Bill Diodato Photography LLC v. Avon Products, Inc.

Filing 30

OPINION re: 8 MOTION to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Avon Products, Inc. Based on the conclusions set forth above, the Defendant's motion to dismiss is denied with respect to the Complaint's breach of cont ract and account stated causes of action and granted with respect to the Complaint's conversion cause of action. Decision regarding the applicability of the statute of limitations to Plaintiff's copyright infringement action is deferred pending limited discovery relating to that issue. Plaintiff is afforded leave to replead within twenty days. (Signed by Judge Robert W. Sweet on 8/5/2012) (lmb)

USDCSDNY
DOCUMENT

ELECTRONIC,A.LLY FILED I

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

DOC #:

-------- x

±-d :; =Il
iJ.J

DATE FILED-;-Z

G,.11::==:::::::===----"-' . . . _._=-- I
1...., - - ­

BILL DIODATO PHOTOGRAPHY LLC,
12 Civ. 847 (RWS)

aintiff,

OPINION

againstAVON PRODUCTS, INC.,
Defendant.

x
A P PEA RAN C E S:

Attorney for Plaintiff

LEBOWITZ LAW OFFICES LLC

777 Third Avenue, 35th Floor

New York, NY 10017

By: Marc Andrew Lebowitz,

Attorney for Defendant

FROSS ZELNICK LEHRMAN & ZISSU, P.C.

866 United Nations Plaza

New York, NY 10004

By: Roger L. Zissu, Esq.

Alexander Lloyd Greenberg, Esq.

Sweet, D.J.

Defendant AVon Products ("Avon

ll

or the "Defendant

ll
)

has moved pursuant to Rule 12(b) (6) of the Federal Rules
Civil Procedure to dismiss the complaint (the "Complaint

ll
)

of

Plaintiff Bill Diodato Photography LLC ("Plaintiff") alleging
copyright infringement, breach of contract, two counts of
account stated and conversion.

Based upon the conclusions set

forth below, Defendant's motion to dismiss is denied with
respect to the Complaint's breach of contract and account
stated causes of action and granted with respect to the
Complaint's conversion cause of action.

Decision with respect

to the validity of Plaintiff's copyright infringement cause of
action is deferred pending limited discovery on the issue of
equitable tolling.

Prior Proceedings

On February 2, 2012, Plaintiff filed the Complaint
in the Southern District of New York alleging five causes of
action, including (1) copyright infringement,
contract,

(2) breach of

(3) account stated with respect invoices sent

between October 2004 and October 2008,
1

(4) account stated with

respect to an invoice sent
conversion.

September 2008 and (5)

The Complaint seeks a preliminary and permanent

injunction enjoining Defendant from copying or
Plaintiff's images

I

splaying

a preliminary injunction ordering

Defendant to turn over to Plaintiff all of Plaintiff's
negatives, an award of all allowable damages under the
Copyright Act, Plaintiff's full cost and litigation expenses
and other damages.

On April 4, 2012, Defendant filed the present motion
to dismiss.

In accordance with the schedule stipulated by the

parties, the motion was heard on June 13, 2012.

Following

oral argument, Plaintiff requested permission to file a sur­
reply brief addressing arguments raised in Defendant's reply.
The Court granted Plaintiff's request to file a sur reply and
afforded Defendant the opportunity to fi
Plaintiff's sur reply.

a reply to

The motion was marked fully submitted

on July 25.

The Complaint

The Complaint alleges the following facts, which are
accepted as true at this stage of the litigation.

2

Bill

Diodato ("Diodato") is a commercial and fine-art photographer
whose work has appeared in a variety of magazines.

Avon is a

global beauty company and the world's largest direct seller.
One component of Avon's direct sales apparatus is the use of
catalogs to promote its products directly to consumers.

Beginning as early as 2001, Avon retained the
services of Plaintiff to perform catalog photography services.
The negotiated fee for the license of Diodato's work provided
license

for a limited
use.

one year and a limited scope of

These limitations were agreed to by Avon and

memoriali

in invoices provided by

invoices also provided that,

the event

would pay legal fees and that PI
rights and ownership of
offer to, or did
the images.

aintiff to Avon.

1 images.

The

a breach, Avon

iff "retains exclusive
1/

At no time did Avon

aintiff propose that, Avon buyout and own

Plaintiff contends that Avon has used Plaintiff's

images in various catalogs and online outside the scope of the
licenses granted, thereby injuring Plaintiff by engaging in
the unlicensed, unauthorized and uncompensated use of
aintiff's work.

3

In or about October 2008, Plaintiff sent Avon a
unauthorized use

series of invoices

Plaintiff had recently become aware.

its images of which

These invoices
images and

identified specific unauthorized uses of specif

invoiced for the usual rate with no penalty or damages for
copyright infringement.

Plaintiff has annexed copies of these

invoices to the Complaint.

Avon did not object to these

invoices.

In or about September 2010,

ter Avon

lowed

aintiff a limited review of Avon's catalogs, Plaintiff sent
Avon a second

es of invoices for unauthorized use of its

images of which Plaintiff had become aware during
Avon's catalogs.

review

Akin to the first series of invoices,

this second series of invoices identified specific
unauthori

images and invoiced for the usual rate with no

penalty or damages for copyright infringement.

Plaintiff has

annexed copies of these invoices to the Complaint.

Plaintiff contends that, because information
regarding Avon's use of PI

iff's photographs remains in

Avon's sole possession, the full and complete scope of
Defendant's infringing activities and infringing uses of

4

been ascertained.

