Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`MEECO MANUFACTURING CO., INC.,
`a Washington corporation,
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`v.
`
`Plaintiff,
`
`No. C06-1582RSL
`
`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR
`RELIEF
`
`_______________________________________
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`Defendant.
`_______________________________________)
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`TRUE VALUE COMPANY, a Delaware,
`corporation,
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`I. INTRODUCTION
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`This matter comes before the Court on “Defendant’s Motion to Dismiss Plaintiff’s Fifth
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`and Sixth Claims for Relief” (Dkt. #4).1 Defendant asserts that plaintiff’s fifth claim for unfair
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`competition and plaintiff’s sixth claim for unjust enrichment should be dismissed under Fed. R.
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`Civ. P. 12(b)(6) because they are preempted by the Copyright Act. In response, plaintiff
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`contends that preemption is premature based on Fed. R. Civ. P. 8 and 12(b)(6) and given the
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`“factual complex” of this case. For the reasons set forth below, the Court grants defendant’s
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`1 The Court notes at the outset that in future filings with the Court, defendant’s counsel is
`strongly urged to comply with Local Civil Rule 10(e)’s formatting requirements. See Appendix A to the
`Local Civil Rules.
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 2 of 10
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`motion to dismiss.2
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`A.
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`Background
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`II. DISCUSSION
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`Plaintiff manufactures and distributes fireplace and stove products bearing MEECO’s
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`Red Devil trademark and logo. See Dkt. #1 (Complaint) at 2. Plaintiff alleges that defendant is
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`not authorized or licensed to sell MEECO-branded products, but defendant uses and displays
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`images of MEECO-branded products in its electronic catalog. Id. at 1. Plaintiff asserts,
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`however, that when a True Value store owner or other user of defendant’s electronic catalog
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`orders a MEECO-branded product, defendant substitutes a competing product from Imperial
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`Manufacturing Group (“Imperial). Id. Plaintiff contends that defendant’s substitution of
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`MEECO products has continued despite receipt of a “cease and desist letter” and the fact that
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`MEECO prevailed in a trademark infringement lawsuit against Imperial. Id. at 2.
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`B.
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`Discussion
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`In resolving a Fed. R. Civ. P. 12(b)(6) motion, “a court may [typically] look only at the
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`face of the complaint to decide a motion to dismiss.” Van Buskirk v. Cable News Network, Inc.,
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`284 F.3d 977, 980 (9th Cir. 2002). The Court must also construe the complaint in the light most
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`favorable to the plaintiff and accept all well-pleaded factual allegations as true, as well as any
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`reasonable inferences drawn from them. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir.
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`2003). The Court is not, however, required to accept as true conclusory allegations, legal
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`conclusions, unwarranted deductions of fact or unreasonable inferences. See Sprewell v. Golden
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`State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
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`Defendant moves for dismissal of plaintiff’s state law claims for: (1) common-law unfair
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`2 Because this matter can be decided on the parties’ memoranda and the complaint, the
`defendant’s request for oral argument is denied.
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 3 of 10
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`competition and statutory unfair and deceptive acts and practices under RCW 19.86.020 et seq.;
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`and (2) unjust enrichment, based on § 301(a) of the Copyright Act, which states:
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`On and after January 1, 1978, all legal or equitable rights that are equivalent to any
`of the exclusive rights within the general scope of copyright as specified by
`section 106 in works of authorship that are fixed in tangible medium of expression
`and come within the subject matter of copyright as specified by sections 102 and
`103 and, whether created before or after that date and whether published or
`unpublished, are governed exclusively by this title. Thereafter, no person is
`entitled to any such right or equivalent right in any such work under the common
`law or statutes of any State.
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`Under this section, “[c]opyright preemption is both explicit and broad[.]” G.S.
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`Rassmussen & Assoc., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 904 (9th Cir. 1992). The
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`Ninth Circuit utilizes a two-part test to determine whether a state law is preempted. A claim is
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`preempted if: (1) the work at issue comes within the subject matter of copyright as described in
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`17 U.S.C. §§ 102 and 103; and (2) the rights granted under the state law are equivalent to the
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`rights contained in 17 U.S.C. § 106, “which articulates the exclusive rights of copyright
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`holders.” See Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 1137-38 (9th Cir. 2006).
