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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Plaintiff,
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`v.
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`Case No. 07 C 3972
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`Judge Joan B. Gottschall
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`INTERNATIONAL UNION OF OPERATING )
`ENGINEERS, LOCAL 150, AFL-CIO,
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`TEAM 150 PARTY, INC., JOSEPH P.
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`WARD, and MICHAEL QUIGLEY,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the court is a motion to dismiss pursuant to Federal Rules of Civil Procedure
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`12(b)(6) and 12(b)(7) filed by defendants Team 150 Party, Inc. (“Team 150”), Joseph P. Ward
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`(“Ward”), and Michael Quigley (“Quigley”), collectively, the “Defendants.” For the reasons
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`stated below, the motion to dismiss [13] is denied.
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`I. BACKGROUND1
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`This is a copyright dispute between rival union leaders over the design of a website. The
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`plaintiff, the International Union of Operating Engineers, Local 150, AFL-CIO (“Local 150”), is
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`a labor organization representing approximately 22,000 construction industry workers.
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`Defendant Ward was, at the time this dispute arose, challenging the incumbent officers of Local
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`150 and had formed Team 150 to do so.
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`1 The factual allegations are taken from the complaint and are deemed true for purposes of this
`motion. See Cody v. Harris, 409 F.3d 853, 857 (7th Cir. 2005) (noting that all reasonable
`inferences must be drawn in favor of plaintiff when ruling on a Rule 12(b)(6) motion); Davis
`Cos. v. Emerald Casino, Inc., 268 F.3d 477, 479 n.2 (7th Cir. 2001) (“For purposes of a motion
`to dismiss for failure to join a party [under Rule 12(b)(7) and] Rule 19, [a court must] accept the
`allegations in the complaint as true.”) (internal citations omitted).
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 2 of 12 PageID #:283
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`Sometime before April 2006, Local 150 hired defendant Quigley, through his employer
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`Midwest Operating Engineers Construction Industry Research and Service Trust Fund
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`(“Midwest”), to develop a prototype website. Effective April 1, 2006, Midwest assigned all
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`copyright rights to the prototype website to Local 150, warranting that the work was original and
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`did not infringe or violate the rights of any third party.
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`Quigley used a copy of Local 150’s prototype website to develop a website for Ward and
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`Team 150. In late August 2006, Ward and Team 150 launched their own website, which copied
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`a substantial portion of Local 150’s prototype website. On September 13, 2006, Local 150 sent a
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`“cease and desist” letter to Ward to notifying him that the website infringed Local 150’s
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`copyright.
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`Local 150 registered its copyright on January 29, 2007, receiving Certificate of
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`Registration No. TXu1-323-047. The Certificate states the nature of authorship to be “computer
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`program code (HTML) and text and photos on website,”2 which Local 150 claims covers the
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`source code and the virtual presentation of the website, including the text formatting and layout
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`of the pictures.
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`II. ANALYSIS
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`On July 13, 2007, Local 150 filed suit in federal court, invoking jurisdiction under 28
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`U.S.C. § 1331 and § 1338. On September 27, 2007, it filed a two-count amended complaint
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`alleging copyright infringement against all three defendants and unjust enrichment on the part of
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`Ward and Team 150.
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`2 The actual text of the Certificate reads: “computer program code for website (HTML) and text
`and photos on website exhibit.” See Am. Compl. Ex. D at 1. The copy is somewhat unclear and
`the court cannot discern whether the strike-through is a copying error or an intentional alteration
`made by the Copyright Office. Local 150 employs in its briefs the truncated version of the
`nature of authorship statement; therefore, for purposes of this motion, the court resolves the issue
`according to the plaintiff’s implicit argument that the words “for website” were deleted.
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`2
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 3 of 12 PageID #:284
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`A. Motion To Dismiss Pursuant To Federal Rule Of Civil Procedure 12(b)(7)
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`The Defendants have moved to dismiss the amended complaint pursuant to Federal Rule
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`of Civil Procedure 12(b)(7) for failure to join a necessary party.
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`1.
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`Legal Standard
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`Rule 12(b)(7) allows a defendant to assert by motion the defense that the plaintiff failed
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`to join a party under Rule 19. Fed. R. Civ. P. 12(b)(7). Rule 19 provides, in relevant part, that
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`“[a] person who is subject to service of process and whose joinder will not deprive the court of
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`subject matter jurisdiction must be joined as a party if that person claims an interest relating to
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`the subject of the action” such that, if the person is not joined, his ability to protect the interest
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`may be impaired or an existing party may be subject to a substantial risk of duplicative litigation.
