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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`ROBERT FRERCK,
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`Plaintiff,
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`v.
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`Case No. 11-cv-2727
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`Judge Robert M. Dow, Jr.
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`JOHN WILEY & SONS, INC. and JOHN
`DOE PRINTERS 1-10,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`This matter is before the Court on Plaintiff Robert Frerck’s motion for a preliminary
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`injunction [11] and Defendant John Wiley and Son’s partial motion to dismiss [20]. Plaintiff
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`seeks an injunction to prevent Wiley from future infringements of his copyrighted products.
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`Defendant Wiley seeks dismissal of Plaintiff’s fraud count. For the reasons set forth below, the
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`Court denies Plaintiff’s motion for a preliminary injunction [11] and denies Defendant’s partial
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`motion to dismiss [20].1
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`I.
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`Background
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`Plaintiff Robert Frerck is a professional photographer who resides in Chicago, Illinois.
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`Odyssey Productions, Inc. acts as licensing agent for Frerck’s photographs. Defendant John
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`Wiley and Sons, Inc. is a textbook publisher, located in Hoboken, New Jersey. Between
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`approximately 1992 and 2010, Plaintiff sold Defendant limited licenses to use a number of
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`Plaintiff’s photographs in Defendant’s publications. Plaintiff maintains that Odyssey expressly
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`defined the number of permissible copies, image size, distribution area, form of media, and
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`1 The parties have been engaged in efforts to settle this case with the assistance of Magistrate Judge
`Brown, which culminated in a settlement conference held on February 2, 2012. Those efforts have not
`yet led to agreement. Magistrate Brown also has been supervising the ongoing discovery process in this
`case.
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 2 of 14 PageID #:1019
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`duration for each publication. Plaintiff alleges that Wiley’s use of Plaintiff’s photographs
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`exceeded the use permitted by the terms of the licenses, or in some cases, used photographs
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`without first seeking permission. Plaintiff asserts claims against Defendant Wiley for fraud and
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`copyright infringement in violation of 17 U.S.C. § 501, et seq.
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`II.
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`Preliminary Injunction
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`Like all forms of injunctive relief, a preliminary injunction is “an extraordinary remedy
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`that should not be granted unless the movant, by a clear showing, carries the burden of
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`persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (emphasis in original); see also
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`Goodman v. Ill. Dep’t of Financial & Professional Reg., 430 F.3d 432, 437 (7th Cir. 2005)
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`(same). A party seeking a preliminary injunction must demonstrate as a threshold matter that (1)
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`its case has some likelihood of succeeding on the merits; (2) no adequate remedy at law exists;
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`and (3) it will suffer irreparable harm if preliminary relief is denied. Abbott Labs. v. Mead
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`Johnson & Co., 971 F.2d 6, 11 (7th Cir. 1992). If the moving party meets its initial burden, then
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`the court must consider the irreparable harm that the nonmoving party will suffer if preliminary
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`relief is granted, balancing such harm against the irreparable harm the moving party will suffer if
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`relief is denied. Storck USA, L.P. v. Farley Candy Co., 14 F.3d 311, 314 (7th Cir. 1994). The
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`court also considers the public interest served by granting or denying the relief, including the
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`effects of the relief on non-parties. Id.
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`The Copyright Act provides that courts may grant injunctive relief “on such terms as it
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`may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a).
