have the effect of coercing settlements and discouraging the assertion of meritorious defenses. This is particularly true in the field of copyright, where the private defendant may sometimes be a private attorney general representing the public interest in access to works of creativity.

Imagine the position of the defendant who is considering pursuing a principled line of defense, perhaps arguing that the plaintiff's work shouldn't be viewed as copyrightable, or that the defendant's use would be regarded as a "fair" one. Under this proposed legislation, this defendant is placed in a nearly intolerable dilemma. If -- even upon advice of competent counsel -- the defendant chooses to pursue vigorously a defense which is anything less than certain to succeed, that choice brings with it exposure to liability for legal fees over the generation of which the defendant has had no control, and which may sometimes amount to more than the potential exposure for money damages. If, on the other hand, the defendant is willing to sacrifice a legal examination of his or her defense and settle, exposure to financial loss can be minimized.

Obviously the assertion of novel defenses, the likelihood of success of which cannot be well assessed in advance of trial, will be chilled, in particular, by the proposed legislation. Thus, the net effect of the proposal would be deter the development of those aspects of copyright doctrine which reflect the public interest in access, while favoring the development of doctrinal structures which reflect the interests of copyright

owners.

Practical concerns

Section 505 of the Copyright Act, as presently worded, provides the federal courts with the statutory basis on which to conduct a multifactor inquiry into the appropriateness of awarding attorneys' fees in particular copyright cases. Clearly, where the plaintiff has "prevailed" the nature of the defendant's underlying conduct can be an important consideration, although the courts differ as to how determinative this factor should be. See Campbell-Ewald Co. v. Price, CCH Copyright Law Reporter Para. 26,517 (6th Cir. 1990)(discussing split among circuits on the question of whether a finding of "willful" infringement is necessary before attorneys' fees may be awarded). Just as clearly, the determination may be influenced by factors which relate to the way in which the litigation was conducted, including the complexity of the issues and the good or bad faith, displayed by the parties in pursuing their legal theories. See Video Views, Inc. v. Studio 21, Ltd., CCH Copyright Law Reporter Para. 26, 492 (N.D. 111. 1989, citing McCulloch v. Albert E. Price, Inc., 823 F.2d 316 (9th Cir. 1987). In particular, courts may give weight to factors such as the behavior of the unsucessful party in considering reasonable offers of settlement from the prevailing part, prior to verdict. See Boz Scaggs Music

The approach which courts have taken to apply present Section 505 is the one which gives judges ample scope to determine whether awarding attorneys' fees in a given case will further the goals of the copyright system. There is no reason to fear that the interests of copyright plaintiffs, as a group, will be overlooked or underestimated. Already, some courts put significant barriers in the way of awards of attorneys' fees to prevailing defendants, while awarding them more freely to successful defendants. See Diamond v. Am-Law Publishing Co., 745 F.2d 142, 148 (2nd Cir. 1942) (discussing Second Circuit requirement that plaintiff's claim be found to have been "objectively without arguable merit" before defendant may recover fees). Indeed, there is every reason to think that the present scheme, with its provisions for the exercise of judicial discretion, provides ample incentives for the assertion of "colorable claims" by copyright plaintiffs.

Most attorneys' fee statutes specify that attorneys' fees may be awarded to the prevailing party at the discretion of the court. Discretion is a very important factor. There are many factors that a court must look at in determining the awarding of attorneys' fees.

The general American rule regarding attorneys' fees provides that each party to a lawsuit should bear its own legal expenses and that federal courts do not have power to award attorneys' fees to litigate unless there exists express statutory authorization. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). However, certain exceptions to this rule have been recognized. Courts may award fees "when the interests of justice so require." Hall v. Cole, 412 U.S. 1, 4-5 (1973). Legal fees may also be awarded for the "willful disobedience of a court order .. as part of the fine to be levied on the defendant." Toledo Scale Co. v. Computing Scale Co., 261 U.S. 399, 426-28 (1923); and when the losing party has "acted in bad faith, vexatiously, wantonly or for oppressive reasons." Runyon v. McCrary, 427 U.S. 160,183, (1976).

...

A number of federal statutes authorize federal courts to award attorneys' fees to a prevailing party. See New York Assoc. of Retarded Children v. Carey, 711 F.2d 1136 (2nd Cir. 1983). The most commonly used of these fee shifting statutes is the Civil Rights Attorneys' Fees Award Act, 42 U.S.C. § 1988. Before awarding fees under this Act, a court must determine whether the litigent seeking fees is, in fact, a prevailing party. The opposing party may contest whether the party has prevailed on several grounds: 1) the dispute was settled or a consent decree was entered; 2) the defendant has taken some voluntary extrajudicial act that makes the suit moot; 3) the plaintiff prevailed on only some, not all claims; 4) the plaintiff prevailed only at an interlocutory stage and not fully on the merits and 5) the defendant has prevailed.

Once a determination is made that a plaintiff has prevailed,

he should normally recover an attorneys' fee unless special circumstances render such an award unjust. Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400 401 (1968). The Ninth Circuit has denied fees where the plaintiffs were awarded damages, Buxton v. Patel, 595 F.2d 1182, 1185 (9th Cir. 1979), and where the parties entered into a consent decree that the court viewed as a compromise that would be altered by an award of fees. Aho v. Clark, 608 F.2d 365 (9th Cir. 1979). The Fifth Circuit has withheld fees where it considered the plaintiff's § 1983 claim to be essentially a private state law tort claim for money damages and where the plaintiffs achieved the benefits sought but their efforts did not contribute to achieving those results. Riddell v. National Democratic Party, 624 F.2d 539, 554-45 (5th Cir. 1980). Additional defenses include bad faith, unclean hands, innocent intent and estoppel.