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`Id. 19(a)(1)(B). If the person cannot be joined, “the court must determine whether, in equity and
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`good conscience, the action should proceed among the existing parties or should be dismissed.”
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`Id. 19(b). “The purpose of Rule 19 . . . is ‘to permit joinder of all materially interested parties to
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`a single lawsuit so as to protect interested parties and avoid waste of judicial resources.’” Davis
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`Cos. v. Emerald Casino, Inc., 268 F.3d 477, 481 (7th Cir. 2001) (quoting Moore v. Ashland Oil,
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`Inc., 901 F.2d 1445, 1447 (7th Cir. 1990)). If the court determines that “there is no way to
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`structure a judgment in the absence of the party that will protect both the party’s own rights and
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`the rights of the existing litigants, the unavailable party is regarded as ‘indispensible’ and the
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`action is subject to dismissal . . . under [Rule] 12(b)(7).” Id.
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`2.
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`Analysis
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`The parties have submitted affidavits in support of their arguments. Although matter
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`outside the pleadings is inappropriate on a Rule 12(b)(6) motion, “[i]n ruling on a dismissal for
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`lack of joinder of an indispensible party, a court may go outside the pleadings and look to
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`3
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 4 of 12 PageID #:285
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`extrinsic evidence.” Id. at 480 n.4. Any conflicts must be resolved in favor of the plaintiff. Id.
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`at 483.
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`Defendant Quigley admits he developed the websites for Local 150 and for Ward and
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`Team 150. Quigley Aff. ¶ 2, attached to Defs.’ Mot. to Dismiss. He avers that he designed the
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`Local 150 and Team 150 websites using pre-designed webpage layouts, graphics, and formatting
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`licensed from Lucky Marble Solutions Corporation (“Lucky Marble”). Id. ¶ 3. He further avers
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`that he bought stock photographs of heavy equipment for each website from BigStockPhoto, Inc.
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`(“BigStockPhoto”). Id. ¶ 4. Thus, both websites were designed using the same basic
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`components. The Defendants submit that the plain language of the Copyright Registration,
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`which claims authorship of “computer program code (HTML) and text and photos on website,”
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`shows that Local 150 is asserting ownership of computer code owned by Lucky Marble and
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`photographs owned by BigStockPhoto. As a result, the Defendants claim that Lucky Marble and
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`BigStockPhoto are necessary parties to this action.
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`The Defendants cite in support of their argument a single factually-distinguishable
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`district court case, Whitney, Atwood, Norcross Assocs., Inc. v. Architects Collaborative, Inc., No.
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`90-11521-Z, 1991 WL 2223 (D. Mass. Jan. 4, 1991). In Whitney, the plaintiff, an architectural
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`firm, had developed the work at issue while under contract to a third party, the Commonwealth
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`of Massachusetts, which had, in turn, hired the defendants to work on a similar project. Id. at *1.
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`The court determined “an interest in a full and fair adjudication of the issues presented here
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`requires that the [third party] be present.” Id. at *2. It reasoned that the third party was
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`necessary because it was unclear whether the plaintiff or the third party owned the copyright
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`because of an ambiguous contract between them. Id. at *4. Here, Quigley obtained valid
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`licenses from the third parties to use various “raw materials” in the development of Local 150’s
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`4
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 5 of 12 PageID #:286
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`website and then created a new work. Local 150 did not transfer any part of its interests in that
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`new work to a third party and it has a Certificate of Registration for the copyright on the website
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`at issue. Thus, the Defendants’ invocation of Whitney is inapposite and resolution of this issue
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`comes down to an interpretation of the scope of Local 150’s copyright.3
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`Local 150 concedes that the prototype website was developed using a template from
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`Lucky Marble and photographs from BigStockPhoto. Nevertheless, it asserts that Lucky Marble
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`and BigStockPhoto do not have an interest in this action because Local 150’s copyright does not
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`cover the template and photographs themselves, but rather covers the “virtual presentation,
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`including the text formatting and layout of the pictures for the website.” Pl.’s Resp. to Mot. to
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`Dismiss at 4 (citing Am. Compl. ¶ 18). In support of its argument, Local 150 submits the
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`affidavit of Ron M. Borden (“Borden”), who is the manager of “the technology services
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`corporation that services [Local 150].”4 Borden Aff. ¶ 2, Ex. 1 to Pl.’s Resp. to Mot. to Dismiss.