Plaintiff's creative works has not

an opportunity for further

Plaintiff further contends

investigation and discovery will yield evidence that Avon's
unauthorized, unlicensed and infringing use of plaintifffs
work is not limited to the uses identified in ei
or second

of invoices.

The Compl

nt also alleges that Plaintiff has

requested that Avon return the
possess

the first

f

ives Avon has in its

but Avon has refused.

The Applicable Standard

On a motion to dismiss pursuant to Rule 12, all
factual allegations in the complaint are accepted as true, and
all inferences are drawn in favor of
~P_o~l~a~r~M~o~l~e~c~u~l~a~r~~~~.,

pleader.

Mills v.

12 F.3d 1170, 1174 (2d Cir. 1993).

The

issue "is not whether a plaintiff will ultimately prevail but
whether
the claims."

claimant is entitled to of
ViII

Pond

evidence to support

Inc. v. Town of Darien, 56 F.3d

375, 378 (2d Cir. 1995).

5

To survive a motion to dismiss pursuant to Rule
12 (b) (6),

"a complaint must contain sufficient

accepted as true, to 'state a
plaus

aim to relief that is

e on its face.'" Ashcroft v. I

129 S.Ct. 1937, 173 L.Ed.2d 868

tual matter,

(2009)

, 556 U.S. 662, 678,
(quoting Bell Atl Corp.

v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929
(2007) ).

Plaintiffs must

lege sufficient facts to "nudge [

their claims across the line from conceivable to plausible."
Twombly, 550 U.S. at 570.

Though the court must accept the

factual allegations of a complaint as true, it is "not bound
to accept as true a legal conclusion couched as a factual
allegation./I Iqbal, 556 U.S. at 678

(quoting Twombly, 550 U.S.

at 555) .

Defendant's Motion To Dismiss Is Granted In Part And Denied In
Part, With Decision Deferred With Respect To Plaintiff's
Copyright Infringement Claim

As noted above, the Complaint alleges five causes of
action, including copyright infringement, breach of contract,
two counts

account stated and conversion.

counts will be addressed individually.

6

Each of these

A. Count I: Decision Concerning The Validity Of The
Complaint's Copyright Infringement Claim Is Deferred
Pending Limited Discovery Concerning Equitable Tolling

1. efore The Statute Of Limitations Issue Is
B
Decided, Plaintiff Is Granted Limited Discovery

According to Defendant, Plaintiff's claim for
copyright infringement is barred by the statute of
limitations.

Copyright Act's statute of limitations

requires infringement actions to be "commenced within
years after the claim accrued."

17 U.S.C.

§

507(b).

The

statute is silent as to when a plaintiff's copyright
infringement action accrues, and the case law in this Ci

t

is inconsistent as some courts have held that a copyright
infringement act

accrues at the moment of infringement,

while other courts have held that the claim accrues only upon
discovery by the plaintiff.

Predictably, Defendant endorses

application of the "injury rule," while Plaintiff contends the
"discovery rule" to be the correct approach.

a. he "Injury Rule" Governs The Accrual Of
T
Plaintiff's Copyright Claim

7

of the Honorable

Defendant highlights the decis

International v. National

Lewis A. Kaplan in
~~~~~. . . .~~~~,

409 F. Supp. 2d 235 (S.D.N.Y. 2004).

In

Auscape, Judge Kaplan engaged in a thorough discussion of when
a claim of copyright infringement accrues, exploring the
applicable case law from
the text

Supreme Court and Second Circuit,

the Copyright Act statute, the statute's

slative history as well as other considerations.
____~_, 409 F. Supp. 2d at 242-48.

See

ter engaging

an

exhaustive analysis, Judge Kaplan concluded that "a claim for
copyright infringement accrues on the date of the
infringement."

Auscape, 409 F. Supp. 2d at 247.

notwithstanding Judge Kaplan's holding in
precedent in this District has held

