John Wiley & Sons, Inc. et al v. Book Dog Books, LLC et al
Filing
308
REPORT AND RECOMMENDATION. For the foregoing reasons, defendants motion to for partial summary judgment (Docket #266) should be granted in part and denied in part. Specifically, defendants motion should be granted as to all trademark and copyright-re lated claims for sales regarding the following works: Roadmap Nos. 1, 2, 4, 5, 6, 7, 9, 10a, 10b, 10c, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29, 30, 32, 33, 34, 36, 37, 39a, 39b, 41, 42, 43a, 43b, 45, 46, 47, 48, 49, 50, 52, 53, 55, 56, 57, 58, 59, 60, 61, 62, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 91, 92, 93a, 93b, 95, 96, 97, 98, 99, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 114, 115, 116, 117, 119, 121, 122, 123, 125a, 125b, 126, 127, 129, 131, 132, 133a, and 133b, and as to Pearsons claim for civil conspiracy, and denied in all other respects. re: 266 MOTION for Partial Summary Judgment filed by Philip Smyres, Book Dog Books, LLC. Objections to R&R due by 10/19/2015. (Signed by Magistrate Judge Gabriel W. Gorenstein on 9/30/2015) (rjm).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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JOHN WILEY & SONS, INC. et al.,
:
:
Plaintiffs,
:
REPORT AND
RECOMMENDATION
:
13 Civ. 816 (WHP) (GWG)
-v.BOOK DOG BOOKS, LLC et al.,
:
Defendants.
:
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GABRIEL W. GORENSTEIN, United States Magistrate Judge
Plaintiffs John Wiley & Sons, Inc. (“Wiley”), Cengage Learning, Inc. (“Cengage”), and
Pearson Education, Inc. (“Pearson”) filed suit against Book Dog Books, LLC (“BDB”) and
Philip Smyres, its owner and chief executive officer, alleging various claims primarily related to
copyright and trademark infringement. Defendants have filed a motion for partial summary
judgment.1 For the reasons stated below, defendants’ motion should be granted in part and
1
See Motion for Partial Summary Judgment by Defendants, filed June 15, 2015 (Docket
# 266) (“Def. Mot.”); Statements of Facts for Which Defendants Contend There is No Genuine
Issue to Be Tried, filed June 15, 2015 (Docket # 267) (“Def. 56.1”); Declaration of Philip
Smyres in Support of Defendants’ Motion for Partial Summary Judgment, filed June 15, 2015
(Docket # 268) (“Smyres Decl.”); Declaration of Tiffany C. Miller, filed June 15, 2015 (Docket
# 269) (“Miller Decl.”); Notice of Filing Deposition Transcript Pages in Support of Defendants’
Motion for Partial Summary Judgment, filed June 15, 2015 (Docket # 271) (“Dep. Trans.”);
Memorandum in Support of Defendants’ Motion for Partial Summary Judgment, filed June 22,
2015 (Docket # 272) (“Def. Mem.”); Plaintiffs’ Supplemental Memorandum in Opposition to
Defendants’ New Motion for Partial Summary Judgment, filed June 29, 2015 (Docket # 276)
(“Pl. Supp. Mem.”); Supplemental Declaration of Julie C. Chen, filed June 29, 2015 (Docket
# 277) (“Supp. Chen Decl.”); Plaintiffs’ New Local Rule 56.1 Counter-Statement of Undisputed
Facts and Response to Defendants’ New Statement of Facts for Which Defendants Contend
There is No Genuine Issue to Be Tried, filed June 29, 2015 (Docket # 278) (“Pl. 56.1”);
Plaintiffs’ Response to Defs’ New 56.1 Statement (annexed to Pl. 56.1 at 13-52) (“Pl. 56.1
Resp.”); Reply Brief in Support of Defendants’ Motion for Partial Summary Judgment, filed July
1
denied in part.
I.
BACKGROUND
A.
Facts
Unless otherwise stated, the following facts are either not in dispute or reflect plaintiffs’
version of the facts as supported by admissible evidence.
1.
The Parties
BDB is a buyer and seller of educational books, including textbooks that are published by
plaintiffs. Def. 56.1 ¶ 1; Second Amended Complaint, filed May 27, 2015 (Docket # 263)
(“SAC”), ¶ 2. BDB’s business includes the purchasing and reselling of used college textbooks
from college students and academics. Smyres Decl. ¶ 8. BDB has previously conducted
business under the trade names UBX Book Exchange, Buckeye Books, TextbooksRUs.com
(“TRU”), and Textbooksrush.com. Id. ¶ 4. Smyres is the founder, chief executive officer, and
“Managing Member” of BDB. Id. ¶ 3.
2.
The “Roadmap”
During this action, plaintiffs created a document that they refer to as a “Roadmap” that
gives information on each of 133 titles that are the subject of this action. Supp. Chen Decl. ¶ 3.
13, 2015 (Docket # 282) (“Def. Reply”).
Plaintiffs’ opposition papers have incorporated by reference their prior filings in
opposition to defendants’ previous motion for partial summary judgment. See Memorandum in
Support of Plaintiffs’ Opposition to Defendants’ Motion for Partial Summary Judgment, filed
Mar. 9, 2015 (Docket # 239) (“Pl. Mem.”); Declaration of Richard P. Essig, filed Mar. 9, 2015
(Docket # 240) (“Essig Decl.”); Declaration of Julie C. Chen, filed Mar. 9, 2015 (Docket # 241)
(“Chen Decl.”).
2
The list totals 140 “works” because some of the titles appear in more than one edition.2 The
Roadmap consists of a “compilation and summary, pursuant to Rule 1006 of the Federal Rules of
Evidence, of the evidence . . . that was produced by Defendants and third-parties.” Chen Decl.
¶ 14; see also id. ¶¶ 5-7 (describing the evidence produced to plaintiffs by defendants and third
parties). The Roadmap lists, for each work and to the extent known, identifying information
about the book (such as title, author, ISBN, and publisher), whether any counterfeit exemplars of
that work either were discovered at defendants’ premises or were obtained from third parties, the
source of any such counterfeit exemplars, the suppliers to defendants of the work where known,
and information about the sales of that work. Defendants do not contest the accuracy of the
summary of evidence contained in the Roadmap. See generally Def. 56.1 ¶ 10; Miller Decl. ¶ 6.
Accordingly, we cite to the Roadmap as admissible evidence.
Only 124 works are at issue in this motion because defendants are not seeking summary
2
In addition to the Roadmap, a numbered list of the 133 titles and 140 works at issue is
also annexed as Exhibit A to the Second Amended Complaint. See List of Plaintiffs’
Copyrighted Works Infringed (annexed as Ex. A to SAC). The Roadmap created by plaintiffs is
not in the same order as the list annexed to the Second Amended Complaint. Def. 56.1 ¶ 12.
Defendants have reordered the Roadmap produced by plaintiffs so that it corresponds with the
list annexed to the Second Amended Complaint. Miller Decl. ¶ 6. Citations to the “Roadmap”
and “Roadmap Nos.” herein refer to the 140 works as contained in defendants’ reorganized
Roadmap. See the “Revised Roadmap” (annexed as Ex. B to Miller Decl.). Additionally,
plaintiffs have provided a chart of the 140 works in the Roadmap in numerical order and, for
each work that was cited in defendants’ initial motion for summary judgment, each work’s
number as cited in the parties’ original briefing. See Title Number Conversion Chart Defendants’ Second Motion for PSJ to Defendants’ First Motion for PSJ (annexed as Ex. 1 to
Supp. Chen Decl.) (“Conversion Chart”).
The Roadmap was first produced to defendants on April 24, 2015, and it was
supplemented on June 10, 2015. Supp. Chen Decl. ¶ 3. The counterfeit exemplars listed in the
Roadmap were made available to defendants over the course of three inspections — on October
22, 2013, November 14, 2014, and May 7, 2015. Id. ¶ 4. Legitimate exemplars were provided
to defendants for inspection at the November 14, 2014 and May 7, 2015 inspections. Id.
3
judgment as to 16 of the works contained in the Roadmap: Nos. 3, 8, 15, 22, 38, 44, 54, 76, 89,
94, 113, 118, 120, 124, 128, and 130.3
3.
Prior Litigation
In 2007, plaintiffs and other publishers sued defendants asserting various claims,
including copyright and trademark claims relating to the importation and distribution of
counterfeit textbooks. See Complaint, filed Oct. 2, 2007 (Docket # 1 in Cengage Learning Inc.
et al. v. Buckeye Books et al., No. 07 Civ. 8540 (S.D.N.Y.)), ¶¶ 98-185. The case was settled
pursuant to a July 11, 2008 settlement agreement in which, among other things, defendants
agreed to disclose the suppliers of counterfeit books and to not infringe again. See Settlement
Agreement and Mutual Releases, dated July 11, 2008 (annexed as Ex. 2 to Declaration of Julie
C. Chen in Support of Plaintiffs’ Motion for Sanctions, filed Nov. 5, 2014 (Docket # 170)),
3
While defendants have not specifically identified the 16 works included in the
Roadmap for which they are not seeking summary judgment, they can be deduced based on
information contained in the parties’ filings. In their previously-filed summary judgment papers,
defendants identified 13 works for which they were not seeking summary judgment: Roadmap
Nos. 3, 13, 16, 28, 32, 47, 66, 79, 85, 91, 92, 101, and 108. See Statement of Facts for Which
Defendants Contend There is No Genuine Issue to Be Tried, filed Jan. 26, 2015 (Docket # 208),
¶ 27. The new numbers are available from the Conversion Chart and are included in the list
above, with one exception. Although defendants previously stated they were not moving for
summary judgment on Roadmap No. 13 — which corresponds to Roadmap No. 13 in the new
motion, see Conversion Chart — it appears that defendants are in fact moving for summary
judgment as to this work. We reach this conclusion because it is included in defendants’ list of
124 works for which they are moving for summary judgment. See Ex. C to Miller Decl.
(identifying, by Roadmap No., the 124 works for which defendants seek summary judgment,
including Roadmap No. 13). Accordingly, the Court will construe defendants’ motion as
including Roadmap No. 13.
In addition to the twelve titles identified in the previous paragraph, we have identified
four other works — identified in the current Roadmap as Nos. 94, 113, 124, and 130 — that are
not included in defendants’ list of works for which they are moving for summary judgment. See
Miller Decl. ¶¶ 7-8 & Ex. C (identifying by Roadmap number the 124 works for which
defendants seek summary judgment). Accordingly, the Court assumes these works are not being
included in the defendants’ motion.
4
¶¶ 5-10; Chen Decl. ¶ 4. In the disclosure mandated by the settlement agreement, defendants
informed plaintiffs that Best Books World (“BBW”), a supplier from Thailand, was “the source
of most if not all the pirated books.” Smyres Deposition Exhibit # 13 (annexed as Ex. 1 to Chen
Decl.) (“Smyres Dep. Ex. 13”), at 2;4 Chen Decl. ¶ 4.
