Macro Niche Software, Inc., et al v. 4 Imaging Solutions, L.L.C.

Filing

UNPUBLISHED OPINION FILED. [14-20371 Affirmed] Judge: ECP , Judge: PRO , Judge: JEG. Mandate pull date is 06/10/2015 [14-20371]

Case: 14-20371

Document: 00513049817

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Date Filed: 05/20/2015

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

FILED
No. 14-20371
Summary Calendar

May 20, 2015
Lyle W. Cayce
Clerk

MACRO NICHE SOFTWARE, INCORPORATED; MICHAEL J.
RUTHEMEYER; R/MED, INCORPORATED,
Plaintiffs - Appellees
v.
IMAGING SOLUTIONS OF AUSTRALIA,
Defendant - Appellant

Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:12-CV-2293
Before PRADO, OWEN and GRAVES, Circuit Judges.
PER CURIAM:*
Imaging Solutions of Australia (“ISA”) prevailed in a copyright
infringement suit brought against it by Plaintiffs Macro Niche Software, Inc.,
R/MED, Inc., and Michael J. Ruthemeyer (collectively “Plaintiffs”).

ISA

appeals the district court’s denial of its motion for attorney’s fees. We affirm.

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
*

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I. Factual and Procedural Background
On August 1, 2012, Plaintiffs filed suit against, inter alia, ISA for
copyright infringement and civil conspiracy. Plaintiffs sell computer software
known as ApronCheck, which tracks the maintenance of lead aprons used by
x-ray technicians to facilitate the protection of the apron users from radiation.
ISA is a supplier of radiographic products, including lead aprons, to
Australian, New Zealand, and Southeast Asian markets.

Plaintiffs’ suit

claimed that they and ISA discussed marketing the ApronCheck software in
Australia and that the parties began to work on joint marketing materials but
never reached a definitive agreement. ISA subsequently was involved in the
release of competing apron-tracking software named RadTrack. Plaintiffs’
infringement suit claimed that RadTrack is substantially similar to
ApronCheck and was developed using the Plaintiffs’ protected intellectual
property.

ISA filed counterclaims against the Plaintiffs for negligent

misrepresentation and fraudulent misrepresentation.
On December 27, 2013, the district court granted ISA’s motion for
summary judgment on the Plaintiffs’ copyright and civil conspiracy claims.
The district court found that while Plaintiffs claimed RadTrack in its entirety
was substantially similar to ApronCheck, Plaintiffs failed to produce evidence
that would allow it to perform the necessary abstraction and filtration steps of
this circuit’s test for software copyright infringement. See., e.g., Computer
Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 400-01 (5th Cir.
2000) (describing the “abstraction-filtration” method).

After summary

judgment, the only remaining issues between Plaintiffs and ISA were ISA’s
counterclaims.

Due to Plaintiffs’ failure to adequately answer the

counterclaim allegations, the district court deemed them admitted. After a
trial on the issue of damages, a jury awarded ISA $129,607.00.
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ISA then filed a motion seeking $239,723.30 in attorney’s fees,
$35,265.57 in costs, and pre-judgment and post-judgment interest on the
damages award. The district court denied attorney’s fees, but awarded ISA
costs and interest. ISA appeals the denial of attorney’s fees.
II. Discussion
We review the district court’s refusal to award attorney’s fees in a
copyright infringement case for abuse of discretion. Virgin Records Am., Inc.
v. Thompson, 512 F.3d 724, 725 (5th Cir. 2008) (citing Positive Black Talk Inc.
v. Cash Money Records, Inc., 394 F.3d 357, 380 (5th Cir. 2004)). “A trial court
abuses its discretion in awarding or refusing to award attorney’s fees when its
ruling is based on an erroneous view of the law or a clearly erroneous
assessment of the evidence.” Id. (quoting Positive Black Talk, 394 F.3d at 380).
“The Copyright Act of 1976, 17 U.S.C. § 505, provides in relevant part
that in any copyright infringement action ‘the court may . . . award a
reasonable attorney’s fee to the prevailing party as part of the costs.’” Fogerty
v. Fantasy, Inc., 510 U.S. 517, 519 (1994) (quoting 17 U.S.C. § 505). “Prevailing
plaintiffs and prevailing defendants are to be treated alike, but attorney’s fees
are to be awarded to prevailing parties only as a matter of the court’s
discretion.” Id. at 534. An award of attorney's fees to the prevailing party in
a copyright action is “the rule rather than the exception and should be awarded
routinely.” Virgin Records, 512 F.3d at 726 (quoting Positive Black Talk, 394
F.3d at 380). However, “recovery of attorney’s fees is not automatic.” Id.; see
Fogerty, 510 U.S. at 533-34 (rejecting a proposed automatic-recovery rule). In
Fogerty, the Supreme Court listed several non-exclusive factors that a court
may consider in exercising its discretion: “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case)
and the need in particular circumstances to advance considerations of
compensation and deterrence.” Fogerty, 510 U.S. at 534 n.19 (quoting Lieb v.
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Topstone Industries, Inc., 788 F.2d 151, 156 (3rd Cir. 1986)); see Virgin Records,
512 F.3d at 726.

“There is no precise rule or formula for making these

determinations,” but instead the district court must exercise equitable
discretion in light of the considerations identified by the Supreme Court.
Fogerty, 510 U.S. at 519 (quoting Hensley v. Eckerhart, 461 U.S. 424, 436-37
(1983)); see Virgin Records, 512 F.3d at 726-27. We have previously affirmed
the denial of attorney’s fees in copyright infringement cases where the district
court fully considered and applied the relevant factors when denying fees. See
Virgin Records, 512 F.3d at 726-27; Positive Black Talk, 394 F.3d at 381-83;
Creations Unlimited, Inc. v. McCain, 112 F.3d 814, 817 (5th Cir. 1997).
In this case, the district court correctly set forth the standards, including
the text of 17 U.S.C. § 505, the principle that fee awards for prevailing parties
are the rule rather than the exception, its own discretion, and the nonexclusive list of Fogerty factors. The district court then applied each of the
factors to the facts of this case, concluded that all of the factors weighed against
awarding attorney’s fees to ISA, and gave a reasonable explanation for its
analysis of each factor. Specifically, the court found that although Plaintiffs
lost at summary judgment, their claims were neither frivolous nor objectively
unreasonable. The court pointed out that Plaintiffs provided two experts who
stated that the two software programs were substantially similar, that ISA
had access to Plaintiffs’ intellectual property due to a prior relationship, and
that software copyright infringement is complex and often requires experts to
differentiate protectable elements from non-protectable elements. The court
also found that there was no evidence of bad faith motivation on the Plaintiffs’
part, and because the claims were not unreasonable and there was no bad
faith, the need for compensation and the deterrence of future unmeritorious
suits would not be served by an award of attorney’s fees in this case. The
district court stated that it considered the entire record and found no reason to
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depart from the outcome dictated by application of these factors, and thus
denied ISA’s motion for attorney’s fees.
Although Plaintiffs were unsuccessful at adequately differentiating
protectable and non-protectable elements of the software program on summary
judgment, there is no basis to overturn the district court’s assessment of
Plaintiffs’ claims or its conclusion that attorney’s fees are not appropriate in
this case. We find no abuse of discretion in the district court’s denial of
attorney’s fees.
III. Conclusion
For the foregoing reasons, the district court’s denial of attorney’s fees is
AFFIRMED.

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