STOCKFOOD AMERICA INC v. PEARSON EDUCATION INC et al

Filing 40

MEMORANDUM DECISION AND ORDER ON MOTION TO AMEND, granting in part and denying in part 29 Motion for Leave to File Second Amended Complaint. By MAGISTRATE JUDGE JOHN H. RICH III. (RICH III, JOHN)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
STOCKFOOD AMERICA, INC.,
Plaintiff
v.
PEARSON EDUCATION, INC.,
Defendant

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No. 2:12-cv-124-JAW

MEMORANDUM DECISION AND ORDER ON MOTION TO AMEND
In this copyright infringement action, plaintiff StockFood America, Inc. (“StockFood”)
moves to file a second amended complaint removing unknown “John Doe” printer defendants
and adding claims for vicarious and contributory infringement. See Plaintiff’s Motion for Leave
To File Second Amended Complaint (“Motion”) (ECF No. 29) at 1.

Defendant Pearson

Education, Inc. (“Pearson”) opposes the Motion insofar as it seeks to add the two new copyright
infringement claims on the grounds that (i) the addition of those claims would be futile, (ii) the
court lacks subject matter jurisdiction over the claims, and (iii) StockFood unduly delayed in
seeking to add those claims, prejudicing Pearson. See Defendant’s Opposition to Plaintiff’s
Motion for Leave To File Second Amended Complaint (“Opposition”) (ECF No. 31) at 1-2. For
the reasons that follow, I grant the Motion to allow the deletion of the “John Doe” defendants
and the addition of the contributory infringement claim, and otherwise deny it.
I. Applicable Legal Standards
Pursuant to Federal Rule of Civil Procedure 15(a)(2), “[t]he court should freely give
leave [to amend a pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2). Leave to amend
should be granted in the absence of reasons “such as undue delay, bad faith or dilatory motive on

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the part of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, futility of
amendment, etc. . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962).
The First Circuit has explained:
A motion to amend a complaint will be treated differently depending on its timing
and the context in which it is filed. . . . As a case progresses, and the issues are
joined, the burden on a plaintiff seeking to amend a complaint becomes more
exacting. Scheduling orders, for example, typically establish a cut-off date for
amendments (as was apparently the case here). Once a scheduling order is in
place, the liberal default rule is replaced by the more demanding “good cause”
standard of Fed. R. Civ. P. 16(b). This standard focuses on the diligence (or lack
thereof) of the moving party more than it does on any prejudice to the partyopponent. Where the motion to amend is filed after the opposing party has timely
moved for summary judgment, a plaintiff is required to show “substantial and
convincing evidence” to justify a belated attempt to amend a complaint.
Steir v. Girl Scouts of the USA, 383 F.3d 7, 11-12 (1st Cir. 2004) (citations, internal quotation
marks, and footnotes omitted).
The scheduling order in this case established a cut-off date of September 19, 2012, for the
filing of motions to amend. See ECF No. 27. The Motion was filed on that date. See Motion.
Hence, the liberal default rule applies.
II. Discussion
I group Pearson’s objections to StockFood’s motion to amend under two broad headings
– futility (including a purported lack of subject matter jurisdiction over the new copyright
infringement claims) and delay/prejudice.

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A. Futility
1. Applicable Legal Standards
An amendment is futile when “the complaint, as amended, would fail to state a claim
upon which relief could be granted.” Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st
Cir. 1996). “In assessing futility, the district court must apply the standard which applies to
motions to dismiss under [Federal Rule of Civil Procedure] 12(b)(6).” Adorno v. Crowley
Towing & Trans. Co., 443 F.3d 122, 126 (1st Cir. 2006).
The Supreme Court has stated:
While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do. Factual allegations
must be enough to raise a right to relief above the speculative level.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and internal punctuation
omitted). This standard requires the pleading of “only enough facts to state a claim to relief that
F

is 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).
In ruling on a motion to dismiss under Rule 12(b)(6), a court assumes the truth of all of
the well-pleaded facts in the complaint and draws all reasonable inferences in favor of the
plaintiff. Román-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011).

