Righthaven LLC v. Mostofi

Filing 34

ORDER that Defendant Dean Mostofi's 25 Motion to Dismiss is GRANTED. Signed by Judge Kent J. Dawson on 7/13/11. (Copies have been distributed pursuant to the NEF - ECS)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF NEVADA 9 10 RIGHTHAVEN LLC, 11 Plaintiff, Case No. 2:10-CV-1066-KJD-GWF 12 v. ORDER 13 DEAN MOSTOFI, 14 Defendant. 15 16 Presently before the Court is Defendant Dean Mostofi’s Motion to Dismiss (#25). Plaintiff 17 filed a response in opposition (#29), to which Defendant replied (#30). 18 I. Background 19 This dispute arises out of Defendant’s alleged copyright infringing conduct. On 20 April 20, 2010, Defendant displayed a Las Vegas Review-Journal (“LVRJ”) article (“Work”), on his 21 website, <http://www.deanmostofi.com/> (“Website”), regarding a Las Vegas, Nevada based lawyer 22 who was reprimanded for false advertising by the Nevada Supreme Court. Defendant allegedly 23 changed the original title of the Work: “Court Reprimands Lawyer Over Misleading Ads,” to a 24 different title: “Las Vegas Lawyer Reprimanded for False Advertising.” (Complaint, ¶ 21). Plaintiff 25 claims that this article infringes upon the copyright. 26 1 On June 24, 2010, approximately two months after Defendant displayed the article on his 2 website, the Work was allegedly registered with the United States Copyright Office (“USCO”). 3 (Complaint, ¶ 19). 4 On or about January 18, 2010, Plaintiff and Stephens Media LLC (“Stephens Media”), the 5 original owner of the Work, entered into a Strategic Alliance Agreement (“SAA”). Plaintiff filed its 6 Complaint (#1) on June 30, 2010. Plaintiff alleges that Defendant willfully copied the Work, without 7 authorization. Defendant raises this Motion to Dismiss for lack of subject matter jurisdiction, 8 specifically asserting Plaintiff’s lack of standing to bring the claim at the time the action was filed. 9 II. Standard for Motion to Dismiss 10 In this action, “as in all actions before federal court, the necessary and constitutional predicate 11 for any decision is a determination that the court has jurisdiction- that is the power- to adjudicate the 12 dispute.” Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998). The purpose of a complaint is 13 two-fold: to give the defendant fair notice of the basis for the court’s jurisdiction and of the factual 14 basis of the claim. See Fed. R. Civ. P. 8; Skaff v. Meridien North Am. Beverly Hills, LLC, 506 F.3d 15 832, 843 (9th Cir. 2007). Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to 16 seek dismissal of a claim or action for a lack of subject matter jurisdiction. Dismissal under Rule 17 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face that 18 are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory 19 (DRAM) Antitrust Litigation, 546 F.3d 981, 984-85 (9th Cir. 2008). Although the defendant is the 20 moving party in a motion to dismiss brought under Rule 12(b)(1), the plaintiff is the party invoking 21 the court’s jurisdiction. As a result, the plaintiff bears the burden of proving that the case is properly 22 in federal court. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. 23 General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). 24 Attacks on jurisdiction pursuant to Rule 12(b)(1) can be either facial, confining the inquiry to 25 the allegations in the complaint, or factual, permitting the court to look beyond the complaint. See 26 Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). In a facial attack “the 2 1 challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke 2 federal jurisdiction.” Safe Air for Everyone v. Myer, 373 F.3d 1035, 1039 (9th Cir. 2004). By 3 contrast, “in a factual attack, the challenger disputes the truth of the allegations that, by themselves, 4 would otherwise invoke federal jurisdiction.” Id. A factual attack made pursuant to Rule 12(b)(1) 5 may be accompanied by extrinsic evidence. Whitehorn v. F.C.C., 235 F. Supp. 2d 1092, 1095-96 (D. 6 Nev. 2002) (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989)). Dismissal for lack 7 of subject matter jurisdiction is proper if the complaint, considered in its entirety, fails to allege facts 8 that are sufficient to establish subject matter jurisdiction. DRAM Antitrust Litigation, 546 F.3d at 9 984-85. 