Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 1 of 30
`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 1 of 30
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`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF NEW YORK
`
`SHAKE SHACK ENTERPRISES, LLC and SSE
`IP, LLC,
`
`Plaintiffs,
`
`- against -
`
`BRAND DESIGN COMPANY,
`INDUSTRIES,
`
`INC. d/b/a HOUSE
`
`
`
`22 Civ. 7713 (VM)
`
`DECISION AND ORDER
`
`USDC SDNY
`DOCUMENT
`ELECTRONICALLY FILED
`DOC#:
`
`DATEFILED:__12/28/23 Defendant.
`
`VICTOR MARRERO, United States District Judge.
`
`Plaintiffs Shake Shack Enterprises, LLC and SSE IP, LLC
`
`(together
`
`“Shake
`
`Shack”)
`
`brought
`
`this
`
`action
`
`against
`
`defendant Brand Design Company,
`
`Inc. d/b/a House Industries
`
`(“House
`
`Industries”). The Complaint seeks
`
`(1) declaratory
`
`judgment that the style of lettering in Shake Shack’s logos,
`
`signage,
`
`and merchandise
`
`does
`
`not
`
`infringe
`
`on House
`
`Industries’ intellectual property rights, and (2) declaratory
`
`judgment
`
`that House
`
`Industries has
`
`engaged in copyright
`
`misuse by attempting to monopolize the legitimate use of a
`
`typeface in the public domain.
`
`(See “Complaint,” Dkt. No. 1.)
`
`House Industries filed an answer and a counterclaim against
`
`Shake Shack, alleging that Shake Shack breached a contract
`
`with House Industries, related to unauthorized use of one of
`
`House Industries’ Neutraface font in logos and signage.
`
`(See
`
`“Counterclaim,” Dkt. No. 13.)
`
`
`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 1 of 30
`
`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF NEW YORK
`
`SHAKE SHACK ENTERPRISES, LLC and SSE
`IP, LLC,
`
`Plaintiffs,
`
`- against -
`
`BRAND DESIGN COMPANY,
`INDUSTRIES,
`
`INC. d/b/a HOUSE
`
`
`
`22 Civ. 7713 (VM)
`
`DECISION AND ORDER
`
`USDC SDNY
`DOCUMENT
`ELECTRONICALLY FILED
`DOC#:
`
`DATEFILED:__12/28/23 Defendant.
`
`VICTOR MARRERO, United States District Judge.
`
`Plaintiffs Shake Shack Enterprises, LLC and SSE IP, LLC
`
`(together
`
`“Shake
`
`Shack”)
`
`brought
`
`this
`
`action
`
`against
`
`defendant Brand Design Company,
`
`Inc. d/b/a House Industries
`
`(“House
`
`Industries”). The Complaint seeks
`
`(1) declaratory
`
`judgment that the style of lettering in Shake Shack’s logos,
`
`signage,
`
`and merchandise
`
`does
`
`not
`
`infringe
`
`on House
`
`Industries’ intellectual property rights, and (2) declaratory
`
`judgment
`
`that House
`
`Industries has
`
`engaged in copyright
`
`misuse by attempting to monopolize the legitimate use of a
`
`typeface in the public domain.
`
`(See “Complaint,” Dkt. No. 1.)
`
`House Industries filed an answer and a counterclaim against
`
`Shake Shack, alleging that Shake Shack breached a contract
`
`with House Industries, related to unauthorized use of one of
`
`House Industries’ Neutraface font in logos and signage.
`
`(See
`
`“Counterclaim,” Dkt. No. 13.)
`
`
`
`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 2 of 30
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`Now pending before the Court is Shake Shack’s motion to
`
`dismiss House Industries’ Counterclaim pursuant to Federal
`Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). (See Dkt.
`No. 22.) For the reasons set forth below, Shake Shack’s motion
`to dismiss the Counterclaim is GRANTED with prejudice.
`I.
`BACKGROUND1
`
`FACTS
`A.
`As alleged or admitted in the Counterclaim, House
`
`Industries is a typeface foundry that develops proprietary
`fonts and provides custom design services, including the
`creation of logos and branding. (See Counterclaim ¶¶ 14-15.)