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`The Supreme Court has made clear that an injunction does not automatically follow a
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`determination that a copyright has been infringed. See eBay Inc. v. MercExchange, LLC, 547
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`U.S. 388, 392-93 (2006) (“Like the Patent Act, the Copyright Act provides that courts ‘may’
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`2
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 3 of 14 PageID #:1020
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`grant injunctive relief ‘on such terms as it may deem reasonable to prevent or restrain
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`infringement of a copyright’ * * * * And as in our decision today, this Court has consistently
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`rejected invitations to replace traditional equitable considerations with a rule that an injunction
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`automatically follows a determination that a copyright has been infringed.”) (internal citation
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`omitted); see also Salinger v. Colting, 607 F.3d 68, 80 (2d. Cir. 2010) (noting that “the court
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`must actually consider the injury the plaintiff will suffer if he or she loses on the preliminary
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`injunction but ultimately prevails on the merits, paying particular attention to whether the
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`‘remedies available at law, such as monetary damages, are inadequate to compensate for that
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`injury’”) (quoting MercExchange, 547 U.S. at 391). The Court also cautioned district courts
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`against presuming that money damages always will be appropriate. MercExchange, 547 U.S. at
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`393-94 (criticizing district court’s categorical rule that a plaintiff’s willingness to license its
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`patents “would be sufficient to establish that the patent holder would not suffer irreparable harm
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`if an injunction did not issue”).
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`A.
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`Likelihood of Success on the Merits
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`A party seeking a preliminary injunction must demonstrate “that it has a ‘better than
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`negligible’ chance of success on the merits of at least one of its claims.” Girl Scouts of Manitou
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`Council, Inc. v. Girl Scouts of U.S.A., 549 F.3d 1079, 1096 (7th Cir. 2008). This is an
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`“admittedly low requirement.” Id. However, if a plaintiff fails to demonstrate any likelihood of
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`success on the merits, the motion for preliminary injunction must be denied. See, e.g., Cox v.
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`City of Chicago, 868 F.2d 217, 223 (7th Cir. 1989).
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`To establish copyright infringement, a plaintiff must show (1) ownership of a valid
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`copyright and (2) the infringer’s unauthorized copying of protected elements of the copyrighted
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`material. JCW Invs., Inc. v. Novelty, Inc., 482 F.3d 910, 914 (7th Cir. 2007). Plaintiff has
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`3
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 4 of 14 PageID #:1021
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`submitted evidence that he owns the copyrights to the photographs that he licensed to Wiley. He
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`also has presented evidence that he licensed only a limited right to copy the photographs, or did
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`not license them at all. Finally, Plaintiff has presented evidence that Defendant printed some of
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`his photographs without any license and maintains that Defendant printed beyond specified
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`limits in other licenses. See Wood v. Houghton Mifflin Harcourt Pub. Co., 589 F. Supp. 2d
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`1230, 1238-42 (D. Colo. 2008) (“Wood has also produced probative evidence that HMH
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`exceeded the scope of the licenses issued for [four textbooks, by introducing HMH’s admissions
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`and inventory records demonstrating print quantities in excess of the licensed quantities] * * * *
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`Therefore, for these four publications, Wood has met his burden of establishing that HMH
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`exceeded the scope of its license and thus violated his copyright.”). Based on the foregoing,
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`Plaintiff has a significant chance of success on the merits. See WPIX, Inc. v. ivi, Inc., 765 F.
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`Supp. 2d 594, 617 (S.D.N.Y. 2011) (finding that the plaintiffs “easily” met their burden of
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`likelihood of success on the merits where plaintiffs demonstrated that they owned valid
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`copyrights and that defendant was using their works without their consent and in the absence of
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`any statutory exception”).
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`B.
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`Irreparable Harm/Absence of Adequate Remedy at Law
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`Plaintiff contends that Defendant’s unauthorized use of his copyrighted works has
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`“forced” him to “grant” licenses to Defendant, “having been stripped by Wiley of the ability to
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`control his copyrighted works.” According to Plaintiff, Defendant’s ongoing infringement
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`constitutes irreparable harm that cannot be redressed through monetary damages. Defendant,
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`noting that Plaintiff is in the business of licensing his photographs and that the fees for licenses
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`are based on specific parameters, counters that any harm to Plaintiff is purely monetary and can
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`be adequately remedied with money damages.