~~~~I

See Ps

v. John Wil

Additionally,

courts

Judge Kaplan/s Auscape decision remain valid.
i

1043 (2d Cir. 1992).
8

1

at *5

aintiff contends
the Southern

relied upon to apply the "discovery rule

92 F.3d 51 (2d Cir. 1996)

&

~~~~~--~~~~~~~-=

the two Second Circuit cases
Dist

recent

time the plaintiff

SonSI Inc., No. 11 Civ. 1416 (JSR) , 2011 WL 4916299
(S.D.N.Y. Oct. 14, 2011).

l

statute of limitations

for copyright infringement to run from
discovers the infringing use.

However

ll

prior to

See Merchant v.

Stone v. Williams, 970 F.2d

Although neither the Supreme Court nor the Second
Circuit has addressed this particular question,
of courts in this Circuit have most recent
copyright claim accrues at the time

Bel

concluded that a

infringement, rather

Harris v. Simon & Schuster,

than at the time of discovery."
Inc., 646 F. Supp. 2d 622, 630

"the majority

(S.D.N.Y. 2009) i see also

v. MGA Entm't, Inc., 831 F. Supp. 2d 687, 694

2011) i Broadvision Inc. v. ---------------- No.
Gen.
ec. Co.,

(S.D.N.Y.

08 Civ.

1478 (WHP) , 2009 WL 1392059, at *6 (S.D.N.Y. May 5, 2009) i Med.
~E._d_u_c_.__
D_e_'__ S_e_r_v_s . I_n_c_._____R_e_e_d~E ..
_v .__
____
v.
.._l_s_e_v_i___ __--,~-,--_P_L_C ,
e_r

No. 05 Ci v .

8665 (GEL) , 2008 WL 4449412, at *10 (S.D.N.Y. Sept. 30[ 2008)
z v. Torres

, No. 06

. 619(CM), 2007 WL

2244784[ at *7 (S.D.N.Y. July II, 2007)

i

04 Civ. 10079(CSH), 2006 WL 547252, at *3
2006); Chival

Roberts v. Keith, No.
(S.D.N.Y. Mar. 7,

Film Prods v. NBC Universal

Inc., No. 05 Civ.

5627 (GEL) , 2006 WL 89944, at *1 (S.D.N.Y. Jan. II, 2006).
this District's strong precedent establishing the
statute of limitations in copyright

ringement actions to

accrue at the point of infringement, rather than the point
discovery, this Court will apply the "injury rule" in
analyzing the timeliness of the Complaint's copyright
infringement cause of action.

9

i

b. Plaintiff Cannot Rely On A Tolling Agreement
Not Pled In The Complaint, But Plaintiff Is
Granted An Opportunity To File An Amended
Complaint

PI

iff,

its opposition to Defendant's motion

to dismiss, alleges that

parties entered into a tolling

agreement, agreeing that the

fective Date" of Plaintiff's

claims would be March 4, 2010.

According to

aintiff,

2010 when the parties were attempting to negotiate a
resolution to the present dispute, Plaintiff insisted on a
tolling agreement as a condition to refraining from commencing
a lawsuit, and the parties entered into that tolling
agreement, setting March 4, 2010 as the relevant date for
statute of limitations purposes.

Plaintiff contends that,

even if the Court applies the "injury rule" rather than the
"discovery rule" with respect to the statute of limitations,
Defendant is liable for infringing acts on or

er March 4,

2007.

"A Rule 12(b) (6) motion to dismiss challenges only
the face
dismiss,

the pleading.

Thus, in deciding such a motion to

'the Court must limit its analysis to the four

10

corners of the complaint.
2596 (PAC) (AJP)
2012)

Inesti v.

III

2012 WL 2362626 1 at *6 (S.D.N.Y. June 221

I

(quoting

Tech Int 11

4574 1 1993 WL 177780 1 at *5

Pani v.

cks l No. 11 Civ.

Ltd' l 92 Civ.

(S.D.N.Y. May 19 1 1993)) i see also

Blue Cross Blue Shield l 152 F.3d 67 1 71 (2d

r. 1998)

(in deciding a motion to dismiss l the Court is

confined to

allegations contained within the four corners

~the

of [the] complaint. II) •

Because the Complaint does not allege

the existence of the 2010 tolling agreement nor incorporate
this tolling agreement by reference
consider that agreement

this Court is unable to

I

ruling on Defendantls motion to

dismiss.

In its reply brief l Defendant contends that
Plaintiff should not be afforded leave to amend the Complaint
to pI

the tolling agreement because such an amendment would

be futile.

Defendant bases its argument on the applicability

of New York General Obligations Law

§

17-103 1 which governs

agreements waiving the statute of limitations.
Defendant

I

where

is an agreement for an indef

period to extend the statute of limitations
action arising out of a contract l
Gen. Oblig. Law

According to

§

17-103(1).

11

l

~applicable

to an

it is unenforceable.

ll

Here

e time

N.Y.

Defendant characterizes

agreement as one that permits Plaintiff an

the toll
indef

during which to file its

te period of t

a

Defendant contends that where Plaintiff/s claims are
outgrowth of a contractual relationship between the parties
the

that Plaintiff/s complaint sounds in both contract

and tort does not I
on enforceability.
N.Y.

Inc'

l

the applicat

of the statutory ban

See T&N PLC v.
S. James & Co. of
--------------------------------------

No. 89 Civ. 7688 (CSH)

(S.D.N.Y. Jan. 21, 1993)
and

l

1

1993 WL 17336 1 at *4

(holding

ling agreement invalid

smissing both contract and tort claims as time barred

where the complaint "had its genesis in the contractual
ionship between the parties
between the part

Because the relationship

ll
).

the present action had its genesis in

the parties' contractual relationship, Defendant contends that
New York General Obligations Law
agreement unenforceable.

§

17-103 renders any tolling

Defendant further contends that

because there is no federal pol

that could

affected by

New York General Obligation Law's prohibition of tolling
agreements of indefinite duration
this case.

l

§

17-103 is applicable

See Boyle v. United Techs. Corp., 487 U.S. 500,

507, 108 S.Ct. 2510, 101 L.Ed.2d 442

(1988)

(holding that

displacement of state law will occur only where significant

12

conflict exists between identifiable federal policy and the
operation of state law).

In its sur-replYt Plaintiff attacks Defendant's
reasoning concerning the unenforceability
agreement.

the tolling

Plaintiff cites language from the Second Circuit

decision in T&N PLC v. Fred S. James & Co of New York t 29 F.3d
57 (2d Cir. 1994) where the Court describes New York General
Obligation Law

§

17 103 as being applicable to "parties to a

contract ll and "in a contract action.1I

T&N PLC t 29 F.3d at 61.

Plaintiff argues that the Supreme Courtts

decision is

levant, as New York General Obligations Law § 17-103 is
not applicable to the tolling agreement concerning Plaintiff's
copyright claim.

aintiff notes that there is no case in

which New York General Obligation Law § 17-103 was found to
invalidate a tolling agreement that tolled copyright claims or
conversion claims and that every case Defendant cited
concerning

§

17-103 applies to claims with the s

year

statute of limitations applicable to actions sounding in
contract.

As noted above, the Complaint has failed to all
the existence of a tolling agreement, thereby precluding this
13

Court from considering that agreement in ruling on Defendant's
motion to dismiss.

The enforceability of the alleged tolling

agreement represents a novel issue of state law, and this
Court will refrain from rul

upon that issue unneces

See Zen Cont

ly.

, 151 F.

