`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`RICHMOND DIVISION
`ROBERT HARRIS, and WORLD ANSWERS,
`INC., and NATURAL SYSTEMS
`TECHNOLOGIES, INC.
`Plaintiffs,
`Action No. 3:09–CV–616
`v.
`LEXJET CORP. and LEXJET SERVICES CO.,
`LLC,
`Defendants.
`THIS MATTER is before the Court on Defendants’ Motion to Dismiss (Docket No. 5)
`based on Rule 12(b)(6).1 For the reasons that follow, the Court GRANTS the Motion
`WITHOUT PREJUDICE as to Counts 1, 2, and 5 and GRANTS the Motion WITH PREJUDICE as
`to Counts 3 and 4.
`This controversy concerns software that Plaintiffs World Answers, Inc., Natural
`Systems, Technologies, Inc., and Robert Harris developed while Harris was engaged as an
`
`MEMORANDUM OPINION
`
`I. BACKGROUND
`
`1 Although Harris filed a sur‐response brief, the Court has not considered it. No new
`arguments were discussed in Lexjet’s Reply and the parties’ arguments were fully
`communicated to the Court within the briefs that the Rules permit.
`
`1
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`
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`independent contractor2 by the makers of digital printing technologies, Defendants Lexjet
`Corporation and Lexjet Service Co., LLC (collectively “Lexjet”).
`The parties’ relationship commenced in 1999 when Lexjet hired Harris, as president
`of Plaintiff Natural Systems, to create a computer program to manage Lexjet’s Internet
`sales. In 2005, Harris terminated Natural Systems and instead began contracting with
`Lexjet through Plaintiff World Answers, another corporation started by Harris. A year
`later, World Answers was also terminated, however, Harris continued to consult for Lexjet
`in his individual capacity.
`Despite the changing nature of Harris’s affiliations, the work he did for Lexjet
`remained the same throughout his tenure there. So too did the billing arrangement: Harris
`worked for half his normal rate and Lexjet agreed to grant Harris ownership rights to the
`software developed by Harris and permission to market the software to other Internet
`based sales companies. The parties never memorialized this arrangement or the exact
`nature of Harris’s relationship with Lexjet in a written agreement. According to Harris, it
`was expressly understood that the software was an experimental beta version and that
`upon completion of the project, Lexjet would retain no property rights in it.
`2 Harris states that he paid all the expenses incurred while developing the software, that he
`did the work from his home, that he had complete discretion when to work, that Lexjet was
`not in the business of software development, and that he personally paid all his state and
`federal withholding taxes himself. (Amend. Compl. ¶¶ 33‐38.) Although labeling an
`individual an “independent contractor” is a legal conclusion, there are substantial facts to
`support the label in the Complaint and Lexjet made no issue with the description in its
`memoranda in support of its Motion to Dismiss. These facts and the facts that follow are
`taken from Harris’s Complaint and are assumed true for purposes of this Motion. See
`Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).
`
`2
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`
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`The software Harris eventually developed—dubbed the “Rob System”—enables
`Lexjet to efficiently manage its Internet purchasing, sales, and distribution. The Rob
`System operates as a “Software as a Service,” or “SaaS,” which is a model of software
`deployment whereby Lexjet provides the software to customers for use as a service on
`demand as opposed to a permanent program located on customers’ hard drives. When a
`consumer makes a purchase from Lexjet’s website, www.lexjet.com, executable software is
`downloaded to the consumer’s computer. When a consumer returns to that site, the
`computer can pull up the version stored on the hard drive rather than download the
`software anew. This type of technology is used in many popular web programs such as
`Google’s email program Gmail and the popular social networking site Facebook.com.
`Harris continued to develop the software until Lexjet ended its relationship with
`him in 2006. Since that time, while Lexjet has not compensated Harris in any way or
`entered into a licensing agreement with him, Lexjet continues to use the Rob System or a
`derivative of it.
`On November 22, 2007, Harris registered the Rob System with the United States
`Copyright Office, who assigned it copyright registration number TXu 1‐599‐694. The
`registration document indicates the “Date of Creation” as 2007.