`In 2002, House Industries developed the Neutraface font,
`which was inspired by and named for the Modernist architect
`Richard Neutra.2 (See id. ¶¶ 15, 20.) House Industries
`developed Neutraface over the course of “several years,”
`expending “thousands of hours.” (Id. ¶ 17)
`
`
`1 Except as otherwise noted, this factual background derives from the
`Counterclaim and the facts pleaded therein, which the Court accepts as
`true for the purposes of ruling on a motion to dismiss.
` Though the words “font” and “typeface” may be casually interchanged in
`everyday conversation, these are distinct terms of art in the world of
`intellectual property. “A typeface is the artistic creation,” but a “font
`is the result of an industrial process to enable the reproduction of
`typefaces in the printing process.” J. Lipton, To © Or Not to ©, Copyright
`& Innovation in the Digital Typeface Industry, 43 U.C. DAVIS L. REV. 143,
`148 (2009) (citing H.R. REP. 94-1476); see also Counterclaim ¶ 19. Whereas
`different typefaces will make individual characters (known as “glyphs”)
`appear in one way or another, fonts are the software programs that convert
`text data into glyphs of a particular typeface.
`
`
` 2
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` 2
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 3 of 30
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`House Industries makes its Neutraface font available to
`
`customers on the House Industries website. (See Counterclaim
`¶ 18.) For a licensing fee, anyone can download the Neutraface
`font software, which enables the downloader to create text on
`a computer in the Neutraface typeface. The downloader must
`also agree to House Industries’ End User License Agreement
`(“EULA”), the standard “Desktop” version of which delineates
`the specific uses for which the Neutraface font software and
`its resulting glyphs may be used by the downloader. (Id.
`¶ 19.)
`
`Though House Industries changes the exact terms of its
`standard Desktop EULA from time to time, House Industries
`alleges that, since 2002, the standard Desktop EULA has
`consistently forbidden users from using the Neutraface font
`software or the glyphs it generates “in connection with logos”
`or “products for sale.” (Id.) House Industries imposes this
`restriction so that it can retain “control over” the usage
`and value of the fonts it has developed. (Id.) If a customer
`wishes to use the glyphs created by the Neutraface font in
`connection with a logo or goods for sale, the customer must
`first license the Neutraface font from House Industries for
`that specific purpose. (See id. ¶ 20.)
`
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`The Court understands House Industries’ Counterclaim to
`
`further allege that there is just one way to produce digital
`text in the Neutraface typeface: by using House Industries’
`Neutraface font software. (See id.; see also House
`Industries’ Opposition to Motion to Dismiss (“Opp.,” Dkt. No.
`25, at 8).)
`
`House Industries alleges that Shake Shack has repeatedly
`used House Industries’ proprietary Neutraface font software
`for logos, advertising, and sales, without having obtained
`permission for those specific uses, thereby violating the
`Desktop EULA. Specifically, according to House Industries,
`Shake Shack has created the following signage through the
`unauthorized use of the Neutraface font software: (1) Shake
`Shack’s “innovation kitchen” signage since September 2018
`(see Counterclaim ¶¶ 22-24); (2) Shake Shack’s “drive thru”
`signage since December 2021 (see id. ¶¶ 26-29); and (3) Shack
`Shack’s “APP+ONLINE PICK-UP,” “SHACK bar,” and “SHAKE SHACK
`bar” signage since 2017 (see id. ¶ 30).
`
`Other than alleging on information and belief that “one
`or more of Shake Shack’s employees, agents, or
`representatives acting on Shake Shack’s behalf obtained
`access to House [Industries’] Neutraface software,” House
`Industries does not purport to know how or when Shake Shack
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 5 of 30
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`obtained the Neutraface font. (Id. ¶ 32; see also Opp. at 9.)
`Nonetheless, House Industries claims that Shake Shack is
`bound by the EULA and indeed breached the EULA by using the
`Neutraface font software to generate logos and other
`materials promoting goods for sale. (See Counterclaim ¶ 31.)
`B.
`PROCEDURAL HISTORY
`Shake Shack initiated this action on September 9, 2022,
`seeking declaratory judgment of non-infringement and
`declaratory judgment of copyright misuse. (See Complaint.)