Supp. 2d 250, 260 (S.D.N.Y. 2001)

("When exploring unchartered

areas of state law, however, a federal court must be mindful
of its limited expertise in state law .

. and of the

undesirability of reaching out unnecessarily to decide novel
issues of state law.").

As noted below, Plaintiff is granted

leave to file an amended complaint within 20 days, and, in
this amended compl

nt, Plaintiff is not precluded from

alleging the existence of the tolling agreement.

Should it

become necessary to address the enforceability of the toll
agreement, this Court will address the issue at the
appropriate t

c. laintiff Is Granted Limited Discovery To
P
Determine Whether Equitable Tolling Is
Applicable

With respect to the statute of limitations,
Plaintiff also contends that equitable tolling would be
appropriate in this case.

According to Plaintiff, Defendant
14

has engaged in fraudulent concealment, as Defendant has
refused to return Plaintiff's negatives and has failed to
produce cop
that a

s of all domestic and international catalogs so

termination

infringement can be made.

aintiff

contends that consideration of the effect of the statute of
limitations in this case should be postponed until after
relevant discovery.

"The doctrine of equitable tolling appl

s only in

'rare and exceptional circumstances' to allow a complainant to
file a claim outside the applicable limitations period."

Boyd

v. J.E. Robert Co., No. 05-cv 2455(KAM) (RER), 2011 WL 477547,
at *7 (E.D.N.Y. Feb. 2, 2011)

(quoting Bertin v. United

States, 478 F.3d 489, 494 n.3

(2d Cir. 2007)).

the doctrine applies only where,

'because

"Generally,

some action on

the defendant's part, the complainant was unaware that the
cause of action existed.'"
F.3d 54, 58 (2d Cir. 1994))

Id.

(quoting

v. Frank, 22

"Equitable tolling based on

fraudulent concealment can apply in federal court if a
plaintiff establishes that:
concealed materi

(1) the defendant wrongfully

facts relating to defendant's wrongdoing;

(2) the concealment prevented plaintiff's discovery of the
nature of the

aim within the limitations period; and (3)
15

plaintiff exercised due diligence in pursuing the discovery of
the claim during the period plaintiff seeks to have tolled."
Koch v. Christie's Int'l PLC, 785 F. Supp. 2d lOS, 116
(S.D.N.Y. 2011)

(citing Corcoran v. N.Y. Power Auth., 202 F.3d

530, 543 (2d Cir. 1999)).

A claim of fraudulent concealment

must be pled with particularity, in accordance with the
height
Nat'l

Fed. R. Civ. P. 9(b).

pleading standards
Commc'ns &

See

Ltd. v. Lucent Techs.

Inc., 420 F. Supp. 2d 253, 265 (S.D.N.Y. 2006).

"Even 'absent

fraudulent concealment,' however, equitable tolling may apply
in the presence of specific 'spec

circumstances' where 'a

reasonable plaintiff in the circumstances would have been
[un] aware

the existence of a cause of action.'"

, 2011

WL 477547, at *8 (quoting Veltri v. Building Servo 32B-J
Pension Fund, 393 F.3d 318, 323

(2d Cir. 2004)).

"Yet, while

a plaintiff need not show fraudulent concealment in the
presence of certain 'spec

circumstances,' such a plaintiff

must still demonstrate due diligence in order to invoke the
equitable

ling doctrine."

Here,
regarding Avon's use

rd.

Complaint alleges that "information
plaintiff's photographs rema

in

Avon's sole possession," Compl. ~ 27, that "Avon's refusal to
16

fully disclose usage information to plaintiff is, at least in
part, an ef

to limit its liability and potential exposure

to claims of copyright infringement," Compl. ~ 31, and that
"Avon's efforts to conceal usage information from plaintiff
further demonstrate that

s conduct is willful," Compl.

~

32.

Additionally, attached to the Complaint is an invoice dated
October 10, 2008 from

aintiff to Defendant in which

aintiff states, "International fees for the use
Diodato's images from year 2002, year 2004 and 2008.

Bill
We have

yet to deduce if these images were used in other Countries in
other years.

We are left to believe that these images have

been used throughout as Avon has not provided us with catalogs
from 2003 through 2009."

As such, the Complaint alleges that

Defendant wrongfully concealed material

s relating to its

wrongdoing, that Defendant's concealment prevented Plaintiff
from discovering the extent of Defendant's alleged
infringement and that Plaintiff, by requesting 2003-2009
catalogs as early as October 2008, exercised its due diligence
in pursuing the discovery

the claim.

Because PI

iff has

identified what material was withheld, how the withholding of
delayed

that mat
how Plaintiff
Comp1a

aintiff's discovery of its claims and

ligently sought to uncover its claims, the

contains sufficient

legations to satisfy the
17

pleading standards of Fed. R. Civ. P. 9(b).

AdditionallYI

these allegations establish "special circumstances

where a

ll

stence

reasonable plaintiff would have been unaware of the
of its cause of action.

Before deciding the issue of whether the statute of
limitations precludes Plaintiff/s cause of action

Plaintiff

l

is afforded limited discovery to pursue its theory of
equitable tolling.

In adopting this course

l

this Court is

following the procedure adopted by the Honorable Harold Baer
Jr. in the case of Kalaras v. Manhattan
----"----

Dec. 18

No. 95 Civ. 7784

I

1

1996).

l

Defendant Manhattan Eye

Throat Hospital moved to dismiss
complaint

Ear and Throat

1996 WL 727439 1 at *2 (S.D.N.Y.

1

In Kalaras

l

aintiff Kalaras

l

l

Ear and

amended

which alleged wrongful termination on the basis of

I

agel on grounds that the plaintiff/s claim was barred by the
statute of limitations.
tolling saved her claim

Kalaras contended that equitable
l

as the defendant allegedly misled

Kalaras by misrepresenting the reason for her termination.
Judge Baer

l

in ruling on the defendant/s motion

l

held:

I have construed plaintiff/s amended complaint liberally
and drawn all inferences in her favor as I must on this
motion [citation omitted]
and while I find that
l

I

18

plaintiff has failed to present facts and circumstances
sufficient to meet the test
equitable tolling
explained in Cerbone [v. International Ladies' Garment
Workers' Union, 768 F.2d 45, 49 (2d Cir. 1985)], she
comes close. Whi
the pI ntiff failed to request the
right to replead in answering this motion, or for
matter, in the initial motion to dismiss, I am prepared
as a consequence of the allegations in the amended
complaint to allow a I
ted amount of
scovery.
Plaintiff may take up to three depositions and the
defendant may depose the plaintiff, with
I questioning
limited to
statute of limitations issues. A
similarly circumscribed document request will also be
permitted. This limited discovery is to be completed by
January 31, 1997. If there is new and different materi
developed, plaintiff may supplement her response to the
motion and defendant may answer, all on or before March
7, 1997. Failing service of supplemental papers by that
date, the motion will be granted.