4.
Defendants’ Dealings With BBW
In mid-2008, defendants purchased copies of six of plaintiffs’ works from BBW, Smyres
Dep. Ex. 13 at 5-7; see Roadmap Nos. 10a, 20, 50, 105, 131, and 133a, and shipped copies of
three of the works to Cengage in order to determine if they were counterfeit, Smyres Dep. Ex. 13
at 2. Cengage confirmed that two of the three were counterfeit and stated that it needed to do
more research into the third work. Id. Defendants subsequently returned the remaining copies
of all six works to BBW. See Smyres Deposition Exhibit # 15 (annexed as Ex. 35 to Chen
Decl.), at 1-2; Smyres Deposition Exhibit # 17 (annexed as Ex. 35 to Chen Decl.), at 1.
Defendants returned fewer copies than they originally bought. See Smyres Dep. Ex. 13 at 6-7;
Email from Mikeal Vancleave, dated Nov. 11, 2008 (annexed as Ex. 36 to Chen Decl.), at 1-2.
In September 2009, defendants began to do business with BBW again, a relationship that
was renewed notwithstanding BBW’s having acknowledged to Smyres — without any evidence
of contradiction by Smyres — that Smyres did “not trust” BBW’s books. Smyres Deposition
Exhibit # 19 (annexed as Ex. 37 to Chen Decl.) (“Smyres Dep. Ex. 19”), at 1.
As part of his “due diligence,” Smyres attempted to meet an individual from BBW
named “Ple,” with whom Smyres had been communicating. Deposition of Philip Smyres, dated
Nov. 20, 2013 (annexed as Ex. 33 to Chen Decl.) (“Smyres Dep. I”), at 259; see, e.g., Smyres
4
References to pages of this exhibit refer to the ECF-assigned pagination.
5
Dep. Ex. 19 at 1 (email correspondence between Smyres and Ple). Despite “tr[ying] to reach out
to her many times,” Smyres was “never able to connect with her face to face.” Smyres Dep. I at
259.
In April 2011, Smyres was concerned that there was a “lot of talk about counterfeit books
coming from Thailand,” and he told BBW that he would only consider buying more books from
it if BBW could “produce a publisher invoice.” Smyres Deposition Exhibit # 28 (annexed as Ex.
39 to Chen Decl.), at 2. BBW told defendants that it could “not [be] responsible but [it] was sure
all [its] books are not counterfeit copies.” Id. Defendants subsequently stopped communicating
with BBW. Smyres Dep. I at 282.
In total, defendants purchased over 11,000 books from BBW. See Chen Decl. ¶ 6(a).5
Defendants do not have a comprehensive list of all the works purchased from BBW since 2006.
See Deposition of Philip Smyres, dated June 5, 2014 (annexed as Ex. 11 to Chen Decl.)
(“Smyres Dep. III”), at 76-79. While defendants were able to produce some purchase orders,
Smyres testified that the “data” from 2006, 2007, and 2008 from the “purchase order system”
was “not very good.” Id. at 77-78. For example, the records produced by defendants did not
include purchases by defendants from individuals who sold defendants only one book. Id. at 70.
Defendants did not keep a list of counterfeit books found in their inventory or a list of suppliers
of counterfeit books. Deposition of David Dimm, dated Feb. 28, 2014 (annexed as Ex. 24 to
Chen Decl.) (“Dimm Dep.”), at 33-34.
5
While plaintiffs do not provide a time period for this sourcing information, Chen Decl.
¶ 6, defendants do not suggest that specifying the time period is necessary for consideration of
their arguments.
6
5.
Defendants’ Dealings with the Blackerbys
In the summer of 2008, defendants began to purchase textbooks from Perry and Mark
Blackerby through the Blackerbys’ company “Life Everest, LLC” and their “Booksvalue”
website. See Deposition of Philip Smyres, dated June 4, 2014 (annexed as Ex. 40 to Chen Decl.)
(“Smyres Dep. II”), at 147-50. Smyres did not ask the Blackerbys where their textbooks came
from. Id. at 149. Smyres believed that the Blackerbys were obtaining the books from overseas.
Id. at 149-50. Plaintiffs point out, see Pl. Mem. at 4, that the Blackerbys had previously been
sued for importing and distributing counterfeit textbooks, see John Wiley & Sons, Inc. v.
Booksvalue.com, Inc., No. 06 Civ. 2314 (N.D. Ala.), though plaintiffs have not shown that
Smyres knew of this suit.
In February 2011, a customer named Lindsey Bache notified defendants that he was
returning 20 copies of a work published by Cengage, identified as Roadmap No. 35, that
defendants had sold him and that Bache believed to be counterfeit. Smyres Dep. II at 105; see
Email Correspondence between Lindsey Bache and Defendants (annexed as Ex. 46 to Chen
Decl.) (“Bache Email”). Defendants traced the source of these counterfeit books to the
Blackerbys. Smyres Dep. II at 106; Email from Tom Cahill to Mark Blackerby, dated Feb. 23,
2011 (annexed as Ex. 10 to Chen Decl.) (“Cahill Email”).
After identifying the Blackerbys as their source of the copies of Roadmap No. 35 that
Bache returned, defendants began to check other books in their inventory that the Blackerbys
had sold them. Smyres Dep. at 105-06. Smyres testified that the other books they checked “had
similar pix[e]lated pictures” and therefore “could possibly be . . . not good books.” Id. at 106.
Over time, defendants “pulled books that had the same characteristics” as the books returned by
Bache, many of which defendants had received from the Blackerbys or BBW. Id. at 106-08.
7
In addition to identifying Roadmap No. 35, defendants identified four other works that
they purchased from the Blackerbys, all published by Cengage, that defendants found in their
inventory and that they concluded were counterfeit. See Cahill Email; Roadmap Nos. 31, 40, 51,
63. There were 422 such books. Id. Defendants told Mark Blackerby that “the guys in the
warehouse have determine [sic] that 5 titles in the [file attached to the email] are also
counterfeit” and defendants were going to be returning them. Cahill Email (listing Roadmap
Nos. 31, 35, 40, 51, and 63). Defendants told Blackerby that they had 422 copies of the five
works remaining in their inventory. Id. They had originally purchased at least 829 copies of
these five works from the Blackerbys, Chen Decl. ¶ 6(c). Defendants subsequently returned the
422 copies to the Blackerbys. Deposition of Mark Blackerby, dated Aug. 22, 2013 (annexed as
Ex. 8 to Chen Decl.), at 75, 79; Email from Mark Blackerby, dated Feb. 10, 2011 (annexed as
Ex. 9 to Chen Decl.) (“Blackerby Email”). Smyres testified that the reason they returned the 422
books to the Blackerbys was because they were counterfeit. Smyres. Dep. II at 136-37.
Mark Blackerby confirmed in his testimony that defendants returned 422 counterfeit
books purchased from him. Deposition of Mark Blackerby, dated Aug. 22, 2013 (annexed in
part as Attach. # 1 to Dep. Trans.) (“Blackerby Dep.”), at 78-79. After defendants returned the
counterfeit books to Mark Blackerby, he resold them. Id. at 78-81. However, Blackerby
testified that some of the counterfeit copies were not sold, but instead were going to be returned
to the publishers. Id. at 80. In 2011, plaintiffs sued the Blackerbys for copyright and trademark
infringement. Chen Decl. ¶ 5. Pursuant to a settlement of that action, the Blackerbys
surrendered “all remaining counterfeit inventory within their possession.” Id.; see also Ex. 2 to
Chen Decl. (identifying the surrendered inventory). Pearson stated that it is “not aware” of
whether the copies surrendered by the Blackerbys to plaintiffs included any of the books
8
returned by defendants to the Blackerbys. Pearson Dep. at 65.
6.
Other Evidence of Defendants’ Buying, Selling, or Disposing of
Counterfeit Books
Defendants further examined their inventory and set aside more books, including books
received from the Blackerbys and BBW. Smyres Dep. II at 103-07. At some point between
February and July 2011, Smyres ordered that a pallet of the books that had been removed from
defendants’ inventory be taken to a barn of an employee and destroyed. Smyres Dep. at 118-19,
133; Deposition of Mark Charles Davenport, dated June 18, 2014 (annexed as Ex. 23 to Chen
Decl.), at 40, 53, 56. Defendants have no way to identify which books were set aside or
destroyed. Smyres Dep. II at 119-20, 134.
One of defendants’ customers, Follett Corporation (“Follett”), terminated its account
with defendants in the summer of 2007, after determining that defendants had sold it counterfeit
books. See Deposition of Michael P. Dalpe, dated Nov. 12, 2013 (annexed in part as Ex. 19 to
Chen Decl.) (“Dalpe Dep. I”), at 32, 106, 120-21, 191-92. However, Follett later started to do
business with defendants again. See id. at 192-93. In May 2011, Follett rejected and returned to
defendants an unopened shipment of books it suspected were counterfeits, and Follett once again
terminated its account with defendants. See Deposition of Kevin Doenges, dated Nov. 21, 2013
(annexed as Ex. 25 to Chen Decl.) (“Doenges Dep.”), at 58-61; Doenges Deposition Exhibit # 37
(annexed as Ex. 26 to Chen Decl.); Smyres Dep. II at 198-200. One of BDB’s employees, Kevin
Doenges, testified that unless the books they received back from Follett were on a list that
defendants had of potentially counterfeit titles, the books were put back into inventory for sale.
Doenges Dep. at 60-61.
According to Smyres, every book that BDB receives that is “identified with any
9
suspicious quality” is evaluated and researched by “supervisory level staff.” Smyres Decl. ¶ 10.
If BDB suspects it is of a “counterfeit quality,” the book is removed from inventory and not
resold. Id. However, defendants do not formally train employees on detecting counterfeits, and
they are unable to determine definitively whether a book is counterfeit or not. See Smyres Dep.
II at 96, 98-99; Dimm Dep. at 14-15; Doenges Dep. at 133-34; Deposition of John Glass, dated
Dec. 10, 2014 (annexed as Ex. 30 to Chen Decl.) (“Glass Dep.”), at 212. Until April 2013,
defendants had a policy of destroying textbooks they believed to be counterfeit that they found.
Dimm Dep. at 33, 44-45, 66; Smyres Dep. II at 242-45. While defendants maintained a log of
the books involved in this case that they identified as counterfeit, they did not keep a list of the
suppliers that provided the counterfeit or a list of which books were returned or destroyed apart
from the list of works involved in this case. See Dimm Dep. at 33-34; Smyres Dep. II at 242,
248. The records defendants do maintain are also inconsistent: for example, records of sales
often exceeded their records of purchases, because defendants did not record buybacks, returns,
or rentals. Smyres Dep. III at 74-76.
Lastly, there is evidence that defendants bought at below-market prices. For example,
defendants’ records show one purchase of 12 new copies of a single work from an online seller
named Ploypatsorn Jaruankool at a price roughly 50 percent less than the price charged by
Pearson. Id. at 65-66.
