LIVE FACE ON WEB, LLC v. HIPPOCRATIC SOLUTIONS, LLC et al

Filing 25

OPINION FILED. Signed by Judge Joseph H. Rodriguez on 3/21/17. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LIVE FACE ON WEB, LLC,

HONORABLE JOSEPH H. RODRIGUEZ

Plaintiff,

Civil No. 15-6874 (JHR/AMD)

v.

OPINION

HIPPOCRATIC SOLUTIONS, LLC,
and PETER KOUKOUNAS,
Defendants.

This matter is before the Court on Defendants’ motion to dismiss the
Amended Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim. The Court has reviewed the submissions and decides the matter
based on the briefs pursuant to Fed. R. Civ. P. 78(b). For the reasons stated here,
Defendants’ motion will be denied.
Background
The Court previously set forth the general background of this copyright
infringement suit brought by Plaintiff Live Face on Web, LLC (“LFOW”) against
Defendants Hippocratic Solutions, LLC, and Peter Koukounas. The Amended
Complaint alleges facts consistent with those in the Court’s prior Opinion, but
with further detail. LFOW develops computer software. (Am. Compl. ¶ 9.) The
copyrighted software at issue allows a website to display a video spokesperson
who walks and talks on the computer screen, directing a website visitor’s
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attention to certain aspects of the website. (Id. ¶ 9.) The website for Defendant
Hippocratic Solutions allegedly has this video spokesperson functionality. (Id. ¶
19.) “[I]n order to display the web spokesperson video on [its] website,”
Hippocratic Solutions allegedly “used, copied, and distributed” LFOW’s software
without permission. (Id. ¶ 20)
The Amended Complaint alleges that each time a person visits Hippocratic
Solutions’ website and views the video spokesperson, a separate violation of
LFOW’s copyright occurs. (Id. ¶ 25.) LFOW explains, “[w]hen a web browser is
directed to a website linked to the LFOW Software, the embedded HTML script
tag is read by the web browser and causes the automatic distribution of a copy of
the LFOW Software. The LFOW Software is automatically saved by the web
browser into cache, and/or a hard drive(s), and loaded into computer memory
and/or RAM (random access memory). As a result of the distribution of the
LFOW Software, the specific web spokesperson video is automatically launched
and displayed . . . on the . . . website.” (Id. ¶ 13.) That is, in order for the video
spokesperson to appear on Hippocratic Solutions’ website, the website causes a
copy of LFOW’s copyrighted software code to be distributed to each website
visitor. (Id. ¶¶ 27-28.) According to LFOW, this “volitional distribution of the
infringing version of the LFOW Software by Defendants to their website visitors
is seamless and transparent for the website visitors, who are able to view the
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video spokesperson . . . by virtue of receiving the copy of the infringing version of
the LFOW Software.” (Id. ¶ 28.) The Amended Complaint asserts only one claim:
“direct, indirect and/or vicarious” copyright infringement. (Id. ¶ 40.)
Motion to Dismiss Standard
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 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.
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). 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) (citing Twombly, 550 U.S. at 556).

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Analysis
Defendants argue that the Amended Complaint fails to state a claim for
copyright infringement. They argue that there are no allegations of unlawful
copying and any alleged copying occurred outside the statute of limitations.
Defendant Koukounas also asserts that the Amended Complaint’s allegations fail
to support any individual liability on his part.
“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.’” Live Face on Web,
LLC v. Emerson Cleaners, Inc., 66 F. Supp. 3d 551, 554 (D.N.J. 2014).

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The Court finds that LFOW has sufficiently pled a claim for direct copyright
infringement1 by alleging that Hippocratic Solutions’ website causes a copy of the
LFOW Software to be automatically downloaded to the website visitor’s computer
in cache, memory and/or hard drive. (Am. Compl. ¶ 25.) See Emerson Cleaners,
66 F. Supp. 3d at 555. “The specific technological mechanism by which this is
accomplished may be explored during discovery.” Id. Besides sufficiently alleging
that Hippocratic Solutions reproduced the computer code, the Amended
Complaint also alleges that Hippocratic Solutions’ website distributed copies of
the code to each of the website’s visitors. (Am. Compl. ¶¶ 20, 25, 31.) Whether
Hippocratic Solutions’ actions were unauthorized or unlawful is not an
appropriate issue at this stage of the litigation.
As to the argument that the allegations of the Amended Complaint are timebarred, the Amended Complaint alleges that each time a person visits
Hippocratic Solutions’ website and views the video spokesperson, a separate
violation of LFOW’s copyright occurs. Without discovery, the parties cannot
know when the last alleged violation occurred. LFOW contends that it

Accordingly, the Court need not address whether the Amended Complaint
pleads “access to” the infringed upon work to support an inference of copying.
While the instant motion discusses direct and indirect infringement, it does not
argue separately against vicarious liability.
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discovered2 the infringement in 2014 and filed suit on June 19, 2015, which is
within the applicable three-year statute of limitations set forth in 17 U.S.C. §
507(b). Again, at the motion to dismiss stage, the Court cannot foreclose this
argument in favor of the defense.
Finally, Defendant Koukounas argues that the Amended Complaint lacks
facts to sustain its claim of individual liability. Of course, individuals may be
liable for copyright infringement. Columbia Pictures Indus. v. Redd Horne, Inc.,
749 F.2d 154, 160 (3d Cir. 1984) (“An officer or director of a corporation who
knowingly participates in the infringement can be held personally liable, jointly
and severally, with the corporate defendant.”). The Amended Complaint alleges:
Upon information and belief, Defendant Peter Koukounas
(“Koukounas”) is a resident of New Jersey and the owner and/or
managing member of Hippocratic Solutions and the subject
website(s) at issue here. Koukounas is the owner and/or chief
executive officer of Hippocratic Solutions, and was responsible for
registering the subject website(s) at issue in this action and
controlling the content of, modification to, and distribution of
infringing source code from the subject website(s) at issue in this

The Third Circuit has adopted the discovery rule, a general inquiry notice rule
that a claim accrues when the plaintiff discovers or should have discovered with
“due diligence” that his rights had been violated with regard to copyright
infringement actions. See Brownstein v. Lindsay, 742 F.3d 55, 69-70 (3d Cir.
2014). The Supreme Court noted, without passing on the question, that “nine
Courts of Appeals have adopted, as an alternative to the incident of injury rule, a
‘discovery rule,’ which starts the limitations period when the plaintiff discovers,
or woth due diligence should have discovered, the injury that forms the basis for
the claim.” Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1969 n.4
(2014).
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action. Additionally, Koukounas was the administrative contact for
the subject website(s) at issue in this action.
(Am. Compl. ¶ 3; accord Am. Compl. ¶¶ 17-27, 44-48.) The Court finds this
sufficient to withstand the instant motion.
Conclusion
For these reasons, Defendants’ motion to dismiss the Amended Complaint
under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim will be
denied. An appropriate Order will be entered.

Date: March 21, 2017

/s/ Joseph H. Rodriguez
JOSEPH H. RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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