Flava Works, Inc. v. Gunter et al

Filing 44

MEMORANDUM Opinion signed by the Honorable John F. Grady on 5/10/2011. Mailed notice(cdh, )

10-6517.111-JCD

May 10, 2011

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FLAVA WORKS, INC.,
Plaintiff,
v.
MARQUES RONDALE GUNTER d/b/a
myVidster.com; SALSAINDY, LLC;
VOXEL DOT NET, INC., and
JOHN DOES 1-26,
Defendants.

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No. 10 C 6517

MEMORANDUM OPINION
Before the court is the motion of defendants Marques Rondale
Gunter and SalsaIndy, LLC to dismiss plaintiff’s first amended
complaint.

For the following reasons, the motion is granted in

part and denied in part.
BACKGROUND
Plaintiff, Flava Works, Inc., is a company that produces and
distributes adult entertainment products, including DVDs, streaming
video,

magazines,

photographs,

and

internet

website

content.

Defendant Marques Rondale Gunter created, owns, and operates a
website

called

myVidster.com

(“myVidster”).

The

complaint

describes myVidster as a social networking website through which
site members can store and “bookmark” video files and post links to
third-party websites on which the files are available.

Defendant

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SalsaIndy,

LLC

(“SalsaIndy”)

is

an

entity

“formed,

owned,

controlled, managed, and/or operated by . . . Gunter in some
connection with myVidster.”

(First Am. Compl. ¶ 5.)

Defendant

Voxel Dot Net, Inc. (“Voxel”) is a company that provides webhosting services to myVidster.1
Plaintiff owns several registered copyrights and trademarks.
It alleges that members and/or users of myVidster (including the
John Doe defendants) have, without plaintiff’s permission, uploaded
plaintiff’s copyrighted videos and images, or links to those
videos, to myVidster. The videos and images are then available for
other

myVidster

users

to

view

and/or

download.

MyVidster

encourages users to invite others to view uploaded and bookmarked
videos; the website states, “While bookmarking videos can be a fun
and addictive activity, it is more enjoyable in the company of like
minded friends.

The form below will send invites to your friends

telling them about myVidster and you will be given the option to
provide a link to your video collection.”

(First Am. Compl. ¶ 24.)

MyVidster offers inexpensive storage space for videos.
In plaintiff’s view, Gunter has, by offering low-cost storage
space and encouraging users to share and view videos, “purposefully
created a system that makes it more difficult for copyright owners

1/

Voxel recently provided plaintiff with a sworn declaration that it no
longer hosts myVidster, and plaintiff has withdrawn its pending motion for a
preliminary injunction as to Voxel. (The motion is still pending against Gunter
and SalsaIndy, and a hearing is scheduled for May 18, 2011.)

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to monitor the site for infringement.”

(First Am. Compl. ¶ 25.)

Plaintiff alleges that after a number of its copyrighted movies
and/or portions of its movies were posted on myVidster, it sent to
Gunter and his web-hosting companies (including Voxel) “takedown
notices” pursuant to § 512 of the Digital Millennium Copyright Act
(“DMCA

notices”).

specified

the

These

infringing

notices

of

copyright

material

and

demanded

immediately removed from myVidster.

infringement
that

it

be

The notices also identified

users that plaintiff suspects to be repeat infringers. Between May
2010 and December 2010, Plaintiff sent Gunter seven DMCA notices.
Plaintiff does not allege that defendants failed to remove the
material from myVidster, but does allege that after the notices
were sent, the website “continued to be updated with more and more
infringing material from its members.”

(First Am. Compl. ¶¶ 54-

57.) According to plaintiff, myVidster “does not have in place any
filters or identifiers to prevent” its copyrighted material from
being re-posted by repeat infringers, and it “took no action toward
stopping, reprimanding, or banning” repeat infringers.

(First Am.

Compl. ¶¶ 61-62.)
The First Amended Complaint contains seven counts: direct
copyright

infringement

(Count

I);

contributory

copyright

infringement (Count II); vicarious copyright infringement (Count
III);

inducement

of

copyright

infringement

(Count

IV);

false

designation of origin in violation of the Lanham Act (Count V);

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trademark and trade dress infringement in violation of the Lanham
Act (Count VI); and common-law trademark infringement and unfair
competition (Count VII).
Gunter

and

SalsaIndy

(“defendants”)

move

to

dismiss

the

complaint.
DISCUSSION
The purpose of a Rule 12(b)(6) motion to dismiss is to test
the sufficiency of the complaint, not to resolve the case on the
merits.