`At some point in time, which the Amended Complaint does not reveal, Harris
`entered into negotiations to license his software to Media One. When Harris approached
`Lexjet about obtaining a statement from Lexjet acknowledging Harris’s ownership of the
`software, Lexjet refused even though it knew Harris was trying to license it. As a result,
`Harris was apparently never able to establish a licensing arrangement with Media One.
`
`3
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`
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`II. LEGAL STANDARD
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`This state of affairs led Harris and his two former corporations to file a five count
`Amended Complaint against Lexjet in November 2009. In Counts 1 and 2, Harris alleges
`Lexjet is directly and secondarily infringing on Harris’s copyrighted software. Count 5
`seeks to enjoin that behavior. In Count 3, Harris alleges a violation of the Virginia
`Computer Crimes Act. Count 4 alleges that Lexjet tortiously interfered with Harris’s
`business relationships.
`Prior to Harris filing his Amended Complaint, Lexjet filed this Motion to Dismiss,
`asserting that the Complaint fails to state any claims upon which relief can be granted.
`Rule 8 of the Federal Rules of Civil Procedure requires a complaint stating a claim
`for relief to contain a short plain statement of the claim that gives the defendant fair notice
`of what the claim is and the grounds upon which it rests. Fed. R. Civ. P. 8(a)(2); Bell Atl.
`Corp. v. Twombly, 550 U.S. 544, 555 (2007). Defendants police this requirement using Rule
`12(b)(6), which permits a party to test the legal sufficiency of a complaint. Republican
`Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles A. Wright &
`Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). A 12(b)(6) motion does
`not, however, “resolve contests surrounding the facts, the merits of a claim, or the
`applicability of defenses.” Id. As a result, in resolving a 12(b)(6) motion, a court must
`regard all of plaintiff’s well‐pleaded allegations as true, Mylan Labs., Inc. v. Matkari, 7 F.3d
`1130, 1134 (4th Cir. 1993), as well as any facts that could be proved consistent with those
`allegations, Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). In contrast, the court does
`not have to accept legal conclusions couched as factual allegations, Twombly, 550 U.S. at
`
`4
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`555, or “unwarranted inferences, unreasonable conclusions, or arguments,” E. Shore Mkts.,
`Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000); see also Ashcroft v. Iqbal,
`129 S. Ct. 1937, 1950 (2009). With these principles in mind, the court must ultimately
`ascertain whether the plaintiff has stated a “plausible, not merely speculative, claim for
`relief.” Twombly, 550 U.S. at 555.
`“Determining whether a complaint states a plausible claim for relief [is] . . . a
`context‐specific task that requires the reviewing court to draw on its judicial experience
`and common sense.” Iqbal, 129 S. Ct. at 1950. While Rule 8(a)(2) requires a showing, not
`simply a blanket assertion of “entitlement to relief,” the plaintiff is not required to show
`that it is likely to obtain relief. Twombly, 550 U.S. at 556 n.3; Iqbal, 129 S. Ct. at 1949. In
`the end, if the complaint alleges—directly or indirectly—each of the elements of “some
`viable legal theory,” the plaintiff should be given the opportunity to prove that claim.
`Twombly, 550 U.S. at 563 n.8.
`Under the federal Copyright Act, copyright infringement occurs when a person
`“violates any of the exclusive rights of the copyright owner.” 17 U.S.C. § 501(a). Therefore,
`the two elements of an infringement claim are (1) ownership of a valid copyright and (2)
`encroachment upon one of the exclusive rights afforded by the copyright. Avtec Sys, Inc. v.
`Peiffer, 21 F.3d 568, 571 (4th Cir. 1994). The Copyright Act grants the owner of a copyright
`the exclusive right to, among other things, “distribute copies . . . of the copyrighted work to
`
`A. Direct Copyright Infringement
`
`III. DISCUSSION
`
`5
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`the public by sale or other transfer of ownership, or by rental, lease, or lending,” 17 U.S.C. §
`106(3), and “to prepare derivative works based upon the copyrighted work.” Id. § 106(2).
