Narrative Ark Entertainment LLC v. Archie Comic Publications, Inc. et al

Filing 90

OPINION AND ORDER re: 47 MOTION to Dismiss Plaintiff's Amended Complaint filed by Sega of America, Inc.; 41 MOTION to Dismiss Counts III-VI of Plaintiff's Amended Complaint filed by Archie Comic Publication s, Inc.; 78 MOTION to Dismiss filed by Scott D. Fulop. Archie's partial motion to dismiss is GRANTED. (Doc. #41). Sega's motion to dismiss is GRANTED and its motion for a more definitive statement is DENIED as moot. (Doc. #47). Fulop's motion to strike or dismiss the amended third-party complaint is DENIED, and his application to add Jonathan Goldwater and Nancy Silberkleit as third-party counter defendants is also DENIED. (Doc. #78). The Court will schedul e an initial conference by separate order. The Clerk is instructed to terminate the motions. (Docs. ##41, 47, and 78). The Clerk is further instructed to terminate defendant Sega of America, Inc. SO ORDERED. (Sega of America, Inc. terminated.) (Signed by Judge Vincent L. Briccetti on 9/5/2017) (anc)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------x
NARRATIVE ARK ENTERTAINMNET LLC,
:
Plaintiff,
:
:
v.
:
:
ARCHIE COMIC PUBLICATIONS, INC. and
:
SEGA OF AMERICA, INC.,
:
Defendants.
:
--------------------------------------------------------------x
ARCHIE COMIC PUBLICATIONS, INC.,
:
Counterclaim Plaintiff and
:
Third-Party Plaintiff,
:
:
v.
:
:
NARRATIVE ARK ENTERTAINMNET LLC,
:
Counterclaim Defendant,
:
:
SCOTT D. FULOP,
:
Third-Party Defendant.
:
--------------------------------------------------------------x

OPINION AND ORDER
16 CV 6109 (VB)

Briccetti, J.:
Plaintiff Narrative Ark Entertainment, LLC (“Narrative Ark”) brings this action against
Archie Comic Publications, Inc. (“Archie”) and Sega of America, Inc. (“Sega”), alleging claims
of copyright infringement, violations of the Lanham Act, 15 U.S.C. § 1125(a), deceptive
business practices under the New York General Business Law, and common law claims of unfair
competition and unjust enrichment. Narrative Ark also seeks a declaratory judgment that certain
of Archie’s copyright registrations are invalid.
Archie brings a counterclaim against Narrative Ark and a third-party complaint against
third-party defendant Scott D. Fulop, seeking a declaratory judgment that certain of Narrative
Ark’s copyright registrations are invalid. Archie also brings a third-party claim for slander of
title against Fulop.

1

Before the Court are (i) Archie’s partial motion to dismiss Narrative Ark’s Lanham Act,
unfair competition, and unjust enrichment claims pursuant to Rule 12(b)(6) (Doc. #41);
(ii) Sega’s motion to dismiss the amended complaint for lack of personal jurisdiction pursuant to
Rule 12(b)(2) or, in the alternative, for a more definitive statement pursuant to Rule 12(e) (Doc.
#47); and (iii) Fulop’s motion to strike or dismiss the amended third-party complaint pursuant to
Rule 12(b)(6) and other grounds (Doc. #78).
For the reasons set forth below, Archie’s motion is GRANTED; Sega’s motion to dismiss
is GRANTED and its motion for a more definitive statement is DENIED as moot; and Fulop’s
motion is DENIED.
The Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1338, and 1367.
BACKGROUND
The following factual background is drawn from the amended complaint, amended thirdparty complaint, and the parties’ submissions in support of and in opposition to the pending
motions. In deciding the pending motions, the Court accepts as true all well-pleaded factual
allegations in the amended complaint and amended third-party complaint, and draws all
reasonable inferences in plaintiff’s and third-party plaintiff’s favor.
Archie is based in New York and is a publisher of comic books. Sega is located in
California and is primarily a video game publisher. In 1992, Archie entered into a license with
Sega to create and sell comic books based on some of Sega’s characters, including “Sonic the
Hedgehog.” In exchange for the right to develop and market comic books based on “Sonic the
Hedgehog,” Archie agreed to pay Sega royalties based on the works Archie developed.
Narrative Ark is a New York limited liability company, and Scott D. Fulop is Narrative
Ark’s principal.

