Getty Images (US), Inc. v. Stability AI, Inc.

Filing 26

REDACTED VERSION of 25 Letter by Getty Images (US), Inc.. (Attachments: # 1 Text of Proposed Order, # 2 Exhibit A - E)(Vrana, Robert)

Case 1:23-cv-00135-GBW Document 26 Filed 07/18/23 Page 1 of 4 PageID #: 2095

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
GETTY IMAGES (US), INC.
Plaintiff,
v.
STABILITY AI, LTD. and STABILITY AI,
INC.
Defendants.

C.A. No. 23-135 (GBW)
REDACTED - PUBLIC VERSION
Filed July 18, 2023

LETTER TO THE HONORABLE GREGORY B. WILLIAMS FROM ROBERT M.
VRANA REGARDING DISCOVERY DISPUTE
Dated: July 18, 2023
OF COUNSEL:
Benjamin E. Marks
Jared R. Friedmann
Melissa Rutman
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
[phone]
[e-mail]
[e-mail]
[e-mail]

YOUNG CONAWAY STARGATT &
TAYLOR, LLP
Tammy L. Mercer (No. 4957)
Robert M. Vrana (No. 5666)
1000 North King Street
Wilmington, Delaware 19801
[phone]
[e-mail]
[e-mail]
Attorneys for Plaintiff Getty Images (US), Inc.

Case 1:23-cv-00135-GBW Document 26 Filed 07/18/23 Page 2 of 4 PageID #: 2096

Dear Judge Williams:
Getty Images (US), Inc. (“Getty Images”) respectfully seeks an order compelling
Stability AI, Ltd. and Stability AI, Inc. (collectively, “Defendants”) to produce additional
jurisdictional discovery in response to the document requests and interrogatories identified
below and to produce a deponent within a reasonable period following the production.
I.

Background

Getty Images brought copyright, trademark, and unfair competition claims against
Defendants arising out of their unauthorized copying of some 12 million images and the
associated captions and metadata from Getty Images’ website to train Stability AI’s generative
AI model and their distribution of infringing images and infringing or otherwise unlawful uses
of Getty Images’ trademarks. The Amended Complaint contains detailed allegations regarding
how the Defendants are alter egos of one another. Stability AI, Ltd. created a Delaware
corporation, Stability AI, Inc.—which admittedly has no employees or day-to-day operations of
its own—to take advantage of US and Delaware securities laws and raise money for the UK
entity’s infringing activities, including raising over $75 million through a securities offering.
D.I. 13 ¶¶ 18-20. Defendants moved to dismiss for lack of personal jurisdiction over the UK
entity or to have the case transferred to the Northern District of California, which is their
preferred forum, even though neither Defendant is located there. In support of their motion,
Defendants submitted a declaration from Peter O’Donoghue, who is both the Chief Financial
Officer and a member of the Board of Directors of both the Delaware and UK entities. See D.I.
18 ¶ 1; Ex. B (defined below), Verification. Mr. O’Donoghue testified that the two companies
“are operated as separate companies,” but his declaration provided no evidence of this other than
his own say-so. D.I. 18 ¶ 7.
Getty Images served jurisdictional discovery requests on Defendants on May 12, 2023,1
and the parties began to meet and confer soon after. The parties then submitted a stipulation and
proposed order regarding jurisdictional discovery, which was entered by the Court. D.I. 21.
But, despite agreeing to a process for jurisdictional discovery, Defendants have largely refused
to answer interrogatories or produce documents, almost entirely on the basis of impermissible
boilerplate objections, even though “[b]oilerplate, generalized objections are inadequate and
tantamount to not making any objection at all.” LG. Philips LCD Co. v. Tatung Co., No. CV 04343-JJF, 2005 WL 8170100, at *16 (D. Del. Aug. 16, 2005) (citation omitted), adopted in
relevant part by 2006 WL 8452351 (D. Del. Sept. 29, 2006). And Getty Images’ efforts to reach
an acceptable compromise on the scope of its requests have been unavailing. For many of the
document requests, Defendants have improperly refused even to disclose whether responsive
documents exist. See Fed. R. Civ. P. 34(b)(2)(C) (“An objection must state whether any
responsive materials are being withheld on the basis of that objection.”).
1

