Introduction

This blog if written by copyright infringement defense attorney Steve Vondran. This is general legal information only and not legal advice. It may be helpful to watch my video on attorney fees in copyright cases before reading this blog. Vondran Legal® has handled several hundred Strike 3 adult file-sharing cases.

There are times when Strike 3 cannot prove its case and may be forced to dismiss the case. In these instances, the defendant may well be deemed the "prevailing party" in the case, which can support an award of costs and attorney fees under 17 U.S.C. 501 (the copyright law in the United States). However, this does NOT AUTOMATICALLY MEAN that Defendant will be able to cover their costs and attorney fees, for this is "discretionary," and the judge will apply a five-factor analysis to determine if a fee award is appropriate to the Defendant. Under the law, the court "may" award attorney fees. This recently happened in a case in Hawaii where Strike 3 and the defendant "stipulated" (agreed) to dismiss a copyright infringement case "with prejudiceThe defendant was considered the "prevailing party," but the court refused to award attorney fees, basically holding that the defense did not further the purposes of the copyright act, and after analyzing the 5 factors below, denied the fee motion.

This illustrates that when litigating against Strike 3 Holdings, you might either need to (a) seek to negotiate your attorney fees as part of a settlement/dismissal situation or (b) be prepared to go all the way and win at trial.

17 U.S.C. 505 - Attorney Fees clause of the Copyright Act

Here is the attorney fee clause of the United States Copyright Act:

"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."

To make the determination under this section as to whether fees may be awarded to defendants, the courts look at the following 5 factors:

The Ninth Circuit has set forth factors that the court may consider when further deciding whether to award attorneys' fees, but the court is not limited to these factors when making its decision. Fogerty, 94 F.3d at 559 (citations omitted). The courts may consider the following factors:

1. The degree of success obtained;

2. Frivolousness;

3. Motivation;

4. Objective reasonableness of the losing party's legal and factual arguments; and

5. The need to advance considerations of compensation and deterrence.

“Substantial weight should be accorded to the fourth factor.” “Courts may look to the[se] nonexclusive . . . factors as guides and may apply them so long as they are consistent with the purposes of the Copyright Act and are applied evenly to prevailing plaintiffs and defendants . . . ” Fogerty, 560 F.3d at 450. The court thus turns to the beginning of its analysis—whether the defense in this case furthered the Copyright Act's purposes.

These factors are discussed in the Hawaii case below.

Court says SORRY, but NO fees

A recent case from Hawaii illustrates how courts may analyze this legal question. Here is the case citation.

Here are a few snippets from the court's analysis:

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Plaintiff brought a copyright infringement claim against the Defendant pursuant to 17 U.S.C. § 501. ECF No. 1 at PageID.10. Under title 17,

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. Plaintiff thus sought attorneys' fees and costs under this statute in its Complaint for Copyright Infringement (“Complaint”). However, as it turns out, on November 18, 2024, the parties entered into a Stipulated Judgment of Dismissal (“Stipulation to Dismiss”), whereby Plaintiff elected to voluntarily dismiss its claim against the Defendant pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii). ECF No. 57. The Stipulation to Dismiss stated that the dismissal of the case was with prejudice, and in its Opposition, Plaintiff “does not contest that Defendant is the prevailing party” in this case. ECF No. 67 at PageID.1044. The defendant now seeks its attorneys' fees.

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Attorneys' fees as a result of copyright infringement lawsuits are awarded at the court's discretion and not as a matter of course. 17 U.S.C. § 501; Fantasy, Inc. v. Fogerty, 94 F.3d 553, 557 (9th Cir. 1996). In determining whether to award attorneys' fees under 17 U.S.C. § 501, “plaintiff's culpability is no longer required.” Fogerty, 94 F.3d at 558. The Court must first determine that the award to “prevailing defendants . . . further the purposes of the Copyright Act and are evenhandedly applied.” Id. (citations omitted). In other words, “[t]he touchstone of the decision to award attorneys' fees is whether the successful defense, and the circumstances surrounding it, further the Copyright Act's ‘essential goals.'” Tresona Multimedia, LLC v. Burbank High Sch. Vocal Music Ass'n, 953 F.3d 638, 653 (9th Cir. 2020).

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The Defense in this Case Did Not Further the Copyright Act's Purposes such that Attorneys' Fees are Warranted to the Prevailing Defendant.

