LIVE FACE ON WEB, LLC v. GREEN TECHNOLOGY SERVICES et al
Filing
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OPINION. Signed by Judge Joseph E. Irenas on 12/11/2014. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LIVE FACE ON WEB, LLC,
HONORABLE JOSEPH E. IRENAS
Plaintiff,
Civil No. 14-00182 (JEI/AMD)
v.
OPINION
EMERSON CLEANERS, INC.,
Defendant.
APPEARANCES:
LAW OFFICE OF JASON RABINOVICH, PLLC
By: Jason L. Rabinovich, Esq.
1700 Market Street
Suite 1005
Philadelphia, PA 19103
Counsel for Plaintiff
BAKOS & KRITZER
By: Noam J. Kritzer, Esq.
147 Columbia Turnpike
Florham Park, NJ 07932
Counsel for Defendant
IRENAS, Senior United States District Judge:
This is a copyright infringement suit. 1
Before the Court is
Defendant Emerson Cleaners, Inc.’s (“Emerson”) Motion to Dismiss for
failure to state a claim for either direct or indirect copyright
infringement.
For the reasons set forth below, the Motion will be
The Court exercises federal question subject matter jurisdiction
pursuant to 28 U.S.C. §§ 1331 and 1338.
1
1
granted as to LFOW’s contributory infringement claim and denied in
all other respects.
I.
This is the first opinion in a series of three, all addressing
similar factual and legal issues, and all involving Plaintiff LFOW’s
claims of copyright infringement. 2
LFOW owns and develops software and video technology, which it
licenses to individuals and businesses for use in online advertising.
(Am. Compl. ¶ 11-12)
LFOW’s customers use the software to customize
a “live” walking and talking “[video] spokesperson” to direct a
website visitor’s attention to particular products or aspects of the
website.
(Id. ¶ 12)
technology.
LFOW allegedly is a “leading developer” of this
(Id. ¶ 11)
LFOW’s software and video player are alleged
to be copyrighted work. (Id. ¶ 18) 3
LFOW originally filed one copyright infringement complaint against
four Defendants: Emerson Cleaners, Inc. (the Defendant in this case);
Unlimited Office Solutions LLC, d/b/a Green Technology Services;
Innovative Pain Management, LLC; and Linvas Corporation t/a Sunrise
Gentlemen’s Club.
Magistrate Judge Donio later ordered the cases severed from each
other, although they are being administered as related cases.
Innovative Pain Management has answered the complaint and has no
motions presently pending. The other three Defendants have each
moved separately to dismiss.
2
The Amended Complaint alleges that the “LFOW Software Package
consists of three parts.” (¶ 18) The “video presentation” is
alleged to be “protectable” under “U.S. copyright law”; the “LFOW
Software” is alleged to be “a copyrighted work, duly registered with
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3
Emerson, which operates a dry cleaning business, had a video
host that would appear when a person visited Emerson’s website.
Compl. ¶ 37)
(Am.
Emerson undisputedly did not obtain this capability
from LFOW, which licenses its software packages to customers for a
fee.
Instead, the parties apparently do not dispute that Emerson
obtained the live spokesperson capability from Tweople, Inc., which
LFOW has separately sued for copyright infringement in the Middle
District of Florida. 4
According to the LFOW v. Tweople complaint (Exhibit B to
Emerson’s Motion to Dismiss), Tweople blatantly copied LFOW’s source
code and began offering live spokesperson services to Tweople’s
customers using LFOW’s source code.
The exact mechanics of how
Emerson was able to operate the video host on its website is not
clear at this point in the case.
The Amended Complaint merely
the U.S. Copyright Office”; and the “LFOW video player” is alleged to
be “a copyrighted work.” (Id.)
See Live Face on Web, LLC v. Tweople, Inc., et al., Civil Case No.
6:14-cv-44 (M.D. Fla.). LFOW filed the Florida suit on the same day
this suit was filed, although different counsel represent LFOW in the
two suits. The Florida litigation has progressed further than the
cases in this Court. Most relevantly, the presiding judge in the
Florida suit, Chief District Judge Anne C. Conway, denied three
motions to dismiss filed by Tweople’s customers (three of 20 such
defendants in the Florida suit). The issues raised by those Motions
to Dismiss are similar to the issues raised by the instant Motion.
