SED, Inc. of South Carolina v. Seven Creeks Entertainment, LLC et al, No. 7:2010cv00222 - Document 56 (E.D.N.C. 2012)
Court Description: ORDER denying 48 Motion to Dismiss and 50 Motion to Dismiss. Signed by Senior Judge Malcolm J. Howard on 2/16/12. (Lee, L.)
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SED, Inc. of South Carolina v. Seven Creeks Entertainment, LLC et al Doc. 56 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 to dismiss Cyber Connect"the Long and (collectively "the Seven Creeks defendants") [DE Entertainment, LLC dismiss Skidmore by 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 Dockets.Justia.com 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 copyright of using, gaming machines illegally-modified marks. infringement, operating, racketeering, and that of and otherwise operate the POT or GOLD of" Plaintiff 24.) infringement, unfair 0' use infringing #34] using trademark 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 Cir. 2005) (quoting Iodice v. (4th Cir. 2002)). unadorned, However I prove Inc' an 415 F.3d 342, l United States, it 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 software. illegally (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 CompI. or other form of lease arrangement." (Am. 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 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. 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. Senior United States District Judge At Greenville, NC #31 9
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