aras, 1996 WL 727439, at *2.

Given the allegations in the Complaint suggesting
fraudulent concealment and the presence

"speci

circumstances" under which a reasonable plaintiff would have
been unaware

its cause of action,

aintiff is hereby

granted limited discovery to develop its equitable tolling
theory.

PIa

iff is granted permission to submit to

Defendant a document request

the

legedly withheld

negatives and domestic and international catalogs.

Both sides

may depose up to three witnesses, with all questions limited
to the statute

limitations issues.
19

This limited

scovery

is to be completed within 45 days.

Both parties may

supplement their motion papers, with Plaintiff's submission
due within one week following the limited discovery deadline,
and Defendant's reply due within one week following
Plaintiff's submission.

Decision regarding whether Plaintiff's copyright
infringement cause of action is precluded by the statute of
limitations is deferred pending review
submissions.

these supplemental

Should the filing of an amended complaint

eliminate Plaintiff's need to employ the equitable tolling
doctrine, Plaintiff will notify Defendant and the Court.

2. he Complaint Pleads A Valid Cause Of Action For
T
Copyright Infringement

"A properly pled copyright infringement claim must
lege 1) which specific original works are the subject of the
copyright claim, 2) that plaintiff owns the copyrights in
those works, 3) that the copyrights have been registered in
accordance with the statute, and 4) by what acts during what
time the defendant infringed the copyright."
Cool J., 145 F.R.D. 32, 36 (S.D.N.Y. 1992).

20

Kel

v. L.L.

---"'-----­

According to

Defendant, the Complaint's copyright infringement claim fails
because Plaintiff

Is to plead both the specific identity of

the allegedly infringed works and the identity of Plaintiff's
istrations for such works.

The Complaint alleges that

In or about October 2008 plaintiff Diodato LLC sent Avon
a series of invoices for unauthorized uses of its images
which plaintiff had recently discovered (the "2008
Infringement Invoices"). The 2008 Infringement Invoices
identified specific unauthorized uses of specific images
and invoiced
the usual rate, with no penalty or
damages for copyright infringement. Copies of the 2008
Infringement Invoices are annexed hereto as Exhibit A.

In or about September 2010, after Avon allowed plaintiff
Diodato LLC a 1
ted
ew of Avon's catalogues (the
"Limited Review"), Diodato LLC sent Avon a series of
invoices for unauthorized uses of its images which
plaintiff discovered in the Limited Review (the "2010
Infringement Invoices"). The 2010
ringement Invoices
identified specific unauthorized uses of specific images
and invoiced for the usual rate, with no penal
damages for copyright infringement.
Copies of
2010
Infringement Invoices are annexed hereto as Exhibit B.

Compl.

~~

23, 25.

The invoices included in Exhibit A include

various titles or descriptions of Plaintiff's images,
including "Charlotte Dodds imagery," "Sensual Embrace" and
"young woman with silver made up face images."
21

The Exhibit B

invoices include both generic descriptions of images
accompanied by the name of a particular campaign as well as
specific titles, including "images from year 2004_campaign 1
and 2007 campaign 1. 3 beauty images and 2 eye images /

sa

Butler imagery," "images from year 2004_campaign 1 and
2007_campaign 2. 2 beauty images / imagery of Kat from Karin
Models," "images from year 2007_campaign 3 pages 58. 1 beauty
image / imagery of Jara, " "images from year 2007_campaign 7
page 45. 1 beauty image / imagery of beauty," "images from
year 2004 campaign 1 and 2007_campaign 8 pg. 16 and campaign
16 pg. 18 / Imagery of Nicole Trunfio," "images from year
2007_campaign 29 and year 2008_campaign 2 ad 10. -4 images
total/Imagery of beauty and jewelry," "images from year
2007_campaign 1, 10

1

18 and 20. 6 images total/imagery of

beauty and jewel

II

among others.

and B also include columns detail

The invoices in Exhibits A
the number

and where the images were used, i.e. "Year 2002
campaign 17) ,II "Year 2003
Campaign 1, 5 and 13)
that the Compl

I"

images used
(Spanish

(US campaign 4) ,II "year 2003

etc.

(US

As such l Defendantls contention

nt fails to identify the infringed or

infringing works is false l as the Complaint lists which of
Plaintiff/s images were used and where Defendant allegedly
used them.

22

Defendant contends that the Complaint is deficient
that Plaintiff fails to identify Plaintiff/s registrations
for the works involved.

According to Defendant I because

Plaintiff neither attaches any copyright registration
certificates nor lists the corresponding registration numbers/
Plaintiff

failed to al

copyright in the material.

owns a registered

that

Under the Copyright Act/

registration of the copyright is a "precondition to filing a
claim."
176 L.

Reed Elsevier/ Inc. v. Mucnick/ 130 S.Ct. 1237/ 1247/
.2d 18 (2010)

(citing 17 U.S.C.

§

411(a)).

In its

motion to dismiss/ Defendant cites the Reed Elsevier decision/
but does not provide support for its contention that
Plaintiff's cause of action must be dismissed at the motion to
dismiss st

of the litigation because Plaintiff has not

attached copyright registration certificates or registration
numbers to the Complaint.

The facts alleged in the Complaint/

which are accepted as true at this stage of the litigation,
expressly state that "Plaintiff has a regist
the creative works identified herein."
Accordingly, Plaintiff has fulfill

Compl.

~

36.

the precondition of

alleging that it holds a registered copyright.

23

copyright in

The Complaint alleges which works are the subject of
Plaintiffls copyright cause of action l that Plaintiff owns the
copyrights in these works

1

that the copyrights have been

registered and by what acts during what time Defendant
infringed these copyrights.

As such l

though the timeliness

of the Complaint remains an undecided issue l the Complaint
states a substantively valid cause of action for copyright
infringement.

B. Count II: The Complaint States A Valid Claim For Breach
Of Contract

1. he Breach of Contract Claim Is Not Preempted by the
T
Copyright Act

Defendant contends that Plaintiffls breach of
contract claim is preempted by its Copyright Act claim.
Congress amended the Copyright Act in 1976
the preemption of state law

1

it provided for

aims that are interrelated with

copyright claims in certain ways."

Natll Basketball Assln v.

Motorola l Inc' l 105 F.3d 841 1 848 (2d Cir. 1997).
17 U.S.C.

§

claim when:

301 1

"When

Pursuant to

"[t]he Copyright Act exclusively governs a

(1) the particular work to which the claim is

being applied falls within the type of works protected by the

24

and (2) the claim seeks to vindicate legal

Copyright Act .

or equitable rights that are equivalent to one of the bundle
of exclusive rights already protected by copyright law .
. Phoenix

II

Inc., 373 F.3d

--~~~~~--~~-------- ...--------------------~------

