Markham Concepts, Inc. v. Hasbro, Inc.
Filing
295
MEMORANDUM AND ORDER denying 258 Motion for Attorney Fees; denying 259 Motion for Attorney Fees; denying 265 Motion for Attorney Fees. So Ordered by District Judge William E. Smith on 11/5/2021. (Urizandi, Nisshy)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
_______________________________________
)
MARKHAM CONCEPTS, INC.; SUSAN GARRETSON;)
and LORRAINE MARKHAM, individually and )
in her capacity as Trustee of the Bill )
and Lorraine Markham Exemption Trust
)
and the Lorraine Markham Family Trust, )
)
Plaintiffs,
)
)
v.
)
C.A. No. 15-419 WES
)
HASBRO, INC.; REUBEN KLAMER; DAWN
)
LINKLETTER GRIFFIN; SHARON LINKLETTER; )
MICHAEL LINKLETTER; LAURA LINKLETTER
)
RICH; DENNIS LINKLETTER; THOMAS FEIMAN, )
in his capacity as co-trustee of the
)
Irvin S. and Ida Mae Atkins Family
)
Trust; ROBERT MILLER, in his capacity
)
as co-trustee of the Irvin S. and Ida
)
Mae Atkins Family Trust; and MAX
)
CANDIOTTY, in his capacity as
)
co-trustee of the Irvin S. and Ida Mae )
Atkins Family Trust,
)
)
Defendants.
)
_______________________________________ )
)
REUBEN KLAMER,
)
)
Counterclaim Plaintiff,
)
)
v.
)
)
MARKHAM CONCEPTS, INC., SUSAN
)
GARRETSON and LORRAINE MARKHAM,
)
)
Counterclaim-Defendants.
)
_______________________________________ )
MEMORANDUM AND ORDER
WILLIAM E. SMITH, District Judge.
Before the Court are Defendants’ Motions for Attorneys’ Fees
and Costs, ECF Nos. 258, 259, 265, through which all Defendants 1
ask this Court to exercise its discretion under 17 U.S.C. § 505 to
award
them
—
the
uncontested
attorneys’ fees and costs. 2
prevailing
parties
— reasonable
After considering the submissions and
carefully reexamining the record, and acknowledging that these
Motions present a close call, the Court DENIES Defendants’ Motions.
Rather than recount the facts of the case, this Order assumes
familiarity with the ones that precede it.
Fees and costs are not
owed automatically, 3 and the Supreme Court has endorsed several
factors to guide courts analyzing whether they are warranted.
See
Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1985 (2016).
These
include
“frivolousness,
motivation,
objective
unreasonableness (both in the factual and in the legal components
Hasbro, Inc., Dawn Linkletter Griffin, Sharon Linkletter,
Michael Linkletter, Laura Linkletter Rich, Dennis Linkletter,
Thomas Feiman, Robert Miller, Max Candiotty, and Reuben Klamer.
1
Defendants request fees and costs only as to Plaintiffs’
third claim for relief.
2
At least one circuit has gone as far as to hold that “the
prevailing party in Copyright Act litigation is presumptively
entitled to an award of fees under § 505,” and that the presumption
is stronger still if the defendant prevails.
Mostly Memories,
Inc. v. For Your Ease Only, Inc., 526 F.3d 1093, 1099 (7th Cir.
2008). The First Circuit has not adopted such a standard.
3
2
of the case)[,] and the need in particular circumstances to advance
considerations
of
compensation
and
deterrence.”
Fogerty
v.
Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994) (internal citation
and quotation marks omitted).
Each is considered alongside the
unchanging purposes of the Copyright Act, which focus on “enriching
the general public through access to creative works.”
18.
Id. at 517-
This is accomplished through “subsidiary aims” of the Act:
“encouraging and rewarding authors’ creations while also enabling
others to build on that work.”
eventual
purposes.
question
is
whether
Kirtsaeng, 136 S.Ct. at 1986.
the
litigation
furthered
The
those
No one factor is controlling, and neither is it a rigid
formula, but
objective
unreasonableness
is
given
“substantial
weight,” see id. at 1983, 1988, and the Court starts there.
Defendants say Plaintiffs advanced objectively unreasonable
positions of law and fact, reflecting their “dubious” motivations 4
and justifying payment.
See Def. Hasbro, Inc.’s Mot. for Att’ys’
Fees and Costs (“Hasbro Mot.“) 3, ECF No. 259.
In the end, this
case boiled down to two dispositive questions: did Bill Markham
create the Prototype (such that he could fairly be considered its
author); and was the Prototype a work made for hire?
said yes and no, respectively.
Plaintiffs
They asked for both a declaration
Bad faith is unnecessary. See Latin Am. Music Co. v. Am.
