SED, Inc. of South Carolina v. Seven Creeks Entertainment, LLC et al
Filing
56
ORDER denying 48 Motion to Dismiss and 50 Motion to Dismiss. Signed by Senior Judge Malcolm J. Howard on 2/16/12. (Lee, L.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:10-CV-222-H
SED, INC. OF SOUTH CAROLINA
d/b/a SED GAMING,
)
)
)
Plaintiff,
)
)
)
v.
)
ORDER
)
SEVEN CREEKS ENTERTAINMENT
LLC ANTHONY LONG, JEREMY NEERI
JOHN FANNIN BRAD SKIDMORE
CYBER CONNECT-NC, LLC, and
SEASIDE GAMING, INC.
I
)
I
)
)
1
I
)
I
)
)
Defendants.
This matter
)
is
before
the
court
filed by defendants John Fannin,
NC,
LLC and Seaside Gaming,
defendantsll)
defendants
[DE
Jeremy Neer
#50] .
the
and
Brad Skidmore
Inc.
I
(collectively
motion
to
Entertainment,
LLC
to dismiss
Cyber Connect"the
dismiss
Skidmore
by
Long
and
(collectively "the Seven Creeks defendants")
[DE
Creeks
a
motion
filed
Seven
#48]
on a
1
Anthony
Appropriate responses and replies have been filed
time
therefore
for
l
further
filings
has
expired.
This
l
matter
and
is,
ripe for ruling.
BACKGROUND
This case arises out of the operation of POT 0' GOLD video
gaming machines at Jackpots Sweepstakes
I
a video gaming parlor
located in Wilmington,
Plaintiff alleges that
North Carolina.
it owns the exclusive rights to the POT 0'
well as
registered and unregistered marks
with the POT 0'
have
used
defendants
in connection
Plaintiff maintains
GOLD video gaming system.
that
GOLD software,l as
infringed plaintiff's
rights
"by making
illegal copies of the POT 0' GOLD software, selling said copies
to
the
public,
and
publicly
publicly displaying
illegal
and/or
software
and
plaintiff's
asserts
video
that
make
claims
(Am.
copies
illegal
Compl.
and
[DE
racketeering,
and
that
of
and
otherwise
operate
the
POT
0'
GOLD
use
infringing
~
using
of"
24.)
Plaintiff
infringement,
copyright
of
using,
gaming machines
illegally-modified
marks.
infringement,
operating,
trademark
#34]
unfair
or
deceptive
trade
practices under North Carolina law.
Defendants move to dismiss
plaintiff's
state
claims
for
failure
to
a
claim
upon
which
relief can be granted.
COURT'S DISCUSSION
I.
Standard of Review
A
federal
district
court
confronted
with
a
motion
to
dismiss for failure to state a claim must accept the plaintiff's
allegations
as
true
and
construe
the
allegations
of
the
lDepending on the version of the operating system, a POT 0'
GOLD machine may have a selection of up to twelve (out of a
possible sixteen) different games that may be selected for play
by the user.
2
complaint in the light most favorable
to the plaintiff.
See
Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997).
intent
of
Rule
complaint.
12(b) (6)
is
to
test
the
Edwards v. City of Goldsboro
Cir. 1999).
A
surrounding
the
sufficiency
a
178 F.3d 231, 243 (4th
I
facts
the
I
merits
Id.
III
of
a
been stated adequately
consistent
I
or
claim,
the
(quoting Republican Party v.
Martini 980 F.2d 943 1 952 (4th Cir. 1992)).
facts
of
Rule 12(b) (6) motion "'does not resolve contests
applicability of defenses.
of
The
"[O]nce a claim has
it may be supported by showing any set
with
the
Bell Atlantic Corp. v. Twombly
allegations
in
the
complaint.
II
550 U.S. 544, 563 (2007).
I
"[A] complaint need not 'make a case' against a defendant or
'forecast
claim.
evidence
sufficient
to
Chao v. Rivendell Woods
II
I
prove
Inc'
an
415 F.3d 342,
l
Cir.
2005)
(quoting Iodice v.
United States,
(4th
Cir.
