LIVE FACE ON WEB, LLC v. MEGAPREVENTIONRX LIMITED LIABILITY COMPANY et al, No. 1:2015cv07143 - Document 23 (D.N.J. 2016)

Court Description: OPINION. Signed by Judge Joseph H. Rodriguez on 6/29/2016. (tf, )

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LIVE FACE ON WEB, LLC v. MEGAPREVENTIONRX LIMITED LIABILITY COMPANY et al Doc. 23 UNITED STATES DISTRICT COURT DISTRICT OF NEW J ERSEY LIVE FACE ON WEB, LLC, Plaintiff, v. HONORABLE J OSEPH H. RODRIGUEZ Civil No. 15-7143 (J HR/ AMD) OPIN ION MEGAPREVENTIONRX, LLC, and MARK GUERRA, Defendants. This copyright infringem ent suit is one of m any brought by Plaintiff Live Face on Web, LLC (“LFOW”). 1 Before the Court is Defendants Megapreventionrx, LLC and Mark Guerra’s Motion to Dism iss for failure to state a claim . LFOW opposes the Motion, and alternatively seeks leave to am end the Verified Com plaint. The Court has considered the written subm issions of the parties, without oral argum ent. For the reason s set forth below, the Motion to Dism iss is dism issed without prejudice, and LFOW is granted leave to am end its Verified Com plaint within 30 days. 1 According to Defendants, at least 60 other suits have been filed. In Decem ber, 20 15, the J udicial Pan el on Multidistrict Litigation denied centralization of the suits. See In re Live Face on Web, LLC Copyright Litig., 20 15 U.S. Dist. LEXIS 1660 50 (J .P.M.L. Dec. 9, 20 15). Thirteen such suits have been filed in the District of New J ersey; four of which rem ain open at this tim e. All four open cases have been designated related cases pursuant to Local Civil Rule 40 .1(c). 1 I. Backgro u n d The Verified Com plain t alleges the following facts. LFOW develops com puter software. (Verified Com plaint ¶ 8) The copyrighted software at issue allows a website to display a video spokesperson who walks and talks on the com puter screen, directing a website visitor’s attention to certain aspects of the website. (Id. at ¶ 9) The website for Defendant Megapreventionrx allegedly has, or had during the relevant tim e period, this video spokesperson functionality. (Verified Com plaint ¶ 19) “[I]n order to display the web spokesperson video on [its] website,” Megapreventionrx allegedly used LFOW’s software without perm ission. (Id. at ¶ 20 ) 2 The Verified Com plain t alleges that each tim e a person visits Megapreventionrx’s website an d views the video spokesperson, a separate violation of LFOW’s copyright occurs. (Verified Com plaint ¶ 25) LFOW explains, “[w]hen a web browser is directed to a website linked to the LFOW Software, the em bedded HTML script tag is read by the web browser and causes the autom atic distribution of a copy of the LFOW Software. The LFOW Software is 2 Though not pled in the Verified Com plaint, Defendants’ m oving brief explains how Megapreventionrx used LFOW’s software without perm ission: Megapreventionrx purchased the software from non-party, Tweople, Inc., who allegedly copied LFOW’s code and sold it as Tweople’s own software. (Moving Brief, p. 3) See also, Live Face on Web, LLC v. Em erson Cleaners, In c., 66 F. Supp. 3d 551, 558 n.10 (D.N.J . 20 14) (“As both LFOW and [Defendant] seem to agree, the alleged prin cipal wrongdoer here is not [Defendant], but Tweople.”); Live Face on Web, LLC v. Tweople, Inc., 20 14 U.S. Dist. LEXIS 171447, *3-4 (M.D. Fla. Dec. 11, 20 14) (“LFOW alleges that Tweople copied its software code, and then used that code in video spokesperson projects Tweople sold to its custom ers for use on the custom ers' websites. . . . The rem aining Defen dants are alleged to be custom ers of Tweople who purchased video spokesperson projects containing the infringing software codes, whose websites operate using the infringing software code, and who use the software to advertise their products and services.”). Tweople has filed for chapter 7 bankruptcy protection in the Middle District of Florida. (Moving Brief, p. 3, 10 -11) ; see also, Live Face on Web, LLC v. Unlim ited Office Solutions, LLC, 14-cv-3777-J EI-AMD (D.N.J .), Docket Entry # 18 -- Suggestion of Bankruptcy as to Tweople, Inc., filed by Tweople, Inc. 2 autom atically saved by the web browser into cache, and/ or a hard drive(s), and loaded into com puter m em ory and/ or RAM (random access m em ory). As a result of the distribution of the LFOW Software, the specific web spokesperson video is autom atically launched and displayed . . . on the . . . website.” (Id. at ¶ 13) Stated m ore sim ply, in order for the video spokesperson to appear on Megapreventionrx’ website, the website causes a copy of LFOW’s copyrighted software code to be