7.
Evidence Regarding Counterfeit Works Provided to Plaintiffs by
Customers of Defendants
During plaintiffs’ investigations in this lawsuit, certain customers of defendants,
including Texas Book Company (“TBC”), MBS Book Exchange (“MBS”), and Follett,
surrendered books to plaintiffs for inspection that they believed to be counterfeit. See 30(b)(6)
10
Deposition of William A. Sampson, Esq., dated June 12, 2014 (annexed in part as Attach. # 3 to
Dep. Trans.), at 44-45; Deposition of John R. Garry, dated June 11, 2014 (annexed in part as
Attach. # 8 to Dep. Trans.). at 159; 30(b)(6) Deposition of John R. Garry, dated June 11, 2014
(annexed in part at Attach. # 11 to Dep. Trans.) (“Pearson Dep.”), at 49; Email Correspondence
between Mike Dalpe and Richard Essig (annexed as Ex. 3.1 to Chen Decl.). According to the
Roadmap, plaintiffs confirmed that at least some of the books surrendered to them were in fact
counterfeit. See, e.g., Roadmap No. 4 (identifying MBS as a source of counterfeit exemplars,
the approximate dates the books were surrendered, and the Bates numbers of the books). For
most of these works, however, there is no direct evidence that a particular book was sold to the
customer by defendants.
Thus, although Follett represented that it had “no doubts” that defendants supplied
“some” of the counterfeit books that were surrendered to plaintiffs and that it was “absolute[ly]
certain[],” based on its analysis, that defendants supplied at least one identifiable counterfeit
work to Follett, Dalpe Dep. I at 300-01, Follett also stated that it “couldn’t say one way or the
other whether or not” particular counterfeit books came from the defendants, Deposition of
Michael P. Dalpe, dated Nov. 12, 2013 (annexed in part as Attach. # 4 to Dep. Trans.) (“Dalpe
Dep. II”), at 213-14.
TBC stated that it stored all copies of the same title in a warehouse together and that
upon receipt of a title from multiple sources, it did not indicate the source of each copy.
Deposition of Thomas Steele, dated Nov. 21, 2014 (annexed in part as Attach. # 14 to Dep.
Trans.) (“TBC Dep.”), at 26-27. Thus, TBC is unable to identify which copies of the title were
obtained from a particular source. Id. at 27. When TBC surrendered counterfeit books to
plaintiffs, TBC did not put any markings on the books to “identify anything” for them, such as
11
their source, and thus could not could not trace any particular copy to defendants. Id. TBC
eventually terminated its business with defendants because of its concern about the “business
risk” of purchasing books from defendants. Deposition of Thomas Steele, dated Nov. 21, 2014
(annexed in part as Ex. 41 to Chen Decl.), at 40, 47-48.
MBS stated that when it received inventory from defendants, it was “intermingled with
inventory provided by other suppliers,” and that it was “real tough” to determine the supplier of
a particular copy of a title unless there was a “receiving number of [sic] a sticker” on the copy.
Deposition of Lon David Daniel, dated Nov. 19, 2014 (annexed in part as Attach. # 5 to Dep.
Trans.) (“Daniel Dep. I.”), at 85. MBS did not start to place “receiving number” labels on books
to track the source of the books until August 2011. See Deposition of Lon David Daniel, dated
Nov. 19, 2014 (annexed as Ex. 20 to Chen Decl.) (“Daniel Dep. II”), at 84. After that date, MBS
maintained a list that identified the date of receipt and receiving number of books received from
particular customers. See Exhibit MBS 3 (annexed to Daniel Dep. I) (“Exhibit MBS 3”). Thus,
MBS could compare the receiving number on a book to the receiving number on the list in order
to determine who supplied the particular copy. See Daniel Dep. I at 58.
After MBS had surrendered counterfeit books to Pearson and Cengage, Pearson and
Cengage compiled a list of the receiving numbers found on those books and sent the list to MBS
to identify the source. Daniel Dep. II at 83. A representative from MBS testified that several of
the books were supplied to MBS by defendants. See id. at 83-84. Plaintiffs’ own review of the
books surrendered by MBS revealed copies of six counterfeit works without receiving numbers
that had defendants’ own stickers on them, indicating that defendants were the supplier.6 Pl.
6
Plaintiffs previously asserted that there were seven counterfeit works, Roadmap Nos.
Roadmap Nos. 3, 8, 15, 38, 100, 120, and 128, that were found bearing defendants’ stickers.
12
56.1 ¶ 26; see Chen Decl. ¶ 11. A representative of MBS testified that it was “more likely” that
defendants were the source of counterfeit books that MBS had received than MBS’s other
suppliers, Daniel Dep. II at 137, though the basis for this conclusion is not contained in the
record provided by the parties. In later questioning, the representative ultimately agreed with the
questioner’s assertion that Smyres was more likely to be the source of counterfeit books than
other suppliers MBS deals with because he was obtaining his books from overseas. Id. 138-39.
8.
Test Purchases by Plaintiffs
In March 2013, plaintiffs purchased copies of Roadmap Nos. 22, 44, 54, and 130 from
defendants over the internet and found them to be counterfeit.7 Chen Decl. ¶ 12; Exhibit 6 at
Bates Nos. BP-SMY-018778 to BP-SMY-020466.
In December 2014, plaintiffs purchased two copies of Roadmap No. 94 (the “Krugman
Title”) from defendants over the internet and both were counterfeit. Essig Decl. ¶¶ 4-5.
Defendants informed plaintiffs that the source of the Krugman Title was Tichenor College
Chen Decl ¶ 11. It is unclear where the discrepancy arises. The Roadmap identifies a
“stickered” copy of the work under the “source of counterfeit exemplar[s]” for six of these works
— Roadmap Nos. 3, 8, 15, 38, 120, and 128. As discussed above, these six works are not at
issue on this motion. Roadmap No. 100 does not list a “stickered” copy as a “source of [a]
counterfeit exemplar,” and defendants are moving for summary judgment with respect to this
work. Although not listed in the Roadmap, plaintiffs apparently possess a “stickered”
counterfeit exemplar of this work. See Photographs of Books (annexed as Ex. 5 to Chen Decl.)
(“Sticker Photographs”), at BP-SMY-025598 (photograph of Roadmap No. 100 with a
“TextbooksRus.com” sticker); Chen Decl. ¶ 11 (identifying the photographed book as
counterfeit).
7
Plaintiffs also represent that they purchased counterfeit copies of Roadmap No. 89
from defendants over the internet. Chen Decl. ¶ 12; see also Roadmap No. 89 (noting a “TRU
Test Purchase” as the source of the counterfeit exemplar). The exhibit cited in support of this
assertion does not appear to document any purchase of Roadmap No. 89. See Ex. 6 to Chen
Decl. (“Exhibit 6”). We need not resolve this discrepancy now, however, because defendants
have not moved for summary judgment as to this work.
13
Textbook Company (“Tichenor”). Supp. Chen Decl. ¶ 7.
9.
Tichenor’s Sales to Defendants
After being contacted by plaintiffs, Tichenor identified an entity called “Morena for
International Trading” (“Morena”), a broker from Jordan, as its source of the Krugman Title. Id.
¶ 9; see also Ex. 3 to Supp. Chen Decl. (letter from Tichenor’s counsel identifying Morena as the
source); Deposition of Tim Tichenor, dated June 3, 2015 (annexed as Ex. 2 to Supp. Chen Decl.)
(“Tichenor Dep.”), at 71 (authenticating the letter).
Thereafter, Tichenor quarantined all books in its inventory that it had purchased from
Morena. Supp. Chen Decl. ¶ 10; see also Ex. 4 to Supp. Chen Decl. (email from Tichenor’s
counsel confirming that Tichenor was quarantining the books); Tichenor Dep. at 136
(authenticating the email). On February 26, 2015, Tichenor provided to plaintiffs a list of all the
books that it purchased from Morena that were subsequently sold to defendants. Supp. Chen
Decl. ¶ 11; see also Ex. 5 to Supp. Chen Decl. (email with attachments identifying books
purchased from Morena and sold to defendants); Tichenor Dep. at 118-22 (authenticating the
email and attachments). Tichenor had sold copies of 23 counterfeit works to defendants.
See Supp. Chen Decl. ¶¶ 12-13. On March 2, 2015, defendants agreed to quarantine their
remaining inventory obtained from Tichenor and allowed plaintiffs to inspect it. Id. ¶ 13.
Plaintiffs found copies of three of the counterfeit works Tichenor had purchased from Morena
and later sold to defendants but did not find any copies of the other 20 works. Id. ¶ 13. Of the
three counterfeit works found, defendants were missing copies that they had purchased from
Tichenor for Roadmap Nos. 43b and 82.8 Supp. Chen Decl. ¶ 13. On March 6 and 13, 2015,
8
For the remaining counterfeit work found in defendants’ inventory, all copies sold to
defendants by Tichenor were found in defendants’ possession, and therefore plaintiffs have not
14
plaintiffs inspected Tichenor’s quarantined inventory and discovered counterfeit copies of works
published by plaintiffs. Id. ¶ 12.
Based on business records produced by defendants and Tichenor from October 2013
through January 2015, Tichenor sold to defendants a total of 459 copies of 21 works (excluding
the Krugman Title, which is not at issue on this motion, and the counterfeit work for which
defendants still possessed all of the copies they purchased from Tichenor) that Tichenor had
purchased from Morena. Id. ¶ 14. Plaintiffs found only 9 of the 459 copies in defendants’
inventory at the March 2, 2015 inspection. Id.
Tim Tichenor — the co-owner of Tichenor, id. ¶ 8 — testified that Tichenor could not
confirm the source of a particular copy of a book if they were purchasing copies of it from
multiple sources, Tichenor Dep. at 203. However, if Tichenor purchased a particular work from
a single source or if they had previously purchased a book from two different sources and only
purchased new books from a single source, they could confirm the source of those books. Id. at
203-04. Mr. Tichenor confirmed that, based upon a summary of Tichenor’s purchase and sale
records created by plaintiffs from Tichenor’s documents, see Ex. 6 to Supp. Chen Decl.
(“Tichenor Spreadsheet”), 19 of the 22 works at issue that defendants purchased from Tichenor
had been purchased by Tichenor from Morena, Supp. Chen Decl. ¶ 15; see Tichenor Dep. at 14245. For the remaining three works, there is a “high likelihood,” Supp. Chen Decl. ¶ 15, that the
books defendants purchased from Tichenor had been purchased by Tichenor from Morena, see
Tichenor Dep. at 205-08; Tichenor Spreadsheet.
included it in this case. Id. Thus, there are 22 works at issue in this case that were sold by
Tichenor to defendants. See Roadmap Nos. 11, 12, 21, 39b, 43b, 46, 47, 48, 65, 82, 83, 85, 87,
90, 94, 95, 113, 116 121, 123, 124, 132. As noted above, defendants are not moving for
summary judgment on Roadmap Nos. 94, 113, and 124.
