Navigating the Waters of Voluntary Dismissals and Legal Fees: What You Need to Know

by Dennis Crouch

The Copyright Act and the Patent Act both feature a provision regarding attorney fees — allowing the district court to grant “a reasonable attorney’s fee to the winning party.” Due to the resemblance in these provisions, they are often interpreted collectively — at least concerning what constitutes a “winning party” under the statute. (In contrast to copyright law, patent law restricts fees to “exceptional case[s]”).

On the Copyright front, there exists a rising circuit split regarding whether defendants can reclaim attorney’s fees following a plaintiff’s voluntary dismissal under Rule 41(a)(1). This rule allows for voluntary dismissal and does not necessitate a court order. In Affordable Aerial Photography, Inc. v. Property Matters USA, LLC, 108 F.4th 1358 (11th Cir. 2024), the 11th Circuit determined that “some judicial action rejecting or rebuffing a plaintiff’s claim is essential to confer prevailing party status on a defendant.” In a related ruling, the 11th Circuit clarified that a plaintiff’s voluntary dismissal does not confer prevailing party status even if it is made “with prejudice.” Affordable Aerial Photography, Inc. v. Reyes, No. 23-12051, 2024 WL 4024619 (11th Cir. Sep. 3, 2024).

The Federal Circuit has developed a legal framework asserting that voluntary dismissals with prejudice can establish prevailing party status and fee awards in patent cases. See O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, 955 F.3d 990 (Fed. Cir. 2020). However, the Federal Circuit typically denies prevailing party status after dismissals without prejudice under Rule 41(a)(1). The Ninth Circuit’s approach focuses on the broader question of preclusion — inquiring whether the plaintiff is “judicially precluded from refiling the claim.” If the answer is affirmative, then the defendant qualifies as the prevailing party. Cadkin v. Loose, 569 F.3d 1142 (9th Cir. 2009). Thus, we observe a divergence among various circuits.

Property Matters has recently filed a petition for review with the Supreme Court. The case originates from a typical copyright conflict concerning the use of a real estate image. (Presidential Place Condos in Boca). The plaintiff, Affordable Aerial Photography, voluntarily withdrew its claims against one defendant under Rule 41(a)(1)(A)(i) after the defendant filed a motion to dismiss based on grounds of statute of limitations. The defendant then sought to reclaim its attorney’s fees ($22k) under § 505 of the Copyright Act, which grants courts discretion to award reasonable attorney’s fees to the prevailing party. However, the 11th Circuit concluded that Section 505 attorney fees were prohibited based on the limitation of the prevailing party.

The practical repercussion of the Eleventh Circuit’s ruling is noteworthy as it provides a straightforward route for plaintiffs to evade potential fee liability by voluntarily dismissing before any court determination, even when their claims may have been objectively unreasonable.

I would like to mention that my docket investigation reveals almost 200 copyright infringement lawsuits initiated by Affordable Aerial Photography in the past decade in the S.D. Florida. Individuals seem to be locating the photographs online and subsequently using them without authorization. AAP appears to be actively searching for infringers and pursuing them for damages. The complaints do not detail the search approach, merely stating that they entail “ongoing diligent efforts to identify unauthorized use of its photographs.”

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Another case concerning copyright attorney fees is currently awaiting review by the Supreme Court. King for Congress v. Griner — however, this one centers on fees available following a Rule 68 offer of judgment. The case stemmed from a brief usage of the well-known “Success Kid” meme by former Congressman Steve King’s campaign, which resulted in a protracted copyright dispute and yielded only minimal statutory damages of $750 for innocent infringement. Prior to trial, King for Congress made a Rule 68 offer of judgment for $15,000, which the plaintiff declined. Following the minimal damages award, King for Congress sought to recover post-offer attorney fees based on Rule 68, arguing that since 17 U.S.C. § 505 defines attorney fees as part of “costs,” they should be recoverable by a non-prevailing party who made a Rule 68 offer exceeding the ultimate judgment. I have not conducted independent research on this matter, but according to the petition, the Eleventh and Second Circuits allow such recovery, contending that if attorney fees are classified as “costs” under the relevant statute, they are recoverable under Rule 68, even by a non-prevailing party. Nevertheless, the Ninth, Seventh, First, and now Eighth Circuits have maintained that the Copyright Act’s restriction of attorney fees to “prevailing parties” prevents such recovery through Rule 68.

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Earlier in 2024, Hasbro petitioned the Supreme Court to settle the circuit split regarding attorney fee awards under Section 505 of the Copyright Act. The case emerged from extensive litigation over the authorship of The Game of Life, wherein Hasbro and Reuben Klamer ultimately triumphed against claims made by the successors of Bill Markham, a designer engaged to assist in the game’s creation. Although the district court deemed the case a “close call,” it rejected attorney fees under the First Circuit’s stringent standard, which necessitates the losing party’s position to be “objectively quite weak.” As previously mentioned, the copyright statute does not confine awards to exceptional cases. The petition emphasized what it described as a three-way circuit split regarding the appropriate standard for awarding fees under Section 505: the Fifth and Seventh Circuits adopt a presumption favoring the awarding of fees to prevailing parties, while the Eighth and Ninth Circuits assess the factors without any presumption either way, and the First Circuit uniquely requires the losing party’s position to be “objectively quite weak.” Ultimately, the court denied certiorari in March 2024.