distributed to each website visitor. (Id. at ¶¶ 27-28) According to LFOW, this “volitional distribution of the infringing version of the LFOW Software by Defendants to their website visitors is seam less and transparent for the website visitors, who are able to view the video spokesperson . . . by virtue of receiving a copy of the infrin ging version of the LFOW Software.” (Id. at ¶ 28) The Verified Com plain t asserts only one claim : “direct, indirect and/ or vicarious” copyright infringem ent. (Verified Com plaint ¶ 40 ) II. Mo tio n to D is m is s Stan d ard Federal Rule of Civil Procedure 12(b)(6) provides that a court m ay dism iss a com plaint “for failure to state a claim upon which relief can be granted.” In order to survive a m otion to dism iss, a com plaint m ust allege facts that raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twom bly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (20 0 7); see also Fed.R.Civ.P. 8 (a)(2). While a court m ust accept as true all allegations in the plaintiff's com plaint, and view them in the light m ost favorable to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 20 0 8), a court is not required to accept sweeping legal conclusions cast in the form of factual allegations, unwarranted inferences, or unsupported conclusions. Morse v. Lower Merion Sch. Dist., 132 F.3d 90 2, 90 6 (3d Cir. 1997). The com plaint m ust state sufficient facts to show that the legal allegations are not sim ply possible, 3 but plausible. Phillips, 515 F.3d at 234. “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 m isconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (20 0 9). III. AN ALYSIS Both Defendants assert that the Verified Com plaint fails to state a claim for copyright infringem ent. Defendant Guerra also asserts that the Verified Com plaint’s allegations fail to support any individual liability on his part. A. Co p yrigh t in frin ge m e n t In Decem ber, 20 14, Senior United States District J udge Irenas, in three earlier-filed LFOW copyright cases, denied m otions to dism iss, holding that the com plaints in those cases adequately stated a claim for direct and indirect copyright infringem ent. See Live Face on Web, LLC v. Em erson Cleaners, Inc., 66 F. Supp. 3d 551 (D.N.J . 20 14); Live Face on Web, LLC v. Linvas Corp., 20 14 U.S. Dist. LEXIS 171663 (D.N.J . Dec. 11, 20 14); Live Face on Web, LLC v. Unlim ited Office Solutions, LLC, 20 14 U.S. Dist. LEXIS 17140 1 (D.N.J . Dec. 11, 20 14). Non e of the parties to the present suit assert that the alleged facts of the earlier suits m aterially differ at all from the facts alleged in the instant suit. Nonetheless, Defendants in this suit contend that their Motion to Dism iss should be granted-- even when the other m otions were not-- because they assert an argum ent so far not raised by any other defendant. (See Moving Brief, p. 7, “This m otion does not seek to revisit m atters already decided and m erely brings to the Court’s attention a dispositive argum ent not previously before it.”). 4 Defendants argue that “[t]he Verified Com plaint is fatally flawed for its failure to allege [Defendants’] access to the copyright protected m aterial.” (Moving Brief, p. 7) According to Defendants, “[w]ithout allegations of access, there cannot be any inference of copying and no copyright infringem ent as a m atter of law.” (Id. at 10 ) Couched within the Twom bly / Iqbal fram ework, Defendants argue that LFOW cannot sim ply rely on conclusory allegations that Defendants copied or distributed LFOW’s copyrightprotected com puter code. Rather, LFOW m ust allege facts plausibly supporting a conclusion that Defendants violated LFOW’s copyright by copying or distributing the code. Absent a factual allegation of access, Defendants reason, the copying and distributing allegations are im plausible. LFOW disagrees. While it does not dispute that “‘copying’ under the Copyright Act can be proven inferentially by showing that the defendant had access to the allegedly infringed copyright work,” (Opposition Brief, p. 5) (em phasis added), it asserts that alleging and proving access is not the only way. Indeed, pertinent to the instant Motion, LFOW asserts that outright or literal copying of the copyrighted work 3 -- as opposed to producing m aterial that is substantially sim ilar to the copyrighted work (such as a very sim ilar work of art) 4 -- can itself support an inference of infringing activity. 3 See, e.g., Dun & Bradstreet Software Servs, Inc. v. Grace Consulting, Inc., 30 7 F.3d 197, 20 70 9 (3d Cir. 20 0 2) (“Geac claim s that Grace’s W-2 program s contain literal copies of [the copyrighted software]. . . . Geac contends that Grace’s witnesses adm itted . . . copying Geac’s copyrighted source code.”). 