TrackMan, Inc. v. GSP Golf AB et al
Filing
62
MEMORANDUM AND ORDER granting 41 Motion to Dismiss; granting in part and denying in part 53 Motion to Dismiss. For the foregoing reasons, the GSP Defendants' motion to dismiss is granted in full and SGT Defendants' motion is granted as to plaintiff's breach of contract claim and denied as to all other claims. Accordingly, plaintiff's breach of contract claim is the only claim that is dismissed, and its other four claims -- a direct copyright infringement claim, two secondary copyright infringement claims, and a false advertising claim -- survive the SGT Defendants' motion. The Clerk of Court is respectfully directed to terminate the motions pending at ECF Nos. 41 and 53. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 9/24/24) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------X
TRACKMAN, INC.,
Plaintiff,
MEMORANDUM AND ORDER
- against -
23 Civ. 598 (NRB)
GSP GOLF AB, doing business as GSPro,
DAVOR BOGAVAC, SIMULATORGOLFTOUR LLC,
and CHAD COOKE,
Defendants.
------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Plaintiff Trackman, Inc. (“plaintiff”) is the maker of the
golf simulator game Perfect Golf.
Among other things, Perfect
Golf offers users the ability to virtually play some of the most
famous golf courses in the world, including St. Andrews, Pebble
Beach, and PGA National.
Beginning in the late summer or early
fall of 2019, defendants Davor Bogavac (“Bogavac”), his company
GSP
Golf
AB
(“GSP”
Defendants”),
Chad
and
together
Cooke
with
Bogavac,
(“Cooke”),
and
the
his
“GSP
company
SimulatorGolfTour LLC (“SGT” and together with Cooke, the “SGT
Defendants”) began taking steps toward creating their own golf
simulator game that would compete with Perfect Golf. 1
these
efforts,
plaintiff’s
defendants
copyrighted
allegedly
software
copied
and,
key
As part of
components
without
of
permission,
When referring to the GSP Defendants and SGT Defendants collectively, we use
the term “defendants.”
1
incorporated
digitally
them
into
converting
their
many
own
of
product.
the
famed
Moreover,
golf
courses
after
from
plaintiff’s platform for use on defendants’ competing platform,
Cooke falsely suggested, in promotions and advertisements, that
defendants were authorized to use these trademarked courses.
Plaintiff subsequently sued defendants, asserting five causes
of
action,
namely:
(1)
direct
copyright
infringement;
(2)
secondary copyright infringement against both Bogavac and Cooke;
(3) breach of contract; and (4) false advertising against Cooke
and his company SGT. Thereafter, the GSP Defendants filed a motion
to dismiss plaintiff’s breach of contract claim, while the SGT
Defendants filed a motion to dismiss all of plaintiff’s claims.
Those two motions to dismiss are the subject of this Memorandum
and Order. For the following reasons, we grant the GSP Defendants’
motion, thereby dismissing plaintiff’s contract claim, but deny
the SGT Defendants’ motion, except as to the contract claim.
Therefore, plaintiff’s copyright infringement claims (both direct
and secondary), as well as its false advertising claim, survive
the motions to dismiss.
-2-
BACKGROUND
A.
Factual Background 2
1. The Parties
Plaintiff is a golf technology company that manufactures
launch monitors and develops simulator technology.
14.
FAC ¶¶ 1, 13-
Using a combination of radars and cameras, plaintiff’s launch
monitors track the full trajectory of a golf shot.
Id. ¶ 15.
Although the launch monitors are portable and can thus be used
outdoors on real golf courses, id. ¶ 17, they are also incorporated
into plaintiff’s simulator technology, which allows users to play
golf indoors using real clubs and balls in front of an “impact
screen” that displays the simulation and keeps golf balls from
ricocheting back at the player after they are hit, id. ¶ 20.
Plaintiff’s golf simulator is powered by Virtual Golf 2, a computer
program that is the product of a multi-year development project,
which began with Perfect Golf, i.e., the software at the center of
this dispute.
Id. ¶¶ 21, 29-30.
Bogavac is the founder, co-owner, and chief executive officer
of GSP, which, like plaintiff, is a provider of golf simulator
The following facts, taken from the First Amended Complaint (“FAC”), ECF No.
32, are assumed to be true for the purposes of this motion.
See Kalnit v.
Eichler, 264 F.3d 131, 135 (2d Cir. 2001).
2
-3-
software.
Id. ¶¶ 2-3.
SGT provides an online golf simulator
platform, Simulator Golf Tour, and is owned by Cooke. 3
Id. ¶¶ 4-
5.
2. Perfect Golf
In
2015,
plaintiff’s
affiliate
Perfect
Parallel,
Inc.
released the golf simulator software Perfect Golf, which offers
users
“an
immersive
experience
centered
on
high-resolution
visuals, accurate ball flight physics developed using state-ofthe-art launch monitors, and hyper-realistic gameplay.”
Id. ¶ 31.
Perfect Golf includes Course Forge, a software that “allows user
to design golf courses that can be played in Perfect Golf.”
¶ 34.
Id.
Since Perfect Golf’s release in 2015, “users have created
hundreds of courses using Course Forge.”
Id.
In addition to
Course Forge, Perfect Golf also includes “an API 4 for external
tournament sites to be able to fully integrate into Perfect Golf
The parties sometimes refer to Cooke as “Cook,” but we will refer to him as
“Cooke” consistent with how his name appears on the case caption and throughout
the First Amended Complaint.
4 An API or application programming interface is defined as “a set of routines,
protocols, and tools designed to allow the development of applications that can
utilize or operate in conjunction with a given item of software, set of data,
website,
etc.”
API,
Oxford
English
Dictionary,
https://www.oed.com/dictionary/api_n-a?tab=meaning_and_use#40470976100
(last
visited Sept. 24, 2024). In practical terms, APIs are “mechanisms that enable
two software components to communicate with each other using a set of
definitions and protocols.”
What is an API (Application Programming
Interface)?, Amazon Web Services, https://aws.amazon.com/what-is/api/ (last
visited Sept. 24, 2024).
3
-4-
for online real-time scoring and tracking.”
Id. ¶ 35.
Through
third-party tournament sites, Perfect Golf users can play each
other on courses designed in Course Forge.
Id.
3. The Perfect Parallel EULA
Individuals who purchase Perfect Golf agree to the terms of
the Perfect Parallel End User License Agreement (the “EULA”).
Id. ¶ 84; see also ECF No. 43-1 (EULA). 5
The EULA grants a
“personal, limited, terminable, non-exclusive and non-transferable
license to install and use” Perfect Golf, including Course Forge
and the underlying API data structures, “on a single computer for
personal non-commercial use.” 6
EULA at 2.
The EULA prohibits the
use of any part of Perfect Golf, Course Forge, and the API data
structures, “in any way, directly or indirectly,” for the purpose
of generating revenue or in exchange for any consideration or value
of any kind.
Id.
This prohibition expressly extends to any “User-
Generated Content,” which includes courses created using Course
Forge.
Id.
Finally, as particularly relevant here, the EULA
The GSP Defendants submitted the full text of the EULA with their motion to
dismiss. See ECF No. 43-1. As plaintiff acknowledges, ECF No. 47 at 5 n.2,
the EULA is integral to the complaint and therefore may be considered on the
motion to dismiss, see DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d
Cir. 2010).
6 Similarly, in the EULA’s “No Commercial Use” section, the agreement grants
users a “limited right, subject to certain restrictions, to use the Software on
a single computer for personal use only.” EULA at 2.
5
-5-
prohibits
users
from
decompiling,
disassembling,
reverse
engineering, or otherwise attempting to derive the source code,
underlying ideas, or algorithms of Perfect Golf and Course Forge.
Id. at 3.
4. The Perfect Parallel Acquisition
In
January
2018,
plaintiff
acquired
Perfect
Parallel,
including Perfect Golf and all Perfect Parallel’s software assets
and intellectual property rights. FAC ¶ 36. Historically, Perfect
Golf had been compatible with various third-party launch monitors,
not just those manufactured by plaintiff, but in August 2019,
plaintiff announced it would be suspending this feature. Id. ¶ 38.
Thus, once that policy went into effect in August 2020, Perfect
Golf users were no longer able to fully play the game unless they
purchased and used plaintiff’s launch monitors.
Id.
5. Defendants’ Alleged Conduct
Bogavac was an “avid” user of Perfect Golf and “regularly”
used Course Forge to design virtual golf courses which he played
using Perfect Golf.
Id. ¶ 39.
After plaintiff announced in August
2019 that it would soon discontinue Perfect Golf’s compatibility
with third-party launch monitors, “Bogavac saw an opportunity.”
Id. ¶ 40.
Specifically, Bogavac sought make a golf simulator game
-6-
that would replace Perfect Golf and allow users to play games
designed in Course Forge but across a number of launch monitors,
not just those developed by plaintiff.
Id.
To that end, as
plaintiff alleges, Bogavac “needed to do three things.”
Id. ¶ 41.
First, Bogavac needed to develop golf simulator software to
replace Perfect Golf, which he would later call “GSPro.” Id. ¶ 42.
To
develop
GSPro,
Bogavac
and
his
associates
allegedly
“downloaded, accessed, and used Perfect Golf, including Course
Forge.”
Id. ¶ 51.
“copied,
adapted,
As part of his development efforts, Bogavac
and
incorporated
[plaintiff’s]
copyright-
protected software into GSPro,” without permission from plaintiff
or Perfect Parallel.
Id.
For example, Bogavac (and his company
GSP) “copied Course Forge code directly into GSPro” and “copied
Perfect
Golf’s
‘combine’
feature,”
which
“enables
identify strengths and weaknesses in their game.”
golfers
to
Id. ¶¶ 52-53.
In 2020, Bogavac released versions of GSPro, which allowed “users
to
integrate
and
use
GSPro
with
other
launch
“compete with [plaintiff’s] launch monitors.”
monitors”
that
Id. ¶ 56.
Second, in addition to developing GSPro, Bogavac “needed an
online platform to host tournament play by GSPro users.” Id. ¶ 43.
To accomplish this, Bogavac closely collaborated with Chad Cooke.
Id. ¶ 60.