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2. Factual Background
The proposed second amended complaint contains the following relevant factual
allegations.1
1.

StockFood, a Maine corporation with its principal place of business in

Kennebunk, Maine, is a stock photography agency that licenses photographs for distribution
throughout the United States. [Proposed] Second Amended Complaint and Demand for Jury
Trial (“Proposed Complaint”) (ECF No. 30) ¶ 5. Pearson, a Delaware corporation, is a publisher
of educational textbooks, which it sells and distributes via employees and agents in Maine and
throughout the United States. Id. ¶ 6.
2.

Prior to the commencement of this action, the copyright holders granted

StockFood co-ownership of the copyrights to the photographic images depicted in Exhibit A to
the Proposed Complaint (“Photographs”). Id. ¶ 7; Exh. A (ECF No. 30-1) thereto.2
3.

Between 1989 and 2009, StockFood sold Pearson limited licenses to use copies of

the Photographs in numerous educational publications. Proposed Complaint ¶ 9. The licenses
were expressly limited by number of copies, distribution area, language, duration, and/or media,
as set forth in Exhibit A. Id.; Exh. A thereto.
4.

On May 3, 2010, and January 13, 2011, Julie Orr, Image Manager, Rights and

Permissions, for Pearson’s Curriculum Group, testified that Pearson published photographs in its
textbooks in some instances without obtaining any permission and, in other instances, had

1

The First Circuit has instructed that, in reviewing a complaint for sufficiency pursuant to Rule 12(b)(6), a court
“should begin by identifying and disregarding statements in the complaint that merely offer legal conclusions
couched as fact or threadbare recitals of the elements of a cause of action.” Ocasio-Hernández v. Fortuño-Burset,
640 F.3d 1, 12 (1st Cir. 2011) (citation and internal punctuation omitted). “Non-conclusory factual allegations in the
complaint must then be treated as true, even if seemingly incredible.” Id. “If that factual content, so taken, allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, the claim has facial
plausibility.” Id. (citation and internal quotation marks omitted).
2
Exhibit A lists 76 images. See Exh. A to Proposed Complaint.

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printed in excess of license limitations. Proposed Complaint ¶ 16; Exh. B (ECF No. 30-2)
thereto.
5.

On March 15, 2012, StockFood requested that Pearson provide it with complete

information regarding Pearson’s unauthorized uses of the Photographs. Proposed Complaint
¶ 18; Exh. D (ECF No. 30-4) thereto. Pearson did not timely respond to StockFood’s request
and, when it belatedly responded, it declined to provide most of the requested information.
Proposed Complaint ¶ 18.
6.

Upon information and belief, Pearson used the Photographs without any

permission in some of the publications identified in Exhibit A and in additional publications. Id.
¶ 20. Because Pearson alone knows these wholly unauthorized uses, StockFood cannot further
identify them without discovery. Id.
7.

Upon information and belief, Pearson reproduced and distributed the Photographs

without StockFood’s permission to other entities, subsidiary companies, divisions, affiliates,
and/or third parties (“Third Parties”). Id. ¶ 24. Upon information and belief, the reproductions
and distribution took place in the United States. Id.
8.

Upon information and belief, the Third Parties then translated the publications at

issue into additional languages or published them in local adaptations or reprints and included
the Photographs in these publications without StockFood’s permission.

Id. ¶ 25.

Upon

information and belief, the Third Parties’ unauthorized use of the Photographs occurred in whole
or in part in the United States. Id. ¶ 26.
9.

Upon information and belief, when Pearson licenses translation rights to Third

Parties, it transmits the electronic file for the Third Party’s use. Id. ¶ 27. Upon information and
belief, Pearson permits Third Parties to distribute its books in new territories without changing

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the content, to translate its books into new languages, and to adapt its books for distribution in
additional territories. Id. ¶ 28.
10.

Upon information and belief, Pearson (i) knew when it reproduced and distributed

the Photographs that the Third Parties would reproduce and distribute them without StockFood’s
authorization and (ii) knew that the Third parties were in fact reproducing and distributing them
without StockFood’s authorization. Id. ¶¶ 29-30. Upon information and belief, Pearson had the
right and ability to supervise the Third Parties’ use of the Photographs. Id. ¶ 31.
11.