`House Industries filed its Answer and Counterclaim on
`November 16, 2022, bringing one count of breach of contract
`against Shake Shack. (See Counterclaim.) The parties then
`engaged in a pre-motion letter exchange regarding Shake
`Shack’s anticipated motion to dismiss House Industries’
`Counterclaim. (See Dkt. Nos. 17-18.) Shake Shack informed the
`Court that House Industries had declined Shake Shack’s
`request to withdraw or amend the Counterclaim. (See Dkt. No.
`19.)
`In light of the parties’ failure to avoid motion
`practice, the Court determined that a pre-motion conference
`was unnecessary and directed the parties to inform the Court
`whether they sought supplemental or full briefing. (See Dkt.
`No. 20.) The parties requested full briefing. (See Dkt. No.
`
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`21.) Shake Shack filed its motion and a supporting memorandum
`of law (see Dkt. Nos. 22, 23), which were followed by House
`Industries’ memorandum in opposition to the motion to dismiss
`(see Opp.), and Shake Shack’s reply memorandum in further
`support of the motion to dismiss. (See Dkt. No. 26.)
`II. LEGAL STANDARD
`“To survive a motion to dismiss, a complaint must contain
`
`sufficient factual matter, accepted as true, to ‘state a claim
`to relief that is plausible on its face.’” Ashcroft v. Iqbal,
`556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
`550 U.S. 544, 570 (2007)). This standard is satisfied “when
`the plaintiff pleads factual content that allows the court to
`draw the reasonable inference that the defendant is liable
`for the misconduct alleged.” Id. In other words, a complaint
`should not be dismissed when the factual allegations
`sufficiently “raise a right to relief above the speculative
`level.” Twombly, 550 U.S. at 555. Still, a plaintiff “must
`allege some factual basis from which to make those inferences”
`of liability, In re Actos End-Payor Antitrust Litig., 848
`F.3d 89, 99 (2d Cir. 2017), because “conclusory allegations
`are not entitled to the assumption of truth,” Francis v. Kings
`Park Manor, Inc., 992 F.3d 67, 72 (2d Cir. 2021) (en banc).
`
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`A Rule 12(b)(6) motion challenges only the legal
`feasibility of the complaint, and courts adjudicating such
`motions “take[] no account of the complaint’s ‘basis in
`evidence.’” Nunes v. NBCUniversal Media, LLC, 643 F. Supp. 3d
`403, 411 (S.D.N.Y. 2022) (quoting Goel v. Bunge, Ltd., 820
`F.3d 554, 559 (2d Cir. 2016)). “Generally, courts do not look
`beyond facts stated on the face of the complaint, documents
`incorporated in the complaint, matters of which judicial
`notice may be taken and documents that are ‘integral’ to the
`complaint.” Id. (quoting Goel, 820 F.3d at 559). At the same
`time, the Rule 12(b)(6) standard instructs the Court to
`construe the complaint “liberally.” In re Inclusive Access
`Course Materials Antitrust Litig., 544 F. Supp. 3d 420, 431
`(S.D.N.Y. 2021) (quoting Coal. for Competitive Elec. v.
`Zibelman, 906 F.3d 41, 48–49 (2d Cir. 2018)).
`III. DISCUSSION
`Shake Shack argues that House Industries has failed to
`
`include plausible, non-speculative allegations in its
`Counterclaim sufficient to state a claim for breach of
`contract. Shake Shack also argues that House Industries’
`contract claim is expressly preempted by the Copyright Act.
`The Court finds both arguments convincing and addresses each
`in turn.
`
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 8 of 30
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`EXISTENCE OF THE CONTRACT
`A.
`To state a claim for breach of contract under New York
`
`law, a plaintiff must allege “(1) an agreement, (2) adequate
`performance by the plaintiff, (3) breach by the defendant,
`and (4) damages.” Fischer & Mandell, LLP v. Citibank, N.A.,
`632 F.3d 793, 799 (2d Cir. 2011); see Fuji Photo Film U.S.A.,
`Inc. v. McNulty, 669 F. Supp. 2d 405, 412 (S.D.N.Y. 2009).
`Shake Shack argues that House Industries has not pleaded facts
`to meet the first element: the existence of a contract between
`the parties. The Court agrees.