Together, they developed a golf tournament platform
-7-
Simulator
Golf
Tour
alongside GSPro. 7
(“SGT”),
which
Id. ¶¶ 60, 63.
is
designed
to
be
played
However, like GSPro, “SGT copies
and borrows from [plaintiff’s] copyright-protected software.”
¶ 64.
Id.
For example, without permission, defendants “downloaded,
accessed, copied, and used” Perfect Golf’s API data structures for
simulating golf competitions.
Id. ¶ 65.
Third, Bogavac needed golf courses for GSPro users to play on
the SGT platform.
Id. ¶ 44.
As plaintiff alleges, by “examining
and studying” courses that were created on plaintiff’s course
design platform, Course Forge, defendants “learned how to build
[competing software GSPro and SGT] that would play these courses.”
Id. ¶ 74.
coordinated
Thereafter, defendants allegedly undertook a “massive
campaign . . .
courses for play in GSPro.”
to
convert
Id. ¶ 75.
Course
Forge-designed
By the time a new version
of GSPro was released in January 2021, “more than two dozen
converted courses were available.”
Id. ¶ 76.
Plaintiff alleges
that “even today, users are playing converted courses on GSPro and
SGT.”
Id. ¶ 79.
7 SGT is a “commercial enterprise, and it has been from the start.”
Currently, members pay $80 for one year of access to SGT. Id.
-8-
FAC ¶ 61.
6. The SGT Defendants’ Alleged Misstatements
Plaintiff also alleges that the SGT Defendants have made
numerous misleading statements regarding SGT’s course offerings.
See id. ¶ 67.
Specifically, Cooke repeatedly promoted on social
media and elsewhere that SGT’s course selection included “iconic,
branded courses like St. Andrews in Scotland and various PGA Tour
Tournament Players Club courses throughout the United States.”
Id.
have
Despite these representations, the SGT Defendants “did not
any
licenses,
including
licenses
of
trademark
rights,
required to offer these and other branded courses to the public.”
Id. ¶ 69.
obtained
By contrast, plaintiff had “diligently sought and
permission[],
including
trademark
licenses,
from
the
owners of branded golf courses,” including St. Andrews and various
PGA Tour courses.
Id. ¶ 70.
Eventually, in 2023, the trademark
owners of the St. Andrews and PGA Tour courses sent cease-anddesist letters to defendants, after which defendants “removed,
disabled access to, or renamed the St. Andrews and PGA Tour
courses.”
Id. ¶ 71.
By that point, however, “the damage had been
done,” as many customers had already elected to purchase GSPro and
SGT rather than plaintiff’s competing software.
-9-
Id. ¶ 72.
B.
Procedural History
1. The Initial Complaint
On January 24, 2023, plaintiff sued only the GSP Defendants
(Bogavac and his company GSP).
ECF No. 1.
Due to delays in
effectuating service, ECF No. 16, the GSP Defendants did not file
an answer and assert counterclaims until July 7, 2023, ECF No. 21.
The
GSP
Defendants
subsequently
filed
a
pre-motion
letter
addressing their anticipated motion for partial judgment on the
pleadings under Federal Rule of Civil Procedure 12(c).
28.
ECF No.
After plaintiff opposed that letter, the Court held a pre-
motion conference on October 4, 2023.
See ECF Nos. 29, 31.
Thereafter, the Court so-ordered the parties’ agreed-upon schedule
allowing
plaintiff
to
file
an
amended
complaint
and
the
GSP
Defendants to file a motion to dismiss the amended complaint.
ECF
No. 31.
2. The Amended Complaint
On November 15, 2023, plaintiff filed its First Amended
Complaint, which asserts five claims, this time against both the
GSP Defendants and the SGT Defendants (Cooke and his company SGT).
See FAC.
First, plaintiff asserts a direct copyright infringement
claim against all defendants based on the allegation that after
-10-
they “downloaded,
installed,
accessed,
and
used
[plaintiff’s]
Perfect Golf, Course Forge, and tournament API, which are protected
by copyright,” defendants “copied, prepared derivative works based
on,
and
distributed
literal
and
structural
[plaintiff’s] copyright-protected software.”
aspects
of
Id. ¶ 81.
Second, plaintiff asserts indirect copyright infringement
claims against both Bogavac and Cooke because they “knew of and
materially
contributed
to
the
direct
infringements”
of
one
another, their respective companies (GSP and SGT), and their
associates.
Id. ¶¶ 82-83.
Third, plaintiff asserts a breach of contract claim against
all defendants.
See id. ¶ 84.
On this claim, plaintiff alleges
that defendants “engaged in activities” that “do not constitute
copying or any other violation of copyright law” but do violate
the terms of the Perfect Parallel EULA.
Id. ¶ 85.
Specifically,
defendants’ violating conduct included “reverse engineering -namely, studying and analyzing [plaintiff’s] software and the
courses created in Course Forge . . . to allow [d]efendants to
develop, produce, and distribute GSPro, SGT, and simulator golf
courses.”
Id.
Finally, plaintiff asserts a false advertising claim under
the Lanham Act against the SGT Defendants in light of the “false
-11-
and misleading” statements they made about the availability of
several “iconic, trademark golf courses” on their platform.
Id.
¶ 86.
3. The Motions to Dismiss
Each
set
of
defendants
filed
a
--
motion
the
to
GSP
dismiss
Defendants
the
First
and
SGT
Defendants
--
Amended
Complaint.
On December 15, 2023, the GSP Defendants filed their
motion, which seeks to dismiss only plaintiff’s breach of contract
claim on the basis that it is expressly and impliedly preempted by
the Copyright Act. 8
2024,
plaintiff
See ECF No. 42 (“GSP Mot.”).
filed
its
response
in
On January 19,
opposition
to
the
GSP
Defendants’ motion to dismiss, ECF No. 47 (“GSP Opp.”), and the
GSP Defendants filed their reply on February 9, 2024, ECF No. 48
(“GSP Reply”).
On March 8, 2024, the SGT Defendants filed their motion to
dismiss, in which they seek to dismiss all claims asserted against
them,
namely,
the
direct
copyright
infringement
claim,
the
indirect copyright infringement claim against Cooke, the breach of
contract claim, and the false advertising claim.
See ECF No. 55
As noted above, the GSP Defendants attached the EULA as an exhibit, ECF No.
43-1, which we can and will consider on this motion to dismiss.
8
-12-
(“SGT Mot.”).
On April 12, 2024, plaintiff filed its response in
opposition to the SGT Defendants’ motion, ECF No. 57 (“SGT Opp.”),
and the SGT Defendants filed their reply on May 7, 2024, ECF No.
59 (“SGT Reply”). 9
LEGAL STANDARD
Defendants collectively seek to dismiss plaintiffs’ First
Amended Complaint pursuant to Rule 12(b)(6).
To survive a motion
to dismiss under Rule 12(b)(6), a complaint must include “enough
facts to state a claim that is plausible on its face.”
Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Bell Atl.
A claim is facially
plausible “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.”
662,
678
(2009).
A
court
must
Ashcroft v. Iqbal, 556 U.S.
accept
as
true
all
factual
allegations in the complaint and draw all reasonable inferences in
plaintiff’s favor. Acticon AG v. China N.E. Petrol. Holdings Ltd.,
692 F.3d 34, 37 (2d Cir. 2012).
In evaluating the sufficiency of
a complaint, a district court may consider documents that are
attached
to
the
complaint,
incorporated
by
reference
in
the
The parties also filed letters notifying the Court of supplemental authority
on May 13, 2024, ECF No. 60, and September 5, 2024, ECF No. 61.
9
-13-
complaint, or otherwise integral to the complaint.
DiFolco v.
MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010).
DISCUSSION
As noted above, the SGT Defendants move to dismiss all the
claims asserted against them, whereas the GSP Defendants move only
to dismiss plaintiff’s breach of contract claim.
Defendants’
motion
implicates
all
of
Because the SGT
plaintiff’s
claims,
we
analyze each claim in turn and address the GSP Defendants’ partial
motion to dismiss in the context of the contract claim.
A.
Direct Copyright Infringement
First, the SGT Defendants move to dismiss plaintiff’s direct
copyright claim on three distinct grounds, namely: (1) the API
data
structures
copyrightable;
at
(2)
the
center
defendants
of
have
this
dispute
dispositive
are
not
license
and
estoppel defenses; and (3) the statute of limitations bars the
claim.
SGT Mot. at 7-15.
As further set forth below, each of
these bases for dismissal is plagued by the same fundamental
deficiency: they are not ripe for determination on a motion to
dismiss.
Therefore, we deny the SGT Defendants’ motion to dismiss
plaintiff’s direct copyright claim against them.
-14-
1. API Structures
We begin with the SGT Defendants’ first argument that the API
structures at the heart of plaintiff’s copyright claim are not
copyrightable. 10
As an initial matter, the API data structures at
issue include the shared naming conventions that allows a simulated
golf tournament site like SGT (the “server”) both to communicate
with software like GSPro (the “client”) and to process data, like
how many shots it takes for a player to complete a hole in the
golf simulation.
SGT Mot. at 9 (citing FAC ¶¶ 35, 56, 65).
The
SGT Defendants argue that these API data structures, or naming
conventions,
are
not
copyrightable
because
they
(1)
lack
originality; and (2) are “nothing more than a process, system, or
method” expressly excluded from protection under the Copyright
Act.
Id. at 10.
For the following reasons, we reject the SGT
Defendants’ arguments regarding the API structures.
“The sine qua non of copyright is originality.
To qualify
for copyright protection, a work must be original to the author.
Originality, as the term is used in copyright, means only that the
work was independently created by the author (as opposed to copied
It bears noting that plaintiff’s copyright claim appears not to be limited
to the copying of the API data structures, and therefore, even if we were to
agree with the SGT Defendants on this issue, it would not completely resolve
plaintiff’s direct copyright claim. See SGT Opp. at 4 (citing FAC ¶ 93).
10
-15-
from other works), and that it possesses at least some minimal
degree of creativity.”
Feist Publ’ns, Inc. v. Rural Tel. Serv.
Co., 499 U.S. 340, 345 (1991) (citation omitted).
