Leslie Klinger v. Conan Doyle Estate, Ltd. , 761 F.3d 789 ( 2014 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-1128
LESLIE S. KLINGER,
Plaintiff-Appellee,
v.
CONAN DOYLE ESTATE, LTD.,
Defendant-Appellant.
____________________
Motion for Award of Attorneys’ Fees in an Appeal
from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 1226 — Rubén Castillo, Chief Judge.
____________________
SUBMITTED JULY 15, 2014 — DECIDED AUGUST 4, 2014
____________________
Before POSNER, FLAUM, and MANION, Circuit Judges.
POSNER, Circuit Judge. This opinion is a sequel to Klinger
v. Conan Doyle Estate, Ltd., 2014 WL 2726187 (7th Cir. June 16,
2014), where we held that Leslie Klinger was entitled to a
declaratory judgment that he would not be infringing copy-
rights on fictional works published by Arthur Conan Doyle
before 1923 by anthologizing stories written long after
Doyle’s death in 1930 that feature Sherlock Holmes and oth-
2 No. 14-1128
er characters depicted in Doyle’s pre-1923 fiction. Even
though the modern (post-Doyle) Sherlock Holmes stories
copy copyrightable material in the pre-1923 fiction, the copy-
rights on that fiction, which cover copyrightable elements in
it that include original depictions of characters (like Holmes
and Dr. Watson), have expired. We rejected the Doyle es-
tate’s argument that because stories published by Doyle be-
tween 1923 and his death—and still under copyright—
depicted those characters in a more “rounded form” than
found in the pre-1923 fiction, the “flat” characters of the ear-
lier stories were protected by the copyrights still in force on
the “rounded” characters of the later stories.
Once the copyright on a work expires, the work becomes
a part of the public domain and can be copied and sold
without a license from the holder of the expired copyright.
So when Klinger published his first anthology of modern
Sherlock Holmes stories he didn’t think he needed a license.
But the Doyle estate told Random House, which had agreed
to publish Klinger’s book, that it would have to pay the es-
tate $5,000 for a copyright license. Random House yielded to
the demand, obtained the license, and published the book.
Klinger arranged for a sequel to the anthology to be pub-
lished by Pegasus Books and distributed by W.W. Norton &
Company to booksellers. When the Doyle estate learned of
this project, it told Pegasus, as it had told Random House,
that Pegasus would have to obtain a $5,000 license from the
estate in order to be legally authorized to publish the new
book. The estate didn’t explicitly threaten to sue Pegasus for
copyright infringement if the publisher didn’t obtain a li-
cense, but did explicitly threaten to prevent distribution of
the book. It did not mince words. It told Pegasus: “If you
No. 14-1128 3
proceed … to bring out [the sequel] unlicensed, do not ex-
pect to see it offered for sale by Amazon, Barnes & Noble,
and similar retailers. We work with those compan[ies] rou-
tinely to weed out unlicensed uses of Sherlock Holmes from
their offerings, and will not hesitate to do so with your book
as well.” There was also a latent threat to sue Pegasus for
copyright infringement if it published Klinger‘s book with-
out a license, and to sue Internet service providers who dis-
tributed it. See Digital Millennium Copyright Act, 17 U.S.C.
§ 512(i)(1)(A). Pegasus yielded to the threat, as Random
House had done, and refused to publish the anthology until
Klinger obtained a license from the Doyle estate.
Instead of obtaining a license Klinger sued the estate,
seeking declaratory relief against being adjudged an infring-
er of any valid copyrights of the estate—and won, both in
the district court and, on the estate’s appeal, in this court.
We could find no basis in statute or case law for extending a
copyright beyond its expiration. When a story falls into the
public domain, story elements—including characters cov-
ered by the expired copyright—become fair game for follow-
on authors. There is no ground known to American law for
extending copyright protection beyond the limits fixed by
Congress. The estate’s appeal bordered on the quixotic.
Now Klinger asks us to order the Doyle estate to reim-
burse the attorneys’ fees he incurred in the appeal, amount-
ing to $30,679.93. (He has filed a separate petition for fees
and related costs incurred in his litigation in the district
court, totaling $39,123.44. That petition is not before us.) The
estate opposes Klinger’s request on the same hopeless
grounds that it had urged in its appeal, but does not ques-
4 No. 14-1128
tion the amount of fees as distinct from Klinger’s entitlement
to an award of any amount of fees in this case.
The Copyright Act authorizes the “award [of] a reasona-
ble attorney’s fee to the prevailing party as part of the costs.”