15
Defendants thereafter produced a list of all individuals to whom they had sold the books
they purchased from Tichenor. Supp. Chen Decl. ¶ 16. Plaintiffs received copies of four books,
copies of either Roadmap Nos. 90, 113, or 124, from some of these individuals who had
purchased them from defendants. Id. ¶¶ 16-17. Upon examination, they were determined to be
counterfeits. Id.
10.
Philomath’s Sales to Defendants
Defendants also did business with a foreign reseller, Philomath Co. Ltd. (“Philomath”),
see Deposition of Thomas Cahill, dated Feb. 19, 2014 (annexed in part as Ex. 12 to Chen Decl.)
(“Cahill Dep.”), at 205, which is based in Thailand, see id. at 202-06; Cahill Deposition Exhibit
131 (annexed as Ex. 13 to Chen Decl.) (“Cahill Dep. Ex. 131”), at 1216. Thomas Cahill was in
charge of Asian purchasing operations and bulk purchases for BDB. Cahill Dep. at 24, 124-25.
Cahill first heard of Philomath because a supplier had sent BDB a shipment that had Philomath’s
name and address on an invoice. Id. at 185. These invoices included a statement indicating that
the shipments were sold for distribution solely outside of the United States. See Pearson
Education Invoices (annexed as Ex. 14 to Chen Decl.). Cahill knew that he was purchasing
books from Philomath for BDB at prices that he could not obtain in the United States. Cahill
Dep. at 222.
In one instance, Philomath was purchasing books from Pearson and Cengage for a
university in Bangkok, and Philomath invited Cahill to bid against other competitors to “share
the books that [Philomath] ordered.” Id. at 205-08. However, Philomath told Cahill that it had
to “pay Pearson staff to get U.S. version[s].” Id. at 212. Cahill believed that these payments
were only attempts to “increase [Cahill’s] costs” and were not bribes used to get books
Philomath would otherwise not be permitted to purchase for defendants. Id. at 212-14.
16
Philomath often asked Cahill which books defendants wanted to purchase before
submitting orders to Pearson. See Cahill Dep. Ex. 131 at 1216; Cahill Deposition Exhibit 133
(annexed as Ex. 15 to Chen Decl.), at 1256; Cahill Deposition Exhibit 135 (annexed as Ex. 16 to
Chen Decl.), at 1059. Cahill also asked Philomath to provide “links” to access Philomath’s
invoices that it received when Philomath placed orders with Pearson. Cahill Dep. at 214-16.
11.
Numerical Information on Counterfeit Works
Information provided to plaintiffs by defendants and third parties, in the form of lists of
defendants’ sources, Chen Decl. ¶¶ 6, 14, lists of defendants’ sales, id. ¶¶ 7, 14, and a list of
surrendered inventory from the Blackerbys, id. ¶¶ 5, 14, in addition to the information provided
by Tichenor, see Supp. Chen Decl. ¶¶ 6-18, reveals the following. For 49 of the 124 works at
issue, the only counterfeit exemplars plaintiffs have were discovered in defendants’ possession
after they had been quarantined by defendants. See Roadmap Nos. 1, 2, 5, 7, 10c, 14, 19, 23, 34,
39a, 41, 43a, 45, 49, 52, 56, 59, 60, 62, 64, 66, 73, 77, 78, 79, 80, 81, 86, 88, 92, 93a, 93b, 97,
98, 99, 101, 102, 103, 106, 107, 108, 109, 112, 117, 122, 125a, 125b, 127, 133b. With respect to
40 of the 124 works at issue on this motion, the only counterfeit exemplars plaintiffs have were
surrendered to them by third parties.9 See Roadmap Nos. 10b, 16, 26, 28, 40, 42, 55, 57, 63, 67,
9
In defendants’ own summary of the Roadmap, defendants list 43 distinct works for
which the only counterfeit exemplar identified in the Roadmap was from a third party surrender.
See Ex. C to Miller Decl. However, according to the Roadmap — which defendants relied on in
creating this summary — counterfeit exemplars of Roadmap Nos. 7 and 60 were found in
defendants’ quarantined inventory and were not surrendered by a third party. See Roadmap Nos.
7 and 60; see also Ex. C to Miller Decl. (listing Roadmap Nos. 7 and 60 under the “BDB’s
Unsold Quarantine Books” category). Further, the Roadmap shows that counterfeit exemplars of
Roadmap No. 100 were found both in defendants’ unsold inventory and surrendered to plaintiffs
by third parties, see Roadmap No. 100, and thus should have been placed by defendants in their
“Combo of Unsold Quarantine + Supplier Books” category, Ex. C to Miller Decl. Accordingly,
there are only 40 distinct works in this category.
17
69, 71, 72, 74, 75, 104, 111, 115, 119, 129 (surrendered by MBS); Roadmap Nos. 16, 17, 25, 28,
110 (surrendered by Follett); Roadmap Nos. 17 (surrendered by TBC); Roadmap Nos. 63, 67
(surrendered by Mark Blackerby); Roadmap Nos. 11, 12, 21, 39b, 46, 47, 48, 65, 83, 85, 87, 90,
95, 116, 121, 123, 132 (surrendered by Tichenor). With respect to 29 of the 124 works at issue,
plaintiffs both discovered a counterfeit copy in defendants’ quarantined inventory and received a
counterfeit copy from a third party’s surrender.10 See Roadmap Nos. 4, 6, 9, 13, 18, 24, 27, 29,
30, 31, 32, 33, 35, 36, 37, 43b, 51, 53, 58, 61, 68, 70, 82, 84, 91, 96, 100, 114, 126. For six of
the 124 works at issue, plaintiffs have no counterfeit copy in their possession. See Roadmap
Nos. 10a, 20, 50, 105, 131, 133a.
Defendants purchased copies of 61 distinct works involved in this lawsuit from either
BBW or the Blackerbys. See Chen Decl. ¶¶ 6(b)-(d). Defendants purchased copies of Roadmap
Nos. 3, 6, 10a, 10b, 13, 15, 16, 17, 18, 20, 24, 25, 26, 28, 30, 32, 33, 36, 37, 38, 40, 42, 50, 53,
57, 58, 61, 68, 69, 71, 72, 75, 91, 96, 104, 105, 110, 111, 114, 115, 118, 119, 120, 122, 126, 128,
129, 131, 133a, and 133b from BBW. Chen Decl. ¶ 6(b). They purchased copies of Roadmap
Nos. 4, 6, 9, 15, 16, 18, 27, 31, 35, 36, 37, 40, 51, 55, 63, 68, 74, 77, 100, 104, 110, 115, and 120
from the Blackerbys. Chen Decl. ¶ 6(d).
B.
Procedural History
Plaintiffs filed the original complaint in this action on February 4, 2013 (Docket # 1) and
a First Amended Complaint on April 24, 2013 (Docket # 16). On January 26, 2015, defendants
filed their first motion for partial summary judgment. See Motion for Partial Summary
10
Defendants assert that there are 28 works in this category. See, e.g., Ex. C to Miller
Decl. As discussed in the prior footnote, Roadmap No. 100 should have been placed in this
category, for a total of 29 works.
18
Judgment by Defendants, filed Jan. 26, 2015 (Docket # 207). At the time, there were 118 works
at issue in this case. See Pl. 56.1 Resp. ¶ 8.
While the motion was sub judice, plaintiffs indicated that they wished to add 22 new
works to the litigation. See Letter from Julie C. Chen and Tiffany C. Miller, filed May 6, 2015
(Docket # 257), at 2. Defendants agreed to allow amendment of the complaint to add these
works but stated that they wished to file a supplemental memorandum in support of their motion
for partial summary judgment based on the addition of these new works. Id. Accordingly, the
Court deemed defendants’ original motion for partial summary judgment withdrawn without
prejudice. See Order, filed May 8, 2015 (Docket # 259).
On May 27, 2015, plaintiffs filed a Second Amended Complaint alleging claims for
copyright infringement, trademark infringement, trademark counterfeiting, illegal importation of
counterfeit goods, trademark dilution, unfair competition and false designation of origin, breach
of contract, and conspiracy to commit fraud. See SAC ¶¶ 59-109. Annexed to the Second
Amended Complaint was a list of the 140 works plaintiffs believed defendants infringed. See
Ex. A to SAC. On June 15, 2015, defendants filed the instant motion for summary judgment.
C.
Plaintiffs’ Objections to Defendants’ Local Rule 56.1 Statement
After defendants filed their original motion for partial summary judgment, plaintiffs filed
a motion to strike parts of defendants’ Local Rule 56.1 statement and parts of the declaration by
defendants’ counsel, Neil B. Mooney, that were filed in support of defendants’ original motion
for partial summary judgment. See Plaintiffs’ Motion to Strike Portions of the Declaration of
Neil B. Mooney and Defendants’ Local Rule 56.1 Statement of Facts Submitted in Support of
Defendants’ Motion for Partial Summary Judgment, filed Feb. 26, 2015 (Docket # 223).
Plaintiffs now state that they do not wish to renew their motion to strike, Pl. Supp. Mem. at 14,
19
and defendants have not relied on these documents in their renewed motion for partial summary
judgment, see Defendants’ Notice of New Motion for Partial Summary Judgment, filed June 15,
2015 (Docket # 265), at 1 (explaining that defendants’ new motion for partial summary
judgment “supplants, entirely” their prior motion).
In briefing the current motion, plaintiffs continue to object to portions of defendants’
Local Rule 56.1 Statement — in particular, its citations to paragraphs 9, 10, and 12, and Exhibits
B, C, and D of the Miller Declaration. See Pl. Supp. Mem. at 14-15. In adjudicating this
motion, however, the Court has not relied on paragraphs 9, 10, or 12 or Exhibit D of the Miller
Declaration.
With respect to Exhibit B, the revised version of the Roadmap, plaintiffs object to some
unspecified citations by defendants to this document on the grounds that defendants “are without
personal knowledge to opine on what the contents represent.” This argument is rejected given
that it is plaintiffs who have relied on the Roadmap (without objection by defendants) to meet
their burden of proof on this motion. Obviously, it is appropriate for defendants to cite to this
document as long as the citation is accurate.
With respect to Exhibit C of the Miller Declaration (defendants’ summary of the
Roadmap), plaintiffs object on the grounds that it constitutes argument and that it is “rife with
errors.” Id. at 15. While the Court has relied upon Exhibit C, it has only been in the context of
deciphering which works are actually the subject of the instant motion and which category of
their argument defendants contend each work belongs in.
II.