296, 305 (2d

r. 2004).

if the claim appl

The first requirement "is satisfied

to a work of authorship fixed

a

tangible medium of expression and falling within the ambit of
one of the categories of copyrightable works."
requirement is satisfied

Id.

That

The second requirement "is

satisfied only when the state-created right may be abridged by
an act that would, by itself, infringe one of the exclus
rights provided by federal copyright law."
Assocs. Int'l
(2d Cir. 1992)).

Inc. v. Altai

That is

f

(1)

Id.

(citing

Inc., 982 F.2d 693, 716

"the state law c

im must

involve acts of reproduction, adaption, performance,
distribution or displaY"i and (2)

"the state law claim must

not include any extra elements that make it qualitatively
different from a copyright infringement claim."
Ltd., 373 F.3d at 305.

Briarpatch

With respect to the "extra element"

requirement, courts examine "what [the] plaintiff seeks to
protect, the theories in which the matter is thought to be
protected and the rights sought to be enforced."
Assocs., 982 F.2d at 716.
25

Computer

According to Plaintiff, no part of the breach of
contract

aim is preempted because it alleges breaches of

provisions of a contract entered into between Plaintiff and
Defendant that are not equivalent to rights protected under
the Copyright Act.

For example, some of the contracts entered

into between Plaintiff and Defendant require that, in the
event Defendant is to use catalog images for longer than one
year,

fta fee must be negotiated prior to use."

Thus,

aintiff contends that it is alleging a claim that involves
Defendant's failure to negotiate a new license agreement and
failure to pay for excessive use, thereby providing the ftextra
elements" necessary to avoid preemption.

According to

Defendant, Plaintiff is alleging only that an agreement
between the two parties has been breached because Defendant
ftreus[ed] Diodato's copyrighted images," Compl.

~

49, thus

ftinfringing on Plaintiff's exclusive rights to control the
reproduction, use distribution and sale of its creative
works."

Compl.

~

29.

As such, Defendant contends that the

breach of contract claim is a repackaging
copyright infringement claim.

26

Plaintiff's

The Complaint alleges that "[b]y using Diodato LLC's
copyrighted images, AVON breached the one (1) year limited
usage license set forth in the Original Invoices," that "[b]y
using Diodato LLC's copyrighted images in international
catalog campaigns, AVON breached the scope of use set forth in
the Original Invoices, which limited the scope of use to
United States catalogs," that "Diodato LLC has, at all times
its obligations to AVON under the

fully performed all

Original Invoices," and that "[b]y virtue of AVON's breach,
Diodato LLC has been damaged in an amount to be determined at
t

II

Compl. ~~ 49 52.

"The Court of Appeals has not

addressed whether the promise inherent in every contract is
sufficient to establish an 'extra element.

v. Gen.

,It

BroadVision Inc.

ec. Co., No. 08 Civ. 1489, 2008 WL 4684114, at *4

------

(S.D.N.Y. Oct. IS, 2008).
establi

However, cases in this Dist

ct

that breach of contract claims alleging breach

agreements to pay for the use of copyrighted works are not
preempted.

& Scheinman

i v. Balch

Supp. 1201, 1205 (S.D.N.Y. 1986)
for use of his product

lf

("a promise to pay plaintiff

is "an element beyond unauthorized

reproduction and use"); see also
~C~o=n=t_ro l~~~-=I=n=c=.,
___

Inc., 645 F.

Archi~ectronics,

Inc. v.

935 F. Supp. 425, 441 (S.D.N.Y. 1996)

("[T]he consensus among courts and commentators appears to
27

that breach of contract claims are qualitatively different
from claims for copyright infringement and therefore are not
preempted.")

(collecting cases).

As such, the Copyright Act

does not preempt Plaintiff's breach of contract claims.

2. he Complaint Alleges Sufficient Facts To Assert A
T
Claim for Breach of Contract

"Under New York law, an action for breach of
contract requires proof of (1) a contract;
of

contract by one party;

and (4) damages."

(2) the performance

(3) breach by the other party;

First Investors Corp. v. Liberty Mut. Ins.

Co., 152 F.3d 162{ 168 (2d Cir. 1998)
quotation marks omitted).
contract at issue in t

tations and

ernal

Defendant contends that there is no

slit

ion.

According to Defendant,

because Plaintiff's only complaint relating to Defendant's
publication

the photographs is that Defendant used the

licensed images beyond the limited one-year term{ it
that the term of the licenses at issue has ended.

lows

Since these

licenses have expired, the terms of these licenses do not
apply to conduct occurring post termination.

Even if these

agreements did apply, under New York law, a "promise to
perform a pre existing legal obligation does not amount to

28

consideration," Murray v. Northrop Grumman Info. Tech., Inc.,
444 F.3d 169, 178 (2d Cir. 2006), so an agreement prohibiting
Defendant from using the photographs outside the scope of the
licenses would be invalid for lack of consideration.

Defendant, however, is incorrect in its
interpretation of Plaintiff's breach of contract claim.

As

described above, the Complaint pleads that Defendant's reuse
of Plaintiff's photographs as well as Defendant's use of the
photographs internationally violated an agreement between the
part

The Complaint alleges that Plaintiff has fully

performed its obligations under the agreement and that
Plaintiff has been damaged.

These allegations provide a

sufficient factual basis for a breach of contract claim.
Defendant provides no support

his argument that the

agreement at issue here is an expired licensing agreement
without any legal authority.

The case law Defendant cites

(from the Western District of Louisiana) is not applicable to
the

s presented here, as the sole issue involved a

district court's determination that a case involving non­
diverse parties and state law claims including breach of
contract could not be removed on preemption grounds based on
the defendant's assertion that the cases involved copyright

29

infringement.

See Def. Br. at 17 (citing Patry on Copyrights'
er Consultants

discussion of Crooks v. Certified

92 F. Supp. 2d 582, 587 (W.D. La. 2000)).

Inc.,

Because the

Complaint alleges the elements necessary to bring a cause of
action

breach of contract, Defendant's motion to dismiss

the breach of contract claim is denied.

C. Counts III & IV: The Complaint states A Valid Claim For
Account Stated

An account stated claim requires "an agreement
between the parties to an account based upon prior
transactions between them .

"

LeBoeuf, Lamb, Greene &

MacRae, L.L.P. v. Worsham, 185 F.3d 61, 64

(2d Cir. 1999)

(internal quotation marks and citations omitted) .

"To state a

claim for an account stated, the plaintiff must plead that:
(1) an account was presented;

(2) it was accepted as correct;

and (3) debtor promised to pay the amount stated. n
~~~,~~~~B~r_a~n~d,s_~~L~L~C~v~.~~,~~~~~~~,

