controlled, or had the ability to monitor or control the contents of NAFED's Web Page is also unclear. These disputed issues of material fact preclude summary judgment for either party on this theory of liability.
3. Vicarious Liability
Plaintiff does not claim, either in its complaint or briefs, that Northwest is vicariously liable for copyright infringement. Nevertheless, the court will briefly address this issue since Northwest seeks summary judgement in its favor on this theory of liability. "[A] defendant is vicariously liable for copyright infringement if it has 'the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.'" Hard Rock Cafe Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143, 1150 (7th Cir. 1992) (quoting Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971)). As mentioned above, the degree to which Northwest monitored, controlled, or had the ability to monitor or control the contents of NAFED's Web Page is unclear. However, it is undisputed that NAFED paid Northwest a one-time set-up fee of $ 20 and that since that time NAFED has paid Northwest a flat fee of $ 67.50 each quarter. It is also undisputed that the fee Northwest receives has never changed based on how many people visit NAFED's Web Page or what is accessed. In other words, NAFED's infringement did not financially benefit Northwest. Accordingly, Northwest cannot be held vicariously liable for NAFED's infringement. See Religious Technology Center v. Netcom On-Line Communication Services., Inc., 907 F. Supp. 1361, 1376-77 (N.D. Cal. 1995).
In sum, Northwest may not be held liable for infringement on theories of direct infringement or vicarious liability. Disputed issues of material fact, however, preclude summary judgment in any party's favor on a theory of contributory infringement. Accordingly, plaintiff's motion for summary judgment against Northwest on Count I is denied, and Northwest's motion for summary judgment against plaintiff on Count I is granted with respect to direct infringement or vicarious liability, but denied with respect to contributory infringement.
In several of its briefs, plaintiff argues that NAFED and Northwest willfully infringed its copyrights. In the Seventh Circuit, a finding of willfulness is justified if the infringer knows that its conduct is an infringement or if the infringer has acted in reckless disregard of the copyright owner's right. Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 511-12 (7th Cir. 1994) (quoting Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1020 (7th Cir. 1991)). A finding of willfulness, however, is also a factual determination. International Korwin Corp. v. Kowalczyk, 855 F.2d 375, 380 (7th Cir. 1988). Robisheaux claims he did not know that the clip art files he placed on NAFED's Web Page were copyrighted. Thus, a finding of willfulness against NAFED requires a determination of Robisheaux's credibility. Summary judgment on the issue is, therefore, inappropriate. Lipton v. Nature Co., 71 F.3d 464, 472 (2d Cir. 1995). The disputed issues of material fact that exist regarding Northwest's knowledge and Northwest's ability to monitor or control the contents of NAFED's Web Page also preclude a summary finding of willfulness against Northwest.
II. UNFAIR COMPETITION (COUNT II)
Northwest seeks summary judgment against plaintiff on Count II on the grounds that plaintiff's common law claim for unfair competition is preempted by § 301 of the Act. Although NAFED has not formally filed a motion seeking summary judgment against plaintiff on Count II, it too argues that plaintiff's unfair competition claim is preempted by § 301 of the Act. Plaintiff responded to NAFED's argument by referring the court to its response to Northwest's argument. In light of the similarity of the arguments presented by Northwest and NAFED on this issue, the court will treat NAFED as having joined in Northwest's motion for summary judgment on Count II.
17 U.S.C. § 301 provides in relevant part:
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). Thus, two conditions must be met for a right under state law to be preempted: (1) the work in which the right is asserted must be fixed in tangible form and come within the subject matter of copyright and (2) the right must be equivalent to any of the rights specified in § 106. Baltimore Orioles, Inc. v. Major League Baseball Players Association, 805 F.2d 663, 674 (7th Cir. 1986) (citations omitted). Plaintiff does not dispute that its clip art software is fixed in tangible form and comes within the subject matter of copyright. Rather, plaintiff argues that the right it asserts is broader than the rights specified in § 106.