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`Borden reviewed the Local 150 computer systems and concluded that, over the course of almost
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`two months, Quigley made “significant modifications to the [Lucky Marble] template,” using
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`Microsoft Frontpage software, including changes to “the layout, sizes of pictures, color scheme,
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`selection and order of words used on the page, font size, order of buttons, and . . . sound.” Id. ¶¶
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`5-7. According to Local 150, its copyright extends only to the “look and feel” of the website that
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`resulted from the manipulation of templates and stock photographs to create something unique.
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`At least one other court has observed that the “look and feel” of a website may be covered by
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`copyright. See, e.g., Mortgage Market Guide, LLC v. Freedman Report, LLC, No. 06-cv-140-
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`3 The court leaves to another day the disputed issue of whether § 102 or § 103 of the Copyright
`Act applies to Local 150’s claim. Compare 17 U.S.C. § 102 (granting copyright protection to
`“original works of authorship”), with id. § 103 (granting protection to compilations and
`derivative works under certain conditions).
`4 Borden does not name the corporation.
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`5
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 6 of 12 PageID #:287
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`FLW, 2008 WL 2991570, at *35 (D.N.J. July 28, 2008) (noting that, even where the form of a
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`work cannot be separated from its function, “unique customization options . . . combined with
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`[the] selection and arrangement of such options [on a website are] protectable under copyright
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`laws”). But see Blue Nile, Inc. v. Ice.com, Inc., 478 F. Supp. 2d 1240, 1245 n.4 (W.D. Wash.
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`2007) (expressing doubt as to whether copyright protection covers the “look and feel” of a
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`website).
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`The record does not contain the full copyright application, so the Certificate of
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`Registration is the only evidence of the meaning of the copyright. Both parties advance tenable
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`interpretations of the meaning of the phrase “computer program code (HTML) and text and
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`photos on website” in the Certificate. Given that Local 150 is aware that the template and
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`photographs are not its own unique work, its argument that its copyright does not extend to those
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`elements is reasonable. Therefore, finding the Registration ambiguous, the court accepts Local
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`150’s explanation of the scope of its copyright. See Davis Cos., 268 F.3d at 483 (requiring
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`district court to resolve conflicts in testimony in favor of the plaintiff on a Rule 19
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`determination).
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`As narrowed by Local 150, the claim does not necessarily implicate the copyright rights
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`of Lucky Marble and BigStockPhoto so as to render them “necessary parties” within the meaning
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`of Rule 19(a). See Davis, 268 F.3d at 481 (specifying three reasons why a party is necessary).
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`Consequently, the court does not reach the parties’ remaining arguments on the feasibility of
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`joinder. Defendants’ motion to dismiss pursuant to Rule 12(b)(7) is denied without prejudice.
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`B. Motion To Dismiss Count II Pursuant To Federal Rule Of Civil Procedure 12(b)(6)
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`The Defendants argue that Local 150’s unjust enrichment claim (Count II) is duplicative
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`of the copyright infringement claim (Count I) and must be dismissed because it is preempted
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`6
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 7 of 12 PageID #:288
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`pursuant to the Federal Copyright Act, 17 U.S.C. § 301.
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`1.
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`Legal Standard
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`Rule 12(b)(6) permits a defendant to assert by motion that the plaintiff’s claim for relief
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`fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The court must
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`accept as true the allegations of the complaint and draw all reasonable inferences in favor of
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`plaintiff. Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (internal citation
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`omitted). Matters outside the scope of the pleadings may not be considered on a motion to
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`dismiss. Fed. R. Civ. P. 12(d). To survive a Rule 12(b)(6) motion, “the complaint need only
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`contain a ‘short and plain statement of the claim showing that the pleader is entitled to relief.’”
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`EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Fed. R. Civ.
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`P. 8(a)(2)). The allegations must provide the defendant with “fair notice of what the . . . claim is
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`and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, __ U.S. __, 127 S. Ct. 1955,
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`1964 (2007). The plaintiff need not plead particularized facts, but the factual allegations in the
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`complaint must be sufficient to suggest a right to relief above the speculative level. Id. at 1973-
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`74 & n.14; Erickson v. Pardus, __ U.S. __, 127 S. Ct. 2197, 2200 (2007); Concentra Health
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`Servs., Inc. 496 F.3d at 776 (citing Twombly, 127 S. Ct. at 1965, 1973 n.14).
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`2.
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`Analysis
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`Section 301 of the Copyright Act provides that:
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`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.
