Express Lien Inc. v. National Association of Credit Management Inc, et al

Filing 13

ORDER & REASONS denying 6 Motion to Dismiss for Failure to State a Claim. Signed by Judge Lance M Africk. (lag, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

EXPRESS LIEN INC.

CIVIL ACTION

VERSUS

No. 13-3323

NATIONAL ASSOCIATION OF
CREDIT MANAGEMENT INC. ET AL.

SECTION I

ORDER AND REASONS
Before the Court is a motion 1 to dismiss filed by defendant, National Association of
Credit Management, Inc. Plaintiff, Express Lien, Inc., opposes the motion.2 For the following
reasons, the motion is DENIED.
Background
According to the complaint, plaintiff, Express Lien, Inc. (“Zlien”), is an internet based
business that sells legal “self-help” forms to parties in the construction industry, provides
assistance in the filing of these forms, and compiles and provides extensive information
resources and tools for clients.3 Zlien alleges that it operates this business through the website
zlien.com.4 To further Zlien’s business goals, and to provide Zlien’s customers with information,
Zlien provides state-by-state informational resources through its website. 5 These resources
include answers to several Frequently Asked Questions (“FAQs”) for each state and
compilations of selected text from each state’s statutes concerning mechanics liens and bond
claim law.6 Zlien claims to have spent substantial amounts of time, money, and effort to create

1

R. Doc. No. 6.
R. Doc. No. 9.
3
R. Doc. No. 1, at ¶ 8.
4
Id. at ¶ 9.
5
Id. at ¶ 10.
6
Id. at ¶ 11.
2

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and compile the content on its website for the purpose of establishing Zlien as an authority and
leader in its area of business, and to promote sales through the website.7
Zlien alleges that every page of its website is marked with a copyright notice and that the
website has been registered for copyright protection.8 Zlien further claims that the compilation of
selected text from each state’s mechanics lien and bond claim law has been registered for
copyright protection as a database or compilation.9 Zlien alleges that it designed its website with
special attention to the “look and feel” of the website, including color and code elements.10
Zlien states that at various times, during inspection of various websites, it discovered that
its copyrighted material was being publicly displayed and distributed by defendant, National
Association of Credit Management (“NACM”), through its website, nacm.org.11 According to
the complaint, NACM is a non-profit Maryland corporation founded in 1896 to advocate “for
business credit and financial management professionals” and to be a “primary learning,
knowledge, and information source.”12 Plaintiff alleges that the NACM website includes a “Lien
Navigator” feature through which NACM provides services similar to those offered by Zlien,
and through which NACM provides information similar to the information provided by Zlien
through the “Resources” section of Zlien’s website.13
On May 20, 2013, Zlien filed this lawsuit against NACM, asserting claims of copyright
infringement, trade dress infringement, and unfair competition.14 Zlien alleges that it is the owner

7

Id. at ¶¶ 12-13.
Id. at ¶¶ 14-15.
9
Id. at ¶ 16.
10
Id. at ¶ 17.
11
Id. at ¶ 19.
12
Id. at ¶ 20.
13
Id. at ¶ 21.
14
R. Doc. No. 1.
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and copyright holder of all information contained on its website, zlien.com.15 Zlien claims it
either holds a copyright certificate from the United States Copyright Office or has applied for
such certificate for the works on its website.16 Zlien alleges that NACM copied Zlien’s protected
content without permission, which included, but is not limited to, Zlien’s compilation of state
mechanics lien and bond claim law and the corresponding hyperlinks.17 Zlien further alleges that
NACM has distributed, and continues to distribute, Zlien’s protected content for profit via
nacm.org, in violation of 17 U.S.C. § 501, resulting in damage to Zlien’s profits, sales, and
business. 18 Zlien claims that it did not authorize NACM to copy, display, distribute, or sell
Zlien’s work.19 Zlien alleges that NACM knew the infringed content belonged to Zlien, and that
it did not have permission to copy such content.20
Zlien further alleges that its website design, including the color, code elements, and
orientation is widely recognized by consumers and that it has become a valuable indicator of the
source and origin of the information provided which, as a result, drives Zliens’ sales and position
as a leader in its field.21 According to Zlien, NACM copied Zlien’s stylistic choices of color,
font, hyperlinks, and website content on its website.22 Zlien claims that such similarities between
websites are “likely to cause confusion, or to cause mistake, or to deceive as to the affiliation,
connection, or association of Defendant with Plaintiff, or as to the origin, sponsorship, or
approval of the Defendant’s services, information, or commercial activities with Plaintiff in

15

Id. at ¶ 23.
Id. at ¶ 24.
17
Id. at ¶ 25.
18
Id. at ¶ 26.
19
Id. at ¶ 27.
20
Id. at ¶ 28.
21
Id. at ¶ 33.
22
Id. at ¶ 34.
16

