Meyer, Suozzi, English & Klein, P.C. v. Higbee et al

Filing 11

MEMORANDUM in Opposition re #10 Affidavit in Opposition to Motion,, Re: Higbee Defendants' Motion to Dismiss filed by Meyer, Suozzi, English & Klein, P.C.. (Schlosser, Kevin)

Case 2:18-cv-03353-ADS-ARL Document 11 Filed 07/13/18 Page 1 of 31 PageID #: 189

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MEYER, SUOZZI, ENGLISH & KLEIN, P.C
Docket No.: 18-cv-3353 (ADS) (ARC)
Plaintiff,
-againstMATHEW K. HIGBEE, Esq.,
NICK YOUNGSON,
RM MEDIA, LTD.,
and HIGBEE & ASSOCIATES,
Defendants.

PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION
TO HIGBEE DEFENDANTS’ MOTION TO DISMISS

MEYER, SUOZZI, ENGLISH & KLEIN, P.C.
990 Stewart Avenue, Suite 300
P.O. Box 9194
Garden City, New York 11530-9194
[phone]
Attorney for Plaintiff (Pro Se)

Case 2:18-cv-03353-ADS-ARL Document 11 Filed 07/13/18 Page 2 of 31 PageID #: 190

Table of Contents
Page(s)
Table of Authorities

ll-V

Preliminary Statement

1

FACTS

3

ARGUMENT

,7

,7

NOT ONLY IS THE HIGBEE DEFENDANTS’ MOTION DEFECTIVE,
BUT ALL OF THEIR CONTENTIONS ARE MERITLESS......................

9

There is No Copyright Infringement Here........................................

9

B.

The Higbee Defendants’ Contention That There is No Controversy
is Meritless, as They Materially Misrepresent the Case Law...........

11

The Higbee Defendants Were a Part of a Larger Deceptive Scheme
That is Consumer-Oriented, and Caused Direct Injury to Plaintiff
Under N.Y. Gen. Bus. L. § 349..........................................................

18

1.

Consumer-Oriented Scheme..................................................

18

2.

Injury to Plaintiff....................................................................-.....

.20

3.

IL

THE FACTUAL ALLEGATIONS THAT ARE OUTSIDE THE SCOPE OF
PLAINTIFF’S COMPLAINT, WHICH THE HIGBEE DEFENDANTS
HEAVILY RELY UPON, SHOULD NOT BE CONSIDERED ON THIS
MOTION...........................................................................................................

A.

1.

The Higbee Defendants Misconstrue the Plaintiffs Complaint..

.22

The Higbee Defendants’ Claim of Immunity is Unsupported by Law as
There is No Absolute Privilege in NY, and Qualified
Privilege does not Protect Threats of Baseless Litigation...................... .

,24

C.

D.

CONCLUSION

.25

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TABLE OF AUTHORITIES
Page(s)
Cases
Ashcroft V. Iqbal,
556 U.S. 662 (2009)

,3,8

Bambu Sales, Inc. v. Ozak Trading, Inc.,
58F.3d 849 (2d Cir. 1995)...............

12

BellAtl. Corp. v. Twombly,
550 U.S. 544 (2007).................................................................................

3,8

Canario v. Gunn,
300 A.D.2d 332 (2d Dep’t 2002)............................................................

19

Castle RockEntm ’t v. Carol Pub. Grp., Inc.,
955 F. Supp. 260 (SDNY 1997)..............................................................

14

City ofNew Yorkv. Smokes-Spirits.Com, Inc.,
12N.Y.3d616(2009)............................... ..............................................

18

Costello Publ ’g Co. v. Rotelle,
670 F.2d 1035 (DC Cir. 1981)...... ..........................................................

16

Dash V. Seagate Technology (US) Holdings, Inc.,
No. 13-CV-63292015, 2015 WL 11973674 (EDNY September 1, 2015)

,21

DiFolco V. MSNBC Cable LLC,
622 F.3d 104 (2d Cir. 2010).........................................................................

8

Doe V. Columbia University,
831 F.3d46 (2d Cir. 2016)...........................................................................

7,8

Dual Groupe, LLC v, Gans-Mex LLC,
932 F.Supp.2d 569 (SDNY 2013)...............................................................

8

E. Materials Corp. v. Mitsubishi Plastics Composites Am., Inc.,
No. 2:17-cv-01034, 2017 WL 4162309 (EDNY Sept. 19, 2017) (Spatt, J.),

8

Elacqua v. Physicians ’ Reciprocal Ins.,
52 A.D.3d886 (3d Dep’t 2009)...................

19

EMI Entm’t World, Inc. v. Karen Records, Inc.,
806 F. Supp. 2d 697 (SDNY 2011)..............

14
11

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Finkel v. Romanowicz,
577 F.3d 79 (2d Cir. 2009)...............................................................

12

Fonte V. Bd. OfManagers of Cont’l Towers Condo.,
848 F.2d24 (2d Cir. 1988)...............................................................

8

Front, Inc. v. Khalil,
24N.Y.3d713 (2015).................................................... ..................

,24

Genesco Ent., Div. ofLymutt Indus., Inc. v. Koch,
593 F.Supp. 743 (SDNY 1984)........................................................

19

Goldman Stone Trading, Inc. v, Wayne Electro Systems, Inc.,
67 A.D.3d 731 (2d Dep’t 2009).......................................................

22

Graham v. James,
144 F.3d 229 (2d Cir. 1998).............................................................

10, 14, 15, 16, 17, 18

Grand Union Co. v. Cord Meyer Dev. Co.,
761 F.2d 141 (2d Cir. 1985).............................................................

10, 15

Hoy V. Inc. Village of Bayville,
765 F.Supp.2d 158 (EDNY 2011)..................................................

,9

I.A.E., Inc. V, Shaver,
74 F.3d768 (7th Cir. 1996)................... .........................................

10, 16

In re Independent Energy Holdings PLC,
154 F.Supp.2d 741 (SDNY 2001)..................................................

8

Jacob Maxwell, Inc. v. Veeck,
110F.3d749(llthCir. 1997)........................................................

10, 15, 16, 17

John Wiley & Sons, Inc. v. DRK Photo,
882F.3d394 (2d Cir. 2018)............................................................

9

Koch V. Acker, Merrall & Condit Co.,
18N.Y.3d940 (2012)......................................................................

18

New York Univ. v. Continental Ins. Co.,
87N.Y.2d308 (1995)......................................................................

19, 20

North State Autobahn, Inc. v. Progressive Ins. Group Co.,
102 A.D.3d5 (2d Dep’t 2012).........................................................

18, 19, 20

Oswego Laborers ’ Local 214 Pension Fund v. Marine Midland Bank,
85N.Y.2d20(1995)........................................................................

18, 19, 20,21

111

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Oxman v. Downs,
999 F.Supp.2d 404 (EDNY 2014) (Spatt, J.)........................

8

Peer Int 7 Corp. v. Pausa Records, Inc.,
909 F.2d 1332 (9th Cir. 1990)...............................................

10

Philpot V. Music Times LLC,
No. 16-CV-1277, 2017 WL 9538900 (SDNY Mar. 29, 2017)
11, 12, 13, 14, 17
Philpot V. Music Times LLC,
No. 16-CV-1277, 2017 WL 1906902 (SDNY May 9, 2017)

11

Rano V. Sipa Press, Inc.,
987 F.2d580 (9th Cir. 1993)...........................