LAW GOVERNING SUMMARY JUDGMENT MOTIONS
Rule 56(a) of the Federal Rules of Civil Procedure states that summary judgment is
appropriate when “the movant shows that there is no genuine dispute as to any material fact and
20
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P. 56(c)). A genuine issue of
material fact exists “if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
In determining whether a genuine issue of material fact exists, “[t]he evidence of the
non-movant is to be believed,” and the court must draw “all justifiable inferences” in favor of the
non-moving party. Id. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59
(1970)). Nevertheless, once the moving party has shown that there is no genuine issue as to any
material fact and that it is entitled to a judgment as a matter of law, “the nonmoving party must
come forward with ‘specific facts showing that there is a genuine issue for trial,’” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e))
(emphasis and additional citation omitted), and “may not rely on conclusory allegations or
unsubstantiated speculation,” Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998) (citation
omitted). In other words, the nonmovant must offer “concrete evidence from which a reasonable
juror could return a verdict in his favor.” Anderson, 477 U.S. at 256. Where “the nonmoving
party bears the burden of proof at trial, summary judgment is warranted if the nonmovant fails to
‘make a showing sufficient to establish the existence of an element essential to [its] case.’”
Nebraska v. Wyoming, 507 U.S. 584, 590 (1993) (quoting Celotex, 477 U.S. at 322) (alteration
in original). Thus, “[a] defendant moving for summary judgment must prevail if the plaintiff
fails to come forward with enough evidence to create a genuine factual issue to be tried with
respect to an element essential to its case.” Allen v. Cuomo, 100 F.3d 253, 258 (2d Cir. 1996)
(citing Anderson, 477 U.S. at 247-48).
21
III.
DISCUSSION
Defendants move for partial summary judgment on the grounds that (1) plaintiffs’
copyright and trademark infringement claims fail with respect to 124 of the 140 works because
plaintiffs cannot show that a counterfeit copy was distributed by defendants, Def. Mem. at 2326; (2) plaintiffs’ illegal importation of counterfeit goods claim fails because no private cause of
action exists for the claim as pleaded, see id. at 21; (3) Pearson’s conspiracy to commit fraud
claim fails because plaintiffs did not plead a predicate fraud claim and have no evidence of
collusion, id. at 27-28; and (4) plaintiffs’ claims for trademark counterfeiting, trademark
dilution, and unfair competition and false designation of origin with respect to the 124 works fail
because plaintiffs cannot show that a counterfeit copy was distributed by defendants, see id. at
20-21, 23-26.11
A.
Copyright and Trademark Infringement
Defendants argue that they are entitled to partial summary judgment as to plaintiffs’
claims for copyright and trademark infringement for 124 of the 140 works at issue in this case
because plaintiffs are unable to prove that a counterfeit copy was distributed by defendants. Def.
Mem. at 23-26. In their memorandum, defendants have broken up these 124 works into four
categories. See id. at 23-26; see also Ex. C to Miller Decl. (listing the 124 works in four
categories based upon the contents of the Roadmap provided by plaintiffs). Defendants assert
that (1) for 49 of these 124 works, the only evidence plaintiffs have are the counterfeit copies
11
It appears that defendants have moved for partial summary judgment solely as to
plaintiffs’ claims that defendants sold or distributed counterfeit works, not as to any claims that
defendants imported counterfeit works in violation of 17 U.S.C. § 602(a)(2). SAC ¶¶ 59-69.
Accordingly, this Report and Recommendation addresses defendants’ motion as to plaintiffs’
copyright and trademark claims relating to the sales or distribution of works, not as to any claims
by plaintiffs that defendants imported particular works in violation of 17 U.S.C. § 602(a)(2).
22
that were found in defendants’ possession that were quarantined and therefore were not
distributed, Def. Mem. at 24-25; (2) for 4112 of the works, the counterfeit copies plaintiffs use as
evidence were acquired from third parties who cannot confirm that they received the copies from
defendants, id. at 25-26; (3) for 2813 of the works, plaintiffs’ evidence consists of a combination
of the previous two types of evidence, which they assert is still insufficient, id. at 26; and (4) for
six of the works, there is no counterfeit copy in plaintiffs’ possession at all, id.
To establish a claim for copyright infringement, a plaintiff must prove two elements:
first, “ownership of a valid copyright”; and second, “copying of constituent elements of the work
that are original.” E.g., Williams v. Crichton, 84 F.3d 581, 587 (2d Cir. 1996) (quoting Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991)) (internal quotation marks
omitted). To establish the second element, a plaintiff must show, inter alia, that the defendant
“actually copied” the work. E.g., Boisson v. Banian, Ltd., 273 F.3d 262, 267 (2d Cir. 2001)
(citation and internal quotation marks omitted); accord Shine v. Childs, 382 F. Supp. 2d 602, 607
(S.D.N.Y. 2005). “The word ‘copying’ is shorthand for the infringing of any of the copyright
owner’s five exclusive rights described in [17 U.S.C. § 106].” Arista Records, LLC v. Doe 3,
604 F.3d 110, 117 (2d Cir. 2010) (citation and internal quotation marks omitted). These rights
include the rights to “reproduce, perform publicly, display publicly, prepare derivative works of,
12
Although defendants assert there are 41 works in this category, as discussed above,
defendants actually list 43 distinct works in their summary and it appears that Roadmap Nos. 7,
60, and 100 were mistakenly included in this category. Thus, there are only 40 works in this
category.
13
Although defendants assert there are 28 works in this category, as discussed above,
counterfeit exemplars for Roadmap No. 100 were found both in defendants’ quarantined
inventory and in a third party surrender. Thus, there are 29 works in this category.
23
and distribute copies of, [the] copyrighted work.” Id. (citing 17 U.S.C. § 106). Thus, section
106 of the Copyright Act gives the owner of a valid copyright the exclusive right, inter alia, to
“reproduce the copyrighted work in copies” and to “distribute copies . . . of the copyrighted work
to the public by sale or other transfer of ownership.” 17 U.S.C. § 106(1), (3); see, e.g., Yash Raj
Films (USA), Inc. v. Adda Rong, Inc., 2010 WL 1270013, at *3 (E.D.N.Y. Mar. 12, 2010)
(“Among the exclusive rights of the copyright owner is the right to reproduce, and to authorize
others to reproduce, the copyrighted work in copies and to distribute the copies to the public by
sale.”) (citation omitted).
15 U.S.C. § 1114(1)(a) proscribes the unauthorized “use in commerce [of] any
reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with
the sale, offering for sale, distribution, or advertising of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.”
Thus, to establish a claim for trademark infringement, a plaintiff must prove that “(1) it has a
valid mark that is entitled to protection under the Lanham Act; and that (2) the defendant used
the mark, (3) in commerce, (4) in connection with the sale or advertising of goods or services,
(5) without the plaintiff’s consent.” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400,
406-07 (2d Cir. 2005) (internal citations, quotation marks, and ellipses omitted) (stating that
these requirements apply to both registered and unregistered trademarks).
As an initial matter, we reject defendants’ argument that plaintiffs are required to prove
the “distribution” requirement by offering at trial a counterfeit copy of each of the 124 works
that is alleged to have been distributed by defendants, or by offering the testimony of someone
who has “seen” the counterfeit. See Def. Mem. at 23-24; see also id. at 6 (“Success on the
copyright and trademark infringement claims will require . . . bringing to trial an infringing copy,
24
proving it is indeed counterfeit, and proving Defendants distributed/sold that particular
counterfeit copy.”). As case law makes clear, “circumstantial evidence may be . . . sufficient to
raise a genuine issue of material fact precluding the grant of summary judgment.” Gayle v.
Gonyea, 313 F.3d 677, 684 (2d Cir. 2002) (citation omitted). At this stage, plaintiffs need only
show that a reasonable jury could return a verdict in their favor. Anderson, 477 U.S. at 248.
While plaintiffs must ultimately prove infringement by defendants, such proof is frequently
accomplished through circumstantial evidence. See Fendi Adele, S.R.L. v. Ashley Reed
Trading, Inc., 507 F. App’x 26, 30 (2d Cir. 2013) (not fatal to plaintiffs’ motion for summary
judgment that plaintiffs failed to produce “any counterfeit items sold by” the defendants where
there was “a significant amount of circumstantial evidence”); London-Sire Records, Inc. v. Doe
1, 542 F. Supp. 2d 153, 177 (D. Mass. 2008) (“While the plaintiffs must eventually prove that an
actual infringement of [their] rights occurred, they may certainly do so through circumstantial
proof and inference.”). Thus, in Capitol Records, Inc. v. MP3tunes, LLC, 821 F. Supp. 2d 627
(S.D.N.Y. 2011), modified on other grounds on reconsideration, 2013 WL 1987225 (S.D.N.Y.
May 14, 2013), a copyright infringement case, the court held that plaintiffs “need not offer
actual copies of the works at issue.” 821 F. Supp. 2d at 647.
Notably, the sole case relied upon by defendants for their argument contains no holding
requiring production or witnessing of an actual counterfeit copy. See Def. Mem. at 19 (citing
Kelly v. L.L. Cool J., 145 F.R.D. 32 (S.D.N.Y. 1992), aff’d, 23 F.3d 398 (2d Cir. 1994)); Def.
Reply at 8-9 (same). In Kelly, the court merely stated that “[a] properly plead [sic] copyright
infringement claim must allege 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
25
infringed the copyright.” 145 F.R.D. at 36 (citations omitted). It says nothing about what form
of proof plaintiffs are required to use to demonstrate these elements at trial.
Of course, circumstantial evidence is available not only to prove the fact that a
counterfeit exemplar was distributed, but also to prove the distribution itself. See, e.g., Capitol
Records, Inc. v. Thomas, 579 F. Supp. 2d 1210, 1225 (D. Minn. 2008) (“[D]irect proof of actual
dissemination is not required by the Copyright Act. Plaintiffs are free to employ circumstantial
evidence to attempt to prove actual dissemination.”) (emphasis in original); see also Atl.
Recording Corp. v. Howell, 554 F. Supp. 2d 976, 983 (D. Ariz. 2008) (“[E]vidence that a
defendant made a copy of a work available to the public might, in conjunction with other
circumstantial evidence, support an inference that the copy was likely transferred to a member of
the public.”) (citation omitted). See generally 2 Melville B. Nimmer and David Nimmer,
Nimmer on Copyright § 8.11[D][5][b] (Matthew Bender, rev. ed.) (“Given the rarity of direct
evidence in copyright litigation that defendant at bar copied from plaintiff’s work, the classic
case of copyright infringement relies on circumstantial evidence . . . . Along similar lines, it has
been held that circumstantial evidence suffices to establish actual distribution. There is nothing
exceptional about that conclusion.”) (footnotes omitted).
Recognizing that circumstantial evidence is entirely appropriate to prove a copyright or
trademark violation, we now turn to the particular claims by defendants as to the insufficiency of
proof to be offered by plaintiffs at trial.
1.
