The US Court of Appeals for the Eleventh Circuit affirmed a district court’s ruling that a copyright holder’s voluntary dismissal of its claims did not render the defendant a prevailing party entitled to attorneys’ fees under the Copyright Act. Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, Case No. 23-12563 (11th Cir. July 30, 2024) (Wilson, Grant, Lagoa, JJ.)

Affordable Aerial Photography (AAP) filed suit against Property Matters and Home Junction over alleged copyright infringement of a 2010 photograph titled “Presidential Place Front Aerial 2010 AAP,” which provides an aerial view of a residential condominium complex. AAP owns all real estate photos and related products (slide shows, virtual tours, stock photography) of Robert Stevens and licenses them for limited use by customers, such as luxury real estate companies. Property Matters is a real estate brokerage, and Home Junction is a real estate marketing solutions and services provider that designed and maintained Property Matters’ website.

The work was posted with copyright management information and registered with the Copyright Office in April 2018. During or before April 2017, the work appeared on Property Matters’ website without authorization, but AAP did not discover the alleged infringement until February 2022. After AAP filed suit, Property Matters filed a motion to dismiss arguing (in relevant part) that 17 U.S.C. § 507(b) sets a three-year statute of limitations from when the claim accrued (i.e., April 2017) to bring civil action and, therefore, AAP’s suit was untimely by more than two years. The district court denied the motion without prejudice. AAP then filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) with respect to its action against Property Matters and filed a joint notice of settlement with Home Junction soon after, which closed the case.

Property Matters then moved for attorneys’ fees under 17 U.S.C. § 505, asserting that “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” AAP argued that Property Matters was not the prevailing party because the voluntary dismissal was without prejudice and the limitations period had not yet expired. The district court found that the voluntary dismissal did not materially alter the legal relationship between the parties. The district court applied the “discovery rule” to conclude that AAP’s copyright infringement claim did not accrue until it discovered the alleged infringement in February 2022 and therefore AAP was not time-barred from raising its copyright infringement claim in a separate suit against Property Matters through February 2025. Property Matters appealed.

Reviewing the legal question on appeal de novo, the Eleventh Circuit affirmed. The Court reasoned that a defendant is not the prevailing party when a plaintiff’s action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. The Court explained that a defendant does not attain prevailing party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the district court itself must act to reject or rebuff the plaintiff’s claims. The Court rejected the cases that Property Matters cited in support of its arguments because of material differences in facts. The Court noted that a defendant can be considered a prevailing party after voluntary dismissal with prejudice or even sometimes because of voluntary dismissal without prejudice when the dismissal comes after the statute of limitations period has expired. However, since AAP’s copyright infringement claim against Property Homes was voluntary dismissed without prejudice and the statute of limitations period had not expired, Property Homes could not be considered a prevailing party for purposes of seeking attorneys’ fees.