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violation of 15 USC [sic] §1125(a).”23 Zlien alleges that it has suffered and continues to suffer
damages to its profits, sales, and business as a result of NACM’s violation of trade dress.24
Zlien claims it is entitled to judgment and relief against NACM for NACM’s copyright
infringement in violation of 17 U.S.C. § 501 and trade dress infringement and unfair competition
in violation of 15 U.S.C. § 1125(a).25 Zlien requests that NACM be enjoined and restrained from
copying, posting, or making any other infringing use or distribution of any of Zlien’s protected
materials. 26 Zlien further requests NACM pay Zlien general, special, actual, and statutory
damages for Zlien’s damages and NACM’s profits pursuant to 17 U.S.C. § 504(b) or, in the
alternative, enhanced statutory damages pursuant to 17 U.S.C. § 504(c)(2), for NACM’s willful
infringement of Zlien’s copyrights.27 Finally, Zlien requests that NACM pay Zlien court costs
and reasonable attorney’s fees pursuant to 17 U.S.C. § 504.28
On July 25, 2013, NACM filed a motion to dismiss plaintiff’s complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).29 NACM argues that Zlien
cannot copyright the public statutes on its website and that its attempt to allege a “compilation”
fails as a matter of law.30 NACM also contends that Zlien failed to plead the basic elements of a
claim for trade dress infringement as required by 11 U.S.C. § 1125(a) because Zlien does not

23

Id. at ¶ 35.
Id. at ¶ 36.
25
Id. at p. 7, §§ 1-2.
26
Id. at pp. 7-8, § 6.
27
Id. at p. 8, § 7.
28
Id. at p. 8, § 8.
29
R. Doc. No. 6.
30
See R. Doc. No. 6-1.
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allege that it owns any trademark rights.31 NACM further argues that a comparison of the two
website reveals no trade dress violation and that the NACM website predates the Zlien website.32
Standard of Law
A district court may dismiss a complaint, or any part of it, for failure to state a claim upon
which relief can be granted if the plaintiff has not set forth a factual allegation in support of his
claim that would entitle him to relief. Fed. R. Civ. Proc. 12(b)(6); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007); Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007). As the Fifth
Circuit explained in Gonzalez v. Kay:
Factual allegations must be enough to raise a right to relief above the
speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
The Supreme Court recently expounded upon the Twombly standard,
explaining that “[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937,
1949 (2009) (quoting Twombly, 550 U.S. 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.” Id. It follows that “where the well-pleaded facts do
not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not show[n]-‘that the
pleader is entitled to relief.’” Id. at 1950 (quoting Fed. R. Civ. P.
8(a)(2)).
577 F.3d 600, 603 (5th Cir. 2009).
This Court will not look beyond the factual allegations in the pleadings to determine
whether relief should be granted. See Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999);
Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In assessing the complaint, a court must
accept all well-pleaded facts as true and liberally construe all factual allegations in the light most
favorable to the plaintiff. Spivey, 197 F.3d at 774; Lowrey v. Tex. A & M Univ. Sys., 117 F.3d

31
32

Id.
Id.
5

242, 247 (5th Cir. 1997). “Dismissal is appropriate when the complaint ‘on its face show[s] a bar
to relief.’” Cutrer v. McMillan, 308 F. App’x 819, 820 (5th Cir. 2009) (quoting Clark v. Amoco
Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).
Discussion
I. Copyright Infringement
NACM argues that Zlien’s copyright claim must be dismissed because Zlien cannot
copyright a state statute.

Zlien responds that the content of its website qualifies as a

“compilation,” and that it did not limit its claim of copyright infringement solely to the text of a
statute.
“A ‘compilation’ is a work formed by the collection and assembling of preexisting
materials or of data that are selected, coordinated, or arranged in such a way that the resulting
work as a whole constitutes an original work of authorship. The term ‘compilation’ includes
collective works.” 17 U.S.C. § 101. “The copyright in a compilation or derivative work extends
only to the material contributed by the author of such work, as distinguished from the preexisting
material employed in the work, and does not imply any exclusive right in the preexisting
material.” 17 U.S.C. § 103(b). “Copyright protection may extend to such a compilation, even if
the material of which it is composed is not copyrightable itself or is already subject to a previous
copyright.” Apple Barrel Prods., Inc. v. Beard, 730 F.2d 384, 387 (5th Cir. 1984).
NACM argues that “the material at issue” is not a compilation as a matter of law because
plaintiff copied the entire California private lien statute verbatim and did not add any original
content. However, Zlien alleged in its complaint that the “state-by-state informational resources
include the answers to several Frequently Asked Questions (“FAQs”) for each state, segregated
between private projects and public projects, and compilations of selected text from each state’s