Upon information and belief, Pearson directly profited from its reproduction and

distribution of the Photographs to the Third Parties. Id. ¶ 33. Documents that Pearson produced
in discovery in this action show that these Third Parties pay Pearson a percentage of their sales
of these products for translation or adaptation rights, including access to all of the content in the
publications. Id.
3. Discussion
a. Asserted Pleading Deficiencies
The Supreme Court has explained:
One infringes contributorily by intentionally inducing or encouraging direct
infringement and infringes vicariously by profiting from direct infringement while
declining to exercise a right to stop or limit it. Although the Copyright Act does
not expressly render anyone liable for infringement committed by another, these
doctrines of secondary liability emerged from common law principles and are
well established in the law.
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930-31 (2005) (citations,
internal punctuation, and footnote omitted). “Absent an actionable claim for direct copyright
infringement, the claims for contributory or vicarious infringement must also fail.” Greenspan v.
Random House, Inc., 859 F. Supp.2d 206, 219 (D. Mass. 2012), aff’d, 2012 WL 5188792 (1st
Cir. 2012).
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Pearson first argues, as a general matter, that the Proposed Complaint does not meet the
pleading standards of Twombly and Iqbal in that it offers only a formulaic recitation of the
elements of the causes of action, devoid of necessary factual allegations, and, worse, grounds
those recitations on information and belief. See Opposition at 3-4.
Pearson elaborates that:
1.

Despite months of discovery, the Proposed Complaint fails to set forth any act of

direct infringement by a Third Party, including the identity of any such party, where or when
such a party acted, and the instances in which any such party purportedly copied any of the
Photographs without permission. See id. at 4-5.
2.

Even if the Proposed Complaint adequately alleged direct infringement by a Third

Party, it fails to allege culpable conduct by Pearson. See id. at 5-7. It (i) alleges only that
Pearson distributed the Photographs in its publications to Third Parties, which falls short of
conduct amounting to a knowing inducement or material contribution to a third party’s
infringement, and (ii) fails to allege facts to support the conclusory allegations that Pearson “had
the right and ability to control the infringing conduct of other entities” or “received a direct
financial benefit from the unauthorized use of the Photographs.”

Id. (quoting Proposed

Complaint ¶¶ 43-44). Although the Proposed Complaint does allege that Third Parties paid
Pearson a percentage of their sales of the products at issue, such a payment does not, in
Pearson’s view, plausibly establish that it did anything improper with respect to the Photographs.
See id. at 5-6.
Pearson observes that the United States District Court for the Eastern District of
Pennsylvania recently denied a motion filed by the same attorneys to add similar claims for
contributory and vicarious infringement on behalf of a different plaintiff, holding that the

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plaintiff’s “vague, broadly-worded assertion does not provide enough factual support to survive a
motion to dismiss under Rule 12(b)(6).” See Opposition at 6-7 (quoting Order, Grant Heilman
Photography, Inc. v. Pearson Educ., Inc., NO. 11-cv-4649, slip op. at 2 (E.D. Pa. July 26, 2012)
(“Heilman Order”), Exh. A (ECF No. 31-1) to Opposition).
StockFood’s allegations in the Proposed Complaint bearing on its claims of contributory
and vicarious copyright infringement are substantially similar, although not identical, to those in
the proposed complaint at issue in Heilman. Compare Proposed Complaint ¶¶ 24-33 with
[Proposed] First Amended Complaint, Heilman (“Heilman Complaint”), Exh. B (ECF No. 31-2)
to Opposition, ¶¶ 34-39. I reach the same conclusion as did the Heilman court with respect to
the claim of vicarious copyright infringement. The Proposed Complaint is too bare-bones, as to
that cause of action, to survive a motion to dismiss. Nonetheless, I conclude that the Proposed
Complaint, which contains some factual allegations not found in the Heilman Complaint, would
survive a motion to dismiss with respect to the claim of contributory copyright infringement.
Pearson first challenges both claims on the basis that the Proposed Complaint falls short
of adequately alleging direct infringement by Third Parties, in the absence of which neither claim
can be sustained. See Opposition at 4-5. StockFood rejoins that Pearson has declined to provide
the details of Third Party infringement in response to discovery requests on the basis that they
are not relevant to the “claims in suit” – a default that StockFood says will be the subject of a
forthcoming motion to compel3 – and that, in any event, the Proposed Complaint adequately
alleges direct infringement by the Third Parties. See Plaintiff[’s] Reply on Motion for Leave To
File Second Amended Complaint (“Reply”) (ECF No. 32) at 3-5. I agree.

