Energy Intelligence Group Inc. et al v. Scotia Capital (USA) Inc.

Filing 33

MEMORANDUM AND ORDER denying 23 Motion to Dismiss; denying 23 Motion to Strike. Because the Court cannot, based on the pleadings, conclude that plaintiffs' causes of action accrued more than three years before the filing of the c omplaint, defendant's motion to dismiss or strike parts of the compliant based on the statute of limitations (Dkt. No. 23) is DENIED. (As further set forth in this Memorandum and Order.) (Signed by Judge P. Kevin Castel on 1/30/2017) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ENERGY INTELLIGENCE GROUP, INC., and
ENERGY INTELLIGENCE GROUP (UK)
LIMITED,
Plaintiffs,
-against

16-cv-00617 (PKC)(KNF)
MEMORANDUM
AND ORDER

SCOTIA CAPITAL (USA) INC.,
Defendant.
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CASTEL, U.S.D.J.
Plaintiffs Energy Intelligence Group, Inc. (“EIG”) and Energy Intelligence Group
(UK) Limited bring claims against defendant Scotia Capital (USA), Inc. (“Scotia”) under the
Copyright Act of 1976, 17 U.S.C. § 101 et seq. (the “Copyright Act”) alleging willful
infringement of plaintiffs’ registered copyrights. Defendant moves to dismiss Counts III and IV
of plaintiff’s four-count complaint under Rule 12(b)(6), Fed. R. Civ. P. for failure to state a claim
upon which relief can be granted, arguing that they are barred by the statute of limitations, and to
strike any allegations of infringement under the remaining counts that are likewise barred by the
statute of limitations. Based on the allegations set forth the complaint the Court cannot rule as a
matter of law that the statute of limitations bars plaintiffs from recovery and defendant’s motion
is thus denied.
BACKGROUND
EIG publishes subscription newsletters concerning the global energy industry.
(Compl. ¶ 8.) Subscribers to these publications include securities brokers and dealers,

consultants, bankers, investors, stock market analysts, traders, commodity analysts, and others
interested in the oil and gas industries. (Id. at ¶ 13.) Subscribers can obtain these publications
either through email subscriptions or via EIG’s password protected website. (Id. at ¶ 24.) The
four publications at issue are the newsletters Oil Market Intelligence (“OMI”), Energy
Intelligence Briefing (“EIB”), Oil Daily (“OD”), and Petroleum Intelligence Weekly (“PIW”).
(See id. at ¶¶ 9-12.) Scotia currently holds subscriptions to OMI and EIB, which are the subject
of Counts I and II, respectively. (Id. at ¶¶ 40-41). Scotia has not held a subscription to OD since
July 2009, or PIW since January 2010. (Id. at ¶¶ 42-43). EIG alleges that Scotia has willfully
copied and distributed the publications beyond the scope permitted by the subscription
agreements in violations of EIG’s copyrights. (Id. at ¶¶ 93- 95, 104-06, 115-17, 126-28.)
LEGAL STANDARD
Rule 12(b)(6) requires a complaint to “contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In assessing
the sufficiency of a complaint, a court must disregard legal conclusions, which are not entitled to
the presumption of truth. Id. Instead, the Court must examine the well-pleaded factual
allegations and “determine whether they plausibly give rise to an entitlement to relief.” Id. at
679. “Dismissal is appropriate when ‘it is clear from the face of the complaint, and matters of
which the court may take judicial notice, that the plaintiff’s claims are barred as a matter of
law.’” Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE, 763 F.3d 198, 208-09 (2d
Cir. 2014) (quoting Conopco, Inc. v. Roll Int’l, 231 F.3d 82, 86 (2d Cir. 2000)).

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DISCUSSION
In Psihoyos v. John Wiley & Sons, Inc., the Second Circuit held that under the
Copyright Act, “copyright infringement claims do not accrue until actual or constructive
discovery of the relevant infringement. . . .” 748 F.3d 120, 125 (2d Cir. 2014). Little more than
a month later, the Supreme Court, in an opinion holding that the equitable defense of laches does
not apply to claims for copyright infringement brought within the statute of limitations under the
Copyright Act, reviewed the statute of limitations for such suits, stating “the limitations period
generally begins to run at the point when the plaintiff can file suit and obtain relief.” Petrella v.
MGM, 134 S. Ct. 1962, 1969 (2014) (internal quotation marks and citation omitted). In
summarizing its introductory discussion of copyright law, the Supreme Court reiterated this
earlier statement, elaborating that the statute of limitations allowed plaintiff “to gain
retrospective relief running only three years back from the date the complaint was filed.” Id. at
1970. In the context of its review of the statute of limitations under the Copyright Act, the
Supreme Court noted that “[a]lthough we have not passed on the question, nine Courts of
Appeals have adopted, as an alternative to the incident of injury rule, a ‘discovery rule,’ which
starts the limitations period when ‘the plaintiff discovers, or with due diligence should have
discovered, the injury that forms the basis for the claim.’” Id. at 1969 n.4 (quoting William A.
Graham Co. v. Haughey, 568 F.3d 425, 433 (3d Cir. 2009)).
Defendant urges the Court to disregard the clear Second Circuit precedent from
Psihoyos that the statute of limitations begins to run at the actual or constructive discovery of
infringement in favor of dicta in Petrella that the Supreme Court itself acknowledged was not
controlling. This the Court will not do. Despite defendant’s contention that Petrella has caused
“instability in the law” and that the “discovery rule. . . will need to be revisited in the near