2

Archie employed Fulop as a staff editor from around August 1988 to May 1991, and
again from around February 1994 to January 1996. After his employment with Archie ended in
1996, Fulop claims to have created and developed, either individually or in collaboration with
other freelance writers and artists, various comic book stories, characters, and artwork, including
new and original characters, for the “Sonic the Hedgehog” comic book series. Fulop claims he
was paid a fixed sum as a freelancer for first publication rights in North America for each story
or artwork Archie accepted. Fulop also claims he never entered into a work-for-hire agreement
with Archie.
In addition to solo assignments, Fulop collaborated as a co-author with Kenneth Penders,
who also worked as a freelance writer and artist for Archie, on several projects for the “Sonic the
Hedgehog” comic book series. Sometime after 1998, Fulop ceased freelance writing for Archie.
In 2009, Penders informed Fulop that Archie was beginning to reprint certain stories
written by Fulop and Penders, as well as continuing to use some characters created by Fulop and
Penders in other media.
Penders filed and obtained copyright registrations in 2009 and 2010 for a number of
stories written or illustrated by Penders, and in some instances co-written by Fulop or co-written
by Fulop and other writers during their tenures as freelance writers and artists for Archie. Four
of Penders’s copyright registrations list Fulop as one of the copyright claimants. In addition,
Fulop filed and obtained copyright registrations in 2010 for other works he created for Archie.
Fulop organized Narrative Ark in October 2014. On October 5, 2015, Fulop transferred
and assigned all of his copyrighted works and other intellectual property rights to Narrative Ark.
Narrative Ark alleges (i) Archie and Sega have produced and distributed publications,
books, and advertisements in which the stories, characters, and artwork Narrative Ark claims to

3

own have been used beyond the scope of the rights Fulop granted to Archie and without further
compensation to Fulop or Narrative Ark; (ii) Archie and Sega have claimed false authorship and
ownership of these works; and (iii) Archie has asserted false claims of authorship and ownership
of the works in certain applications for copyright registration filed with the United States
Copyright Office.
Based on these allegations, Narrative Ark asserts causes of action against Archie and
Sega for direct and contributory copyright infringement, and seeks a declaratory judgment that
Archie’s above-mentioned copyright registrations are invalid.
Narrative Ark also asserts causes of action against Archie for violations of the Lanham
Act, deceptive practices under New York General Business Law Section 349, unfair competition,
and unjust enrichment.
Archie moved to dismiss the amended complaint as to Narrative Ark’s claims for
violations of the Lanham Act, deceptive practices under General Business Law Section 349,
unfair competition, and unjust enrichment. Archie answered Narrative Ark’s other claims, and
brought an amended counterclaim against Narrative Ark and an amended third-party complaint
against Fulop seeking a declaratory judgment of invalidity of Narrative Ark’s copyright
registrations. Archie also brings an amended third-party claim for slander of title against Fulop.
Thereafter, Fulop moved to dismiss the amended third-party complaint arguing, among other
things, (i) Archie failed to timely file its third-party complaint under Rule 14, (ii) Archie is not
the owner of the property at issue in this case, (iii) Archie failed to state a claim upon which
relief can be granted, and (iv) the claims against Fulop do not arise out of the subject matter of
Narrative Ark’s claims against Archie.

4

Sega also moved to dismiss the amended complaint, arguing Narrative Ark cannot
establish any basis for this Court to exercise personal jurisdiction over Sega. In the alternative, if
Sega’s motion to dismiss is denied, Sega seeks a more definitive statement from Narrative Ark
that clarifies Narrative Ark’s factual and legal claims asserted against Sega.
DISCUSSION
I.

Legal Standards
A.

Rule 12(b)(2)

On a motion to dismiss under Rule 12(b)(2), the “plaintiff bears the burden of showing
that the court has jurisdiction over the defendant.” In re Magnetic Audiotape Antitrust Litig.,
334 F.3d 204, 206 (2d Cir. 2003). Prior to discovery, a plaintiff may defeat a motion to dismiss
“by pleading in good faith legally sufficient allegations of jurisdiction.” Ball v. Metallurgie
Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990) (internal citation omitted). A plaintiff
can make this showing through “affidavits and supporting materials containing an averment of
facts that, if credited . . . would suffice to establish jurisdiction over the defendant.” Whitaker v.
Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001). When there has been no hearing on the
merits, “all pleadings and affidavits must be construed in the light most favorable to [plaintiff]
and all doubts must be resolved in . . . plaintiff’s favor.” Landoil Res. Corp. v. Alexander &
Alexander Servs. Inc., 918 F.2d 1039, 1043 (2d Cir. 1990).
B.

