Case 2:10-cv-02155-MMD-PAL Document 27 Filed 05/03/11 Page 1 of 9
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEVADA
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`RIGHTHAVEN LLC, a Nevada limited
`liability company,
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`2:10-CV-2155 JCM (PAL)
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`Plaintiff,
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`v.
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`AZKAR CHOUDHRY, et al.,
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`Defendants.
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`ORDER
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`Presently before the court is defendants Azkar Choudhry’s and Pak.org’s motion to dismiss,
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`or in the alternative, motion for judgment on the pleadings, or in the alternative, motion for summary
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`judgment. (Doc. #9). The plaintiff has responded (doc. #23), and the defendants have replied (doc.
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`#24).
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`Also before the court is plaintiff Righthaven’s motion to dismiss, or in the alternative, motion
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`to strike counterclaim. (Doc. #22). The defendants have responded (doc. #26), but to date the
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`plaintiff has not replied.
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`Plaintiff Righthaven filed the instant complaint on December 13, 2010, alleging copyright
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`infringement under 17 U.S.C. § 502. (Doc. #1). Plaintiff alleges that it is the current owner of the
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`copyright in the illustration “Vdara death-ray” (doc. #1, ¶ 11), which was originally owned/published
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`by the Las Vegas Review-Journal (“LVRJ”). Plaintiff alleges that on or about October 8, 2010, the
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`defendants “displayed, and continue to display, an unauthorized reproduction of the Work . . . as part
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`of the content accessible through the Domain. . . .” (Doc. #1 ¶ 14). As relief for the alleged
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`James C. Mahan
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`infringement, plaintiff requests statutory damages with both pre- and post-judgment interest,
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`attorneys’ fees, and for the registrar for the domain, GoDaddy, to lock the domain and transfer
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`control to Righthaven. The defendants have filed the instant motion attacking the complaint. (Doc.
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`#9).
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`In response, the defendants have alleged twenty defenses (see doc. #9, ¶¶ 43–62) and have
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`pleaded two counterclaims – (1) declaratory relief and (2) champerty. In the prayer for relief, the
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`defendants request attorneys’ fees and damages. The plaintiff has filed the instant motion attacking
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`the counterclaims. (Doc. #22).
`I.
`The Complaint (doc. #9)
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`The complaint alleges one claim for relief, copyright infringement. Thus, to plead a prima
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`facie case, the plaintiff must allege: (1) ownership of the allegedly infringed material, and (2) that
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`the alleged infringers violated at least one exclusive right granted to the copyright holder. 17 U.S.C.
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`§ 106, 501(a).
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`The defendants urge the court to: (1) dismiss the complaint under Federal Rule of Civil
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`Procedure 12(b)(6); (2) dismiss the complaint under Federal Rule of Civil Procedure 12(c); or (3)
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`find that the plaintiff has failed to prove their case as a matter of law under Federal Rule of Civil
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`Procedure 56, and grant summary judgment in favor of the defendants. Accordingly, the court
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`evaluates the motion under each of these standards.
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`A.
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`Defendants’ Motion Under the Standard for Motions to Dismiss
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`A motion to dismiss filed after the pleadings is treated by this court as a motion for judgment
`on the pleadings. Aldabe v. Aldabe, 616 F.2d 1089, 1093 (9th Cir. 1980). Federal Rule of Civil
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`Procedure 12(h)(2) authorizes this procedure, allowing a party to raise the defense of failure to state
`a claim upon which relief may be granted even after an answer has been filed. Id. Thus, the court
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`evaluates the defendants’ motion (doc. #9) as a motion for judgment on the pleadings under Rule
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`12(c). The same standard of review applies to a motion to dismiss under Rule 12(b)(6) and a motion
`for judgment on the pleadings. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir.
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`1989).
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`“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
`as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937,
`1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Where a
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`complaint pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops short of the
`line between possibility and plausibility of entitlement to relief.’” Id. (citing Bell Atlantic, 550 U.S.
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`at 557). However, where there are well pled factual allegations, the court should assume their
`veracity and determine if they give rise to relief. Id. at 1950.
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`Here, the court finds that the plaintiff has pled a prima facie case of copyright discrimination.
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`First plaintiff has alleged that it owns the copyright in the disputed material and, second, that
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`defendants infringed his exclusive right to reproduce the material. Accordingly, the court denies the
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`motion insofar as it purports to be a motion to dismiss and evaluates it under the higher standard of
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`a motion for summary judgment.