10, 16, 17

Reed v. Garden City Union Free School Dist.,
987 F.Supp.2d 260 (EDNY 2013)...................

8

Septembertide Publ ’g, B. V. v. Stein and Day, Inc.,
884 F.2d 675 (2d Cir. 1989).............................

16

Small V. Lorillard Tobacco Co.,
94N.Y.2d 43 (1999)..........

21

Stutman v. Chemical Bank,
95 N.Y.2d 24 (2000)....

18,21

TVT Records v. Island DefJam Music Group,
412F.3d82 (2d 2005).......................................................................................

10, 16

Twin Peaks Prods., Inc. v. Publ‘ns Int’I, Ltd.,
996 F.2d 1366 (2d Cir. 1993)...........................................................................

14

Twombly v. Bell Atl. Corp.,
313 F.Supp.2d 174 (SDNY 2003), reversed and remandedfor other reasons
by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).......................................

8

United States Naval Inst. v. Charter Communications, Inc.,
936F.2d 692 (2d Cir. 1991)..............................................................................

10

Vodopia V. Ziff-Davis Publ. Co.,
243 A.D.2d 368 (1st Dep’t 1997)....................................................................

,24

Wilner v. Allstate Ins. Co.,
71 A.D.3d 155 (2d Dep’t 2010)

19

IV

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Statutes
Copyright Act, 17 U.S.C.
§ 203.................................................................
§§ 504-05.........................................................

6
5-6

Declaratory Judgment Act, 28 U.S.C. §§ 2201-02

,2

N.Y. Gen. Bus. L. § 349........................................

,2, 6,10, 18,19, 20, 22,25

Rules
Fed. R. Civ. P.
§ 12(b)(6).
§56

6-7
8

Other Authorities
3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright (6th ed. 1978)
§ 8D.03(A)(1)................................................................................................
§ 10.15(A)......................................................................................................

15
17

Matthew Chan, Higbee Associates Letter & Lawsuits Forum, The ELI Forums,
available at https://www.extortionletterinfo.com/forum/higbee-letter-lawsuitsforum/photog-nick-youngson-(higbee-assoc-)-lists-rm-media-ltd-in-templatelawsuit/................................................ .......... ......................................................

23

V

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Preliminary Statement
Plaintiff instituted this action against defendants Mathew K. Higbee and his firm Higbee
& Associates (together, “Higbee Defendants”), as well as against defendants RM Media, Ltd. and
Nicholas Youngson (together, “UK Defendants”) (all defendants collectively, “Defendants”) for a
declaratory judgment to protect itself against Defendants’ scheme to extract monetary
“settlements” by falsely claiming willful copyright infringement and purported entitlement to
statutory copyright damages of $150,000, while knowing fully that their claims are objectively
baseless. Contrary to Defendants’ threats and assertions, the law is clear that they cannot establish
a claim for copyright infringement or any statutory copyright damages under the circumstances
described in the Complaint because: (1) the subject “image” (“Image”) was offered for free use
under a contractual license that granted broad, unlimited perpetual rights and required no
conditions (including any attribution) prior to Plaintiffs access to, and use of, the Image; (2) there
was no rescission of the license to use the Image for free at any time, including before Plaintiff
discontinued its de minimis use of the Image; (3) Plaintiff immediately ceased use of the Image
after receiving notice of a dispute concerning its use; (4) any failure to attribute credit to some
unknown third-party (neither the author nor copyright holder of the Image) was innocent and
inadvertent, not material nor willful; and (5) failure to attribute such credit, on its own, does not
constitute copyright infringement. At most, any claim regarding the use of the Image would be for
alleged breach of contract (the license), not copyright infringement, and therefore no statutory
copyright damages would be available. As such. Defendants had no legitimate basis to try to
extract a settlement (of over $5,000) based upon the threat of $150,000 of statutory copyright
damages. Further, as the license granted broad, unlimited rights to use the Image for free, any de
minimis failure to provide attribution under the license is not even actionable because Defendants
cannot establish the elements of a breach of contract claim - namely damages.

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As alleged in paragraph 3 of the Complaint: “Plaintiff brings this action for a declaratory
judgment, pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, determining
and declaring that (a) Defendants have no legitimate claim for copyright infringement because
Plaintiff did not infringe as a matter of law, and (b) Defendants have no cognizable or recoverable
damages for breach of contract or otherwise.” (The Complaint is annexed to the Declaration of
Kevin Schlosser, dated July 13, 2018 (“Schlosser Decl.”), as Exhibit (“Ex.”) 1.) “Plaintiff also
seeks relief, including damages, for Defendants’ false, fraudulent and deceptive practices, which
violate N.Y. Gen. Bus. L. § 349.” Id. 14.
Only the Higbee Defendants now move to dismiss and attempt to shield themselves from
liability by claiming that they were merely zealously advocating for their clients. The Higbee
Defendants miss the point. The sole inquiry on this motion is merely whether Plaintiff s Complaint
alleges claims for the declaratory judgment sought and for the claim under N.Y. Gen. Bus L. §
349. Whether Plaintiff ultimately prevails under those claims is not the issue on this motion.
Plaintiffs Complaint clearly and sufficiently alleges the basis for the declaratory relief sought
against all Defendants, including based upon the Higbee Defendants’ use of their position as
attorneys to collude with the UK Defendants in this scheme to mislead users of the UK Defendants’
generic images and extract “settlements” from unsuspecting victims of their scheme. As attorneys
purporting to be experienced in copyright law, the Higbee Defendants knew fully that no claim of
copyright infringement existed here because the law is abundantly clear and well-settled. They
also knew that the threat of litigation has a unique power to intimidate those they wrongfully accuse
into settling claims to avoid costly litigation, and moreover, they knew that the fear of statutory
liability of “up to $150,000,” or more, would increase the chances of deceiving their victims into
“settling” for a much lower, yet still significant amount of money. As the Complaint alleges, the

2

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Higbee Defendants have used this scheme to extract monetary payments from others in the public
beyond Plaintiff.
As discussed below, there are numerous reasons why the Higbee Defendants’ motion to
dismiss Plaintiffs action pursuant to Federal Rule 12(b)(6) (the “Motion”) should be denied. First,
the Motion improperly relies on extraneous factual allegations (that are not even supported by any
evidentiary foundation or declaration from anyone with personal knowledge), for which they have
offered no basis for the court to consider on such Motion. Defendants also rely on outdated and
wildly inapposite case law, as well as ineffective and incorrect arguments. As the Higbee
Defendants fail to satisfy their burden to show that Plaintiff has not alleged “enough facts to state
a claim to relief that is plausible on its face[,]” their Motion must be denied. See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009).
FACTS
The facts set forth below are taken from Plaintiffs Complaint, which must be accepted as
true for the purposes of this Motion. As alleged in the Complaint, Defendants’ scheme to claim
copyright infringement and statutory damages to extract monetary settlements is based upon the
following:
An individual []takes photographs .... [and a] copyright registration is filed ... for
the subject photos. The photos are then made available on the internet, and easily
found through the use of common search terms of the text in the photos, for anyone
to copy the photos and use such in whatever manner and for whatever purpose they
wish, including for commercial use. On the website page where the photo is found,
no charge or any fee is requested for use of the photo as it appears. . . . Although
on the original website where the photo is located, the photo is offered free under
license, there is also a free “shared” form of license agreement on an entirely
different page and website . . . that does not even contain the names of the parties
to that form of license or any place in which either party can sign or agree to the
terms.
In their pursuit of catching innocent victims. Defendants then troll the internet. . .
. Once Defendants identify someone who has used the photo(s) and unwittingly
failed to include the “attribution” that is requested[], Defendants launch their
3

