Public.Resource.org v. Sheet Metal and Air Conditioning Contractors' National Association, Inc.

Filing 29

RESPONSE (re 22 MOTION for Default Judgment by the Court as to Defendant Sheet Metal and Air Conditioning Contractors' National Association, Inc. ) filed bySheet Metal and Air Conditioning Contractors' National Association, Inc.. (Attachments: # 1 Attachment A)(Napolitan, Nicholas) (Filed on 6/17/2013)

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ANDREW E. MONACH (CA SBN 87891)
[e-mail]
NICHOLAS S. NAPOLITAN (CA SBN 251762)
[e-mail]
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone: [phone]
Facsimile: 415.268.7522
Attorneys for Defendant
SHEET METAL AND AIR CONDITIONING
CONTRACTORS’ NATIONAL ASSOCIATION, INC.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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PUBLIC.RESOURCE.ORG,

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Plaintiff,
v.
SHEET METAL AND AIR CONDITIONING
CONTRACTORS’ NATIONAL ASSOCIATION,
INC.,

Case No.

cv-13-0815 (SC)

DEFENDANT’S MEMORANDUM
OF LAW IN PARTIAL
OPPOSITION TO PLAINTIFF’S
MOTION FOR DEFAULT
JUDGMENT AND IN
OPPOSITION TO REQUEST FOR
ATTORNEYS’ FEES

Defendant.

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DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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INTRODUCTION

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Defendant Sheet Metal and Air Conditioning Contractors’ National Association

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(“SMACNA”) submits this memorandum primarily to oppose Plaintiff’s request for attorneys’

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fees related to its Motion for Default Judgment. The request for attorneys’ fees is not

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procedurally proper at this time under Local Rule 54-5, and should be rejected on that basis alone.

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But to avoid any claim of waiver, SMACNA sets forth its substantive objections to any award of

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fees in this case.

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SMACNA has made an economically rational decision not to litigate its legitimate
copyright claims so that this case may be brought to an end now, without further expense to the

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parties or further expenditure of judicial resources. SMACNA submits this brief for the sole

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purpose of opposing Plaintiff’s unwarranted request for attorneys’ fees and for an injunction.

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In the interest of avoiding unnecessary expenses, SMACNA submits that this matter

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should be decided on the papers, and that oral argument is unnecessary. SMACNA requests that

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the Court deny Plaintiff’s request for attorneys’ fees and cancel the hearing set for July 19, 2013.

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BACKGROUND

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SMACNA is a non-profit, international association of sheet metal contractors that

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develops and publishes technical standards, safety guidelines and manuals for its members.

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(Sandusky Decl. ¶ 2; see also http://www.smacna.org/about/.) SMACNA customarily files for

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copyrights on its published materials with the United States Copyright Office and receives

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revenue from these copyrighted materials. (Sandusky Decl. ¶ 3.)

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SMACNA is the holder of a registered copyright for its 1985 HVAC Air Duct Leakage

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Test Manual (hereafter, the “Disputed Copyrighted Publication”). (See Compl. Ex. A.) The

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Disputed Copyrighted Publication contains a cover page with an explicit copyright notice,

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including the following recital:

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Except as allowed in the Notice to Users and in certain licensing
contracts, no part of this book may be reproduced, stored in a
retrievable system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of the publisher.

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(Id.)
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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Despite SMACNA’s federally-registered copyright and the aforementioned copyright

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notice, Plaintiff Public.Resource.Org posted the Disputed Copyrighted Publication on its website

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without authorization or permission from SMACNA. SMACNA sent several cease and desist

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letters before Plaintiff removed the Disputed Copyrighted Publication from its website. (See

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Compl. Exs. B-C.) Plaintiff then filed its Complaint, seeking to invalidate SMACNA’s copyright

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and arguing that SMACNA’s copyrighted work became public property when the government

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incorporated the Disputed Copyrighted Publication by reference into a federal regulation. See 10

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C.F.R. § 434.403.2.9.3.