`
`A contract plaintiff “must plead facts surrounding the
`formation of the contract such as the date the parties entered
`into the contract, the major terms of the contract, the
`parties to the contract, and that the party to be bound
`assented to the contract.” Fuji Photo Film, 669 F. Supp. 2d
`at 412; see also Berman v. Sugo LLC, 580 F. Supp. 2d 191, 202
`(S.D.N.Y. 2008) (dismissing claims because they “do not set
`forth a single fact relating to the formation of the contract,
`the date it took place, the contract's major terms, the
`parties to the contract, or [defendant’s] assent to its
`terms”); Ebomwonyi v. Sea Shipping Line, 473 F. Supp. 3d 338,
`348 (S.D.N.Y. 2020) (dismissing claims because complaint
`alleged only a “promise[] to pay” without detailing the
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 9 of 30
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`parties to the contract or how or when such contract was
`formed); Silverman v. 3d Total Solutions, Inc., 18 Civ. 10231,
`2019 WL 4248040, at *17 (S.D.N.Y. Sept. 9, 2019) (dismissing
`claim because the complaint “fails to allege any facts
`surrounding the formation of the contract”); Eaves v. Design
`for Finance, Inc., 785 F. Supp. 2d 229, 258-59 (S.D.N.Y. 2011)
`(dismissing claims because pleadings “fail to provide facts
`regarding any specific contract between the parties, how or
`when such contract was formed, or any terms of the contract”);
`Window Headquarters, Inc. v. MAI Basic Four, Inc., 91 Civ.
`1816, 1993 WL 312899, at *3 (S.D.N.Y. Aug. 12, 1993)
`(similar).
`
`The details of Shake Shack’s assent to the EULA —
`particularly, who gave it, and when — are entirely lacking
`from House Industries’ Counterclaim. Indeed, House Industries
`admits that it “has not been able to locate a license that
`specifically identifies ‘Shake Shack’ as the licensee” in its
`own records. (Opp. at 9.) It therefore does not identify the
`date the contract was formed, the language of the EULA at
`issue, the major terms of the EULA, the identity of the person
`who entered into the EULA on Shake Shack’s behalf, or any
`reason to believe why that person had the authority to bind
`Shake Shack to any version of the EULA.
`
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 10 of 30
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`House Industries instead asks the Court to draw several
`
`inferences to conclude that Shake Shack was party to some
`version of the EULA, the specifics of which House Industries
`expects to unearth in discovery. House Industries argues that
`the Court can draw this conclusion based on the following
`allegations: (1) it is impossible to obtain Neutraface except
`through House Industries’ website, (2) all users who download
`Neutraface from the House Industries website must agree to
`the standard Desktop EULA, and (3) Shake Shack’s signage uses
`glyphs that are almost identical to the Neutraface glyphs.
`(See id. at 5-6.) Therefore, says House Industries, one of
`Shake Shack’s many agents and employees must have downloaded
`the Neutraface font software, agreed to the Desktop EULA, and
`violated the Desktop EULA by incorporating Neutraface glyphs
`into Shake Shack’s logos and signage. (See id. at 6-7.)
`
`That allegation does not set forth a reasonable
`inference that can be assumed true based on the facts pleaded
`in the Counterclaim. It is speculation to assert that Shake
`Shack created its signage with glyphs generated by House
`Industries’ software. Even if the glyphs in Shake Shack’s
`signage are identical to the Neutraface glyphs, typeface is
`part of the public domain. See 37 C.F.R. § 202.1(e)
`(prohibiting copyright registration of “[t]ypeface as
`
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 11 of 30
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`typeface”); Eltra Corp. v. Ringer, 579 F.2d 294, 298 (4th
`Cir. 1978) (typeface not subject to copyright protection);
`see generally B. Fry, Why Typefaces Proliferate Without
`Copyright Protection, 8 J. ON TELECOMMS. & HIGH TECH. L. 425
`(2010). The public is free to replicate, imitate, or reverse
`engineer Neutraface glyphs to create glyphs of identical
`appearance, as long as House Industries’ software is not used
`to do so.3 That House Industries’ Neutraface font software is
`one way to generate those glyphs does not support the
`conclusion that it is, in fact, how Shake Shack generated
`those glyphs for its signage. With no facts in the
`Counterclaim tying Shake Shack to the Neutraface font
`software, House Industries has pleaded the mere possibility,
`but not the plausibility, that a contract exists between the
`parties. This is not enough to survive a motion under Rule
`12(b)(6). See Iqbal, 556 U.S. at 679; Actos, 848 F.3d at 99
`(on a 12(b)(6) motion, “[p]laintiffs are due all reasonable
`inferences, but they must allege some factual basis from which
`to make those inferences”).
