LIVE FACE ON WEB, LLC v. UNLIMITED OFFICE SOLUTIONS, LLC

Filing 12

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. 14-3777 (JEI/AMD)
v.

OPINION

UNLIMITED OFFICE SOLUTIONS, LLC
d/b/a GREEN TECHNOLOGY
SERVICES,
Defendant.

APPEARANCES:
LAW OFFICE OF JASON RABINOVICH, PLLC
By: Jason L. Rabinovich, Esq.
1700 Market Street
Suite 1005
Philadelphia, PA 19103
Counsel for Plaintiff
MARSHALL DENNEHEY WARNER COLEMAN & GOGGIN
By: Dante C. Rohr, Esq.
200 Lake Drive East, Suite 300
Cherry Hill, NJ 08002
Counsel for Defendant

IRENAS, Senior United States District Judge:
This is a copyright infringement suit. 1

Before the Court is

Defendant Unlimited Office Solutions, LLC d/b/a Green Technology
Services, Inc. (“Green Technology’s”) Motion to Dismiss for failure
to state a claim for either direct or indirect copyright

The Court exercises federal question subject matter jurisdiction
pursuant to 28 U.S.C. §§ 1331 and 1338.
1
1

infringement.

For the reasons set forth below, the Motion will be

granted as to LFOW’s contributory infringement claim and denied in
all other respects.

I.
This is the second 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.
(Compl. ¶ 8-9, 14)

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. ¶ 9-10)
technology.

LFOW allegedly is a “leading developer” of this
(Id. ¶ 8)

LFOW’s software is alleged to be copyrighted

work, registered with the U.S. Copyright Office. (Id. ¶ 15)
Green Technology allegedly “operated its website using an
unlawful version of LFOW’s software.”

(Compl. ¶ 18)

The software

LFOW originally filed one copyright infringement complaint against
four Defendants: Emerson Cleaners, Inc.; Unlimited Office Solutions
LLC, d/b/a Green Technology Services (the Defendant in this case);
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 managed 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

2

version Green Technology used is alleged to be unlawful because the
version came from Tweople, Inc., rather than LFOW.

(Compl. ¶ 18)

According to the Complaint LFOW filed against Tweople in the
Middle District of Florida (Exhibit E to Green Technology’s Motion to
Dismiss) 3, Tweople blatantly copied LFOW’s source code and began
offering live spokesperson services to Tweople’s customers (including
Green Technology) using LFOW’s source code.
According to the Complaint in this case, in order to “implement”
the infringing software from Tweople, Green Technology “modified” its
website to include a source code that “link[ed]” Green Technology’s
website “to the infringing software.”

(Compl. ¶ 19) 4

What allegedly happened when a person visited Green Technology’s
website is particularly relevant to the instant Motion.

According to

the Complaint:
12.
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
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.
3

The Complaint alleges that “during at least a portion of the period
of infringement Tweople has hosted the infringing software for [Green
Technology].” (Compl. ¶ 25)
3
4

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.

. . .

21. As
a
result
of
the
modification
to
[Green
Technology’s] website . . . a copy of the infringing
software is distributed by [Green Technology] to each
visitor to its website, which is necessarily stored on
the website visitor’s computer.
22. [Green Technology] intends for a copy of the
infringing
software
to
be
distributed
to
website
visitors, as this is necessary for the video spokesperson
to appear on the screen of the website visitor.
The
volitional distribution of the infringing software by
[Green Technology] to its website visitors is seamless
and transparent for the website visitors, who are able to
view the video spokesperson . . . by virtue of receiving
the copy of the infringing software.

Notably, however, the Complaint indicates that Green
Technologies does not “host” the allegedly infringing source code.
Instead, the Complaint acknowledges that Tweople hosts the code.
(Compl. ¶ 48)
The 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).”
(Compl. ¶ 41)

II.
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.” 5
Green Technology argues that the Complaint fails to state a
claim for direct infringement because the facts alleged cannot
support a legal conclusion that Green Technology copied, as opposed
to merely used, LFOW’s copyrighted software.
Green Technology argues that the Complaint does not allege
anywhere that Green Technology “copied” or “reproduced” LFOW’s
software.

But of course that simple observation is not dispositive

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).
6
5

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,

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.”). 6

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
7
6

By alleging that Green Technology’s website causes “a copy of
the LFOW Software” to be “automatically downloaded” 7 “into” the
website visitor’s “cache and/or computer memory and/or hard drive,”
LFOW has sufficiently alleged that Green Technology has caused the
copying of the software.