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extortionate tactics to harass, intimidate and scare the user into paying thousands
of dollars. Although[], a party called “Blue Diamond Gallery” is purportedly
making the photos available, Defendants do not piuport to assert claims on behalf
of “Blue Diamond Gallery” or the individual who filed the actual copyright
registration, or the entity for which an attribution is requested. ... As part of their
extortionate tactics, [the UK] Defendants send threatening letters through use of
[the Higbee Defendants] to the unsuspecting victims demanding thousands of
dollars to “settle,” claiming[]copyright infringement and[] statutory damages of up
to $150,000.
Defendants’ demand letter does not provide any factual basis under which damages
of up to $150,000 would ever be awarded. In fact, contrary to the assertions in the
demand letter, there is no copyright infringement under the circumstances because
the photos are freely made available to the user under a “license,” which thereby
precludes a claim for copyright infringement and simply renders the use subject to
a mere alleged claim of breach of the “license” ... for which no actual damages
can be proved, certainly not the thousands of dollars deceptively demanded by
Defendants. Defendants then continue their harassing conduct by repeatedly
attempting to extract some form of “settlement” money from their victims,
including threatening suit, or in some instances, bringing suit and then quickly
settling and/or dismissing such suits.
Schlosser Deck Ex. 1, at Compl. T| 2(a)-(k).
On or about December 26,2017, Plaintiff became a target of the Defendants’ scheme when
it published a blog post, and when posting the title, a clerk in Plaintiffs marketing department
used the Image she found on the Blue Diamond Gallery website (the “Website”). See id. 118-19.
The Image was marketed on that Website as “burden-of-prooffree pictures for your web site.” Id.
I 19 (emphasis added); see also Schlosser Deck Ex. 1, at Ex. 1 to Compl. pg. 1 On the Website
page where the Image was found, the license applicable to free use stated only: “Free License
permits: Sharing, copying and redistributing in any medium or format including adapting,
remixing, transforming, and burden-of-proofmg [5zc,] upon the material for any purpose, even
commercially. Attribution required.” Schlosser Deck Ex. 1, at Ex. 1 to Compl. pg. 2 (emphasis in
original); see also Schlosser Deck Ex. 1, at Compl. ^ 2(f-g).
On February 5, 2018, Plaintiff received a letter from the Higbee Defendants (“Demand I”),
in which they claimed to represent Defendant RM Media concerning the Image that was allegedly
4

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copyrighted by Defendant Youngson. Schlosser Decl. Ex. 1, at Compl. 22, 27-28. In Demand I,
the Higbee Defendants falsely claimed that Plaintiff was an infringer of copyright because it failed
to inelude the requested attribution with the Image and threatened that “[i]f forced to go to court,
[Defendants] will ask for the maximum relief possible, which may include statutory damages
under 17 U.S.C. | [^/c] 504 for up to $150,000 for intentional infringement or $30,000 for
unintentional infringement.” Id. t 29. The Higbee Defendants demanded Plaintiff immediately
access an online aceount and pay $5,280 to “settle” a elaim of eopyright infringement, “even
though Defendants knew full well that there was no legal basis for their elaim.” Id. ^ 30-34.
Demand I provided thirty (30) days to comply, but the Higbee Defendants nonetheless sent
multiple harassing eommunications and threats before expiration of the 30 days. Id. ^ 35.
When it reeeived Demand I, Plaintiff immediately removed the Image from its website and
diseontinued its use altogether. Id. ]f 23. On February 13, 2018, Plaintiff notified the Higbee
Defendants of such, informed them that any failure to attribute credit to the third-party—who was
neither Defendant RM Media (the eopyright holder) nor Defendant Youngson (the author)—was
“inadvertent, innocent and unintentional,” and inquired into the Higbee Defendants’ basis for the
infringement elaim. See id.

25, 36. The Higbee Defendants then simply continued to send

threatening emails and calls to Plaintiff demanding payment, whieh the Higbee Defendants
escalated with a letter that included a draft of a eivil eomplaint that the Higbee Defendants
threatened to file against Plaintiff (“Demand 11”). Id. 137-38, 42.
Demand II repeated the false elaim that Plaintiff “engaged in copyright infringement when
it posted [the] elient’s eopyrighted image on its website without a valid licensing agreement,”
despite the Higbee Defendants knowing full well that the Image was made available by license.
Id. H 39-40. The Higbee Defendants also asserted that Plaintiff willfully infringed the eopyright,
entitling the UK Defendants “to recover Statutory damages of up to $150,000 for each
5

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infringement and may also recover attorney fees and court costs. See 17 U.S.C. §§ 504 & 505.
Id. 1|41.
At all times, the Defendants’ claims of copyright infringement were false because the
Image was offered under a license for free use and thus, as a matter of law, only subject to claims
for breach of contract (the license). Id.

44. As purportedly experienced copyright attorneys, the

Higbee Defendants knew the well-settled law on this matter, but still chose to use their semblance
of experience and authority on the law to collude with the UK Defendants in this scheme to lure
users, including Plaintiff, to the UK Defendants’ websites by offering free images, and then,
deceive them into “settling”—under false claims of copyright infringement—by creating a belief
that if the Higbee Defendants’ “generously low” offer of a few thousand dollars were accepted,
costly litigation and ultimate liability for over $150,000 in damages would be avoided.
The foregoing is the factual basis for Plaintiffs request for a judicial declaration that there
IS no

copyright infringement under the circumstances here and no entitlement to the statutory

damages that form the basis of the threats to extort the money that Defendants demanded to “settle”
those fraudulent and meritless claims. In addition, the Higbee Defendants’ actions in conspiracy
with the UK Defendants constitutes fraudulent business practices in violation of N.Y. Gen. Bus. L
§ 349, for their abuse of their positions as attorneys to further their scheme to defraud, which
caused injury to Plaintiff by forcing Plaintiff to take valuable time away from its business and
clients to address the Defendants’ false claims of infringement, as well as to be subjected to the
Higbee Defendants’ non-stop harassment. See id45; see also id*^ 22^3.
On June 7, 2018, Plaintiff filed this action against the Defendants. On June 29, 2018, the
Higbee Defendants filed their 12(b)(6) Motion. The Motion includes, and relies on, claimed
factual assertions outside the Complaint and that were not within Plaintiffs knowledge nor on
which Plaintiff relied in its Complaint. See The Higbee Defendants’ Memorandum in Support of
6