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`4
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 5 of 14 PageID #:1022
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`The Court agrees that the harm suffered by Plaintiff can be adequately remedied with
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`money damages. Nothing that Plaintiff has presented indicates that money damages would be
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`insufficient and, indeed, the evidence suggests that Plaintiff primarily wants to be compensated
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`with money—both in the form of actual damages and attorneys’ fees and costs—for the
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`unauthorized use of his photographs. Moreover, the cases cited by Plaintiff do not support his
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`position that monetary damages will be an insufficient remedy. In Apple Inc. v. Pystar Corp.,
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`673 F. Supp. 2d 943, 948–49 (N.D. Cal. 2009), the court issued a permanent injunction upon
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`finding that the plaintiff would suffer irreparable harm and that legal remedies were inadequate.
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`The defendant infringed on Apple’s copyright by reproducing, modifying, and distributing
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`Apple's Operating System (OS) for use on non-Apple computers. The court found that the
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`decreased functionality and quality of the defendant’s installation of Apple’s OS would damage
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`Apple’s reputation, goodwill, competitive position, and market share. Id. at 948–49 (also citing
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`damage to plaintiff's “investment in and commitment to high standards of quality control and
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`customer service”). The court determined that these harms would be “difficult, if not impossible,
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`to quantify.” Id. at 950.
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`Similarly, in Microsoft Corp. v. Marturano, 2009 WL 1530040, at *8 (E.D. Cal. May 27,
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`2009), a permanent injunction was issued to enjoin the illegal distribution of counterfeit
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`software. The court found the defendant’s actions caused irreparable injury in the form of
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`“confusion, mistake or deception as to the product’s source, origin or authenticity.” Id. Also, in
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`Designer Skin, LLC, v. S & L Vitamins, Inc., 2008 WL 4174882 (D. Ariz. Sept. 5, 2008), the
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`defendant impermissibly copied and posted on its website 42 of the plaintiff’s copyrighted
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`images. After a bench trial, the court granted a permanent injunction. The court found that the
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`defendant’s infringement resulted in irreparable harm and that there was no adequate remedy at
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`5
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 6 of 14 PageID #:1023
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`law, because of the difficulty of proving damages where “the product license * * * has no
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`market.” Id. at *5.
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`In contrast to those cases, Plaintiff does not contend that his losses cannot be quantified,
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`that the market for his product has been damaged, or that his “brand, business reputation, and
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`goodwill * * * would be irreparably harmed” simply because his photographs appear in
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`Defendant’s textbooks in unauthorized quantities. Compare Apple, 673 F. Supp. 2d at 948–49.
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`Likewise, Plaintiff’s allegation that he will be subjected to future copyright infringement by
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`Defendant does not support a claim of irreparable harm. “[T]he mere likelihood of future
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`infringement by a defendant does not by itself allow for an inference of irreparable harm”
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`because “future copyright infringement can always be redressed via damages, whether actual or
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`statutory.” Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1215 (C.D.
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`Cal. 2007).2 It is Plaintiff’s burden to explain how future infringements would result in the type
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`of harm—loss of market share, competitive disadvantage, or intangible harm such as a loss of
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`goodwill or damage to their reputation—that cannot be fully redressed by monetary damages,
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`and he has failed to do so. See also Bean v. Pearson Educ., Inc., 2011 WL 1211684, at *2-4 (D.
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`Ariz. Mar. 30, 2011). In short, Plaintiff’s claim centers on the loss of money—the fee for each
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`use of his photographs under the terms of the license and any costs and fees he would be entitled
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`to should he prevail in this lawsuit.
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`Plaintiff’s best argument, or certainly the one that resonates most with the Court, is that
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`that “unreimbursed attorneys’ fees and costs make the ‘continuous litigation’ model a money-
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`losing proposition.” As Plaintiff points out, he “is in the business of creating and licensing
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`photographs, not investigating and suing Wiley for copyright infringement.” But this argument
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`2 Defendant has represented to the Court that the “majority of the books in which Plaintiff’s photographs
`were used are no longer in print and are unavailable for purchase from Wiley.”