Defendants’ responses to Getty Images’ discovery demands are attached as Exs. A (Stability AI
Ltd.’s Supplemental Objections and Responses to Plaintiff’s Jurisdictional Requests for the
Production of Documents), B (Stability AI Ltd.’s Supplemental Objections and Responses to
Plaintiff’s Jurisdictional Interrogatories), C (Stability AI Inc.’s Supplemental Objections and
Responses to Plaintiff’s Jurisdictional Requests for the Production of Documents), and D
(Stability AI Inc.’s Supplemental Objections and Responses to Plaintiff’s Jurisdictional
Interrogatories). The exhibits are being filed under seal because Defendants labeled all four
documents “Highly Confidential – Attorney Eyes Only” though only a small portion of the
documents arguably contains confidential information.

Case 1:23-cv-00135-GBW Document 26 Filed 07/18/23 Page 3 of 4 PageID #: 2097

Defendants’ principal—but untenable—position is that “Getty [Images] is not entitled to
jurisdictional discovery at all” and that Defendants’ responses have been “voluntar[y].” See Ex.
E, Letter from Defendants’ Counsel (July 6, 2023) at 1. On this basis, Defendants have
unilaterally decided what discovery to “voluntarily” respond to. But that is not how discovery
works. The Third Circuit has held that jurisdictional discovery should be “freely permitted”
when a party has moved to dismiss for lack of personal jurisdiction. Renner v. Lanard Toys
Ltd., 33 F.3d 277, 283 (3d Cir. 1994) (vacating dismissal of the case where plaintiffs were
denied jurisdictional discovery needed to oppose motion to dismiss); see also Toys “R” Us, Inc.
v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003) (holding district court erred in denying
request for jurisdictional discovery as “courts are to assist the plaintiff by allowing jurisdictional
discovery unless the plaintiff's claim is ‘clearly frivolous’”).
II.

The Court Should Compel Discovery Concerning the Defendants’ Relationship

Defendants, which share the same principal place of business and appear to have a
common CEO and a common CFO, have refused to provide adequate discovery concerning the
relationship between Stability AI, Inc. and Stability AI, Ltd. propounded to test the degree to
which they are actually operated as separate companies.
Failure to Observe Corporate Formalities
Although Defendants have represented that the two companies “maintain[] separate
books and records, maintain[] separate bank accounts, and observe[] corporate formalities,” D.I.
18 ¶ 7, Defendants have refused to respond to basic discovery requests that test the accuracy of
these statements. For example, Mr. O’Donoghue averred that Stability AI, Inc. “has a Board of
Directors that meets regularly and records minutes of these meetings appropriately,” D.I. 18 ¶
10 (emphasis added), but Defendants have refused to produce those minutes or any other
evidence concerning these meetings. See Shopman’s Loc. Union 502 Pension Fund v. Samuel
Grossi & Sons, Inc., No. 20-CV-5776, 2022 WL 129684, at *4 (E.D. Pa. Jan. 13, 2022)
(compelling production of board minutes as they may demonstrate “the relationship between or
among Defendants” in alter ego claim).
Records concerning corporate formalities go to the core of the alter ego analysis. See
Software Rts. Archive, LLC v. Google Inc., No. CIV.A. 2:07-CV-511, 2009 WL 1438249, at *3
(D. Del. May 21, 2009) (granting motion to compel information about jurisdictional contacts
where additional discovery could help determine alter ego claim); see also Shopman’s Loc.
Union, 2022 WL 129684, at *5 (compelling documents related to shared equipment and
property to help determine “if the entities have ‘interrelated operations,’ which is itself a factor
in assessing whether the entities are alter egos”); id. (written agreements between defendants
“may provide information regarding the relationships between and among Defendants” and “go
to the heart of Plaintiffs’ . . . claims alleging that Defendants are not in practice separate
entities”). Specifically, Getty Images respectfully requests that the Court order Defendants to
provide additional discovery in response to Getty Images’ requests concerning:
•

the corporate relationship between the two companies (Ex. A, RFP 9; Ex. C, RFP 10);