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Motion to Dismiss under FRCP 12(b)(6) (“DE 9-1”) at 2-3 (discussing the alleged relationship of
the UK Defendants, and Defendant RM Media’s business practices and media library); DE 9-1 at
19 (concluding that Plaintiff engaged in “specific infringing conduct unique to Plaintiff’ with no
basis). The Motion also includes, and relies on, blatantly false information, of which the Higbee
Defendants know to be false. DE 9-1 at 3 (falsely stating higher purchase price for images,
including the Image, and a different reason for such purchase); DE 9-1 at 5 (discussing the
relationship between all Defendants); DE 9-1 at 10 (claiming that the attribution requested was to
credit the owner of the Copyrighted Work”); DE 9-1 at 20 (claiming that the license terms are
stated on the Website); e.g., DE 9-1 at 12 (claiming that the attribution was an “express condition[]
to obtaining a license.”). Finally, the Motion relies on a series of claimed “admissions” that
Plaintiff never made. DE 9-1 at 8 (that “Plaintiff acknowledges, the Higbee Defendants do not own
any interest in the Copyrighted Work”); DE 9-1 at 16 (that Plaintiff admitted to a failure to read
or understand the license); DE 9-1 at 20 (that the Higbee Defendants have no relationship to the
Image and Plaintiff “recognize[s] such”). Moreover, the Higbee Defendants fail to offer a
declaration of anyone to lay the required evidentiary foundation for any of these extraneous
“factual” assertions they make solely in a memorandum of law in support of the Motion. The
Motion is also riddled with arguments that are confused and/or severely misrepresent case law,
rendering them meritless. For these reasons, the Higbee Defendants’ Motion must be denied.
ARGUMENT
I.
THE FACTUAL ALLEGATIONS THAT ARE OUTSIDE THE SCOPE OF
PLAINTIFF’S COMPLAINT, WHICH THE HIGBEE DEFENDANTS
HEAVILY RELY UPON, SHOULD NOT BE CONSIDERED ON THIS MOTION
On a motion to dismiss a complaint for failure to state a claim under FRCP 12(b)(6), the
only facts to be considered are those alleged in the complaint. Doe v. Columbia University, 831
7

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F.3d 46, 48 (2d Cir. 2016) (citing DiFolco v. MSNBC Cable LLC, 622 F.3d 104, 110-11 (2d Cir.
2010)); Reedv. Garden City Union Free School Dist, 987 F.Supp.2d 260, 263 (EDNY 2013). A
court must accept such facts as true and draw all reasonable inferences in favor of Plaintiff Id.;
BellAtl. Corp. v. Twombly, 550 U.S. 544 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009).
This makes it very “difficult to resolve [certain questions] as a matter of law.” Twombly v. Bell
Atl. Corp., 313 F.Supp.2d 174, 179 (SDNY 2003), reversed and remanded for other reasons by
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), (quoting In re Independent Energy Holdings
PLC, 154 F.Supp.2d 741, 748 (SDNY 2001)). For a complaint to “be enough to raise a right to
relief above the speculative level,

plaintiff need only allege “enough facts to state a claim to

relief that is plausible on its face,” Twombly, 550 U.S. at 555, 570. “Needless to say,... a court at
this stage of our proceeding is not engaged in an effort to determine the true facts. The issue is
simply whether the facts the plaintiff alleges, if true, are plausibly sufficient to state a legal claim.”
Columbia University, 831 F.3dat48.
“Generally, when a defendant attempts to counter a plaintiffs Complaint with its own
factual allegations and exhibits, such allegations and exhibits are inappropriate for consideration
by this Court at the motion to dismiss stage.” Oxman v. Downs, 999 F.Supp.2d 404, 407 (EDNY
2014) (Spatt, J.) (citing Dual Groupe, LLC v. Gans-Mex LLC, 932 F.Supp.2d 569, 572 (SDNY
2013) (“Defendants dispute many of the complaint’s factual allegations, which the court cannot
adjudicate at the motion to dismiss stage.”)). When a defendant alleges facts that are “found to be
outside the pleadings, the Court may either exclude the additional material or convert the motion
to a summary judgment motion under FED. R. CIV. P. 56, and provide both parties the chance to
present additional support.” E. Materials Corp. v. Mitsubishi Plastics Composites Am., Inc., No.
2:17-cv-01034, 2017 WL 4162309, at *5 (EDNY Sept. 19, 2017) (Spatt, J.) (citing Fonte v. Bd.
OfManagers ofCont’l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988). Conversion of a motion to
8

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dismiss, though, is unwarranted where the plaintiff has no “knowledge or possession of the
[defendant’s extraneous facts and did not rely on them] in framing the complaint.” Hoy v, Inc.
Village ofBayville, 765 F.Supp.2d 158 (EDNY 2011).
The Higbee Defendants’ Motion offers and relies on claimed “facts” neither included nor
addressed by reference in the Complaint, and not on which Plaintiff relied in framing its
Complaint. See above at 6; see also DE 9-1 at 2-3, 19. Also, the Motion includes and relies on
false statements of fact, as well as “admissions” by Plaintiff that were never made. See above at
6-7; see also DE 9-1 at 3, 5, 10, 12-13, 20; DE 9-1 at 8, 16, 20. There is no evidentiary foundation
for any of the extraneous factual matters that the Higbee Defendants introduce, as they offer no
statements, supporting affidavits, or declarations from appropriate witnesses with personal
knowledge of the alleged “facts.” Accordingly, a conversion of the Motion is unwarranted here,
and all of the extraneous “facts” must be excluded from consideration. Further, as discussed below,
the Motion should be denied outright because Plaintiffs Complaint sufficiently alleges the
relevant facts to state its claims.
II.
NOT ONLY IS THE HIGBEE DEFENDANTS’ MOTION DEFECTIVE,
BUT ALL OF THEIR CONTENTIONS ARE MERITLESS
A.

There is No Copyright Infringement Here

“It is well settled that state law rules of contract construction govern the interpretation of
copyright transfer agreements, notwithstanding the federal statutory source of the rights at issue.”
John Wiley & Sons, Inc. v. DRKPhoto, 882 F.3d 394,412 (2d Cir. 2018) (citing Graham v. James,
144 F.3d 229, 237 (2d Cir. 1998). When a work is subject to a license, the law does not entertain
claims under the Copyright Act, as an “award of copyright damages in [any case involving a
license] is problematic [ because a] copyright owner who grants a nonexclusive license to use his
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copyrighted material waives his right to sue the licensee for copyright infringement.” See Graham,
144 F.3d at 236 (citing Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 753 (11th Cir. 1997); Peer
Int 7 Corp. v. Pausa Records, Inc., 909 F.2d 1332,1338-39 (9th Cir. 1990)); see also United States
Naval Inst. v. Charter Communications, Inc., 936 F.2d 692, 695 (2d Cir. 1991) (for the proposition
that though a licensee “is capable of breaching the contractual obligations imposed on it by the
license, [it] cannot be liable for infringing the copyright rights conveyed to it.”).
With respect to claims of breach of a nonexclusive license that has no duration and grants
broad, unrestricted rights to use a copyrighted work, the license (1) is not terminable at will by the
licensor; (2) must be materially and willfully breached by the licensee in order to give rise to the
licensor’s right of rescission; and (3) must be expressly and formally rescinded before any use by
the licensee can be deemed not subject to the license and thereby, considered copyright infringing
am
use . Graham, 144 F.3d at 236-38; see also TVTRecords v. IslandDef J Music Group, 412 F.3d
82, 93 (2d Cir. 2005); Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir. 1993). Furthermore, failure
to attribute credit to the author is not a material breach such that a licensor may rescind a license
because such obligations are considered covenants, not conditions. See Graham, 144 F.3d at 237
(citing Grand Union Co. v. Cord Meyer Dev. Co., 761 F.2d 141, 147 (2d Cir. 1985); Jacob
Maxwell, Inc., 110 F.3d at 754; I.A.E., Inc. v. Shaver, lA F.3d 768, 778 (7th Cir. 1996). Also,
failure to attribute credit, alone, is not copyright infringement. Graham, 144 F.3d at 237.
Based upon the above straightforward law. Plaintiff has stated a claim for the declaratory
judgment sought.
The Higbee Defendants also knew that they were engaging in fraudulent and deceptive
business practices, a violation of N.Y. Gen. Bus. L. § 349. The Higbee Defendants knew that their
claims of copyright infringement were manifestly false. They also knew that their claim of
exposure to over $150,000 in statutory damages was false, but nonetheless, attempted to capitalize
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on their victims’ fear of liability. They simply never expected any particular victim to discover the
spuriousness of their claims and threats, nor to adequately and steadfastly defend themselves. Now,
they have pieced together their Motion, which is filled with inaccurate propositions based on
inapposite legal support, in an attempt to shield themselves from liability for their role in a vast
extortion scheme to defraud countless victims out of thousands of dollars, including their attempt
on Plaintiff.
B.