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3
alleges that Emerson “used” an “unlawful version of LFOW’s Software.”
(Am. Compl. ¶ 35) 5
What allegedly happened when a person visited Emerson’s website
is particularly relevant to the instant Motion.
According to the
Amended Complaint, ¶ 15:
When a web browser is directed to a website which has
incorporated LFOW Technology, the website distributes a
copy of the LFOW Software, which is automatically
downloaded by the web browser into cache and/or computer
memory and/or hard drive, allowing the launch of the
specified video using the LFOW Software. As a result,
every time a website with LFOW’s Software is visited, a
copy of LFOW’s Software is distributed to the website
visitor.
The Amended Complaint asserts one claim for “copyright
infringement.”
However, that one “copyright infringement” claim
states that it “is an action under 17 U.S.C. § 501 for direct,
indirect, vicarious, and/or contributory infringement of registered
copyright(s).”
(Am. Compl. ¶ 78)
II.
Emerson vigorously argues that this alleged fact is not true,
insofar as the alleged infringing source code actually resided on
servers owned by Tweople. According to Emerson, it “merely
provide[d] a website which allow[ed] the customers to receive the
allegedly infringing content from Tweople, Inc.” (Moving Brief, p.
3) Such argument, however, is better left for summary judgment.
Unlike the Complaints in the related cases against Defendants Green
Technologies and Linvas Corp., the Amended Complaint in this case
makes no reference to Tweople.
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4
Federal Rule of Civil Procedure 12(b)(6) provides that a court
may dismiss a complaint “for failure to state a claim upon which
relief can be granted.”
In order to survive a motion to dismiss, a
complaint must allege facts that raise a right to relief above the
speculative level.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007); see also Fed. R. Civ. P. 8(a)(2).
While a court must accept
as true all factual allegations in the plaintiff’s complaint, and
view them in the light most favorable to the plaintiff, Phillips v.
County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008), a court is not
required to accept sweeping legal conclusions cast in the form of
factual allegations, unwarranted inferences, or unsupported
conclusions.
Cir. 1997).
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d
The complaint must state sufficient facts to show that
the legal allegations are not simply possible, but plausible.
Phillips, 515 F.3d at 234.
“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).
III.
The Court addresses first the direct infringement claim, and
then the indirect infringement claims.
A.
5
“To establish infringement, two elements must be proven: (1)
ownership of a valid copyright, and (2) copying of constituent
elements of the work that are original.”
Feist Publications, Inc. v.
Rural Telephone Service Co., Inc., 499 U.S. 340, 361 (1991).
Only
the second element is at issue in this motion.
“Copying is a shorthand reference to the act of infringing any
of the copyright owner’s . . . exclusive rights set forth at 17
U.S.C. § 106.”
Dun & Bradstreet Software Servs., Inc. v. Grace
Consulting, Inc., 307 F.3d 197, 206 (3d Cir. 2002) (internal citation
and quotation omitted).
The exclusive rights implicated in this suit
are the first three enumerated by § 106: the right “(1) to reproduce
the copyrighted work in copies . . . ; (2) to prepare derivative
works based upon the copyrighted work; [and] (3) to distribute copies
. . . of the copyrighted work to the public by sale or other transfer
of ownership, or by rental, lease, or lending.” 6
Emerson argues that the Amended Complaint fails to state a claim
for direct infringement because the facts alleged cannot support a
legal conclusion that: (1) Emerson (as opposed to Tweople); (2)
copied (as opposed to merely used) LFOW’s copyrighted software.
As to the first issue, the Court already noted at fn. 5 supra-the Amended Complaint alleges that Emerson used the software / source
code at issue.
The details of the interactions or transactions
The other enumerated rights pertain only to the arts-- i.e.,
“literary, musical, dramatic, . . . choreographic works” and the
like-- and “sound recordings.” 17 U.S.C. § 106(4)-(6).