3

Local Rule 26(b) prohibits written discovery motions without the prior approval of a judicial officer.

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StockFood alleges that Pearson reproduced the Photographs and then distributed them to
Third Parties without its permission and that the Third Parties then translated publications
containing the Photographs into additional languages or published them in local adaptations or
reprints without its permission. See Proposed Complaint ¶¶ 24-25. StockFood further alleges
that the Third Parties’ unauthorized use of the Photographs took place in whole or in part in the
United States. See id. ¶ 26. Accordingly, StockFood supplies sufficient factual matter to allow
the court to draw a plausible inference that the Third Parties directly infringed its copyrights in
the Photographs. See Litecubes, LLC v. Northern Light Prods., Inc., 523 F.3d 1353, 1371 (Fed.
Cir. 2008) (“[T]he Copyright Act does not explicitly require that sales be in the United States,
and courts have generally held that the Copyright Act only does not reach activities that take
place entirely abroad.”) (citation and internal quotation marks omitted) (emphasis in original).
Given Pearson’s superior knowledge of the underlying facts, StockFood’s reliance on
“information and belief” does not prevent the Proposed Complaint from stating a plausible claim
of entitlement to relief as against Pearson. See, e.g., Arista Records LLC v. Doe 3, 604 F.3d 110,
120 (2d Cir. 2010) (“The Twombly plausibility standard, which applies to all civil actions, does
not prevent a plaintiff from pleading facts alleged ‘upon information and belief’ where the facts
are peculiarly within the possession and control of the defendant or where the belief is based on
factual information that makes the inference of culpability plausible.”) (citations and internal
quotation marks omitted); Wright v. Lehigh Valley Hosp. & Health Network, Civil Action No.
10-431, 2011 WL 2550361, at *3 (E.D. Pa. June 23, 2011) (“Although defendants take strong
issue with Wright’s use of ‘upon information and belief’ pleading, the allowance of pleading
upon information and belief has been held to be appropriate under the Twombly/Iqbal regime
where the facts required to be pled are uniquely in the control of the defendant.”).

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Nor does StockFood’s failure to enumerate specific details of the alleged Third Party
infringement prevent the Proposed Complaint from adequately alleging direct infringement by
the Third Parties. See, e.g., American Inst. of Physics v. Schwegman Lundberg & Woessner,
P.A., Civ. No. 12-528 (RHK/JJK), 2012 WL 3799647, at *3 (D. Minn. July 2, 2012) (“A plaintiff
asserting fraud must plead ‘the who, what, when, where, and how’ of its claim because Federal
Rule of Civil Procedure 9(b) subjects such a claim to a heightened-pleading requirement. But no
similar requirement exists for copyright plaintiffs, who are constrained only by Federal Rule of
Civil Procedure 8(a)(2), requiring ‘a short and plain statement of the claim showing that the
pleader is entitled to relief.’ Here, Plaintiffs have alleged that Defendants copied their protected
works; they need not suffuse their Complaint with details regarding when, or the precise manner
in which, such copying occurred.”) (citations omitted) (emphasis in original).4
StockFood also pleads sufficient facts for the court to draw a plausible inference of
contributory infringement by Pearson.

“A party may be liable for contributory copyright

infringement if it (1) has knowledge of a third party’s infringing activity, and (2) induces, causes,
or materially contributes to the infringing conduct.” Med-Sys., Inc. v. Masterson Mktg., Inc., No.
11CV695 JLS (BLM), 2011 WL 5873399, at *6 (S.D. Cal. Nov. 23, 2011) (citation and internal
quotation marks omitted).
With respect to the first element, StockFood alleges that Pearson knew when it
reproduced and distributed the Photographs that the Third Parties would reproduce and distribute
them without StockFood’s authorization and knew that the Third Parties were in fact doing so.

