FILED

NOT FOR PUBLICATION FEB 27 2013

MOLLY C. DWYER, CLERK

UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICROHITS, INC., a California No. 11-56411 corporation, D.C. No. 2:10-cv-00036-PA-E Plaintiff - Appellant,

and MEMORANDUM*

RONALD MAGNESS, an individual,

Plaintiff,

v.

DEEP DISH PRODUCTIONS, INC., a Delaware corporation,

Defendant - Appellee.

Appeal from the United States District Court for the Central District of California Percy Anderson, District Judge, Presiding

Argued and Submitted February 13, 2013 Pasadena, California

* This disposition isn’t appropriate for publication and isn’t precedent except as provided by 9th Cir. R. 36-3. page 2 Before: KOZINSKI, Chief Judge, SILVERMAN, Circuit Judge, and RAKOFF, Senior District Judge.**

1. We have jurisdiction over the denial of Microhits’s motion to withdraw

its motion for voluntary dismissal. Microhits’s appeal of this ruling was timely.

Fed R. App. P. 4(a)(1). It also suffered sufficient injury to establish Article III

standing because the district court dismissed the case with prejudice, even though

Microhits had requested dismissal without prejudice. Cf. Unioil, Inc. v. E.F.

Hutton & Co., Inc., 809 F.2d 548, 556 (9th Cir. 1986).

2. When granting a motion for voluntary dismissal, a district court may

impose “terms that [it] considers proper.” Fed. R. Civ. P. 41(a)(2). These terms

may include that the dismissal be with prejudice. See Burnette v. Godshall, 828 F.

Supp. 1439, 1443 (N.D. Cal. 1993), aff’d sub nom. Burnette v. Lockheed Missiles

& Space Co.,72 F.3d 766 (9th Cir. 1995). Where a plaintiff “knows or has reason

to know that [it] may withdraw [its] motion for dismissal,” it “will be deemed to

have consented to the conditions . . . unless [it] withdraws [its] motion within a

reasonable time.” Unioil, 809 F.2d at 555. Microhits was represented by counsel,

and so it should have known of its right to withdraw its motion. See Beard v.

** The Honorable Jed S. Rakoff, Senior District Judge for the U.S. District Court for the Southern District of New York, sitting by designation. page 3 Sheet Metal Workers Union Local 150, 908 F.2d 474, 476–77 (9th Cir. 1990).

Nevertheless, it waited more than two months after entry of the dismissal order to

file its motion to withdraw, and more than three months after it knew the court was

considering dismissal with prejudice. The district court didn’t abuse its discretion

in denying the motion as untimely.

3. We also have jurisdiction over the district court’s award of attorney’s

fees. 28 U.S.C. § 1291. Under the Copyright Act, a district court has discretion to

award fees to a prevailing party when doing so would further the purposes of the

Act. 17 U.S.C. § 505; Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1120 (9th

Cir. 2007). The district court’s overarching rationale for awarding fees against

Microhits was its belief that Microhits failed to exercise due diligence in

discovering that a third party had purchased the copyright before it did. While

Microhits knew there was a previous conveyance of some interest in the work to

the third party, there’s no evidence that Microhits knew the conveyance was a full

transfer of the copyright, rather than a license. The third party purchaser never

recorded the copyright with the Copyright Office, and Deep Dish doesn’t argue

that the conveyance was otherwise publicly available. Nor is there anything in the

record that would have put Microhits on notice that it needed to obtain a copy of page 4 the transfer document. The award of attorney’s fees under these circumstances

would unduly chill meritorious copyright lawsuits, which wouldn’t serve the

purposes of the Copyright Act. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 525–27

(1994).

Deep Dish’s belated motion to file a supplemental brief is denied. The

district court’s denial of the motion to withdraw is AFFIRMED; the award of fees

is REVERSED. NO COSTS.

FILED

Microhits, Inc. v. Deep Dish Productions, 11-56411 FEB 27 2013

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

SILVERMAN, Circuit Judge, concurring in part and dissenting in part:

Ten months after the plaintiffs brought suit for copyright infringement –

after substantial discovery had been conducted and just four weeks before trial was

to have begun – plaintiffs moved to voluntarily dismiss their complaint because,

they said, they discovered that they could not prove that they own the copyright

over which they brought suit to begin with. Meantime, the defendants incurred

tens of thousands of dollars in attorneys’ fees defending the action. Then, after

dismissing its case, plaintiff Microhits, Inc. filed an untimely “notice of

withdrawal” of its motion to dismiss, causing the defendant to incur still additional

attorneys’ fees.

A district court has discretion to award attorneys’ fees in a copyright case,

Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1120 (9th Cir. 2007), and given the

circumstances here, did not abuse its discretion in doing so. With all due respect,

my colleagues are effectively reviewing the award de novo. I join the majority in

affirming the district court’s denial of the Microhits’ belated notice of withdrawal,

but dissent from the reversal of the attorneys’ fee award. I would affirm the

district court in full.