The Higbee Defendants’ Contention That There is No Controversy
is Meritless, as They Materially Misrepresent the Case Law

To avoid what they know is a true legal controversy as alleged in the Complaint, the Higbee
Defendants falsely contend that New York courts have already found Plaintiff to have infringed as
a matter of law. See generally DE 9-1. More specifically, they claim that “Plaintiff committed
copyright infringement as a matter of law by failing to meet an express condition (attribution) of
the license on which it relies for its use of the Copyrighted Work.” Id. at 12-13. This position is
meritless. The Higbee Defendants have not cited case law indicating that failure to include
attribution upon request constitutes willful copyright infringement or a condition to the license. In
fact, the law is the exact opposite. The Higbee Defendants’ wholly inaccurate position is crafted
through a series of half-truths, and their reliance on the cases they cite is entirely misplaced.
The Higbee Defendants cite to Philpot v. Music Times LLC, 16-CV-1277, 2017 WL
9538900, *1 (SDNY Mar. 29, 2017) (report and recommendation), adopted by Philpot v. Music
Times LLC, 2017 WL 1906902, *1 (SDNY May 9, 2017) for the propositions that the Southern
District of New York (1) “addressed whether the defendant’s failure to include the requisite
attribution gave rise to a claim of copyright infringement,” and (2) concluded that “[n]early
identical conduct [to that of Plaintiff in this case] has previously given rise to a finding of willful
copyright infringement.” Philpot does not support any of the Higbee Defendants’ assertions.
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First, Philpot was only before the court for reeommendation on the damages to be awarded
to the plaintiff because the defendant defaulted. See id.-, see also Finkel v, Romanowicz, 577 F.3d
79, 84 (2d Cir. 2009) (noting that, where a defendant has defaulted, the well-pleaded allegations
of the complaint are deemed to be true)”). Thus, the “default judgment entered on well-pleaded
allegations in [the] complaint establishe[d the] defendant’s liability,” not the court’s adjudication
of the facts alleged. See Philpot, 2017 WL 9538900, at *4 (quoting Bambu Sales, Inc. v. Ozak
Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995)). The Higbee Defendants conveniently do not
mention this crucial backdrop of the decision because it undermines their argument that there is
“willful infringement” by Plaintiff here, even though Plaintiff did not default and adamantly
refutes any claim that it is an infringer.
Second, the Higbee Defendants’ Motion omits material distinguishing faetors that make
Philpot clearly inapposite here. In Philpot, the photographs of major music celebrities actually had
value and were placed on a recognized third-party forum (Wikipedia). Id. at *2. The page hosting
each photograph included the pertinent terms of the license and expressly stated that attribution
was a ‘‘condition. ” Id. And, “before copying any photographs, would-be licensees would receive
a ‘pop-up’ that would ‘stop[ ] them, making it clear that they must first agree to, and follow, the
exact attribution specifications of the [licensor].”’ Id.
Also, the photographs’ metadata—^the collection of codes that describe each photograph
and operate behind the scenes—originally included the attribution. Id. In order for the defendant
to use them without attribution, the defendant needed to “wipe them of all metadata, and reproduce
and distribute the [then] wiped Copyrighted Photographs without attribution or with [only] a
‘Wikipedia Commons’ attribution.” Id. On those facts, the Philpot court found “that a ‘potential
licensee would have to go out of its way to avoid complying’ with that system.” See id. Then,
“[e]ven after [the d]efendant was put on notice that it had no lieense or authority, [the d]efendant
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elected to continue to reproduce and display and/or distribute [the pjlaintiffs Copyrighted
Photographs.” Id.
None of those facts exists here. The Image here was a generic depiction of a tablet bearing
listed words and focusing on the user’s searched term in Google. Despite the Higbee Defendants’
claim of the “unique” nature of his work, Defendant Youngson has reproduced this very image for
hundreds of terms and phrases. See Schlosser Deck Ex. 2. The Higbee Defendants’ claim that the
Image was available for purchase at a price of $250 is similarly false, as the Website stated that a
larger size of the Image could be purchased “for a few dollars” ($9.95 to be exact) and directed
users to another website (Alpha Images) if they wanted a different size (different than the Image
used by Plaintiff which was available for free). See Compl. Ex. 1; see also Schlosser Deck Ex. 3.
Also unlike in Philpot, here, the actual webpage hosting the Image did not include any
terms of the license nor did it expressly state that attribution was a condition precedent to obtaining
a license. After finding the Image on the one webpage where it was offered for free under license,
the user would have to go to another third-party website for additional language that is contained
simply in a “form” of license, but significantly the user is not prevented access to the attributionfree Image should it fail to go “out of its way” to find terms in that form of license. Evidence of
this critical distinction can, now, be found right on the Website. Significantly, it has been
discovered that within the last 30 days, the Website has been altered to state that “attribution is a
condition of the license,” as well as additional statements to that effect. Compare Compl. Ex. 1
with Schlosser Deck Ex. 3.
More importantly, the Image here did not include the desired attribution within its metadata
nor was it protected by any pop-up notices. In fact, the Image could be copied directly from a
Google search thumbnail without ever accessing the Website. This has also been recently changed,
as the Image is no longer readily available through a Google search. See Schlosser Deck Ex. 4-5.
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Finally, here, the Plaintiff ceased use of the Image immediately after it was notified by the
Higbee Defendants of a dispute concerning its use. “A copyright holder seeking to prove that a
copier’s infringement was willful must show that the infringer ‘had knowledge that its conduct
represented infringement or... recklessly disregarded the possibility.’” Philpot, 2017 WL 9538900,
at *5 (quoting Twin Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1382 (2d Cir. 1993)).
“Courts will infer willful infringement from the fact that a defendant engages in infringing activity
after receiving warning that the activity constitutes infringement.” Id. (citing EMI Entm’t World,
Inc. V. Karen Records, Inc., 806 F. Supp. 2d 697, 704 (SDNY 2011); Castle Rock Entm’t v. Carol
Pub. Grp., Inc., 955 F. Supp. 260, 267 (SDNY 1997) (willful infringement found where defendant
continued to publish infringing book after receiving actual cease and desist notice from plaintiff)).
Having been counsel in Philpot, the Higbee Defendants are fully aware that their
representation olPhilpot is disingenuous. The Philpot court did not hold, as the Higbee Defendants
inexplicably contend, that a user of a work marketed and made available to the public for free and
without restriction of access is an infringer of the author’s copyright as a matter of law, where, as
here, the Plaintiff innocently pulled the Image from a website and any failure to include attribution
credit to a third-party—who was neither the author nor the copyright holder of the Imag(