Rule 12(b)(6)

In deciding a Rule 12(b)(6) motion, the Court evaluates the sufficiency of the operative
complaint under the “two-pronged approach” articulated by the Supreme Court in Ashcroft
v. Iqbal, 556 U.S. 662, 679 (2009). First, plaintiff’s legal conclusions and “[t]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory statements,” are not entitled
to the assumption of truth and are thus not sufficient to withstand a motion to dismiss. Id. at 678;
5

Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). Second, “[w]hen there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. at 679.
To survive a Rule 12(b)(6) motion, the allegations in the complaint must meet a standard
of “plausibility.” Ashcroft v. Iqbal, 556 U.S. at 678; Bell Atl. Corp. v. Twombly, 550 U.S. 544,
564 (2007). 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.” Ashcroft v. Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id.
C.

Rule 12(f)

Under Rule 12(f), “[t]he court may strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “Motions to
strike are generally looked upon with disfavor.” Chenensky v. N.Y. Life Ins. Co., 2011 WL
1795305, at *1 (S.D.N.Y. Apr. 27, 2011) (internal quotation marks omitted). A motion to strike
“will be denied, unless it can be shown that no evidence in support of the allegation would be
admissible.” Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
District courts have discretion in resolving Rule 12(f) motions. See, e.g., In re Platinum
& Palladium Commodities Litig., 828 F. Supp. 2d 588, 593 (S.D.N.Y. 2011).

6

II.

Analysis
A.

Archie’s Partial Motion to Dismiss the Amended Complaint
1.

Lanham Act Claim

Narrative Ark alleges Archie and Sega violated the Lanham Act by engaging in false
designation of origin and false and misleading description of fact regarding the creation, origin,
and ownership of Narrative Ark’s copyrighted works. Narrative Ark’s claim is based on the
allegation that defendants have published and sold or otherwise used Narrative Ark’s
copyrighted works in Archie’s publications and advertisements in which false credit as to the
source of the authorship is given to Archie and Sega, thereby passing off Narrative Ark’s
copyrighted works as those of Archie and Sega. Narrative Ark also claims Archie and Sega have
engaged in false designation of origin and false and misleading description of fact regarding the
creation, origin, and ownership of Narrative Ark’s copyrighted works by registering copyrights
with the U.S. Copyright Office claiming ownership and authorship credit for works created,
authored, and owned by Narrative Ark. Narrative Ark claims consumers viewing defendants’
group registrations are likely to be misled to believe the works belong in whole to defendants
when in fact they belong in whole or in part to Narrative Ark.
Archie argues Narrative Ark’s claim for false designation of origin of goods under the
Lanham Act is foreclosed by the U.S. Supreme Court’s decision in Dastar Corp. v. Twentieth
Century Fox Film Corp., 539 U.S. 23, 31–38 (2003).
The Court agrees with Archie.
Section 43(a)(1)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), creates a cause of
action against one who makes a “false designation of origin, false or misleading description of
fact, or false or misleading representation of fact, which . . . is likely to cause confusion . . . as to

7

the origin . . . of his or her goods.” The term “origin” refers to both geographical origin as well
as the origin of manufacture. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. at
30–31. Thus, a claim of “reverse passing off”—that defendant has misrepresented someone
else’s goods or services as his own—is actionable under Section 1125(a)(1)(A). 1 Id. at 28 n.1,
31.
In Dastar, the plaintiff brought a reverse passing off claim against Dastar Corp.,
distributor of the “Campaign” videos. Dastar Corp. v. Twentieth Century Fox Film Corp., 539
U.S. at 26–28. The Campaign videos were about the Allied campaign in Europe during World
War II, and included footage from the “Crusade” television series, which had been produced by
Time, Inc., decades earlier. Id. However, Dastar Corp. neglected to attribute the “Crusade”
television series as the origin of this footage. Id.
In considering the plaintiff’s claims under the Lanham Act, the Supreme Court held:
reading the phrase “origin of goods” in the Lanham Act in accordance with the
Act’s common-law foundations (which were not designed to protect originality or
creativity), and in light of the copyright and patent laws (which were), we conclude
that the phrase refers 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.
Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. at 37. In other words, the author or
creator of ideas that are reproduced in tangible products—such as comic books—is not the
“origin of goods” within the meaning of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A).
Accordingly, such an author may not claim that the producer of the tangible product—such as a
publisher—has committed an actionable “false designation of origin” by reproducing the

1

“Passing off” occurs when a producer falsely claims as its own goods that were produced
by someone else, and is also actionable under Section 1125(a)(1)(A). Dastar Corp. v. Twentieth
Century Fox Film Corp., 539 U.S. at 27 n.1.