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statutes concerning mechanics lien and bond claim law.”33 Zlien further alleged that it “spends
substantial amounts of time, money, and effort creating and compiling the informational
resources, and all other content on the plaintiff’s website.”34 The California webpage, attached
to the complaint, was included only as one example of the website.35 Plaintiff also alleged in the
complaint that NACM copied such protected content without authorization “including, but not
limited to, Plaintiff’s extensive compilation of state mechanics lien and bond claim law, and
plaintiff’s hyperlinks.” Accordingly, NACM has not shown that the material at issue is not a
compilation as a matter of law or that Zlien has otherwise failed to state a claim for copyright
infringement.
II. Trade Dress Infringement
NACM argues that Zlien failed to state a claim for a trade dress violation because it did
not allege the existence of a valid trademark. As Zlien notes, however, Section 43(a) of the
Lanham Act can be used “to protect a product’s appearance, or ‘trade dress,’ without having a
registered trademark.” Healthpoint, Ltd. v. River's Edge Pharmaceuticals, L.L.C., No. 03-984,

33

R. Doc. No. 1, at ¶ 11.
Id. at ¶ 12.   
35
Zlien has referred to portions of its website that are not contained in the pleadings in order to
show that the website, as a whole, qualifies as a compilation “In resolving a Rule 12(b)(6)
motion, the court is generally limited to considering only those allegations appearing on the face
of the complaint . . . , matters of public record, orders, items appearing in the record of the case,
and exhibits attached to the complaint.” Francois v. Miller, No. 09-3522, 2009 WL 4799312, at
*4 (E.D. La. Dec. 2, 2009) (Zainey, J.) (citing Chester County Intermediate Unit v. Pa. Blue
Shield, 896 F.2d 808, 812 (3d Cir. 1990)). Additionally, “[d]ocuments that a defendant attaches
to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's
complaint and are central to [the] claim.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d
285, 288 (5th Cir. 2004). Federal Rule of Civil Procedure 12(d) provides that a motion to dismiss
filed under Rule 12(b)(6) must be treated as one for summary judgment if “matters outside the
pleadings are presented to and not excluded by the court.” Given the early stage of the
proceedings and the limited and incomplete record with respect to the claims asserted in this
matter, this Court declines the opportunity to convert the motion to dismiss into a motion for
summary judgment in order to consider the materials outside the pleadings referred to by
plaintiff.
34

7

2005 WL 356839, at *4 (W.D. Tex. Feb. 14, 2005) (citing Two Pesos, Inc. v. Taco Cabana, Inc.,
505 U.S. 763 (1992); Eppendorf–Netheler–Hinz GMBH v. Ritter GMBH, 289 F.3d 351, 354-55
(5th Cir. 2002); Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806, 812 (5th
Cir. 1989)).
The Fifth Circuit follows a two-step analysis in determining whether there has been an
infringement of trade dress under the Lanham Act. Allied Marketing Grp., 878 F.2d at 813.
“First, the court must determine whether the trade dress is protected under the Act. This first
inquiry encompasses three issues: (1) distinctiveness, (2) ‘secondary meaning,’ and (3)
‘functionality.’” Id. Second, “[i]f a court determines that the trade dress is protected—because it
is non-functional and is either distinctive or has acquired secondary meaning, the court must then
determine whether the trade dress has been infringed. Infringement is shown by demonstrating
that the substantial similarity in trade dress is likely to confuse consumers.” Id.
NACM argues that a comparison of the two websites reveals no trade dress violation.
NACM argues that apart from the actual California statute, there are no similarities between the
two web pages that could plausibly support a trade dress claim. Although this Court need not, as
NACM suggests, accept as true conclusory allegations, unwarranted factual inferences, or legal
conclusions, Zlien alleges that the website design, including the color, code elements, and
orientation is widely recognized by consumers and has become a valuable indicator of the source
and origin of the information in its website. Zlien alleges that NACM copied its stylistic choices
along with the content of the website, including the color, font, and hyperlinks, in a manner that
is confusingly similar to Zlien’s website. The fact that the NACM webpage relating to the
California mechanics lien statute has several differences from a corresponding Zlien webpage
does not show that Zlien has failed to state a claim upon which relief can be granted.

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Finally, NACM argues that its website predates Zlien’s website and that it developed the
look, feel, style, and font of its website before plaintiff even existed as a company. This
argument necessarily turns on matters outside the pleadings. As previously stated, given the
early stage of the proceedings and the limited and incomplete record with respect to the claims
asserted in this matter, the Court declines the opportunity to consider matters outside the
pleadings or to treat this motion as one for summary judgment. See Fed. R. Civ. P. 12(d).
Conclusion
In light of the foregoing,
IT IS ORDERED that the motion to dismiss is DENIED.

New Orleans, Louisiana, August 23, 2013.
__________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

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