AFL Telecommunications LLC v. Incorporated et al

Filing 64

ORDER denying 56 Motion to Dismiss Counts/Claims. Signed by Judge David G Campbell on 4/9/2012.(NVO)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 AFL Telecommunications LLC, Plaintiff, 10 11 ORDER vs. 12 No. CV11-1086-PHX-DGC, Inc., Tech Sales, LLC, and Daniel Parsons and Jane Doe Parsons, 13 Defendant. 14 15 On January 27, 2012, Plaintiff AFL Telecommunications LLC (“AFL”) filed a 16 First Amended Complaint (“FAC”). Doc. 55. Defendants have filed a motion to dismiss 17 Count 4. Doc. 56. Plaintiff has responded (Doc. 58) and Defendants have replied 18 (Doc. 59). Neither party has requested oral argument. For the reasons that follow, the 19 Court will deny the motion. 20 I. Background. 21 AFL is a wholly-owned subsidiary of Fujikura Ltd. (“Fujikura”), a Japanese 22 manufacturer of fiber optic equipment. One of Fujikura’s products is a fusion splicer, a 23 device that it sells under the FUJIKURA trademark. 24 American licensee for Fujikura fusion splicers. 25 related equipment online. Each Fujikura fusion splicer contains operating software that is 26 installed on the splicers during the manufacturing and licensed in the country to which it 27 is shipped. 28 AFL is the exclusive North Defendants sell fusion splicers and 1 II. Standard. 2 When analyzing a complaint for failure to state a claim to relief under 3 Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light 4 most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 5 Cir. 2009) (citation omitted). Legal conclusions couched as factual allegations are not 6 entitled to the assumption of truth, Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009), and 7 therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re 8 Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010) (citation omitted). To avoid a 9 Rule 12(b)(6) dismissal, the complaint must plead “enough facts to state a claim to relief 10 that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This 11 plausibility standard “is not akin to a ‘probability requirement,’ but it asks for more than 12 a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S. Ct. at 1949 13 (quoting Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the 14 court to infer more than the mere possibility of misconduct, the complaint has alleged – 15 but it has not ‘show[n]’ – ‘that the pleader is entitled to relief.’” Id. at 1950 (quoting Fed. 16 R. Civ. P. 8(a)(2)). 17 III. Analysis. 18 To establish a prima facie case of copyright infringement, a plaintiff must show 19 (1) ownership of the allegedly infringed material and (2) a violation of at least one 20 exclusive right granted to copyright holders under 17 U.S.C. § 106. A & M Records v. 21 Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). 22 distributed fusion splicers in the United States which incorporated the Fujikura operating 23 software. Defendants make two primary arguments to support dismissal of this claim: 24 (1) AFL has not adequately alleged ownership of a valid copyright on the operating 25 software at the time of the alleged infringement, and (2) AFL has not adequately alleged 26 how Defendants infringed the copyright. AFL alleges that Defendants 27 A. Ownership. 28 AFL’s claim of ownership arises from a combination of (1) Fujikura’s ownership -2- 1 of a copyright and (2) Fujikura’s licensing to AFL of the exclusive right to distribute the 2 copyrighted work in the United States. A work is copyrightable under the Copyright Act 3 when it is original and fixed in a tangible medium. 17 U.S.C. § 102(a). “Original, as the 4 term is used in copyright, means only that the work was independently created by the 5 author (as opposed to copied from other works), and that it possess at least some minimal 6 degree of creativity.” Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 7 (1991). AFL alleges that all versions of the operating software since its creation in 2008 8 “constitute original works of authorship that were created by Fujikura employees, who 9 wrote the code constituting the software in Japan and within the scope of their 10 employment.” Doc. 55 ¶75. An employer owns the copyright to any copyrightable work 11 created by employees within the scope of their employment. 17 U.S.C. § 101 (definition 12 of “work made for hire”). AFL has sufficiently alleged that the operating software is 13 owned by Fujikura and is copyrightable. 14 The Copyright Act provides that “no action for infringement . . . shall be instituted 15 until preregistration or registration of the copyright claim has been made in accordance 16 with this title.” 17 U.S.C. § 411(a). On May 26, 2011, Fujikura obtained U.S. Copyright 17 Registration No. TX 7-400-942, which covers version 1.32b of the operating software for 18 the splicers. 