v. KBS America, Inc. et al

Filing 135

MEMORANDUM Opinion and Order Signed by the Honorable John F. Grady on 3/28/2013. Mailed notice(vcf, )

09-6665.131-JCD

March 28, 2013

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KM LPTV OF CHICAGO-28,
LLC,
Plaintiff,
v.
KBS AMERICA, INC.,
Defendant.

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No. 09 C 6665

-----------------------------------KBS AMERICA, INC.,
)
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Counter-Plaintiff,
)
)
v.
)
)
KM LPTV OF CHICAGO-28,
)
)
Counter-Defendant,
)
)
and
)
)
KBC-TV, WOCH CH 41 CHICAGO;
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KM COMMUNICATIONS, INC.;
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KOREAN AMERICAN BROADCASTING
)
CO., INC.; KEVIN BAE; DONALD BAE;
)
MYUNG HWA BAE; and SCOTT BAE,
)
)
Third-Party Defendants. )
MEMORANDUM OPINION
After we granted in large part the motion of defendant KBS
America, Inc. (“KBS”) to dismiss the Second Amended Complaint, the
sole remaining claim was that of plaintiff KM LPTV of Chicago-28,

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LLC (“Channel 28”) against KBS in Count I for violation of the
Illinois

Franchise

counterclaim

against

Disclosure
Channel

Act.
28

KBS
breach

for

then
of

asserted
contract

a
and

copyright infringement, and it also asserted copyright-infringement
claims against

third-party

defendants

KM

Communications,

Inc.

(“KM”); Korean American Broadcasting Company, Inc. (“KABC”); KBCTV, WOCH CH 41 Chicago (“Channel 41”); and “the owners, managers
and/or officers of any and all of these entities, including but not
limited to Kevin Bae, Myung Hwa Bae, Donald Bae, [and] Scott Bae .
. . .”

(Countercl. and Third-Party Compl. ¶ 4.)1

Before us are two motions: (1) the motion of Channel 28 to
dismiss the counterclaim pursuant to Rule 12(b)(6); and (2) the
motion of the third-party defendants to dismiss the third-party
complaint pursuant to Rule 12(b)(6).2

For the following reasons,

Channel 28’s motion is denied, and the third-party defendants’
motion is granted in part and denied in part.
DISCUSSION
Under federal notice-pleading standards, a complaint need not
contain “detailed factual allegations,” but it must have more than
mere “labels and conclusions.”

Bell Atl. Corp. v. Twombly, 550

1/
Channel 28 and the third-party defendants appear to be affiliated; they
are all represented by the same counsel.
2/

Channel 41, Kevin Bae, Myung Hwa Bae, Donald Bae, and Scott Bae have
filed the same motion five times. We will rule on the first motion and terminate
the other four as duplicative. The reply brief indicates that the remaining two
third-party defendants, KM and KABC, join the motion.

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U.S. 544, 555 (2007).

The complaint must contain sufficient facts

to raise a plaintiff’s right to relief above a “speculative” level,
id. at 555, and the claim must be “plausible on its face,” id. at
570.

“A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
A.

Breach of Contract (Count I)
In Count I of its counterclaim, KBS alleges that Channel 28

failed to pay licensing fees for KBS World programming in 2009 and
provided that programming to third parties without KBS’s consent,
therefore breaching the terms of a Broadcast License Agreement
(“BLA”) that KBS and Channel 28 entered into on July 20, 2005.
Channel 28 argues that Count I of KBS’s counterclaim should be
dismissed because KBS “judicially admits in its Answer to the
Second Amended Complaint that upon the July 19, 2008 termination of
the BLA, there was no license agreement,” Mot. at 2, and because
KBS has taken the position in earlier filings in this case that the
BLA was “good only for the 3-year term from July 20, 2005 through
July 19, 2008,” Reply at 4 (emphasis omitted).
We are unpersuaded. KBS’s position throughout this litigation
has been that the BLA expired after its three-year term, but that
KBS “grant[ed]” Channel 28 “several months-long extensions” of that
contract.

(E.g., Def.’s Mot. to Dismiss First Am. Compl. at 1

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(Feb. 26, 2010).)
following

allegation

Channel 28 relies on KBS’s denial of the
in

paragraph

36

of

the

Second

Amended

Complaint: “Once the written agreement . . . expired on July 19,
2008, KBS America and Plaintiffs ‘orally’ agreed to continue to
distribute and broadcast KBS America content in consideration of
the $7,000.00 monthly fee, provided that once Plaintiffs obtain
basic cable channel [sic], that fee be waived.”

It is clear that

KBS was denying that the parties orally agreed to the terms that
are alleged; it was not admitting that “there was no license
agreement” after July 2008. Indeed, in the very same document, KBS
alleges in its counterclaim what it has alleged since the outset of
the case--that the BLA was extended through October 2009.
We also reject Channel 28’s argument that KBS’s alleged
damages are not supported by the BLA.

It is not evident from the

pleadings that KBS’s damages cannot exceed $35,000, as Channel 28
asserts. Channel 28 presumes that KBS is seeking only five months’
worth of license fees, but that is not what the counterclaim
alleges. Channel 28’s motion will be denied as to Count I.
B.