Critically,
“the requisite level of creativity is extremely low; even a slight
amount will suffice.”
Id.
Indeed, as the Supreme Court has
explained, “[t]he vast majority of works make the grade quite
easily, as they possess some creative spark, no matter how crude,
humble or obvious it might be.”
Id. (quotations omitted).
Here, plaintiff has pleaded sufficient facts to satisfy the
“modest” requirements of originality.
Weissmann v. Freeman, 868
F.2d 1313, 1321 (2d Cir. 1989). As alleged, plaintiff’s subsidiary
Perfect Parallel spent “years” developing Perfect Golf, a golf
game that provides, among other things, “an immersive experience
centered
gameplay.”
on
high-resolution
FAC ¶ 31.
visuals”
and
“hyper-realistic
Perfect Parallel also “built . . . an API
for external tournament sites to be able to fully integrate into
Perfect Golf for online real-time scoring and tracking.” Id. ¶ 35.
Such allegations, at this stage, are more than sufficient to
demonstrate that Perfect Parallel both independently developed the
subject API structures and made numerous creative decisions in
-16-
doing so. 11
See Nicholls v. Tufenkian Imp./Exp. Ventures, Inc.,
No. 04 Civ. 2110 (WHP), 2004 WL 1399187, at *2 (S.D.N.Y. June 23,
2004) (finding allegations that plaintiff “created an original
design” in “approximately 1997 or 1998” sufficient to establish
originality and withstand a motion to dismiss).
Tellingly, the SGT Defendants overlook these well-pleaded
allegations and instead ask us to determine that plaintiff’s API
structures, which the SGT Defendants append to their motion, lack
originality on their face.
See SGT Mot. at 10 (citing Declaration
of Chad Cooke (“Cooke Decl.”), Ex. 3).
Even if we could consider
the API structures attached to their motion, the SGT Defendants’
“merits-based argument . . . is premature.”
King-Devick Test Inc.
v. NYU Langone Hosps., 17 Civ. 9307 (JPO), 2019 WL 78986, at *4
(S.D.N.Y. Jan. 2, 2019).
“[C]ourts in this Circuit have concluded
that questions of originality are generally ‘inappropriate for
determination on a motion to dismiss.’”
Sohm v. Mcgraw-Hill Glob.
Educ. Holdings, LLC, 16 Civ. 4255 (WHP), 2016 WL 5061116, at *2
(S.D.N.Y.
Sept.
16,
2016)
(quoting
FragranceNet.com
v.
Although Perfect Golf is a registered copyright, it was only registered in
September 2022, seven years after its publication in January 2015. See Perfect
Golf, Registration No. TX0009168826 (Sept. 14, 2022). While production of a
certificate of registration constitutes prima facie evidence of the validity of
the copyright, it only does so when the registration was made before or within
five years after first publication of the work. See Urbont v. Sony Music Ent.,
831 F.3d 80, 88-89 (2d Cir. 2016).
11
-17-
FragranceX.com, Inc., 679 F. Supp. 2d 312, 320-21 (E.D.N.Y. 2010)).
Indeed, on such a motion, it is axiomatic that the question is not
whether plaintiff can definitively prove originality, as the SGT
Defendants suggest it is, but “whether [plaintiff] ha[s] made
sufficiently plausible allegations to justify the creation of an
evidentiary record on the question of originality in the first
place.”
King-Devick Test Inc., 2019 WL 78986, at *4.
For the
reasons discussed above, we have no trouble answering this question
in the affirmative -- plaintiff has cleared the preliminary hurdle
of plausibly alleging originality such that an evidentiary record
on the issue should be developed.
While the SGT Defendants’
merits-based contention may ultimately prove correct with the
benefit of discovery and expert opinions, the Court cannot say at
this
early
stage
that
plaintiff’s
API
structures
lack
originality. 12
In support of their argument, the SGT Defendants rely heavily on Ragan v.
Berkshire Hathaway Automotive, Inc., 91 F.4th 1267 (8th Cir. 2024), where the
Eighth Circuit affirmed the dismissal of a copyright infringement claim on the
basis that the document at issue lacked originality. Id. at 1271. That case,
however, is readily distinguishable. In Ragan, the Eighth Circuit’s originality
determination relied on the fact that the subject document -- a single-page car
dealership customer intake form “containing fewer than 100 words seeking basic
information” -- was merely “a form designed to record, not convey, information.”
Id. Here, by contrast, the API’s entire purpose is to communicate, or convey,
information so that “external tournament sites [can] fully integrate into
Perfect Golf for real-time scoring and tracking.” FAC ¶ 35. Thus, the Court
rejects the SGT Defendants’ attempts to analogize plaintiff’s potentially
complex tournament API to a simple customer intake form used by car dealerships.
12
-18-
Next, the SGT Defendants argue that plaintiff’s copyright
infringement claim fails because plaintiff’s API data structures
are a “process” or “method of operation” expressly excluded from
copyright protection under the Copyright Act.
(quoting 17 U.S.C. § 102(b)).
SGT Mot. at 11-13
It is of course true that copyright
protection does not “extend to any . . . process [or] method of
operation.”
17 U.S.C. § 102(b).
However, like the question of
originality, whether plaintiff’s API structures are a protectable
process or method of operation cannot be determined on a motion to
dismiss.
In what is likely the leading case on this issue, Oracle
America, Inc. v. Google Inc., 750 F.3d 1339, (Fed. Cir. 2014), the
U.S. Court of Appeals for the Federal Circuit explained that the
question of whether non-literal elements of a computer program,
including
the
structures,
“sequence,
are
protected
structure,
under
and
the
organization”
Copyright
on . . . the particular facts of each case.”
Act
of
API
“depends
Id. at 1356.
With
the benefit of a full trial record, the Federal Circuit concluded
that Oracle’s API packages were indeed entitled to copyright
protection
because,
among
other
reasons,
they
could
considered mere “processes” or “methods of operation.”
1348, 1368. 13
not
be
See id. at
The numerous cases cited by the SGT Defendants
The U.S. Supreme Court initially denied the petition for certiorari that was
filed after the Federal Circuit’s decision addressing the copyrightability of
13
-19-
similarly demonstrate that this issue is not ripe for resolution
on a motion to dismiss.
See SGT Mot. at 12 (citing cases).
In
each of them, the court only decided the question of whether the
relevant API constituted a process or method of operation after
the
completion
of
discovery,
judgment or after trial. 14
Defendants’
invitation
to
either
on
a
motion
for
summary
Therefore, the Court rejects the SGT
conclude,
at
this
stage,
that
plaintiff’s API is a process or method of operation precluded from
protection under the Copyright Act. 15
API data structures.
See Google, Inc. v. Oracle Am., Inc., 576 U.S. 1071
(2015). However, after the Federal Circuit’s second decision in the case, which
addressed only the issue of fair use, Oracle Am. v. Google LLC, 886 F.3d 1179
(Fed. Cir. 2018), the Supreme Court granted certiorari on two questions: (1)
whether certain API is copyrightable or instead constitutes a “process,”
“system,” and “method of operation” that is expressly exempt from protection
under the Copyright Act; and (2) whether Google’s use of the API in that case
was a fair use. See Google LLC v. Oracle Am., Inc., 593 U.S. 1, 19-20 (2021).
But due to the “rapidly changing technological, economic, and business-related
circumstances,” the Supreme Court opted not to address the copyrightability
question and instead resolved the case on fair use grounds. Id. at 20. As a
result, the Federal Circuit’s original opinion in Oracle, which we rely upon
here, remains good law and is particularly instructive on this evolving issue.
See, e.g., Baystate Techs., Inc. v. Bentley Sys., Inc., 946 F. Supp. 1079 (D.
Mass. 1996) (trial); Lotus Dev. Corp. v. Borland Int’l, Inc., 49 F.3d 807 (1995)
(multiple trials), aff’d, 516 U.S. 233 (1996); ATC Distrib. Grp., Inc. v.
Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700 (6th Cir. 2005)
(summary judgment); SAS Inst., Inc. v. World Programming Ltd., 64 F.4th 1319
(Fed. Cir. 2023) (summary judgment); Comput. Assocs. Int’l, Inc. v. Altai, Inc.,
982 F.2d 693 (2d Cir. 1992) (trial).
14
As the Supreme Court’s decision in Oracle demonstrates, whether the type of
API data structures at the heart of plaintiff’s copyright claims are entitled
to copyright protection has yet to be definitively resolved.
Therefore, we
address plaintiff’s claim as the law stands presently, but as discussed more
fully below, we recognize that the legal landscape could change during the
pendency of this litigation.
15
-20-
2. Claimed Defenses
The SGT Defendants also contend that plaintiff’s copyright
infringement
claim
should
be
dismissed
established license and estoppel defenses.
because
they
have
See Mot. at 13-14.
An
affirmative defense may be raised on a motion to dismiss under
Rule 12(b)(6), without resort to summary judgment, but only “if
the defense appears on the face of the complaint.”
Pani v. Empire
Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir. 1998).
Here, the
SGT Defendants stake their affirmative defense argument not on
allegations contained in the operative complaint but instead on
statements proffered in a declaration attached to their own motion
to dismiss.
See SGT Mot. at 13-14 (citing Cooke Decl.).
On this
basis alone, the Court refuses to consider the SGT Defendants’
claimed defenses at this stage.
See Spinelli v. Nat’l Football
League, 903 F.3d 185, 199 (2d Cir. 2018) (“Because the existence
of a license is an affirmative defense, it is a permissible basis
for dismissal only where the facts necessary to establish the
defense are evident on the face of the complaint.” (quotations and
citation omitted)); Morningstar Films, LLC v. Nasso, 554 F. Supp.
3d 525, 540-41 (E.D.N.Y. 2021) (stating that the “[estoppel]
inquiry is ‘peculiarly fact-specific’ and, therefore, generally
inappropriate for resolution on a motion to dismiss” (quoting
-21-
Broad. Music, Inc. v. Hearst/ABC Viacom Ent. Servs., 746 F. Supp.
320, 329-30 (S.D.N.Y. 1990)).
The Court likewise rejects the SGT Defendants’ request to
convert their motion into one for summary judgment.
at 14.