-as

requested was inadvertent. Yet, the Higbee Defendants go even further to suggest that the Philpot
court held that failure to include attribution is per se willful infringement. The truth is that Philpot
simply, and clearly, does not support the Higbee Defendants’ position, and because Philpot was
decided on default solely upon the plaintiffs contentions and because the facts are utterly
distinguishable, Philpot does not support the Higbee Defendants’ position.
The other decision the Higbee Defendants cite—Graham v. James, 144 F.3d 229 (2d Cir.
199g)—entirely supports Plaintiffs position. The Higbee Defendants incorrectly claim that
Graham's only significance is that “the Second Circuit has indicated, ‘ [i]f the nature of a licensee’s
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violation consists of a failure to satisfy a condition to the license, it follows that the rights
dependent upon satisfaction of such condition have not been effectively licensed, and therefore,
any use by the licensee is without authority from the licensor and may therefore, constitute an
infringement of copyright.’” DE 9-1 (quoting Graham, 144 F.3d at 237). A simple review of
Graham indicates why it actually supports Plaintiffs case.
Graham is an influential case on the interplay between conflicting copyright and contract
laws. See generally Graham, 144 F.3d at 229. Applicable here, the Second Circuit issued four
important rulings. See id. at 236-38. First, the court confirmed that there is no copyright
infringement without a finding first that the licensing agreement had been explicitly rescinded. Id.
at 236. Second, the court stated that a failure to credit authorship is not, on its own, copyright
infringement. Id. Citing Nimmer on Copyright, the court noted that:
The generally prevailing view in this country under copyright law has been that an
author who sells or licenses her work does not have an inherent right to be credited
as author of the work, [citation] In line with that general rule, it has been held not
to infringe an author’s copyright for one who is licensed to reproduce the work to
omit the author’s name.
Id. (quoting 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8D.03(A)(1), at 8D32 (6th ed. 1978)) (citation omitted).
Third, the court held that “the payment of royalties and the inclusion of a notice crediting
[] authorship are to be considered covenants, not conditions.” Id. at 237 (citing Grand Union Co.
V. Cord Meyer Dev. Co., 761 F.2d 141, 147 (2d Cir. 1985) (“In the absence of more compelling
evidence that the parties intended to create a condition, the negotiation provision must be construed
as a promise or covenant.”)). There, the parties had actually reached an oral agreement, but it “did
not clearly delineate its conditions and covenants.” Id. Notably, the Graham court found it
“important that [the defendant had already] turned over the [work] for use before any royalties
were paid,” when it concluded that such obligation was a covenant. Id. (citing Jacob Maxwell,
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Inc., 110 F.3d at 754 (holding that payment of royalties and attribution were covenants because
“[the composer] expressly granted [the licensee] permission to play the song before payment was
tendered or recognition received”); I.A.E., Inc. v. Shaver, 74 F.3d 768, 778 (7th Cir. 1996) (holding
that full payment was not a condition because the licensee received the copyrighted drawings after
tendering only half the required payment)).
Finally, the Graham court held that “[a] material breach of a covenant will allow the
licensor to rescind the license and hold the licensee liable for infringement/or uses of the work
thereafter:' Id. (emphasis added) (citing Rano, 987 F.2d at 586 (“[A] material breach of a licensing
agreement gives rise to a right of rescission which allows the nonbreaching party to terminate the
agreement.”); Costello Publ’g Co. v. Rotelle, 670 F.2d 1035, 1045 (DC Cir. 1981) (“[E]ven if the
counterclaims asserted merely constitute a breach of contract, an action for copyright infringement
would lie if the breach is so material that it allows the grantor [of] power to recapture the rights
granted so that anyfurther use of the work was without authority.”) (emphasis added)). However,
the court concluded that only breaches that are “material and willful, or, if not willful, so
substantial and fundamental as to strongly tend to defeat the object of the parties in making the
contract” will warrant rescission. Id. (quoting Septembertide Publ’g, B. V. v. Stein and Day, Inc.,
884 F.2d 675, 678 (2d Cir. 1989) (internal quotations and citation omitted)).
The Second Circuit has since confirmed Graham's final holding. See TVTRecords v. Island
DefJam Music Group, 412 F.3d 82, 93 (2d Cir. 2005). In TVT, the court reversed the District
Court’s ruling because it “mistakenly concluded that [a] fraudulently induced copyright license is
invalid ipso facto" and allowed a copyright infringement claim to proceed. Id. (internal quotations
omitted). The Second Circuit found that “[the] conclusion overlooks the fact that the license must
formally be rescinded before an infringement action based on fraudulent inducement of a copyright
license can proceed.” Id. (citing Graham, 144 F.3d at 237—38) (“A material breach of a covenant
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will allow the licensor to rescind the license and hold the licensee liable for infringement for uses
of the work thereafter,” but “rescission [does] not occur automatically

see also Jacob

Maxwell, 110 F.3d at 753 (“One party’s breach does not automatically cause rescission of a
bilateral contract”); Rano, 987 F.2d at 586 (“[UJnder federal and state law a material breach of a
licensing agreement gives rise to a right of rescission which allows the nonbreaching party to
terminate the agreement. After the agreement is terminated, any further distribution would
constitute copyright infringement.”)(emphasis added); 3 Nimmer on Copyright, supra, § 10.15 [A]
(“Failing such rescission,... the grant [of license] continues in place, thus precluding infringement
liability until such time as the copyright owner exercises his entitlement to rescind.”).
The Graham court was comprehensive and clear in its decision, and each of the
abovementioned holdings apply in this case, making it clear that the UK Defendants never had any
claim of copyright infringement against Plaintiff. First, there was no rescission in this case. See
Rano, 987 F.2d at 585-86 (for the proposition that Demand I was not an effective rescission
because the license had no duration, and thus, section 203 of the Copyright Act only allows for
termination of any such agreement within a specific five year period). In any event, after Plaintiff
received Demand I, it stopped using the Image, and thus, there was never any infringing use.
Second, any failure to attribute, alone, is not copyright infringement. Third, absent express
agreement to the contrary, attribution requirements are merely covenants. This is even more true
here where, similar to Graham, Plaintiff had unfettered access to the Image without needing to
first provide attribution—or, unlike in Philpot, no pop-up notice alerted Plaintiff of the license nor
required acceptance of the express condition prior to accessing the Image.
Lastly, any failure to include the requested attribution was innocent and immaterial,
causing the UK Defendants no damage. The standard of materiality articulated in Graham is high
and such trivial conduct, as here, does not rise to the level of permitting rescission. It can hardly
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be said that not including the attribution “strongly tend[ed] to defeat the object of’ sharing
Defendant Youngson’s mass-produced images. See Graham, 144 F.3d at 237. This is especially
so here, where the attribution requested was that of a third-party.
The foregoing shows that the Higbee Defendants have woefully failed to establish that
Plaintiff has not alleged a plausible claim for a judicial declaration regarding Defendants’ alleged
claim of copyright infringement and statutory damages that form the basis of Defendants’
extortionate demands for monetary payments.
C.

The Higbee Defendants Were a Part of a Larger Deceptive Scheme
That is Consumer-Oriented, and Caused Direct Injury to Plaintiff
Under N.Y. Gen. Bus. L. $ 349.