Copyright Infringement (Count II)
KBS alleges in Count II that it owns registered copyrights in

several KBS World television programs, including “2009 Korean Ghost
Stories,” “Jolly Widow,” “Love and Obsession,” and “The Great King
Sejong.”

(Countercl. and Third-Party Compl. ¶¶ 20-21, 45.)

It is

alleged that in May 2008, Channel 28 entered into a Retransmission

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Consent Agreement with AT&T Services, Inc. (“AT&T”) pursuant to
which Channel 28 granted AT&T the right to retransmit KBS World
programming on AT&T’s multichannel video programming distribution
system.

(Countercl. and Third-Party Compl. ¶¶ 29-30.)

According

to KBS, Channel 28 and the third-party defendants have, “on their
own or by conspiring with each other,” infringed KBS’s rights to
reproduce and distribute the copyrighted works by “distribut[ing]
and

supply[ing]”

to

AT&T.

(Countercl. and Third-Party Compl. ¶¶ 3-4, 31, 33-35, 46.)

It is

also

alleged

and

that

“provid[ing]”

Channel

28

and

this

the

content

third-party

defendants

“continuously authorized AT&T to distribute and broadcast KBS World
programming without authorization from KBS America from September
2008 [t]o October 22, 2009” and that “[e]ach distribution and
broadcast of KBS World programming was a continuous violation of
the copyrights owned by KBS America.”

(Countercl. and Third-Party

Compl. ¶ 48.)
Channel 28 and the third-party defendants contend that Count
II fails to state a claim for copyright infringement because there
are no allegations that AT&T ever received and broadcasted the
Programming at issue or how and when it did so, or “that any ThirdParty

Defendant

was

a

party

to”

the

alleged

retransmission

agreement, nor are there any allegations regarding “how each Thirdparty Defendant was involved in providing AT&T with the Programming
at issue.” (Third-Party Defs.’ Mem. in Supp. of Mot. at 2; Channel

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28’s Mem. in Supp. of Mot. at 7.)

KBS responds that it has

expressly alleged “direct involvement” by each of the defendants in
copyright infringement and that additionally, “the officers and
directors of Channel 28, KM, KABC and Channel 41 may be held liable
in their individual capacity as contributory infringers for the
corporate entities’ copyright infringement.” (KBS’s Opp’n at 8-9.)
KBS has sufficiently alleged that Channel 28 has directly
infringed

its

copyrighted

copyrights

works

to

by

AT&T.

distributing

copies

To

claim

state

a

of
for

KBS’s
direct

infringement, it is not necessary that KBS allege that AT&T ever
broadcast the programs that Channel 28 allegedly distributed to
AT&T.

If KBS were asserting a theory of contributory infringement

as a result of any broadcast by AT&T, it would be necessary for KBS
to allege that AT&T infringed KBS’s copyright, but it does not
appear that KBS is attempting to allege that sort of theory of
contributory infringement.

Channel 28’s motion will be denied as

to Count II.
The allegations with respect to the third-party defendants,
however, fail in part to adequately put those defendants on notice
of

the

manner

copyrights.

in

which

they

have

allegedly

infringed

KBS’s

KBS has sufficiently alleged that these parties

directly infringed its copyrights by distributing the programming
to AT&T; it is not necessary that KBS allege that the third-party
defendants were parties to the retransmission agreement.

(Whether

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it will be able to prove direct infringement by these parties--that
they personally distributed copies of the programs to AT&T--is
another issue.)

But KBS has failed to sufficiently allege any

claims based on secondary liability for infringement, which it
might be attempting to do; we are unsure.

KBS mentions in its

response brief the possibility of contributory infringement, yet
the third-party complaint is vague because it merely hints at such
theories.

For instance, the third-party complaint identifies each

individual third-party defendant as an “owner, agent, member, or
officer

of

Channel

28”

and

alleges

that

each

of

them

acted

intentionally and willfully. (Countercl. and Third-Party Compl. ¶¶
11-14, 50.)

These allegations, when read together with KBS’s

response brief, seem to indicate that KBS is confusing the distinct
elements of contributory and vicarious infringement. KBS’s counsel
should familiarize themselves with those elements. Count II of the
third-party complaint will be dismissed without prejudice, and KBS
will be given leave to file an amended counterclaim/third-party
complaint that alleges its copyright claims with more precision.
KBS should set forth, with respect to each third-party defendant,
whether it is alleging direct, contributory, or vicarious copyright
infringement, or some combination of these claims, as well as their
factual bases.

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CONCLUSION
For the foregoing reasons, the motion of KM LPTV of Chicago-28
to dismiss the counterclaim [95] is denied, and the motion of the
third-party defendants to dismiss the third-party complaint [116]
is granted in part and denied in part.

Count II of the third-party

complaint is dismissed without prejudice, and KBS America, Inc. is
given until April 12, 2013 to file an amended counterclaim and
third-party complaint that more particularly states its copyright
claims, as

discussed

above.

Channel

28

and

defendants may file answers by April 26, 2013.

the

third-party

The remaining

motions of the third-party defendants [118, 120, 122, 124] are
terminated as duplicative of motion #116.
A status hearing is set for May 1, 2013 at 11:00 a.m. to set
a date for trial.

DATE:

March 28, 2013

ENTER:

_____________________________________________
John F. Grady, United States District Judge