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between Tweople and Emerson may be explored during discovery.
Emerson’s argument concerning Tweople is not based on any fact
alleged within the four corners of the Amended Complaint and
therefore is inappropriately considered on a Motion to Dismiss.
As to the second issue, Emerson argues that the Amended
Complaint does not allege anywhere that Emerson “copied” or
“reproduced” LFOW’s software.
But of course that simple observation
is not dispositive of the issue, particularly when the material
alleged to have been infringed is computer code.
As the case law demonstrates, determining when digital media on
the Internet is “copied” is a fact-intensive inquiry.
While the
Third Circuit has not addressed the issue, other Courts of Appeals
have.
For example, the Second Circuit has held, in a thorough and
well-reasoned opinion, that copying of digital information for
purposes of copyright infringement liability occurs when the
copyrighted work “is placed in a medium such that it can be
perceived, reproduced, etc., from that medium,” and is “embodied [in
the medium] for a period of more than transitory duration.”
Cartoon
Network LP v. Twentieth Century Fox Film Corp., 536 F.3d 121 (2d Cir.
2008).
Similarly, the Ninth Circuit has held that “the loading of
software into [a computer’s] RAM [random access memory] creates a
copy under the Copyright Act.”
Mai Systems Corp. v. Peak Computer,
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Inc., 991 F.2d 511, 519 (9th Cir. 1993); see also id. at 518 (“MAI
has adequately shown that the representation created in the RAM is
sufficiently permanent or stable to permit it to be perceived,
reproduced, or otherwise communicated for a period of more than
transitory duration.”). 7
By alleging that Emerson’s website causes “a copy of the LFOW
Software” to be “automatically downloaded” 8 “into” the website
visitor’s “cache and/or computer memory and/or hard drive,” LFOW has
sufficiently alleged that Emerson has caused the copying of the
software.
The specific technological mechanism by which this is
accomplished may be explored during discovery.
Moreover, completely independent from the copying issue-- which
implicates the exclusive right granted by § 106(1) (the right to
“reproduce”)-- is the distribution issue, which implicates § 106(3).
Even if the Court were to rule that LFOW had failed to sufficiently
allege that Emerson reproduced the computer code (which the Court
does not rule), the Amended Complaint sufficiently alleges facts
supporting the plausible conclusion that Emerson’s website
distributed copies of the code to each of the website’s visitors.
Cited with approval in Levey v. Brownstone Inv. Group, LLC, 2014
U.S. App. LEXIS 20616 at *7 (3d Cir. Oct. 23, 2014); see also Quantum
Systems Integrators, Inc. v. Sprint Nextel Corp., 338 F. App’x 329,
336-337 (4th Cir. 2009) (following MAI Systems).
7
The Oxford English Dictionary defines “download” as “to copy (data)
from one computer to another (now usually from a web server, via the
Internet).”
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8
Indeed, by arguing that “Emerson merely provides a website which
allows the customers to receive the allegedly infringing content from
Tweople, Inc.,” (Moving Brief p. 3), Emerson seems to implicitly
concede that the Amended Complaint pleads that Emerson distributed
the code from Tweople to its website visitors.
See Sony Music
Entertainment v. Cloud, 2009 U.S. Dist. LEXIS 45427 at *8-9 (E.D. Pa.
May 29, 2009) (holding that an allegation that “Defendant has engaged
in ongoing acts of downloading and/or distributing to the public the
copyrighted recordings” sufficiently stated a violation of the
exclusive right to distribute copyrighted material). 9
Lastly, as to both reproducing and distributing, Emerson argues
that the Amended Complaint fails to allege that Emerson engaged in
any “volitional conduct.”
Here again, Emerson invites the Court to
decide at this early stage of the case, what its website did or did
not do as a technical matter.
The Court will not do so.
The “volitional conduct” requirement for direct copyright
infringement liability focuses on “the volitional conduct that causes
the copy to be made.”
Cartoon Network, 536 F.3d at 131.