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`7
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 8 of 12 PageID #:289
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`17 U.S.C. § 301(a). Consequently, the Copyright Act preempts a right under state law if two
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`conditions are met: (1) “the work in which the right is asserted must be fixed in tangible form
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`and come within the subject matter of copyright as specified in § 102”; and (2) “the right must be
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`equivalent to any of the rights specified in § 106.” Baltimore Orioles, Inc. v. Major League
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`Baseball Players Assoc., 805 F.2d 663, 674 (7th Cir. 1986).
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`Local 150 concedes that the website is “fixed in tangible form and come[s] within the
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`subject matter of copyright as specified in § 102,” thus satisfying the first element of the
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`preemption test, but contends that its unjust enrichment claim is not “equivalent” to its copyright
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`claim because the claim is of an equitable nature and seeks recovery for items other than the
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`copying of the copyrighted work. The Defendants argue that the factual allegations for both
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`claims are identical, that a state law claim based on the same alleged conduct that gives rise to a
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`copyright claim is preempted as a matter of law, and that the damages sought are compensable
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`under the Copyright Act.
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`“A right under state law is ‘equivalent’ to one of the rights within the general scope of
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`copyright if it is violated by the exercise of any of the rights set forth in § 106.” Baltimore
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`Orioles, Inc., 805 F.2d at 676. Section 106 “grants the owner of a copyright the exclusive rights
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`to reproduce (whether in original or derivative form), distribute, perform, and display the
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`copyrighted work.” Id. at 677 (citing 17 U.S.C. § 106). A right is equivalent to a copyright “if
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`. . . it is infringed by the mere act of reproduction, performance, distribution, or display,” and
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`even if the claim “requires additional elements to make out a cause of action,” unless “the
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`additional elements . . . differ in kind from those necessary for copyright infringement,” it is
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`preempted. Id. at 678 n.26.
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`8
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 9 of 12 PageID #:290
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`Under Illinois law, a claim of unjust enrichment requires a plaintiff to show “that the
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`defendant has unjustly retained a benefit to the plaintiff’s detriment, and that defendant’s
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`retention of the benefit violates the fundamental principles of justice, equity, and good
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`conscience.” HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., 545 N.E.2d 672, 679 (Ill. 1989).
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`This court is not the first in this district to consider whether such a claim is preempted by the
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`Copyright Act. Some courts have found the claim not to be preempted. See, e.g., G.D. Searle &
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`Co. v. Philips-Miller & Assocs., 836 F. Supp. 520, 526 (N.D. Ill. 1993) (Plunkett, J.); McNabb
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`Bennett & Assoc., Inc. v. Terp Meyers Architects, No. 85 C 8792, 1987 WL 7817, at *6 (N.D. Ill.
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`Mar. 10, 1987) (Williams, J.); Weigel Broad. Co. v. Topel, No. 83 C 7921, 1985 WL 2360, at *5
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`(N.D. Ill. Aug. 21, 1985) (Marshall, J.). Other courts have found that the claim is preempted.
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`See, e.g., Vaughn v. Kelly, No. 06 C 6427, 2007 WL 804694, at *4 (N.D. Ill. Mar. 13, 2007)
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`(Manning, J.); Igram v. Page, No. 98 C 8337, 2000 WL 263707, at *4 (N.D. Ill. Feb. 28, 2000)
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`(Lindberg, J.); Stephen & Hayes Constr., Inc. v. Meadowbrook Homes, Inc., 988 F. Supp. 1194,
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`1201 (N.D. Ill. 1998) (Alesia, J.). The case holdings show that the success of a defendant’s
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`preemption argument corresponds to the plaintiff’s failure, through its factual allegations, to
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`establish that its unjust enrichment claim qualitatively differs from its copyright claim.
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`For example, in Stephen & Hayes Construction, Inc., the plaintiff alleged that a
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`competing designer and builder of residential homes copied its plans and concepts for particular
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`homes without permission and used the plaintiff’s finished homes as “models” for its own
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`products. 988 F. Supp. at 1196. The plaintiff’s unjust enrichment claim rested on the
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`defendant’s profit made from its direction of potential customers to view the plaintiff’s homes.
