Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 1 of 13 PageID #:132
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`CHARLES P. KOCORAS, District Judge:
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`This matter comes before the Court on Defendants’ KAM Development,
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`L.L.C., (“KAM Development”) doing business as Green Energy Air Sealing, and
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`Kimberly Radostits (“Radostits”) (collectively, “Defendants”) motion to dismiss,
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`pursuant to Federal Rule of Civil Procedure 12(b)(6), Plaintiff Live Face on Web,
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`LLC’s (“LFOW”) Complaint. LFOW opposes the motion, and alternatively, seeks
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`leave to amend the Complaint. For the following reasons, the motion is granted in
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`part and denied in part. LFOW is granted twenty-one days to amend the Complaint
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`consistent with this Opinion.
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`LIVE FACE ON WEB, LLC,
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`a Pennsylvania company,
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`Plaintiff,
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`KAM DEVELOPMENT, L.L.C. d/b/a,
`GREEN ENERGY AIR SEALING, an
`Illinois company, and KIMBERLY
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`RADOSTITS, an individual,
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`Defendants.
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`MEMORANDUM OPINION
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`16 C 8604
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`
`
`CHARLES P. KOCORAS, District Judge:
`
`
`
`This matter comes before the Court on Defendants’ KAM Development,
`
`L.L.C., (“KAM Development”) doing business as Green Energy Air Sealing, and
`
`Kimberly Radostits (“Radostits”) (collectively, “Defendants”) motion to dismiss,
`
`pursuant to Federal Rule of Civil Procedure 12(b)(6), Plaintiff Live Face on Web,
`
`LLC’s (“LFOW”) Complaint. LFOW opposes the motion, and alternatively, seeks
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`leave to amend the Complaint. For the following reasons, the motion is granted in
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`part and denied in part. LFOW is granted twenty-one days to amend the Complaint
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`consistent with this Opinion.
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`LIVE FACE ON WEB, LLC,
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`a Pennsylvania company,
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`Plaintiff,
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`v.
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`KAM DEVELOPMENT, L.L.C. d/b/a,
`GREEN ENERGY AIR SEALING, an
`Illinois company, and KIMBERLY
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`RADOSTITS, an individual,
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`Defendants.
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`MEMORANDUM OPINION
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`16 C 8604
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 2 of 13 PageID #:133
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`BACKGROUND
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`For purposes of the instant motion, the following well-pleaded allegations
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`derived from LFOW’s Complaint are accepted as true and the Court draws all
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`reasonable inferences in LFOW’s favor. See Tamayo v. Blagojevich, 526 F.3d 1074,
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`1081 (7th Cir. 2008). “LFOW is a developer and owner of ‘live person’ software,
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`which is an original work of authorship independently created by LFOW.” LFOW’s
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`software “allows a company to display a video of a ‘walking’ and ‘talking’ personal
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`host who introduces a website to an online visitor,” and “explains a company’s
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`products and/or services and directs a visitor’s attention to a particular product or
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`aspect of the website.” LFOW’s software uses “a real spokesperson to capture, hold
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`and prolong the attention of the average online visitor” to enhance a customer’s
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`website. Companies can “customize and [ ] modify settings and functionality of the
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`web spokesperson.” LFOW charges customers a license fee and its software is
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`subject to an “End User License Agreement (‘EULA’).” Since October 2007,
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`“anyone who accessed” LFOW’s software “had notice of the EULA.” “[O]n
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`December 20, 2007, LFOW [ ] registered the copyright in the LFOW Software
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`version 7.0.0, prior to the publication of version 7.0.0, in the United States Copyright
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`Office” and received a certificate of registration from the Register of Copyrights.