The “Copyright Act's primary objective [is to] ‘encourage the production of original literary, artistic, and musical expression for the good of the public.'” Fogerty, 560 F.3d at 557. Further, “[o]ne of the goals of the Copyright Act is to discourage infringement, [but] it is by no means the only goal of that Act.” Fogerty, 560 F.3d at 559 (emphasis in original). Another goal is to “encourage ‘defendants who seek to advance a variety of meritorious copyright defenses . . . to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement.'” Id. at 557-558. A “[s]uccessful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright[.]” Id. at 558.

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The Defendant does not argue that Plaintiff's works do not contribute to the creativity of the general public and that Plaintiff's lawsuits seek to merely fix prices by controlling the distribution of products. The Defendant does not dispute that Plaintiff creates motions pictures that “have had positive global impact, leading more adult studios to invest in better content, higher pay for performers, and to treat each performer with respect and like an artist.” ECF No. 1 at

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PagerID.5. Although Plaintiff is seeking to control the distribution of its works, unlike the situation in Omega, Plaintiff alleges that these films include creative works produced by Plaintiff.1 The Defendant has not alleged that Plaintiff is a “copyright troll” that buys up copyrights to films and then sues masses of people for illegally downloading the films. See Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1035 (9th Cir. 2018) (citation omitted). Instead, based upon the Complaint, this case was brought because it was believed that Defendant was a user who illegally downloaded and distributed works created by Plaintiff.

The Court is aware of various litigation in this and other districts initiated by the Plaintiff. The Defendant claims that because of these multiple lawsuits, and the circumstances in this situation, Plaintiff is merely seeking to pressure non- infringers into a settlement. However, the Court cannot find this to be true based on the information and evidence in this particular case.

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The Ninth Circuit has stated that “[d]igital piracy of copyrighted materials on peer-to-peer networks can have severe financial consequences for copyright holders.” Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1035 (9th Cir. 2018).

Under U.S. law, stealing intellectual property is just that—stealing. It hurts artists, the music industry, the movie industry, and others involved in creative work. And it is unfortunate that the software being used—called “file sharing,” as if it were simply enabling friends to share recipes, is helping create a generation of Americans who don't see the harm . . . . To combat losses from peer-to-peer file sharing, copyright holders have filed a spate of lawsuits against infringers in federal courts across the country.

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Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1036 (9th Cir. 2018) (citations omitted). Thus, as much as it is important that defendants litigate meritorious defenses, it is similarly important that the owners/creators of copyrighted materials are able to protect their creations. Under the circumstances of this case, the Court cannot find that the Defendant's defense, although legitimate, necessarily furthered the Copyright Act's purpose in this case.

Court's analysis of the five factors:

You can see the magistrate ruling here (discussing each of the five factors):

A. Degree of Success Obtained

The Defendant argues that the Defendant prevailed in this matter and obtained complete success, and that this factor weighs in favor of a fee award. On the other hand, Plaintiff claims that although it does not dispute that the Defendant is the prevailing party in this case, it disputes the degree to which the Defendant succeeded. Plaintiff claims that the Defendant only prevailed on a technical matter and thus, this factor should only weigh lightly in favor of the Defendant.

It is certain that Defendant prevailed in this case due to the Stipulation to Dismiss. However, on October 31, 2024, there was a settlement on the record, and the “[s]ettlement terms . . . remain confidential.” The Court is unable to discuss or even weigh the defense's degree of success because of the confidentiality and lack of evidence in the records and in the moving papers. Accordingly, the Court cannot determine the Defendant's degree of success beyond the entry of the Stipulation to Dismiss; this factor weighs in favor of the Defendant, but not as heavily and absolute as the Defendant urges.

Attorney Steve® Tip: Consider negotiating attorney fees as part of any settlement agreement or stipulation to dismiss.

B. Frivolousness

The Defendant argues that Plaintiff's litigation in this case was frivolous and defines frivolousness by quoting a Seventh Circuit case. According to the Defendant:

“A claim is frivolous under Fogerty when: . . . the losing party's motivation in filing or contesting the action was questionable, including because of a multiplicity of suits or improperly joined parties (citing Live Face on the Web v. Cremation Society of Illinois, 77 F.4th 630, 634 (7th Cir. 2023)). However, in Live Face, “the defendants argued that Live Face is a copyright troll—lurking in the shadows to extract nuisance settlements from passerby[s].” Live Face, 77 F.4th at 634. The Defendant has made no such argument in this case, and the Court does not have any evidence before it that this may be the case. Further, even the Defendant cites that “the Ninth Circuit cautions against simply focusing on [Plaintiff's] 10,000+ lawsuits, as the sole evidence of frivolousness.” ECF No. 63-1 at PageID.666 (citing Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1045 (9th Cir. 2018)) (emphasis added). In this case, although the Defendant refers to the number of cases brought by Plaintiffs in various districts, as noted earlier, there is no evidence that litigation in this case is based on “copyright troll” practices by Plaintiff. See Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1035 (9th Cir. 2018) (citation omitted).

