After all this time . . . I had thought that FRCP Rule 68 was an excellent tool to hammer the plaintiff, even where the copyright defendant had in fact copied. This is because an argument exists that the recoverable "costs" under Rule 68 include attorneys fees. Thus, by making a Rule 68 offer early in the game, the defendant could shift the fees burden even if infringement was found (assuming, of course, the offer exceeded what plaintiff was able to recover at trial).
Opps. Turns out I was wrong, at least in part. Turns out there is a split in authority. I've been taking one side, while the 9th Circuit has taken the other.
In Ninth Circuit copyright actions, costs awardable pursuant to a Fed. R. Civ. P. 68 offer of judgment that exceeds plaintiff’s recovery at trial do not include a defendant’s post-offer attorney’s fees. This is because the Ninth Circuit has held that Rule 68 “costs” do not include a non-prevailing defendant’s post offer attorney’s fees when the underlying statute only awards attorney’s fees to a prevailing party. See, Champion Produce, Inc. v. Ruby Robinson Co., Inc., 342 F.3d 1016, 1031-32 (9th Cir. 2003). 17 U.S.C. § 505, the copyright provision dealing with attorney’s fees awards, provides that attorney’s fees may be awarded as a component of costs, but only to a prevailing party. 17 U.S.C. § 505 (“[T]he court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.”).
Thus, because a defendant who is entitled to post Rule 68 offer costs is necessarily not the prevailing party (as the defendant is consenting to judgment), copyright defendants in this Circuit may not recover attorney’s fees as a component of costs. This view is also held by the First, Third, Fifth, Seventh, Eighth, Ninth, and D.C. Circuits. See, William F. Patry, Patry on Copyright § 22:215 (2011).