Seventh Circuit Confirms Presumptive Fees in Copyright Litigation are Not Guaranteed

Seventh Circuit Court of Appeals – The U.S. Court of Appeals for the Seventh Circuit affirmed the denial of fees for the Defendant, David Knott (“Knott”), after Plaintiff, Timothy B. O’Brien LLC (“Apple Wellness”), voluntarily dismissed all its claims with prejudice.

Originally filed in the Western District of Wisconsin, Apple Wellness alleged that Knott, a former employee of Apple Wellness started a similar, competing wellness shop. Apple Wellness sued Knott for alleged trademark, trade dress, and copyright infringement. Knott countersued for tortious interference and retaliation. The District Court found the copyright claims baseless and denied a preliminary injunction on the trademark and trade dress claims. Apple Wellness later voluntarily dismissed all its claims.

While Apple Wellness submitted a motion to dismiss without prejudice, the District Court ordered Apple Wellness to withdraw its motion or accept a dismissal with prejudice because Knott had already expended resources litigating an injunction. The District Court further noted that in its opinion, no party’s claim was strong. Apple agreed to the dismissal with prejudice and the District Court declined to exercise supplemental jurisdiction over the counterclaims. The District Court subsequently denied Knott’s motion for fees leading to this appeal only as to the fees for the copyright claims and the appeal.

The Court of Appeals found that while Apple Wellness’s copyright claims were frivolous, it appears the claims were brought in good faith. Therefore, “there were minimal concerns regarding compensation and deterrence.” Further, Knott did not have to expend a large amount of time, money, or energy defending against the copyright claims as they were quickly dismissed. After considering all of the factors, the Court of Appeals affirmed the judgment of the District Court denying Knott’s motion for fees.

This Opinion is from The Seventh Circuit Court of Appeals Case. No. 19-2138 and was brought before Circuit Judges Joel M. Flaun, Michael S. Kanne and Michael B. Brennan.

The underlying case was assigned to Chief Judge James D. Peterson and Magistrate Judge Stephen L. Crocker in the Western District of Wisconsin and assigned Case No. 3:18-cv-00684-JDP