4

Moreover, as discussed below with respect to the issue of alleged undue delay in filing the Motion, StockFood
explains that Pearson had refused, as of the time of the filing of the Motion, to (i) provide requested discovery in this
case that would flesh out details of the Third Party infringement or (ii) permit StockFood to import into the Proposed
Complaint, from parallel copyright infringement cases, factual information that was labeled as “confidential” and
provided pursuant to a confidentiality order entered in those other cases.

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See Proposed Complaint ¶¶ 29-30. This suffices to allege knowledge of the Third Parties’
infringing activities. See, e.g., Acosta v. United States, No. Civ. 04-265-P-S, Civ. 03-116-GZS,
2005 WL 757581, at *2 (D. Me. Feb. 16, 2005) (rec. dec., aff’d Mar. 28, 2005) (noting the “usual
rule” that “malice, intent, knowledge, and other condition of mind of a person may be averred
generally”) (citation and internal punctuation omitted).
With respect to the second element, StockFood alleges that, pursuant to licenses between
Pearson and the Third Parties, Pearson transmitted electronic files containing the Photographs to
the Third Parties knowing that they (the Third Parties) would reproduce and distribute the
Photographs without StockFood’s permission.

See Proposed Complaint ¶¶ 27-29.

These

allegations, taken as true for purposes of the Motion, suffice to show that Pearson induced,
caused, or materially contributed to the Third Parties’ infringement.5
Nonetheless, I agree with Pearson that StockFood’s claim of vicarious copyright liability
fails to state a claim upon which relief can be granted. A claim for vicarious copyright liability
entails a showing that a defendant has “the right and ability to supervise the infringing activity”
and has “a direct financial interest” in the activity.

Pegasus Imaging Corp. v. Northrop

Grumman Corp., No. 8:07-CV-1937-T-27EAJ, 2008 WL 5099691, at *2 (M.D. Fla. Nov. 25,
2008). StockFood adequately pleads the second element by alleging that the Third Parties pay
Pearson a percentage of their sales of the products at issue for translation or adaptation rights,
including access to all of the content in the publications. See Proposed Complaint ¶ 33.
5

Pearson cites two cases for the proposition that merely supplying means to accomplish infringing activity cannot
give rise to the imposition of liability for contributory infringement. See Opposition at 5 (citing Capitol Records,
Inc. v. Foster, No. Civ. 04-1569-W, 2007 WL 1028532 (W.D. Okla. Feb. 6, 2007); Newborn v. Yahoo!, Inc., 391
F. Supp.2d 181 (D.D.C. 2005)). Both cases are distinguishable. In Capitol Records, the complaint was “devoid of
any suggestion that [the defendant] knew third parties were using her account to infringe the plaintiffs’ copyrights or
that she substantially participated in any infringing activities.” Capitol Records, 2007 WL 1028532, at *3. In
Newborn, the complaint contained “brief, conclusory statements, which are accompanied by no factual support,” and
did not allege that “the defendants’ activities were anything more than the mere operation of the website
businesses.” Newborn, 391 F. Supp.2d at 189 (citation and internal quotation marks omitted).

