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Attorney’s-fees clauses automatically become “loser pays” under California law

Suppose a contract contains a one-way attorneys’ fees provision — for example, a provision in a technology license agreement that the licensor can recover attorneys’ fees incurred in enforcing the license agreement.

And suppose the contract is governed by California law.

It appears that, under California Civil Code § 1717(a), that contract provision is automatically and non-waivably treated as a “loser pays” prevailing-party provision.

That is, if the technology licensor brings suit to enforce the license agreement, but the licensee is found to be the “prevailing party,” then the licensee can recover its attorneys’ fees even though the contract doesn’t say so.

I’ve updated the California choice-of-law cheat sheet to reflect this.

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