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Seide v. Level-(1) Global Solutions, LLC

United States District Court, N.D. Illinois, Eastern Division

August 10, 2016

David Seide and Defined Space, Inc., Plaintiffs,
v.
Level-(1) Global Solutions, LLC; Steadfast Networks, LLC; Orbit Media Studios, Inc. and Nozone, Inc., Defendants.

          MEMORANDUM OPINION AND ORDER

HONORABLE THOMAS M. DURKIN, UNITED STATES DISTRICT JUDGE

         David Seide is a photographer who licenses use of his copyrighted photographs through the company Defined Space (Seide and Defined Space together are “Plaintiffs”). Plaintiffs licensed Level-(1) Global Solutions, Inc., to use certain of Seide’s photographs on Level-(1)’s website. Plaintiffs allege that Level-(1) and its internet service providers-Steadfast Networks, LLC, and Nozone, Inc.-violated various provisions of federal copyright law with respect to those photographs. Level-(1) has moved to dismiss some of the claims against it for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). R. 36. Steadfast has moved to dismiss the claims against it for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(c). R. 26. And Nozone has moved to be dropped as a party to this case pursuant to Federal Rule of Civil Procedure 21. R. 29. For the following reasons, all three motions are denied.

         Legal Standard

         A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g., Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). A complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), sufficient to provide defendant with “fair notice” of the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). This standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While “detailed factual allegations” are not required, “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. The complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “‘A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’” Mann v. Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). In applying this standard, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the non-moving party. Mann, 707 F.3d at 877.

         Federal Rule of Civil Procedure 12(c) permits a party to move for judgment after the parties have filed the complaint and answer. Buchanan-Moore v. County of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). A Rule 12(c) motion is subject to the same standard as a Rule 12(b)(6) motion. See Lodholtz v. York Risk Servs. Group, Inc., 778 F.3d 635, 639 (7th Cir. 2015). Rule 12(c) is “the proper heading” for a motion asserting an affirmative defense because “an affirmative defense is external to the complaint.” Yassan v. J.P. Morgan Chase & Co., 708 F.3d 963, 975-76 (7th Cir. 2013). For purposes of Rule 12(c), the pleadings include not just the complaint but the answer and “a copy of a written instrument that is an exhibit to a pleading.” Fed.R.Civ.P. 10(c). Such written instruments include affidavits, letters, contracts, and loan documents. See N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452-53 (7th Cir. 1998).

         Background

         In March 2010, Plaintiffs licensed Level-(1) to use several photographs as “flash components” on its website for three months. R. 11 ¶ 22. The parties do not explain what “flash components” are, but based on the Court’s review of Level-(1)’s website (www.level-1.com), the Court understands “flash component” to refer to a slideshow of photographs.[1] Plaintiffs delivered the photographs to Level-(1) on a CD. Id. ¶ 23. Embedded on each of the image files was information about the photograph’s title, author, creation date, copyright, and terms of use. Id. Plaintiffs allege that “Level-(1) used and displayed the [photographs] beyond use as flash components under the terms of the Level-(1) License, including without limitation creating unauthorized derivative works of the [photographs], impermissibly altering the [photographs], removing the copyright management information presented with and embedded in the [photographs], and publishing the [photographs] without regard to the copyright management information presented with and embedded in the [photographs].” Id. ¶ 25. More specifically, Plaintiffs allege that Level-(1) failed to accompany each of the photographs with the copyright notice, “© David B. Seide/DefinedSpace.com.” Id. ¶ 26. Plaintiffs, however, do not explain how Level-(1) allegedly created “unauthorized derivative works” or “alter[ed]” the photographs.[2]

         Plaintiffs attempted to contact Level-(1) about the license breach and the possibility of expanding the scope, and extending the term, of the license. Id. ¶ 29. Not until January 2011 were the parties able to reach agreement on a new license with a term of June 22, 2010 through December 31, 2011. Id. ¶ 30. Since the agreement post-dated its term, the agreement was apparently intended to serve as a settlement of Plaintiffs’ claims regarding Level-(1)’s use of the photographs. Level-(1), however, failed to pay the fee required by the agreement. Id. ¶ 31.

         Plaintiffs contacted Level-(1) about its breach of the license again on June 6, 2011. Id. ¶ 32. Level-(1) again orally agreed to a new license agreement, but again failed to pay. Id. ¶ 34. Plaintiffs allege that they “have diligently and repeatedly contacted Level-(1) . . . to discuss the matter, ” id. ¶ 33, but Plaintiffs do not specifically allege any facts about the ensuing four years.

         Apparently as of June 23, 2015, Level-(1) was still displaying Plaintiffs’ photographs on its website, because on that date Plaintiffs sent a copyright infringement notice to NTT America, Inc., which at that time was Level-(1)’s internet service provider. Id. ¶¶ 35, 37. This notice was also forwarded to a company called Orbit (also a defendant in this case, who has not made a motion to dismiss), which designed and managed Level-(1)’s website. Id. ¶¶ 36, 39. As part of this notice, Plaintiffs again offered to enter into a new license agreement. Id. ¶ 40. Level-(1) and Orbit responded to the notice by rejecting the new license and removing the photographs from Level-(1)’s website. Id. ¶ 41.

         However, on February 29, 2016, Plaintiffs discovered that the photographs had reappeared on Level-(1)’s website. Id. ¶ 42. Steadfast was Level-(1)’s new internet service provider, and Plaintiffs allege that Steadfast is a division of Nozone. Id. ¶ 15. Plaintiffs sent a copyright infringement notice to Steadfast and Nozone on March 2, 2016. Id. ¶ 46. Steadfast’s answer alleges that the notice stated the following in relevant part:

This letter is official notification under the Digital Millennium Copyright Act, and we seek the removal of the aforementioned infringing material from your servers. We further request that you immediately notify the infringer of this notice and inform them of their duty to remove the infringing material immediately, and notify them to cease any further posting of infringing material to your server in the future.

R. 13 at 15. Steadfast alleges that it forwarded Plaintiffs’ letter to Level-(1) on March 2, 2016 (the email is attached as an exhibit to Steadfast’s answer), id., and informed Level-(1) that Steadfast’s policy was that it would act to remove the photographs if Level-(1) did not do so within five days. Id. at 16. Steadfast also alleges that it received confirmation on March 10, 2016, that the photogrpahs had been removed from Level-(1)’s website, and attaches to its answer a copy of the notice. Id. at 17. Plaintiffs, however, allege that Defendants “failed to act expeditiously to remove, or disable access to, ” the photographs. R. 11 ¶¶ 47-49.

         Nozone alleges in its answer that it has nothing to do with this case because it assigned its assets and liabilities to Steadfast. See R. 20. The assignment agreement is attached to Nozone’s answer. See R. 20-1. In its brief, ...


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