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`1. Subject Matter of Copyright
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`Plaintiff’s state law claims meet the first element of the preemption test because the work
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`at issue, MEECO’s labels and logo, comes within the subject matter of copyright. Plaintiff’s
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`state law claims are founded on the allegation that “True Value continues to use and display
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`images of MEECO-branded products in True Value’s electronic catalog.” Dkt. #1 at ¶1.
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`MEECO-branded products are packaged with MEECO labels, which include the MEECO Red
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`Devil logo. Id. at ¶8. MEECO’s label and logo are within the subject matter of copyright
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`because MEECO has copyright registrations for its product labels, which include the MEECO
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`logo, and the Ninth Circuit has held that labels are within the subject matter of copyright. Id.;
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`Drop Dead Co., Inc. v. S. C. Johnson & Son, Inc., 326 F.2d 87, 93 (9th Cir. 1963) (“We hold
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`with the trial court the plaintiff’s copyright of its PLEDGE label was and is valid. We agree
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`26 ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 4 of 10
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`with the . . . proposition that labels which go beyond a mere trademark are copyrightable”)
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`(internal citation omitted).
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`In response, plaintiff argues that its unfair competition and unjust enrichment claims are
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`based on alleged factual conduct that is not covered by subject matter of copyright law. See
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`Response at 2. This assertion, however, is contrary to the allegations of the state law claims that
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`expressly include the copyright claim allegations. Paragraphs 23 through 28 of plaintiff’s
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`complaint contain the copyright cause of action. See Dkt. #1. Plaintiff’s claims for unfair
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`competition and unjust enrichment both incorporate these paragraphs by reference. See Dkt. #1
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`(¶32 “MEECO repeats and re-alleges paragraphs 1 through 31 of this Complaint as if fully set
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`forth herein”; ¶36 “MEECO repeats and re-alleges paragraphs 1 through 35 of this Complaint as
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`if fully set forth herein”). Plaintiff cannot both expressly rely on the copyright allegations in its
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`state law claims and assert that the state law claims are outside copyright’s subject matter for
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`purposes of avoiding preemption. See Blue Nile, Inc. v. Ice.com, Inc., — F. Supp. 2d —, 2007
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`WL 172613, at *4 (W.D. Wash. Jan. 18, 2007).
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`Plaintiff argues against this conclusion in section II of its response. First, plaintiff
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`contends that its unfair competition and unjust enrichment claims should not be preempted
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`because they were pleaded as an alternative to the copyright infringement claim. See Response
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`at 2 (“Under Fed. R. Civ. P. 8, alternative pleading is possible.”), 3 (“Pursuant to Rule 8(e)(2),
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`these factual allegations alternatively support claims for . . . state unfair competition and
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`statutory unfair and deceptive actions (claim five); and unjust enrichment (claim six).”).
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`Second, plaintiff asserts that preemption is not appropriate under Rule 12(b)(6). These
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`arguments, however, are not persuasive.
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`First, while plaintiff may be correct that “pleading state law causes of action that
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`incorporate pleading allegations associated with a party’s copyright claim” is “common,”,
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`plaintiff here included more than just the allegations “associated” with its copyright claim.
