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39. Should the court grant the corporation's motion for sanctions against the copyright holder?
The corporation moved to dismiss the copyright holder's complaint for failure to state a claim on which relief could be granted. The copyright holder opposed the motion and continued to press the federal district court to accept his legal theory for months after the Supreme Court's decision. The corporation then served the copyright holder a motion for sanctions for failing to plead in good faith. The copyright holder did not withdraw or alter his complaint, and after three weeks, the corporation filed its motion for sanctions with the court.
A copyright holder of a book sued a corporation in federal court. The book's author had conducted video interviews and included the accompanying transcripts in the book. The copyright holder claimed that the corporation had been using and distributing the videos over the express objection by the author. Although the copyright holder had not registered a separate copyright for the interview videos, he alleged copyright infringement on the theory that his book copyright extended to the videos as well. In the complaint, the copyright holder explicitly sought a modification of the law. While this lawsuit was pending, the U.S. Supreme Court decided an unrelated case in which it rejected the same legal argument the copyright holder was making.
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In this case, by continuing to advocate for a legal position that the copyright holder knew had become frivolous under newly-decided, governing case law, he acted in bad faith and could be subject to sanctions. The corporation then properly waited 21 days before filing a separate sanctions motion.
A is incorrect. Even if the copyright holder is entitled to have the court rule on its theory of the case, the copyright holder is subject to Rule 11 sanctions, as explained above.
B is incorrect. The motion for sanctions was not based on the copyright holder's complaint when it was filed, but on the copyright holder later advocating the legal position that the copyright holder knew was frivolous in light of the U.S. Supreme Court's later ruling.
C is incorrect. The court should grant the corporation's sanctions motion, but not because the copyright holder knew existing law did not support his complaint when he filed it. The copyright holder's original complaint explicitly sought a modification of the law, which, under Rule 11, was a proper pleading supported by a «nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.» However, once the Court's decision was issued and the copyright holder's claim was no longer valid, he acted in bad faith by continuing to pursue the legal theory.