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`6
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 7 of 14 PageID #:1024
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`does not compel injunctive relief in the present circumstances because, fortunately for Plaintiff,
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`“[t]he Copyright Act provides the owner of a copyright with a potent arsenal of remedies against
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`an infringer of his work, including * * * a recovery of his actual damages and any additional
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`profits realized by the infringer or a recovery of statutory damages and attorneys’ fees.” Sony
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`Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433-34 (1984); see also 17
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`U.S.C. § 504(b) (“The copyright owner is entitled to recover the actual damages suffered by him
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`or her as a result of the infringement, and any profits of the infringer that are attributable to the
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`infringement and are not taken into account in computing the actual damages. In establishing the
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`infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross
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`revenue, and the infringer is required to prove his or her deductible expenses and the elements of
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`profit attributable to factors other than the copyrighted work.”); Bonner v. Dawson, 404 F.3d
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`290, 294 (4th Cir. 2005) (“[O]nce liability has been shown, § 504(b) creates an initial
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`presumption that the infringer’s profits attributable to the infringement are equal to its gross
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`revenue.”).
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`Because Plaintiff has failed to demonstrate the absence of an adequate remedy at law as
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`well as irreparable harm, he is not entitled to a preliminary injunction. However, if he is able to
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`prove infringement, he will be in a strong position to request not only actual damages, but also
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`additional profits realized by Defendant, statutory damages, attorneys’ fees, and/or pre- and post-
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`judgment interest. Specifically, with respect to the issue of attorneys’ fees, the Copyright Act
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`grants courts discretion to award reasonable attorneys’ fees and costs to prevailing parties in civil
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`copyright actions. See 17 U.S.C.A. § 505 (“In any civil action under this title, the court in its
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`discretion may allow the recovery of full costs by or against any party * * * * Except as
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`otherwise provided by this title, the court may also award a reasonable attorney’s fee to the
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`7
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 8 of 14 PageID #:1025
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`prevailing party as part of the costs.”). In determining whether to exercise that discretion and
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`award costs and fees, the Court may look to a number of nonexclusive factors identified by the
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`Supreme Court: (1) the objective unreasonableness of the action; (2) the losing party’s
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`motivations for filing or contesting the action; (3) the frivolousness of the action; and (4) the
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`need to “advance considerations of compensation and deterrence.” Fogerty v. Fantasy, Inc., 510
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`U.S. 517, 535 n. 19 (1994) (quoting Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3rd Cir.
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`1986) (internal quotations omitted)). According to the Seventh Circuit, the “two most important
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`[of these] considerations * * * are the strength of the prevailing party’s case and the amount of
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`damages or other relief the party obtained.” Assessment Techs. of Wisconsin, LLC v. Wire Data,
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`Inc., 361 F.3d 434, 436 (7th Cir. 2004); see also Brownmark Films LLC v. Comedy Partners,
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`2011 WL 6002961, at *5-6 (E.D. Wis. 2011). If Plaintiff’s allegations—including allegations
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`that Defendant has repeatedly and continuously infringed Plaintiff’s copyrighted works (and
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`continues to do so even now) and has failed to establish a system to monitor its uses of licensed
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`photographs—prove to be true, the Court will have little sympathy for the position taken by
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`Defendant in this lawsuit. As Defendant points out, “the calculation of Plaintiff’s damages is a
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`straightforward formula based on the licensed per use fee and the number of uses that exceeded
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`the license limit.” Def.’s Resp. to Pl.’s Mot. at 8. Should Plaintiff prevail after being forced to
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`proceed through lengthy litigation, evidence of conduct by Defendant that delayed resolution of a
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`“straightforward” claim of copyright infringement would make for a similarly straightforward
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`assessment of any fees and costs
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`8
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 9 of 14 PageID #:1026
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`III. Motion to Dismiss
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`A.
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`Standard
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`A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
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`sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d
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`1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first
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`must comply with Rule 8(a) by providing “a short and plain statement of the claim showing that
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`the pleader is entitled to relief” (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given “fair
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`notice of what the * * * claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.
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`Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
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`Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief
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`above the “speculative level,” assuming that all of the allegations in the complaint are true.
