LIVE FACE ON WEB, L.L.C. v. ABSONUTRIX, L.L.C. et al
Filing
18
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 05/08/2018, that Defendants' Motion to Dismiss for Failure to State a Claim (Docket Entry 11 ) be denied.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
LIVE FACE ON WEB, LLC,
)
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
ABSONUTRIX, LLC, et al.,
Defendants.
1:17cv937
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This
case
comes
before
the
undersigned
United
States
Magistrate Judge for a recommendation on Defendants’ “Motion to
Dismiss for Failure to State a Claim” (Docket Entry 11) (the
“Motion”).
For the reasons that follow, the Court should deny the
Motion.
BACKGROUND
Live Face on Web, LLC (“LFOW”), commenced this action against
Absonutrix,
LLC,
and
Himanshu
Nautiyal
“Defendants”), alleging copyright infringement.
1 (the “Complaint”), ¶¶ 1-3, 42.)
(collectively,
(See Docket Entry
According to the Complaint:
“LFOW is a developer and owner of ‘live person’ software,
which is an original work of authorship independently created by
LFOW (‘LFOW Software’).”
(Id., ¶ 11.)
“The LFOW Software allows
a company to display a video of a ‘walking’ and ‘talking’ personal
host who introduces a website to an online visitor.
The personal
host is, in effect, a website spokesperson for the specific company
for whom the video has been created.
Typically, the website
spokesperson explains a company’s products and/or services and
directs a visitor’s attention to a particular product or aspect of
the website.”
(Id., ¶ 12.)
“The LFOW Software seeks to enhance a
website by using a real spokesperson to capture, hold and prolong
the attention of the average online visitor, enhancing the ability
of the website to advertise specific goods and services.”
(Id.,
¶ 14.)
“Generally speaking, the LFOW Software can be implemented by
LFOW’s customers by modifying the HTML code of the LFOW customer’s
website.
An HTML script tag is embedded in the HTML code of the
LFOW customer’s website, which links the LFOW customer’s website to
a copy of the LFOW Software.”
(Id., ¶ 15.)
“Regardless of the
particular webserver(s) where the LFOW Software is stored, the
functionality and result is the same.
When a web browser is
directed to a website linked to the LFOW Software, the embedded
HTML script tag is read by the web browser and causes the automatic
distribution of a copy of the LFOW Software.
The LFOW Software is
automatically saved by the web browser into cache, and/or a hard
drive(s), and loaded into computer memory and/or RAM (random access
memory). As a result of the distribution of the LFOW software, the
specific website spokesperson video is automatically launched and
displayed to advertise on the associated website.”
-2-
(Id., ¶ 16.)
LFOW owns a registered copyright in the LFOW Software.
(Id.,
¶ 19.)
“Defendants
own,
operate
and/or
control
the
http://www.absonutrix.com/ (‘Defendants’ Website’).”
website
(Id., ¶ 20.)
“Upon information and belief, Defendants have used a website
spokesperson
video
to
promote
their
products
and/or
services. . . . [I]n order to display the website spokesperson
video
on
Defendants’
Website,
Defendants
used,
copied
and
distributed, without permission, [an] infringing version of the
LFOW
Software,
thereby
copyrighted work.”
infringing
upon
LFOW’s
rights
in
its
(Id., ¶¶ 22-23.)
“[T]o implement and distribute the infringing version of the
LFOW Software, the Defendants’ Website was modified by or on behalf
of Defendants . . . .”
(Id., ¶ 25.)
Specifically, source code on
Defendants’ Website “links the Defendants’ Website to the file
‘ip_player.js’,
which
is
an
infringing
version
of
the
LFOW
Software, which was stored for Defendants on the webserver(s) for
www.tweople.com.”
(Id., ¶ 26.)
“As a result of the modifications
to the Defendants’ Website . . . when a web browser retrieves a
page from the Defendants’ Website, a copy of the infringing version
of the LFOW Software is distributed by Defendants to the website
visitor and stored on the visitor’s computer in cache, memory,
and/or its hard drive.
Accordingly, each visit to the Defendants’
Website is a new act of copyright infringement.”
-3-
(Id., ¶ 28.)
In
sum, LFOW contends that, in modifying their website to link to the
“ip_player.js” file stored on a third-party server, Defendants
engaged in “direct, indirect and/or vicarious infringement of
registered copyright(s).”