•

individuals with authority to act on behalf of both companies (Ex. B, Interrogatory 12);

•

shared resources and office space between the companies (Ex. C, RFP 26);

•

intercompany agreements (Ex. A, RFP 11; Ex. B, Interrogatory 15; Ex. C, RFP 12); and

•

shareholder meeting minutes, agendas or board presentations (Exs. A & C, RFPs 3, 4, 5).
2

Case 1:23-cv-00135-GBW Document 26 Filed 07/18/23 Page 4 of 4 PageID #: 2098

Improper Commingling of Funds
Getty Images is also entitled to test Mr. O’Donoghue’s assertions about the role of the
U.S. entity and the financial relationship between the two companies. See, e.g., Wells Fargo
Bank, N.A. v. Konover, No. 3:05CV1924 CFD/WIG, 2009 WL 585430, at *11 (D. Conn. Mar. 4,
2009) (compelling production of documents concerning defendants’ common funds as relevant
to plaintiff’s position that joint funds showed improper commingling and supported claims of
undue domination or control and a lack of separate corporate existence); Mikola v. Penn Lyon
Homes, Inc., No. 4:CV-07-0612, 2008 WL 11370035, at *1–2 (M.D. Pa. May 13, 2008)
(granting plaintiffs’ motion to compel production of tax returns, income statements, financial
statements, and schedule of assets as “relevant to [plaintiffs’] claims that [defendants] are . . .
alter egos”). Specifically, Getty Images respectfully asks the Court order Defendants to answer
discovery Getty Images’ requests concerning:
•

intercompany transfers, dividends, or payments (Ex. A, RFP 32; Ex. B, Interrogatories
11, 13, 14; Ex. C, RFP 23; Ex. D, Interrogatories 3, 5);

•

financial statements and annual reports (Ex. A, RFP 12; Ex. C, RFP 13 and 16); and

•

pitch and solicitation documents, including for the $75 million raised by Stability AI,
Inc. in 2022 (Ex. A, RFPs 19 and 20; Ex. C, RFP 24 and 25; Ex. D, Interrogatory 4).

III.

The Court Should Compel Discovery Regarding Jurisdictional Contacts in the U.S.

As alleged in the Amended Complaint, Stability AI, Ltd. operates a website that is
accessible to internet users in Delaware and elsewhere in the United States. D.I. 13 ¶ 22. But it
has refused to respond to Interrogatory Nos. 2, which seeks information about the U.S. locations
of downloads or access to Defendants’ programs, nor has it confirmed whether that information
exists. During the meet-and-confer process, Getty Images has repeatedly asked for different
ways that this information may be extrapolated, for example, through the addresses associated
with credit card purchases of Defendants’ programs, but Defendants have refused to provide this
basic information. Because Stability AI, Ltd. not only claims that it lacks sufficient contacts
with Delaware, but also seeks to choose its own forum through its request for a transfer to the
Northern District of California, Defendants should be compelled to provide responsive
information, if any exists, regarding the extent of its users in the U.S. on a state-by-state basis.
*

*

*

Defendants should be compelled to answer the interrogatories and provide documents
responsive to the requests identified above within seven (7) days of a decision on this motion and
to thereafter make a witness available for deposition on a mutually convenient date for the
parties within ten (10) days after completing their production of the additional discovery. Getty
Images further requests that the Court extend the deadline for Getty Images’ answering brief in
opposition to the motion to dismiss until thirty (30) days after the Court’s order on this discovery
dispute. A proposed order is submitted herewith.
Respectfully submitted,
/s/ Robert M. Vrana
Robert M. Vrana (No. 5666)
cc: All Counsel of Record (via e-mail)

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