The 49 Works Found in Defendants’ Possession
Defendants contend that for 49 of the 124 works, plaintiffs’ “only” evidence consists of
unsold counterfeit copies of each of the 49 works that were found in defendants’ possession after
26
they had been quarantined by defendants.14 Def. Mem. at 24-25. Plaintiffs offer other evidence
on this question that they contend is relevant. In addition to the counterfeit exemplars found in
defendants’ inventory, plaintiffs have introduced evidence of the number of copies of each of the
49 works that were sold by defendants, which is derived from information produced by
defendants and third parties. See Chen Decl. ¶ 7(b); see also Roadmap Nos. 1, 2, 5, 7, 10c, 14,
19, 23, 34, 39a, 41, 43a, 45, 49, 52, 56, 59, 60, 62, 64, 66, 73, 77, 78, 79, 80, 81, 86, 88, 92, 93a,
93b, 97, 98, 99, 101, 102, 103, 106, 107, 108, 109, 112, 117, 122, 125a, 125b, 127, 133b
(identifying the quantity of copies sold by defendants). For the majority of the 49 works,
defendants sold hundreds of copies, see Roadmap Nos. 1, 5, 7, 10c, 14, 19, 23, 39a, 43a, 52, 56,
59, 62, 64, 73, 77, 78, 80, 81, 88, 92, 93b, 97, 98, 99, 101, 102, 103, 107, 108, 109, 112, 117,
125a, 125b, 133b, and for some works, they sold thousands of copies, see Roadmap Nos. 34, 49,
60, 86, 106.
Additionally, although defendants have removed some counterfeit books from their
inventory and quarantined them, plaintiffs have provided significant evidence that defendants’
efforts to avoid the acquisition of counterfeit books were ineffective. In addition to the fact that
counterfeit exemplars of one work were purchased from defendants as late as December 2014,
see Essig Decl. ¶¶ 4-5; Supp. Chen Decl. ¶ 6, defendants’ own employees admit that they have
not been trained to reliably identify counterfeits in order to remove them from inventory, see
Smyres Dep. II at 96, 98-99; Dimm Dep. at 14-15; Doenges Dep. at 133-34; Glass Dep. at 212.
14
The 49 works are Roadmap Nos. 1, 2, 5, 7, 10c, 14, 19, 23, 34, 39a, 41, 43a, 45, 49,
52, 56, 59, 60, 62, 64, 66, 73, 77, 78, 79, 80, 81, 86, 88, 92, 93a, 93b, 97, 98, 99, 101, 102, 103,
106, 107, 108, 109, 112, 117, 122, 125a, 125b, 127, and 133b.
27
Moreover, even when the defendants have identified potentially counterfeit books and
quarantined them, they failed to keep any records as to what those works were or who supplied
them so that they might identify other potential counterfeits in the future. See Smyres Dep. II at
242; Dimm Dep. at 33-34. As plaintiffs put it, there is ample evidence that would allow a jury
to conclude that “Defendants routinely fail to identify counterfeits” and that they have a “history
of sourcing from sketchy overseas suppliers . . . who have in the past sold them counterfeit
books.” Pl. Mem. at 17-18.
When we consider this evidence combined with the fact that the listed counterfeit works
were found in defendants’ inventory, however, we still cannot conclude that a reasonable jury
could find by a preponderance of the evidence that defendants distributed a counterfeit copy of
any one of these 49 works. In brief, there is no reliable evidence that the other copies that
defendants previously acquired of these works were counterfeit. And without the foundational
finding that the other copies of the work previously in the defendants’ possession were
counterfeit, it would be impossible for a factfinder to find by a preponderance of the evidence
that the sale by defendants of one of these works amounted to the sale of a counterfeit copy
Plaintiffs assert that defendants’ poor recordkeeping practices should allow a jury to
conclude that defendants must have had other counterfeit copies of these works and that they
must have distributed those works. Id. at 15-16. Tellingly, however, the cases plaintiffs cite to
support this proposition, see id. at 16, do not resemble the situation here. In Pearson Education,
Inc. v. Frances, 2013 WL 1360340 (S.D.N.Y. Apr. 3, 2013), the defendant was only selling
infringing copies of the works at issue and advertised those infringing copies for sale. Id. at *3.
The seller directed buyers not to provide any information that would identify the infringing
works in their sales orders. See id. The court concluded that, based on the volume of sales and
28
the incomplete records, a jury could find that the infringing works were sold. Id. Here by
contrast, the inference that defendants sold other counterfeit copies of each of these infringing
works rests entirely on surmise. As is made plain by the evidence in the record, there are
counterfeit copies of works that have entered the stream of commerce. Thus, the mere fact that a
seller has in its possession a counterfeit copy does not permit a finding that all copies of that
particular work previously sold by that seller were likely to have been counterfeit. The other
case cited by plaintiffs, Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199
(4th Cir. 1997), is irrelevant as it held only that a library’s offering of an infringing work to the
public — by “mak[ing] the work available to the borrowing or browsing public” — constituted a
“distribution within the meaning of [17 U.S.C. § 106(3)].” Id. at 203. Here, defendants never
claimed to the public that the copies they were offering for sale were the counterfeits.
Plaintiffs are understandably frustrated by the fact that defendants’ recordkeeping makes
it impossible to connect purchases and sales of particular works. As they put it, defendants’
recordkeeping practices mean that “there is scant information regarding whether the particular
counterfeit books found in Defendants’ possession had already been distributed.” Pl. Mem. at
15. But this is precisely the problem. Any failure to show a distribution of a “particular”
counterfeit book is fatal to plaintiffs’ claims. The copyright statute does not contemplate a claim
that a defendant at some point engaged in copyright infringement as to some work. Rather, the
statute contemplates a claim asserting the violation of exclusive rights in “the copyrighted
work,” e.g. 17 U.S.C. § 106 (emphasis added) — that is, a particular work. This requirement is
reflected in the myriad cases that require a pleading in a copyright case to identify the “specific
original works [that] are the subject of the claim.” E.g., LivePerson, Inc. v. 24/7 Customer, Inc.,
83 F. Supp. 3d 501, 507-08 (S.D.N.Y. 2015); accord Kelly, 145 F.R.D. at 36. Thus, plaintiffs
29
cannot prevail on a claim of copyright infringement unless they can identify a specific work and
show that defendants distributed a counterfeit copy of that specific work.15
Plaintiffs also argue that even a counterfeit exemplar found in defendants’ possession
might itself have been previously rented or sold inasmuch as defendants do not maintain records
of rentals, returns, or buybacks. Pl. Supp. Mem. at 10. Plaintiffs argue that “there is no reason
to believe that” such a rental or sale had not occurred. Id. at 10-11. But it is plaintiffs’ burden to
prove such a rental or sale did occur. A reasonable jury could not find such a rental or sale
occurred merely based on the presence of a counterfeit copy in defendants’ inventory.
For these reasons, defendants’ motion for partial summary judgment on plaintiffs’
copyright and trademark infringement claims should be granted with respect to these 49 works.
2.
The (a) 23 Works Surrendered by Third Party Customers of Defendants
For Which No Copies Were Found in Defendants’ Possession and (b) 19
Works that Tichenor and Mark Blackerby Surrendered to Plaintiffs16
Defendants argue that they should be granted summary judgment as to all works where
there is only evidence of “counterfeit exemplars surrendered to Plaintiffs by third-party
suppliers.” Def. Mem. at 25. We view this argument as presenting two situations in which
exemplars were surrendered to plaintiffs. One involves customers of defendants, consisting of
MBS, Follett, and TBC. The other situation involves suppliers to defendants — specifically,
Tichenor and Mark Blackerby, who sold works to defendants and surrendered exemplars of
15
Plaintiffs’ trademark claim rests on their assertion that any counterfeit books that were
sold by defendants contained their trademarks. E.g., SAC ¶¶ 9, 46, 72. Thus, plaintiffs’
trademark claim similarly must show the distribution of a particular unauthorized work.
16
As noted above, there are 40 distinct works in this section. As discussed below,
Roadmap Nos. 63 and 67 were surrendered by both third party customers of defendants as well
as from Mark Blackerby.
30
certain counterfeit works to plaintiffs. We discuss each situation separately.
a.
The 23 Works Surrendered by Third Party Customers of
Defendants For Which No Copies Were Found in Defendants’
Possession
In this category are counterfeit books that have been turned over or “surrendered” to
plaintiffs over the last several years by entities that were at some point in time customers of
defendants, including MBS, Follett and TBC. See Def. Mem. at 25-26; Roadmap Nos. 10b, 16,
26, 28, 40, 42, 55, 57, 63, 67, 69, 71, 72, 74, 75, 104, 111, 115, 119, 129 (surrendered by MBS);
Roadmap Nos. 16, 17, 25, 28, 110 (surrendered by Follett); Roadmap Nos. 17 (surrendered by
TBC). With respect to Roadmap Nos. 40 and 63, there is additional evidence distinguishing
them from the other 21 works in this category. Roadmap Nos. 40 and 63 are discussed in more
detail in section III.A.4 below. With respect to the other 21 works, there is no evidence that the
customers have records on a work-by-work basis that would allow them to identify where each
book they surrendered came from. Nor has any evidence been marshaled by plaintiffs in their
memoranda of law that gives information on whether there were or were not other book
suppliers who might have provided the counterfeit works to these customers.
Follett, through its representative, testified that it “couldn’t say one way or the other
whether or not” specific counterfeit books found in its inventory came from defendants. Dalpe
Dep. II at 214. Nonetheless, Follett further testified that, based on its own mathematical
analysis, it was an “absolute certainty” that defendants supplied “some” of the counterfeit copies
of Roadmap No. 13 to Follett, and that it had “no doubts” that defendants supplied at least
“some” of the other counterfeit books Follett surrendered to the publishers, though it could not
attest to a certainty based upon mathematical analysis. Dalpe Dep. I at 300-01. The problem
with this testimony is that plaintiffs’ briefs marshal no evidentiary basis for Follett’s assertions.
31
The fact that Follett is “certain” or has “no doubt” as to the source of the books cannot substitute
for evidence that would allow a reasonable jury to conclude by a preponderance of the evidence
that defendants actually sold an identified counterfeit work to Follett. With the cited testimony
alone, no reasonable juror could reach this conclusion as to any particular book that had been in
Follett’s possession.
TBC testified that when it receives books from companies like BDB, it stores all books of
the same title together on shelves in its warehouse. TBC Dep. at 27. Once the books are
aggregated, TBC has no way to determine “which books came from which source, if they’re all
the same title.” Id. at 26-27. When TBC surrendered counterfeit books to plaintiffs, TBC did
not put any markings on the books to “identify anything” for them, such as their source. Id. at
26.
MBS testified that when it purchased inventory from defendants, it keeps that inventory
“intermingled with inventory provided by other suppliers.” Daniel Dep. I at 85. MBS started to
place “receiving number” labels on books to track the source of the books in August 2011. See
Daniel Dep. II at 53, 84. These stickers could be used to identify the source of a particular book.
Daniel Dep. I at 58, 85; see also Exhibit MBS 3 (a list of receiving numbers with corresponding
“Customer”). Other than looking at the receiving number, MBS testified that it is “real tough” to
determine who supplied a particular book. Daniel Dep. I at 85.