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`B.
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`Defendants’ Motion Under the Standard for Summary Judgment
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`Summary judgment is appropriate when, viewing the facts in the light most favorable to the
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`nonmoving party, there is no genuine issue of material fact, and the moving party is entitled to
`judgment as a matter of law. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996); FED. R. CIV. P.
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`56(c). The moving party bears the burden of presenting authenticated evidence to demonstrate the
`absence of any genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323
`(1986); Orr v. Bank of America, 285 F.3d 764 (9th Cir. 2002).
`Inline Linking of Images
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`i.
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`Defendants’ first argument in support of the motion is that the allegedly infringing act, as a
`matter of law, cannot constitute copyright infringement under Ninth Circuit precedent. In Perfect 10,
`Inc. v. Amazon.com, Inc., the court held that “in-line linked images . . . do not constitute direct
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`infringement of the copyright owner’s display rights.” 508 F.3d 1146, 1160–61 (9th Cir. 2007). Such
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`images are described as being “HTML instructions that direct a user’s browser to a website
`publisher’s computer that stores the full-size photographic image.” Id. at 1161. Thus, because a
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`defendant using this technology does not store the photographic images on its computer, the
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`defendant would not have a “copy” of the images as that term is used in the Copyright Act.” Id. at
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`1160.
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`Acknowledging that the process of “linking” may not constitute direct copyright infringement
`under the Perfect 10, the court is unable to conclude, as a matter of law, that the technology at issue
`here falls into the Perfect 10 category. Specifically, the court is not an expert in “source code
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`authorship,” and plaintiff Righthaven has contested both the authenticity of the source code (doc.
`#9-2) and defendant Choudhry’s statements relating to the source code (doc. #9-1). (See doc. #23,
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`p. 9). The court declines to grant summary judgment on the copyright infringement claim on the
`basis of the rule articulated in Perfect 10.
`Volitional Act
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`ii.
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`Second, defendants argue that Righthaven’s copyright infringement claim must fail as a
`matter of law because Righthaven cannot show that the defendants engaged in a volitional act. See
`Field v. Google, Inc., 412 F. Supp. 2sd 1106 (D. Nev. 2006) (holding that a plaintiff must show
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`volitional conduct on defendant’s part to support finding of direct copyright infringement).
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`Specifically, defendants argue that the disputed “infographic” appeared through an “inline link”
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`generated by an “automated RSS feed” published by a third party website. (Doc. #9, p. 11). In
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`response, plaintiff has identified several disputed issues of material fact that plaintiff claims the court
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`is unable to resolve as a matter of law.
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`Defendants’ argument as to volition depends on the court concluding that, as a matter of low,
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`the alleged infringement here was actually “inline linking.” Having already held that the court cannot
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`make this determination as a matter of law, the court similarly cannot conclude that no volitional act
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`occurred. Additionally, the court finds the genuine issues of material fact cited by plaintiff
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`Righthaven at pages eleven to twelve of the response brief (doc. #23) apropos and declines to grant
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`summary judgment on this ground.
`Fair Use
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`iii.
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`Plaintiff’s final argument is that the case should be dismissed as a matter of law because the
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`alleged infringement constitutes fair use. The fair use doctrine is an affirmative defense to a claim
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`of infringement, which protects certain uses of a copyright. The court considers four factors to
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`determine whether the use of a copyrighted work is fair: “(1) the purpose and character of the use,
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`including whether such use is of a commercial nature or is for nonprofit educational purposes; (2)
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`the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation
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`to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or
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`value of the copyrighted work.” 17 U.S.C. § 107. The four factors should be considered in light of
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`the purposes of copyright to promote the progress of science and useful arts and to serve the welfare
`of the public. Perfect 10., 508 F.3d at 1163.
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`“Fair use is a mixed question of law and fact. If there are no genuine issues of material fact,
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`or if, even after resolving all issues in favor of the opposing party, a reasonable trier of fact can reach
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`only one conclusion, a court may conclude as a matter of law whether the challenged use qualifies
`as a fair use of the copyrighted work.” Los Angeles News Serv. v. KCAL-TV Channel 9, 108 F.3d
`1119, 1120 (9th Cir. 1997) (citing Hustler Magazine, Inc. v. Moral Majority, Inc., 796 F.2d 1148,
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`1150 (9th Cir.1986)). Here, weighing each of the four use factors and resolving all issues in favor
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`of plaintiff Righthaven, the court finds that disputed issues of material fact exist for trial and denies
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`the motion for summary judgment on this basis.