5B Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure § 1356, at 354 (3d ed. 2004). 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 U.S. 544, 555

(2007). A plaintiff is obligated to provide the factual grounds of
his entitlement to relief, and a “formulaic recitation” of the
elements of a claim will not do.

Id.

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, --- U.S. ----, ----, 129

S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009).

When evaluating a

motion to dismiss a complaint, we must accept as true all factual

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allegations in the complaint, but not its legal conclusions.

Id.

at 1949-50.
A.

Direct Copyright Infringement (Count I)
To state a claim for direct copyright infringement, plaintiff

must allege (1) ownership of a valid copyright and (2) defendants’
unauthorized copying of the constituent elements of the work that
are original.

See Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499

U.S. 340, 361 (1991); Harbor Motor Co. v. Arnell Chevrolet-Geo,
Inc., 265 F.3d 638, 644 (7th Cir. 2001).
Defendants contend that plaintiff has failed to sufficiently
plead the second element of direct infringement because it alleges
merely

that

myVidster

unauthorized copying.

is

a

conduit

for

its

users’

acts

of

Defendants cite a handful of decisions

holding that internet service providers are not liable for direct
infringement where their role is limited to operating a website
that others use to create and/or exchange unauthorized copies of
works.

Plaintiff

responds:

“By

allowing

users

to

store

and

reproduce the copyrighted materials, Defendants have engaged in
unauthorized copying.”
to

its

allegations

(Pl.’s Resp. at 2.)

that

Defendants

Plaintiff also points

“posted”

its

authority

for

copyrighted

materials.
Plaintiff

cites

no

apposite

interpretation of “copying.”

its

broad

The decisions cited by defendants

stand for the proposition that to establish liability for direct

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copyright infringement, a plaintiff must demonstrate that the
defendant engaged in volitional conduct that causes a copy to be
made.

See CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 555

(4th Cir. 2004) (“[W]e hold that [internet service providers], when
passively storing material at the direction of users in order to
make that material available to other users upon their request, do
not ‘copy’ the material in direct violation of § 106 of the
Copyright Act.”); Religious Tech. Ctr. v. Netcom On-Line Commc’n
Servs., Inc., 907 F. Supp. 1361, 1370 (N.D. Cal. 1995) (“Although
copyright is a strict liability statute, there should still be some
element

of

volition

or

causation

which

is

lacking

where

a

defendant’s system is merely used to create a copy by a third
party.”); see also Parker v. Google, Inc., 242 F. App’x 833, 836-37
(3d Cir. 2007) (citing CoStar and Netcom).
The first amended complaint does not allege that defendants
themselves made copies of plaintiff’s works.
that

defendants

“posted”

the

works

is

The vague allegation

not

equivalent

to

an

allegation that they caused copies of the works to be made,
especially considering the remaining allegations, where the only
volitional copying is alleged to have been done by myVidster users,
not its operators.

(First Am. Compl. ¶¶ 27, 74 (Count I).)

Because there is no allegation that defendants caused copies of
plaintiff’s copyrighted works to be made, plaintiff fails to state

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a claim for direct copyright infringement, and Count I will be
dismissed.
B.

Contributory Copyright Infringement (Count II)
“[O]ne

who,

with

knowledge

of

the

infringing

activity,

induces, causes or materially contributes to the infringing conduct
of another, may be held liable as a ‘contributory’ infringer.”
Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d
1159, 1162 (2d Cir. 1971); see also Metro-Goldwyn-Mayer Studios
Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005).

Thus, to state

a claim for contributory infringement, a plaintiff must plead (1)
a third party directly infringed a copyrighted work; (2) the
defendant

knew

of

the

infringement;

and

(3)

the

defendant

materially contributed to the infringement. Monotype Imaging, Inc.
v. Bitstream Inc., 376 F. Supp. 2d 877, 883 (N.D. Ill. 2005).
Knowledge,

for

purposes

of

contributory

copyright

infringement, encompasses both actual and constructive knowledge.
In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003)
(“Willful blindness is knowledge, in copyright law (where indeed it
may be enough that the defendant should have known of the direct
infringement) . . . .”).

