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NXIVM Corp. v. Ross Inst. - 2005 U.S. Dist. LEXIS 44789 (N.D.N.Y. Aug. 2, 2005)

Rule:

It is well established that a "prevailing party" is one who has been awarded some relief by the court. The standard to apply when deciding whether a party has "prevailed" is the same for plaintiffs and defendants. A party need not be successful on all claims to be deemed the "prevailing party" under the Copyright Act. Instead, a party may be deemed prevailing if it succeeds on a significant issue in litigation that achieves some benefits that the party sought in bringing suit.

Facts:

Plaintiff NXIVM sued defendant Franco and various co-defendants for copyright infringement under 17 U.S.C. §§ 106 and 106A, trademark disparagement under the Lanham Act, 15 U.S.C. § 1125(a), and for other state law claims under two separately-filed complaints. In response, Franco filed a motion to dismiss the copyright infringement claim of the member complaint, 1051, pursuant to FED. R. CIV. P. 12(b)(6). NXIVM cross-moved, seeking leave to file an amended complaint. However, NXIVM retained new counsel and requested to supplement the cross-motion to amend with an entirely new proposed complaint to consolidate both actions and to retract certain claims against Franco and the other defendants. Specifically, NXIVM withdrew its claim of copyright infringement against Franco in the proposed amended complaint. Franco's motion to dismiss the copyright infringement claim under FED. R. CIV. P. 12(b)(6) was granted. Specifically, the court dismissed the copyright infringement claim against Franco in the 1051 complaint based upon its legal deficiencies and upon NXIVM's apparent withdrawal of this claim in the proposed amended complaint. Franco moved for attorney's fees associated with the dismissal of the copyright infringement claim under the Copyright Act. On May 24, the court issued a text order directing Franco to submit its application in compliance with the lodestar method for the Northern District of New York.  On May 26, Franco amended her invoices for attorney's fees in compliance with this district's lodestar rate. NXIVM opposed the motion. 

Issue:

Did defendant Franco fail to satisfy the prevailing party requirement under the Copyright Act?

Answer:

No

Conclusion:

The United States District Court for the Northern District of New York held that defendant Franco was a "prevailing party" under Section 505 of the Copyright Act, 17 U.S.C. § 505. Franco was the prevailing party inasmuch as her motion to dismiss resulted in a judicially sanctioned material alteration of the legal relationship between the parties. Although the court based its decision in part on NXIVM's voluntary withdrawal of that claim, the complaint clearly failed to assert any facts or allegations to support a copyright infringement claim against Franco. A conclusion that NXIVM conceded by its present argument that there was no copyright infringement claim against Franco in the original member complaint. Moreover, the Court was required to exercise a high degree of judicial oversight and involvement in addressing the numerous motions in this case, including NXIVM's motion for leave to amend. Similarly, NXIVM's reliance on Chambers v. Time Warner, Inc.,279 F. Supp. 2d 362 (S.D.N.Y. 2003) is inapposite because that case did not involve a judicial determination on the merits. 

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