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`E.E.O.C. v. Concentra Health Svcs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly,
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`550 U.S. at 569 n. 14). “[O]nce a claim has been stated adequately, it may be supported by
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`showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at
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`546. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
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`factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief
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`requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
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`of action will not do.” Id. at 555 (citations, quotation marks, and brackets omitted). The Court
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`accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences
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`that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th Cir. 2005).
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`Where a complaint sounds in fraud, the allegations of fraud must satisfy the heightened
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`pleading requirements of Rule 9(b). Fed. R. Civ. P. 9(b); see also Borsellino v. Goldman Sachs
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`Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007). Rule 9(b) of the Federal Rules of Civil
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`9
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 10 of 14 PageID #:1027
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`Procedure creates exceptions to the federal regime of notice pleading and specifies that, for “all
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`averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated
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`with particularity.” Fed. R. Civ. P. 9(b). The rule is designed “to force a plaintiff to do more
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`than the usual investigation before filing his complaint.” Ackerman v. Nw. Mut. Life Ins. Co.,
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`172 F.3d 467, 469 (7th Cir. 1999). To that end, the “circumstances” of fraud that a plaintiff must
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`include in her complaint are “the identity of the person who made the misrepresentation, the
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`time, place and content of the misrepresentation, and the method by which the misrepresentation
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`was communicated to the plaintiff.” Windy City Metal Fabricators & Supply, Inc. v. CIT Tech.
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`Fin. Svcs., Inc., 536 F.3d 663, 668 (7th Cir. 2008) (quoting Gen. Elec. Capital Corp. v. Lease
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`Resolution Corp., 128 F.3d 1074, 1075 (7th Cir. 1997)); Midwest Commerce Banking Co. v.
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`Elkhart City Centre, 4 F.3d 521, 523-24 (7th Cir. 1993); see also Borsellino, 477 F.3d at 507
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`(quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990) (noting that the complaint
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`must allege the “the who, what, when, where, and how: the first paragraph of a newspaper
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`story.”). “Read together, Rule 9(b) and Rule 8 require that the complaint include the time, place
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`and contents of the alleged fraud, but the complainant need not plead evidence.” Amakua
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`Development LLC v. Warner, 411 F. Supp. 2d 941, 947 (N.D. Ill. 2006) (citing Nissan Motor
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`Acceptance Corp. v. Schaumburg Nissan, Inc., 1993 WL 360426, at *3 (N.D. Ill. Sept. 15,
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`1993)). A fraud claim cannot be based on “information and belief” unless the plaintiff “states
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`the grounds for his suspicions.” Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 924 (7th Cir.
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`1992).
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`B.
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`Plaintiff’s Fraud Allegations
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`Under Illinois law, a claim for fraud must include allegations of: “(1) a false statement of
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`material fact; (2) defendant’s knowledge that the statement was false; (3) defendant’s intent that
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`10
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 11 of 14 PageID #:1028
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`the statement induce the plaintiff to act; (4) plaintiff’s reliance upon the truth of the statement;
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`and (5) plaintiff’s damages resulting from reliance on the statement.” Tricontinental Indus., Ltd.
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`v. PricewaterhouseCoopers, LLP, 475 F.3d 824, 841 (7th Cir. 2007). Here, the basis for
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`Plaintiff’s fraud claim is that, at the time Wiley represented to Frerck that it needed specific,
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`limited permission to use his photographs, Wiley knew that its actual use under the licenses
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`would exceed the permission requested, and that Wiley did this on a continuous basis. Plaintiff
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`attaches several of Defendant’s “request letters” to his complaint as “examples” of Defendant’s
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`fraud.