See SGT Mot.
While a district court has discretion to convert a motion
to dismiss into one for summary judgment, the “essential inquiry”
in exercising such discretion is whether the parties “should
reasonably have recognized the possibility that the motion might
be converted into one for summary judgment or [whether they were]
taken by surprise and deprived of a reasonable opportunity to meet
facts outside the pleading.”
288, 295 (2d Cir. 1985).
In re G & A Books, Inc., 770 F.2d
“Where both parties submit extrinsic
evidence in support of their positions, a district court may fairly
convert a motion to dismiss into one for summary judgment under
Fed. R. Civ. P. 56.”
Carruthers v. Flaum, 388 F. Supp. 2d 360,
379 (S.D.N.Y. 2005).
Here, however, the SGT Defendants are the
only party to have submitted and relied upon extrinsic evidence;
plaintiff has not had a comparable opportunity to address facts
outside the pleadings.
the
SGT
Defendants
Moreover, as plaintiff explains, and as
effectively
concede,
there
remain
“[s]ignificant disputed issues” regarding what licensing rights,
if any, plaintiff granted to defendants.
-22-
SGT Opp. at 12.
These
factual issues can and should be fleshed out during discovery, not
resolved by the Court without the benefit of a full evidentiary
record.
Accordingly,
the
Court
will
not
convert
the
SGT
Defendants’ motion into one for summary judgment and defers any
consideration
of
their
affirmative
defenses
until
after
the
completion of discovery.
3. Statute of Limitations
Finally, the SGT Defendants assert that plaintiff’s copyright
claim is barred by the statute of limitations.
14-15.
The
Copyright
Act
provides
a
See SGT Mot. at
three-year
statute
limitations beginning when an infringement claim accrues.
U.S.C. § 507(b).
of
See 17
To determine when such a claim arises, the Second
Circuit applies a discovery rule.
See Michael Grecco Prods., Inc.
v. RADesign, Inc., 112 F.4th 144, 148 (2d Cir. 2024).
Under that
rule, “an infringement claim does not accrue until the copyright
holder discovers, or with due diligence should have discovered,
the infringement.”
Id. at 150 (quotations and emphasis omitted).
As with other affirmative defenses, a statute of limitations
defense may be decided on a Rule 12(b)(6) motion “only if it is
clear on the face of the complaint” that the statute of limitations
has indeed run.
Id.
-23-
In this case, it is unclear from the operative complaint
whether plaintiff’s copyright infringement claim against the SGT
Defendants is untimely.
To the contrary, the allegations, when
viewed in the light most favorable to plaintiff, strongly suggest
that plaintiff’s claim is indeed timely.
Defendants
were
added
to
this
case
on
For context, the SGT
November
15,
2023.
Accordingly, to dismiss on timeliness grounds, it must be evident
that plaintiff discovered, or should have discovered, the SGT
Defendants’ infringement before November 15, 2020.
Plaintiff
alleges that, although Bogavac (the owner of GSP) “set out to
produce his golf simulator software . . . [i]n the late summer and
early fall of 2019,” plaintiff “was not aware of these development
efforts at that time.”
FAC ¶ 50.
Plaintiff further alleges that,
“[a]t the same time,” Bogavac began “coordinating” with the SGT
Defendants to “develop a similar golf tournament platform.”
Id.
¶ 60.
The SGT Defendants argue that, because the “late summer and
early fall of 2019” is more than three years before they were added
to this case on November 15, 2023, plaintiff’s infringement claim
against them is untimely on the face of the complaint.
at 15.
SGT Mot.
However, the late summer and early fall of 2019 was only
when defendants began taking steps to develop their allegedly
-24-
infringing product, suggesting that the thrust of the infringing
conduct did not take place until much later.
Indeed, according to
plaintiff, Cooke did not even register his company SGT until a
full year later, on November 11, 2020, at which point he “continued
to directly engage in the infringing activities alleged in this
complaint.”
FAC ¶ 97 (emphasis added).
These allegations thus
support the reasonable inference that plaintiff did not and could
not discover the SGT Defendants’ infringing conduct until after
November 15, 2020, placing plaintiff’s infringement claim squarely
within the three-year statute of limitations.
Therefore, it is
hardly clear on the face of the complaint that plaintiff’s claim
against the SGT Defendants is untimely.
See Parisienne v. Scripps
Media, Inc., 19 Civ. 8612 (ER), 2021 WL 3668084, at *2 (S.D.N.Y.
Aug. 17, 2021) (“[W]here there is even some doubt as to whether
dismissal is warranted, a court should not grant a Rule 12(b)(6)
motion on statute of limitations grounds.” (quotations omitted)).
For these reasons, the Court denies the SGT Defendants’ motion
to dismiss as to the direct infringement claim against them.
B.
Secondary Copyright Infringement
The SGT Defendants also move to dismiss plaintiff’s claim of
secondary copyright infringement against Cooke on the basis that
-25-
(1)
absent
infringement;
direct
and
infringement,
(2)
plaintiff
there
fails
to
is
state
infringement claim specifically against Cooke.
17.
no
secondary
a
secondary
See Mot. at 15-
Since we have already concluded that plaintiff has stated a
direct infringement claim, we need only address the SGT Defendants’
second
argument
independently
for
fails
dismissal.
because
However,
plaintiff
that
sufficiently
argument
pleads
a
secondary infringement claim against Cooke.
“To establish secondary infringement claims under a theory of
contributory
or
vicarious
infringement,
a
plaintiff
must
adequately allege direct infringement by a party other than the
defendant.”
Hartmann v. Amazon.com, Inc., 20 Civ. 4928 (PAE),
2021 WL 3683510, at *6 (S.D.N.Y. Aug. 19, 2021).
established
that
a
third
party
committed
direct
Once it is
copyright
infringement, a defendant may be held liable for contributory (or
secondary) infringement if he (1) possessed “knowledge of the
infringing activity,” and (2) “materially contribute[d] to the
infringing conduct of another.”
Arista Recs. LLC v. Lime Grp.
LLC, 784 F. Supp. 2d 398, 432 (S.D.N.Y. 2011) (quoting Matthew
Bender & Co., Inc. v. West Pub. Co., 158 F.3d 693, 706 (2d Cir.
1998)).
persons
The knowledge required is constructive, meaning that
who
“know
or
have
reason
-26-
to
know
of
the
direct
infringement” may be liable.
110,
118
(2d
Cir.
2010)
Arista Recs. LLC v. Doe 3, 604 F.3d
(quotations
and
emphasis
omitted).
Material contribution requires that the defendant “encouraged or
assisted others’ infringement, or provided machinery or goods that
facilitated infringement.”
Lime Grp., 784 F. Supp. 2d at 432.
To
qualify as material contribution, the defendant’s support must be
“substantial.”
Arista Recs. LLC v. Usenet.com, Inc., 633 F. Supp.
2d 124, 155 (S.D.N.Y. 2009).
In this case, plaintiff plainly alleges sufficient facts to
demonstrate that Cooke is secondarily liable for his company’s
direct infringement.
As an initial matter, plaintiff alleges that
Cooke “is the owner, single member, and manager of [SGT].”
FAC
¶ 5. Although the SGT Defendants correctly observe that “ownership
alone” may be insufficient to establish secondary liability, SGT
Mot. at 16-17 (citing Coach, Inc. v. Cont’l Gift, 2012 WL 13162344,
at
*5
(E.D.N.Y.
Aug.
24,
2024)),
plaintiff
involvement from Cooke than mere ownership.
alleges
far
more
For example, the
complaint states that Cooke “personally directed [SGT’s] conduct,”
FAC
¶
97,
coordinat[ing]”
id. ¶ 45.
including
by
infringement
“carefully
efforts
orchestrat[ing]
with
other
and
defendants,
Additionally, plaintiff asserts that Cooke himself
“downloaded, installed, accessed, and used” plaintiff’s Perfect
-27-
Golf, Course Forge, and tournament API in order to copy and
distribute this copyright-protected software.
Id. ¶ 81.
As a
result of these efforts, moreover, Cooke “received income” and
“enjoyed a direct financial benefit.”
Id. ¶ 102.
Collectively,
these allegations are sufficient to state a claim for secondary
liability against Cooke, and thus we deny the SGT Defendants’
motion to dismiss as to the secondary infringement claim. 16
C.
Breach of Contract
As
discussed
above,
plaintiff
asserts
that
defendants
breached the Perfect Parallel EULA (the licensing agreement) by
engaging in reverse engineering of Perfect Golf and courses created
in Course Forge.
both
sets
of
See id. ¶¶ 108-17.
defendants
--
the
GSP
Unlike the other claims,
Defendants
and
the
SGT
Defendants -- move to dismiss plaintiff’s breach of contract claim.
The GSP Defendants’ position, which the SGT Defendants also adopt,
is
that
the
Copyright
Act
plaintiff’s contract claim.
19.
expressly
and
impliedly
preempts
See GSP Mot. at 7-23; SGT Mot. at 18-
Express, or statutory, preemption “preempts state law claims
16 Plaintiff also states a claim for secondary liability against Cooke for
materially and knowingly assisting the GSP Defendants in their direct copyright
infringement. For example, the complaint asserts, “as the developer of SGT[,]
which [Cooke] designed to be interoperable with GSPro for tournament play,
[Cooke] had the right and ability to supervise and control GSP’s and Mr.
Bogavac’s infringing activities.” FAC ¶ 107.
-28-
to the extent that they assert rights equivalent to those protected
by the Copyright Act, in works of authorship within the subject
matter of federal copyright.”
In re Jackson, 972 F.3d 25, 33-34
(2d Cir. 2020) (citing 17 U.S.C. § 301).
Implied preemption, on
the other hand, “precludes the application of state laws to the
extent that those laws interfere with or frustrate the functioning
of the regime created by the Copyright Act.”
Id. at 33.
For the
following reasons, we hold that plaintiff’s claim is expressly
preempted by the Copyright Act, and, as a result, we need not reach
the issue of implied preemption or the alternative grounds on which
the SGT Defendants move to dismiss plaintiff’s contract claim.