Defendants contend that the allegation

that they received DMCA notices, without more, is insufficient to
impute knowledge for a contributory infringement claim.

They cite

the district court’s opinion in the CoStar litigation, CoStar Group
Inc. v. LoopNet, Inc., 164 F. Supp. 2d 688, 707 (D. Md. 2001), as

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well as Netcom, 907 F. Supp. at 1374, which explain that the
receipt of a DMCA (or similar) notice might not automatically imply
knowledge.

A useful discussion of the distinction can be found in

Emily Zarins, Comment, Notice Versus Knowledge Under the Digital
Millennium Copyright Act’s Safe Harbors, 92 Calif. L. Rev. 257,
287-88 (2004) (“Knowledge for purposes of contributory infringement
refers to a service provider’s knowledge of actual infringement,
while notification communicates to a service provider a claim of
alleged infringement. . . . Contributory infringement seeks to
punish a party for knowingly continuing to assist infringement;
[DMCA] notification aims to provide an effective warning to give
rise to a duty to investigate.”)
Plaintiff cites to four decisions in support of its argument
that the multiple DMCA notices it sent to defendants are sufficient
for knowledge. Two of the decisions are inapposite because neither
involved a contributory copyright infringement claim.

See Olan

Mills, Inc. v. Linn Photo Co., 23 F.3d 1345, 1348 (8th Cir. 1994);
Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502,
512

(7th

Cir.

1994).

In

the

single

case

involving

notifications, there was additional evidence of knowledge.

DMCA
See A

& M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1020 n.5 (9th
Cir. 2001) (defendant had actual knowledge because a document
authored by defendant’s co-founder mentioned the “need to remain
ignorant” of users’ real names and IP addresses “since they are

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exchanging pirated music” and because Napster had been notified of
more than

12,000

infringing files,

some

of

which

were

still

available, and had constructive knowledge for four additional
reasons).

There was also additional evidence of knowledge in

Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 261-64 (9th
Cir. 1996).

The defendant, which operated a swap meet, knew that

swap-meet vendors were selling counterfeit recordings not only
because it had been notified about the sale of infringing materials
but also because the sheriff had raided the swap meet and seized
counterfeit recordings.
We will assume for this discussion that to allege knowledge,
plaintiff must allege something more than defendants’ receipt of
the DMCA notices. The issue is whether plaintiff has alleged facts
that allow us to draw a reasonable inference that defendants
actually or constructively knew of copyright infringement occurring
on myVidster.

We believe that it has done so.

“The knowledge

element for contributory copyright infringement is met in those
cases where a party has been notified of specific infringing uses
of

its

technology

and

fails

to

act

to

prevent

future

such

infringing uses, or willfully blinds itself to such infringing
uses.”

Monotype, 376 F. Supp. 2d at 886 (citing Aimster, 334 F.3d

at 650, and Fonovisa, 76 F.3d at 264).

Here, plaintiff has alleged

that it sent not just one DMCA notice, but seven notices over a
seven-month period.

The DMCA notices attached to the complaint

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identify specific infringing files and users as well as specific
repeat infringers.

Moreover, while plaintiff does not allege that

defendants failed to remove the infringing material from myVidster,
it does allege that defendants failed to take any action to stop,
reprimand, or ban the repeat infringers listed in the DMCA notices
and that defendants failed to implement filters or identifiers to
prevent repeated infringing conduct.

(First Am. Compl. ¶¶ 61-62.)

Because plaintiff alleges not just the receipt of DMCA notices but
also that after having received the notices defendants failed to
act

to

prevent

sufficiently

future

alleged

similar

the

infringing

knowledge

element

conduct,
of

it

has

contributory

copyright infringement.
Defendants also argue that plaintiff has failed to adequately
allege that they materially contributed to the infringing activity
of myVidster’s users.
additional

They contend that the “mere allegation that

unidentified

infringing

material

was

uploaded

to

[myVidster] following [defendants’] receipt of the takedown notices
is not an allegation that [defendants] materially contributed to
the specific acts of infringement that Plaintiff addressed in the
takedown notices.”