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`LFOW alleges that Defendants “own, and/or have operated and/or have
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`controlled the website http://www.greenenergyairsealing.com.” LFOW claims that
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`“Defendants have used a web spokesperson video to promote [their] products and/or
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`2
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 3 of 13 PageID #:134
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`services,” and that “in order to display the web spokesperson,” on their website,
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`“Defendants used and distributed, without permission,” LFOW’s software. LFOW
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`further alleges that “Defendants copied and stored an infringing version of the LFOW
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`Software on the webserver(s) for” their website. To implement the supposedly
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`infringing version of LFOW’s software, Defendants allegedly modified their website
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`to include a specific “source code and/or text,” which apparently linked “the
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`Defendants’ website to the file ‘new_player.js,’ an infringing version of the LFOW
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`Software.” LFOW claims that every time “a web browser retrieved a page from
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`Defendants’ website,” Defendants distributed a copy of LFOW’s software to the
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`website visitor, which was stored on the visitor’s computer. Thus, LFOW asserts,
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`“each visit to the Defendants’ website was a new act of copyright infringement.”
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`According to LFOW, Defendants never paid the applicable license and video
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`production fees when it used LFOW’s software. Allegedly, “Defendants have caused,
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`enabled, facilitated, and/or materially contributed to the infringement,” by distributing
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`copies of LFOW’s software to each website visitor. Although Defendants allegedly
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`own, operate, and/or control their website, and supposedly have “the right and ability
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`to supervise and control the infringement,” they “refused to exercise their ability to
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`stop the infringement.” Moreover, LFOW claims that Defendants acted with
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`“reckless disregard for, or [with] willful blindness to LFOW’s rights” when it
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`“initiated or continued the infringing conduct with knowledge of the infringement.”
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`3
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 4 of 13 PageID #:135
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` LFOW also alleges that “Defendants profited directly from and have a direct
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`financial
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`interest
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`in
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`the
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`infringement,” because LFOW’s software “allowed
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`Defendants to more effectively promote and sell their products and/or services by
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`capturing, holding and prolonging the attention of the average online visitor,
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`providing a direct positive impact on sales and/or the brand, public image and
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`reputation of Defendants.” LFOW also claims that Defendants used the infringing
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`version of its software “to generate revenues and profits,” while LFOW suffered “loss
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`of licensing revenue.” Consequently, LFOW filed a one-count Complaint against
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`Defendants pursuant to 17 U.S.C. § 501, alleging “direct, indirect, and/or vicarious
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`infringement of registered copyrights.”
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`LEGAL STANDARD
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`A motion to dismiss pursuant to Rule 12(b)(6) “tests the sufficiency of the
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`complaint, not the merits of the case.” McReynolds v. Merrill Lynch & Co., 694 F.3d
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`873, 878 (7th Cir. 2012). The allegations in a complaint must set forth a “short and
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`plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.
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`Civ. P. 8(a)(2). A plaintiff need not provide detailed factual allegations, but must
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`provide enough factual support to raise his right to relief above a speculative level.
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`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim must be facially
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`plausible, meaning that the pleadings must “allow[ ] the court to draw the reasonable
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`inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
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`556 U.S. 662, 678 (2009). The claim must be described “in sufficient detail to give
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`4
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 5 of 13 PageID #:136
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`the defendant ‘fair notice of what the . . . claim is and the grounds upon which it
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`rests.’” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007)
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`(quoting Twombly, 550 U.S. at 555).
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`I.
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`Direct Copyright Infringement
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`DISCUSSION
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`To establish a claim for direct copyright infringement, LFOW must allege: “(1)
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`ownership of a valid copyright, and (2) copying of constituent elements of the work
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`that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361
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`(1991). Defendants do not challenge that LFOW owns a valid copyright. Rather,
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`Defendants contend that LFOW failed to sufficiently plead the second element of
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`direct infringement. Specifically, Defendants argue that LFOW fails to allege “that
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`KAM ever had ‘access to’ or the opportunity to view the actual ‘expression’ of the
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`software in question, namely any of the sets of statements or instructions allegedly
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`owned by LFOW.” Without such allegations, they claim, “there cannot be any
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`inference of copying,” and thus, “no claim of copyright infringement.”
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`Conversely, LFOW contends that Defendants erroneously argue that it had to
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`allege that Defendants had “access to” LFOW’s copyrighted work. Moreover,
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`according to LFOW, at this stage of the litigation, the allegations in the Complaint are
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`sufficient to state a claim for copyright infringement.