8

author’s ideas without proper attribution. Id.; see also Silverstein v. Penguin Putnam, Inc., 522
F. Supp. 2d 579, 601 (S.D.N.Y. 2007) (same).
Narrative Ark argues Dastar held that the unaccredited copying of a work in the public
domain is not actionable under Section 43(a) of the Lanham Act, which is distinguishable from
this case because the copyrighted works at issue here are not in the public domain. Plaintiff also
relies on Levine v. Landy, 832 F. Supp. 2d 176, 188–91 (N.D.N.Y. 2011), a case in which the
court allowed a reverse passing off claim under the Lanham Act to go forward based on the
plaintiff’s allegation that the defendant had reproduced and published plaintiff’s photographs
without attribution.
The Court rejects plaintiff’s suggestion that the holding of Dastar is limited to works in
the public domain. As other courts in this District considering this question have concluded,
Dastar’s holding barring Lanham Act claims premised on the false designation of the origin of
ideas, concepts, or communications embodied in tangible goods, does not turn on whether the
work is still under copyright protection or in the public domain. See, e.g., Contractual
Obligation Prods., LLC v. AMC Networks, Inc., 546 F. Supp. 2d 120, 130 (S.D.N.Y. 2008)
(noting “district court cases following Dastar have expressly rejected the argument that Dastar
does not apply where, as here, the work in issue is copyrighted” and collecting cases).
Moreover, Narrative Ark’s reliance on Levine v. Landy is misguided. In that case, the
court distinguished its facts from Dastar and its progeny, concluding the plaintiff alleged the
defendants had misrepresented the origin of the photographs themselves, rather than the ideas,

9

concepts, or communications embodied in the photographs. Levine v. Landy, 832 F. Supp. 2d at
190. 2 Such an argument is inapplicable here.
Accordingly, Narrative Ark’s Lanham Act claim is dismissed.
2.

Unfair Competition Claim

Narrative Ark also brings an unfair competition claim under New York law based on the
same conduct giving rise to its Lanham Act claim—namely, Archie’s alleged false designations
of origin of stories, characters, and artwork owned by Narrative Ark in Archie’s publications and
advertisements and in copyright applications.
Narrative Ark’s state law unfair competition claim is likewise foreclosed by Dastar.
“Although Dastar construed the Lanham Act, ‘it is well recognized that the standards for Section
43(a) claims of the Lanham Act and unfair competition claims under New York Law are almost
indistinguishable.’” Vaad L’Hafotzas Sichos, Inc. v. Krinsky, 133 F. Supp. 3d 527, 538 n.4
(E.D.N.Y. 2015), appeal withdrawn (Feb. 19, 2016) (quoting Tri–Star Pictures, Inc. v. Unger, 14
F. Supp. 2d 339, 363 (S.D.N.Y. 1998)). And “[u]nder Dastar, . . . the law of unfair competition
does not allow a claim for false or misleading representations as to the origin of the content of a
‘communicative product.’” Id. at 538.
Thus, Narrative Ark’s common law unfair competition claim is dismissed for the same
reasons as its Lanham Act claim.

2

In so holding, Levin v. Landy relied on Waldman Publishing Corp. v. Landoll, Inc., 43
F.3d 775 (2d Cir. 1994), which pre-dates Dastar and is no longer good law. See, e.g., Atrium
Grp. De Ediciones Y Publicaciones, S.L. v. Harry N. Abrams, Inc., 565 F. Supp. 2d 505, 513
(S.D.N.Y. 2008). Accordingly, it is not even clear Levin v. Landy is correctly decided.

10

3.

Deceptive Business Practices Claim

Narrative Ark claims Archie’s alleged false designations of origin of certain stories,
characters, and artwork “caused harm to the public” by “deceiv[ing] or mislead[ing]” the public
and “influenc[ing] the purchasing decisions of the public.” (Am. Compl. ¶¶ 106, 109).
Archie contends Narrative Ark has failed to allege sufficient harm to the public under
Section 349 of the New York General Business Law.
The Court agrees with Archie.
Section 349 of the New York General Business Law is a consumer protection statute
providing that “[d]eceptive acts or practices in the conduct of any business, trade or commerce or
in the furnishing of any service in this state are . . . unlawful.” N.Y. Gen. Bus. L. § 349(a). It
creates a private right of action for consumers harmed by violation of the statute. Id. § 349(h).
To state a claim, a plaintiff must allege “(1) the defendant’s deceptive acts were directed at
consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as
a result.” Stadt v. Fox News Network LLC, 719 F. Supp. 2d 312, 324 (S.D.N.Y. 2010) (quoting
Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)). “[T]he gravamen of the complaint
must be consumer injury or harm to the public interest.” Securitron Magnalock Corp. v.
Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995).
Here, Narrative Ark alleges the public was harmed because Archie’s conduct caused
confusion. In particular, Narrative Ark alleges Archie fraudulently concealed the “extent and use
of properties belonging” to Narrative Ark (Am. Compl. ¶ 108), and that Archie’s “false and
misleading representations of fact and conduct have influenced the purchasing decisions of the
public.” (Id. ¶ 109). Narrative Ark asserts no further allegations as to how consumers were
harmed by Archie’s alleged conduct.