MBS also provided to plaintiffs a list of receiving numbers affixed to books they had
purchased. See Email from Lon Daniel, dated Jan. 17, 2014 (annexed as Ex. 22 to Chen Decl.)
(“Daniel Email”). Several books — including copies of Roadmap Nos. 76 and 118 — had
receiving numbers associated with defendants. See Chen Decl. ¶ 10; Bates Nos. BP-CF-103 and
BP-CF-104 (annexed as Ex. 4 to Chen Decl.) (receiving numbers “5292491-9” and “511940932
0”); Spreadsheet (annexed to Daniel Email), at 17 (noting that receiving numbers “52924919”
and “51194090” were associated with “UBX Book Exchange” in Columbus, Ohio). Neither of
these works are part of this summary judgment motion.
After reviewing counterfeit books surrendered by MBS, several counterfeit works were
identified bearing stickers of defendants’ prior business names. Chen Decl. ¶ 11; Sticker
Photographs. MBS testified that a book that had such a sticker meant that at one time defendants
had owned the book and “somewhere along the line [defendants] had distributed th[e] book and
MBS got it and then MBS determined it was counterfeit and turned it over to the publishers.”
Daniel Dep. I at 105. The only one of these works at issue on this motion is Roadmap No. 100,
which is addressed in section III.A.3 below.
The import of all this evidence is that certain customers of defendants at some point had
counterfeit works in their possession. It is also clear that, at least in the case of MBS, defendants
sold other counterfeit works that are not the subject of this motion. But it would require
speculation to find that defendants actually sold these customers any of the 21 counterfeit works
that are at issue in this branch of defendants’ motion. Plaintiffs assert, without actually
marshaling the evidence in their memoranda of law, that there is a significant “temporal
progression” that shows the flow of books from defendants’ suppliers to defendants and then to
their customers. Pl. Mem. at 18; Pl. Supp. Mem. at 11. This chain seems to boil down to the
proposition that for some of the works, defendants sold copies to their customers “within weeks
following the purchase from BBW or the Blackerbys.” Pl. Mem. at 18-19. But there is no
evidence that a majority, let alone all, of BBW and the Blackerbys’ business involved the sale of
counterfeits, so this temporal connection alone has little evidentiary value. Nor, as already
noted, is there any evidence that would allow a jury to conclude that the counterfeit books found
33
in defendants’ customers’ possession actually came from defendants.
Accordingly, a reasonable jury could not find that counterfeit copies of 21 of the works
found in defendants’ customers’ possession — Roadmap Nos. 10b, 16, 17, 25, 26, 28, 42, 55, 57,
67, 69, 71, 72, 74, 75, 104, 110, 111, 115, 119, 129 — were distributed by defendants.
b.
The 19 Works that Tichenor and Mark Blackerby Surrendered to
Plaintiffs
For 19 works, plaintiffs’ counterfeit exemplars were surrendered not by customers of
defendants but rather by two entities that sold books to defendants — specifically, Mark
Blackerby and Tichenor. See Roadmap Nos. 63, 6717 (surrendered by Mark Blackerby);
Roadmap Nos. 11, 12, 21, 39b, 46, 47, 48, 65, 83, 85, 87, 90, 95, 116, 121, 123, 132
(surrendered by Tichenor). As noted above, there is additional evidence with respect to
Roadmap No. 63, which is discussed in more detail in section III.A.4 below.
Plaintiffs’ argument as to the Blackerby surrenders is that “a counterfeit title found
within Blackerbys’ inventory supports more than a reasonable inference that copies of that title
sold by Blackerby to Defendants (which Defendants then sold) were also counterfeit.” Pl. Mem.
at 20. This chain of inference again depends on the initial inference that all or at least a very
large portion of the particular works sold by Blackerby to defendants consisted of counterfeit
books. However, as already discussed, the mere fact that Blackerby has had a history of dealing
in some counterfeit books on some occasions is not a strong enough basis for an inference that
the copies of a particular work sold to defendants were themselves counterfeit.
17
Although Roadmap No. 67 identifies a “Blackerby Surrender” as a source of a
counterfeit exemplar, it only identifies “Amazon Flash” under the section “Defendants’
Sourcing.” Roadmap No. 67. Neither party explains this discrepancy. However, we need not
resolve this issue because, for reasons stated below, a reasonable juror could not conclude that
defendants distributed a counterfeit copy of this work.
34
With respect to Tichenor, as has already been described, plaintiffs purchased two
counterfeit copies of the Krugman Title (Roadmap No. 94) from defendants in December 2014,
Essig Decl. ¶¶ 4-5, and confirmed that Tichenor was defendants’ source for the counterfeits,
Supp. Chen Decl. ¶ 7. The Krugman Title is not the subject of this motion. Tichenor then
identified Morena as their source, id. ¶ 9, and quarantined all of the books in its inventory that
had been purchased from Morena, id. ¶ 10. Tichenor’s quarantined inventory contained
counterfeit copies of works published by plaintiffs — 23 of which had been sold by Tichenor to
defendants. Id. ¶¶ 12-13. Defendants then quarantined their remaining inventory obtained from
Tichenor and allowed plaintiffs to inspect it. Id. ¶ 13. Plaintiffs found copies of only three of
the counterfeit works Tichenor had purchased from Morena and later sold to defendants, and for
two of them, not in the quantities that had been originally obtained by defendants from Tichenor.
Id. Plaintiffs thus assume that Tichenor must have sold counterfeit works to defendants, and
then, for 22 of the works, defendants must have sold them to others. See Pl. Supp. Mem. at 13.
Once again, the failure of proof here revolves around the source of the books. There is
almost no information regarding the nature of Morena’s business and whether the counterfeit
copies reflected the entirety, the majority, or a small percentage of the books that Morena
distributed. In the absence of this information, a jury could not begin to travel the causal chain
that would allow them to conclude that the books from Tichenor that defendants ultimately sold
were counterfeit.
Accordingly, summary judgment should be granted for defendants as to this category.
This conclusion is subject to two exceptions. For one of these works, Roadmap No. 90,
plaintiffs “recently” obtained a copy from an individual who purchased it from defendants, and
plaintiffs confirmed it to be counterfeit. Supp. Chen Decl. ¶ 17; Pl. Supp. Mem. at 8 n.7. Thus,
35
summary judgment should not be granted with respect to Roadmap No. 90.
As noted above, Roadmap Nos. 63 and 67 were surrendered by both one of defendants’
customers and Mark Blackerby. Roadmap No. 63 is discussed in section III.A.4 below. As for
Roadmap No. 67, that plaintiffs have counterfeit exemplars from a customer and a supplier to
defendants makes no meaningful difference because, for the same reasons discussed above, a
juror could not conclude from the mere presence of a counterfeit book in a customer’s
possession that defendants distributed counterfeit copies of that book to the customer.
3.
The 29 Works with Combined Evidence
This category consists of 29 works for which a counterfeit copy was found in
defendants’ possession after being quarantined and for which a counterfeit copy was surrendered
by a third party. See Roadmap Nos. 4, 6, 9, 13, 18, 24, 27, 29, 30, 31, 32, 33, 35, 36, 37, 43b,
51, 53, 58, 61, 68, 70, 82, 84, 91, 96, 100, 114, 126. As has been described above, only
speculation would allow a jury to connect a counterfeit work in a third party’s possession to an
actual sale by defendants. While the existence of a counterfeit copy of a work in defendants’
possession makes the inference that a sale by defendants took place stronger, these
circumstances, even in combination with the other evidence in this case, still do not allow for a
reasonable inference that there was an actual the sale of a specific counterfeit work by
defendants for the reasons already stated.
This conclusion is subject to several exceptions. First, for one of these works, Roadmap
No. 35, there is evidence that defendants distributed counterfeit copies of the work to a
customer, Lindsey Bache. See Roadmap No. 35; Smyres Dep. II at 105; Bache Email. In
February 2011, Bache determined that at least one copy of Roadmap No. 35 that he purchased
from defendants was counterfeit, see Blackerby Dep. at 76, and informed defendants that he was
36
returning 20 copies of that work that he had purchased from them because he suspected them of
being counterfeit, Bache Email at BP-SMY-017819; see Smyres Dep. II at 105. Defendants
traced the source of these books to the Blackerbys. Smyres Dep. II at 106; Cahill Email.
Defendants subsequently began to segregate books in their inventory that had characteristics
similar to the books returned by Bache because they were “possibly . . . not good books.”
Smyres Dep. II at 106. Smyres returned to Blackerby the copies of Roadmap No. 35 that Smyres
received from Bache because Smyres suspected them of being counterfeit. See Blackerby Dep.
at 74-79; see Blackerby Email. Subsequently, defendants told Blackerby that they were
returning copies of five works, including Roadmap No. 35, that defendants stated “are also
counterfeit.” Cahill Email. Accordingly, a reasonable jury could conclude that defendants
distributed a counterfeit copy of Roadmap No. 35 to Bache. Thus, summary judgment should
not be granted with respect to Roadmap No. 35.
Second, as discussed above, although it is not listed in the Roadmap, there is evidence of
a “stickered” counterfeit exemplar of Roadmap No. 100. See Sticker Photographs at BP-SMY025598; Chen Decl. ¶ 11. The “stickered” exemplar of Roadmap No. 100, which was
determined to be counterfeit, was surrendered to plaintiffs by MBS. Chen Decl. ¶ 11. Because a
reasonable jury could conclude that the sticker indicates that the copy came from defendants, the
jury could conclude that defendants distributed the copy to MBS. Thus, summary judgment
should not be granted as to Roadmap No. 100.
Finally, there is additional evidence with respect to Roadmap Nos. 31 and 51, which are
discussed in more detail in the next section.
4.
Roadmap Nos. 31, 40, 51, and 63
With respect to Roadmap Nos. 31, 40, 51, and 63, there is a much stronger showing that
37
defendants distributed counterfeit copies of these works. After being alerted to the problems
with Roadmap No. 35 by Bache, defendants found 100 copies of Roadmap No. 31, 20 copies of
Roadmap No. 40, 70 copies of Roadmap No. 51, and 161 copies of Roadmap No. 63 in their
inventory that they had also purchased from the Blackerbys and that they determined were
counterfeit. See Cahill Email. They subsequently returned these 422 copies (which included the
71 copies of Roadmap No. 35) to the Blackerbys. See Cahill Email; Blackerby Dep. at 75, 7879. Both an employee of defendants, see Cahill Email, and Smyres, see Smyres Dep. II at 13637, stated that they were returning these 422 books to the Blackerbys because they were
counterfeit. Blackerby also testified that the reason they were returned was because defendants
believed they were counterfeit. Blackerby Dep. at 75, 78-79.
