Adlife Marketing & Communications Company, Inc. v. Popsugar Inc.

Background

Adlife alleged that Popsugar infringed Adlife’s copyright in a photograph of fish tacos. Adlife said it acquired the photograph in a larger portfolio from Malcolm Bedell. The case was originally filed in the Southern District of New York and was later transferred to the Northern District of California.

Popsugar initially answered without asserting a license defense. During discovery, Popsugar learned that it had a license, and it amended its answer to add that defense. Adlife later stated that it learned Bedell had granted Popsugar a license before selling the portfolio to Adlife. Adlife concluded that the license provided a complete defense to its copyright claim and that continuing the litigation had no point.

Motion and parties’ positions

Adlife moved under Federal Rule of Civil Procedure 41(a)(2) for voluntary dismissal of its own complaint with prejudice. Popsugar did not oppose dismissal with prejudice itself. Instead, it opposed the motion only to request that the dismissal preserve Popsugar’s ability to seek attorney’s fees and costs and establish Popsugar as the prevailing party.

Court’s reasoning

The court explained that a voluntary-dismissal motion under Rule 41(a)(2) generally should be granted unless the defendant would suffer clear legal prejudice. Here, both parties requested dismissal with prejudice, so the court found that Popsugar would not be prejudiced.

The court declined to resolve the parties’ disputes about when Adlife discovered the license or whether the parties could have used a stipulation to establish Popsugar’s prevailing-party status. It held that those issues concerned the parties’ conduct during the litigation and did not affect whether the current dismissal should be granted. The court stated that dismissal with prejudice would confer prevailing-party status on Popsugar because Adlife would be barred from refiling the claim in federal court.

Ruling and next steps

Judge Lucy H. Koh granted Adlife’s motion to dismiss the complaint with prejudice. The court did not decide the amount, timing, or ultimate entitlement to attorney’s fees and costs. It proposed a telephonic settlement conference with United States Magistrate Judge Nathanael Cousins. If the parties did not agree to that conference, the court ordered direct settlement negotiations before any fee motion and required a declaration describing those negotiations.