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future,” (Def.’s Mem. in Supp., 8), other courts within this district have found the discovery rule
to still control post Petrella. See e.g., Cooley v. Penguin Grp. (USA), Inc., 31 F. Supp. 3d 599,
611 n.76 (S.D.N.Y. 2014). The Court concludes that the statute of limitations applicable to this
action for infringement under the Copyright Act is three years from plaintiffs’ actual or
constructive discovery of the infringement.
Defendant contends that even if the Court finds Psihoyos controlling and applies
the discovery rule to the statute of limitations in this action, such that plaintiffs’ causes of action
accrued within the statute of limitations, damages are still not recoverable for any infringement
that occurred more than three years prior to the filing of the complaint due to a separate damages
limitation laid down in Petrella. (Def.’s Mem. in Supp., 13-14.) In support of this proposition
defendant relies on the above cited language from Petrella. As already discussed, the dicta from
Petrella did not overrule Psihoyos. In any event, under no reasonable reading of Petrella could
the opinion be interpreted to establish a time limit on the recovery of damages separate and apart
from the statute of limitations.
Defendant argues that even if the discovery rule is applied to the statute of
limitations applicable to plaintiffs’ claims, several of plaintiffs’ claims must still be dismissed
because, based on the pleadings, plaintiffs were on inquiry notice of the infringement more than
three years before the filing of the complaint. (See Def.’s Mem. in Supp., 9-10.) Under the
Copyright Act, “[a] claim accrues when a reasonably diligent plaintiff knows or has reason to
know of the injury upon which the claim is premised.” Mahan v. ROC Nation, LLC, 634 F.
App’x 329, 331 (2d Cir. 2016) (citing Merchant v. Levy, 92 F.3d 51, 56 (2d Cir. 1996)).
Defendant argues that plaintiffs were on inquiry notice of defendant’s infringement as early as
2000 based on the fact that the email addresses designated by defendant for the delivery of

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several of the subscriptions did not match the names of the Authorized Users (the only people
allowed to access the subscriptions) on record with plaintiffs. (Def.’s Mem. in Supp., 10-11.)
Alternatively, defendant argues plaintiffs were on inquiry notice of possible infringement as
early as 2008 due to similar fact patterns in various lawsuits plaintiffs filed against other
institutional entities similar to defendant. (Id. at 11-12.)
A motion to dismiss based on a statute of limitations defense “should not be
granted unless ‘it appears beyond doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief.’” Ortiz v. Cornetta, 867 F.2d 146, 148 (2d Cir.
1989) (emphasis in original) (quoting Abdul-Alim Amin v. Universal Life Insurance Co., 706
F.2d 638, 640 (5th Cir. 1983)). Keeping in mind the requirement that all reasonable inferences
be drawn in the non-movant’s favor when deciding a motion to dismiss, the Court cannot
conclude, based only on the pleadings, that plaintiffs were on inquiry notice of the infringement
more than three years before the filing of the complaint. Neither the discrepancies between the
designated delivery email addresses and the names of the Authorized Users, nor the fact that
plaintiffs had filed lawsuits against other parties based on factually similar infringement
allegations so obviously indicates infringement that it would be appropriate to dismiss or strike
any part of the complaint at this juncture. A statute of limitations is a fact-based affirmative
defense which may be better addressed on a more complete record at the summary judgment
stage or at trial.
CONCLUSION
Because the Court cannot, based on the pleadings, conclude that plaintiffs’ causes
of action accrued more than three years before the filing of the complaint, defendant’s motion to

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dismiss or strike parts of the compliant based on the statute of limitations (Dkt. No. 23) is
DENIED.
SO ORDERED.

Dated: New York, New York
January 30, 2017

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