The fact that the actual code resides on

Tweople’s server and not Green Technology’s server does not change
this conclusion.

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 Green Technology reproduced the computer code (which the
Court does not rule), the Complaint sufficiently alleges facts
supporting the plausible conclusion that Green Technology’s website
distributed copies of the code to each of the website’s visitors.
(See Compl. ¶¶ 21-22, supra)

Indeed, Green Technology does not argue

otherwise.

Systems Integrators, Inc. v. Sprint Nextel Corp., 338 F. App’x 329,
336-337 (4th Cir. 2009) (following MAI Systems).
The Oxford English Dictionary defines “download” as “to copy (data)
from one computer to another (now usually from a web server, via the
Internet).”
8
7

Lastly, as to both reproducing and distributing, Green
Technology argues that the Complaint fails to allege that Green
Technology engaged in any “volitional conduct.”
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
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)).

9

In this case, Green Technology clearly is not an ISP.

Moreover,

LFOW alleges that Green Technology, by operating its own website, is
more than just a conduit of information; that its website operates to
cause the downloading of LFOW software, and that Green Technology
modified its own website to accomplish the downloading.

These

allegations are sufficient to satisfy the volitional conduct or
causation element of a direct infringement claim.

The specifics of

how Green Technology’s website caused the downloading of LFOW
software, and Tweople’s role in that process, may be explored during
discovery.
LFOW has stated a claim for direct copyright infringement
against Green Technology.

Green Technology’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.
10

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)).
As to the first element, Green Technology argues that it “did
not have the right to, nor did it supervise Tweople’s infringing
activity.”

(Moving Brief, p. 9)

However this argument misses the

mark.
LFOW’s Complaint alleges that Green Technology’s website caused
LFOW’s software to be copied and caused copies to be distributed.

It

is certainly plausible that Green Technology had the right and
ability to supervise the operation of its own website.

Indeed, the

Complaint pleads that Green Technology did modify its website to
allow for the software to be downloaded to visitors’ computers.
At oral argument, Green Technology 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.

Green Technology cites no authority for such

a narrow interpretation of vicarious infringement law.
appears the law is not so narrow.

Indeed, it

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

11

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 Green Technology is analogous to the dance
hall proprietor; it provides a forum-- its website-- for visitors to
come and receive an unlawful copy of the copyrighted material.

Thus,

Green Technology’s argument fails.
Likewise, Green Technology’s financial benefit argument fails.
The Complaint alleges that the live talking person on Green
Technology’s website “was a powerful sales and advertising tool for
Defendant to generate revenues and profits.”

(Compl. ¶ 30)

“[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.”

(Compl. ¶ 29)

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
12

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
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)).
Green Technology only challenges the second element, arguing
that LFOW has merely pled conclusions and not facts supporting a
13

plausible inference that Green Technology knew that Tweople was
infringing LFOW’s copyright.
LFOW makes no argument in opposition.
The Court agrees with Green Technology.

Even when viewing the

allegations of the Complaint as a whole, nothing about the
circumstances or context within which the claims are alleged to have
arisen suggests that Green Technology 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, Green Technology’s Motion to Dismiss will be
granted as to the contributory infringement claim.

IV.
For the above-stated reasons, Green Technology’s Motion to
Dismiss will be granted as to LFOW’s contributory infringement claim
and denied in all other respects. 8

The Court has not ignored Green Technology’s observation of the
seeming unfairness of this result. As counsel very pragmatically
observed at oral argument, Green Technology is a small business. For
a one-time fee of a few hundred dollars, it contracted with Tweople
to provide “live” spokesperson capabilities on Green Technology’s
website and nothing more. Nothing about the facts of this case
suggests that Green Technology had any reason to know that, or should
have inquired whether, Tweople had allegedly copied LFOW’s computer
code. As both LFOW and Green Technology seem to agree, the alleged
principal wrongdoer here is not Green Technology, but Tweople. Yet,
as a result of this decision, Green Technology must now engage in
litigation to defend this suit. Even if Green Technology ultimately
14
8

An appropriate Order accompanies this Opinion.

Date:

December 11, 2014

___s/ Joseph E. Irenas_____
JOSEPH E. IRENAS, S.U.S.D.J.

prevails at summary judgment or trial, the costs to Green Technology- 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,
perhaps the Court of Appeals will have an opportunity to address this
issue.
15