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Pythagoras Intellectual Holdings, LLC v. Stegall

October 5, 2009

PYTHAGORAS INTELLECTUAL HOLDINGS, LLC, PLAINTIFF,
v.
STEVEN STEGALL, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Andrew J. Guilford United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR ATTORNEY FEES

This case involved claims for patent, copyright, and trademark infringement. Defendants Steven Stegall and A.M. Sokoloski-Stegall, both individually and doing individually and doing business as Fire on Ice Central Coast and doing business as Fire Crystals, also known as Firecrystals ("Defendants") filed a Motion to Recover Fees and Costs. After considering all arguments submitted, the Motion for attorney fees is GRANTED in part and DENIED in part.

BACKGROUND

Plaintiffs filed their Complaint on January 25, 2008 and the First Amended Complaint ("FAC") on April 9, 2008. The FAC alleged, among other things, patent, copyright, and trademark infringement.

Between September 15, 2008 and July 27, 2009, the Court granted three Motions to Withdraw as Counsel for Plaintiffs. Each time, the Court expressed concern due to the number of Defendants, the amount of attorney fees and costs being incurred by the Defendants, possible prejudice to Defendants due to the withdrawal, and the amount of time elapsed since the Complaint had been filed. (Order Dismissing Case, August 24, 2009 ("Dismissal Order") Docket No. 364, ¶¶ 2, 5, 10.)

On July 23, 2009, the Court granted a Motion for Summary Judgment in favor of several defendants. (Order Granting Motion for Summary Judgment ("Summary Judgment Order"), Docket No. 352). The Court found that Plaintiffs did not produce sufficient evidence to go forward with any of its claims. The Defendants moving in this Motion did not join in the Motion for Summary Judgment. After the Court granted the Motion for Summary Judgment, the Court dismissed the remainder of the case with prejudice. (Dismissal Order, Docket No. 364.) All of Plaintiffs' claims against Defendants were dismissed. Defendants now move to recover costs and attorney fees incurred defending against Plaintiffs' copyright, trademark, and patent infringement claims under the attorney fee provisions of the Copyright Act, 17 U.S.C. § 505, the Lanham Act, 15 U.S.C. § 1117, and the Patent Act, 35 U.S.C. § 285. (Motion 4:9-12, 18-19, 25-27.)

ANALYSIS

Defendants ask the Court to award attorney fees incurred in the defense of Plaintiffs' copyright, trademark, and patent infringement claims. (Motion 4:9-12, 18-19, 25-27.)

1. ATTORNEY FEES UNDER THE COPYRIGHT ACT

Under the Copyright Act, courts may award reasonable attorney fees to the prevailing party in a copyright claim as a part of the costs. 17 U.S.C. § 505. In Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), the Supreme Court held that the prevailing party language in 17 U.S.C. § 505 included prevailing defendants. In determining whether to award attorney fees to a prevailing party under the Copyright Act, a district court may consider: (1) the degree of success obtained by the prevailing party; (2) frivolousness of the losing party's claim; (3) the motivation of the losing party; (4) the reasonableness of the losing party's legal and factual arguments; and (5) the need to advance considerations of compensation and deterrence. See Wall Data Inc. v. L.A. County Sheriff's Dep't, 447 F.3d 769, 787 (9th Cir. 2006); Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763, 766 (9th Cir. 2003). The Court finds that, on balance, the factors weigh in favor of awarding attorney fees.

First, the degree of success obtained by Defendants was high because the Court dismissed all of Plaintiffs' claims against Defendants.

Second, the Court finds that the need for compensation here is strong. Plaintiffs failed to provide evidentiary support for their copyright infringement claim. After defense counsel submitted appropriate discovery requests to Plaintiffs, Plaintiffs failed to timely respond and subsequently served insufficient responses. (Reagan Decl. ¶ 11.) Plaintiffs had numerous chances to withdraw their claims before those claims were dismissed. Because Plaintiffs did not do so, Defendants' attorneys were obligated, as zealous advocates for their clients, to take the complaint seriously and vigorously defend their clients.

Third, the Court finds that Plaintiffs' claims were frivolous. Plaintiffs failed to allege how Defendants infringed upon the Plaintiffs' copyright. Further, Plaintiffs failed to produce information in discovery regarding Defendants' conduct. The Court finds that Plaintiffs knew that the copyright claims were unfounded, yet continued to argue those claims.

Finally, the Court finds that the need for deterrence here is strong. An award of fees in this case will deter Plaintiffs from filing and arguing frivolous and baseless claims in the future. An award of fees will also encourage Plaintiffs to withdraw future claims when Plaintiffs discover that the claims are no longer viable. Further, an award of fees will encourage Plaintiffs to choose defendants carefully in future suits and ensure that Plaintiffs have a reasonable basis for each claim against each defendant. After ...


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