1. Express Preemption
Before
we
can
address
defendants’
express
argument, a brief review of the EULA is necessary.
preemption
As discussed
above, any person who purchases Perfect Golf (including Course
Forge and the API data structures) must agree and is subject to
the EULA.
See FAC ¶ 84.
Plaintiff’s breach of contract claim is
based on a single provision of the EULA (the “Reverse Engineering
Provision” or “RE Provision”), which provides:
-29-
Notwithstanding the grant to you of a limited license to use
the Software set as set forth in Section 3, above, 17 you may
not: . . . decompile, disassemble, reverse engineer, or
otherwise attempt to derive the source code, underlying
ideas, or algorithms of the Software.
EULA at 3 (emphases added).
Plaintiff alleges that defendants
violated this provision by “studying and analyzing [plaintiff’s]
software and the courses created in Course Forge in order to learn
details
of
design,
construction,
and
operation
--
to
allow
[d]efendants to develop, produce, and distribute GSPro, SGT, and
simulator golf courses.”
FAC ¶ 85.
Elsewhere, plaintiff contends
that “[b]y examining and studying Course Forge-created courses -without at first copying them -- [d]efendants learned how to build
. . . GSPro and tournament platform SGT that would play these
courses.” 18 Id. ¶ 74. Put simply, plaintiff claims that defendants
breached the RE Provision by “studying and analyzing” plaintiff’s
software as part of its efforts to develop its own competing golf
simulator software that would be compatible with Course Forge
courses and third-party hardware.
The EULA grants a limited, non-exclusive license to install Perfect Golf for
“personal, non-commercial use.” FAC ¶ 84(a); EULA at 2.
17
Plaintiff also alleges that defendants “reverse engineered the sim connector
in Perfect Golf” to accommodate third-party launch monitors. FAC ¶ 114.
18
-30-
Defendants argue that plaintiff’s breach of contract claim is
expressly preempted by the Copyright Act.
The Copyright Act’s
express preemption provision, Section 301, provides in full:
On and after January 1, 1978, all legal or equitable rights
that are equivalent to any of the exclusive rights within the
general scope of copyright as specified by section 106 in
works of authorship that are fixed in a tangible medium of
expression and come within the subject matter of copyright as
specified by sections 102 and 103, whether created before or
after that date and whether published or unpublished, are
governed exclusively by this title. Thereafter, no person is
entitled to any such right or equivalent right in any such
work under the common law or statutes of any State.
17 U.S.C. § 301(a).
The Second Circuit “has interpreted the
statute as directing a two-part analysis for determining whether
a state law claim is preempted under § 301.”
42.
Jackson, 972 F.3d at
While we analyze both prongs of the test, as we must, our
focus -- and the crux of the parties’ dispute -- centers on the
second prong of the two-part analysis.
a. Subject Matter Requirement
The first prong of the express preemption inquiry, which has
been labeled the “subject matter” requirement, “looks at the work
that would be affected by the plaintiff’s exercise of a statecreated right, and requires (as an essential element of preemption)
that the work ‘come within the subject matter of copyright as
specified by sections 102 and 103.’”
-31-
Id. (quoting 17 U.S.C.
§ 301(a)).
Thus, if the disputed work “is a ‘literary work’ . . .
or [falls into] any other category of ‘work of authorship’ within
the ‘subject matter of copyright’ (even if the subject of the claim
is
for
some
reason
ineligible
for
copyright
protection)
the
plaintiff’s claim is subject to the possibility of statutory
preemption.”
Id. (quoting 17 U.S.C. § 102(a)).
In analyzing this
prong, we are instructed to focus on “the gravamen of the claim
and the allegations supporting it.”
Id. at 47.
Here, plaintiff’s claim is that defendants breached the EULA
by reverse engineering plaintiff’s software. 19
See FAC ¶ 113.
Thus, since the underlying work at issue is software, it falls
squarely within the subject matter of copyright because software
has been deemed a “literary work” under Section 102(a)(1).
See
Comput. Assocs. Int’l, Inc. v. Altai, Inc., 982 F.2d 693, 702 (2d
Cir. 1992) (“While computer programs are not specifically listed
as part of the above statutory definition, the legislative history
leaves no doubt that Congress intended them to be considered
literary works.”); IBM Corp. v. Micro Focus (US), Inc., 676 F.
Supp. 3d 263, 277 (S.D.N.Y. 2023) (“[S]oftware is protected as a
As a general matter, reverse engineering is the process by which a “competitor
. . . create[s] copies of copyrighted software for the purpose of analyzing
that software and discovering how it functions.”
Authors Guild, Inc. v.
HathiTrust, 755 F.3d 87, 95 (2d Cir. 2014).
19
-32-
literary
work
under
the
Copyright
Act.”).
Plaintiff
itself
acknowledges that its computer programs are “original works of
authorship
fixed
in
a
tangible
medium
of
expression
and
are
protected by copyright,” FAC ¶ 90, and it does not seriously
dispute that its software falls inside the realm of copyright for
preemption purposes, GSP Opp. at 20 n.6.
Therefore, plaintiff’s
contract claim satisfies the subject matter requirement, and thus
we move on to the more complex and vigorously disputed second prong
of the two-part test.
b. Equivalence Requirement
The second prong of the express preemption inquiry, referred
to as the “equivalence” or “general scope” requirement, “looks at
the right being asserted (over a work that comes within the
‘subject matter of copyright’) and requires (for preemption to
apply) that the right be ‘equivalent to any of the exclusive rights
within the general scope of copyright as specified by section 106.”
Jackson, 972 F.3d at 43 (quoting 17 U.S.C. § 301(a) (emphasis in
Jackson).
Section 106 of the Copyright Act defines the “exclusive
rights” granted by the federal copyright law, “which consist of
the rights ‘to do and to authorize’ the reproduction, distribution,
performance, and display of a work, and the creation of derivative
works based on a work.”
Id. (quoting 17 U.S.C. § 106).
-33-
“The
general scope [or equivalency] requirement is satisfied only when
the state-created right may be abridged by an act that would, by
itself, infringe one of the exclusive rights provided by federal
copyright law.”
Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc.,
373 F.3d 296, 305 (2d Cir. 2004).
Accordingly, for preemption to
apply, “the state law claim must involve acts of reproduction,
adaptation, performance, distribution, or display.”
“Even
if
a
claim
otherwise
satisfies
the
Id.
general
scope
requirement, a claim is not preempted if it ‘include[s] any extra
elements that make it qualitatively different from a copyright
infringement claim.’”
ML Genius Holdings LLC v. Google LLC, No.
20-3113, 2022 WL 710744, at *3 (2d Cir. Mar. 10, 2022) (quoting
Briarpatch, 373 F.3d at 305), cert denied, 143 S. Ct. 2658 (2023).
“To determine whether a claim is qualitatively different, we look
at what the plaintiff seeks to protect, the theories in which the
matter is thought to be protected and the rights sought to be
enforced.” Briarpatch, 373 F.3d at 306 (quotations and alterations
omitted).
Critically, the Second Circuit has admonished that the
“extra element” inquiry is not “mechanical” but instead “requires
a holistic evaluation of the nature of the rights sought to be
enforced, and a determination whether the state law action is
qualitatively
different
from
a
copyright
-34-
infringement
claim.”
Jackson, 972 F.3d at 44 n.17 (quotations and emphasis omitted).
Therefore, under this test, state law claims “survive preemption
when [they] include a sufficiently significant ‘extra element’
that ‘qualitatively distinguishes [such claims] from claims for
copyright infringement.”
Id. at 44-45 (quoting Altai, 982 F.2d at
717).
As we wade into this analysis, we note that we are far from
the first court to grapple with whether the Copyright Act expressly
preempts a breach of contract claim.
To the contrary, it is widely
recognized that this question “has proven especially challenging”
for courts in this district.
Piuggi v. Good for You Prods. LLC,
--- F. Supp. 3d ---, No. 23 Civ. 3665 (VM), 2024 WL 3274638, at
*14 (S.D.N.Y. July 2, 2024) (citing cases).
In particular, there
has been widespread “disagreement among the district courts in
this Circuit about how [the] ‘[extra] elements’ test applies to a
breach
of
contract
claim,
with
conclusions” regarding this issue.
courts
reaching
divergent
Dow Jones & Co., Inc. v. Juwai
Ltd., No. 21 Civ. 7284 (PKC), 2023 WL 2561588, at *7 (S.D.N.Y.
Mar. 17, 2023); see also Canal+ Image UK Ltd. v. Lutvak, 773 F.
Supp. 2d 419, 442 n.5 (S.D.N.Y. 2011) (noting that “Courts of
Appeals are also divided on this issue”).
Some courts have held
that “the extra element that saves a contract claim from preemption
-35-
is the promise itself.”
Canal+, 773 F. Supp. 2d at 442 (citing
cases). Under this view, breach of contract claims are, in effect,
categorically exempt from express preemption because there is a
“promise inherent in every contract.”
BroadVision Inc. v. Gen.
Elec. Co., No. 08 Civ. 1489 (WHP), 2008 WL 468114, at *4 (S.D.N.Y.
Oct. 15, 2008).
Meanwhile, other courts have taken a more fact-
specific approach to the extra-elements test, holding “that a
breach of contract claim is preempted if it is merely based on
allegations that the defendant did something that the copyright
laws reserve exclusively to the plaintiff (such as unauthorized
reproduction, performance, distribution, or display).”
Canal+,
773 F. Supp.2d at 443 (quotations omitted) (citing cases).
Courts following the first approach -- that the contractual
promise is itself the requisite extra element -- have (perhaps
unsurprisingly) concluded that similar contractual prohibitions on
reverse engineering are not preempted by the Copyright Act.
For
example, in Bowers v. Baystate Technologies, Inc., 320 F.3d 1317
(Fed. Cir. 2003), the plaintiff asserted breach of contract claims
against
the
defendant
for
allegedly
violating
a
“broad[]”
prohibition on reverse engineering embodied in the plaintiff’s
shrink-wrap license agreements.
Id. at 1326.