`In his Complaint, Harris attempts to allege that he has a valid copyright in the Rob
`System and that each time a Lexjet customer uses the software, it is duplicated without
`permission in violation of copyright law. (Amend. Compl. ¶¶ 48‐52.) The Court finds,
`however, that Harris’s Amended Complaint fails to plead factual content that allows this
`Court to conclude or reasonably infer that Harris is the owner of the software currently
`used by Lexjet. See Iqbal, 129 S. Ct. at 1949. Despite several references to the copyright
`registration in his Complaint, Harris did not provide a copy of it. Lexjet, however, did
`attach three pages of registration documents to its Memorandum in Support of its Motion
`to Dismiss.3 Those registration documents unequivocally state that the “Date of Creation”
`is 2007. If Harris created the software in 2007—a year after his relationship with Lexjet
`ended—then the software that Lexjet began using in 2006 cannot be the software
`registered by Harris. Since registration is a prerequisite to a copyright claim, Harris’s claim
`must fail. Harris attempts to rebut this date by providing a document that allegedly is also a
`copyright registration form for the software. The date of creation field is left blank in the
`document Harris provided, which the Court presumes Harris believes helps his case by
`sowing doubt as to when the software was created. Apart from any doubt it may create,
`what the document does not do is help to establish that Harris owns a copyright in the
`3 A district court may consider documents “attached to the motion to dismiss, so long as
`they are integral to the complaint and authentic.” Sec’y of State of Defence v. Trimble
`Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).
`
`6
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`
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`B. Secondary Copyright Infringement
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`software used by Lexjet. Moreover, although the document Harris provided lists the case
`number “1‐271348171” at the top of the page, there is no indication on the face of this
`document that it actually has anything to do with the software in this case. As a result, the
`Court GRANTS the Motion to Dismiss as to this claim because Harris has not provided
`sufficient factual support for an essential element of his copyright infringement claim.
`Courts recognize several types of secondary liability for copyright infringement. See
`Metro‐Goldwyn‐Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). One
`category of such secondary liability is vicarious liability, which generally exists when a
`defendant (1) possesses the right and ability to supervise the infringing conduct and (2)
`has “an obvious and direct financial interest in the exploitation of copyrighted material.”
`Gershwin Publishing Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.
`1971); see also Nimmer on Copyright, § 12.04[A][2] (2008).
`Because the Court grants the Motion to Dismiss as to Harris’s direct infringement
`claim, it must also GRANT the Motion as to the secondary infringement claim as Harris
`cannot advance an infringement claim for a copyright he has not sufficiently plead that he
`has registered. See 17 U.S.C. § 411.
`The elements necessary to show a violation of § 18.2‐152.3 of the Virginia Computer
`Crimes Act (“VCCA”) are: (1) that the defendant “use[d] a computer or computer network;”
`(2) “without authority;” and (3) “with the intent to . . . [o]btain property or services by false
`pretenses; . . . [e]mbezzle or commit larceny; or . . . [c]onvert the property of another.” Va.
`
`C. Virginia Computer Crimes Act Claim
`
`7
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`Code Ann. § 18.2‐152.3; see also id. § 18.2‐152.12(A) (providing a civil cause of action for
`damages to one injured as a result of a violation of the Act). The Virginia Supreme Court
`has held that pursuant to § 18.2‐152.8 of the VCCA, “computer data, computer programs,
`[and] computer software” are “personal property subject to embezzlement.” Perk v. Vector
`Resources Group, Ltd., 485 S.E.2d 140, 143 (Va. 1997).
` The Fourth Circuit has held that federal copyright law preempt state law claims that
`are equivalent to copyright infringement claims under federal law. Rosciszewski v. Arete
`Associates, Inc., 1 F.3d 225, 230 (4th Cir. 1993). In order to ascertain whether a specific
`state cause of action involves a right equivalent to one of those identified in § 106,
`reference must be made to the elements of the state cause of action. See Trandes Corp. v.
`Guy F. Atkinson, Co., 996 F.2d 655, 659 (4th Cir. 1993). State‐law claims that infringe one
`of the exclusive rights contained in § 106 are preempted by § 301(a) if the right defined by
`state law “‘may be abridged by an act which, in and of itself, would infringe one of the
`exclusive rights.’” Computer Assocs. Int'l v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992)
`(quoting Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 200 (2d Cir.1983),
`rev’d on other grounds, 471 U.S. 539 (1985)). However, “if an ‘extra element’ is ‘required
`instead of or in addition to the acts of reproduction, performance, distribution or display, in
`order to constitute a state‐created cause of action, . . . there is no preemption,’” id. (quoting
`1 Nimmer on Copyright § 1.01 [B], at 1‐14 to 1‐15 (1992)), provided that “the ‘extra
`element’ changes the ‘nature of the action so that it is qualitatively different from a
`copyright infringement claim,’” id. (quoting Mayer v. Josiah Wedgwood & Sons, Ltd., 601 F.