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`26 ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 5 of 10
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`Plaintiff expressly incorporated the copyright claim itself into the state law claims. See
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`Response at 5 n.1; Dkt. #1 at ¶ ¶32, 36. Plaintiff could have, in paragraphs 32 and 36 of its
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`complaint, incorporated only the allegations relating to the unfair competition and unjust
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`enrichment claims. But plaintiff did not. Instead, paragraph 32 of the unfair competition claim
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`and paragraph 36 of the unjust enrichment claim incorporate paragraphs 23 - 28, the paragraphs
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`containing the copyright infringement claim. Plaintiff cannot reasonably assert that it was
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`pleading “in the alternative” when its unfair competition and unjust enrichment claims
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`incorporate the copyright claim. As drafted, therefore, plaintiff’s copyright claim is part of the
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`foundation of plaintiff’s unfair competition and unjust enrichment claims. Furthermore, other
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`courts have rejected the argument proffered by plaintiff that state law claims cannot be
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`preempted because they were pleaded in the alternative. See Moser Pilon Nelson Architects,
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`LLC v. HNTB Corp., 2006 U.S. Dist. Lexis 58344, 2006 WL 2331013, at *11 (D. Conn. Aug. 8,
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`2006) (“Plaintiffs further argue that, even if their unjust enrichment claim would be preempted
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`by a valid copyright claim, they are entitled to plead it ‘in the alternative[.]’ . . . But Plaintiffs’
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`argument proves too much: on Plaintiffs’ theory of pleading in the alternative, no court could
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`ever decide a motion to dismiss a claim on the basis of preemption until the merits of copyright
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`claim had first been decided. Yet courts routinely grant motions to dismiss state law claims on
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`the basis of preemption by the Copyright Act.”).
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`Second, the Court rejects plaintiff’s argument that preemption is not proper under Rule
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`12(b)(6) because the “leading Ninth Circuit cases involving copyright preemption are based on a
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`Rule 56 analysis and not on a Rule 12(b)(6) standard of review.” See Response at 6. While it is
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`true that the Ninth Circuit’s opinions in Kodadek v. MTV Networks, Inc., 152 F.3d 1209 (9th
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`Cir. 1998) and Del Madera Props. v. Rhodes and Gardner, Inc., 820 F.2d 973 (9th Cir. 1987)
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`both affirmed the trial court’s preemption of state law claims on summary judgment, the Ninth
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`Circuit has not held that dismissing a state law claim as preempted on a motion to dismiss is per
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`26 ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 6 of 10
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`se improper. To the contrary, in Grosso v. Miramax Film Corp., 383 F.3d 965, 968 (9th Cir.
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`2004), the Ninth Circuit applied the Del Madera two-part preemption test to a breach of implied
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`contract claim dismissed on a Rule 12(b)(6) motion by the district court. Although the Ninth
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`Circuit reversed dismissal of the breach of implied contract claim, the Ninth Circuit did not hold
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`that trial court’s preemption inquiry was improper on a motion to dismiss. Furthermore, trial
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`courts in this circuit have repeatedly dismissed claims as preempted on motions to dismiss. See,
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`e.g., Salim v. Lee, 2002 F. Supp. 2d 1122, 1128 (C.D. Cal. 2002) (dismissing state law claims
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`on Rule 12(b)(6) motion).
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`As alleged in its complaint, plaintiff’s state law claims expressly rest on the same
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`allegations as its copyright claim. Plaintiff has failed to justify how the state law claims at issue
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`are exempt from the reach of § 301 because at bottom, both claims depend on the allegation that
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`defendant displayed images of MEECO-labeled products. Accordingly, the Court concludes
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`that the first element of the preemption is satisfied in this case. Having made this determination,
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`the Court must next determine whether the rights granted under the state laws forming the basis
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`of plaintiff’s claims are equivalent to the rights contained in 17 U.S.C. § 106.
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`2. Equivalent Rights
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`Under the second, or “equivalent rights” part the Ninth Circuit’s two-part test,
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`the state law claim must contain an “extra element” in order to survive preemption:
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`To satisfy the “equivalent rights” part of the preemption test . . . the . . . alleged
`misappropriation . . . must be equivalent to rights within the general scope of
`copyright as specified by section 106 of the Copyright Act. Section 106 provides
`a copyright owner with the exclusive rights of reproduction, preparation of
`derivative works, distribution, and display. 17 U.S.C. § 106. To survive
`preemption, the state cause of action must protect rights which are qualitatively
`different from the copyright rights. The state claim must have an “extra element”
`which changes the nature of the action.
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`Del Madera Props., 820 F.2d at 977 (internal citation omitted) (overruled on other grounds).
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`The two state law claims subject to preemption are analyzed individually under this framework
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`26 ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 7 of 10
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`below.