The
requirement originated with a now-famous case that held that an
Internet Service Provider (ISP) (i.e., the company that provides
As discussed at length during oral argument on the Motion, it may
be the case that Emerson’s website does nothing other than connect
its visitors directly to Tweople’s server and then effectively steps
out of the transaction, leaving the visitor and Tweople digitally
interacting only with each other. However, such a determination
cannot be made on the pleadings alone.
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9
Internet access, usually for a fee) cannot directly infringe
copyrighted material because “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.”
Religious Tech. Ctr.
v. Netcom On-Line Comm. Svs., Inc., 907 F. Supp. 1361, 1369 (N.D.
Cal. 1995); see also Parker v. Google, Inc., 242 F. App’x 833, 836
(3d Cir. 2007) (“‘[an] ISP should not be found liable as a direct
infringer when its facility is used by a subscriber to violate a
copyright without intervening conduct of the ISP. . . . When an
electronic infrastructure is designed and managed as a conduit of
information and data that connects users over the Internet, the owner
and manager of the conduit hardly ‘copies’ the information and data
in the sense that it fixes a copy in its system of more than
transitory duration.’”) (quoting CoStar Group, Inc. v. LoopNet, Inc.,
373 F.3d 544, 550 (4th Cir. 2004)).
In this case, Emerson clearly is not an ISP.
Moreover, LFOW
alleges that Emerson, by operating its own website, is more than just
a conduit of information; that its website operates to cause the
downloading of LFOW software.
This allegation is sufficient to
satisfy the volitional conduct or causation element of a direct
infringement claim.
The specifics of how Emerson’s website caused
the downloading of LFOW software may be explored during discovery.
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LFOW has stated a claim for direct copyright infringement
against Emerson.
Emerson’s Motion to Dismiss the direct infringement
claim will be denied.
B.
LFOW has also sufficiently stated a claim for vicarious
copyright infringement, but not contributory copyright infringement.
1.
“A plaintiff alleges a claim for vicarious copyright
infringement when he alleges that the defendant ‘has the right and
ability to supervise the infringing activity and also has a direct
financial interest in such activities.’”
Parker v. Google, 242 F.
App’x 833, 837 (3d Cir. 2007) (quoting Gershwin Publ'g Corp. v.
Columbia Artists Mgmt Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)).
“‘Financial benefit exists where the availability of infringing
material acts as a draw for customers.’
There is no requirement that
the draw be ‘substantial.’” Id. (quoting Ellison v. Robertson, 357
F.3d 1072, 1078 (9th Cir. 2004)).
In arguing that LFOW has failed to state a claim for vicarious
infringement, Emerson again relies on its assertion that Tweople
actually did the copying, and therefore argues that Emerson could not
have had the right or ability to supervise Tweople’s infringing
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activity.
Here again, Emerson relies on facts outside the
allegations of the Amended Complaint.
LFOW’s Amended Complaint alleges that Emerson’s website caused
LFOW’s software to be copied and caused copies to be distributed.
It
is certainly plausible that Emerson had the right and ability to
supervise the operation of its own website.
At oral argument, Emerson argued that the question was not
whether it had the ability to control its own website, but rather,
whether it had the ability to supervise Tweople’s alleged copying of
LFOW’s code.
Emerson cites no authority for such a narrow
interpretation of vicarious infringement law.
law is not so narrow.
Indeed, it appears the
As the Second Circuit has observed, “a person
who has promoted or induced the infringing acts of the [direct
infringer] has been held jointly and severally liable as a
‘vicarious’ infringer.” Gershwin Publ'g Corp., 443 F.2d at 1163
(emphasis added).
Further, as Nimmer on Copyright explains, “vicarious liability
exceeds the traditional scope of the master-servant theory -- the
proprietor of a dance hall is liable for infringing performances of
the orchestra, even if the orchestra is hired as an independent
contractor and exclusively determines the music to be played.”
Nimmer on Copyright § 12.04.
3
In this case, at least at the pleadings
stage, it appears that Emerson is analogous to the dance hall
proprietor; it provides a forum-- its website-- for visitors to come
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and receive an unlawful copy of the copyrighted material.
Thus,
Emerson’s argument fails.
Likewise, Emerson’s financial benefit argument fails.