2002)).
it
unadorned,
However
I
element'
must
provide
more
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
matter,
570) .
on
The
its
court
349
(4th
1
281
than
"an
accusation.
II
"To survive a
a complaint must contain sufficient factual
accepted as true,
plausible
the
289 F.3d 270
the-defendant-unlawfully-harmed-me
motion to dismiss,
of
face.
to
'11
need not
'state a claim to relief that is
Id.
(quoting Twombly,
accept
couched as factual allegations.
as
Twombly
3
true
I
legal
550
U.S.
at
conclusions
550 U.S. at 555.
II.
Copyright Claim
Defendants
copyright
lodge
a
infringement
number
of
objections
Defendants
claim.
to
first
plaintiff's
argue
that
plaintiff has not alleged sufficient facts to support a finding
that plaintiff owns a registered copyright to the POT 0'
GOLD
Defendants further contend that plaintiff's amended
software.
complaint is deficient because it fails to identify what aspects
of
the
software
are
registered
software
are
alleged
to
have
includes
no
factual
basis
and
been
for
which
versions
infringed
its
and
of
the
because
allegation,
made
it
upon
information and belief, that the software has been copied.
In
its
amended
complaint,
plaintiff
"copyrights for original versions of the
has
pled
[POT 0' GOLD]
that
software
have been registered with the United States Copyright Office"
and that plaintiff
"is
the
sole and exclusive holder of
rights in and to the Software."
has
also
attached copies
of
a
{Am. CompI.
number
of
~
28.}
documents
all
Plaintiff
from
the
United States Copyright Office documenting the registration of
several subsequent and derivative versions of the software and
the transfer of the copyrights to plaintiff.
&
B. )
Plaintiff
plaintiff' s
alleges
that
defendants
(Am. Compl. Ex. A
have
infringed
exclusive rights by "making illegal copies of the
software," selling illegal copies of the software, and "publicly
operating, using and otherwise publicly displaying video gaming
4
machines"
running
illegally
software.
(Am. Compl.
~
copied
or
modified
For example,
the alleged infringement.
Skidmore defendants
Creeks
defendants
27,28.)
operating
GOLD
with
video
the
selling or
gaming
further details of
complaint
leasing
machines
that
to
charges
the
were
illegal copies of plaintiff's POT 0' GOLD software.
~~
0'
24.)
Plaintiff's amended complaint contains
the
POT
Seven
running
(Am. Compl.
It also charges the Seven Creeks defendants with
and
using
video
gaming
copied versions of the POT 0'
machines
running
illegally
GOLD software obtained from the
Skidmore defendants and other persons or entities not party to
this action.
thirty-six
Creeks
(Am.
of
Compl.
plaintiff's
defendants
operate
~~
25,
26.)
complaint
Additionally,
alleges
approximately
that
twelve
paragraph
the
POT
Seven
0'
GOLD
machines that belong to the Skidmore defendants pursuant to "a
revenue
sharing
or
other
form
of
lease
arrangement."
(Am.
CompI. ~ 36.)
The court finds that plaintiff has alleged sufficient facts
to
plead a
each of
the
plausible
claim of
defendants.
copyright
Accordingly,
infringement
defendants'
against
motions
to
dismiss plaintiff's copyright infringement claim are denied.
III. Trademark Claim
Defendants
next
They maintain that
the
challenge
plaintiff's
trademark
claim should be dismissed for
5
claim.
lack of
standing because plaintiff has failed to provide
~adequate
proof
that Plaintiff is in fact the exclusive licensee of the POT 0'
GOLD mark."
19.)
(Skidmore Dfs.' Mem. Supp. Mot. Dismiss
[DE #49]
at
Defendants further assert that dismissal of the trademark
claim is warranted because plaintiff has failed to specifically
allege that the machines displayed the words "POT 0' GOLD"
(Id.
at 20) .
Plaintiff has alleged in its amended complaint that it is
the owner of the registered POT 0' GOLD mark (Reg. No. 3139045)1
having acquired the mark as part of its March 2009 acquisition
of the assets of Vision Gaming & Technology, Inc.
21.)
(Am. Compl.