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`a. Unfair Competition Claim
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`Defendant argues that plaintiff’s fifth cause of action for unfair competition should be
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`preempted because it does not add “an extra element that ‘transforms the nature of the action’ to
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`anything other than a Copyright Act claim.” See Motion at 5.3 Plaintiff’s unfair competition
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`claim contains no distinct factual allegations. See Dkt. #1 at ¶¶33-35. It simply alleges that the
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`elements of an unfair competition claim have been satisfied in this case, and “repeats and re-
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`alleges paragraphs 1 through 31 of this Complaint” as constituting the “conduct” that constitutes
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`unfair competition. Id. at 33. The allegations and claims expressly incorporated by reference
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`into the unfair competition claim include paragraphs 23 through 28, which set forth plaintiff’s
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`copyright claim.
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`In Kodadek, plaintiff filed a complaint alleging causes of action for copyright
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`infringement and unfair competition. Plaintiff’s unfair competition claim was dismissed on
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`summary judgment as preempted by the Copyright Act. The unfair competition claim
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`“incorporate[d] by reference paragraphs from the copyright infringement claim.” Kodadek, 152
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`F.3d at 1212. For this reason, the Ninth Circuit affirmed dismissal of the unfair competition
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`claim because it explicitly relied on the same allegations as the copyright claim, and held:
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`Kodadek’s complaint expressly bases his unfair competition claim on rights
`granted by the Copyright Act. The Copyright Act grants rights “to reproduce the
`copyrighted work in copies,” “to prepare derivative works based upon the
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`3 Defendant contends that plaintiff’s allegation that “True Value supplies other retailers Imperial
`products instead of the MEECO-branded products ordered” does not suffice as the “extra element”
`because there is no factual support for this allegation in the complaint. As currently pleaded, the Court
`agrees. On review of a Rule 12(b)(6) motion, the Court is not required to accept as true conclusory
`allegations. See Sprewell, 266 F.3d at 988. As defendant maintains, paragraph 14 of the complaint
`“does not support the conclusion that True Value supplied Homeandbeyond.com with the alleged
`infringing Imperial products. Assuming the representative’s statement is true, it establishes that
`Homeandbeyond.com purchased MEECO products from True Value–not Imperial products.” See Reply
`at 5-6.
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`Case 2:06-cv-01582-RSL Document 10 Filed 04/04/07 Page 8 of 10
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`copyrighted work,” “to distribute copies to . . . to the public,” and “to display the
`copyrighted work publically.” 17 U.S.C. § 106, Del Madera Properties v. Rhodes
`& Gardner, Inc., 820 F.2d 973, 977 (9th Cir. 1987) (overruled on other grounds).
`Thus, it is clear that Kodadek’s state law unfair competition claim is based solely
`on rights equivalent to those protected by the federal copyright laws.
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`Id. at 1213 (emphasis added). It is the same here. Based on Kodadek’s holding,
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`plaintiff’s unfair competition claim is preempted because it incorporates the copyright claim by
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`reference and is therefore based on rights equivalent to those protected by copyright.
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`Furthermore, plaintiff’s fifth cause of action for unfair competition seeks an injunction
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`barring defendant from “displaying MEECO-branded products.” Dkt. #1 at ¶34. Plaintiff’s
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`copyright claim similarly seeks injunctive relief because defendant “displayed the MEECO-
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`branded product images,” which “constitute[s] copyright infringement under the Copyright Act.”
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`Id. at ¶ ¶25-28. Where, as here, an unfair competition claim is based upon the premise that
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`defendant misappropriated plaintiff’s copyrighted material it is considered to be “part and parcel
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`of the copyright claim” and preemption is appropriate. Del Madera Props., 820 F.2d at 977.
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`The gravamen of this action is plaintiff’s claim that “True Value continues to use and
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`display images of MEECO-brand products in True Value’s electronic catalog.” See Dkt. #1 at
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`¶1. Under § 106(1) of the Copyright Act, a copyright owner has the exclusive right “to
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`reproduce the copyrighted work.” Therefore, while the elements of plaintiff’s unfair
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`competition claim may not be identical to the copyright claims, “the underlying nature of
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`[MEECO’s] state law claims is part and parcel of a copyright claim” for preemption purposes.