(Defs.’ Mem. at 5.)

But that is not all that

plaintiff alleges.

It alleges that defendants provide a website

that stores infringing material, allows backup copies to be made,
and encourages sharing.

It also alleges that myVidster has no

filters or identifiers in place to prevent repeat infringers and

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that it took no action to stop or ban the repeat infringers who
allegedly posted plaintiff’s copyrighted works.

These allegations

are more than sufficient to allege material contribution.

See,

e.g., Napster, 239 F.3d at 1022 (holding that defendant materially
contributed to direct infringement by providing the website and
support services to enable users to locate music files); Fonovisa,
76 F.3d at 264 (holding that defendant materially contributed to
direct infringement by providing the location and support services
for the vendors selling counterfeit recordings).
The motion to dismiss will be denied as to Count II.
C.

Vicarious Copyright Infringement (Count III)
“[A] defendant is variously liable for copyright infringement

if it has the right and ability to supervise the infringing
activity

and

activities.”

also

has

a

direct

financial

interest

in

such

Hard Rock Cafe Licensing Corp. v. Concession Servs.,

Inc., 955 F.2d 1143, 1150 (7th Cir. 1992) (internal quotation marks
omitted).

This theory allows the imposition of liability even if

the defendant initially lacked knowledge of the infringement.
Grokster, 545 U.S. at 930 n.9.
Defendants assert that plaintiff has failed to allege that
defendants have the right and ability to supervise the infringing
activity. Plaintiff cites Napster, 239 F.3d at 1023, and Fonovisa,
76 F.3d at 262, for the proposition that the ability to block
infringers’ access to the environment in which the infringing

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activity occurs is evidence of the right and ability to supervise.
In Napster, the Court observed that the defendant reserved the
right to control access to its system, but failed to police its
virtual “premises,” thus satisfying this element of vicarious
liability.

239 F.3d at 1023-24.

In its brief, plaintiff contends that defendants “have the
right and ability to supervise myVidster users: MyVidster Terms of
Service.”

(Pl.’s Resp. at 11.)

But the amended complaint fails to

include this allegation or even refer to the myVidster’s terms of
service.

We are also unpersuaded by plaintiff’s suggestion that,

from its allegation that Gunter owns and operates myVidster, we can
infer that defendants “can block an infringer’s access to the
website and from posting infringing materials.”
11.)

(Pl.’s Resp. at

To sufficiently allege the element of “right and ability to

supervise,” plaintiff will have to allege more than the mere
ownership
defendants’

and

operation

contention

of

that

myVidster.
plaintiff

However,
must

allege

we

reject

“pervasive

participation” in the infringing activity. In Fonovisa, “pervasive
participation” was found to be amply sufficient to satisfy the
control element.

76 F.3d at 263.

But it is not the standard, and

the phrase is not part of the “right and ability to supervise” test
as articulated by the Seventh Circuit.
Defendants also contend that plaintiff fails to allege that
defendants had a direct financial interest in the infringing

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activity.

“Financial benefit exists where the availability of

infringing material acts as a draw for customers.”
F.3d at 1023 (internal quotation marks omitted).

Napster, 239
In defendants’

view, plaintiff must allege that customers either subscribed to
myVidster because of the available infringing material or cancelled
their subscriptions because infringing materials were no longer
available.
demanding

Defendants cite no case law in support of this overlystandard.

All

plaintiff

need

allege

is

that

the

availability of infringing material on myVidster is a draw for
customers. See, e.g., Ellison v. Robertson, 357 F.3d 1072, 1078-79
(9th Cir. 2004).

For example, in Fonovisa, 76 F.3d at 263,

allegations that the defendant swap-meet operator gained benefits-the payment of a daily rental fee by the infringing vendors,
customer admission fees, and incidental customer fees--from the
infringing sales occurring at the meet were found to be sufficient
to allege direct financial benefit.
Although plaintiff’s pleading burden with respect to the
second aspect of vicarious liability is a low hurdle, it has not
managed to clear it.