(Id., ¶ 42.)
In response to the Complaint, Defendants moved to dismiss,
contending, first, that the allegations in the Complaint do not
state a plausible claim for copyright infringement under Rule
12(b)(6) of the Federal Rules of Civil Procedure (the “Rules”), and
second, that any alleged copyright infringement occurred outside
the three-year statute of limitations.
8.)
(See Docket Entry 12 at 6,
LFOW filed a response to the Motion (Docket Entry 14), to
which Defendants replied (Docket Entry 15).
DISCUSSION
I. Failure to State a Claim
In support of the Motion, Defendants contend that LFOW’s
allegations of “‘use[], cop[ying] and distribut[ion]’ of the code
in question” constitute factually “unsupported conclusions” that
fail to satisfy Rule 8’s pleading standards.
(Docket Entry 15 at
2 (brackets in original); see also Docket Entry 12 at 6 (“[The
Complaint] does not provide facts supporting the conclusory and
formulaic labels of copying and use by Absonutrix.”).)
To
survive
a
motion
to
dismiss
under
Rule
12(b)(6),
a
complaint must contain sufficient factual allegations “to ‘state a
claim to relief that is plausible on its face.’”
-4-
Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
To qualify as plausible, a
claim needs sufficient factual content to support a reasonable
inference of the defendant’s liability for the alleged misconduct.
Id. Facts that remain “‘merely consistent with’” liability fail to
establish a plausible claim for relief.
U.S. at 557).
Id. (quoting Twombly, 550
However, a complaint need not contain detailed
factual recitations, as long as it provides the defendant “fair
notice of what the claim is and the grounds upon which it rests.”
Twombly, 550 U.S. at 555 (internal quotation marks and alteration
omitted).
In reviewing a motion to dismiss, the Court must “accept the
facts alleged in the complaint as true and construe them in the
light most favorable to the plaintiff.”
Coleman v. Maryland Court
of Appeals, 626 F.3d 187, 189 (4th Cir. 2010), aff’d sub nom.,
Coleman v. Court of App. of Md., 566 U.S. 30 (2012).
must
also
“draw
plaintiff.”
couched
reasonable
inferences
in
favor
of
the
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc.,
637 F.3d 435,
omitted).
all
The Court
440
(4th Cir. 2011)
(internal
quotation
marks
However, the Court “will not accept ‘legal conclusions
as
facts
or
unwarranted
conclusions, or arguments.’”
inferences,
unreasonable
United States ex rel. Nathan v.
Takeda Pharm. N. Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013)
(quoting Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir.
-5-
2012)).
“At bottom, determining whether a complaint states . . .
a plausible claim for relief . . . will ‘be a context-specific task
that
requires
the
reviewing
experience and common sense.’”
court
to
draw
on
its
judicial
Francis v. Giacomelli, 588 F.3d
186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 679).
“To establish a claim for copyright infringement under the
Copyright Act of 1976, 17 U.S.C. § 101 et seq., a plaintiff must
prove that it possesses a valid copyright and that the defendant
copied elements of its work that are original and protectable.”
Copeland v. Bieber, 789 F.3d 484, 488 (4th Cir. 2015).
“[T]he
Copyright Act grants the copyright holder ‘exclusive’ rights to use
and to authorize the use of his work in five qualified ways,
including reproduction of the copyrighted work in copies.”
Sony
Corp. v. Universal City Studios, Inc., 464 U.S. 417, 432-33 (1984).
Direct infringement of a copyright “requires conduct by a person
who causes in some meaningful way an infringement.”
CoStar Grp.,
Inc. v. LoopNet, Inc., 373 F.3d 544, 549 (4th Cir. 2004) (emphasis
in original). A defendant may also infringe a copyright indirectly
under the theories of contributory and vicarious infringement. See
id. at 550.
“Under a theory of contributory infringement, ‘one
who, with knowledge of the infringing activity, induces, causes or
materially contributes to the infringing conduct of another’ is
liable
for
the
infringement.
Under
a
theory
of
vicarious
liability, a defendant who ‘has the right and ability to supervise
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the infringing activity and also has a direct financial interest in
such activities’ is similarly liable.”
Id. (citation omitted)
(quoting Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443
F.2d 1159, 1162 (2d Cir. 1971)).