To successfully assert a claim under N.Y. Gen. Bus. L. § 349(h), “a plaintiff must allege
that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading
and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.” North
State Autobahn, Inc. v. Progressive Ins. Group Co., 102 A.D.3d 5, 11 (2d Dep’t 2012) (quoting
City ofNew Yorkv. Smokes-Spirits.Com, Inc., 12 N.Y.3d 616, 621 (2009)); citing Koch v. Acker,
Merrall & Condit Co., 18 N.Y.3d 940, 941 (2012); Stutman v. Chemical Bank, 95 N.Y.2d 24, 29
(2000)). The Higbee Defendants attempt to claim that the license created a private transaction
between Plaintiff and the UK Defendants, and thus, was not consumer-oriented. The Higbee
Defendants likewise contend that Plaintiff suffered no injury because it did not submit to the
fraudulent demands and harassment. Nearly identical arguments were made in North State, supra.
and the Second Department rejected both.
1.

Consumer-Oriented Scheme

“[Cjonduct has been held to be sufficiently consumer-oriented to satisfy the statute . . .
where it constituted a standard or routine practice that was ‘consumer-oriented in the sense that
[it] potentially affect[ed] similarly situated consumers. ?59 Id. at 12 (quoting Oswego Laborers’
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Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 27 (1995); see also Wilner v.
Allstate Ins. Co., 71 A.D.3d 155, 164 (2d Dep’t 2010); Elacqua v. Physicians’ Reciprocal Ins., 52
A.D.3d 886, 888 (3d Dep’t 2009). In other words, “[the] defendant’s acts or practices must have a
broad impact on consumers at large.” North State, 102 A.D.3d at 12 (quoting New York Univ. v.
Continental Ins. Co., 87 N.Y.2d 308, 320 (1995) (internal quotations omitted); see also Oswego
Laborers’, 85 N.Y.2d at 25; Canario v. Gunn, 300 A.D.2d 332, 333 (2d Dep’t 2002); Genesco
Ent., Div. ofLymutt Indus., Inc. v. Koch, 593 F.Supp. 743, 752 (SDNY 1984).
In North State, the defendants. Progressive insurance company and its employees, misled
claimants insured by Progressive into believing that they were required to have their vehicles
serviced at specific repair shops. Id. at 13. “The complaint further allege[d] that this conduct. . .
constituted a standard practice that was routinely applied to all claimants[.]” Id. The Second
Department concluded that such allegations sufficiently complained-of conduct that was
consumer-oriented under NYGBL § 349.
Here, the Website is one of many others set up by the Defendants to promote their multistep scheme that begins with the marketing of “free images for [a user’s] website.” See DE 9-1 at
2; See also, e.g, Schlosser Deck Ex. 1, at Compl. ^ 19. Users of the UK Defendants’ websites are,
without doubt, consumers in the market for images, and more specifically, as here, for free images
to use on their websites. Unbeknownst to such consumers, the Higbee Defendants, despite
knowing that there is no copyright infringement, wait in the wings for the opportunity to send
threatening demand letters containing the intimidating ultimatum to pay thousands of dollars or be
sued and face possible liability for over $150,000. Then, they follow up with consistent, harassing
and disturbing emails and phone calls. Plaintiff was one such consumer when it acquired the
Image, and a victim of the Defendants’ scheme. The Higbee Defendants’ contention that their role
in the scheme does not constitute consumer-oriented conduct under N.Y. Gen. Bus. Law § 349
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misses the point by focusing only on the existence of the licenses. Plaintiff s Complaint clearly
details the elaborate, deceptive scheme used by Defendants to extort money from users of the UK
Defendants’ convoluted websites.
Additionally, the Higbee Defendants’ assertion that either license created only a private
contractual dispute fails. While “[p]rivate contract disputes, unique to the parties ... [do] not fall
within the ambit of the statute,” North State, 102 A.D.3d at 12 (quoting Oswego Laborers’, 85
N.Y.2d at 25) (emphasis added), neither license is “tailored to meet the purchaser’s wishes and
requirements.” See id. (quoting New York Univ., 87 N.Y.2d at 321 (internal quotations omitted)).
Also, the separate license on the other webpage relied upon by the Higbee Defendants did not even
state the names of the parties, but merely provided that the agreement was between the defined
terms “Licensor” and “You.” See Schlosser Decl. Ex. 1, at Ex. 1 to Compl. pg. 6-7. The generic,
one-size-fits-all nature of that license is further evidence that it is targeted to the public at large,
not specific to any party—not even the UK Defendants. This is similar to North State in that, there,
the claimants were not singled out for receipt of the false information, nor was the information
individually-tailored to each claimant.
2.

Injury to Plaintiff

N.Y. Gen. Bus. L. § 349(h) provides that “any person who has been injured .. . may bring
an action in his own name to enjoin such unlawful act or practice, an action to recover his actual
damages or fifty dollars, whichever is greater, or both such actions.” N.Y. Gen. Bus. L. § 349(h).
Though there is no support for their position, the Higbee Defendants incorrectly contend that the
injury-causation requirement creates a burden on Plaintiff to show detrimental reliance. They cite
to outdated case law for the proposition that “[s]ection 349 mandates a showing that plaintiff s
injury be a result of reliance on a materially deceptive act or practice.” See DE 9-1 at 15. However,
“the Court of Appeals of New York has cautioned courts against conflating ‘reliance’ and
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‘causation’ with regard to section 349 claims.” Dash v. Seagate Technology (US) Holdings, Inc.,
No. 13-CV-63292015, 2015 WL 11973674, at *18 (EDNY September 1, 2015) (quoting Stutman,
95 N.Y.2d 24, 30 (2000)).
“[A] plaintiff must prove ‘actual’ injury to recover under the statute, though not necessarily
pecuniary harm.” Stutman, 95 N.Y.2d at 29 (citations omitted). “Further, [the NY Court of Appeals
has] repeatedly stated, reliance is not an element of a section 349 claim.” Id. at 29 (citing Small v.
Lorillard Tobacco Co., 94 N.Y.2d 43, 55 (1999) (“Intent to defraud and justifiable reliance by the
plaintiff are not elements of the statutory claim”); Oswego Laborers ’, 85 N.Y.2d at 26 (“the statute
does not require proof of justifiable reliance”)). “In order to satisfy the causation requirement, a
Section 349 plaintiff need only show that he or she sustained a loss ‘because of defendant[’s] act.

?9?

Dash, 2015 WL 11973674, at * 18 (quoting Stutman, 95 N.Y.2d at 30).
In Stutman, the defendant bank informed plaintiffs that there would be no prepayment
penalty on plaintiffs’ loan. Stutman, 95 N.Y.2d at 29. However, when plaintiffs sought to refinance
their loan, they were assessed an “attorney’s fee.” Id. The plaintiffs alleged “that the note was
deceptive for not revealing that fee.” Id. The Court of Appeals overruled the First Department,
discussing the lower court’s error as follows:
The Appellate Division dismissed plaintiffs’ claim, holding that they failed to show
justifiable reliance: that is, that the note’s failure to disclose the $275 attorney’s fee
“had any effect on plaintiffs’ decision to borrow from defendant in the first place.”
That, however, was the wrong standard, because reliance is not an element of a
section 349 claim.
Id. at 30.
Here, as the Higbee Defendants repeatedly point out. Plaintiff is a law firm. As such.
Plaintiff had the resources to independently assess Defendants’ claim of infringement and avoid
unjustly enriching the Defendants; other victims were likely not as fortunate. In any event, that
time spent assessing the validity of the Defendants’ false claims of copyright, responding to the
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Higbee Defendants, and being subsequently harassed by the Higbee Defendants, was valuable time
Plaintiff did not spend tending to any number of important matters nor assisting Plaintiffs
numerous clients.
Thus, contrary to the Higbee Defendants’ contention. Plaintiff does not need to allege that
it actually paid the extortionate fee requested in reliance on the false claims of copyright
infringement. The Plaintiff was required to take valuable time away from its business and expend
resources to assess the Defendant’s claim. Such is injury sufficient to state a N.Y. Gen. Bus. L. §
349 claim.
3.

