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Kirtsaeng v. John Wiley & Sons, Inc.

Held: 1. When deciding whether to award attorney’s fees under §505, a district court should give substantial weight to the objective reasonableness of the losing party’s position, while still taking into account all other circumstances relevant to granting fees. Pp. 3–11.

(a) Section 505 states that a district court “may . . . award a reasonable attorney’s fee to the prevailing party.” Although the text “clearly connotes discretion” and eschews any “precise rule or formula,” Fogerty v. Fantasy, Inc., 510 U. S. 517, the Court has placed two restrictions on that authority: First, a court may not “award[ ] attorney’s fees as a matter of course,” id., at 533; and second, a court may not treat prevailing plaintiffs and prevailing defendants differently, id., at 527. The Court also noted “several nonexclusive factors” for courts to consider, e.g., “frivolousness, motivation, objective unreasonableness[,] and the need in particular circumstances to advance considerations of compensation and deterrence,” id., at 534, n. 19, and left open the possibility of providing further guidance in the future, id., at 534–535.

This Court agrees with both Kirtsaeng and Wiley that additional guidance respecting the application of §505 is proper so as to further channel district court discretion towards the purposes of the Copyright Act. In addressing other open-ended fee-shifting statutes, this Court has emphasized that “in a system of laws discretion is rarely without limits,” and it has “found” those limits by looking to “the large objectives of the relevant Act.” Flight Attendants v. Zipes, 491 U. S. 754, 759. In accord with such precedents, this Court must determine what approach to fee awards under §505 best advances the well-settled objectives of the Copyright Act, which are to “enrich[ ] the general public through access to creative works” by striking a balance between encouraging and rewarding authors’ creations and enabling others to build on that work. Fogerty, 510 U. S., at 527, 526. Fee awards should thus encourage the types of lawsuits that advance those aims. Pp. 3–6.

(b) Wiley’s approach—to put substantial weight on the reasonableness of a losing party’s position—passes this test because it enhances the probability that creators and users (i.e., plaintiffs and defendants) will enjoy the substantive rights the Act provides. Parties with strong positions are encouraged to stand on their rights, given the likelihood that they will recover fees from the losing (i.e., unreasonable) party; those with weak ones are deterred by the likelihood of having to pay two sets of fees. By contrast, Kirtsaeng’s proposal—to give special consideration to whether a suit meaningfully clarified copyright law by resolving an important and close legal issue—would produce no sure benefits. Even accepting that litigation of close cases advances the public interest, fee-shifting will not necessarily, or even usually, encourage parties to litigate those cases to judgment. While fees increase the reward for a victory, they also enhance the penalty for a defeat—and the parties in hard cases cannot be confident if they will win or lose.

Wiley’s approach is also more administrable. A district court that has ruled on the merits of a copyright case can easily assess whether the losing party advanced an unreasonable position. By contrast, a judge may not know whether a newly decided issue will have broad legal significance. Pp. 6–10.

(c) Still, objective reasonableness can be only a substantial factor in assessing fee applications—not the controlling one. In deciding whether to fee-shift, district courts must take into account a range of considerations beyond the reasonableness of litigating positions. Pp. 10–11. 2. While the Second Circuit properly calls for district courts to give “substantial weight” to the reasonableness of a losing party’s litigating positions, its language at times suggests that a finding of reasonableness raises a presumption against granting fees, and that goes too far in cabining the district court’s analysis. Because the District Court thus may not have understood the full scope of its discretion, it should have the opportunity to reconsider Kirtsaeng’s fee application. On remand, the District Court should continue to give substantial weight to the reasonableness of Wiley’s position but also take into account all other relevant factors. Pp. 11–12.

605 Fed. Appx. 48, vacated and remanded.

KAGAN, J., delivered the opinion for a unanimous Court.

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