`
`
`3 House Industries admits as much in its argument on preemption under the
`Copyright Act: “If, for example, Shake Shack or its agents created the
`signage in question without using the software (through hand tracing or
`independent creation, as Shake Shack suggests is somehow possible), then
`House’s claims will fail.” (Opp. at 13.) Neither House Industries’
`pleading nor its briefing informs the Court why independent recreation of
`those glyphs would be impossible. (See id.)
`
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 12 of 30
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`Moreover, the Counterclaim suffers from an additional,
`
`unusual flaw: It does not identify the EULA language on which
`Shake Shack’s liability is to be grounded, nor does it
`identify the version of the EULA to which Shake Shack is
`bound. House Industries cannot state a breach-of-contract
`claim without such details. See Hudson Neurosurgery, PLLC v.
`UMR, Inc., No. 20 Civ. 9642, 2022 WL 902107, at *4 (S.D.N.Y.
`Mar. 28, 2022) (dismissing contract claim where “[p]laintiffs
`do not even identify the document which allegedly constitutes
`the contract”); Negrete v. Citibank, N.A., 187 F. Supp. 3d
`454, 468 (S.D.N.Y. 2016) (in the Second Circuit, “plaintiffs
`must at least allege which agreement was breached”).
`
`House Industries does allege that, when it filed its
`Counterclaim in November 2022, the then-current version of
`the Desktop EULA clearly prohibited use of the Neutraface
`font software to generate glyphs that would be used for
`commercial purposes; it also alleged all prior versions of
`the Desktop EULA contained a similar provision. (See
`Counterclaim ¶ 19.) For the purpose of ruling on the
`underlying claims, the Court accepts these allegations as
`true. Yet by pleading the existence of a contract in this way
`— that is, by pleading the substantive effect of the contract
`but not the language of the contract itself — House Industries
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`did not fairly put Shake Shack on notice of the nature of the
`contract claim. Without knowing which contract it is alleged
`to have violated, Shake Shack has no way of knowing what
`defenses it may be afforded under that contract, or even how
`its conduct violated the terms of the contract in the first
`instance. See Negrete, 187 F. Supp. 3d at 468. Such ambiguous
`pleading does not satisfy the requirements of Federal Rule of
`Civil Procedure 8 and cannot be sustained over a Rule 12(b)(6)
`motion. See id.; see also Iqbal, 556 U.S. at 678.
`
`House Industries attempts to overcome this deficiency by
`asking the Court to credit the theory, alleged in the
`Counterclaim on information and belief, that a Shake Shack
`agent or employee of unknown identity “likely entered into”
`a binding agreement with House Industries on Shake Shack’s
`behalf. (Opp. at 9; see Counterclaim ¶¶ 31-32). The Court
`does not credit such information-and-belief pleadings because
`they are merely conclusions that assume the existence of the
`alleged contract. See Citizens United v. Schneiderman, 882
`F.3d 374, 384-85 (2d Cir. 2018) (observing that pleadings can
`be conclusory even if they follow the words “information and
`belief”); see also Arista Records, LLC v. Doe 3, 604 F.3d
`110, 120 (2d Cir. 2010).
`
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`In Arista Records, information-and-belief pleadings were
`
`sufficient to state a claim against unidentified “Doe”
`defendants for copyright infringement. In particular, the
`plaintiff did not know the identity of the infringers by name.
`Rather, the plaintiff knew identifying characteristics about
`the infringers, namely the infringers’ internet protocol
`(“IP”) addresses, which were alleged as facts in the
`complaint. See 604 F.3d at 121. By comparison, House
`Industries’ Counterclaim alleges no information (for
`instance, a name or an IP address) about the person who
`allegedly entered into the EULA that House Industries seeks
`to enforce against Shake Shack, except that this person was
`one of the “nearly 10,000 employees who may have licensed and
`downloaded the font.” (Opp. at 9.)