411 (S.D.N.Y. 2009)
omitted).

IMG

679 F. Supp. 2d 395,

(internal quotation marks and citations

An agreement to pay the account presented "may be

implied if a party receiving a statement of account keeps it
without objecting to it within a reasonable time or if the

30

debtor makes partial payment."

Worsham, 185 F.3d at 64

(internal quotation marks and citations omitted) .

ft[U]nless

fraud, mistake or other equitable considerations are shown,
the party who receives a statement of account must examine the
statement and make

1 necessary objections in order to avoid

implication of an agreement."

d v. Chrismas, 818 F.

Supp. 2d 763, 768 69 (S.D.N.Y. 2011)

(citing Kramer, Levin,

Nessen, Kamin & Frankel v. Aronoff, 638 F. Supp. 714, 719
(S.D.N.Y. 1986)).

According to Defendant, the fact that invoices were
sent illustrates that the part

had not come to an agreement

regarding the appropriate amount to be charged.

Defendant

contends that the parties here were no longer engaged in an
ongoing business relationship, that Plaintiff was merely
demanding payment and that these demands

payment were not

met with silence but rather led to meetings by the parties and
their counsel to review

facts and negotiate a resolution.

To support its position, Defendant cites
Court

Appeals case

1916 New York

-Morris Co. v. Talcott, in

which then Judge Cardozo stated, ftThere is no doubt that an
account stated may sometimes result from the retention of
accounts current without objection.

31

But the rest does not

always follow.

It varies with the circumstances that surround

he submission of the statements t and those circumstances
include t of course t the relation between the parties."
N.Y.

219

505, 511, 114 N.E. 846 (1916).

As noted above, in evaluating a motion to dismiss,
the issue "is not whether a plaintiff will ultimately prevail
but whether the claimant is entitled to offer evidence to
support the claims."

ViII

Pond, 56 F.3d at 378.

---=----'-----'-­

Here,

the Complaint alleges that Plaintiff sent various invoices to
Defendant and that Defendant did not object to those invoices.
As such, the Complaint pleads sufficient facts to establish a
claim for account stated, and Defendant's motion to dismiss
the two account stated counts of the Complaint is denied.

