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June 7, 2010

Lahiri v. Universal Music and Video ODW-CT Distribution 606 F.3d 1216 (9th cir. 2010)

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The Second District holds that continuous representation ends when a client hires new counsel to represent the client and the attorney takes no further action on the subject matter.  The Court also holds that contractual attorneys’ fees may be awarded to a firm representing itself under a broadly worded prevailing party attorneys’ fee provision in a retainer agreement. 

Anthony Kornarens represented Bappi Lahiri, who composed a song for an Indian movie pursuant to an agreement with the film’s producer.  Under Indian law, the producer owned the copyright which it later assigned to a third party.  Twenty-one years later, Kornarens filed suit on Lahiri’s behalf, claiming defendants used unauthorized excerpts of the song in violation of U.S. and California laws regarding false designation.

Shortly after the suit was filed the U.S.  Supreme Court granted certiorari in a case that held laws covering false designation claims did not include protection for ideas, concepts or communications embodied in the goods.  An adverse decision would eliminate Lahiri’s claims.  Lahiri then registered a copyright in the song with the United States Copyright Office.  The Supreme Court issued its opinion which eliminated Lahiri’s claims and Lahiri amended his complaint to add a copyright infringement claim, which became his sole claim when the district court dismissed all other claims.

The third party assignee of the copyright also sued defendants for infringement.  The two competing copyright lawsuits were consolidated.

Kornarens presented an agreement to the district court that he mischaracterized as resolving the issue of copyright ownership, when it was actually an agreement between Lahiri and the assignee to split the proceeds of the lawsuit.  This led the district court to incorrectly conclude Lahiri was a co-owner of the copyright and the court denied summary judgment against Lahiri.

Three more years of contentious litigation followed, until the district court granted summary judgment against Lahiri.  Defendants then moved for substantial attorney’s fees and costs under the courts inherent ability to sanction attorney misconduct.  The district court awarded substantial fees and costs as a sanction against Kornarens.

The Court of Appeals found that the sanction was warranted.  Indian law clearly vested the copyright in the film’s producers, not Lahiri, something Kornarens would have known if he had made even a cursory investigation into the circumstances of Lahiri’s composition.  The court rejected Kornaren’s argument that he reasonably relied on an Indian law expert.  Indian law is straightforward, did not require expert advice to understand, and is similar to U.S. law.  The leading Indian decision is in English and the court rejected what it characterized as Kornaren’s misrepresentation of it.

Kornaren’s misrepresentations of Indian law evidenced his bad faith and recklessness in pursuit of Lahiri’s copyright claim.  The claim was created by Kornaren’s registration of a 21 year old composition after the false designation claims were jeopardized by the Supreme Court’s grant of certiorari in a similar case.

The trial court was entitled to consider Kornaren’s attempt to cause the judge’s recusal by retaining the judge’s former law firm to defend him against the sanctions motion.  This tactic was designed to have a judge unfamiliar with case decide the motion.  The initial denial of summary judgment did not preclude the sanctions because it was predicated on Lahiri’s representation that an agreement with the assignee pertained to the copyright itself, not the proceeds of the litigation.

The district court’s bad faith finding was properly based on the cumulative effect of five years of litigation conduct.  Kornarens acted recklessly and in bad faith and his conduct caused unreasonably protracted and costly litigation over a frivolous copyright claim.

Comment: Federal courts have broad powers to sanction attorney misconduct.  Sanctions can be substantial, and are generally not covered by insurance.


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