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However, StockFood relies on a “formulaic recitation of the elements of a cause of
action[,]” Twombly, 550 U.S. at 555, with respect to the second element, alleging that “[u]pon
information and belief, Pearson had the right and ability to supervise the Third Parties’ use of the
Photographs[,]” Proposed Complaint ¶ 31. StockFood alleges no facts that would allow the
court to conclude that this was the case. It asserts merely that some of the Third Parties were
subsidiary companies, divisions, or affiliates of Pearson, see id. ¶ 24, and that Pearson licensed
translation rights to them, see id. ¶ 27. In the absence of further detail regarding the nature of the
relationship between Pearson and its affiliates or subsidiaries or the terms of the licensing
agreements at issue, one cannot draw a reasonable inference that Pearson had the right and
ability to supervise any of the Third Parties’ infringing activities. See, e.g., Pegasus, 2008 WL
5099691, at *2 (“A parent corporation cannot be held liable for the infringement of its subsidiary
unless there is a substantial and continuing connection between the infringing acts of the parent
and subsidiary.”) (citation and internal quotation marks omitted).
Thus, the Motion must be denied with respect to the addition of a claim for vicarious
copyright infringement against Pearson.
b. Asserted Lack of Subject Matter Jurisdiction
Pearson next argues that StockFood’s bid to add the new claims is futile on another basis:
that the court would lack subject matter jurisdiction over them because they are premised on
direct infringements that allegedly occurred outside of the United States. See Opposition at 7-8.
StockFood rejoins that its claims are subject to a well-established exception to the general rule
that the Copyright Act does not apply to extraterritorial infringements. See Motion at 3; Reply at
7.

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As a threshold matter, according to my research, courts have split on the matter of
whether extraterritorial infringement implicates a court’s subject matter jurisdiction; the better
view, adopted by the United States Court of Appeals for the Federal Circuit, is that it does not.
See Litecubes, 523 F.3d at 1362, 1368 (following the “readily administrable bright line rule” set
forth in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), that “when Congress does not rank a
statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character”; holding that, because “[t]here is no indication that Congress intended
the extraterritorial limitations on the scope of the Copyright Act to limit the subject matter
jurisdiction of the federal courts[,] . . . the issue is properly treated as an element of the claim
which must be proven before relief can be granted, not a question of subject matter jurisdiction”)
(citation and internal quotation marks omitted); Luar Music Corp. v. Universal Music Grp., Inc.,
861 F. Supp.2d 30, 39 n.5 (D.P.R. 2012) (noting split; following Litecubes approach).
Therefore, even assuming arguendo that the new claims implicate solely extraterritorial
infringement, that does not deprive the court of subject matter jurisdiction.
In any event, I agree with StockFood that it has pleaded sufficient factual matter to state a
claim with respect to the “predicate act” exception. See, e.g., Tire Eng’g & Distrib., LLC v.
Shandong Linglong Rubber Co., 682 F.3d 292, 306 (4th Cir. 2012) (“As a general matter, the
Copyright Act is considered to have no extraterritorial reach. But courts have recognized a
fundamental exception: when the type of infringement permits further reproduction abroad, a
plaintiff may collect damages flowing from the foreign conduct.”) (citations and internal
quotation marks omitted). StockFood alleges an infringement in the United States – Pearson’s
unauthorized copying of the Photographs for distribution to the Third Parties – that permitted
further infringement (unauthorized copying and distribution) abroad. See Proposed Complaint

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¶¶ 24-30. These allegations, taken as true for purposes of the Motion, suffice to trigger the
predicate exception. See, e.g., Stolle Mach. Co. v. RAM Precision Indus., No. 3:10-cv-155, 2011
WL 6293323, at *13 (S.D. Ohio Dec. 15, 2011) (“In this case, it was the initial unauthorized
copying that occurred in the United States that allowed the subsequent infringement overseas.”).
B. Asserted Undue Delay and Prejudice
Pearson finally contends that the court should deny the Motion on the grounds of
StockFood’s undue delay in seeking to add the new claims and the resulting prejudice to
Pearson. See Opposition at 8-10. StockFood argues that it filed the Motion expeditiously based
on documents produced in discovery and that there is no discernible prejudice to Pearson. See
Motion at 4-5; Reply at 1-2. StockFood has the better argument.
StockFood filed the instant Motion on September 19, 2012, the deadline for filing
motions to amend, which was two-and-a-half months prior to the close of discovery on
December 5, 2012. See ECF No. 27. Pearson argues that StockFood nonetheless demonstrated
undue delay, bad faith, and a lack of due diligence because (i) StockFood has known since at
least 1998 that Pearson’s foreign affiliates have been using StockFood’s images and, (ii) as of
September 19, 2012, StockFood’s counsel had been in possession of the relevant Pearson
documents for more than two months in this case and more than a year in other cases in which
other plaintiffs have filed similar copyright actions against Pearson. See Opposition at 8-9 & n.2.
Pearson argues that, “[t]o the extent that the information was subject to protective orders in those
other cases, Plaintiff’s counsel could have, as it did in other instances, sought permission to use
the information outside of those cases or it could have sought expedited production of the
information here, but Plaintiff’s counsel did neither.” Id. at 9 n.2.