"A right under state law is 'equivalent' to one of the rights within the general scope of copyright if it is violated by the exercise of any of the rights set forth in § 106." Id. at 676. In other words, "a right is equivalent to one of the rights comprised by a copyright if it 'is infringed by the mere act of reproduction, performance, distribution or display.'" Id. at 677 (quoting Melville B. Nimmer and David Nimmer, Nimmer on Copyright, § 1.01[B]). To avoid preemption, the state claim must incorporate an "extra element" that "changes 'the nature of the action so that it is qualitatively different from a copyright infringement claim.'" Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992) (quoting Mayer v. Josiah Wedgwood & Sons, Ltd., 601 F. Supp. 1523, 1535 (S.D.N.Y. 1985)). Plaintiff argues that the inclusion and promotion of its clip art on NAFED's Web Page deceived the public as to the origin, affiliation and sponsorship of its clip art. Plaintiff therefore asserts that its unfair competition claim includes the extra element of public deception. In support of its position, plaintiff cites Nash v. CBS, Inc., 704 F. Supp. 823 (N.D. Ill. 1989) (finding claim under the Illinois Uniform Deceptive Trade Practices Act ("UDTPA") (which codified the common law of unfair competition) was not preempted under § 301 because the UDTPA's goal of consumer protection was distinct from the Act's goal of securing authors' intellectual property rights), aff'd, 899 F.2d 1537 (7th Cir. 1990).
Plaintiff's argument is unpersuasive. Plaintiff's copyright infringement claim and unfair competition claim are based on the same conduct: the unauthorized copying and distribution of its clip art on NAFED's Web Page. There are no new allegations of likelihood of consumer confusion in Count II. In fact, there are no new allegations at all in Count II. The two paragraphs that make up Count II in its entirety read as follows: "[Plaintiff] realleges and incorporates herein paragraphs 1 through 32 of this Complaint. By virtue of the aforementioned acts, Defendants have engaged in unfair competition with [plaintiff]."
In any event, the inherent misrepresentation that accompanies the unauthorized copying and distribution of another's copyrighted work is not enough. Courts have refused to conclude that an allegation of misrepresentation based solely on an alleged infringer's act of displaying, selling, or promoting the infringing work as his or her own creation, is sufficient to remove a state based claim from the preemptive reach of 17 U.S.C. § 301(a)." Fasa Corporation v. Playmates Toys, Inc., 869 F. Supp. 1334, 1361-62 (N.D. Ill. 1994). "The fact that the defendants were selling the allegedly infringing works under their own names -- and, hence, implicitly misrepresenting the origin of the works or causing confusion in the consuming public -- did not alter the analysis . . . . this fact was not regarded as so qualitatively altering the nature of the underlying infringement as to take the state based claims out of the preemptive scope of copyright." Id. at 1363.
Generally, unfair competition claims premised on "passing off" are not preempted by the Act. Id. at 1362. Plaintiff, however, has not alleged "passing off" which "involves 'the selling of a good or service of one's own creation under the name or mark of another.'" Web Printing Controls Co. Inc. v. Oxy-Dry Corp., 906 F.2d 1202, 1203, n.1 (7th Cir. 1990) (quoting Smith v. Montoro, 648 F.2d 602, 604 (9th Cir. 1981)). The conduct plaintiff alleges is more like "reverse passing off" which "occurs 'when a person removes or obliterates the original trademark, without authorization, before reselling goods produced by someone else,'" Web Printing, 906 F.2d at 1203, n.1 (quoting Smith, 648 F.2d 602 at 605), or when someone simply "sells plaintiff's products as its own." Waldman Publishing Corp. v. Landoll, Inc., 848 F. Supp. 498, 500-01 (S.D.N.Y. 1994), vacated in part on other grounds, 43 F.3d 775 (2d Cir. 1994). Claims premised on reverse passing off are preempted under the Act. See Fasa Corporation v. Playmates Toys, Inc., 869 F. Supp. 1334, 1361-64 (N.D. Ill. 1994). The court in Nash -- the sole case upon which plaintiff relies -- did not adequately consider the distinction between passing off and reverse passing off. Thus, the two conditions for preemption are satisfied, and plaintiff's common law unfair competition claim is preempted under § 301 of the Act. Accordingly, Northwest and NAFED's motion for summary judgment against plaintiff on Count II is granted.
Plaintiff's motion for summary judgment against NAFED on Count I is granted. Plaintiff's motion for summary judgment against Northwest on Count I is denied. Northwest's motion for summary judgment against plaintiff on Count I is granted with respect to direct infringement and vicarious liability, but denied with respect to contributory infringement. Northwest and NAFED's motion for summary judgment against plaintiff on Count II is granted. This matter is set for a report on status December 4, 1997, at 9:00 a.m., at which time the parties are directed to present a definitive discovery plan.
November 13, 1997
Robert W. Gettleman
United States District Judge