Here, Defendants maintain that the Complaint’s allegations
fall short because they “simply do not assert that the code was
ever actually displayed to visitors or copied to any visitor’s
computer; the facts stated in the Complaint merely allege that it
was possible that the Absonutrix website displayed the software.”
(Docket Entry 15 at 1-2 (emphasis in original).)
“[T]he Complaint
does not . . . allege facts[] that the website was actually
accessed, the link to the allegedly infringing code activated, or
the video image supplied to the user’s computer . . . .”
3.)
Stated
another way,
Defendants
argue
that,
(Id. at
because
the
Complaint did not expressly allege that any visitors accessed
Defendants’
Website,
the
Complaint’s
allegations
of
“‘use[],
cop[ying] and distribut[ion]’” (id. at 2) constitute conclusory
labels.
This
line of
argument
lacks
merit, as
LFOW
has
alleged
sufficient factual material to survive a motion to dismiss.
At
this stage of the proceedings, the Court must “accept the facts
alleged in the [C]omplaint as true and construe them in the light
most favorable to the plaintiff,” Coleman, 626 F.3d at 189, and
must
also
“draw
all
reasonable
-7-
inferences
in
favor
of
the
plaintiff.”
E.I. du Pont de Nemours & Co., 637 F.3d at 440
(internal quotation marks omitted).
Here, the Complaint alleges that Defendants’ Website linked to
an infringing version of the LFOW Software, as well as that, when
a visitor accessed Defendants’ Website, “a copy of the infringing
version of the LFOW Software [wa]s distributed . . . to the website
visitor and stored on the visitor’s computer in cache, memory
and/or its hard drive.”
(Docket Entry 1, ¶ 28.)
Additionally, the
Complaint states that “Defendants actively induced end users to
visit
Defendants’
Website,
and
thereafter
distributed
the
infringing version of the LFOW Software to end users (e.g. website
visitors)
“Defendants
numerous
have
times.”
caused,
(Id.,
enabled
¶
36
(emphasis
and/or
added).)
facilitated
the
infringement by, inter alia, distributing copies of the accused
software to each visitor . . . .”
(Id., ¶ 37 (emphasis added).)
The Complaint may not allege verbatim that “the code was . . .
actually displayed to visitors or copied to any visitor’s computer”
(Docket Entry 15 at 2 (emphasis in original)), but it need not to
satisfy Rule 8.
Taken in the light most favorable to LFOW, the
Complaint’s language gives rise to a reasonable inference that
users actually visited Defendants’ Website, and therefore that
copying and distribution of the LFOW Software occurred.
Defendants
allegations
fail
further
to
argue
establish
that
the
that
Defendants,
-8-
Complaint’s
factual
rather
than
tweople.com, committed any infringement.
6-7.)
(See Docket Entry 12 at
In support, Defendants rely on Flava Works, Inc. v. Gunter,
689 F.3d 754 (7th Cir. 2012).
(Docket Entry 12 at 6-7.)
In that
case, the plaintiff sued the owner of “myVidster,” a website that
allows users to share links to videos that other users can then
watch on their computers.
plaintiff,
“Flava,”
See Flava Works, 689 F.3d at 756.1
argued
that
by
providing
myVidster committed contributory infringement.
this
The
service,
Id. at 757.
The
court, however, observed that,
as long as the visitor makes no copy of the copyrighted
video that he is watching, he is not violating the
copyright owner’s exclusive right . . . “to reproduce the
copyrighted work in copies” and “distribute copies . . .
of the copyrighted work to the public.” His bypassing
Flava’s pay wall by viewing the uploaded copy is
equivalent to stealing a copyrighted book from a
bookstore and reading it. That is a bad thing to do (in
either case) but it is not copyright infringement. The
infringer is the customer of Flava who copied Flava’s
copyrighted video by uploading it to the Internet.
Id. (citation omitted) (quoting 17 U.S.C. § 106(1), (3)).
Defendants analogize their situation to myVidster’s.
Docket Entry 12 at 7.)
(See
“Like myVidster in Flava Works, the
1
myVidster operates as follows: “Patrons of myVidster find
videos on the Internet, and if they want to make them available to
other patrons of myVidster . . . [they] “bookmark” (note) them on
myVidster’s website. Upon receiving the bookmark myVidster
automatically requests the video’s “embed code” from the server
that hosts (that is, stores) the video. . . . The embed code
contains the video’s web address plus instructions for how to
display the video. Armed with that code, myVidster creates a web
page that makes the video appear to be on myVidster’s site. . . .