The
Amended Complaint alleges that the live talking person on Emerson’s
website “was a powerful sales and advertising tool for Defendant to
generate revenues and profits.”
(Amend. Compl. ¶ 38)
“[T]he use of
the infringing source code allows Defendants to more effectively
promote and sell their product(s) and/or service(s) on their website
by capturing, holding and prolonging attention of the average online
visitor.”
(Amend. Compl. ¶ 84)
These allegations plausibly support
a conclusion that the availability of infringing material acted as a
“draw for customers.”
Parker, 242 F. App’x at 837; see generally 3
Nimmer on Copyright § 12.04 (“courts seem to have relaxed [the
financial benefit] standard over time. . . . Indeed, [one district
court has held] that, even absent the receipt of any revenues
whatsoever, a future hope to ‘monetize’ suffices.
It seems scarcely
an exaggeration to posit that an obvious and direct financial
interest is now understood to encompass a possible, indirect
benefit.”); see also Live Face on Web, LLC v. Howard Stern
Productions, Inc., 2009 U.S. Dist LEXIS 21373 at *11-12 (E.D. Pa.
March 17, 2009) (holding that LFOW had stated a claim for vicarious
infringement where complaint alleged that the video spokesperson was
“designed to and did draw and prolong visitors’ attention to the
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website” and “increased the amount of time users would spend on the
website.”).
The Motion to Dismiss will be denied as to the vicarious
infringement claim.
2.
To allege a claim of contributory copyright infringement, a
plaintiff must allege: (1) direct copyright infringement of a thirdparty; (2) knowledge by the defendant that the third-party was
directly infringing; and (3) material contribution to the
infringement.
Parker, 242 Fed. Appx. at 837 (citing Columbia
Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 160 (3d Cir.
1984)).
Emerson only challenges the second element, arguing that LFOW
has merely pled conclusions and not facts supporting a plausible
inference that Emerson knew that Tweople was infringing LFOW’s
copyright.
In response, LFOW argues that the allegation that Emerson’s
website directed visitors to the location of the infringing code
could support a plausible inference that Emerson knew that the code
was impermissibly copied.
The Court disagrees.
This single
allegation is insufficient to support a conclusion of actual or
constructive knowledge, or willful blindness.
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Even when viewing the allegations of the Amended Complaint as a
whole, nothing about the circumstances or context within which the
claims are alleged to have arisen suggests that Emerson-- a dry
cleaning business who operated a website designed to attract dry
cleaning customers-- knew or should have known, or deliberately took
steps not to know, that the software it was using was copyrighted by
someone other than the company from which it obtained the software.
Accordingly, Emerson’s Motion to Dismiss will be granted as to
the contributory infringement claim.
IV.
For the above-stated reasons, Emerson’s Motion to Dismiss will
be granted as to LFOW’s contributory infringement claim and denied in
all other respects. 10
The Court has not ignored Emerson’s observation of the seeming
unfairness of this result. As counsel very pragmatically observed at
oral argument, Emerson is a small business that provides dry cleaning
services. For a one-time fee of a few hundred dollars, Emerson
contracted with Tweople to provide “live” spokesperson capabilities
on Emerson’s website and nothing more. Nothing about the facts of
this case suggests that Emerson had any reason to know that, or
should have inquired whether, Tweople had allegedly copied LFOW’s
computer code. As both LFOW and Emerson seem to agree, the alleged
principal wrongdoer here is not Emerson, but Tweople. Yet, as a
result of this decision, Emerson must now engage in litigation to
defend this suit. Even if Emerson ultimately prevails at summary
judgment or trial, the costs to Emerson-- in terms of both time and
money-- seem quite disproportionate in view of the simple transaction
that led to this suit.
Nonetheless, applying copyright law to computer code is tricky
business, and this Court has very little controlling precedent with
which to work. Depending on the ultimate outcome of this suit,
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10
An appropriate Order accompanies this Opinion.
Date:
December 11, 2014
___s/ Joseph E. Irenas______
JOSEPH E. IRENAS, S.U.S.D.J.
perhaps the Court of Appeals will have an opportunity to address this
issue.
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