`
`This argument is particularly deficient where, as here,
`House Industries purports to be one of the original
`signatories to the contract it wishes to enforce. There is no
`factual or legal basis to conclude that the identity of the
`Shake Shack employee or agent who assented to the alleged
`contract constitutes a fact peculiarly within Shake Shack’s
`possession if House Industries was present when the contract
`was formed. To the extent House Industries contends that Shake
`Shack directed one of its employees or agents to download the
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 15 of 30
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`Neutraface software and enter into the EULA under a personal
`name so that Shake Shack could avoid paying licensing fees to
`House Industries (see id.; Counterclaim ¶¶ 31-32), that
`version of events is unsupported by facts alleged in the
`Counterclaim, and the Court is not bound to accept such a
`conclusory contention as true. See Actos, 848 F.3d at 99.
`
`Because House Industries has not sufficiently pleaded
`the existence of a binding contract with Shake Shack, its
`breach-of-contract claim fails. The Counterclaim therefore
`does not state a claim upon which relief can be granted, and
`the Court can dismiss the Counterclaim on that basis alone.
`B.
`PREEMPTION UNDER THE COPYRIGHT ACT
`
`Even if House Industries’ Counterclaim sufficiently
`pleaded a breach-of-contract claim, that claim still must be
`dismissed as preempted by the Copyright Act. The Court must
`dismiss any state-law claim that asserts “legal or equitable
`rights that are equivalent to any of the exclusive rights
`within the general scope of copyright as specified by [17
`U.S.C.] section 106” in works of authorship that “come within
`the subject matter of copyright as specified by [17 U.S.C.]
`sections 102 and 103.” 17 U.S.C. § 301; see also Briarpatch
`Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 305 (2d
`Cir. 2004); Nat’l Basketball Ass’n v. Motorola, Inc., 105
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 16 of 30
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`F.3d 841, 848-49 (2d Cir. 1997) [hereinafter “NBA”]. The
`preemption analysis proceeds in two steps: first, the Court
`must determine whether the claim concerns a type of work
`described in section 102 or 103 of the Copyright Act, and
`second, the Court must determine whether the claim asserts
`one of the exclusive rights granted to copyright owners under
`section 106 of the Copyright Act.
`
`The Court finds that the Counterclaim is, indeed,
`preempted. House Industries’ claim for breach of contract
`attempts to regulate graphic or pictorial works of authorship
`within the general subject matter of copyright — namely, the
`Neutraface glyphs. The claim further attempts to control
`Shake Shack’s reproduction and public display of those
`glyphs, which are exclusive rights granted by section 106 of
`the Copyright Act.
`1.
`Subject Matter of Copyright
`A claim is subject to the possibility of statutory
`
`preemption if it attempts to vindicate rights against a “work
`of authorship” within the “subject matter of copyright” as
`those terms are defined in 17 U.S.C. § 102. In re Jackson,
`972 F.3d 25, 42-43 (2d Cir. 2020); see ML Genius Holdings LLC
`v. Google LLC, No. 20-3113, 2022 WL 710744, at *2 (2d Cir.
`Mar. 10, 2022); see also 17 U.S.C. § 301. In turn, section 102
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 17 of 30
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`extends copyright protection to “original works of authorship
`fixed in any tangible medium of expression” and proceeds to
`list “pictorial” and “graphic” works as categories included
`within that definition. Id. § 102(a)(5); see Jackson, 972
`F.3d at 42-43. The Copyright Act further defines pictorial
`and graphic works, together, to include “fine, graphic, and
`applied art.” 17 U.S.C. § 101.
`
`In analyzing the subject-matter prong of copyright
`preemption, the Court is to focus “on the gravamen of the
`claim and the allegations supporting it.” Jackson, 972 F.3d
`at 47; see also ML Genius Holdings, 2022 WL 710744, at *2.
`The gravamen of House Industries’ Counterclaim is that Shake
`Shack has wrongfully used Neutraface glyphs in public-facing
`signage and logos. (See Counterclaim ¶ 2.) Though House
`Industries characterizes its Counterclaim as a breach-of-
`contract case centered around a software license, this
`characterization is difficult to accept. (See Opp. at 10.)