The U.S. Court of
Appeals for the Federal Circuit rejected the defendant’s express
-36-
preemption
argument
and
held
the
plaintiff’s
contract
claims
escaped such preemption. See id. Following the reasoning of “most
courts to examine this issue,” the Federal Circuit explained that
“mutual assent and consideration required by a contract claim”
(i.e.,
the
promise
itself)
“render
that
different from copyright infringement.”
claim
qualitatively
Id. at 1324-25 (citing,
e.g., ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996)).
This approach, if we were to follow it, invariably leads to the
conclusion
that
plaintiff’s
contract
claim
is
not
expressly
preempted by the Copyright Act -- like any two parties to a
contract, the parties here necessarily exchanged “mutual assent
and consideration,” which, under the Bowers line of cases, is
sufficient to avoid express preemption.
However, as defendants correctly observe, the Second Circuit
recently rejected the “promise-is-sufficient” approach reflected
in Bowers.
See GSP Mot. at 21-22.
In ML Genius Holdings, the
plaintiff published song lyrics with permission from the relevant
copyright holders.
2022 WL 710744, at *1, n.3.
The defendants
then allegedly copied those song lyrics and licensed them to
Google, which was among the named defendants, in direct violation
of the plaintiff’s terms of service agreement.
Id. at *4.
The
plaintiff subsequently brought breach of contract claims, alleging
-37-
that the defendants “breache[d] [plaintiff’s] Terms of Service
regarding
the
copying
and
reproduction
of
[plaintiff’s]
[c]ontent.” Id. In response to the defendants’ express preemption
argument, the plaintiff contended, consistent with Bowers, that
its breach of contract claims could not be preempted “because those
claims require it to plead mutual assent and valid consideration.”
Id. (quotations omitted).
In other words, the plaintiff argued
the promise itself was the extra element necessary to save its
contract claims from preemption. But the Second Circuit explicitly
rejected that argument, reasoning that a contractual promise alone
is “not sufficient . . . to avoid preemption” because such a “per
se
rule
that
all
preemption . . . .
breach
of
contract
would
be
in
claims
tension
are
with
exempt
[the
from
Court’s]
precedent holding that the general scope inquiry is ‘holistic.’”
Id. (quoting Jackson, 972 F.3d at 44 n.17).
Applying what seems
to be a more fact-sensitive analysis, the Second Circuit held the
plaintiff’s contract claim was indeed preempted because “the right
[the plaintiff] seeks to protect is coextensive with an exclusive
right already safeguarded by the [Copyright] Act -- namely, control
over reproduction and derivative use of copyrighted material.”
Id. (quotations and alterations omitted).
-38-
While ML Genius is non-precedential and does not address the
well-documented disagreement on this issue, we find it prudent to
apply the approach most recently adopted by the Second Circuit. 20
See also Dow Jones & Co., Inc., 2023 WL 2561588, at *7 (“ML Genius
is
non-precedential,
but
this
Court
finds
its
reasoning
and
conclusion to be persuasive.”). Under that approach, we do not
simply accept that the promise inherent in every contract is
sufficient to take plaintiff’s contract claim outside the realm of
copyright law and avoid preemption.
Instead, the fundamental
question is whether the rights that plaintiff seeks to protect
through its breach of contract claim are “coextensive” with the
exclusive rights protected by the Copyright Act. On this question,
plaintiff asserts that its contract claim aims to protect distinct
rights from copyright because it is specifically (and carefully)
“directed
to
the
copyrighted works.”
non-copying
acts
of
studying
and
analyzing
GSP Opp. at 21 (citing FAC ¶¶ 74, 85, 113,
We also note that the Second Circuit, even before ML Genius, held that a
breach of contract claim was expressly preempted because it “seeks solely to
vindicate an exclusive right under the Copyright Act.” Universal Instruments
Corp. v. Micro Sys. Eng’g, Inc., 924 F.3d 32, 49 (2d Cir. 2019). Although its
analysis is not particularly expansive, Universal Instruments implicitly
rejects the Bowers approach simply because it holds that a contract claim can
indeed be preempted. In other words, as in ML Genius, the Second Circuit in
Universal Instruments did not merely accept the premise set forth in Bowers
(and the like) that a promise alone is sufficient to avoid preemption.
Therefore, Universal Instruments suggests that the Second Circuit was already
beginning to move away from the Bowers approach in the years prior to ML Genius,
which lends further support to our decision to apply the more fact-sensitive
approach reflected in ML Genius.
20
-39-
117) (emphasis added).
However, in characterizing its pleadings
in this narrow fashion, plaintiff ignores the Second Circuit’s
instruction to “holistic[ally]” evaluate the nature of the rights
sought to be enforced by the contract claim when conducting the
equivalency inquiry.
ML Genius, 2022 WL 710744, at *4 (quoting
Jackson, 972 F.3d at 44 n.17).
To that end, a thorough review of
all allegations supporting plaintiff’s contract claim is in order.
Plaintiff points to five allegations in its complaint in
support of its argument that its contract claim is qualitatively
different from a copyright infringement claim.
(citing
FAC
¶¶
74,
85,
113,
117).
See GSP Opp. at 21
However,
two
of
these
allegations must be disregarded at the outset because they assert,
in wholly conclusory terms, that plaintiff’s contract claim is not
based on defendants’ copying activities. See FAC ¶ 85 (“Defendants
engaged in activities, which do not constitute copying or any other
violation of copyright law, in violation of the Perfect Parallel
EULA.”); id. ¶ 117 (“[Plaintiff] does not allege contract claims
for Defendants’ copying activities, which are the subject of
[plaintiff’s] copyright infringement claims.”).
After setting
aside these allegations, see Sacerdote v. N.Y. Univ., 9 F.4th 95,
107 (2d Cir. 2021), we turn our focus to the remaining three
allegations
cited
by
plaintiff:
-40-
(1)
“[d]efendants’
unlawful
conduct
included
reverse
engineering
--
namely,
studying
and
analyzing [plaintiff’s] software and the courses created in Course
Forge . . .
to
allow
[d]efendants
to
develop,
produce,
and
distribute GSPro, SGT, and simulator golf courses, FAC ¶ 85; (2)
“[d]efendants studied and analyzed [plaintiff’s] software” and
“undertook these activities to allow them to develop and distribute
GSPro, SGT, and golf courses,” id. ¶ 113; and (3) “[b]y examining
and studying Course Forge-created courses -- without at first
copying them -- [d]efendants learned how to build golf simulator
software GSPro and tournament platform SGT that would play these
courses,” which they did “for commercial gain, to build their
businesses,” id. ¶ 74.
Even viewed in the light most favorable to plaintiff, these
allegations reveal that plaintiff’s contract claim is nothing more
than a thinly veiled attempt to cloak what is, at bottom, a claim
for copyright infringement.
purported
reverse
While plaintiff focuses solely on the
engineering
activities
of
“studying
and
analyzing,” it completely disregards the other parts of the same
allegations,
which
answer
the
more
important
and
dispositive
question about those activities: to what end were defendants
engaging in them?
As the remainder of plaintiff’s allegations
tell us, “defendants undertook [those] activities [i.e., studying
-41-
and
analyzing] . . .
to
develop,
produce,
and
distribute”
allegedly infringing software, including GSpro and SGT.
This explanation is fatal to plaintiff’s contract claim.
Id. ¶ 85.
What it
demonstrates is that defendants’ reverse engineering activities
(i.e., studying and analyzing) were part and parcel of their
broader infringing conduct that is at the heart of plaintiff’s
copyright
claims
(i.e.,
unlawfully
distributing plaintiff’s software).
developing,
producing,
and
In other words, alleging that
defendants “studied and analyzed” plaintiff’s software as one step
in their overall efforts to “develop, produce, and distribute”
their own infringing software is effectively the same as alleging
that defendants reproduced, prepared a derivative work based upon,
and distributed copies of plaintiff’s software in violation of the
Copyright Act.
Moreover, the fact that plaintiff’s contract
allegations are almost substantively identical to those underlying
plaintiff’s
copyright
infringement
claims,
see
FAC
¶¶ 90-97,
demonstrates that the rights plaintiff seeks to protect in its
contract
claim
are
indeed
“coextensive”
with
those
“already
safeguarded by the [Copyright] Act,” ML Genius, 2022 WL 710744, at
*4.
Our conclusion is supported by recent case law following the
Second Circuit’s ML Genius decision.
-42-
In IBM Corp., the plaintiff
claimed,
in
provision
relevant
part,
the
parties’
in
assembling,
reverse
that
the
defendant
contract
compiling,
prohibiting
translating,
engineering” of the plaintiff’s software.
(alterations omitted).
violated
or
the
“reverse
reverse
676 F. Supp. 3d at 278
In light of this and similar allegations,
the court found that “[t]he gravamen” of the provisions that were
allegedly breached “is to prohibit [the defendant] from infringing
[the plaintiff’s] exclusive rights to copy and distribute its
software.”
breach
of
Id.
The court thus concluded that the plaintiff’s
contract
claim
“is
simply
a
restatement
of
[the
plaintiff’s] claims under the Copyright Act for unlawful copying
and distribution.” Id. (quoting New London Assocs., LLC v. Kinetic
Soc. LLC, 384 F. Supp. 3d 392, 411 (S.D.N.Y. 2019)).
Because the
same is true of plaintiff’s contract claim here, that claim is
expressly preempted by the Copyright Act and we “must [] dismiss
[it] for failing to state a cause of action.”
Briarpatch, 373
F.3d at 309. 21
The Court recognizes that there were likely well-founded strategic reasons
underlying plaintiff’s decision to assert a breach of contract claim alongside
its copyright claims. As discussed above, despite granting certiorari on the
question of whether certain API data structures are copyrightable, the Supreme
Court expressly left open that question for another day. See Oracle, 593 U.S.
at 19. Thus, we can understand plaintiff’s potential concern that during the
pendency of this litigation, the Supreme Court (and/or the Second Circuit) could
conceivably foreclose some or all of plaintiff’s copyright claims by finding
that its API structures are not copyrightable. If that occurs, plaintiff could
be wholly or partly without a remedy for its well-pleaded injury given our
dismissal of the breach of contract claim. For this reason, the Court dismisses
21
-43-
D.
False Advertising
Finally, we turn to plaintiff’s false advertising claim under
the Lanham Act, which is asserted only as to the SGT Defendants.