[T]he video is being transmitted directly from the server on which
the video is stored to the viewer’s computer.” Id. at 757.
-9-
allegedly infringing code is embedded and the Seventh Circuit made
clear that this is not copyright infringement.”
(Id.)
However,
Flava Works does not stand for the proposition that embedding code
that enables the transfer of copyrighted material never constitutes
copyright infringement.
Rather, the Flava Works court rested its
reasoning
that
on
the
fact
viewers
of
Flava’s
videos
using
myVidster did not make copies of the videos on their computers.
See Flava Works, 689 F.3d at 757.
As such, myVidster’s actions did
not increase the amount of copyright infringement occurring and
they
therefore
infringement.
could
not
incur
liability
for
contributory
See id. at 757-58.
By contrast, LFOW’s Complaint specifically alleges that, when
a user visits Defendants’ Website, “a copy of the infringing
version of the LFOW Software is distributed . . . to the website
visitor and stored on the visitor’s computer . . . .
Accordingly,
each visit to the Defendants’ Website is a new act of copyright
infringement.” (Docket Entry 1, ¶ 28.) That allegation materially
distinguishes Flava Works from the instant case.
In sum, Defendants have not shown that LFOW’s Complaint fails
to state a claim.
II. Statute of Limitations
Defendants also contend that any alleged infringement falls
outside the Copyright Act’s statute of limitations.
Entry 12 at 8.)
(See Docket
Specifically, they note that the most recent copy
-10-
of Defendants’ Website that LFOW provides dates back to May 17,
2014.
(See id. at 9.)
LFOW did not commence the lawsuit until
October 17, 2017, and the Complaint does not expressly allege
infringement occurring after May 17, 2014.
Entry 1.)
(See generally Docket
Accordingly, Defendants argue, the Complaint falls
outside the Copyright Act’s three-year statute of limitations.
(See Docket Entry 12 at 8-9 (citing 17 U.S.C. § 507(b)).)
A motion to dismiss generally “cannot reach the merits of an
affirmative defense, such as the defense that the plaintiff’s claim
is time-barred.
But in the relatively rare circumstances where
facts sufficient to rule on an affirmative defense are alleged in
the [C]omplaint, the defense may be reached by a motion to dismiss
filed under Rule 12(b)(6).
This principle only applies, however,
if all facts necessary to the affirmative defense ‘clearly appear[]
on the face of the [C]omplaint.’”
Goodman v. Praxair, Inc., 494
F.3d 458, 464 (4th Cir. 2007) (quoting Richmond, Fredericksburg &
Potomac R.R. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993)).
The instant case does not appear to present an example of
those “rare circumstances,” id.
Defendants base their argument on
the fact that the Complaint “points to [Defendants’ Website’s]
source code from May 17, 2014,” as well as that the Complaint
attached “tweople.com code that [Defendants’] Website code links
to, which is dated October 24, 2013.”
However,
it
does
not
“clearly
(Docket Entry 12 at 9.)
appear[]
-11-
on
the
face
of
the
[C]omplaint,” Richmond, Fredericksburg & Potomac R.R., 4 F.3d at
250, that May 17, 2014, represents the last occasion on which
Defendants’
Website
contained
a
link
to
the
infringing
LFOW
Software. By its express terms, the Complaint provides the copy of
the code “[b]y way of example” (Docket Entry 1, ¶ 20), implying
that Defendants’ Website contained the link to tweople.com on other
dates.
Moreover, the Complaint itself states that “Defendants
unlawfully and continuously used the infringing version of the LFOW
Software on Defendants’ Website” (id., ¶ 34 (emphasis added)), and
“distributed the infringing version of the LFOW Software . . .
numerous times” (id., ¶ 36 (emphasis added)).
Accordingly, taking
the Complaint’s allegations in the light most favorable to LFOW,
Defendants’ Website could plausibly have linked to tweople.com on
October 17, 2014, or later.
In any event, the United States Court of Appeals for the
Fourth Circuit has declared that “[t]he limitations period for
bringing copyright infringement claims is three years after the
claims accrues.
And a claim accrues when ‘one has knowledge of a
violation or is chargeable with such knowledge.’”