`House Industries finds Shake Shack’s alleged use of the
`Neutraface software objectionable only because Shake Shack
`has used in signs and logos the glyphs allegedly created by
`the software. (See id. (“[The Counterclaim] involves the use
`of the software to create glyphs.” (emphasis added)); id.
`(“House Industries’ Counterclaim is based on use of the glyphs
`
`17
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 18 of 30
`
`created by the [software].” (emphasis added)); Counterclaim
`¶ 31 (“[T]his signage was created through the unauthorized
`use of House’s proprietary software and the glyphs generated
`thereby[.]” (emphasis added)).) Further, the sole allegation
`in the Counterclaim that connects Shake Shack to the
`Neutraface software is that Shake Shack uses glyphs in its
`public-facing materials with a strong resemblance to the
`Neutraface glyphs. House Industries has pleaded no details
`whatsoever concerning Shake Shack’s alleged use of the
`proprietary software. The Court accordingly focuses on Shake
`Shack’s use of the glyphs as the gravamen of the Counterclaim.
`
`Next, the Neutraface glyphs are pictorial or graphic
`works, and they fall within the subject matter of copyright.
`Though it is not this Court’s role to opine on exactly what
`is (or is not) art, “[t]hat a typeface design may constitute
`a work of art seems hardly open to question.” 1 Nimmer on
`Copyright, § 2.15 (2023). The Neutraface glyphs have a
`specific “style of . . . lettering” and a “scale and design”
`that House Industries describes as uniquely impossible to
`recreate. (Opp. at 8.) Neutraface has a certain aesthetic of
`“sophistication and clean architectural lines,” and is found
`within House Industries’ “fun, hand-crafted, design-driven”
`portfolio of works. (Counterclaim ¶¶ 14, 16.) The Court is
`
`18
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 19 of 30
`
`satisfied that typeface glyphs constitute a work of pictorial
`or graphic art within the meaning of 17 U.S.C. sections 101
`and 102.
`
`House Industries attempts to resist this conclusion on
`the basis that “[t]ypeface as typeface” is not subject to
`copyright protection under 37 C.F.R. § 202.1(e). (See Opp. at
`11-12.) Though 37 C.F.R. § 202.1(e) excludes typefaces from
`the ambit of copyright protection, it does not follow that
`typefaces fall entirely outside the subject matter of
`copyright for purposes of statutory preemption.
`
`“The scope of copyright for preemption purposes . . .
`extends beyond the scope of available copyright protection.”
`Forest Park Pictures v. Universal TV Network, Inc., 683 F.3d
`424, 429-30 (2d Cir. 2012); NBA, 105 F.3d at 849 (“As long as
`a work fits within one of the general subject matter
`categories of sections 102 and 103, [section 301] prevents
`the States from protecting it even if it fails to achieve
`Federal statutory copyright because it is too minimal or
`lacking in originality to qualify, or because it has fallen
`into the public domain.” (quoting H.R. REP. 94-1476 at 131));
`see also Briarpatch, 373 F.3d 296 at 305 (holding the work at
`issue “need only fit into one of the copyrightable categories
`in a broad sense”).
`
`
`19
`
`
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 20 of 30
`
`This conclusion follows because Congress, not the
`
`states, may decide which types of works are copyrightable and
`which others belong to the public domain. See Forest Park
`Pictures, 683 F.3d at 430. “[I]t would run directly afoul of
`one of the [Copyright] Act’s central purposes to allow the
`states to expand copyright protection to works Congress
`deemed uncopyrightable.” Id. (quotation marks omitted)
`(quoting Harper & Row Pub’rs, Inc. v. Nation Enters., 723
`F.2d 195, 200 (2d Cir. 1983), rev’d on other grounds, 471
`U.S. 539 (1985)); see also ML Genius Holdings, 2022 WL 710744,
`at *2 (“Section 301’s preemption scheme functions properly
`only if the ‘subject matter of copyright’ includes all works
`of a type covered by sections 102 and 103, even if federal
`law does not afford protection to them.”). The same logic
`applies here, where the glyphs at issue are within the
`protected general category of pictorial or graphic works,
`though they belong to a particular subset of those works left
`unprotected by the Copyright Act.