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`The Seventh Circuit has acknowledged that:
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`5
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 6 of 13 PageID #:137
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`The standard for copying is surprisingly muddled. Where direct
`evidence, such as an admission of copying, is not available . . . , a
`plaintiff may prove copying by showing that the defendant had the
`opportunity to copy the original (often called ‘access’) and that the
`two works are ‘substantially similar,’ thus permitting an inference
`that the defendant actually did copy the original. The various
`efforts
`to define
`these
`two key concepts, however, have
`unfortunately had the unintended effect of obscuring rather than
`clarifying the issues.
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`Peters v. West, 692 F.3d 629, 633 (7th Cir. 2012).
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`The Seventh Circuit continued, the tort “of infringement simply requires the plaintiff
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`to show that the defendant had an actual opportunity to copy the original . . . , and that
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`the two works share enough unique features to give rise to a breach of the duty not to
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`copy another’s work.” Id. at 633–34. In a more recent Seventh Circuit Opinion, the
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`Court stated, “[t]here are two methods to proving ‘copying’: (1) ‘that the defendant
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`had the opportunity to copy the original (often called ‘access’);’ and (2) ‘that the two
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`works are ‘substantially similar,’ thus permitting an inference that the defendant
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`actually did copy the original.’” Muhammad-Ali v. Final Call, Inc., 832 F.3d 755,
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`761 (7th Cir. 2016) (quoting Peters, 692 F.3d at 633).
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`At this stage of the litigation, LFOW is not required to prove copying; rather,
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`the Complaint need only contain sufficient allegations of copying. The Complaint
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`states that “Defendants used and distributed . . . the infringing version of the LFOW
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`Software,” and that the “Defendants copied and stored an infringing version of the
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`LFOW Software on the webserver(s) for” Defendants’ website. Additionally, LFOW
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`alleges that the infringing version “is substantially similar to the LFOW Software,”
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`6
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 7 of 13 PageID #:138
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`because it contains the letters “LFOW” and “the unique prefixes ‘lf_,’” in the code.
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`According to LFOW, these letters and prefixes “were arbitrarily chosen by LFOW to
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`mark its code and indicate LFOW’s unique and original code.” These allegations are
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`sufficient to allege that Defendants had the “opportunity to copy the original,” and
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`“that the two works are ‘substantially similar.’” Peters, 692 F.3d at 633. Moreover,
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`these allegations sufficiently provide Defendants with “fair notice of what the . . .
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`claim is and the grounds upon which it rests.” Concentra Health Servs., Inc.,
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`496 F.3d at 776 (quoting Twombly, 550 U.S. at 555). Thus, the motion to dismiss the
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`direct infringement claim is denied.
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`II. Vicarious Copyright Infringement
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`Although Defendants moved to dismiss the Complaint for failure to adequately
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`allege a claim for contributory infringement, in its response brief, LFOW concedes
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`that it “does not expressly allege” a contributory infringement claim. This is,
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`therefore, a non-issue. However, since there are sufficient allegations to support a
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`claim for direct copyright infringement, the Court turns to LFOW’s claim for
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`vicarious infringement. See QSRSoft, Inc. v. Rest. Tech., Inc., No. 06 C 2734, 2006
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`WL 3196928, at *4 (N.D. Ill. Nov. 2, 2006) (“[T]o state a claim for contributory and
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`vicarious copyright infringement, the plaintiff must plead sufficient facts for a valid
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`claim of direct copyright infringement.”).
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`To state a claim for vicarious infringement, LFOW has to allege that
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`Defendants: (1) possessed “the right and ability to supervise the infringing activity,”
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`7
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 8 of 13 PageID #:139
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`and (2) had “a direct financial interest in such activities.” Hard Rock Cafe Licensing
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`Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1150 (7th Cir. 1992) (quoting
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`Gershwin Publ’g Corp v. Columbia Artists Mgmt, Inc., 443 F.2d 1159, 1162 (2d Cir.