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`(a)
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`Purpose and Character of the Use
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`This first factor addresses whether the new work “replaces the object of the original creation
`or instead adds a further purpose or different character . . . [and] is ‘transformative.’” A&M Records,
`Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir. 2001) (quoting Campbell v. Acuff-Rose Music,
`Inc., 510 U.S. 569, 579 (1994)). This factor also requires the court to determine whether the new use
`is commercial or non-commercial. Id.
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`First, the court finds that defendants’ use of the article is transformative. Although the former
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`owner, the LVRJ, used the article for news-reporting, the court focuses on the current copyright
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`owner’s use, which is merely litigation-driven. Accordingly, defendants’ use of the article to educate
`the public is transformative and does not constitute a substitution of the plaintiff’s use. See Perfect
`10, 508 F.3d at 1146 (discussing the effect of market substitution in relation to the first and fourth
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`factors).
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`However, the court finds that a dispute of fact exists as to whether the use here was
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`commercial or non-commercial. Defendant Choudhry admits in his declaration that the website does
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`make money, albeit not much. (Doc. #9-1 at 2 ¶ 13). Accordingly, the court finds that further
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`discovery is warranted under Rule 56(d).
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`(b)
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`Nature of the Copyrighted Work
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`The second factor considers the nature of the copyrighted work. “Works that are creative in
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`nature are ‘closer to the core of intended copyright protection’ than are more fact-based works.”
`Napster, 239 F.3d at 1016 (citing Campbell, 510 U.S. at 586). Where the disputed use can be
`characterized as news-reporting, this factor weighs heavily in favor of a finding of fair use. Los
`Angeles News Serv., 108 F.3d at 1121.
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`Here, the court cannot conclude that a reasonable trier of fact could only reach one
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`conclusion as to the nature of the disputed article. Although it is an information work, it also displays
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`elements of creativity, for example, the title of the photo, which described the scene as a “death ray.”
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`Although the defendants removed the title, the idea of the death ray was expanded upon in article
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`displayed on the defendant-website. Accordingly, the court cannot, as a matter of law, declare this
`to be an informational work deserving less protection than a creative work of entertainment. Sony
`Corp. Of Am. v. Universal City Studios, Inc., 464 U.S. 417, 496–97 (1984). This is a disputed issue
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`of material fact that is more properly resolved at trial.
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`(c)
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`Amount/Substantiality
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`“The third factor considers whether the amount and substantiality of the portion used in
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`relation to the copyrighted work as a whole . . . are reasonable in relation to the purpose of the
`copying.” Campbell, 510 U.S. at 586. Although “wholesale copying does not preclude fair use per
`se, copying an entire work militates against a finding of fair use.” Napster, 239 F.3d at 1016 (internal
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`quotations omitted). Thus, under some circumstances, a court may determine that a use is fair even
`where the protected work is copied in its entirety. Id. (citing Sony, 464 U.S. at 449–50).
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`Defendants argue that they have not engaged in wholesale copying, as the image displayed
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`is only thirty percent the size of plaintiff’s original work, and defendants’ image omits the original.
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`Plaintiff retorts that the entire image was copied, albeit a smaller version. Finding some merit in both
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`arguments, the court declines to resolve this dispute on a motion for summary judgment, as it finds
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`that a reasonable jury could reach more than one conclusion on this issue.
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`(d)
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`Effect of the Use Upon the Potential Market
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`The fourth factor is the effect of the allegedly infringing use upon the potential market for
`or value of the original, copyrighted work. Campbell, 510 U.S. at 590 (citing 17 U.S.C. § 107(4)).
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`The rationale behind the inclusion of this factor is that “[f]air use . . . is limited to copying by others
`which does not materially impair the marketability of the work which is copied.” Harper & Row
`Publishers, 471 U.S. at 566–67.
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`First, the plaintiff has failed to allege that a “market” exists for its copyright at all, and the
`court declines to simply presume the existence of a market. See e.g., Field v. Google Inc., 412 F.