11

However, “allegations of consumer confusion are generally not sufficient consumer harm
to state a section 349 claim.” Levine v. Landy, 832 F. Supp. 2d at 188–91 (quoting Stadt v. Fox
News Network LLC, 719 F. Supp. 2d 312, 324 (S.D.N.Y. 2010)); see also Gross v. Bare
Escentuals Beauty, Inc., 632 F. Supp. 2d 293, 299 (S.D.N.Y. 2008) (“Consumer confusion as to
the source of the product does not create a cause of action under this statute. Danger to the
public safety and health does.”).
Accordingly, Narrative Ark’s deceptive business practices claim under General Business
Law Section 349 is dismissed.
4.

Unjust Enrichment Claim

Narrative Ark claims it has been “denied any financial compensation and credit in
connection with the publication and sale of” its copyrighted works, and “has lost business
opportunities caused by . . . diversion of trade and been diminished in good will and reputation,
and dilution of its rights.” (Am. Compl. ¶¶ 123, 124). Narrative Ark further claims Archie and
Sega have “been enriched by the use and sale of [Narrative Ark’s copyrighted works] in
advertising, merchandising and the sale of comic books and other merchandise at [Narrative
Ark’s] expense.” (Id. ¶ 125).
Archie argues Narrative Ark’s unjust enrichment claim is preempted by federal copyright
law.
The Court agrees.
To state a claim for unjust enrichment under New York law, a plaintiff must allege (i) the
defendant was enriched, (ii) at the plaintiff’s expense, and (3) that it would be “against equity
and good conscience to permit the defendant to retain what is sought to be recovered.” Cruz v.

12

McAneney, 31 A.D.3d 54; 59 (2d Dep’t 2006); see also Briarpatch Ltd. v. Phoenix Pictures, Inc.,
373 F.3d 296, 306 (2d Cir. 2004).
“However, the Copyright Act preempts a state cause of action if the subject matter of the
state law right falls within the subject matter of federal copyright law and the state law rights are
equivalent to the rights federal copyright law protects.” Netzer v. Continuity Graphic Assocs.,
Inc., 963 F. Supp. 1308, 1321 (S.D.N.Y. 1997) (citing Computer Associates Int’l, Inc. v. Altai,
982 F.2d 693, 716 (2d Cir. 1992)).
“A state law claim whose gravamen is unauthorized publication is preempted by federal
Copyright law unless it involves rights that are ‘different in kind’ from those protected by the
Copyright statute.” Netzer v. Continuity Graphic Assocs., Inc., 963 F. Supp. at 1322 (quoting
Strauss v. The Hearst Corp., 8 U.S.P.Q.2d 1832, 1838–39 (S.D.N.Y. 1988)).
Narrative Ark’s unjust enrichment claim is based on Archie’s allegedly illicit use of
Narrative Ark’s stories, characters, and artwork in its publications and advertisements—conduct
that constitutes infringement of a copyright owner’s exclusive rights under 17 U.S.C. § 106 and
the same conduct on which Narrative Ark’s direct and contributory copyright infringement
claims are premised. This theory of unjust enrichment is “essentially equivalent to rights
protected by the Copyright Act” and thus Narrative Ark’s unjust enrichment claim relating to the
use of copyrighted material is preempted. See Netzer v. Continuity Graphic Assocs., Inc., 963 F.
Supp. at 1322.
Accordingly, Narrative Ark’s unjust enrichment claim is dismissed.
B.

Sega’s Motion to Dismiss the Amended Complaint for
Lack of Personal Jurisdiction

Sega, a California corporation, argues the allegations in the amended complaint fail to
establish that the exercise of personal jurisdiction over Sega in New York would be proper here.

13

To determine whether specific personal jurisdiction exists over a non-domiciliary in a
case involving a federal question, the Court engages in a two-step inquiry. Chloe v. Queen Bee
of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). First, the Court determines whether the
forum state’s law permits the exercise of jurisdiction over the defendant. Id. If such a basis for
jurisdiction exists, the Court then must determine “whether personal jurisdiction comports with
the Due Process Clause of the United States Constitution.” Id. at 164.
1.