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Once Plaintiff filed this suit, it became apparent to SMACNA that Plaintiff would use this

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litigation to pursue a public policy agenda. (Sandusky Decl. ¶ 6.) Indeed, Plaintiff appears to be

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a well-funded organization with a principal and attorneys intent on pursuing public policy change

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via litigation. (Id.; see also Brendan Greeley, One Man’s Quest to Make Information Free,

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Businessweek, Apr. 12, 2012 (attached as Sandusky Decl. Ex. A).) Plaintiff bluntly

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acknowledges that this case is part of its “mission,” which has “come to encompass the

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publication of health and safety codes that federal, state and local governments have incorporated

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into law.” (Pl.’s Mot. for Default J. at 1:10-11, 2:5-7.)

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SMACNA must make difficult decisions based on its limited resources. (Sandusky Decl.

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¶ 6.) While SMACNA has a solid legal claim based on its valid and enforceable copyright,

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SMACNA no longer sells the Disputed Copyrighted Publication because it has been superseded

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by other publications. (Id., ¶¶ 3, 6; Compl. ¶¶ 41-42.) It therefore made little sense to protect this

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copyright by expending hundreds of thousands of dollars over many years against an opponent

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with substantial resources. (Sandusky Decl. ¶ 6.) Consequently, once the situation became clear,

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SMACNA made a reasoned decision not to respond to the Complaint, rather than to spend large

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sums of money to enforce this particular copyright.

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SMACNA informed Plaintiff that it would not be filing a responsive pleading to the

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Complaint. (Farnsworth Decl. ¶ 3.) SMACNA and its counsel did so in the belief that this

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approach would put the matter to rest without any additional expense. (Id.) The clerk for the

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Northern District of California entered default in Plaintiff’s favor on or about May 5, 2013.
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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(Docket No. 20.) Plaintiff then submitted a voluminous Motion for Default Judgment and

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requested its attorneys’ fees. (Docket No. 22.)

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SMACNA opposes the request for attorneys’ fees because under governing Ninth Circuit

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law, attorneys’ fees in a copyright action are typically awarded if the copyright holder asserted

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and pursued a frivolous or bad faith claim, or the award of fees would otherwise advance the

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purposes of the Copyright Act. Here, the situation is the opposite. Although SMACNA had a

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good-faith basis for pursuing a copyright infringement action under governing Ninth Circuit law,

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it has elected not to pursue such an action, not to litigate the continuing copyright in the Disputed

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Copyrighted Publication, and to file a binding covenant not to sue, to put this manufactured

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dispute to rest.

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ARGUMENT

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I.

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Plaintiff seeks its attorneys’ fees in conjunction with its Motion for Default. (Pl.’s Mot.

ATTORNEYS’ FEES SHOULD NOT BE AWARDED.

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for Default J. at 24.) Plaintiff failed to cite any applicable statute or case law to support its

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request for attorneys’ fees in its motion. Plaintiff is presumably relying on 17 U.S.C. § 505 of the

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Copyright Act. That statute provides:

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In any civil action under this title, the court in its discretion may
allow the recovery of full costs by or against any party other than
the United States or an officer thereof. Except as otherwise
provided by this title, the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs.
17 U.S.C. § 505.
The determination of whether to award fees to the prevailing party under 17 U.S.C. § 505

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is a matter within the court’s discretion in light of several factors articulated in the case law.

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Fogerty v. Fantasy, Inc., 510 U.S. 517, 534-35 (1994); Smith v. Jackson, 84 F.3d 1213, 1221 (9th

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Cir. 1996), superseded on other grounds by 18 U.S.C. § 1961(1)(B). Factors that should affect a

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district court’s decision to award fees include: (1) the degree of success obtained; (2)

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frivolousness; (3) motivation; (4) the objective unreasonableness of the losing party’s factual and

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legal arguments; and (5) the need, in particular circumstances, to advance considerations of

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compensation and deterrence. Smith, 84 F.3d at 1221.
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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In the Ninth Circuit, fees typically have been denied to non-copyright holders under

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17 U.S.C. § 505 where the copyright holder’s claim was neither frivolous nor pursued in bad

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faith. See, e.g., Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1120 (9th Cir. 2007) (affirming

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denial of fees where there was “ample support for the district court’s finding that [the copyright

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holder’s] legal claims are not frivolous or objectively unreasonable”); Smith, 84 F.3d at 1221

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(affirming denial of fees where district court “noted that it did not find frivolousness or that the

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suit was motivated by bad faith [and] that the claims had a legal basis sufficient to survive

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summary judgment and a factual basis supported by expert testimony.”); Bibbero Sys. Inc. v.

