 (9th Cir. 2003).

         The Lanham Act also provides for the award of attorney's fees to the prevailing party, though such an award is warranted only in “exceptional cases.” 15 U.S.C. § 1117. A district court analyzing a request for attorney's fees under the Lanham Act considers the “‘totality of the circumstances' to determine if the case was exceptional, exercising equitable discretion in light of the nonexclusive factors identified in Octane Fitness and Fogerty, and using a preponderance of the evidence standard.” SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., 839 F.3d 1179, 1181 (9th Cir. 2016) (internal citations omitted). An “‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position ... or the unreasonable manner in which the case was litigated.” Memory Lane, Inc. v. Classmates, Inc., 646 Fed.Appx. 502, 504 (2016).

         Both the Copyright Act and Lanham Act permit courts to award attorney's fees to a “prevailing party.” 17 U.S.C. § 505; 15 U.S.C. § 1117. A prevailing party does not need to obtain a ruling on the merits to obtain attorney's fees. CRST Van Expedited, Inc. v. EEOC, 136 S.Ct. 1642, 1646 (2016) (finding that “[t]here is no indication that Congress intended that defendants should be eligible to recover attorney's fees only when courts dispose of claims on the merits”); see also Amphastar Pharm., Inc. v. Aventis Pharma SA, 856 F.3d 696, 710 (9th Cir. 2017) (“we conclude that the Supreme Court has effectively overruled Branson's holding that when a defendant wins because the action is dismissed for lack of subject matter jurisdiction he is never a prevailing party.”).

         III. Discussion

         As a preliminary matter, IIM argues that defendants do not satisfy the “prevailing party” requirement of the Copyright Act, and thus cannot recover attorney's fees. (ECF No. 71). Specifically, IIM contends that only a judgment on the merits can give rise to attorney's fees under Section 505, and that “there is no prevailing party in a Copyright Act case when the case is voluntarily dismissed without prejudice.” Id.

         These arguments are without merit. Following the Supreme Court's decision in CRST Van Expedited, a defendant is not required to obtain a favorable judgment on the merits in order to recover attorney's fees. 136 S.Ct. at 1646. Further, nothing in CRST Van Expedited indicates that a dismissal without prejudice necessarily changes the calculus. Nonmerits dismissals are often without prejudice, and this fact appears to have had no effect on the determination that a defendant may prevail where “the court's final judgment rejects the plaintiff's claim for a nonmerits reason.” Id. at 1651.

         Here, the court dismissed this action without prejudice based on a lack of personal jurisdiction over defendants. Defendants have thus successfully rebuffed IIM's challenge in this action. Accordingly, the court finds that defendants have satisfied the “prevailing party” requirement of Section 505 of the Copyright Act.

         a. Attorney's fees under the Copyright Act

         The following factors weigh in favor of awarding attorney's fees here: objective unreasonableness, degree of success obtained, absence of chilling effect, and the need to advance considerations of compensation and deterrence.

         1. Objective unreasonableness

         A claim is objectively unreasonable where the party advancing it “should have known from the outset that its chances of success in th[e] case were slim to none.” SOFA Entm't v. Dodger Prods., Inc., 709 F.3d 1273, 1280 (9th Cir. 2013). “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 Productions Inc. v. Kast, No. 5:13-cv-05472-HRL, 2016 WL 3951659, at *2 (N.D. Cal. July 22, 2016) (citation omitted).

         IIM sought to hale a New York citizen and a foreign organization into a Nevada federal court based on the bare allegations that defendants operated the Better Life Index on a website, sold a book with allegedly infringing materials on, and published the 2009 report online. (ECF No. 1). In granting defendants' motions to dismiss, the court found that “the complaint does not contain any allegations of specific conduct related to Nevada other than IIM's contacts with the forum.” (ECF No. 64). Based on unambiguous Ninth Circuit authority, the court also held that “merely uploading materials on a passive website and placing products in the stream of commerce are not affirmative acts that directly target Nevada.” Id.

         IIM's attempt to establish personal jurisdiction based on these allegations had slim to no chance of success. Accordingly, the court finds that this suit was legally objectively unreasonable.

         2. Degree of success obtained

         Although defendants did not obtain a substantive judgment on the merits, they were successful insofar as this suit was dismissed for a lack of personal jurisdiction. This dismissal does not bar IIM from refiling in another jurisdiction, but it does terminate further litigation in Nevada. While this is likely not defendants' preferred outcome, it is without question that they have obtained at least a modicum of success in having this action dismissed.

         3. Chilling effect

         IIM has not alleged that it lacks the resources to pay an award or that it will be deterred from seeking to enforce valid copyrights in the future. Rather, IIM argues that “[w]ithout protection from retaliation against good-faith and non-merit issues, few, if any, of the victims of copyright infringement … will come forward to claim their right, and the end result will be increased infringement and decreased incentive to invest in creating new works when dealing with defendants with large pockets.” (ECF No. 71).

         The court finds this argument unavailing. That this case may have been brought in good faith and was not dismissed on the merits has little bearing on whether victims of copyright infringement will continue to bring suit. An award of attorney's fees here serves ...

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