New York’s Long-Arm Statute

Narrative Ark asserts personal jurisdiction over Sega under New York Civil Practice Law
and Rules Sections 302(a)(1) and (3).
Section 302(a)(1) provides, “As to a cause of action arising from any of the acts
enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, .
. . who in person or through an agent[,] transacts any business within the state.” N.Y. C.P.L.R.
§ 302(a)(1). Thus, the Court must determine whether Sega has sufficient business contacts in
New York that give rise to Narrative Ark’s copyright infringement claim.
The Court properly considers the following factors in deciding whether a foreign
defendant transacts business in New York for purposes of Section 302(a)(1):
(i) whether the defendant has an on-going contractual relationship with a New York
corporation; (ii) whether the contract was negotiated or executed in New York and
whether, after executing a contract with a New York business, the defendant has
visited New York for the purpose of meeting with parties to the contract regarding
the relationship; (iii) what the choice-of-law clause is in any such contract; and (iv)
whether the contract requires [defendants] to send notices and payments into the
forum state or subjects them to supervision by the corporation in the forum state.
Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22–23 (2d Cir. 2004) (internal quotation marks
omitted). “[N]o one factor is dispositive and other factors may be considered. The ultimate

14

determination is based on the totality of the circumstances.” Id. at 23 (citations and internal
quotation marks omitted).
The only link Narrative Ark alleges Sega has with New York arises out of its contractual
relationship with Archie, a New York company, pursuant to which Archie developed, marketed,
and sold works that Narrative Ark claims to own. Narrative Ark does not allege the agreement
between Archie and Sega was negotiated or signed in New York, nor does Narrative Ark make
any allegations regarding the terms of the contract or Sega’s conduct thereunder. The licensing
agreement between Sega and Archie contains California choice-of-law and venue clauses, and it
requires Archie to make royalty payments to Sega in California. Narrative Ark does not allege
Archie acts as Sega’s agent, 3 nor does it allege Sega makes or distributes any of the products
Archie produces and sells in New York.
It is well established “[t]he mere fact that a non-domiciliary enters into a contract with a
company headquartered in New York does not establish the requisite minimum contacts, unless
the purpose of the contract is to project the non-domiciliary into the New York market.” Spencer
Trask Ventures, Inc. v. Archos S.A., 2002 WL 417192, at *4 (S.D.N.Y. Mar. 18, 2002) (internal
quotation marks omitted); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985)
(“If the question is whether an individual’s contract with an out-of-state party alone can

3

In its brief in opposition to Sega’s motion to dismiss, Narrative Ark contends “Archie
also acted as Sega’s agent in New York for various joint business purposes.” (Pl.’s Opp’n at 21).
However, Narrative Ark does not allege any facts in the amended complaint supporting such a
contention, and Section 19 of the licensing agreement between Archie and Sega expressly
provides, “Nothing contained herein shall be construed as a joint venture or shall make one party
the agent of the other party.” (Suai Decl. Ex. A § 19). Narrative Ark merely asserts the “Sonic
the Hedgehog” comic books contain an indicia stating the “Postmaster should send any address
changes for [sic] SONIC THE HEDGEHOG c/o Archie Comic Publications.” (Pl.’s Opp’n at
21). This allegation, however, is plainly insufficient to establish that Archie acts as Sega’s agent
in New York.
15

automatically establish sufficient minimum contacts in the other party’s home forum, . . . the
answer clearly is that it cannot.”).
The totality of the circumstances in this case—in which Sega entered into a licensing
agreement with Archie that was not negotiated or executed by Sega in New York, provided for
no performance by Sega in New York, contained California venue and choice-of-law clauses,
and provided for payment of royalties to Sega in California—does not favor exercising personal
jurisdiction over Sega. See Maranga v. Vira, 386 F. Supp. 2d 299, 306 (S.D.N.Y. 2005)
(declining to find personal jurisdiction even though defendant had an ongoing contractual
relationship with a New York corporation because the contract was executed outside New York,
controlling law of the contract was not New York law, there was no ongoing supervision
emanating from New York, nor payment flowing into New York).
Section 302(a)(3) of New York’s Long-Arm Statute provides for jurisdiction over an outof-state defendant who “commits a tortious act without the state causing injury to person or
property within the state” if the defendant (i) “regularly does or solicits business, or engages in
any other persistent course of conduct, or derives substantial revenue from goods used or
consumed or servicers rendered in the state” or (ii) “expects or should reasonably expect the act
to have consequences in the state and derives substantial revenue from interstate or international
commerce.” N.Y. C.P.L.R. § 302(a)(3).
The standard under Section 302(a)(3)(i) is “‘more stringent than any constitutional
requirement,’ and requires a showing of contacts somewhere between the large quantity required
for general jurisdiction under N.Y. C.P.L.R. 301 and the ‘one shot’ single business transaction
that can satisfy Section 302(a)(1).” Vista Food Exch., Inc. v. Champion Foodservice, LLC, 124
F. Supp. 3d 301, 307 (S.D.N.Y. 2015), appeal dismissed sub nom. VISTA FOOD EXCHANGE