17 U.S.C. § 505. We said in Assessment Technologies of Wiscon-
sin, LLC v. WIREdata, Inc., 361 F.3d 434, 436–37 (7th Cir. 2004)
(and reaffirmed in DeliverMed Holdings, LLC v. Schaltenbrand,
734 F.3d 616, 625–26 (7th Cir. 2013)) that the two most im-
portant considerations in deciding whether to award fees
“are the strength of the prevailing party’s case and the
amount of damages or other relief the party obtained. If the
case was a toss-up and the prevailing party obtained gener-
ous damages, or injunctive relief of substantial monetary
value, there is no urgent need to add an award of attorneys’
fees. But if at the other extreme the claim or defense was
frivolous and the prevailing party obtained no relief at all,
the case for awarding attorneys’ fees is compelling” (cita-
tions omitted). We said that as a consequence of the success-
ful defense of an infringement suit the defendant is entitled
to a “very strong” presumption in favor of receiving attor-
neys’ fees, in order to ensure that an infringement defendant
does not abandon a meritorious defense in situations in
which “the cost of vindication exceeds the private benefit to
the party.” 361 F.3d at 437. “For without the prospect of such
an award, [an infringement defendant] might be forced into
a nuisance settlement or deterred altogether from exercising
[its] rights.” Id.We’re not alone in expressing these concerns. See Mi-
chael J. Meurer, “Controlling Opportunistic and Anti–
Competitive Intellectual Property Litigation,” 44 Boston Col-
lege L. Rev. 509, 521 (2003). See also Ben Depoorter & Robert
No. 14-1128 5
Kirk Walker, “Copyright False Positives,” 89 Notre Dame L.
Rev. 319, 343-45 (2013), where we read that many persons or
firms accused of copyright infringement find that “it is more
cost-effective to simply capitulate” than to fight, even when
the alleged claim is of dubious merit. Copyright holders, the
authors explain, have larger potential upsides and smaller
downside risks to filing suit, since if they win they obtain
damages but if they lose they don’t have to pay damages
(although a loss, especially if recorded in a published opin-
ion as in this case, may make it more difficult for them to
play their extortionate game in future cases). So copiers or
alleged copiers may be “induced into licensing [that is, pay-
ing a fee for a license to reproduce] the underlying work,
even if this license is unnecessary or conveys non-existent
rights." Id. at 345. Depoorter and Walker (id. at 345 n. 172)
give the example of the Summy-Brichard Company, a sub-
sidiary of Warner Music Group, which “receives approxi-
mately $2 million per year in royalty payments for licenses
to the song ‘Happy Birthday to You,’ despite the fact that the
song is most likely in the public domain,” as argued in Rob-
ert Brauneis, “Copyright and the World’s Most Popular
Song,” 56 J. Copyright Society U.S.A. 335, 338–40 (2009).
This case illustrates the concerns expressed both in the
articles we’ve just cited and in our opinions in Assessment
Technologies and DeliverMed Holdings. Unless Klinger is
awarded his attorneys’ fees, he will have lost money—to be
precise, $25,679.93 ($30,679.93 – $5,000)—in winning an ap-
peal in which the defendant’s only defense bordered on the
frivolous: a Pyrrhic victory if ever there was one. It’s irrele-
vant that in Assessment Technologies and DeliverMed Holdings,
the alleged infringer was the defendant, and in this case it’s
the plaintiff; a declaratory-judgment plaintiff in a copyright
6 No. 14-1128
case is in effect a defendant permitted to precipitate the in-
fringement suit.
The Doyle estate’s business strategy is plain: charge a
modest license fee for which there is no legal basis, in the
hope that the “rational” writer or publisher asked for the fee
will pay it rather than incur a greater cost, in legal expenses,
in challenging the legality of the demand. The strategy had
worked with Random House; Pegasus was ready to knuckle
under; only Klinger (so far as we know) resisted. In effect he
was a private attorney general, combating a disreputable
business practice—a form of extortion—and he is seeking by
the present motion not to obtain a reward but merely to
avoid a loss. He has performed a public service—and with
substantial risk to himself, for had he lost he would have
been out of pocket for the $69,803.37 in fees and costs in-
curred at the trial and appellate levels ($30,679.93 +
$39,123.44). The willingness of someone in Klinger’s position
to sue rather than pay Doyle’s estate a modest license fee is
important because it injects risk into the estate’s business
model. As a result of losing the suit, the estate has lost its
claim to own copyrights in characters in the Sherlock
Holmes stories published by Arthur Conan Doyle before
1923. For exposing the estate’s unlawful business strategy,
Klinger deserves a reward but asks only to break even.
We note finally that the estate was playing with fire in
asking Amazon and other booksellers to cooperate with it in
enforcing its nonexistent copyright claims against Klinger.
For it was enlisting those sellers in a boycott of a competitor
of the estate, and boycotts of competitors violate the anti-
trust laws. The usual boycott is of a purchaser by his suppli-
ers, induced by a competitor of the purchaser in order to
No. 14-1128 7
eliminate competition from that purchaser, as in the leading
case (old as it is) of Eastern States Retail Lumber Dealers’ Ass’n
v. United States, 234 U.S. 600 (1914); see also JTC Petroleum
Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 777–79 (7th Cir.
1999). This case is different, in its facts but not in economic
substance or legal relevance, because the boycotters enlisted
by the Doyle estate were buyers from the victim, rather than
sellers to it. But functionally they were suppliers—suppliers
of essential distribution services to Klinger.
It’s time the estate, in its own self-interest, changed its
business model.
Klinger’s motion is granted and the Doyle estate ordered
to pay him $30,679.93 for the legal fees that he incurred in
his successful defense of the district court’s judgment in his
favor.