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`1971)); see also Leveyfilm, Inc. v. Fox Sports Interactive Media, LLC, No. 13 C 4664,
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`2014 WL 3368893, at *8 (N.D. Ill. July 8, 2014). Defendants assert that LFOW’s
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`claim for vicarious infringement fails because the allegations in the Complaint are
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`“vague and conclusory” and do not connect the alleged infringing activity to the
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`alleged financial benefit. Additionally, Defendants rely on In re Amister Copyright
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`Litigation, where the court stated: “[t]he financial benefit element is also satisfied
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`where, as here, the existence of infringing activities act as a draw for potential
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`customers,” to support their contention that LFOW must allege that the infringing
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`activity constituted a draw for the Defendants’ customers. 252 F. Supp. 2d 634, 655
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`(N.D. Ill. 2002). Defendants assert that LFOW “has failed to allege any facts to
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`suggest that KAM’s customers were drawn to its website because of” its alleged use
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`of the “copyrighted live spokesperson.” We disagree with Defendants’ argument that
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`In re Amister Copyright Litigation stands for the proposition that LFOW must allege
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`that the infringing activity constituted a draw for Defendants’ customers. Rather, we
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`interpret the above quote from In re Amister Copyright Litigation as stating that a
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`plaintiff may demonstrate direct financial interest by alleging that the infringing
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`activity constitutes a draw for Defendants’ customers.
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`8
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 9 of 13 PageID #:140
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` We also disagree with Defendants’ argument that the allegations in the
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`Complaint are “vague and conclusory” and do not connect the alleged infringing
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`activity to the alleged financial benefit. The Complaint states that Defendants had “a
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`direct financial interest in the infringement,” because when Defendants used “[t]he
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`web spokesperson video” on their website it “advertised and promoted products
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`and/or services of Defendants, encouraging the website viewer to purchase and/or use
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`Defendants’ products and/or services.” Moreover, the Complaint alleges that
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`“Defendants profited directly from and have a direct financial interest in the
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`infringement because the use of” LFOW’s software “allowed Defendants to more
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`effectively promote and sell their products and/or services by capturing, holding and
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`prolonging the attention of the average online visitor, providing a direct positive
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`impact on sales and/or the brand, public image and reputation of Defendants.” At this
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`stage in the litigation, accepting these allegations as true and construing them in the
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`light most favorable to LFOW, the Complaint sufficiently states a claim for vicarious
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`copyright infringement. Accordingly, the motion to dismiss the vicarious copyright
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`infringement claim is denied.
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`III. Actual Damages
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`Defendants next argue that “[i]n addition to failing to state a viable claim of
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`copyright infringement, [LFOW] also fails to show why it should be entitled to actual
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`damages.” In response, LFOW asserts that it need not allege actual damages as an
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`element of its copyright infringement claim. Nevertheless, LFOW cites to several
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`9
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 10 of 13 PageID #:141
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`allegations in the Complaint to demonstrate that it has alleged a basis for actual
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`damages. For example, Defendants copying and use of LFOW’s software “results in
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`actual damages to LFOW, including but not limited to the loss of licensing revenue;”
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`“Defendants . . . used the infringing version of the LFOW Software . . . for which
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`[they] did not pay applicable license fees and video production fees to LFOW;” and
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`“LFOW has suffered significant harm and loss.” In reply, Defendants do not respond
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`to any of these arguments. The Court is “not going to do” Defendants’ “research and
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`try to discover whether there might be something to say against” LFOW’s arguments.
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`Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999).
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`Defendants’ failure to respond in their reply brief to any of LFOW’s arguments
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`regarding actual damages acts as a waiver. United States v. Farris, 532 F.3d 615, 619
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`(7th Cir. 2008) (Defendant “failed to respond to the Government’s argument in a
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`Reply Brief, and accordingly, we find that [Defendant] waived his sufficiency of the
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`evidence challenge.”). Thus, the motion to dismiss on this ground is denied.
