Fedoseyev v. CFD Research Corporation

Filing 20

MEMORANDUM OPINION as more fully set out in order. Signed by Magistrate Judge Harwell G Davis, III on 11/15/16. (SPT )

FILED
2016 Nov-15 AM 08:09
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
ALEXANDRE FEDOSEYEV,
Plaintiff
vs.
CFD RESEARCH CORPORATION,
Defendant

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) Case No. 5:15-cv-02321-HGD
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MEMORANDUM OPINION
Defendant, CFD Research Corporation (CFD) has moved, pursuant to
Fed.R.Civ.P. 12(b)(6), to dismiss Count III of plaintiff, Alexandre Fedoseyev’s, First
Amended Complaint. (Doc. 16, Motion to Dismiss). CFD’s basis for its motion is
that Count III, which alleges a wanton disregard of a known duty, is preempted by
§ 301 of the Copyright Act. (Id.).
A 12(b)(6) motion tests the legal sufficiency of a plaintiff’s claim, and the court
construes all allegations as set forth in plaintiff's complaint as true and resolves all
inferences in favor of the plaintiff. United States v. Gaubert, 499 U.S. 315, 327, 111
S.Ct. 1267, 113 L.Ed.2d 335 (1991); Powell v. Lennon, 914 F.2d 1459, 1463 (11th
Cir. 1990). Although it must accept well-pled facts as true, the court is not required
to accept a plaintiff’s legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662,129 S.Ct.