19 maintain the current action because the alleged infringement occurred in 2009. AFL cites 20 two cases which adopt the “effective registration doctrine” and hold that a plaintiff need 21 not produce a separate registration relating to a pre-existing work in order to maintain an 22 action for infringement of the preexisting work. See Streetwise Maps v. Vandam, Inc., 23 159 F.3d 739, 747 (2d Cir. 1998) (holding that “the registration certificate relating to the 24 derivative work . . . will suffice to permit [the plaintiff] to maintain an action for 25 infringement based on defendants’ infringement of the pre-existing work”); Salestraq 26 Am., LLC v. Zyskowski, 635 F. Supp. 2d 1178, 1181 (D. Nev. 2009) (holding that a 27 registration of a 2008 version of a compilation of floor plans and locations was sufficient 28 to maintain an action for infringement of the 2007 unregistered version). Plaintiff argues that the 2011 copyright registration is insufficient to -3- 1 Defendants rely on an Eleventh Circuit case which holds that when the registration 2 of a work entirely fails to identify the unregistered preexisting work in the copyright 3 registration, an action for infringement of the unregistered preexisting work cannot be 4 maintained. Oravec v. Sunny Isles Luxury Ventures, L.C., 527 F.3d 1218, 1229-30 (11th 5 Cir. 2008). Oravec recognized, however, that cases applying the effective registration 6 doctrine all involve “derivative or collective works that incorporated material from 7 unregistered preexisting works.” Id. at 1229. 8 In this case, the FAC alleges that “[a]lthough each new numbered version [of the 9 operating software] incorporates some original, copyrightable content not included in the 10 immediately preceding version, all versions share substantial original, copyrightable 11 content.” Doc. 55 ¶ 76. It is reasonable to infer from this allegation that each successive 12 version incorporates the preceding versions. Given this allegation, the Court concludes 13 that the law stated in Streetwise and Salestraq should be applied in this case. In addition 14 to those cases, other courts have held that registration of a derivative work permits legal 15 actions on preceding versions of the work. See, e.g., In re Indep. Serv. Orgs. Antitrust 16 Litig., 964 F. Supp. 1469, 1473 (D. Kan. 1997) (holding that registration of derivative 17 service manuals and software was sufficient to allow infringement claim based on 18 preexisting works authored by same party); Greenwich Film Prods. v. DRG Records, 19 Inc., 833 F. Supp. 248, 251-52 (S.D.N.Y. 1993) (holding that registration for motion 20 picture was sufficient to cover musical compositions contained therein where plaintiff 21 owned copyrights in both); 2 Melville B. Nimmer & David Nimmer, Nimmer on 22 Copyright § 7.16[B][2][c] (2008) (“When the same party owns the derivative or 23 collective work plus the underlying elements incorporated therein, its registration of the 24 former is sufficient to permit an infringement action on the underlying parts, whether 25 they be new or preexisting.”) (citation and internal quotation marks omitted)). 26 The Court also notes that in Oravec the plaintiff sought to assert copyright 27 infringement of unregistered three-dimensional models of an architectural work based on 28 registration of architectural drawings. 527 F.3d at 1230. In Streetwise, the plaintiff was -4- 1 asserting infringement of prior unregistered street maps based on a registration of a later 2 version of the same map. 159 F.3d at 747. The allegations in the FAC suggest that an 3 updated version of the splicer operating software is more like the street maps in 4 Streetwise – some or all of the prior versions are still part of the work. 5 The FAC alleges that Fujikura “grants to AFL the right to bring suit for 6 infringement, including infringement claims existing as of the date of the agreement.” 7 Doc. 55 ¶ 77. AFL argues that this allegation is sufficient to allow AFL to pursue an 8 infringer for infringement that occurred prior to the assignment. The Court agrees. See 9 Co-Opportunities, Inc. v. Nat’l Broadcasting Co., Inc., 510 F. Supp. 43, 46-47 (N.D. Cal. 10 1981) (assignment of existing causes of action entered into after commencement of 11 litigation was valid to transfer accrued claims back to the filing of the complaint). 12 2. Infringement. 13 Defendants argue that AFL does not plausibly allege how they violated any 14 exclusive and protectable right. In particular, Defendants argue that it is impossible to 15 determine whether the products that it allegedly sold included the original aspects of the 16 copyrighted software or even part of the software. AFL has alleged that Defendants 17 distributed fusion splicers in the U.S. which incorporated Fujikura’s operating software. 18 Doc. 55 ¶ 78. The exclusive rights granted to a copyright owner are found in § 106 of the 19 Copyright Act, and include the exclusive right to distribute the copyrighted work. 17 20 U.S.C. § 106(3). Accepting AFL’s allegations as true, as the Court must at this stage, 21 AFL has adequately alleged a violation of its exclusive right to distribute. 22 IT IS ORDERED that Defendants motion to dismiss (Doc. 56) is denied. 23 Dated this 9th day of April, 2012. 24 25 26 27 28 -5-

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