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Colwell Sys. Inc., 893 F.2d 1104, 1108-09 (9th Cir. 1990). 1 Just two weeks ago, for example, the

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District Court in the Central District of California denied an award of attorneys’ fees to actress

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Angelina Jolie after she prevailed in defending a copyright infringement claim and received a

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judgment on the pleadings. The District Court emphasized that the plaintiff’s claims, although

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unsuccessful, were not “frivolous or objectively unreasonable. A frivolous claim is one that

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‘lacks an arguable basis either in law or in fact’ or is not ‘colorable’ or is ‘without arguable

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merit.’” Braddock v. Jolie, No. 12-5883, slip op. at 3 (C.D. Cal. June 7, 2013) (citations omitted)

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(attached as Attachment A).

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In this case, Plaintiff does not and cannot allege that SMACNA acted in bad faith or with

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an improper motivation. It is undisputed that SMACNA has a federally-registered copyright on

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the Disputed Copyrighted Publication. Had SMACNA chosen to litigate, the sole dispute would

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have been the legal question of whether SMACNA’s copyright was still valid after the

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government incorporated the Disputed Copyrighted Publication by reference into a federal

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In Bibbero, the Ninth Circuit affirmed a denial of fees, even though plaintiff’s copyright was
invalid as a matter of law. 893 F.2d at 1108-09. This was because there was “apparent support”
for the copyright holder’s claim, and this cut against the defendant’s argument that the copyright
claims had been asserted in bad faith and were frivolous. Id. Although the Supreme Court’s
Fogerty decision in 1994 expanded the factors that a court can consider when ruling on a fee
motion against a copyright holder, “[p]ost-Fogerty cases awarding fees to prevailing [nonholders] still tend to focus on the [holder’s] bad faith motivation, hard-ball tactics [], or objective
unreasonableness . . . . Conversely, most courts deny fees to prevailing defendants when the
plaintiffs’ claims were not motivated by bad faith.” 5-14 Nimmer on Copyright § 14.10[D][3][b].
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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regulation. There is no question that SMACNA’s assertion of its copyright in its cease and desist

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letters was in good faith and based on legitimate legal principles.

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SMACNA’s cease and desist letter cited and discussed, among other cases, Practice

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Management Information Corp. v. American Medical Ass’n, 121 F.3d 516 (9th Cir. 1997),

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amended by 133 F.3d 1140 (9th Cir. 1998). (See Compl. Ex. C.) Practice Management remains

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controlling Ninth Circuit precedent. It involved facts remarkably similar to this case. The

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American Medical Association (“AMA”) had developed and copyrighted diagnostic codes

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(“CPTs”) that the Health Care Financing Agency regulations required to be used by applicants for

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Medicare reimbursement. 121 F.3d at 518. The plaintiff argued that incorporation by reference

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in the regulations put the copyrighted CPTs in the public domain, and the Ninth Circuit squarely

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rejected this argument: “We affirm the district court’s ruling that the AMA did not lose its

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copyright when use of the CPT was required by government regulations . . . .” Id. at 521. 2

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Recognizing that its position is contrary to binding Ninth Circuit precedent, Plaintiff

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devotes nearly five pages of its brief to its attempt to impose a narrow reading on Practice

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Management, in an effort to preclude its application to the facts of this case. (Pl.’s Mot. for

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Default J. at 17-21.) Plaintiff proposes that Practice Management should not apply because the

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CPT was not “identical” to the regulation in that case, because those “coding lists” did not

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“function[] as a law,” and because the economic incentives stack up differently. (Id.) But

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nothing in Practice Management requires or even supports these limitations. Quite the contrary.

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The Ninth Circuit explicitly foreshadowed cases exactly like this one when it explained why

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copyrighted materials do not enter the public domain once adopted by a government agency:

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[I]nvalidating [the AMA’s] copyright on the ground that the CPT
entered the public domain when HCFA required its use would
expose copyrights on a wide range of privately authored model
codes, standards, and reference works to invalidation. Non-profit
organizations that develop these model codes and standards warn
they will be unable to continue to do so if the codes and standards
enter the public domain when adopted by a public agency.