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`Supp. 2d 1106, 1121 (D. Nev. 2006) (declining to presume a market exists where the work was
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`offered for free in its entirety). Second, because Righthaven cannot claim the LVRJ’s market as its
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`own and is not operating as a traditional newspaper, Righthaven has failed to show that there has
`been any harm to the value of the copyright. Cf. eBay v. MercExchange, LLC, 547 U.S. 388 (2006)
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`(holding that courts should not broadly presume harm when issuing preliminary injunctions in the
`patent context); see Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) (extending eBay to the copyright
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`context and anchoring the irreparable harm analysis in equitable principles). Accordingly, the fourth
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`fair use factor weighs in favor of a finding of fair use.
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`(e)
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`Conclusion
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`As to the first three fair use factors, the court is unable to conclude that, as a matter of law,
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`each favors the defendants. Although the fourth factor does weigh against the plaintiff, that alone
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`is insufficient for the court to grant summary judgment on the basis of fair use.
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`C.
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`Domain Transfer
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`In the complaint’s prayer for relief, plaintiff requests that the court “[d]irect GoDaddy, and
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`any successor domain name registrar for the Domain, to lock the Domain and transfer control of the
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`Domain to Righthaven. . . .” (Doc. #1). The defendants contend that such relief is not warranted
`under the Copyright Act, and Righthaven has admitted this point in a brief filed in another case. See
`Righthaven v. Dibiase, 2:10-cv-01343-RLH-PAL, Dkt 29 at 5:26–27 (“Righthaven concedes that
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`such relief is not authorized under the Copyright Act”). Accordingly, the court finds that
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`Righthaven’s request for such relief fails as a matter of law.
`II.
`The Counterclaim (doc. #22)
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`Righthaven moves the court to dismiss or strike the defendants’ declaratory relief
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`counterclaim as redundant of the claim for copyright infringement. Righthaven alleges that the court
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`has discretion to dismiss, under Rule 12(b)(6), a declaratory relief counterclaim which mirrors the
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`complaint or raises the same factual or legal issues as those placed at-issue in the pleadings.
`Englewood Lending, Inc. v. G&G Coachella Invs., LLC, 651 F. Supp. 2d 1141, 1145 (C.D. Cal.
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`2009). Alternatively, courts have stricken counterclaims under Rule 12(f), if those claims raise the
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`same facts or legal issues as those asserted in the pleadings, or which constitute a mirror image of
`the original complaint. See e.g., Tenneco Inc. v. Saxony Bar & Tube, Inc., 776 F.2d 1375, 1379 (7th
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`Cir. 1985) (“Indeed, repetitious and unnecessary pleadings, such as a counterclaim that merely
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`restates an affirmative defense, or which seeks the opposite effect of the complaint, should be
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`stricken regardless of whether prejudice has been shown.”).
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`Defendants respond that the court should not dismiss the counterclaim unless there is a
`“complete identity of factual and legal issues between the complaint and the counterclaim.” Pettrey
`v. Enter. Title Agency, Inc., 2006 U.S. Dist. LEXIS 83957, at *3 (N.D. Ohio Nov. 17, 2006).
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`Defendants allege that the counterclaims provide an avenue for defendants to define issues subject
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`to discovery, and that even dismissal of the complaint with prejudice is no substitute for adjudication
`of the declaratory relief counterclaim. See Castaline v. Aaron Muellers Arts, 2010 U.S. Dist. LEXIS
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`13111, at *5 (N.D. Cal. Feb. 16, 2010) (“In the patent and trademark realm, courts have found that
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`counterclaims alleging patent or trademark invalidity should not be dismissed as redundant under
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`Rule 12(f).”).
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`The court agrees with defendants and finds that the counterclaim is not redundant. Rather,
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`defendants seek a declaration that would be substantially more detailed than a judgment on the claim
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`of copyright infringement in the complaint; for example, defendants seek a declaration that the
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`alleged infringement was actually an “inline link,” which would not necessarily be encompassed in
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`a general judgment in defendants’ favor. The court declines to dismiss or strike the counterclaim.
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`Accordingly,
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`IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants’ motion to
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`dismiss, or in the alternative, motion for judgment on the pleadings, or in the alternative, motion for
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`summary judgment (doc. #9), is DENIED;
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`IT IS FURTHER ORDERED that plaintiff’s motion to dismiss, or in the alternative, to strike
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`the declaratory relief counterclaim (doc. #22) is hereby DENIED.
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`DATED May 3, 2011.
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`UNITED STATES DISTRICT JUDGE
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