~
Plaintiff further asserts that it updated the registration
to reflect its current ownership in January 2010.
allegations
are
sufficient
standing to assert
to
establish
that
(Id. )
These
plaintiff
has
infringement and unfair competition claims
relating to the POT 0' GOLD mark.
Moreover, plaintiff has alleged sufficient facts to support
its
trademark
claim.
complaint asserts
this
that
Specifically,
plaintiff's
the video gaming machines at
amended
issue
case were operating pirated or counterfeit software
displays the POT 0'
defendants
1
use
confusion among
of
GOLD mark
the
consumers
(Am.
mark
in
Compl.
has
the
6
~~
created
video
52,
a
54)
in
that
and that
likelihood
gaming market.
of
(Am.
~54) •
Compl.
Defendants'
motions
to
dismiss
plaintiff's
trademark claim are, therefore, denied.
IV.
Racketeering Claims
Defendants further move to dismiss plaintiff's federal and
state civil RICO claims.
that plaintiff
has
As to these claims, defendants contend
failed
to
adequately allege
facts
showing
that defendants were part of an enterprise, much less one that
is a separate and distinct organizational framework established
to "engage in criminal acts of counterfeiting and piracy for the
common
purpose
of
injuring
12(b) (6)
amended
and,
complaint
therefore,
(Skidmore
II
Dfs.'
Mem.
The court finds the allegations of
Supp. Mot. Dismiss at 23.)
plaintiff's
Plaintiff.
sufficient
denies
to
defendants'
withstand
motions
Rule
as
to
unfair
or
plaintiff's racketeering claims.
V.
Unfair or Deceptive Trade Practice Claim
Next,
defendants
contend
that
plaintiff's
deceptive trade practices claim is preempted by the Copyright
Act.
The court notes that plaintiff's unfair or deceptive trade
practices
claim
copyright
infringement,
infringement.
is
As
based
such,
not
but
only
also
defendants
upon
upon
have
defendants'
defendants'
not
alleged
trademark
demonstrated
the
absence of a plausible claim for relief, and defendants' motions
to dismiss are denied as to this claim.
7
VI.
Individual Defendant Claims
With regard to plaintiff's claims
defendants,
defendants
maintain
the
individual
plaintiff
that
against
has
failed
to
allege any facts demonstrating that these defendants engaged in
wrongdoing.
The court disagrees.
Plaintiff's amended complaint
asserts that defendants Anthony Long,
and Brad Skidmore
"materially participated in a
infringe
upon
the
through
the
sale
commercial
software.
copyrights
and/or
distribution,
l
operation of
(Am. Compl.
II
Jeremy Neer
pirated and/or
~
13.)
conspiracy to
trademarks
public
John Fannin
I
of
Plaintiff
performance,
counterfeit
and
infringing
Additionally, plaintiff alleges
that the individual defendants are the owners or managers of the
allegedly infringing entities and that each of them
and ratified
amended
tortuous
complaint.
plaintiff's
evidence
the
I
While l
amended
[sic]
acts
lf
alleged
ultimatelYI
complaint
may
not
the
be
"approved
in plaintiff' s
facts
borne
alleged
out
they are sufficient to withstand defendants
I
by
in
the
motion to
dismiss for failure to state a claim.
VII. Punitive Damages
FinallYI defendants move to dismiss plaintiff/s "claimll for
punitive
damages.
As
defendants
point
outl
there
is
no
independently cognizable cause of action for punitive damages in
North
Carolina.
Punitive
damages
are
ancillary to a recognized cause of action,
8
\\a
form
of
relief
which is sought in
addition
to
compensatory
Exterminating
Co.,
(M.D.N.C. Sept.
30,
No.
damages.
II
1:09-CV-106,
2009).
Belton
2009
v.
WL
Dodson
3200035,
Bros.
at
*6
At this stage of the litigation it
is unclear to the court whether plaintiff's claims would support
an award
of
puni tive
damages.
The
court,
therefore,
denies
without prejudice defendants' motions as to punitive damages.
CONCLUSION
For the foregoing reasons,
[DE #48
&
50J
are DENIED.
defendants'
motions to dismiss
The clerk is directed to continue
management of this case.
This
1(, "0- day
of February 2012.
6t~
Senior United States District Judge
At Greenville, NC
#31
9
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