Plaintiff alleges that Cooke (on behalf of himself and SGT) made
statements that sought to commercially advertise and promote the
availability of iconic branded golf courses for simulator play on
the SGT platform.
FAC ¶ 119.
However, according to plaintiff,
these statements were false and misleading because they suggested
SGT was “authorized to offer genuine, trademarked courses,” when,
in reality, “SGT lacked the rights to offer these branded courses.”
Id. ¶¶ 120-21.
false
As plaintiff alleges, Cooke’s conduct constitutes
advertising
§ 1125(a)(1)(B).
in
violation
of
the
Lanham
Act,
15
U.S.C.
Id. ¶ 126.
The Lanham Act prohibits misrepresentations “in commercial
advertising
qualities,
or
or
§ 1125(a)(1)(B).
promotion”
of
“the
geographic
origin”
nature,
of
characteristics,
goods.
15
U.S.C.
“To prevail on a false advertising claim, a
plaintiff must establish that the message at issue is (1) either
literally
or
impliedly
false,
(2)
material,
(3)
placed
in
that contract claim without prejudice to plaintiff’s filing a second amended
complaint and/or a motion to reconsider our decision should there be any
substantial changes in the law while this litigation is pending.
-44-
interstate commerce, and (4) the cause of actual or likely injury
to the plaintiff.”
Souza v. Exotic Island Enters., 68 F.4th 99,
118 (2d Cir. 2023) (quotations omitted).
that
plaintiff’s
because
injury. 22
false
plaintiff
advertising
fails
to
SGT Mot. at 21-23.
plead
The SGT Defendants argue
claim
should
falsity,
be
dismissed
materiality,
and
For the following reasons, however,
we disagree and conclude that plaintiff does indeed state a claim
for false advertising under 15 U.S.C. § 1125(a)(1)(B). 23
1. Falsity
A plaintiff bringing a false advertising claim must show
falsity.
See Apotex Inc. v. Acorda Therapeutics, 823 F.3d 51, 63
(2d Cir. 2016).
There are two ways to do so.
“First, a plaintiff
can demonstrate that the challenged advertisement is literally
false, i.e.,
false
on
its
face.”
Id.
(quotations
omitted).
There is no dispute that the representations at issue were placed in
interstate commerce.
23 At the outset, while the parties do not address it, the Court finds that
plaintiff maintains the requisite standing to assert a false advertising claim
under the Lanham Act. See Lexmark Int’l, Inc. v. Static Control Components,
Inc., 572 U.S. 118, 134 n.6 (2014) (stating that standing is an element of a
false advertising claim).
First, plaintiff’s false advertising claim falls
into the “zone of interests” that the Lanham Act protects, id. at 137, because
plaintiff alleges that it suffered “substantial damage” to its business
reputation, goodwill, market share, as well as a loss in profits. FAC ¶ 125.
Second, plaintiff has shown that the injury was “proximately caused” by the SGT
Defendants’ alleged false advertising, Lexmark, 572 U.S. at 139, because it
alleges that the misstatements made by the SGT Defendants directly influenced
consumers’ decisions to purchase GSPro and SGT, rather than plaintiff’s
competing software, resulting in a substantial loss in profits for plaintiff.
See FAC ¶¶ 123, 125.
22
-45-
Second, “a plaintiff can show that an advertisement, while not
literally false, is nevertheless likely to mislead or confuse
consumers.”
Id. (quotations omitted).
Plaintiff claims that
Cooke’s representations satisfy both types of falsity, while the
SGT Defendants argue that plaintiff cannot establish either.
discussed
below,
we
conclude
that
although
plaintiff
As
cannot
establish literal falsity, it does allege sufficient facts to
demonstrate implied falsity (i.e., likelihood of confusion).
a. Literal Falsity
Plaintiff claims the SGT Defendants’ statements that “iconic,
branded golf courses were available for simulator play on SGT” are
false on their face because the SGT Defendants lacked the licenses
necessary to offer those courses on their simulator in a legal
manner.
SGT Opp. at 22 (citing FAC ¶¶ 67-71, 86, 120).
argument is insufficient to establish literal falsity.
This
To be
literally false, plaintiff would have to allege that, contrary to
the SGT Defendants’ representations, the “iconic, branded golf
courses” were not actually available for simulator play on SGT.
However, plaintiff’s own allegations show the exact opposite: that
those courses were indeed available for play on SGT albeit without
the requisite authorization (i.e., licenses) from those courses.
See FAC ¶¶ 67-69.
Indeed, precisely because the SGT Defendants
-46-
made these branded courses available for play, the trademark owners
of several of the courses sent defendants cease-and-desist letters
with which defendants complied.
See id. ¶ 71.
In other words,
the allegation that the branded courses were made available on SGT
unlawfully does render false the SGT Defendants’ representation
that these courses were, in fact, available for play on SGT.
Therefore, we conclude that the challenged statements are not
literally false.
b. Implied Falsity
Although
plaintiff
has
not
demonstrated
that
the
SGT
Defendants’ representations were literally false, it may still
succeed on a Lanham Act false advertising claim under an implied
falsity theory. 24
plaintiff
confusion.”
must
“Typically, to demonstrate implied falsity, a
present
evidence
rely
consumer
deception
or
Merck Eprova AG v. Brookstone Pharm., LLC, 920 F.
Supp. 2d 404, 418 (S.D.N.Y. 2013).
must
of
on
extrinsic
evidence
That is, “a district court
[of
consumer
deception
or
In setting forth the relevant law for implicit falsity, plaintiff seems to
rely on cases addressing false advertising claims under New York state law.
See SGT Opp. at 23 (citing cases). However, plaintiff only asserts a false
advertising claim under the Lanham Act, FAC ¶ 126, and therefore, the case law
that plaintiff cites is largely inapt.
24
-47-
confusion] to support a finding of an implicitly false message.” 25
Time Warner Cable, Inc v. DIRECTV, Inc., 497 F.3d 144, 153 (2d
Cir. 2007).
“Such extrinsic evidence is generally provided by
customer surveys exhibiting customer confusion.”
920 F. Supp. 2d at 418.
Merck Eprova AG,
At the motion to dismiss stage, however,
“plaintiffs need only state that there was confusion and offer
facts to support that claim.”
Restellini v. Wildenstein Plattner
Inst., Inc., 20 Civ. 4388 (AT), 2021 WL 4340824, at *7 (S.D.N.Y.
Sept. 22, 2021) (quoting Kuklachev v. Gelfman, 600 F. Supp. 2d
437, 473 (E.D.N.Y. 2009); Lokai Holdings LLC v. Twin Tigers USA
LLC, 306 F. Supp. 3d 629, 639 (S.D.N.Y. 2018)).
Here, plaintiff alleges sufficient facts to support its claim
that
the
confusion.
SGT
Defendants’
representations
caused
customer
As plaintiff alleges, the SGT Defendants repeatedly
touted the availability of iconic, branded courses for play on
SGT, falsely suggesting that SGT had the requisite licenses -- and
indeed endorsement -- from those courses.
86.
See FAC ¶¶ 67-68, 72,
In plaintiff’s view, consumers relied on these implicitly
false statements and were drawn to SGT (and GSPro) as a direct
However, “if the plaintiffs can demonstrate that defendants ‘have
intentionally set out to deceive the public,’ then no survey is required.”
Kuklachev v. Gelfman, 600 F. Supp. 2d 437, 470 (E.D.N.Y. 2009) (quoting Johnson
& Johnson * Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d
294, 298 (2d Cir. 1992)).
25
-48-
result of them.
develop
evidence
See id. ¶ 68.
of
While plaintiff will have to
customer
confusion
in
discovery
to
substantiate its claim, these allegations are enough, at this
stage, to establish that consumers purchased SGT (and GSPro) based
upon their false belief that the iconic courses offered on SGT
were genuine and authorized by the courses themselves.
Additionally, “where a plaintiff adequately demonstrates that
a defendant has intentionally set out to deceive the public, and
the
defendant’s
deliberate
conduct
in
this
regard
is
of
an
egregious nature, a presumption arises that consumers are, in fact,
being deceived.”
Johnson & Johnson * Merck Consumer Pharm. Co. v.
Smithkline Beecham Corp., 960 F.2d 294, 298-99 (2d Cir. 1992)
(quotations omitted).
Here, although plaintiff does not expressly
rely on this theory of confusion, there are enough facts to suggest
that such theory may be viable.
For example, plaintiff alleges
that the SGT Defendants (1) knew that they did not have the
requisite authorization to make available the trademarked courses;
(2) made a litany of statements on social media and elsewhere
suggesting that they had such authorization; and (3) made these
statements with the intention of influencing “a significant number
of users” to purchase SGT subscriptions and GSPro downloads on the
basis that they could play “at some of the most coveted courses
-49-
around the world.”
FAC ¶¶ 68-72.
These allegations allow the
Court to presume that customers are being deceived, and thus
plaintiff
plausibly
alleges
that
the
SGT
Defendants’
representations are misleading.
2. Materiality
In addition to establishing falsity, plaintiff must also
establish materiality -- that the SGT Defendants “misrepresented
an inherent quality or characteristic of the product.”
Nat’l
Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir.
1997) (quotations omitted).
“In other words, the allegedly false
statement must be likely to influence purchasing decisions.” Int’l
Code Counsel, Inc. v. UpCodes Inc., 43 F.4th 46, 63 (2d Cir. 2022)
(quotations omitted).
Thus, the materiality inquiry “analyzes
whether [the consumer] confusion . . . related to an inherent
quality of the product, such that they would influence consumers’
purchasing decisions.”
Id. at 64 n.10.
The Second Circuit has
“declared that plaintiffs should be given the opportunity to
develop
their
evidence
to
demonstrate
materiality”
such
that
materiality “generally cannot be determined on consideration of a
motion to dismiss.”
Id. at 64 (quotations omitted).
-50-
Here,
plaintiff’s
allegations
that
the
SGT
Defendants’
misleading statements likely influenced purchasing decisions are
plausible.
At the core of plaintiff’s apparent commercial success
is that it “diligently sought and obtained permissions, including
trademark licenses, from the owners of branded golf courses,”
including St. Andrews and PGA Tour courses.