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`See Laws, 448 F.3d at 1144. Accordingly, plaintiff’s fifth claim for unfair competition is
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`preempted and dismissed without prejudice. See Blue Nile, Inc. v. Ice.com, Inc., — F. Supp. 2d
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`—, 2007 WL 172613, at *7 (dismissing unfair competition claim).4
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`4 Plaintiff attempts to distinguish the Court’s recently published Blue Nile opinion by arguing
`while “[t]hat case [Blue Nile] appears to take task with the practice of pleading state law causes of action
`that incorporate pleading allegations associated with a party’s copyright claim[,] [t]hat common pleading
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`b. Unjust Enrichment Claim
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`Plaintiff’s sixth cause of action for unjust enrichment is also preempted for the reasons
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`set forth above in section II.B.2(a) justifying dismissal of the unfair competition claim.
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`Paragraph 36 of the unjust enrichment claim incorporates by reference all of the complaint’s
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`prior allegations and claims, including the allegations supporting the claim for copyright
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`infringement in paragraphs 23 through 28. Based on Kodadek’s holding, plaintiff’s unjust
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`enrichment claim is dismissed as preempted because by incorporating the copyright claims by
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`reference, the sixth cause of action is based on rights equivalent to those protected by copyright.
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`Plaintiff’s unjust enrichment claim states: “True Value unjustly enriched itself by benefitting
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`from MEECO’s intellectual property rights without paying a license for those rights” See Dkt.
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`#1, ¶37. The intellectual property rights at issue in this case include MEECO’s copyrights.
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`Accordingly, the underlying nature of plaintiff’s unjust enrichment claim “is part and parcel of a
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`copyright claim.” Laws, 448 F.3d at 1144.
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`Finally, the Court finds the reasoning of this Circuit’s decisions preempting unjust
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`enrichment claims controlling and persuasive. See Del Madera, 820 F.2d at 977 (preempting
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`unjust enrichment claim); Zito v. Steeplechase Films, Inc., 267 F. Supp. 2d 1022, 1027 (N.D.
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`Cal. 2003) (dismissing claim on a 12(b)(6) motion because “[w]hile a claim for unjust
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`practice is not dispositive of copyright preemption issues here because MEECO’s pleading incorporates
`factual allegations that variously and alternatively support all alleged federal and state claims.” See
`Response at 5, n.2. Plaintiff’s assertion, however, understates the extent of the incorporation of its
`copyright claim. Not only do plaintiff’s unfair competition and unjust enrichment claims incorporate the
`exact same factual allegations supporting the copyright claim, but the state law claims also expressly
`incorporate all the allegations from the copyright claim itself. See Dkt. #1 at ¶¶32, 36. In Blue Nile,
`this Court, based on the Ninth Circuit’s holding in Kodadek v. MTV Networks, Inc., 152 F.3d 1209 (9th
`Cir. 1998), concluded that when a plaintiff expressly incorporates by reference an entire copyright claim
`into a state law claim, the state law claim is based on rights equivalent to those protected by copyright.
`See Blue Nile, 2007 WL 172613 at *6-7. Accordingly, plaintiff’s attempt to distinguish application of
`the reasoning from Blue Nile fails.
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`enrichment may require proof that a benefit was conferred on the defendant, where the unjust
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`enrichment arises from defendants’ unauthorized use of a copyrighted work, such an extra
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`element does not qualitatively change the rights at issue, the rights the plaintiff holds in the
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`copyrighted work, and does not avoid preemption.”). For these reasons, plaintiff’s claim for
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`unjust enrichment is dismissed without prejudice. See Blue Nile, Inc., 2007 WL 172613, at *8
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`(dismissing unjust enrichment claim).
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`III. CONCLUSION
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`For all of the foregoing reasons, “Defendant’s Motion to Dismiss Plaintiff’s Fifth and
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`Sixth Claims for Relief” (Dkt. #4)” is GRANTED. Plaintiff’s fifth and sixth claims for relief are
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`DISMISSED without prejudice.
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`DATED this 3rd day of April, 2007.
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`A R
`
`obert S. Lasnik
`United States District Judge
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`26 ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS PLAINTIFF’S
`FIFTH AND SIXTH CLAIMS FOR RELIEF
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`-10-