16

INC. v. CHAMPION FOODSERVICE LLC (Sept. 21, 2015) (quoting Ingraham v. Carroll, 90
N.Y.2d 592, 597 (1997)). Because Narrative Ark has not alleged sufficient contacts under
Section 302(a)(1), as discussed above, it cannot establish jurisdiction under Section 302(a)(3)(i)
either.
With respect to Section 302(a)(3)(ii), Narrative Ark fails to allege any affirmative
conduct on the part of Sega that infringed Narrative Ark’s putative copyrights, or any other
tortious act that Sega purportedly committed. Additionally, Narrative Ark does not allege facts
demonstrating that Sega reasonably should have expected to litigate any dispute relating to its
licensing agreement with Archie in New York. The contract contains California choice-of-law
and forum selection clauses. (Suai Decl. Ex. A §§ 15, 16). It also contemplates that Archie
would be solely responsible for the manufacture, production, sale, and distribution of products
produced pursuant to the license from Sega. (Id. § 5(e))
The amended complaint acknowledges Fulop never entered into any agreements with
Sega, and that Archie, not Sega, paid Fulop for the work he performed. (Am. Compl. ¶¶ 22, 27).
Narrative Ark’s opposition to Sega’s motion asserts that Sega engaged in “extensive supervision
and quality control over [Archie] and the freelance workers engaged by [Archie] to create the
product licensed by Sega.” (Pl.’s Opp’n at 19; Fulop Decl. ¶¶ 4, 8–15). However, the
communications Fulop alleges he had with Sega occurred from February 1994 through January
1996 while Fulop worked as a staff editor at Archie. (See Fulop Decl. ¶¶ 3–10, 14–15).
According to the copyright registration certificates Narrative Ark submitted with its amended
complaint, however, the earliest publication date of the works at issue appears to be June 4,
1996. (See Am. Compl. Ex. A). Narrative Ark has made no allegation that Sega supervised

17

freelance contributors to “Sonic the Hedgehog” comic books or the development of any of the
works at issue.
Moreover, Fulop did not file his copyright registrations for the works Narrative Ark
claims to own until almost one-and-a-half decades after Fulop stopped working for Archie.
Narrative Ark asserts it sent Archie a demand letter regarding its claims before commencing this
litigation, but did not send a similar letter to Sega. (See Am. Compl. ¶ 46, Ex. C). Narrative Ark
also claims it “entered into extended settlement negotiations” with Archie before commencing
this litigation, but does not assert that Sega participated in those negotiations. It is Sega’s
position that it had no notice of any dispute regarding work Fulop performed for Archie until
Narrative Ark filed its complaint on August 1, 2016. (Suai Decl. ¶ 12; Am. Compl. ¶¶ 46, 56,
Ex. C).
For the foregoing reasons, the Court concludes Sega could not reasonably have
anticipated being haled into court in New York based on its license agreement with Archie.
Accordingly, Narrative Ark has failed to allege a basis for this Court’s exercise of personal
jurisdiction over Sega.
C.

Fulop’s Motion to Strike or Dismiss the Amended Third-Party Complaint

Fulop first argues the amended third-party complaint should be dismissed because it was
not timely filed. This argument fails, however, because the Court expressly granted Archie leave
to file an amended third-party complaint by no later than March 3, 2017, which Archie did. (See
Docs. ##70, 72, 73, 74).
Next, Fulop contends Archie fails to state a claim for slander of title upon which relief
may be granted.
The Court disagrees.