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StockFood rejoins that, (i) although it previously knew about alleged infringements
relating to foreign affiliates’ licensed uses of its images in translations, it did not know until
recently that Pearson was copying and transmitting its images to third parties without any license
at all, see Reply at 4 n.14, (ii) it did not receive discovery in this case bearing on the new claims
until July 2012 and, even then, Pearson refused to respond to discovery requests aimed at
eliciting more detailed information regarding third-party usage no grounds that it was irrelevant
to the claims at issue, see id. at 3 & 5 n.22, and (iii) while Pearson has produced other, more
detailed documents in parallel copyright infringement cases against it, those documents were
labeled “confidential” and were subject to a protective order prohibiting StockFood’s counsel
from using them in other cases, see id. at 5.
StockFood explains that, as of the time of the filing of its reply brief (October 24, 2012),
it had not as yet moved to compel the production of responsive documents because it had
engaged in two “meet and confers” with Pearson over these discovery disputes on September 21,
2012, and October 16, 2012, and Pearson had promised to complete its production by late
October. See id. at 5 n.22. It also points out that, upon being presented with a draft version of
the Proposed Complaint, Pearson protested the inclusion therein of information from documents
and deposition transcripts that were designated confidential under protective orders entered in
this and other cases. See id. at 5-6; Exh. 3 (ECF No. 32-3) thereto.
In these circumstances, StockFood displayed neither undue delay, bad faith, nor a lack of
due diligence when it filed the instant Motion on September 19, 2012. See Bean v. Pearson
Educ., Inc., No. CV 11-8030-PCT-PGR, 2012 WL 1716021, at *1 (D. Ariz. May 15, 2012)
(finding that plaintiffs timely raised new fraud claims when critical documents had been received
on a rolling basis from January 2012 to the present).

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Nor, in any event, does Pearson demonstrate that it would suffer prejudice as a result of
the allowance of the amendment. See Taliaferro v. City of Kansas City, 128 F.R.D. 675, 678 (D.
Kan. 1989) (the party opposing amendment has the burden of showing prejudice). Pearson
complains that it will not have adequate time to respond to the new complaint, engage in
discovery relating to the “baseless” claims, and prepare for and participate in the pre-filing
summary judgment conference that is required by Local Rule 56(h). See Opposition at 9.
However, it does not explain why this is so. See id. Beyond this, as StockFood points out, it put
Pearson on notice in both its original and first amended complaints that it alleged that Pearson
had used some images without any permission, although it could not identify those uses without
discovery, see Motion at 4-5; Complaint and Demand for Jury Trial (“Original Complaint”)
(ECF No. 1) ¶ 20; First Amended Complaint and Demand for Jury Trial (ECF No. 6) ¶ 21, and
the new claims concern the same images at issue since the inception of this suit, compare Exh. A
(ECF No. 1-1) to Original Complaint with Exh. A to Proposed Complaint.6
III. Conclusion
For the foregoing reasons, StockFood’s motion to amend its complaint is GRANTED in
part, to the extent that StockFood may remove unknown “John Doe” printer defendants and add
a claim for contributory infringement, and is otherwise DENIED. StockFood shall file a second
amended complaint consistent herewith within 10 days of the date of this order.

6

I find only one difference between the version of Exhibit A attached to the Original Complaint and that attached to
the Proposed Complaint: StockFood deleted one photograph, No. 11.

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NOTICE
In accordance with Federal Rule of Civil Procedure 72(a), a party may serve and file
an objection to this order within fourteen (14) days after being served with a copy thereof.
Failure to file a timely objection shall constitute a waiver of the right to review by the
district court and to any further appeal of this order.
Dated this 29th day of November, 2012.

/s/ John H. Rich III
John H. Rich III
United States Magistrate Judge

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