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`IV. Copyright Infringement Claim Against Radostits
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`Finally, Defendants assert that the copyright claim against Radostits fails
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`because LFOW did not allege that Radostits, “as an alleged corporate officer of
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`KAM,” “acted willingly and knowingly in procuring and using the alleged
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`copyrighted material.” Moreover, Defendants contend that the Complaint lacks
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`“specific allegations” that Radostits is individually liable, and therefore, the claims of
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`copyright infringement against her must be dismissed. LFOW asserts two arguments
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`10
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 11 of 13 PageID #:142
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`in response. First, LFOW contends that the Complaint “alleges the elements
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`necessary to plead a cause of action against R[a]dostits for copyright infringement
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`based on her joint ownership, supervision, control, and profiting from the website and
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`infringing conduct.” Specifically, LFOW points to the allegations in the Compliant
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`stating that Radostits’ owned, operated and/or controlled the Defendants’ website and
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`“modified Defendants’ website to cause the copying, use and distribution of the
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`infringing version of the LFOW Software.” Second, LFOW asserts that the
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`Complaint “alleges the elements necessary to plead a cause of action against
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`R[a]dostits for copyright infringement based on her role as a corporate office[r] and
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`owner of KAM Development . . . and her joint ownership, supervision, control and
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`profiting from the website and infringing conduct.” LFOW subsequently relies on
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`cases from outside of this District which found that similar allegations are sufficient to
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`deny a corporate officer’s motion to dismiss. See Live Face on Web, LLC v. Five
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`Boro Mold Specialist, Inc., No. 15 CV 4779-LTS-SN, 2016 WL 1717218 (S.D.N.Y
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`Apr. 28, 2012).
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`We agree with Defendants that it is unclear from the Complaint whether LFOW
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`is alleging copyright infringement against Radostits in her individual capacity,
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`corporate capacity, or both. The Complaint names Radostits “as an individual”
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`Defendant, while the allegations state that she “is a principal of KAM.” “Merely
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`being an officer in the corporation will not confer liability on the individual.” Asher
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`Worldwide Enter. LLC v. Housewaresonly.com Inc., No. 12 C 568, 2013 WL
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`11
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 12 of 13 PageID #:143
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`4516415, at *3 (N.D. Ill. Aug. 26, 2013). With respect to the liability of a corporate
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`officer based on a corporation’s alleged infringement, the Seventh Circuit has stated:
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`“It is when the officer acts willfully and knowingly—that is, when he personally
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`participates in the manufacture or sale of the infringing article (acts other than as an
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`officer), or when he uses the corporation as an instrument to carry out his own willful
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`and deliberate infringements, or when he knowingly uses an irresponsible corporation
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`with the purpose of avoiding personal liability—that officers are held jointly with the
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`company.” Dangler v. Imperial Mach. Co., 11 F.2d 945, 947 (7th Cir. 1926).
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`Here, the Complaint lacks sufficient factual allegations that Radostits: (i)
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`“personally participated in” the alleged copying of LFOW’s software; (ii) used KAM
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`Development “as an instrument to carry out [her] own willful and deliberate
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`infringements;” or (iii) used KAM Development to conduct the infringement with the
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`purpose of avoiding personal liability for copyright infringement. Thus, the motion to
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`dismiss the copyright infringement claim brought against Radostits is granted without
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`prejudice. LFOW has twenty-one days to file an amended Complaint clarifying
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`whether Radostits is being sued in her individual capacity, as a corporate officer, or
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`both, and if applicable, provide allegations of Radostits’ personal involvement in the
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`alleged copyright infringement.
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`12
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`Case: 1:16-cv-08604 Document #: 22 Filed: 12/20/16 Page 13 of 13 PageID #:144
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`CONCLUSION
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`For the aforementioned reasons, Defendants’ motion to dismiss is granted in
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`part and denied in part. LFOW has twenty-one days to amend its current Complaint
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`consistent with this Opinion.
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`Date: 12/20/2016
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` Charles P. Kocoras
` United States District Judge
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`13
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