Soc’y of Composers, Authors & Publishers (ASCAP), 642 F.3d 87, 91
(1st Cir. 2011).
4
3
that Markham was the author and a ruling that they could pursue a
statutory right to termination, which they would use to renegotiate
a royalty agreement they found lacking.
A finding that the
Prototype was a work made for hire would doom Plaintiffs’ quest
because these are excepted from termination rights, as would a
finding that Markham was not the author.
So success depended on
proving both that Markham himself physically created the Prototype
and that it was not made for another’s use and benefit.
U.S.C. § 304(c).
See 17
This was a high bar to be sure, but the payoff
if successful would no doubt have been substantial.
After a bench trial, this Court resolved those questions,
finding that the Prototype was indeed a work made for Reuben
Klamer’s hire.
It did so after applying the instance-and-expense
test, which Plaintiffs argued did not hold post-Community for
Creative Non-Violence v. Reid, 490 U.S. 730 (1989) (“CCNV”).
Having successfully asserted that it did, Defendants argue now –
as they did before – that the First Circuit’s decision in Forward
v. Thorogood, 985 F.2d 604 (1st Cir. 1993), foreclosed Plaintiffs’
case from the start, and Plaintiffs’ argument to the contrary
amounted to a far-fetched mischaracterization of the law.
Throughout the case, Plaintiffs maintained that the Supreme
Court’s decision in CCNV abrogated the instance-and-expense test
followed in Forward.
While ultimately unpersuasive to both this
Court and the First Circuit, and subject to formidable opposition
4
from Defendants, Plaintiffs’ argument was not without support.
See, e.g., Melville B. Nimmer & David Nimmer, Nimmer on Copyright
§ 9.03[D] (2019) 5.
And while this Court (and the Panel) 6 was bound
by First Circuit precedent holding otherwise, see Mag Jewelry Co.
v. Cherokee, Inc., 496 F.3d 108, 124 (1st Cir. 2007) (reversing
district court decision denying attorneys’ fees and costs where
“the legal principle at the core of their argument [was], as noted
earlier, well established”), the Court hesitates to say that
Plaintiffs “argue[d] for an unreasonable extension of copyright
protection,” Matthews v. Freedman, 157 F.3d 25, 29 (1st Cir. 1998)
(emphasis added).
See Universal Instruments Corp. v. Micro Sys.
Eng’g, Inc., 799 F. App’x 43, 46 (2d Cir. 2020) (holding that it
was not unreasonable for a party “to try to push through the door
Hasbro reduces Nimmer’s take to merely his own “personal
musings.”
Def. Hasbro, Inc.’s Reply in Supp. of Its Mot. for
Att’ys’ Fees and Costs 8, ECF No. 279.
Generalist courts –
including our Supreme Court – often cite Nimmer on Copyright when
analyzing this niche and complex area of the law. See, e.g., Feist
Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991)
(citing Nimmer on Copyright twelve times); Perea v. Ed. Cultural,
Inc. 13 F.4th 43, 52 (1st Cir. 2021); Markham Concepts, Inc. v.
Hasbro, Inc., 1 F.4th 74, 83 (1st Cir. 2021) (while remaining
“skeptical” of Plaintiffs’ position, acknowledging that Plaintiffs
had at least one “influential adherent” on their side).
5
Offering even more explanation, the First Circuit said that,
even if not bound by precedent, it would be “disinclined to
[abrogate a prior panel opinion] in this case,” remaining
“skeptical that the Supreme Court, in construing the 1976 Act,
casually and implicitly did away with a well-established test under
a different Act.”
Markham Concepts, 1 F.4th at 82-83 (citing
circuit opinions holding similarly).
This, however, does not
necessarily mean that the position was unreasonable.
6
5
that [the court] left open,” despite that it disagreed with the
position); see also Order Denying Mot. to Amend 2, ECF No. 250
(“Of course it is the Court of Appeals’s prerogative to accept
this argument and thereby change the law it applied in Forward.”).
The Court thus declines to award fees and costs on this basis. 7
See Lotus Dev. Corp. v. Borland Int’l, 140 F.3d 70, 75 (1st Cir.
1998)
(considering
particular
case,
awards
may
against
have
“a
advanced
plaintiff,
a
who,
reasonable,
in
a
albeit
unsuccessful, claim”); see also Photographic Illustrators Corp. v.
Orgill, Inc., No. CV 14-11818-PBS, 2020 WL 3051774, at *1 (D. Mass.
June 8, 2020) (declining to award attorneys’ fees where party
raised “novel argument that was not objectively baseless”).
Defendants’ better argument is that Plaintiffs’ case was
factually weak.