1937, 1949, 173 L.Ed.2d 868 (2009) (noting “the tenet that a court must accept as
true all of the allegations contained in a complaint is inapplicable to legal
conclusions”). In evaluating the sufficiency of a plaintiff’s pleadings, the court
makes reasonable inferences in plaintiff’s favor, “but [it is] not required to draw
plaintiff’s inference.” Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242,
1248 (11th Cir. 2005). Similarly, “unwarranted deductions of fact” in a complaint are
not admitted as true for the purpose of testing the sufficiency of plaintiff’s
allegations. Id.; see also Iqbal, 556 U.S. at 681, 129 S.Ct. at 1951 (stating conclusory
allegations are “not entitled to be assumed true”).
A complaint may be dismissed if the facts as pled do not state a claim for relief
that is plausible on its face. See Iqbal, 556 U.S. at 679, 129 S.Ct. at 1950 (explaining
“only a complaint that states a plausible claim for relief survives a motion to
dismiss”); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 561-62, 570, 127 S.Ct. 1955,
1968-69, 1974, 167 L.Ed.2d 929 (2007) (retiring the prior “unless it appears beyond
doubt that the plaintiff can prove no set of facts” standard).
Plaintiff alleges that CFD used software developed by plaintiff called
CNSPACK, without properly compensating him for its usage, which he alleges CFD
promised to do. In Count I, he charges that CFD knowingly and willfully infringed
on his copyright in CNSPACK. In Count II, he alleges that CFD failed to pay him
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for the use of CNSPACK as it promised, thus breaching its contractual obligation to
plaintiff.
Count III states, in pertinent part:
In its dealings with Dr. Fedoseyev and in using his CNSPACK software
as described above, CFD voluntarily and knowingly undertook the duty
and obligation to compensate Dr. Fedoseyev with a payment of a
reasonable royalty for its commercial use of CNSPACK, which duty
CFD, acting with wanton disregard for Dr. Fedoseyev’s rights, and
purposefully, to cause him injury, ignored.
(Doc. 13, First Amended Complaint, at ¶ 20). The essence of Count III is that CFD
made use of or “copied” CNSPACK without plaintiff’s permission and without
compensation and did so with a wanton disregard for his right to license and be
compensated for the use of this software. It is this claim which defendant asserts is
preempted by § 301 of the Copyright Act.
According to the Eleventh Circuit:
Section 301 in effect establishes a two-pronged test to be applied in
preemption cases. We must decide whether the rights at issue fall within
the “subject matter of copyright” set forth in sections 102 and 103 and
whether the rights at issue are “equivalent to” the exclusive rights of
section 106. Harper & Row, Publishers v. Nation Enters., 501 F.Supp.
848, 850 (S.D.N.Y. 1980).
Crow v. Wainwright, 720 F.2d 1224, 1225-26 (11th Cir. 1983). The Eleventh Circuit
further noted that “[t]he proper method of analysis is to examine whether the elements
of a cause of action for the tort of copyright infringement are equivalent to the
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elements of the crime of dealing in stolen property as it applies in this case.” Id. at
1226.
There is no question that a software program such as the one here falls within
the subject matter of copyright. Therefore, the first prong of the preemption test is
satisfied.
With regard to the second prong,
Section 301 of the Act preempts all state causes of action based on a
right found in the Act or an equivalent to such a right. The Act states
that,
all legal or equitable rights that are equivalent to any of the
exclusive rights within the general scope of copyright as
specified by section 106 in works of authorship that are
fixed in a tangible medium of expression and come within
the subject matter of copyright as specified by sections 102
and 103, . . . are governed exclusively by this title. . . .
[N]o person is entitled to any such right or equivalent right
in any such work under the common law or statutes of any
State.
17 U.S.C. § 301(a). A short list of specific exceptions is delineated in
section “(b)”, resulting in a generally broad scope of preemption. One
of those exceptions is for state common law or statutes “with respect to
. . . (3) activities violating legal or equitable rights that are not
equivalent to any of the exclusive rights within the general scope of
copyright as specified by section 106.” 17 U.S.C. § 301(b)(3). The
result of this subsection is that the Act “preempts only those state law
rights that may be abridged by an act which, in and of itself, would
infringe one of the exclusive rights provided by federal copyright law.”
Computer Assoc. Int’l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.
1992) (quotations omitted).
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Foley v. Luster, 249 F.3d 1281, 1285 (11th Cir. 2001).
According to the Eleventh Circuit, if an “extra element is required instead of
or in addition to the acts of reproduction, performance, distribution or display, in
order to constitute a state-created cause of action, then the right does not lie within
the general scope of copyright and there is no preemption.” Id. (quoting Altai, 982
F.2d at 716 (internal quotations omitted)).
Altai further holds that:
A state law claim is not preempted if the “extra element” changes the
“nature of the action so that it is qualitatively different from a copyright
infringement claim.” Mayer v. Josiah Wedgwood & Sons, Ltd., 601
F.Supp. 1523, 1535 (S.D.N.Y. 1985); see Harper & Row, Publishers,
Inc., 723 F.2d at 201. To determine whether a claim meets this standard,
we must determine “what plaintiff seeks to protect, the theories in which
the matter is thought to be protected and the rights sought to be
enforced.” 1 Roger M. Milgrim, Milgrim on Trade Secrets § 2.06A[3],
at 2-150 (1992) (hereinafter “Milgrim”). An action will not be saved
from preemption by elements such as awareness or intent, which alter
“the action’s scope but not its nature. . . .” Mayer, 601 F.Supp. at 1535.
Following this “extra element” test, we have held that unfair competition
and misappropriation claims grounded solely in the copying of a
plaintiff’s protected expression are preempted by section 301. See, e.g.,
Walker v. Time Life Films, Inc., 784 F.2d 44, 53 (2d Cir.), cert. denied,
476 U.S. 1159, 106 S.Ct. 2278, 90 L.Ed.2d 721 (1986); Warner Bros.,
Inc. v. American Broadcasting Cos., 720 F.2d 231, 247 (2d Cir. 1983);
Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 919 & n.15 (2d Cir.
1980). We also have held to be preempted a tortious interference with
contract claim grounded in the impairment of a plaintiff’s right under the
Copyright Act to publish derivative works. See Harper & Row,
Publishers, Inc., 723 F.2d at 201.
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Altai, 982 F.2d at 716-17.
Plaintiff asserts that his right is not conditioned on CFD’s acts of reproduction
and distribution of copies of the work alone, but on the right to enforce the State’s
policy against wanton acts. However, despite this claim, there is nothing in enforcing
any State policy that adds an “extra element” to the copyright infringement claim.
Plaintiff further asserts that plaintiff’s wantonness claim is based on his right
to enforce an obligation CFD undertook to compensate him with payment for the
commercial use of CNSPACK. The Court agrees with defendant that this claim is
nothing more than a claim that CFD failed to compensate plaintiff for the use of his
software. The addition of the claim that defendant acted with wanton disregard is the
allegation of mental status, but alleges no actual actions by defendant in addition to
those that make up the alleged acts of infringement. The additional elements of
mental status such as “knowledge,” “intent” and “scienter” have been held not to add
rights different in kind from those protected by copyright laws. Crow v. Wainwright,
720 F.2d at 1226-27. The same is true with regard to negligence claims. See, e.g.,
Bridgeport Music, Inc. v. 11C Music, 154 F.Supp.2d 1330, 1335 (M.D.Tenn. 2001).
There is no basis in Eleventh Circuit case law which supports differentiating
plaintiff’s wantonness claim from these other cases involving mental status.

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Based on the foregoing, defendant’s motion to dismiss Count III of the First
Amended Complaint is due to be GRANTED. Upon the occurrence of such event,
plaintiff has asked, in advance, for the opportunity to file another amended complaint.
Defendant opposes this request. Nonetheless, plaintiff may amend its complaint if
it does so within 28 days of the date of the order dismissing Count III. Plaintiff is
advised, however, that any amendment that attempts to add any claim that requires
only mental status to differentiate it from the alleged Copyright Act violation is likely
to meet the same fate.
A separate order in conformity with this Memorandum Opinion will be entered
contemporaneously herewith.
DONE and ORDERED this 15th day of November, 2016.

HARWELL G. DAVIS, III
UNITED STATES MAGISTRATE JUDGE

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