10 III. Analysis 11 12 Section 501(b) of the 1976 Copyright Act (“Act”) establishes who is legally authorized to sue for infringement of a copyright: 13 The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for an infringement of that particular right committed while he or she is the owner of it. 14 15 17 U.S.C. § 501(b). Therefore, to be entitled to sue for copyright infringement, the plaintiff must be 16 the “legal or beneficial owner of an exclusive right under a copyright.” See Silvers v. Sony Pictures 17 Entm’t, Inc., 402 F.3d 881, 884 (9th Cir. 2005). If the plaintiff “is not a proper owner of the 18 copyright rights, then it cannot invoke copyright protection stemming from the exclusive rights 19 belonging to the owner, including infringement of the copyright.” Id. (quoting 4 Business and 20 Commercial Litigation in Federal Courts, at 1062 § 65.3(a)(4) (Robert Haig ed.)). Section 106 of the 21 Act defines and limits the exclusive rights under copyright law.1 Id. at 884-85. While these 22 1 23 24 25 26 “[T]he owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound 3 1 exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is 2 ineffectual because it is not one of the exclusive rights. Id. Since the right to sue is not one of the 3 exclusive rights, transfer solely of the right to sue does not confer standing on the assignee. Id. at 4 890. Additionally, the “bare assignment of an accrued cause of action is impermissible under [the 5 Act].” Id. One can only obtain a right to sue on a copyright if the party also obtains one of the 6 exclusive rights in the copyright. See id. 7 A. Contract Interpretation 8 Furthermore, although the Act grants exclusive jurisdiction for infringement claims to federal 9 courts, those courts construe copyrights as contracts and turn to the relevant state law to interpret 10 them. See Automation By Design v. Raybestos Products Co., 463 F.3d 749, 753 (7th Cir. 2006). The 11 question of the interpretation of the contract is a question of law. See Shelton v. Shelton, 78 P.3d 12 507, 510 (Nev. 2003). A contract is ambiguous if it is reasonably susceptible to more than one 13 interpretation. Id. A contract may be ambiguous if the paragraphs in question are reasonably 14 susceptible to different constructions or interpretations. See Agric. Aviation Eng’g Co. v. Board of 15 Clark County Com’rs, 749 P.2d 710, 712 (Nev. 1990). 16 The SAA defines the relationship between Plaintiff and Stephens Media and governs all 17 future copyright assignments between them (including the assignment at issue here). See 18 (Defendant’s Motion to Dismiss, Doc. No. 25, p. 4 of 28). Plaintiff alleges that the SAA “envisions 19 an assignment to Plaintiff of all right, title, and interest in and to potential copyrighted works.” 20 (Plaintiff’s Opposition to Defendant’s Motion to Dismiss, Doc. No. 29, p. 8 of 14). This is an 21 inaccurate conclusion. Here, the SAA is not ambiguous. The SAA expressly denies Righthaven any 22 right from future assignments other than the bare right to bring and profit from a copyright 23 infringement action. 24 /// 25 26 recordings, to perform the copyrighted work publicly by means of a digital audio transmission.” 17 U.S.C. § 106. 4 1 2 3 4 5 6 7 8 This notion is clearly expressed in Section 7.2 of the SAA: 7.2 Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery. To the extent that Right haven’s [sic] maintenance of rights to pursue infringers of the Stephens Media Assigned Copyrights in any manner would be deemed to diminish Stephens Media’s right to Exploit the Stephens Media Assigned Copyrights, Righthaven hereby grants an exclusive license to Stephens Media to the greatest extent permitted by law so that Stephens Media shall have unfettered and exclusive ability to Exploit the Stephens Media Assigned Copyrights… 9 (Defendant’s Motion to Dismiss, Doc. No. 25, Exhibit A, p. 9 of 22 (bold emphasis added, 10 italicization in original)). It is clear from this section that Plaintiff is prevented from obtaining, 11 having, or otherwise exercising any right other than the bare right to sue, which is expressly 12 forbidden pursuant to Silvers. As a result, Defendant asserts that Plaintiff lacks standing to maintain 13 this lawsuit. The Court agrees with this conclusion because it is clear that the entirety of the SAA 14 was designed to prevent Righthaven from becoming “an owner of any exclusive right in the 15 copyright…,” Silvers, 402 F.3d at 886 (emphasis in original), regardless of Righthaven and Stephens 16 Media’s post hoc, explanations of the SAA’s intent or later amendments. 17 B. Amendment to the SAA 18 Notwithstanding the actual transaction that occurred, Plaintiff argues that the amendment it 19 executed with Stephens Media on May 9, 2011 fixes any possible errors in the original SAA that 20 would prevent Plaintiff from having standing in this matter. Righthaven LLC v. Vote For The Worst, 21 LLC, et al., Case No. 2:10-cv-1045-KJD-GWF (Doc. No. 41 and 42). Specifically, Plaintiff alleges 22 that this amendment further clarifies and effectuates, “to the extent not already accomplished, what 23 has at all times been the intent of the parties - to transfer full ownership in copyright,” to Plaintiff. 