18

To state a claim for slander of title under New York law, a plaintiff must allege: “(1) a
communication falsely casting doubt on the validity of [the] complainant’s title, (2) reasonably
calculated to cause harm, and (3) resulting in special damages.” See Chamilia, LLC v. Pandora
Jewelry, LLC, 2007 WL 2781246, at *11 (S.D.N.Y. Sept. 24, 2007) (quoting 39 Coll. Point
Corp. v. Transpac Capital Corp., 27 A.D.3d 454, 455 (2d Dep’t 2006)).
Archie’s amended third-party complaint alleges each of the elements of a slander of title
claim. Archie claims it owns the works at issue and that Fulop made communications with
Narrative Ark that falsely cast doubt on the validity of Archie’s ownership of those works by
wrongly claiming that Fulop, rather than Archie, owned those works. (See Am. Third-Party
Compl. ¶¶ 6, 10–15). Archie also alleges Fulop’s false communications to Narrative Ark “were
calculated to cause harm to Archie by inducing Narrative Ark to pursue copyright infringement
claims against Archie following Fulop’s assignment of such rights to Narrative Ark.” (Id. ¶ 16).
Archie further claims Fulop made false communications to Narrative Ark “with actual
knowledge of the falsity of such communications and with malicious intent to cause harm to
Archie.” (Id. ¶ 17). Finally, Archie claims it suffered special damages as a result of Fulop’s
slanderous communications in the form of costs and expenses of defending against Narrative
Ark’s infringement claims and lost licensing revenues and commercial opportunities.
Fulop next argues that Archie asserts a new cause of action against Fulop—for slander of
title—that is unrelated to any of Narrative Ark’s claims against Archie. This argument also fails.
Rule 14(a) of the Federal Rules of Civil Procedure provides in pertinent part: “A
defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who
is or may be liable to it for all or part of the claim against it.” Moreover, “[i]mpleader is
appropriate when the third-party defendant’s liability to the third-party plaintiff is ‘dependent

19

upon the outcome of the main claim’ or the third-party defendant is ‘potentially secondarily
liable as a contributor to the defendant.’” Too, Inc. v. Kohl’s Dep’t Stores, Inc., 213 F.R.D. 138,
140 (S.D.N.Y. 2003) (quoting Kenneth Leventhal & Co. v. Joyner Wholesale Co., 736 F.2d 29,
31 (2d Cir. 1984)). District courts have “considerable discretion in deciding whether to permit a
third-party complaint.” Too, Inc. v. Kohl’s Dep’t Stores, Inc., 213 F.R.D. at 140 (citing Kenneth
Leventhal & Co. v. Joyner Wholesale Co., 736 F.2d 29, 30 (2d Cir. 1984)).
Here, Archie’s slander of title claim against Fulop depends on the outcome of Narrative
Ark’s copyright claims against Archie. If Archie establishes it is the owner of the copyrights at
issue in this case, which Narrative Ark claims were assigned to it by Fulop and infringed on by
Archie, then Narrative Ark’s copyright infringement claims against Archie will fail for lack of
copyright ownership. Additionally, the falsity of Fulop’s communications to Narrative Ark
regarding the copyright ownership of the works at issue will be established, which is an element
of Archie’s slander of title claim.
The Court has considered Fulop’s remaining arguments and finds them, at this stage, to
be without merit.
Accordingly, Fulop’s motion to strike or dismiss the amended third-party complaint is
denied.
D.

Leave to Add Jonathan Goldwater and Nancy Silberkleit as Third-Party Counter
Defendants

Fulop seeks leave to add Jonathan Goldwater and Nancy Silberkleit, Archie’s principals
and co-owners, as third-party counter defendants in the event the Court does not strike the
amended third party complaint. Narrative Ark and Fulop assert no basis for this motion other
than claiming “on information and belief, [Goldwater and Silberkleit] have made false
communications to [Archie] and Sega which have created a cloud on the title transferred by

20

Fulop to Narrative Ark causing Fulop to suffer special damages in the form of legal costs and
expenses, lost licensing revenues and lost commercial opportunities.” (Fulop’s Br. at 15).
Having asserted no more than a threadbare recital of the elements of a cause of action, supported
by a wholly conclusory statement, Fulop’s request is denied.
CONCLUSION
Archie’s partial motion to dismiss is GRANTED. (Doc. #41).
Sega’s motion to dismiss is GRANTED and its motion for a more definitive statement is
DENIED as moot. (Doc. #47).
Fulop’s motion to strike or dismiss the amended third-party complaint is DENIED, and
his application to add Jonathan Goldwater and Nancy Silberkleit as third-party counter
defendants is also DENIED. (Doc. #78).
The Court will schedule an initial conference by separate order.
The Clerk is instructed to terminate the motions. (Docs. ##41, 47, and 78).
The Clerk is further instructed to terminate defendant Sega of America, Inc.
Dated: September 5, 2017
White Plains, NY
SO ORDERED:

____________________________
Vincent L. Briccetti
United States District Judge

21