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`Plaintiff’s complaint states that Defendant falsely represented its intention to abide by the
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`print limitations set forth in Wiley’s request letters.3 Defendant argues that Plaintiff’s allegations
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`are
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`insufficient because he has
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`failed
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`to
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`identify
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`specific
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`statements
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`that are
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`“misrepresentations.” In response, Plaintiff maintains that the request letters attached to the
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`complaint set forth “the identity of the persons making the misrepresentations, the time, place
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`and content of the misrepresentations, and the method by which the misrepresentations were
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`communicated to Frerck.” Compl. at ¶ 10. And indeed, the request letters, sent in each instance
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`by representatives of Wiley to Odyssey on behalf of Plaintiff, contain information about the
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`photographs requested and the print runs for the publications, or in some cases, estimated print
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`runs. Furthermore, the complaint alleges that Plaintiff relied on the specific representations in
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`the request letters when granting the limited licenses and figuring out the license fees. The
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`alleged misrepresentations set forth in Exhibits B through E, if accompanied by the requisite
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`3 In his complaint, Plaintiff states that the attached exhibits are only “examples” of Wiley’s fraudulent
`conduct. However, in his response brief, Plaintiff cabins his fraud claim to the statements contained in
`the request letters attached to Plaintiff’s complaint as Exhibits B through E. Thus, going forward, only
`the instances referenced in Exhibits B through E may serve as the basis for Plaintiff’s fraud claim.
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`11
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 12 of 14 PageID #:1029
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`intent, are sufficiently detailed to satisfy Rule 9(b). 4 Each letter provides the time, place, and
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`content of the misrepresentation, and the identity of the parties to the misrepresentation.
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`“Reading these letters in the light most favorable to [plaintiff], these statements could be
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`construed as representations that [Defendant] would not exceed the licenses by printing more
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`than” the stated number of copies. Wood v. Houghton Mifflin Harcourt Pub. Co., 569 F. Supp.
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`2d 1135, 1140 (D. Colo. 2008).
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`The difficulty lies here in discerning (i) whether it is enough for Plaintiff to plead, on
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`information and belief, that Defendant intended to defraud Plaintiff at the time that the request
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`letters were sent, without providing the Court with specific factual allegations that support an
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`inference that Defendant possessed the requisite intent, and (ii) whether Defendant’s conduct
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`amounts to fraud or merely a broken promise. With respect to the question on intent, Federal
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`Rule of Civil Procedure 9(b) states that “[m]alice, intent, knowledge, and other conditions of a
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`person’s mind may be alleged generally.” See also Uni*Quality, 974 F.2d at 924 (“[A]llegations
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`made upon information and belief are insufficient, even if the facts are inaccessible to the
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`plaintiff, unless the plaintiff states the grounds for his suspicions.”). At this stage, Plaintiff has
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`identified the evidence that provides a basis for his fraud claim (primarily, request letters and
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`subsequent uses) but has only generally alleged an intent to deceive. As Defendant points out,
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`4 Other district courts in parallel lawsuits have evaluated similar statements by publishers in license
`request letters and found them to constitute misrepresentations sufficient to support a fraud claim. See
`Bergt v. McDougal Littell, 2006 Wl 3782919, at *4 (N.D. Ill. Dec. 21, 2006) (finding that since the
`complaint specifically alleged that publisher “falsely represented that it sought to use the painting in the
`textbook for a print run of 40,000, when in fact it knew at the time that it made that representation that its
`actual use would greatly exceed that number * * * these allegations are sufficient to state a claim for fraud
`as they allege * * * a misrepresentation”); Wood v. Houghton Mifflin Harcourt Publishing Co., 569 F.
`Supp. 2d 1135, 1140 (D. Colo. 2008) (“Reading these letters in the light most favorable to Wood, these
`statements could be construed as representations that HMH would not exceed the licenses by printing
`more than 40,000 copies. Thus, the attached letters do not contradict the complaint, and the Court
`concludes that Wood has sufficiently alleged that Defendants made a false representation.”); Bean v. John
`Wiley & Sons, Inc., 2011 WL 3348959, at *2 (D. Ariz. Aug. 3, 2011).