Defendants had evidence supporting multiple paths
to victory, and under any one Plaintiffs’ case would fold.
This
is a closer call; but, because in the end the case turned on the
Court’s interpretation of the evidence, the Court declines to award
fees and costs on this ground, too.
Among other theories, Defendants argued that the Prototype
was a work made for hire for Klamer and now submit that it was
It is at least somewhat telling that “[t]he Supreme Court
has also been presented with, but has declined to take up, the
question of whether [CCNV] abrogated the instance and expense test
as to commissioned works,” id. at 83 n.4; that other litigants
have raised this argument lends some support to the conclusion
that Plaintiffs’ position was reasonable.
7
6
unreasonable for Plaintiffs to argue otherwise.
Defendants had
evidence to support this theory, including witnesses Grace Falco
Chambers and Leonard Israel, who testified at various points in
the litigation that their work was done at Klamer’s instance and
expense.
And
Defendants
stress
that
Plaintiffs’
counsel’s
admission that Chambers and Israel were Markham’s employees doomed
Plaintiffs’ case because they – the Prototype’s true authors –
created it as a work-for-hire, which is doubly fatal in that it
also proved that Markham was not the Prototype’s author.
But that concession only got Defendants part of the way.
Plaintiffs called Chambers’ and Israel’s testimony incredible as
to the extent of their contributions, and they had some evidence
to rebut it.
For example, Plaintiffs pointed to contemporaneous
documents as evidence that Markham was the sole creator.
These
included the Assignment Agreement and letters between Markham and
Klamer (the impetus for these letters being disputes stemming from
credit given in a trade publication).
See Findings of Fact and
Conclusions of Law 12-14, ECF No. 240.
In further defense,
Plaintiffs argued that the Assignment Agreement showed that the
Prototype was not intended to be a work made for hire, overcoming
any presumption that it was one.
See Playboy Enterprises, Inc. v.
Dumas, 53 F.3d 549, 554 (2d Cir. 1995) (“That presumption can be
overcome, however, by evidence of a contrary agreement, either
written or oral.” (internal citation omitted)).
7
Defendants had
plenty of responses to this evidence, including that the Assignment
Agreement was hollow legalese, 8 that nothing spoke directly to
physical creation, and that, in any event, it was all small proof
(if
proof
at
all)
measured
against
Chambers’
and
Israel’s
testimony.
After a close review of the record, the Court again cannot
say that Plaintiffs pursued a factually unreasonable case.
See
Airframe Sys., Inc. v. L-3 Commc’ns Corp., 658 F.3d 100, 110 (1st
Cir. 2011) (affirming district court’s denial of fees, even where
the claims failed at the summary judgment stage because of a lack
of admissible evidence, emphasizing that it is a matter of the
district court’s discretion).
Both sides came to trial with
evidence to support their claims on all theories.
Plaintiffs had
much to overcome, including surmounting Markham’s admission in a
decades-old deposition that Chambers, Israel, and his wife worked
on the game, as reflected in the invoice submitted to secure
reimbursement.
See Hasbro Mot. 16.
But Plaintiffs did not
purposefully obscure relevant evidence (contrary to Defendants’
argument).
See Mag Jewelry Co., 496 F.3d at 123 (reversing
district court denial of fees and costs because it was “apparent
Some of the litigated language included that Markham
“invented, designed[,] and developed” the game, and that, at Link
Research Corporation’s request, Markham would pursue any copyright
“to which he may be entitled as the inventor, designer, and
developer of the [g]ame.” See Findings of Fact and Conclusions of
Law 10, 23, ECF No. 240.
8
8
that the inadequacies in [the company’s] showings are traceable to
facts of which the company had full knowledge at the time of
summary judgment”).
Neither did Plaintiffs make false assertions.
See Webloyalty.com, Inc. v. Consumer Innovations, LLC, 388 F. Supp.
2d 435, 444 (D. Del. 2005) (awarding fees and costs where, “on the
record presented, [the] assertions were’ so outlandish as to offend
any reasonable concept of the truth,” “wast[ing] the resources of
its opponent and this court by persisting with an objectively
unreasonable strategy”).
Rather, Defendants’ success turned on how the factfinder
interpreted the evidence and assessed credibility.
Defendants
spend much of their energy relitigating the merits with the benefit
of this Court’s Findings of Fact and Conclusions of Law, see, e.g.,
Def. Reuben Klamer’s Reply in Supp. of His Mot. for an Award of
Att’ys’ Fees and Costs 7-11, ECF No. 285; Def. Hasbro, Inc.’s Reply
in Supp. of Its Mot. for Att’ys’ Fees and Costs 3-4, ECF No. 279,
but unpersuasive arguments are not necessarily unreasonable ones.
