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Panoramic Stock Images, Ltd. v. Pearson Education, Inc.

United States District Court, Seventh Circuit

May 29, 2013

PANORAMIC STOCK IMAGES, LTD. a/b/a PANORAMIC IMAGES, Plaintiff,
v.
PEARSON EDUCATION, INC., Defendant.

Memorandum Opinion and Order

SHARON JOHNSON COLEMAN, District Judge.

Plaintiff, Panoramic Stock Images, Ltd. d/b/a Panoramic Images ("Panoramic"), filed a three count First Amended Complaint alleging copyright infringement, contributory copyright infringement, and fraud against defendant, Pearson Education, Inc. ("Pearson"). Pearson moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim [17]. Panoramic attached a proposed Second Amended Complaint to its response in opposition to the motion to dismiss. For the following reasons, this Court grants in part and denies in part Pearson's motion.

Background

Panoramic is a stock photography licensing agency engaged in licensing photographs to publishers. Pearson publishes and sells textbooks. Panoramic alleges that "[b]etween 1991 and 2012, in response to permission requests from Pearson, Panoramic sold Pearson limited licenses to use copies of the Photographs in numerous educational publications. The licenses Panoramic granted Pearson were expressly limited by number of copies, distribution area, language, duration and/or media (print or electronic) as set forth in Exhibit 1." (First Am. Compl. Dkt. 8 at ¶ 7). Panoramic further alleges that "Panoramic granted the limited use licenses in response to Pearson's representations to Panoramic that the use of the Photographs would not exceed the limitations contained in its license requests." Id. at ¶ 8. Panoramic asserts that Pearson exceeded the license limitations and knew that it would when it purchased the licenses and did so to pay less for the images. Panoramic also alleges that Pearson knowingly permitted third parties to reproduce and distribute publications containing Panoramic's images.

Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires plaintiff set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). To survive a motion to dismiss brought pursuant to Rule 12(b)(6), a plaintiff must provide sufficient facts to state a claim for relief plausible on its face, raising the right to relief above a speculative level. See Arnett v. Webster, 658 F.3d 742, 751-52 (7th Cir. 2011). When ruling on a motion to dismiss, courts accept all well-pleaded allegations in the complaint as true, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (7th Cir. 2004), and draw all reasonable inferences in favor of the plaintiff. Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 633 (7th Cir. 2007). Plaintiffs are not required to plead a copyright action with the particularity required under Federal Rule of Civil Procedure 9(b) for fraud claims. Mid America Title Co. v. Kirk, 991 F.2d 417, 421 (7th Cir. 1993).

Discussion

Pearson moves to dismiss all three counts of the First Amended Complaint, arguing that the factual allegations to support the claims inadequately state a claim for relief. This Court will address each count in turn.

1. Count I: Copyright Infringement

In order to state a claim for copyright infringement, a plaintiff must allege "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

Pearson argues that Panoramic has not established that the alleged copyrights in the photographs were validly registered. An application to register must be filed, and either granted or refused, before suit can be brought. 17 U.S.C.§ 411(a); See Gaiman v. McFarlane, 360 F.3d 644, 655 (7th Cir. 2004). Although registration is a prerequisite to litigation, "[a] suit that is premature because a condition to litigation remains unsatisfied must be dismissed without prejudice." Brooks-Ngwenya v. Thompson, 202 F.Appx. 125, 127 (7th Cir. 2006) (citing Ford v. Johnson, 362 F.3d 395 (7th Cir. 2004)).

Here, Panoramic acknowledges that it had filed registration for some of the images at issue, but that registration had not yet been granted or refused. Although it has yet to expressly rule on the issue, the Seventh Circuit appears to follow the application approach, whereby receipt by the Copyright Office of a complete application satisfies Section 411(a). See Chicago Bd. of Educ. v. Substance, Inc., 354 F.3d 624, 631 (7th Cir. 2003); Hard Drive Productions, Inc. v. Does 1-55, No. 11 C 2789, 2011 U.S. Dist. LEXIS 118049 *9, n.2 (N.D. Ill. Oct. 12, 2011)(J. Darrah). Panoramic asserts that registration has been granted and the appropriate documentation attached to the proposed Second Amended Complaint. Therefore, regardless of which approach the Seventh Circuit ultimately adopts, Panoramic is able to satisfy the registration requirement in this case.

Pearson also argues that Panoramic fails to provide sufficient factual basis to show copyright ownership and that it owned the copyrights at the time of the alleged infringement. Pearson asserts that Panoramic fails to adequately plead ownership because it alleges only that it owns the photographs without facts showing that it owns at least one of the exclusive rights under the Copyright Act. In making this argument, Pearson refers to Hyperquest, Inc. v. N'Site Solutions, Inc., 632 F.3d 377, 381-82 (7th Cir. 2011) and other cases that address challenges to a plaintiff's standing to sue. Pearson has not challenged Panoramic's standing to sue, but rather contends that Panoramic fails to adequately plead ownership despite arguing that "the Complaint does not contain a single factual allegation concerning the basis of any purported ownership that would suffice to confer statutory standing to assert the claims in suit." (Emphasis in original) (Def. Memorandum In Support of Motion to Dismiss, Dkt. 17-1 at 10). Pearson however is conflating statutory standing requirements and requirements for pleading ownership.

The precise contours of what a plaintiff must allege to satisfy pleading the ownership requirement are ill-defined. Some courts appear to allow a showing of registration to also satisfy the ownership requirement. See, e.g, Hard Drive Productions, Inc., 2011 U.S. Dist. LEXIS 118049, at *10-11; Sweet v. City of Chicago, 953 F.Supp. 225, 227 (N.D.Ill. 1996); Home & Nature Inc. v. Sherman Specialty Co., Inc., 322 F.Supp.2d 260, 266 (E.D.N.Y. 2004)("the plaintiff satisfies the second element by asserting ownership of five copyrights in the complaint, listing the copyright registration numbers, and annexing copies of the five copyright registrations."). "Where a complaint alleges ownership, registration, and infringement, it need not specifically allege the derivation of the plaintiff's ...


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