The Higbee Defendants misconstrue the Plaintiffs Complaint

The Higbee Defendants’ second contention is a bit baffling. They (incorrectly) assert that
“Plaintiff[ ] admittedly failed to read the express license terms,” and that such “failure to read
material containing allegedly deceptive representations or an alleged failure to understand the
content is insufficient to state a § 349 claim”. See DE 9-1 at 16. However, Plaintiff has not alleged
that the language of the additional license on the third-party web page is, itself, deceptive. The
Higbee Defendants therefore, again, miss the point entirely in citing Goldman Stone Trading, Inc.
V. Wayne Electro Systems, Inc., 61 A.D.3d 731, 732 (2d Dep’t 2009) for the well-known
proposition that “[a] party who executes a contract is presumed to know its contents and to assent
to them and an inability to understand the English language, without more, is insufficient to avoid
this general rule.”
Ironically, the Higbee Defendants continue to emphasize the contractual relationship
created by the third-party license to support this argument, and others, with respect to Plaintiff s
N.Y. Gen. Bus. L. § 349 claim. This directly contradicts their initial position that Plaintiff never
obtained a license to use the Image. Nonetheless, their argument shows a lack of understanding of
the allegations against them. Plaintiff does not allege that a failure to read the license on the other
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webpage gives rise to a deceptive business practice claim against the Defendants. Plaintiff also
does not allege that Defendants drafted a license that included “deceptive representations.”
Plaintiffs allegations make clear that the Higbee Defendants’ are a part of a scheme to
defraud users of the UK Defendants’ images. In fact, the Higbee Defendants’ role in the scheme
is, by far, the most offensive. Under the color of legal authority and the threat of costly statutory
ramifications, which they knew to be false, the Higbee Defendants sent demand letters to many
unsuspecting victims in an attempt to extract thousands of dollars for images that are marketed and
made available to the general public forfree.
One such targeted victim was Plaintiff, but it did not simply cower and pay the extortionate
fees. Plaintiff asked the Higbee Defendants for clarification and further information to support
their claim for copyright infringement; without such. Plaintiff maintained that it did not so infringe.
See Ex. 1, Compl.

36. The Higbee Defendants, however, did not—^because they could not—

respond with law supportive of their claim. Instead, they began a barrage of harassing
communications. Id. ^ 35-44. This scam has also been well documented on the Internet. See, e.g,
Matthew Chan, Higbee Associates Letter & Lawsuits Forum, The ELI Forums (a forum tracking
and

'reporting

of

Extortion

Settlement

Demand

Letters”),

available

at

https://www.extortionlettennfb.com/fbnim/hinbee~letter-lawsuifs-fbrum/photo2~nick-voimsson(hiHbee-assoc-i-U.sts~rm~media-ltd-in-temvlate-law.'iHU/ (last visited on July 11, 2018).
The Higbee Defendants have been properly identified in this suit for their role in a
fraudulent scheme. For the same reason, their opining that they hold no copyright interest in the
Image, and thus, are improper defendants, is likewise unavailing.

23

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D.

The Higbee Defendants’ Claim of Immunity is Unsupported by
Law as There is No Absolute Privilege in NY, and Qualified
Privilege does not Protect Threats of Baseless Litigation.

The Higbee Defendants again cite to outdated cases to claim that their demand letters
falsely claiming copyright infringement are protected by absolute privilege. For example, Vodopia
V. Ziff-Davis Publ. Co., 243 A.D.2d 368 (1st Dep’t 1997), concerned a “[p]laintiffs defamation
cause of action, premised upon contents of [a] letter written by opposing counsel[.]” Id. There, the
First Department held that the lower court “properly dismissed ... [on the] ground that letter was
absolutely privileged[.]” Id. The Higbee Defendants cite to Vodopia, among others, for the
proposition that “absolute privilege applied to ‘a letter written... during the course of negotiations
to settle a copyright lawsuit threatened by plaintiff s client.’” See DE 9-1 at 20 (quoting Vodopia,
243 A.D.2d at 368).
Vodopia, and all cases holding the same, were abrogated by Front, Inc. v. Khalil, 24 N.Y.3d
713 (2015). Front Inc. addressed the confusion amongst the First, Second, and Third Departments.
Id. There, the Court of Appeals held:
To ensure that such commimications are afforded sufficient protection the privilege
should be qualified. Rather than applying the general malice standard to this pre­
litigation stage, the privilege should only be applied to statements pertinent to a
good faith anticipated litigation. This requirement ensures that yrivilese does not
protect aitornevs who are seekhts to bully, harass, or intimidate their client’s
adversaries by threatenms baseless litisation or by assertins wholly
immeritorious clahtis, unsupported in law and fact, in violation of connseFs
ethical ohlisations. Therefore, we hold that statements made prior to the
commencement of an anticipated litigation are privileged, and that the privilege is
lost where a [it is proven] that the statements were not pertinent to a good faith
anticipated litigation.
Id. at 720 (emphasis added).
There is no absolute privilege for pre-litigation demand letters, and the qualified privilege
clearly does not apply here. Plaintiff is suing the Higbee Defendants for their role in a fraudulent
scheme. Plaintiffs Complaint sufficiently alleged that the Higbee Defendants colluded with the
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UK Defendants in an attempt to extort money from their victims, including Plaintiff More
specifically, the Higbee Defendants used their positions as copyright attorneys to threaten litigation
and heightened statutory liability of $150,000, knowing that no claim of copyright infringement,
especially not willful infringement, existed. The communications were a part of a larger scheme
to defraud. ■bully, harass, [and] intimidate” users of the UK Defendants’ images, including
Plaintiff, and as such, the Higbee Defendants do not qualify for the protection of the privilege.
CONCLUSION
Plaintiffs Complaint sufficiently alleges facts to state its claims for declaratory judgment
that Plaintiffs de minimis use of the Image does not constitute copyright infringement and that it
is not liable for breach of the license because the Defendants can show no damage. Likewise,
Plaintiffs Complaint sufficiently alleges facts to state its claims that the Defendants violated N.Y.
Gen. Bus. L. § 349 by engaging in a scheme to deceive Plaintiff, and other consumers, out of
thousands of dollars under false claims of willful copyright infringement.
In contrast, the Higbee Defendants have failed to show that Plaintiffs Complaint should
be dismissed under FRCP 12(b)(6). Moreover, their Motion relies on extraneous and false facts
that may not be considered on such motion, and all of their contentions are meritless.
Consequently, their Motion to dismiss should be denied.
Dated: Garden City, New York
July 13,2018

MEYER, SUOZZI, ENGLISH & KLEIN, P.C.
By:
/s/
Kevin Schlosser ([e-mail])
Adreama Mackey-Ponte (awaiting admission)
Attorney for Plaintiff (Pro Se)
990 Stewart Ave
Garden City, New York 11530
[phone]

25
4125849