FAC ¶ 69.
In the
golf simulator market, it is unsurprising that consumers would be
convinced to purchase plaintiff’s product not only because those
courses are available on the platform but also because the courses
are official partners of plaintiff.
plaintiff’s
product
plausibly
That is, the success of
depends
on
what
could
be
characterized as endorsements from these iconic courses, which
plaintiff says were hard-earned.
See id. ¶ 70.
Thus, it is
entirely reasonable, as plaintiff alleges, that when the SGT
Defendants began to misleadingly suggest that they, too, were
officially licensed by and affiliated with St. Andrews and PGA
Tour courses, “a significant number of users” were influenced to
join SGT and GSPro, rather than plaintiff’s platform.
Id. ¶ 68.
Therefore,
that
plaintiff
has
adequately
demonstrated
misrepresentations at issue were indeed material.
the
See Travel
Leaders Grp., LLC v. Corley, 19 Civ. 1595 (GBD)(JLC), 2019 WL
6647319,
at
*8
(S.D.N.Y.
Dec.
-51-
5,
2019)
(finding
plaintiff
adequately alleged materiality based on “the defendants’ erroneous
claim of affiliation with . . . a company with which [they have]
never been affiliated”), report and recommendation adopted by,
2022 WL 950957 (S.D.N.Y. Mar. 30, 2022); Chanel, Inc. v. RealReal,
Inc., 449 F. Supp. 3d 422, 444 (S.D.N.Y. 2020) (finding plaintiff
plausibly
alleged
representation
materiality
that
all
“based
the
on
products
[defendant’s]
it
offers
[false]
have
been
authenticated and are 100% the real thing”).
Nevertheless, the SGT Defendants contend that Dastar Corp. v.
Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), and its
progeny preclude plaintiff’s false advertising claim. 26
at 23-24.
SGT Mot.
Dastar “addresses the interplay between copyright --
which protects authors’ rights in their creations -- and unfair
competition
laws
[namely,
the
Lanham
Act]
--
which
protect
consumers from, inter alia, confusion as to the origin of goods.”
Vaad L’Hafotzas Sichos, Inc. v. Krinsky, 133 F. Supp. 3d 527, 538
(E.D.N.Y. 2015). In that case, a film company copied a documentary
series that had passed into the public domain onto videotapes that
it then sold under its own name.
See Dastar, 539 U.S. at 27-28.
Production companies that owned the exclusive rights to the series
Although they do not couch their Dastar argument in the context of the
materiality analysis, we find it appropriate to do so. See Restellini, 2021 WL
4340824, at *7 (addressing similar Dastar argument in materiality inquiry).
26
-52-
asserted a Lanham Act claim against the film company for false
designation of origin.
See id.
Specifically, the production
companies alleged that the lack of attribution to the original
series misrepresented the “origin” of the series, in violation of
15
U.S.C.
§ 1125(a)(1)(A),
which
makes
it
unlawful
to
make
misrepresentations that “[are] likely to cause confusion . . . as
to the origin . . . of [the defendant’s] goods.”
The question before the Court was whether “origin of goods,”
as used in § 1125(a)(1)(A) of the Lanham Act, referred to the
producer of the physical goods for sale (i.e., the videotapes owned
by the film company) or the creator of the intangible, creative
content on the videotapes (i.e., the documentary owned by the
production companies).
See id. at 31.
The Court concluded that
the term “origin of goods” referred to the former: “to the producer
of the tangible goods that are offered for sale, and not to the
author of any idea, concept, or communication embodied in those
goods.”
Id. at 37.
To hold otherwise, the Court reasoned, the
Lanham Act would provide authors of creative works with a perpetual
protection that is not offered to them under the Copyright Act.
Id.
As a result, the production companies could not recover for
false designation of origin because the film company had accurately
-53-
represented
that
it
was
indeed
videotapes it sold as its own. 27
the
“origin”
of
the
physical
See id. at 38.
As the SGT Defendants observe, some courts “have extended the
Supreme Court’s ruling [in Dastar] to preclude Lanham Act claims
premised upon false representations of licensing status.”
SGT
Mot. at 24 (quoting Micro/sys, Inc. v. DRS Techs., Inc., 2015 WL
12748631, at *2 (C.D. Cal. Feb. 18, 2015)).
The most notable
example of this application is Sybersound Records, Inc. v. UAV
Corp., 517 F.3d 1137 (9th Cir. 2008), in which sellers of karaoke
recordings misrepresented to their customers that their recordings
were “100% licensed,” i.e., that they held the underlying rights
to the songs on the recordings, even though, for at least some
songs, the sellers held “no licenses at all.”
Id. at 1141.
On
this basis, the plaintiff sued the sellers for false advertising
under
15
requires
U.S.C.
a
§ 1125(a)(1)(B),
showing
that
the
which,
defendants
as
discussed
above,
“misrepresent[ed]
the
nature, characteristics, qualities, or geographic origin” of their
goods.
However, the U.S. Court of Appeals for the Ninth Circuit,
citing
Dastar,
rejected
the
plaintiff’s
argument
that
“the
The Court did note that if the film company had misrepresented, in advertising
or promotion, that the contents of the video were significantly different from
the series that it copied, it would have a false advertising claim under the
Lanham Act for misrepresenting the “nature, characteristics, [or] qualities” of
its goods. Dastar, 539 U.S. at 38.
27
-54-
licensing
status
characteristics,
of
or
each
work
qualities
Sybersound, 517 F.3d at 1144.
is
of
part
the
of
the
karaoke
nature,
products.”
Rather, “to avoid overlap between
the Lanham and Copyright Acts, the nature, characteristics, and
qualities of karaoke recordings under the Lanham Act are more
properly construed to mean characteristics of the good itself,
such as the original song and artists of the karaoke recording,
and the quality of its audio and visual effects.”
Circuit
reasoned
that
“[c]onstruing
the
Lanham
Id.
Act
The Ninth
to
cover
misrepresentations about copyright licensing status . . . would
allow [distributors] of copyrightable materials to litigate the
underlying copyright infringement when they have no standing to do
so.”
Id.
Courts in this district have adopted similar reasoning.
For
example, in Agence France Presse v. Morel, 769 F. Supp. 2d 295
(S.D.N.Y. 2011), a professional photojournalist asserted a false
advertising claim against news outlets for falsely representing
that they were authorized to use certain of his photographs.
at 308.
Id.
In light of Dastar, however, the district court dismissed
the claim because such misrepresentations did not concern “the
nature, characteristics, qualities, or geographic origin” of the
photographs.
Id.
The court explained that the photojournalist
-55-
“holds
copyrights
for
his
photographs,
and
his
recourse
for
unauthorized copying, whether through a false claim of authorship
or a false assertion of license, lies in copyright law, not in
trademark.”
Id. at 307-08.
Contrary to the SGT Defendants’ argument, this line of cases
has no bearing on, and certainly does not foreclose, plaintiff’s
false advertising claim.
The rationale animating Dastar and its
progeny is to clearly bifurcate the distinct set of protections
offered by the Lanham and Copyright Acts.
Said otherwise, Dastar
and the like are concerned about impermissibly blurring the lines
between
trademark
and
copyright
law.
Plaintiff’s
false
advertising claim, however, does not implicate any such concerns.
To the contrary, plaintiff’s claim is based solely on the SGT
Defendants’
misleading
statements
regarding
the
licensing
of
trademarked courses, not the licensing of expressive copyrighted
(or copyrightable) material.
Unlike Dastar and its progeny, the
misrepresentations at issue have nothing to do with claims of
authorship of an expressive work or creation of an invention.
Plaintiff does not contend, for example, that the SGT Defendants
failed to credit plaintiff with creating the simulated version of
courses like St. Andrews.
That allegation is properly the subject
of plaintiff’s copyright claim.
-56-
Similarly, plaintiff does not
allege that the SGT Defendants failed to credit St. Andrews with
designing the actual course underlying the simulated version.
Rather, the statements that plaintiff challenges are those falsely
suggesting that trademarked courses available for play on SGT were
genuine and sanctioned by the courses themselves.
That is a
paradigmatic Lanham Act claim, not a disguised copyright claim,
and
therefore
Dastar
and
its
progeny
do
not
preclude
it.
Accordingly, we reject the SGT Defendants’ argument and find that
their misleading statements were material.
3. Injury
Finally, the SGT Defendants assert, albeit briefly, that
plaintiff fails to establish that plaintiff suffered any injury as
a result of the allegedly false advertising.
However, this argument is unavailing.
SGT Mot. at 23.
Plaintiff claims that the
various misrepresentations about SGT’s course offerings “resulted
in the diversion of sales from [plaintiff].”
SGT Opp. at 24
(citing FAC ¶¶ 67-68, 72, 86, 125). For example, plaintiff alleges
that “[u]sers who otherwise would have purchased [plainitff’s]
launch monitors and used [plaintiff’s] software for simulator play
were diverted to buy SGT memberships and purchase GSPro as a
consequence
statements.”
of
[the
SGT
FAC ¶ 86.
Defendants’]
false
and
misleading
This and comparable allegations in the
-57-
operative
complaint
are
sufficient
to
establish
harm
because
“diversion of sales to a direct competitor [is] the paradigmatic
direct injury from false advertising.”
Therefore,
we
reject
the
SGT
Lexmark, 572 U.S. at 138.
Defendants’
cursory
argument
regarding plaintiff’s alleged injury and deny their motion to
dismiss as to the false advertising claim.
CONCLUSION
For the foregoing reasons, the GSP Defendants’ motion to
dismiss is granted in full and SGT Defendants’ motion is granted
as to plaintiff’s breach of contract claim and denied as to all
other claims.
Accordingly, plaintiff’s breach of contract claim
is the only claim that is dismissed, and its other four claims -a direct copyright infringement claim, two secondary copyright
infringement claims, and a false advertising claim -- survive the
SGT
Defendants’
motion.
The
Clerk
of
Court
is
respectfully
directed to terminate the motions pending at ECF Nos. 41 and 53.
SO ORDERED.
Dated:
September 24, 2024
New York, New York
____________________________
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
-58-
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