Copyright Act Does Not Preempt Contractual Fee-shifting Claim: Ninth Circuit | Practical Law

Copyright Act Does Not Preempt Contractual Fee-shifting Claim: Ninth Circuit | Practical Law

Reviewing an issue of first impression, the US Court of Appeals for the Ninth Circuit in Ryan v. Editions Ltd. West, Inc. held that the Copyright Act does not preempt the enforcement in copyright litigation of a contractual fee-shifting provision between licensing partners.

Copyright Act Does Not Preempt Contractual Fee-shifting Claim: Ninth Circuit

Practical Law Legal Update 1-614-1965 (Approx. 4 pages)

Copyright Act Does Not Preempt Contractual Fee-shifting Claim: Ninth Circuit

by Practical Law Intellectual Property & Technology
Published on 22 May 2015 • USA (National/Federal)
Reviewing an issue of first impression, the US Court of Appeals for the Ninth Circuit in Ryan v. Editions Ltd. West, Inc. held that the Copyright Act does not preempt the enforcement in copyright litigation of a contractual fee-shifting provision between licensing partners.
On May 19, 2015, in Ryan v. Editions Ltd. West, Inc., the US Court of Appeals for the Ninth Circuit held, on an issue of first impression, that the Copyright Act did not preclude Ryan from enforcing a contractual attorney fee-shifting provision in a copyright contributory infringement claim (Nos. 12-17810, 13-15061, (9th Cir. May 19, 2015)). Although Ryan was entitled to attorney fees under the provision, the court vacated and remanded the district court's fee calculation.
Artist Victoria Ryan entered into a licensing agreement with Editions Ltd. West, Inc. (ELW) for ELW to publish Ryan's artwork in exchange for royalties. The agreement included a provision awarding costs and attorney fees to the prevailing party in the event of litigation. After suspecting ELW of supplying third-parties with posters of her artwork for the purpose of creating derivative works, Ryan filed suit, accusing ELW of violating the agreement, the Copyright Act and California law. In a bench trial, the US District Court for the Northern District of California found ELW liable for contributory copyright infringement. Due to a failure to timely register her copyright, Ryan was unable to recover fees under the Copyright Act (17 U.S.C. § 412), however as the prevailing party under the agreement with ELW, Ryan submitted evidence for a claim of attorney fees of $328,077.50. The district court determined that although the Copyright Act did not preclude enforcement of the agreement's fee-shifting provision, Ryan was entitled to only a fraction of her requested fees. Both parties appealed.
On appeal, the Ninth Circuit agreed with the district court that the license agreement allowed Ryan to collect fees. The Ninth Circuit held that the Copyright Act did not preempt Ryan's claims under the agreement either:
The Ninth Circuit held the Copyright Act did not expressly preempt the fee-shifting provision because Ryan's cause of action under the agreement survived the two-part test to exclude her claim from §301(a) when:
  • Ryan's work at issue, artwork, fell within the scope of copyright subject matter.
  • Though Ryan's work was copyright subject matter, her state cause of action contained an extra element that removed it from the Copyright Act's scope. A contractually-based claim, like enforcing the agreement's fee-shifting provision here, implicates rights outside of the copyright claim.
Additionally, the Ninth Circuit held there was no implicit preemption either, because:
  • It was possible for the parties to comply with both the Copyright Act and California's § 1021 (Cal. Civ. Proc. Code § 1021).
  • The state law would not undermine the purposes of the Copyright Act, specifically § 412 (17 U.S.C. § 412). Congress added § 412 to encourage copyright holders to publicly register their copyrights before suit as a predicate to recovering extraordinary remedies. Because this case involved contracting parties seeking to enforce a private agreement, having a public record of the copyright at the time of infringement was not a serious concern. Therefore, enforcing the contract provision did not obstruct the purposes of § 412.
The Ninth Circuit concluded that the district court correctly determined Ryan was entitled to attorney fees since there was no preemption. However, because the district court abused its discretion in calculating those fees and by inadequately explaining its calculations, the Ninth Circuit vacated and remanded to the district court. The Ninth Circuit also affirmed the district court's rulings on evidentiary issues and denying Ryan's motion for leave to amend her complaint.