`Supp. 1523, 1535 (S.D.N.Y. 1985)).
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`8
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`Citing Dorsey v. Money Mack Music, Inc., 304 F. Supp. 2d 858, 865 (E.D. La. 2003),
`Harris asserts that his VCCA claim is not preempted because he is claiming the conversion
`of monetary funds, not the conversion of intangible rights under copyright law. (Amend.
`Compl. ¶ 61.) However, Dorsey not only fails to support Harris’s argument, it actually
`supports the opposite conclusion. In Dorsey, the court specifically stated that
`“[p]reemption is appropriate in the majority of instances because the typical unjust
`enrichment claim is qualitatively equivalent to a cause of action for copyright
`infringement.” Id. The only reason the court in Dorsey held that there was no preemption
`was because plaintiff’s underlying damages were the result of state law fiduciary duty
`claims that rendered the claims qualitatively different from a copyright infringement claim.
`Id. Unlike in Dorsey, Harris’s claim for “conversion” is simply an attempt to seek monetary
`damages for alleged copyright violations under a different name. As such, the Court holds
`that Count 3 is preempted and thus the Motion to Dismiss this claim is GRANTED.
`A claim of tortious interference requires a showing of: “(1) the existence of a valid
`contractual relationship or business expectancy; (2) knowledge of the relationship or
`expectancy on the part of the interferor; (3) intentional interference inducing or causing a
`breach or termination of the relationship or expectancy; and (4) resultant damage to the
`party whose relationship or expectancy has been disrupted.” T.G. Slater & Son, Inc. v.
`Donald P. and Patricia A. Brennan LLC, 385 F.3d 836, 844 (4th Cir. 2004) (quoting Chaves v.
`Johnson, 335 S.E.2d 97, 102 (Va. 1985)).
`
`D. Tortious Interference with Business Relationship Claim
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`9
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`In his Amended Complaint, Harris alleges that he had entered into negotiations with
`Media One and that Lexjet knew of these negotiations. In reference to the third element,
`Harris then adds that Lexjet has intentionally interfered with Harris’s business expectancy
`by “refus[ing] to acknowledge Harris’ [sic] ownership rights in the software, therefore
`effectively barring Harris’ [sic] licensing activities with Media One.” (Amend. Compl. ¶ 69.)
`Harris’s Amended Complaint does not expand in any way on how refusing to acknowledge
`Harris’s ownership interfered with Harris’s business relationships. Nor does Harris’s
`Amended Complaint explain why a third party would care about what Lexjet says about
`ownership of the software, especially since Harris has a registered copyright in it. Even
`viewed in its most favorable light, Harris’s allegations on the third element are
`conspicuously lean on facts. It is well settled that “[t]hreadbare recitals of the elements of a
`cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S. Ct.
`at 1949. Harris’s allegations are simply sterile legal conclusions that “are not entitled to
`the assumption of truth.” Id. at 1950. Stripped of such legal incantation, these allegations
`provide insufficient factual support for at a minimum the third element of his tortious
`interference claim. As a result, Harris’s Amended Complaint fails to sufficiently plead a
`claim of tortious interference with a business relationship, and thus the Court GRANTS the
`Motion to Dismiss as to Count 4.
`For the foregoing reasons, the Court will GRANT the Motion WITHOUT PREJUDICE
`as to Counts 1, 2, and 5 and GRANT the Motion WITH PREJUDICE as to Counts 3 and 4. An
`appropriate Order will accompany this Memorandum.
`
`IV. CONCLUSION
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`Let the Clerk send a copy of this Memorandum to all counsel of record.
` /s/
`James R. Spencer
`Chief United States District Judge
`ENTERED this 3rd day of December 2009
`
`11