D. Count V: The Complaint Fails To State A Claim For

Conversion

The Complaint's claim for conversion
it is barred by the statute of limitations.

Is because

A claim for

conversion under New York law has a three-year statute of
limitations and accrues upon the act of conversion,
"regardless of when the conversion is discovered."

32

Seneca

Ins. Co. v Wilcock, No. 01 Civ. 7620 (WHP) , 2002 WL 1067828, at
86 (S.D.N.Y. May 28, 2002)

(citing Lennon v. Seaman, 63 F.

Supp. 2d 428, 440 (S.D.N.Y. 1999))

i

see also Marvel Worldwide,

Inc. v. Kirby, 756 F. Supp. 2d 461, 469 (S.D.N.Y. 2010)
statute

("Conversion claims have a three
in New York.")

(citing N.Y. C.P.L.R.

§

214 (3))

limitations
The statute

begins to run "from the date conversion takes place and not
from discovery or the exercise of diligence to discover."
lant Ins. Co. of Am. v. Hous

Auth., 87 N.Y.2d 36, 44,

637 N.Y.S.2d 342, 660 N.E.2d 1121 (1995).

According to the Complaint, "Defendant has converted
plaintiff's negatives by wrongfully retaining possession of
said photographs without right or permission, and to be the
exclusion
Compl.

~

plaintiff, despite plaintiff's numerous demands."
64.

This claim accrued as soon as Defendant

"exercised ownership over the [negatives], to the exclusion of
[PIa i n t iff's] righ t s . "
Fund

..::.S-=t-=a-=t-=e=-----=-=-_::._....:.-==--=---=--==--=....:.-=~=_=_=_=__~:.:._=_::~

Inc., 98 N.Y.2d 249, 259, 746 N.Y.S.2d 637, 774 N.E.2d

702 (2002).

Since Plaintiff's licenses to Defendant were

limited to one year in duration, Defendant exercised unlawful
control over Plaintiff's property by retaining the negatives
longer than the term of this one-year licensing agreement.
33

See

tizens Nat'l Bank v. Osetek, 353 F. Supp. 958, 963

(S.D.N.Y. 1973)

("The controlling law of New York is clear

that any unjustified exercise of dominion over property by one
who is not the owner of the property and who is not entitl
to possession of the property which interferes with

right

to possession of another who is lawfully entitled to such
possession is a conversion.") .

Plaintiff contends that, under the New York Court of
Appeals holding in Seventh Regiment Fund, "[s]ome affirmative
act-asportation by the defendant or another person, denial of
access to the rightful owner or assertion to the owner
claim on the goods,

a

e or other commercial exploitation

the goods by the defendant-has always been an element of
conversion."

Seventh Regiment Fund, 98 N.Y.2d at 260.

Because there was no affirmative act suffic

"to inform the

owner or any other interested party that an interference with
ownership is intended,H id., Plaintiff contends that the
"silent termination" of the one-year licensing agreements is
insufficient for the conversion claim to accrue.
Additionally, according to

aintiff, the tolling agreement

sets the relevant statute of limitations date at March 4,
2010, which means any claim of conversion is valid if based on
34

s after March 4, 2007.

Plaintiff contends that, as noted

in the invoices attached to the Complaint, Defendant, on
several occasions, engaged in the known re-publication of
images in 2007 and 2008, thereby establishing a valid cause of
action for conversion.

Notwithstanding Plaintiff's contentions, the
Complaint's cause of action for conversion is premised on the
Defendant's "wrongfully retaining possession of said

fact

photographs without right or permission, and to the exc
of plaintiff, despite plaintiff's numerous demands."
64.

Plaintiff had not

Defendant did not return

ion

Compl.,

of its conversion claim as soon as
negatives following the lapse of

the one-year licensing agreement.

As such, Plaintiff's cause

action for conversion accrued when Defendant did not return
the negat

upon termination of the one year licenses.

Since the latest of these one-year licenses terminated in
2007, the three

ar statute of limitations for conversion

claims precludes Plaintiff from bringing a conversion cause of
action in the Complaint, which was filed in February 2012. 1

1

As noted above
the discussion of Plaintiff's copyright
claim, the alleged tolling agreement was not plead in the
Complaint and, therefore, cannot be considered when deciding
the present motion to dismiss.
35

Unlike Plaintiff's first cause of action

leging

copyright infringement, Plaintiff's conversion cause of action
raises no issue with respect to the doct
tolling.

of equitable

Accordingly, the discovery permitted with respect to

the statute of limitations issues is limited to Plaintiff's
copyright infringement cause of action.

E. Plaintiff Is Granted Leave To Replead

Although Defendant requests that Plaintiff be denied
leave to replead, "[i]t is the usual practice upon granting a
motion to dismiss to allow leave to replead.
French, 232 Fed. Appx. 17, 19 (2d Cir. 2007)
Indus.
1991)).

Inc. v. Sum

n

Schindler v.
(citing Cortec

949 F.2d 42, 48

(2d Cir.

Accordingly, Plaintiff is granted leave to replead

within twenty days.

Conclusion

Based on the conclusions set forth above, the
Defendant's motion to dismiss is denied with respect to the
Complaint's breach of contract and account stated causes of

36

action and granted with respect to the Complaint's conversion
cause of action.
statute

Decision regarding the applicability of the

limitations to Plaintiff's copyright infringement

action is deferred pending limited discovery
issue.

Plaintiff is

ating to that

forded leave to replead within twenty

days.

It is so ordered.

New York, NY
August Jr-, 2012

ROBERT W. SWEET
U.S.D.J.

37