4 See, e.g. Kay Berry, Inc. v. Taylor Gifts, Inc., 421 F.3d 199, 20 8 (3d Cir. 20 0 5) (“A showing of substantial sim ilarity . . . , coupled with evidence that the infringing author had access to the original work, perm its the fact-finder to infer that the infringing work is not itself original, but rather is based on the original.”). 5 Thus, LFOW explains, the exhibits to the Verified Com plaint support a plausible inference of copying: a com parison of Exhibit A1-- LFOW’s copyrighted source code, and Exhibit C-- Defendants’ website source code, reveal line after line of identical code. (See Opposition Brief, p. 6-8) According to LFOW, this is sufficient to plausibly support a conclusion that Defendants violated LFOW’s copyright. Alternatively, LFOW seeks leave to am end its Verified Com plaint “to clarify or expound upon” its factual allegations of literal copying and/ or distributing. (Opposition Brief, p. 16) Defendants oppose this alternate request, asserting that given the volum e of com plaints that LFOW has filed across the country, LFOW already has had num erous opportunities to clarify and refine its pleadings. According to Defendants, allowing am endm ent would be tantam ount to giving LFOW “over sixty bites at the apple.” (Reply Brief, p. 1; see also Moving Brief, p. 16) Am endm ent will be allowed. As J udge Irenas previously observed, “applying copyright law to com puter code is tricky business, and this Court has very little controlling precedent with which to work.” Em erson Cleaners, Inc., 66 F. Supp. 3d at 558 n.10 . The situation today rem ains the sam e. Notwithstanding the num erous com plaints filed by LFOW, guidance in the caselaw n ationwide is largely absent. Under such circum stances, it is not inequitable to allow LFOW an opportunity to attem pt to put its best pleading forward before ruling on the sufficiency of the factual allegations. See gen erally, Phillips, 515 F.3d at 245 (“if a com plaint is subject to a Rule 12(b)(6) dism issal, a district court m ust perm it a curative am endm ent unless such an am endm ent would be inequitable or futile.”). The Verified Com plaint in this particular suit has not been am ended previously. Defendants’ Motion to Dism iss is dism issed without prejudice. 6 B. In d ivid u al liability Defendant Guerra asserts that the Verified Com plaint m akes no m eaningful distinction between him self, in his individual capacity, and his corporate entity, Megapreventionrx. While Guerra does not dispute that, as a m atter of law, individuals m ay be liable for copyright infringem ent, see Colum bia Pictures Indus. v. Redd Horne, Inc., 749 F.2d 154, 160 (3d Cir. 198 4) (“An officer or director of a corporation who knowingly participates in the infringem ent can be held personally liable, jointly and severally, with the corporate defendant.”), he asserts that the Verified Com plaint fails to plead sufficient facts as to his alleged role in the copyright infringem ent. Therefore, he explain s, the individual liability claim fails under Twom bly / Iqbal. Defendant Guerra is correct. The Verified Com plaint m akes only one particularized allegation as to Defendant Guerra—that he “is a resident of New J ersey and the owner and/ or m anaging m em ber of Megapreventionrx and the subject website(s) at issue here.” (Verified Com plaint ¶ 3) Sim ilarly, Defendant Megapreventionrx is only separately identified one tim e: “[u]pon inform ation and belief, Defendant Megapreventionrx, Lim ited Liability Com pany is a Delaware lim ited liability com pany with a principal place of business [in] Hackettstown, New J ersey. (Id. at ¶ 2) Throughout the rem ainder of the 55-paragraph Verified Com plaint, Defendants Guerra and Megapreventionrx are collectively referred to as “Defendants.” The Verified Com plain t fails to plead sufficient facts to support Defendant Guerra’s individual liability. However, for the reasons stated above, LFOW m ay am end the Verified Com plaint to attem pt to cure the pleading deficiency. The Motion to Dism iss is dism issed without prejudice. 7 IV. CON CLU SION For the above-stated reasons, the Motion to Dism iss is dism issed without prejudice, and LFOW is granted leave to am end the Verified Com plaint within 30 days. An appropriate Order accom panies this Opinion. Date: J une 29, 20 16 _ _ s/ J oseph H. Rodriguez ____ Hon. J oseph H. Rodriguez, UNITED STATES DISTRICT J UDGE 8

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