`
`Though House Industries suggests (see Opp. at 11-12)
`that the Third Circuit reached a different conclusion in Dun
`& Bradstreet Software Servs., Inc. v. Grace Consulting, Inc.,
`307 F.3d 197, 217 (3d Cir. 2002), the Court does not agree
`and in any case is bound by the applicable precedent of the
`
`20
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 21 of 30
`
`Second Circuit. There, the Third Circuit held that state-law
`misappropriation claims concerning stolen customer lists were
`not preempted by the Copyright Act because customer lists are
`not original works of authorship. See id. at 219 (citing Feist
`Pubs., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 347 (1991),
`for the proposition that compiled facts are not within the
`subject matter of copyright “because they are not original in
`the constitutional sense”). The holding in Dun & Bradstreet
`with respect to unoriginal customer lists being outside the
`constitutional scope of copyright is not instructive in the
`circumstances here, where the glyphs at the heart of this
`case are pictorial or graphic works but are nonetheless
`relegated to the public domain pursuant to the policy
`judgments of Congress and the United States Copyright Office.
`
`House Industries also cites (see Opp. at 11-12) a
`favorable decision it obtained in the United States District
`Court for the Eastern District of Pennsylvania concerning the
`allegedly unlawful use of the Neutraface font software to
`create the logo for Rite Aid. See Brand Design Co., Inc. v.
`Rite Aid Corp., 623 F. Supp. 3d 526 (E.D. Pa. 2022)
`[hereinafter “Rite Aid”]. The Court in Rite Aid, 623 F. Supp.
`3d at 534-35, held that House Industries’ claims for alleged
`breaches of licensing agreements with Rite Aid were not
`
`21
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 22 of 30
`
`preempted by the Copyright Act, relying on Dun & Bradstreet,
`307 F.3d at 219, and Facenda v. N.F.L. Films, Inc., 542 F.3d
`1007, 1027-28 (3d Cir. 2008).
`
`In Facenda, a claim under Pennsylvania’s right-of-
`publicity statute was not preempted when a sound recording of
`famed sports announcer John Facenda was reproduced in a film
`series; the Third Circuit reached this conclusion because “a
`voice is not copyrightable” and therefore outside the subject
`matter of copyright, even if the sound recordings of the voice
`were. 542 F.3d at 1027-28.
`
`This doctrine, sometimes called partial preemption, has
`been squarely rejected by the Second Circuit. NBA, 105 F.3d
`at 848. In particular, where copyrightable material “contains
`uncopyrightable elements,” the Copyright Act bars state-law
`claims “with respect to uncopyrightable as well as
`copyrightable elements,” assuming that the other conditions
`for preemption have been satisfied. NBA, 105 F.3d at 849; see
`also ML Genius Holdings, 2022 WL 710744, at *2. In NBA, the
`plaintiff (that is, the NBA) complained that a newsgathering
`organization engaged in unfair competition by republishing
`basketball game scores from copyrighted television
`broadcasts. See 105 F.3d at 833-34; id. at 846. Because the
`scores were transmitted by copyrighted television broadcast,
`
`22
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`Case 1:22-cv-07713-VM Document 27 Filed 12/28/23 Page 23 of 30
`
`state law was preempted to the extent it controlled
`reproduction of those scores, even though the scores
`themselves embodied factual information not subject to
`copyright. See id. at 848-49.
`
`Despite the strong factual similarities between this
`case and Rite Aid, this Court cannot reach the same conclusion
`as in Rite Aid and must instead follow the binding and
`instructive precedent from the Second Circuit on the relevant
`issues. When Neutraface glyphs are used in a particular way
`– “as typeface” (37 C.F.R. § 202.1(e)) – they cannot be the
`basis of a copyright infringement suit. However, it does not
`follow that the Neutraface glyphs fall outside the broad
`subject matter of copyright as defined by the Second Circuit.
`2.
`Equivalence of Claims
`Having found that the Neutraface glyphs fall within the
`
`subject matter of copyright, the Court now considers whether
`House Industries’ contract claim asserts “legal or equitable
`rights that are equivalent to any of the exclusive rights”
`enumerated in the Copyright Act, among them the rights to
`reproduce or publicly displa
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