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`12
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 13 of 14 PageID #:1030
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`Plaintiff has not actually pointed to statements made by Defendant that it knew its actual uses
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`would exceed the permission requested and that Defendant intended to obtain access at a lower
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`cost. However, although Plaintiff’s allegations regarding Defendant’s intent to defraud him are
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`made “upon information and belief,” he also alleges a scheme by which Defendant intentionally
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`deceived licensors about its planned uses of their visual art in order to (i) obtain lower pricing for
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`licenses and (ii) hide its later copyright infringements. See generally Compl. at ¶¶ 9-18. His
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`contention is that, because the request letters set forth certain limitations, and Defendant
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`routinely exceeded those limitations, Defendant must have intended to defraud Plaintiff all along.
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`Although Plaintiff maintains that he is not bringing a claim of promissory fraud—that is,
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`fraudulent statements concerning future performance (see Trade Finance Partners, LLC v. AAR
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`Corp., 573 F.3d 401, 413 (7th Cir. 2009) (promissory fraud involves “a false statement of intent
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`regarding future conduct rather than present or past facts”))—he in fact appears to be doing just
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`that. In Illinois, promissory fraud is disfavored and not actionable, unless it is “part of a scheme
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`to defraud.” Id. (citations omitted); see also Desnick v. Am. Broadcasting Cos., 44 F.3d 1345,
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`1354 (7th Cir.1995) (noting there is “understandable ambivalence * * * about allowing suits to
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`be based on nothing more than an allegation of a fraudulent promise.”). The “scheme to
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`defraud” exception applies when the fraud is “one element of a pattern of fraudulent acts”
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`(Speakers of Sport, Inc. v. Proserv, Inc. 178 F.3d 862, 866 (7th Cir. 1999)), and the scheme is
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`intended to induce the promisee to act for the promisor’s benefit at the time of the promise. See
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`Bower v. Jones, 978 F.2d 1004, 1011-12 (7th Cir. 1992); see also Ass'n Benefit Servs., Inc. v.
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`Caremark RX, Inc., 493 F.3d 841, 847 (7th Cir. 2007) (promissory fraud involves “a false
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`representation of intent to fulfill the promise at the time the promise was made.”). If, however,
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`the promisor simply changed its mind, then it may have breached the contract, but it has not
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`Case: 1:11-cv-02727 Document #: 96 Filed: 02/07/12 Page 14 of 14 PageID #:1031
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`committed fraud. Bower, 978 F.2d at 1012 (quoting Price v. Highland Community Bank, 772
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`F.Supp. 454, 459-60 (N.D. Ill. 1989) (Posner, J., sitting by designation)).
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`Given that Plaintiff has limited his claims to the alleged misrepresentations set forth in
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`sufficient detail in Exhibits B through E to Plaintiff’s complaint and also alleged that
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`Defendant’s conduct is part of continuous scheme, his allegations are sufficient (though barely)
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`to support a claim for promissory fraud. He has sufficiently alleged that at the time Defendant
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`solicited licences from Plaintiff, Defendant routinely knew its use would exceed the permission
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`requested and that Defendant intended by its misrepresentations to obtain access at a lower cost
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`than it would have paid had Defendant been honest about its intended usage. If proven to be
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`true, Defendant’s actions—evincing the attitude that it is cheaper to infringe now, hope not to get
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`caught, and pay later if necessary—would be fraudulent. However, the Court cautions Plaintiff
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`that “[b]roken promises, without more, are breaches of contract” and not fraud. See Analysts
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`Int’l Corp. v. Recycled Paper Prods., Inc., 1987 WL 18360, at *2 (N.D. Ill. Oct. 7, 1987). Thus,
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`as the case progresses, Plaintiff must develop evidence of Defendant’s intent to deceive and of a
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`scheme to defraud; allegations will not suffice at summary judgment. Defendant’s partial motion
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`to dismiss is denied.
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`IV. Conclusion
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`For these reasons, the Court denies Plaintiff’s motion for a preliminary injunction [11]
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`and also denies Defendant John Wiley and Sons’ partial motion to dismiss [20].
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`Dated: February 7, 2012
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`______________________________
`Robert M. Dow, Jr.
`United States District Judge
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