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The court found, for reasons inapplicable to this case, that the AMA had engaged in copyright
misuse in its licensing terms that rendered the copyright unenforceable. 121 F.3d at 520-21.
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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Practice Mgmt., 121 F.3d at 519 (emphasis added). The Ninth Circuit went on to cite a list of

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standards (not unlike the Disputed Copyrighted Publication) published by non-profit

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organizations (not unlike SMACNA), which the court did not wish to threaten by invalidating the

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AMA’s copyright to the CPTs. Id. at 519 nn.5-6.

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Plaintiff cites a Fifth Circuit case, Veeck v. Southern Building Code Congress

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International, Inc., 293 F. 3d 791 (5th Cir. 2002), which held in a 9-6 en banc decision that there

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was no enforceable copyright in a model building code created for the sole purpose of

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incorporation into local law. The case is readily distinguishable: Unlike Practice Management,

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the Veeck opinion set forth strict “limits of this holding,” and ruled that a copyright is invalid only

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when “the text of the model [code] serves no other purpose than to become law,” and the author’s

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“sole motive and purpose [was] creating codes that will become obligatory in law.” Id. at 803-05.

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The majority took pains to distinguish the case from situations like those in Practice Management

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(and this case) where the copyrighted publication was not created solely as a model law. Id.

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Unlike the plaintiff in Veeck, SMACNA’s primary goal in publishing standards is not the creation

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of obligatory law. (Sandusky Decl. ¶4.)

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Even if Veeck could be extended to the facts in this case, it would not make SMACNA’s

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cease and desist letters frivolous or in bad faith. As a Fifth Circuit decision, Veeck is not binding

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here, and it does not represent the majority position among the circuits that have addressed this

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issue. 3 And even in the Fifth Circuit, six of the fifteen judges disagreed with the Veeck holding.

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Although Plaintiff may endorse the Fifth Circuit majority’s reasoning, it was not bad faith for

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SMACNA to ask Plaintiff to abide by the law of the Ninth Circuit and to take down its

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unauthorized publication of SMACNA’s copyrighted materials.

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The Second Circuit has observed that the Plaintiff’s position raises serious constitutional
concerns, as it would result in an eminent-domain-like situation whereby the government’s
incorporation of a copyrighted document by reference automatically eviscerates the copyright,
even though no compensation is paid to the copyright holder. See CCC Info. Servs. v. MacLean
Hunter Mkt. Reports, 44 F.3d 61, 74 (2d Cir. 1994) (“[A] rule that the adoption of such a
reference by a state legislature or administrative body deprived the copyright owner of its
property would raise very substantial problems under the Takings Clause of the Constitution.”).
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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Plaintiff filed this case with the intention of changing Ninth Circuit law and vindicating

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the Fifth Circuit’s position in Veeck. Fortunately, this Court does not need to resolve this

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potential circuit split, nor could it overturn Ninth Circuit precedent. To resolve Plaintiff’s fee

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demand, this Court only needs to find that SMACNA had a reasoned, good-faith basis for asking

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Plaintiff to stop infringing its registered copyright. UMG Recordings, Inc. v. Veoh Networks,

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Inc., No. 07-5744, 2010 U.S. Dist. LEXIS 44430, at *6 (C.D. Cal. Apr. 6, 2010) (“[t]here is

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typically no award of fees in cases involving issues of first impression or advancing claims that

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were neither frivolous nor objectively unreasonable”) (citation omitted), aff’d in part and

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remanded in part on other grounds, __ F.3d __, 2013 U.S. App. LEXIS 5100 (9th Cir. Mar. 14,

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2013). Courts routinely deny fees under 17 U.S.C. § 505 where a party has a good faith basis for

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asserting its position. 4 To do otherwise would punish copyright holders who act to protect

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colorable claims, and thereby undermine the purpose of the Copyright Act. See McCulloch v.

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Albert E. Price, Inc., 823 F.2d 316, 322-23 (9th Cir. 1987) (“Attorneys’ fees to prevailing [non-

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copyright holders] should be awarded circumspectly to avoid chilling a copyright holder’s

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incentive to sue on colorable claims.”) (citation and internal quotations omitted).