While the complaint does allege that that

inexpensive storage space and the ability to share videos attracts
customers to myVidster, it does not allege that the presence of the
infringing material on the site enhances the site’s attractiveness
or draws customers.

Therefore, it does not adequately plead that

defendants had a direct financial interest in the infringement.

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Count III will be dismissed, and plaintiff will be given leave
to file an amended complaint that adequately alleges vicarious
copyright infringement, if it can do so.
D.

Inducement of Copyright Infringement (Count IV)
In Grokster, 545 U.S. at 936-37, the Supreme Court adopted an

“inducement rule” for copyright, holding that “one who distributes
a

device

with

the

object

of

promoting

its

use

to

infringe

copyright, as shown by clear expression or other affirmative steps
taken to foster infringement, is liable for the resulting acts of
infringement by third parties.”

The Court explained that “mere

knowledge of infringing potential or of actual infringing uses
would not be enough . . . to subject a distributor to liability,”
nor would ordinary acts incident to product distribution, such as
offering customers technical support.

Id. at 937.

The rule,

instead, “premises liability on purposeful, culpable expression and
conduct.”

Id.

Plaintiff pleads merely a formulaic recitation of inducement
but no facts that plausibly suggest that it is entitled to relief
on this theory.

It is not enough to allege that myVidster provides

storage for video files and encourages sharing (or even that it
also knew that the website could be used to infringe).

No clear

expression of an infringing purpose is alleged, and no active steps
taken to foster infringement, such as advertising an infringing use

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or instructing how to engage in an infringing use, are alleged.
Accordingly, Count IV will be dismissed.
E.

False Designation and Trademark Infringement (Counts V-VII)
Counts V and VI are claims for false designation of origin and

trademark and trade dress infringement in violation of the Lanham
Act, 15 U.S.C. §§ 1125 and 1114, respectively.

Count VII is a

common-law trademark infringement and unfair competition claim.
Section 32 of the Lanham Act, 15 U.S.C. § 1114(1), imposes
civil liability on
[a]ny person who . . . without the consent of the
registrant . . . use[s] in commerce any reproduction . .
. [or] copy . . . of a registered mark in connection with
the sale, offering for sale, distribution, or advertising
of any goods or services on or in connection with which
such use is likely to cause confusion . . . .
15 U.S.C. § 1114(1)(a) (emphasis added).

Section 43 of the Lanham

Act imposes liability on
[a]ny person who, on or in connection with any goods or
services . . . uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any
false designation of origin . . . which . . . is likely
to cause confusion . . . as to the origin, sponsorship,
or approval of . . . goods, services, or commercial
activities by another person.
15 U.S.C. § 1125(a)(1)(A) (emphasis added).

A mark is “deemed to

be in use in commerce” for services when “it is used or displayed
in the sale or advertising of services and the services are
rendered in commerce . . . .”
plaintiff’s

common-law

15 U.S.C. § 1127.

trademark

The analysis of

infringement

and

unfair

competition claim is the same as that of its Lanham Act claims.

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See Specht v. Google Inc., --- F. Supp. 2d ----, 2010 WL 5288154,
at *24 (N.D. Ill. Dec. 17, 2010).
Defendants contend that plaintiff has failed to allege that
defendants used plaintiff’s marks in commerce.
complaint
posted

alleges

to

only

myVidster

that

plaintiff’s

without

We agree.

copyrighted

plaintiff’s

permission

The

material
“often

contains” its trademarks or trade dress and that defendants’
unauthorized distribution of the material causes confusion about
its origin.

(First Am. Compl. ¶ 28.)

It does not allege that

defendants used plaintiff’s marks at all or that they used the
marks in commerce.

Counts V, VI, and VII will therefore be

dismissed.
CONCLUSION
For the foregoing reasons, the motion of Marques Rondale
Gunter and SalsaIndy, LLC to dismiss the first amended complaint
[12] is granted in part and denied in part.
VI, and VII are dismissed.

Counts I, III, IV, V,

Plaintiff is given leave to file a

second amended complaint by May 16, 2011 that cures Count III’s
deficiencies, if it can do so.
II.

The motion is denied as to Count

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DATE:

May 10, 2011

ENTER:

_____________________________________________
John F. Grady, United States District Judge