However, defendants had originally purchased at least 829 copies of these same five
works from the Blackerbys. Chen Decl. ¶ 6(c). The 422 copies of these five works that
defendants returned to the Blackerbys were the only copies of these works that defendants had in
their inventory that had been purchased from the Blackerbys. See Cahill Email (identifying the
422 copies as the “Qty Remaiding [sic]”). In other words, every single identifiable copy of these
five works in defendants’ possession that had been purchased from the Blackerbys was
counterfeit. Under these circumstances, a reasonable jury could conclude that the remaining 407
copies of these five works purchased from the Blackerbys were also counterfeit. In light of the
fact that defendants are in the business of selling and renting books, the jury could also
reasonably conclude that the 407 copies of the five works were not found in defendants’
inventory because they had been distributed by the defendants.
In sum, because that there is sufficient evidence to allow a jury to conclude that
defendants distributed counterfeit copies of Roadmap Nos. 31, 40, 51, and 63, summary
38
judgment should be denied with respect to these works.
5.
The Remaining Six Works
For the remaining six works, there was neither an exemplar of a counterfeit book in
defendants’ possession nor an exemplar in a supplier’s possession. See Roadmap Nos.
10a, 20, 50, 105, 131, 133a. For the reasons already stated, there is insufficient proof of any
distribution by defendants of one of these works.
B.
Illegal Importation of Counterfeit Goods
Plaintiffs assert a claim for the illegal importation of counterfeit goods under 15 U.S.C.
§ 1124 and 19 U.S.C. § 1526 on the ground that defendants knowingly imported counterfeit
copies of books. SAC ¶¶ 81-84. Defendants contend that there is no private cause of action
available to plaintiffs under 15 U.S.C. § 1124 or 19 U.S.C. § 1526. Def. Mem. at 21. We need
not address whether plaintiffs have a private cause of action under 15 U.S.C. § 1124, however,
because plaintiffs have a private cause of action under 19 U.S.C. § 1526.
Defendants argue that 19 U.S.C. §1526 “provides only for civil penalties assessed by the
United States Customs Service” and “not for a private cause of action.” Id. (citing 19 U.S.C.
§ 1526(f)). However, 19 U.S.C. § 1526(c), entitled “Injunction and damages,” provides that
Any person dealing in any . . . merchandise [bearing unauthorized trademarks] may be
enjoined from dealing therein within the United States or may be required to export or
destroy such merchandise or to remove or obliterate such trademark and shall be liable
for the same damages and profits provided for wrongful use of a trademark, under the
provisions of sections 81 to 109 of Title 15.
19 U.S.C. § 1526(c). It is settled in this Circuit that the owner of a trademark has the right to
pursue a private causes of action for damages under 19 U.S.C. § 1526. See, e.g., Original
Appalachian Artworks, Inc. v. Granada Elecs., Inc., 816 F.2d 68, 71 (2d Cir. 1987); Philip
Morris USA Inc. v. C.H. Rhodes, Inc., 2010 WL 1196124, at *4 (E.D.N.Y. Mar. 26, 2010);
39
Philip Morris USA Inc. v. U.S. Sun Star Trading, Inc., 2010 WL 2133937, at *5 (E.D.N.Y. Mar.
11, 2010). Thus, defendants’ motion for summary judgment with respect to plaintiffs’ claim for
illegal importation of counterfeit goods should be denied.
C.
Conspiracy to Commit Fraud
Defendants argue that Pearson’s claim alleging a conspiracy to commit fraud fails
because plaintiffs have not pleaded an underlying fraud. See Def. Mem. at 22. “New York . . .
recognize[s] a cause of action for conspiracy to commit fraud.” E.g., Abu Dhabi Commercial
Bank v. Morgan Stanley & Co. Inc., 888 F. Supp. 2d 431, 451 n.97 (S.D.N.Y. 2012) (citation
omitted); accord Maersk, Inc. v. Neewra, Inc., 554 F. Supp. 2d 424, 458 (S.D.N.Y. 2008).
To establish a prima facie case for conspiracy, a plaintiff must allege the primary
tort and four additional elements: “(a) a corrupt agreement between two or more
persons, (b) an overt act in furtherance of the corrupt agreement, (c) the parties’
intentional participation in the furtherance of a plan or purpose, and (d) the
resulting damage or injury.”
Amusement Indus., Inc. v. Stern, 786 F. Supp. 2d 758, 783 (S.D.N.Y. 2011) (quoting Chrysler
Capital Corp. v. Century Power Corp., 778 F. Supp. 1260, 1267 (S.D.N.Y. 1991); accord Kashi
v. Gratsos, 790 F.2d 1050, 1055 (2d Cir. 1986) (“In alleging conspiracy, the plaintiff carries the
burden of proving (1) the corrupt agreement between two or more persons, (2) an overt act, (3)
their intentional participation in the furtherance of a plan or purpose, and (4) the resulting
damage.”) (citation and internal quotation marks omitted); Decter v. Second Nature Therapeutic
Program, LLC, 42 F. Supp. 3d 450, 464 (E.D.N.Y. 2014) (“To properly plead civil conspiracy
for these limited purposes, a plaintiff must allege both a primary tort and also show the four
elements of a conspiracy . . . .”) (citation and internal quotation marks omitted).
Here, Pearson’s claim for civil conspiracy is that defendants conspired with Philomath to
defraud Pearson. See SAC ¶¶ 55-58, 103-09. Thus, to survive the motion for summary
40
judgment, Pearson was required to set forth its evidence that (1) that Philomath committed a
fraud against Pearson (that is, the “primary tort”) and (2) that defendants conspired with
Philomath to commit this fraud. See generally Maersk, Inc., 554 F. Supp. 2d at 458. While
Pearson has provided some evidence regarding the second of these prongs, see Pl. Mem. at 23,
they marshal no admissible evidence at all regarding the underlying tort: that is, the alleged fraud
by Philomath against Pearson.
To survive the motion for summary judgment as to the first prong of the inquiry, Pearson
was required to show proof that would allow a jury to find:
that (1) [Philomath] made material representations that were false, (2)
[Philomath] knew the representations were false and made them with the intent to
deceive [Pearson], (3) [Pearson] justifiably relied on [Philomath’s]
representations, and (4) [Pearson] was injured as a result of [Philomath’s]
representations.
Cerabono v. Price, 7 A.D.3d 479, 480 (2d Dep’t 2004) (internal citations omitted). Pearson
points to no evidence for any of these elements. See Pl. Mem. at 23-24. Instead, it cites to
allegations of the complaint and to the fact that it recently sued Philomath. See id. at 23.
Obviously, these citations cannot satisfy Pearson’s evidentiary burden to prove the underlying
tort of fraud, and thus defendants’ motion for summary judgment as to plaintiffs’ claim for civil
conspiracy to commit fraud should be granted. See generally Corbett v. eHome Credit Corp.,
2010 WL 1063702, at *3 n.5 (E.D.N.Y. Mar. 22, 2010) (“A claim for civil conspiracy is only
actionable if the complaint states a claim for the underlying tort.”) (citations omitted); Fisher v.
Big Squeeze (N.Y.), Inc., 349 F. Supp. 2d 483, 489 (E.D.N.Y. 2004) (“Civil conspiracy cannot
stand on its own, apart from an independent claim asserting the underlying tort that the
defendants allegedly conspired to commit.”) (citation omitted); Am. Preferred Prescription, Inc.
v. Health Mgmt., Inc., 252 A.D.2d 414, 416 (1st Dep’t 1998) (“[P]laintiff has failed to
41
sufficiently allege an actionable underlying tort and thus there is no support for the conspiracy
allegations.”); Buccieri v. Franzreb, 201 A.D.2d 356, 358-89 (1st Dep’t 1994) (“Since the
complaint sets forth no otherwise actionable tort, plaintiff’s fifth cause of action [alleging
conspiracy] must be dismissed . . . .”).18
Accordingly, defendants’ motion for summary judgment should be granted as to
Pearson’s claim for conspiracy to commit fraud.
D.
Other Trademark Claims
Plaintiffs allege various other trademark-related claims for which defendants seek partial
summary judgment, see Def. Mem. at 20-21, 23-26, consisting of Trademark Counterfeiting
under 15 U.S.C. § 1114(1)(a), SAC ¶¶ 77-80; Trademark Dilution in violation of 15 U.S.C.
§ 1125(c), id. ¶¶ 85-89; and Federal Unfair Competition and False Designation of Origin in
violation of 15 U.S.C. § 1125(a), id. ¶¶ 90-96. Defendants contend that they are entitled to
partial summary judgment on these claims as to the 140 works at issue unless “Plaintiffs can
evidence Defendants distributed a counterfeit copy of . . . the works at issue.” Def. Mem. at 21.
Plaintiffs do not contest this argument. Thus, to the extent infringement claims as to particular
works are being dismissed because of the lack of proof of distribution or sale, the claims under
these other statutes must also fail.
IV.
CONCLUSION
For the foregoing reasons, defendants’ motion to for partial summary judgment (Docket
18
Perhaps there is evidence somewhere in the record to meet these elements. However,
a district court is not required to “scour the record on its own in a search for evidence.” CILP
Assocs., L.P. v. PriceWaterhouse Coopers LLP , 735 F.3d 114, 125 (2d Cir. 2013) (citation and
internal quotation marks omitted). Instead, it is the party’s responsibility to set forth such
evidence in its memorandum of law.
42
# 266) should be granted in part and denied in part. Specifically, defendants’ motion should be
granted as to all trademark and copyright-related claims for sales regarding the following works:
Roadmap Nos. 1, 2, 4, 5, 6, 7, 9, 10a, 10b, 10c, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 23, 24, 25,
26, 27, 28, 29, 30, 32, 33, 34, 36, 37, 39a, 39b, 41, 42, 43a, 43b, 45, 46, 47, 48, 49, 50, 52, 53,
55, 56, 57, 58, 59, 60, 61, 62, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77, 78, 79, 80, 81, 82,
83, 84, 85, 86, 87, 88, 91, 92, 93a, 93b, 95, 96, 97, 98, 99, 101, 102, 103, 104, 105, 106, 107,
108, 109, 110, 111, 112, 114, 115, 116, 117, 119, 121, 122, 123, 125a, 125b, 126, 127, 129, 131,
132, 133a, and 133b, and as to Pearson’s claim for civil conspiracy, and denied in all other
respects.
PROCEDURE FOR FILING OBJECTIONS TO THIS
REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil
Procedure, the parties have fourteen (14) days including weekends and holidays from service of
this Report and Recommendation to serve and file any objections. See also Fed. R. Civ. P. 6(a),
(b), (d). Such objections (and any responses to objections) shall be filed with the Clerk of the
Court, with copies sent to the Hon. William H. Pauley III at 500 Pearl Street, New York, New
York 10007. Any request for an extension of time to file objections must be directed to Judge
Pauley. If a party fails to file timely objections, that party will not be permitted to raise any
objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140
(1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile,
P.C., 596 F.3d 84, 92 (2d Cir. 2010).
43
S tember 30, 2015
k New York
Dated: ep
New Yor ,
44