A prevailing defendant may also recover attorneys' fees under § 1988 but only where the court finds that the plaintiff's action was frivolous, unreasonable, or without foundation, or brought to harass or embarrass the defendant. Christianburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978).

Under the Civil Rights Attorneys' Fees Awards Act, the court has discretion to set the amount of the fees awarded. In general, courts have used a combination of two approaches. The first is to consider the twelve factors established in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974): 1) the time and labor required; 2) the novelty and difficulty of the questions; 3) the skill requisite to perform the legal services properly; 4) preclusion of other employment by the attorney's acceptance of the case; 5) customary fee; 6) whether the fee is fixed or contingent; 7) time limitation imposed by the client or circumstances; 8) amount involved and results obtained; 9) experience, reputation and ability of the attorneys; 10) undesirability of the case; 11) nature and length of professional relationship; and 12) awards in similar cases. The other means is to use what is called the lodestar rule which arrives at a figure by multiplying the number of hours worked by a reasonable hourly rate. Hughes v. Repko, 578 F.2d 483 (1978). The court also has discretion to enhance or diminish the amount based on some of the Johnson factors enumerated above. We assume that this legislation would have no impact on these criteria.

The next practical concern relates to the "size" of the prevailing plaintiff that is guaranteed the award of attorneys' fees namely those not having in excess of 500 employees. While at first blush it would appear that this language was designed to assist the poorest, or those who need additional protection, in reality this is not necessarily the case. The number of employees of a corporation or association does not necessarily relate to wealth or abiliy to protect rights. With a relatively small staff, a computer software company may have tens of millions of dollars in sales. Turning to another potential

the United States and the number is in the thousands, according to the American Society of Association Executives, only approximately 80 have staffs above 500. Those under 500 include American Bankers Association, American Petroleum Institute, National Association of Realtors, American Dental Association, American Insurance Association and the National Rifle Association -- these groups can hardly be described as poor and in need of litigation assistance. Furthermore, in the field of copyright we called BMI and learned that its staff is less than 500.

Even were the references to "small business concerns' to be stricken from the bill, the remaining reference to the "individual who is the author of the work" would still pose similar problems. This could refer to anyone from a struggling self-emmployed poet, to a best-selling author with the full institutional resources of a publisher backing him or her up, to a rock star with his or her own legal staff. Obviously, the relative economic position of the parties is one factor into which courts now can inquire in making determinations about attorneys' fees. No attempt to routinize this inquiry and deny the role of judicial discretion is likely to produce consistently just results.

Another practical problem with the application of the proposed language also should be noted in passing. Often, it is difficult in practice to determine which party to a completed litigation, especially one involving multiple claims and defenses, has in fact "prevailed." See Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126-27 (2nd Cir. 1989). As things now stand, courts can avoid the necessity of making this difficult and profitless determination in cases that present a "close call," by exercising their general discretion not to award attorneys' fees and thus rendering the issue moot. The proposed bill, with its provisions for mandatory awards of attorneys' fees, might require the expenditure of judicial time and energy to decide an issue which is sometimes better left undecided.

Turning now to the education and library exception language found in Section 505 b(1)(A):

o The exemption relates to "reproductions" of a work. The copyright law itself does not define the term "reproduction." Even giving the term a broad meaning, it would not cover performance or display issues. What of a music performance that is normally permitted under section 110 but may technically violate the law because one performer was paid a fee? Should the educational institution automatically have to pay attorneys' fees? We think not. What of a showing of a copyrighted video to an educational group that is technically a public performance? We believe that the defense of not charging a fee for an activity that has no direct or indirect commercial purpose should be available.

o There is also the issue of copyrighted display. The

copyright to school photos are often retained by the professional photographer because the school officials do not have the legal background to ask for the copyright or even for unlimited use when the contract for photos was drafted. The photos are used as originally planned. Subsequently, the photos are displayed to parents and to the public at a school fair or similar occasion. There may be a copyright violation. Are attorneys' fees guaranteed under this example, even if there was no direct or indirect commercial gain?

o Does the term "reproduction" mean all copying? Specifically, would it include computer software? This is a very sensitive area for many reasons with issues of equity applying both to the copyright user and copyright owner. The scope of fair use was never really fully explored when the copyright law revision was being developed as was the case for photocopying or off the air taping. For example, can a professor or teacher show other students how a particular student handled a difficult computer problem if the underlying software has to be copied in order for students to understand how the problem was solved? The copy will be erased and the purpose of this class exercise is not to develop a derivative work.

As new technology is developed some of the concepts of copyright may hinder instead of support progress. As educators push the fields of knowledge, we need to know that all the penalties do not automatically attach in cases where there was a technical infringement. We should be able to defend our actions in court that attorneys' fees are not warranted.

While the threat of not being able to obtain attorney's fees may act as a deterrent to copyright owners, the threat of manditory attorney's fees will also act to frighten educators from legitimate uses of copyright materials.

We respectfully request that this legislation not be reported