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If fees are awarded to Public.Resource.Org, the public will also be harmed. As the Ninth

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Circuit recognized in Practice Management, adopting the Plaintiff’s legal position would provide

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a disincentive for organizations like SMACNA to invest resources and produce future works,

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even though such organizations “arguably . . . do a better job than could the state alone in seeing

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that complex yet essential regulations are drafted. . . .” See Practice Mgmt.,121 F.3d. at 518-19

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(citation omitted); SMC Promotions, Inc. v. SMC Promotions, 355 F. Supp. 2d 1127, 1137-38

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(C.D. Cal. 2005) (“copyrighted works must be protected as an incentive for people to create new

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works”) (citation omitted). Unwarranted awards of attorneys’ fees against such copyright holders

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See, e.g., DC Comics v. Pac. Pictures Corp., No. 10-3633, 2013 U.S. Dist. LEXIS 49119, at *12
(N.D. Cal. Apr. 4, 2013) (denying fees under 17 U.S.C. § 505 where “Defendants also had a legal
foundation for their argument”); Corbello v. Devito, No. 08-867, 2012 U.S. Dist. LEXIS 94158,
at *11-12 (D. Nev. July 9, 2012) (denying fees under 17 U.S.C. § 505 because the party “had a
good-faith basis for believing the Work had been infringed”); Walker v. Viacom Int’l, Inc., No.
06-4931, 2008 U.S. Dist. LEXIS 38882, at *26 (N.D. Cal. May 13, 2008) (denying fees under 17
U.S.C. § 505 because “this case was brought in good faith”).
DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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who merely assert their legitimate rights outside the courtroom would have a similar chilling

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effect on the creation of safety and testing standards that benefit the public.

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Finally, when a party with a valid or colorable claim elects not to litigate because the costs

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of litigation would outweigh the benefits of winning a lawsuit, the public interest would be

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adversely affected by a fee award. Public policy favors the efficient resolution of disputes

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without undue litigation costs or consumption of judicial resources. Such awards would

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discourage the prompt resolution of disputes that are not worth fighting over, and encourage

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future copyright holders to make a federal case out of every claim, regardless of the value of the

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work. For all of the above-stated reasons, Plaintiff should not be awarded attorneys’ fees.

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II.

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PLAINTIFF’S DEMAND FOR AN INJUNCTION IS MOOT AND
UNNECESSARY

At the end of Plaintiff’s brief, Plaintiff offhandedly requests that the Court use its

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extraordinary judicial power to enjoin SMACNA from asserting a copyright claim against

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Plaintiff with respect to the Disputed Copyrighted Publication. (Pl.’s Mot. for Default J. at 23.)

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As Plaintiff has cited no legal basis for its request, for now it is sufficient to state that such an

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“extraordinary remedy” is unnecessary and inappropriate, given that SMACNA has voluntarily

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and irrevocably entered a covenant not to sue Plaintiff for copyright infringement relating to the

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Disputed Copyrighted Publication. (Sandusky Decl. ¶ 10.) See, e.g., Jacobsen v. Katzer, 609 F.

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Supp. 2d 925, 936-37 (N.D. Cal. 2009) (finding that injunction is improper where plaintiff “failed

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to demonstrate that there is any continuing or ongoing conduct that indicates future harm is

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imminent”).

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III.

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If the court determines Public.Resource.Org is entitled to its attorneys’ fees, this Court

PLAINTIFF’S SUBMISSIONS ARE EXCESSIVE

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should drastically reduce any proposed fee award based on the unnecessary and voluminous

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submissions by Plaintiff related to its Motion. Plaintiff’s voluminous submissions appear to be

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based exclusively on its intent to appeal any adverse decision to the highest court and to attempt

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to overturn existing law. SMACNA has made, and continues to make, every effort to avoid

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DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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litigation expenses. SMACNA should not be forced to finance Plaintiff’s “mission” to change

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public policy via litigation.

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CONCLUSION
Based on the foregoing, SMACNA respectfully requests that this court deny Plaintiff’s

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Motion for Default Judgment to the extent it seeks attorneys’ fees or an injunction, and that this

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Court take Plaintiff’s Motion for Default Judgment under advisement without oral argument or

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hearing.

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Dated: June 17, 2013

MORRISON & FOERSTER LLP

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By:

/s/ Nicholas S. Napolitan
Nicholas S. Napolitan
Attorneys for Defendant
SHEET METAL AND AIR
CONDITIONING CONTRACTORS’
NATIONAL ASSOCIATION, INC.

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DEFT.’S MEMORANDUM OF LAW IN PARTIAL OPPOSITION TO PLTFF.’S MOTION FOR DEFAULT JUDGMENT
Case No. cv-13-0815 (SC)

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