In addition, this Court is not persuaded by Defendant's cherry-picked, expansive definition of frivolousness from the Seventh Circuit. The courts in the Ninth Circuit have defined frivolousness for purposes of a fee request under the Copyright Act.

A claim is not frivolous under the Copyright Act merely because it is unsuccessful. Rather, a frivolous claim under the Copyright Act is one that, in either the factual or legal assertions, is clearly baseless, involving fantastic or delusional scenarios. Put another way, a case is deemed frivolous only when the result is obvious or the arguments are wholly without merit.

Perfect 10, Inc. v. Giganews, Inc., No. CV 11-07098-AB SHX, 2015 WL 1746484, at *8 (C.D. Cal. Mar. 24, 2015), aff'd, 847 F.3d 657 (9th Cir. 2017) (internal citations and quotation marks omitted). In the Complaint (ECF No. 1) and Application to Serve a Third-Party Subpoena Prior to a Rule 26(f) Conference (ECF No. 8), Plaintiff carefully describes the technology used to monitor and detect the illegal downloading and distribution of its films, and how it acquired an IP address that was infringing its copyright. It is clear that Plaintiff subpoenaed Defendant's Internet Service Provider (Spectrum) to identify the user assigned to the IP address being used to download and distribute Plaintiff's films. The Defendant was identified using this procedure, and further information was anticipated to be obtained through the discovery process. The records in this case reflect that it was during the discovery process that the parties entered settlement on the record. Based on these facts, the Court cannot find that Plaintiff's claims were “baseless,” involved “fantastic or delusional scenarios,” and was “wholly without merit. See Perfect 10, 2015 WL 1746484 at *8.

Accordingly, this factor does not weigh in favor of an award of attorneys' fees.

Attorney Steve® Tip: Here is where you need to build a case that Strike 3 is proceeding in a lawsuit without good faith grounds. For example, one thing we try to do when our client's deny liability is to offer up the following exculpatory evidence:

1. Review their computers for forensic examination
2. Show proof that the person was not home on specific days of alleged downloads (ex. airplane/travel receipts)
3. Offer up a interview or deposition where Plaintiff can assess credibility of the defendant

These are just some of the things to consider. If Strike 3 refuses to look at any of this, or do this, are they acting in good faith? Should they force a litigant (often with limited funds) into court in a situation like this? Should they amend the complaint and pursue the defendant under these circumstances? According to the cases noted above, would it help to allege that Plaintiff is a copyright troll, and try to prove that somehow? I believe this is a tough factor to prove for a prevailing defendant, but you should be thinking about this as the case progresses through discovery.

C. Motivation

As explained previously, this Court simply does not have any evidence before it that indicates an improper motive by the Plaintiff and that Defendant's defense furthers the Copyright Act's purpose. See supra Part I. Plaintiff's commenced this case on April 17, 2025, and the Defendant was served on October 22, 2023. Since that time, the Defendant answered the Complaint, this Court held a Rule 16 Scheduling Conference with the parties, the parties litigated to allow Defendant to proceed anonymously, and discovery disputes ensued until settlement was placed on the record, and this case was dismissed with prejudice on November 18, 2024. Notably, no dispositive motions were filed by the Defendant. Accordingly, based upon the record in this case, this Court cannot find that Plaintiff's motivation was improper in bringing this case. This factor does not weigh in favor of an attorney fee award.

Attorney Steve® Tip: The court is indicating that filing a motion, such as a summary judgment motion (being forced to do that because S3 won't settle), could be a factor to show bad faith motivation.

D. Objective Reasonableness of Plaintiff's Legal and Factual Arguments

“A claim is objectively unreasonable where the party advancing it ‘should have known from the outset that its chances of success in this case were slim to none.'” See Perfect 10, 2015 WL 1746484 at *11 (citing SOFA Entertainment, Inc. v. Dodger Prods., Inc., 709 F.3d 1273, 1280 (9th Cir.2013)). The Court finds that given the information before this Court, the technology described by the Plaintiff, and the process Plaintiff followed to identity the user assigned to the infringing IP address, the Court cannot find that Plaintiff's legal and factual arguments were not objectively reasonable at the outset of this case. This factor therefore does not weigh in favor of awarding attorneys' fees to the Defendant.