Lyons P’ship,
L.P. v. Morris Costumes, Inc., 243 F.3d 789, 796 (4th Cir. 2001)
(quoting Hotaling v. Church of Jesus Christ of Latter-Day Saints,
118 F.3d 199, 202 (4th Cir. 1997)).
Defendants would have the
Court ignore the foregoing authority on the grounds that:
-12-
(1) “[t]he Supreme Court has very clearly stated that a
copyright
infringement
claim
‘arises
or
“accrues”
when
an
infringing act occurs’” (Docket Entry 12 at 8 (quoting Petrella v.
Metro-Goldwyn-Mayer, Inc., 572 U.S. ___, ___, 134 S. Ct. 1962, 1969
(2014)) (internal bracket omitted)); and
(2) “the ‘notice’ proposition was dicta in both cited Fourth
Circuit cases” (id. at 10).
Neither of these rationales warrants entry of judgment for
Defendants.
As to the first, the Supreme Court’s ruling on which
Defendants rely acknowledged (but did not overrule) authority in
which
federal
appellate
courts
broadly
recognized,
“as
an
alternative to the incident of injury rule, a ‘discovery rule,’
which starts the limitations period when ‘the plaintiff discovers,
or with due diligence should have discovered, the injury that forms
the basis for the claim.’”
Petrella, 572 U.S. at ___ n.4, 134 S.
Ct. at 1969 n.4 (quoting William A. Graham Co. v. Haughey, 568 F.3d
425, 433 (3d Cir. 2009) (citing cases, including Lyons P’ship));
see also SCA Hygiene Prods. Aktiebolag v. First Quality Baby
Prods., LLC, ___ U.S. ___, ___, 137 S. Ct. 954, 962 (2017) (“[I]n
Petrella, we specifically noted that ‘we have not passed on the
question’ whether the Copyright Act’s statute of limitations is
governed by such a [discovery] rule.” (quoting Petrella, 572 U.S.
at ___ n.4, 134 S. Ct. at 1969 n.4)).
Second, the Supreme Court
did not construe the Fourth Circuit’s position on the discovery
-13-
rule as mere dicta; rather, the Supreme Court described the Fourth
Circuit as (like eight other circuits) “hav[ing] adopted . . .
[the] ‘discovery rule,’” Petrella, 572 U.S. at ___ n.4, 134 S. Ct.
at 1969 n.4 (quoting Third Circuit opinion which, in turn, listed
Lyons P’ship as one of “eight of [its] sister circuits [to] have
applied the discovery rule to civil actions under the Copyright
Act,” Haughey, 568 F.3d at 433).
Consistent with the foregoing considerations, district courts
in the Fourth Circuit have continued to follow the endorsement of
the discovery
Petrella.
rule
in
Lyons
P’ship and
Hotaling,
even
after
See RoyaltyStat, LLC v. IntangibleSpring Corp., Civil
Action No. PX 15-3940, 2018 WL 348151, at *3 (D. Md. Jan. 10,
2018); Topline Sols., Inc. v. Sandler Sys., Inc., Civil Action No.
ELH-09-3102, 2017 WL 1862445, at *21 (D. Md. May 8, 2017); see also
Mitchell v. Capitol Records, LLC, 287 F. Supp. 3d 673, 677 (W.D.
Ky. 2017) (“Since Petrella, the courts interpreting [its] footnote
[4] have largely decided that the discovery rule remains viable in
the circuits that had previously applied it.”).
do likewise.
This Court should
See generally Awuah v. Coverall N. Am., Inc., 554
F.3d 7, 11 (1st Cir. 2009) (“Given that the Supreme Court has not
clearly spoken, the interests of predictability are served by
respecting [a federal appellate court’s] prior language . . . .”).
As LFOW has observed, “[w]hen [it] discovered [] Defendants’
infringement is a question of fact to be determined at a later
-14-
date.
There is no allegation or suggestion in the Complaint that
[LFOW] discovered Defendants’ infringement more than three years
before filing suit.”
(Docket Entry 14 at 13.)
Accordingly, the
Court should not dismiss the Complaint as untimely (at least not at
this juncture).
CONCLUSION
The Complaint states a claim for copyright infringement and
Defendants have not established as a matter of law that said claim
falls outside the statute of limitations.
IT IS THEREFORE RECOMMENDED that Defendants’ Motion to Dismiss
for Failure to State a Claim (Docket Entry 11) be denied.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
May 8, 2018
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