24 This amendment, however, cannot create standing because “[t]he existence of federal jurisdiction 25 ordinarily depends on the facts as they exist when the complaint was filed.” Lujan v. Defenders of 26 5 1 Wildlife, 504 U.S. 555, 571 n.4 (1992) (quoting Newman-Green, Inc. v. Alfonzo- Larrain, 490 U.S. 2 826, 830 (1989)) (emphasis in Lujan). Although a court may allow parties to amend defective 3 allegations of jurisdiction, it may not allow the parties to amend the facts themselves. Newman- 4 Green, 490 U.S. at 830. As an example, a party who misstates his domicile may amend to correctly 5 state it. This is an amendment of the allegation. However, that party is not permitted to subsequently 6 move in order to change his domicile and amend accordingly. This would be an amendment of the 7 jurisdictional facts, which is not allowed. See id. Here, Plaintiff and Stephens Media attempt to 8 impermissibly amend the facts to manufacture standing. Therefore, the Court shall not consider the 9 amended language of the SAA, but the actual assignment and language of the SAA as it existed at 10 the time the complaint was filed. 11 B. Copyright Assignment 12 Even if the Court were to consider the amendments, these cosmetic adjustments do not alter 13 the fact that Plaintiff has failed to sufficiently allege whether or not Stephens Media assigned the 14 copyrighted Work to Righthaven pursuant to the SAA, as amended or not. 15 Pursuant to Section 3.1 of the SAA, Stephens Media retains the right to assign copyrights that 16 it owns and that it, among other things, considers a “material risk of infringement.” Once a copyright 17 is designated as such, it is assigned to Righthaven. See (Defendant’s Motion to Dismiss, Doc. No. 18 25, Exhibit A, p. 7 of 22). Section 7 of the SAA establishes how Stephens Media assigns copyright 19 content to Righthaven. Here, the SAA states: 20 21 22 23 24 25 26 Stephens Media shall effect the assignments to Righthaven of copyrights as required by [the SAA]…by executing a particularized assignment with respect to each copyright and each consistent with (and in form and substance the same as) the scope of assignment as set forth in the form of copyright assignment as embodied in Exhibit 1 (each a “Copyright Assignment”). Stephens Media shall provide Notice to Righthaven of each copyright…that is required to be the subject of a Copyright Assignment…by no later than five (5) Business Days prior to the last day upon which each respective Copyright Assignment is required to be executed by Stephens Media as provided in Section 3.1. (Defendant’s Motion to Dismiss, Doc. No. 25, Exhibit A, pp. 8-9 of 22) (Emphasis added). 6 1 The SAA clearly does not envision an all-encompassing assignment of all Stephens Media 2 owned copyrights, as Plaintiff alleges. The SAA sets forth guidelines for the assignment of each 3 copyright that Stephens Media identifies as a potential risk for infringement. Specifically, as stated 4 above, Exhibit 1 of the SAA is the legal memorialization of the terms set forth in Section 7. Through 5 this instrument, Stephens Media “transfers, vests and assigns,” all copyrights requisite to have 6 Righthaven “recognized as the copyright owner of the work.” Accordingly, the work must be 7 depicted as “Exhibit A,” and must be attached to Exhibit 1. Plaintiff acknowledges this fact because 8 Plaintiff directs the Court to an entire section of the Opposition devoted to a “Written Assignment,” 9 yet fails to provide a copy of the Assignment to the Work in question, pursuant to the SAA. 10 Furthermore Plaintiff’s reference to the Vote For The Worst case works against Plaintiff because it 11 provides a copy of the assignment pertaining to the work in that case. Additionally, Plaintiff 12 acknowledges that the purpose of the SAA is not to “effectuate the assignment of any work;” rather, 13 Exhibit 1 achieves this purpose. See (Plaintiff’s Opposition to Defendant’s Motion to Dismiss, Doc. 14 No. 29, p. 7 of 14). 15 C. Prior Rulings within this District 16 Finally, Plaintiff contends that multiple courts within this district have already determined 17 that Plaintiff has standing to bring claims for past infringement under the Silver standard based on 18 the plain language of the copyright assignment. Again, this Court is unable to conclude whether or 19 not the assignment confers standing upon Plaintiff because Plaintiff does not provide a copy of the 20 assignment for the Court’s consideration as it did in the prior cases within this district. 21 D. Plaintiff Lacks Standing to Bring this Action 22 Because the SAA prevents Plaintiff from obtaining any of the exclusive rights necessary to 23 maintain standing in a copyright infringement action and because Plaintiff fails to sufficiently allege 24 an assignment of rights from Stephens Media to Plaintiff, the Court finds that Plaintiff lacks standing 25 in this case. Accordingly, the Court dismisses Plaintiff’s cause of action. 26 /// 7 1 2 3 4 IV. Conclusion Accordingly, IT IS HEREBY ORDERED that Defendant Dean Mostofi’s Motion to Dismiss is GRANTED. DATED this 13TH day of July 2011. 5 6 7 8 _____________________________ Kent J. Dawson United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 8

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