At no point before the issuance of the Findings of Fact and
Conclusions of Law did Plaintiffs (or Defendants) know how the
Court would weigh the evidence, including Chambers’ and Israel’s
testimony. 9
See InvesSys, Inc. v. McGraw-Hill Companies, Ltd.,
For this reason, Hasbro’s Rule 11 letter, in which Hasbro
contended that “the testimony of Chambers, Israel and Klamer had
definitively established” that Plaintiffs “could not support a
claim for termination” does little to answer the relevant
9
9
369 F.3d 16, 21 (1st Cir. 2004) (emphasizing that “reasonableness
of the original claim ha[s] to rest on what [the party] knew when
he made and pressed his claim and not merely on the unfavorable
outcome”); see also Latin Am. Music Co., Inc. v. Spanish Broad.
Sys., Inc., No. 20-2332-CV, 2021 WL 4536898, at *2 (2d Cir. Oct.
5,
2021)
(considering
claims’
objective
unreasonableness
and
frivolousness based on “the time they were filed and litigated”
and upholding fees when the court “expressly warned” the plaintiffs
at summary judgment).
Taking the words of the First Circuit, it
was the “district court’s job to sort through the evidence and
decide what and who was credible.”
Markham Concepts, Inc. v.
Hasbro, Inc., 1 F.4th 74, 84 (1st Cir. 2021); see Kirtsaeng, 136
S.Ct. at 1988 (“Courts every day see reasonable defenses that
ultimately fail (just as they see reasonable claims that come to
nothing); in this context, as in any other, they are capable of
distinguishing
between
those
defenses
(or
claims)
and
the
objectively unreasonable variety.”); Small Justice LLC v. Xcentric
Ventures LLC, 873 F.3d 313, 329 (1st Cir. 2017) (“[T]he trial court
is in the best position to gauge the bona fides of a request for
fees.” (internal citation and quotation marks omitted)).
questions. Def. Hasbro, Inc.’s Mot. for Att’ys’ Fees and Costs 5,
ECF No. 259. There is no question from the Court’s point of view
that once Chambers and Israel testified it was difficult to imagine
a scenario where Plaintiffs would defeat the work-for-hire
argument, but Plaintiffs could not know how the Court was viewing
the testimony.
10
From
the
Court’s
vantage,
both
sides
raised
plausible
arguments and Plaintiffs’ claim, though unsuccessful, was not so
weak as to be objectively unreasonable to pursue.
136
S.Ct.
at
reasonableness
1988
(carefully
and
asking
distinguishing
whether
a
See Kirtsaeng,
liability
party
“made
from
serious
arguments”); Overseas Direct Imp. Co. v. Fam. Dollar Stores Inc.,
No. 10 CIV. 4919 JGK, 2013 WL 5988937, at *2 (S.D.N.Y. Nov. 12,
2013) (explaining that “lack of success on the merits, without
more, does not establish that the non-prevailing party’s position
was objectively unreasonable”). 10
Objective
weakness
is
not
the
end
of
the
inquiry,
see
Matthews, 157 F.3d at 29 (“Depending on other circumstances, a
district court could conclude that the losing party should pay
even if all of the arguments it made were reasonable.”), but the
Court makes quick work of those grounds that remain.
Because the
case was not objectively unreasonable, it follows that it was not
frivolous.
Nothing
in
the
record
convinces
the
Court
that
Plaintiffs proceeded with an improper motivation that justifies an
None of Defendants’ arguments about Plaintiffs’ litigation
conduct sway in favor of an award, including Hasbro’s grievance
about its efforts to remove Plaintiffs’ original counsel from the
case.
10
11
award, and neither would an award serve any meaningful deterrence
effect. 11
For those reasons, the Court concludes that the litigation
furthered the purposes of the Copyright Act and DENIES Defendants’
Motions for Attorneys’ Fees and Costs, ECF Nos. 258, 259, 265.
IT IS SO ORDERED.
William E. Smith
District Judge
Date: November 5, 2021
For his part, Klamer claims the equities favor awarding him
his fees in the interest of compensation because he, unlike his
compatriots, proceeded through the litigation as a single
individual, and one in frail health.
See Def. Reuben Klamer’s
Reply in Supp. of Mot. for an Award of Att’ys’ Fees and Costs 13,
17, ECF No. 285. (The Court is sorry to learn of Reuben Klamer’s
recent death. See Katharine Q. Seelye, Reuben Klamer, Creator of
the
Game
of
Life,
Dies
at
99,
available
at
https://www.nytimes.com/2021/09/20/business/reuben-klamerdead.html (last visited Nov. 5, 2021).) On balance, this itself
does not weigh heavily enough in favor of an award.
11
12
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