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`Id. at 1200. The court concluded that the utilization of plaintiff’s homes in this manner was the
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`same conduct as prohibited by the Copyright Act, namely reproduction, distribution, display, or
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`9
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`performance, and the claim was therefore preempted. Id. at 1201. The complaint contained no
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`allegations that could be reasonably read to allege infringements on the plaintiff’s rights outside
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`the scope of copyright protection. See also Blue Nile, Inc., 478 F. Supp. 2d at 1250-51 (finding
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`an unjust enrichment claim preempted where a competitor had copied a website and the
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`allegations were only that the defendants obtained profits to which they were not entitled by
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`means of copying the site); Vaughn, 2007 WL 804694, at *4 (finding allegations that without the
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`plaintiff’s efforts and talents the defendant would not have released a certain recording to be
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`equivalent to a “joint work” claim under the Copyright Act), Microstrategy, Inc. v. Netsolve,
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`Inc., 368 F. Supp. 2d 533, 537 (E.D. Va. 2005) (finding an unjust enrichment claim preempted
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`where a computer software manufacturer alleged unjust enrichment against a licensee of the
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`software for making unauthorized copies because reproduction claims are within the province of
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`the Copyright Act).
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`In contrast, in McNabb Bennett Associates, Inc., the court concluded that the plaintiff’s
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`allegations showed that its unjust enrichment claim was not preempted. 1987 WL 7817, at *6.
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`The plaintiff alleged that the defendant wrongfully copied certain architectural drawings and
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`sketches and passed them off as defendant’s own. Id. at *1. The court read the allegation of
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`“wrongful use” of the drawings and other work product as encompassing such acts as
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`appropriation of “certain facts found in the architectural drawings, such as measurements of
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`distances and angles.” Id. at *6. It found that such appropriations fell outside of the scope of the
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`Copyright Act and were not preempted. Id. Thus, the court concluded that the defendant had, in
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`effect, obtained a windfall of benefits that it would otherwise have had to expend resources to
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`obtain in addition to the benefits it obtained by virtue of unauthorized reproduction. Another
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`case concerning unauthorized use of architectural drawings reached a similar conclusion. See
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`10
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 11 of 12 PageID #:292
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`Schuchart & Assocs., Prof’l Eng’rs, Inc. v. Solo Serve Corp., 540 F. Supp. 928, 948 (W.D. Tex.
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`1982). In Schuchart & Associates, the defendant had the plaintiffs prepare architectural
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`drawings, for which they obtained copyright registration. Id. at 933. It then passed on the
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`drawings to another architect who used them as a guide to design a second, substantially-similar,
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`building in a different location. Id. at 934. The court reasoned that, in their unjust enrichment
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`claim, the plaintiffs were seeking “to recover the value of the architectural and mechanical
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`services rendered to the Defendants by Defendants’ acceptance and use of Plaintiffs’ drawings
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`and specifications.” Id. at 945. The court also noted that the damages sought, namely the value
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`of services rendered, was not a typical damages claim under the Copyright Act. Id. Thus, in
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`both Schuchart & Associates and McNabb Bennett Associates, Inc., the fact that the defendants
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`had been able to obtain the benefit of the content of the work to substitute for an independent
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`expenditure of resources or time to create the work from scratch was key to a finding of no
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`preemption.
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`Local 150’s amended complaint alleges that the “action arises out of [the] Defendants’
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`taking, misappropriating, and copying Local 150’s [prototype website], and[,] without
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`permission or compensation to Local 150, . . . using copies . . . .” Am. Compl. ¶ 1. The claims
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`for copyright infringement and unjust enrichment are based on the same conduct: the alleged
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`copying of Local 150’s website design. However, contrary to the Defendants’ contention, the
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`claim for unjust enrichment includes additional allegations. Specifically, it includes the
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`allegation, albeit conclusory, that “Defendants Ward and Team 150 obtained the benefit of the
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`prototype website developed by Local 150 without paying Local 150.” Id. ¶ 27. Local 150
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`explains that the “benefit” includes the money defendants Team 150 and Ward saved by copying
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`Local 150’s website instead of building their own from scratch (or at least from the original form
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`11
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`Case: 1:07-cv-03972 Document #: 31 Filed: 09/05/08 Page 12 of 12 PageID #:293
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`of the template) and by re-using stock photographs. Construed in this way, the allegations
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`resemble those of Schuchart & Associates and McNabb Bennett Associates, Inc. Finding the
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`reasoning of those courts persuasive, the court similarly finds that Local 150’s unjust enrichment
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`claim is not preempted. Therefore, the motion to dismiss Count II is denied.
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`III. CONCLUSION
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`For the reasons stated above, the defendants’ motion to dismiss is denied. The
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`defendants shall answer within 28 days.
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`ENTER:
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`________/s/___________________
`JOAN B. GOTTSCHALL
`United States District Judge
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`DATED: September 5, 2008
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`12