Attorney Steve® Tip: Again, this can be another difficult point and something to consider while going through the litigation process.

E. Compensation and Deterrence

This Court has previously discussed its findings in this case regarding whether the defense furthers the Copyright's purpose. This is not a situation where the defense against Plaintiff's allegations necessarily furthers the purpose of the Copyright Act beyond the fact that Defendant was the meritorious party due to a voluntary Stipulation to Dismiss.

For example, the Ninth Circuit has “previously recognized ‘[w]hen a fee award encourages a defendant to litigate a meritorious fair use claim against an unreasonable claim of infringement, the policies of the Copyright Act are served.'” Tresona Multimedia, LLC v. Burbank High Sch. Vocal Music Ass'n, 953 F.3d 638, 654 (9th Cir. 2020) (citation omitted). In Tresona, copyrighted music was used in a high school choir competition program, held by a nonprofit organization, to raise money to help cover a high school's show choir expenses. Id. at 642. This is because student contributions failed to cover these expenses. Id. Plaintiffs sued the public high school, the vocal music director, and other parties believed to be involved in the copyright infringement. The defendants asserted the defense o fair use, which under this doctrine, “teaching is explicitly listed as fair use [in the Copyright Act.]”

The fair use doctrine “permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster[.]” Therefore, “[a] public school teacher acting in his teaching capacity would be reasonable in believing the fair use defense applies.” Attorneys' fees were awarded as a result of the defendants' successful defense in Tresona because the defense served the purposes of the Copyright Act's purposes.

This case is obviously distinguishable from Tresona because the fair use doctrine is not involved here, and Defendant does not claim to be an educator or a nonprofit organization using copyrighted material for educational purposes. However, given the type of defenses in which fees are awarded to the prevailing defendant under the Copyright Act, including Tresona and Omega, it is difficult for this Court to find, based on the facts of this case, that the Defendant's defense furthered the Copyright Act. The Defendant merely denied the downloading and distribution of copyrighted material created and owned by Plaintiff. Further, the Defendant did not file any dispositive motions in this case, and the Stipulation to Dismiss was entered into during the discovery phase. It is not enough to merely assert that Plaintiff has a large number of cases and that the Defendant in this case prevailed based on a voluntary Stipulation to Dismiss. Merely dodging a bullet, without more as to how this would further the purposes of the Copyright Act, does not entitle a defendant to an award of attorneys' fees. Accordingly, the Court finds that this factor also fails to weigh in favor of a fee award.

Because this Court FINDS that the defense in this case does not necessarily further the purposes of the Copyright Act, and four out of the five factors do not support the award of fees, the Court DENIES the Defendant's request for fees and costs. Based upon the foregoing, the Court FINDS that the defense in this case did not further the Copyright Act's purposes and accordingly RECOMMENDS that Defendant's request for $85,612.75 in attorneys' fees and $2,158.86 in costs be DENIED.

Attorney Steve® Tip: There is not likely a fair use defense in a Strike3 bittorent case. If a defendant can prevail on another defense, such as deminimis downloads, copyright misuse, third party is liable, etc., this can help the prevailing party defendant recover attorney fees.

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Conclusion

Defending against Strike 3 Holdings copyright infringement cases is filled with challenge and nuance. When the accused downloader is NOT the proper defendant (not the one that downloaded their Tushy and Vixen movies), a decision has to be made whether or not to litigate the case. If you litigate, you will want to first be able to defend against the case (which can, at times, include showing you were not home on various dates of alleged downloads, or to have a credible wifi case, for example (a close neighbor in an apartment building may have hopped onto an unsecured network, or via a stolen password). Next, you need to be thinkg about how you plan to address the five-factors above to put yourself in the best position to be able to recover attorney fees and costs if you prevail in the federal court litigation. You need to be thinking about how your defense of the case furthers the purposes of the federal copyright act. Careful strategic planning is often required. Pin down some key facts to support your claim for fees during discovery, and depositions. If you cannot afford to litigate the case, this can present significant challenges since most lawyers are not able to litigation these types of cases on a contingency fee basis (as can be clearly understood looking at the denial of the fee motion in this case). Always be thinking about meeting these factors at the outset of the case.