`
`UNITED STATES DISTRICT COURT
`DISTRICT OF MINNESOTA
`
`
`Civil No. 16-1960 (DWF/LIB)
`
`
`MEMORANDUM
`OPINION AND ORDER
`
`Alexander Farrell, Esq., and Russell M. Spence, Jr., Esq., Hellmuth & Johnson PLLC,
`counsel for Plaintiff Neil Leonard Haddley.
`
`Bruce H. Little, Esq., and Sarah Pruett, Esq., Lindquist & Vennum LLP, counsel for
`Defendants.
`
`
`
`Neil Leonard Haddley,
`
`
`
`v.
`
`Next Chapter Technology, Inc., a corporation;
`Vaughn Mulcrone, an individual;
`dataBridge, LLC, a limited liability company;
`County of Kittson, Minnesota;
`County of Mahnomen, Minnesota;
`County of Marshall, Minnesota;
`County of Norman, Minnesota;
`County of Polk, Minnesota;
`County of Red Lake, Minnesota;
`County of Roseau, Minnesota;
`County of Kandiyohi, Minnesota;
`County of Rice, Minnesota;
`County of Scott, Minnesota;
`County of Stearns, Minnesota;
`County of Washington, Minnesota;
`County of Becker, Minnesota;
`County of Clay, Minnesota;
`County of Dodge, Minnesota;
`County of Isanti, Minnesota;
`County of Otter Tail, Minnesota;
`County of Mower, Minnesota;
`County of Steele, Minnesota; and
`County of Waseca, Minnesota;
`
`
`
`
`
`Plaintiff,
`
`
`
`
`
`Defendants.
`
`
`
`
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 2 of 15
`
`INTRODUCTION
`
`
`
`This matter is before the Court on Defendants’ Motion to Dismiss for Lack of
`
`Subject Matter Jurisdiction and Failure to State a Claim (Doc. No. 44); and Plaintiff’s
`
`Motion to Consolidate (Doc. No. 51). For the reasons set forth below, the Court grants in
`
`part Defendants’ Motion to Dismiss and grants Plaintiff’s Motion to Consolidate.
`
`I.
`
`Factual Background
`
`BACKGROUND
`
`Plaintiff Neil Haddley filed suit against Defendants alleging various acts of
`
`copyright infringement stemming from their use and then replacement of a software
`
`program called Scanning Enabler. In 2007, Plaintiff developed Scanning Enabler as a
`
`program to scan documents into Microsoft SharePoint and which also allowed the user to
`
`view and index paper documents without leaving SharePoint. (Doc. No. 18 (“Am.
`
`Compl.”) ¶ 36.) Haddley first published Scanning Enabler in Australia while he was
`
`living there. At the time, Haddley was operating as the sole shareholder of Blue Duck
`
`Pty., Ltd, an Australian entity that Haddley formed in 2006. Blue Duck Pty. had no
`
`formal employees. Instead, Haddley used Blue Duck Pty. as a vehicle to market and sell
`
`Scanning Enabler. (Defs.’ MTD Memo. at 4.)1
`
`
`1
`The Court will cite Defendants’ Memorandum in Support of their Motion to
`Dismiss as “Defs.’ MTD Memo.” (Doc. No. 46); Plaintiff’s Memorandum in Opposition
`as “Pl.’s MTD Opp.” (Doc. No. 48); and Defendants’ Reply Brief as “Defs.’ MTD
`Reply” (Doc. No. 49). The Court will cite Plaintiff’s Memorandum in Support of his
`Motion to Consolidate as “Pl.’s Consolidation Memo.” (Doc. No. 54); and Defendants’
`Memorandum in Opposition to the Motion to Consolidate as “Defs.’ Consolidation Opp.”
`(Doc. No. 58).
`
`(Footnote Continued on Next Page)
`
`
`
`2
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 3 of 15
`
`In 2009, Haddley entered into a resale agreement for Scanning Enabler with
`
`Defendant Next Chapter Technology (“NCT”). (Am. Compl. ¶ 46.) Haddley also
`
`licensed to NCT two versions of Scanning Enabler, which NCT then incorporated into its
`
`document-management program ScottWorks. (Id. ¶¶ 47-48.) NCT helped develop
`
`ScottWorks for Scott County, Minnesota. (Id. ¶ 51.) Based on the success of
`
`ScottWorks, NCT began marketing the product as CaseWorks to other county
`
`governments in Minnesota. (Id. ¶¶ 52-53.) A number of Minnesota counties purchased
`
`licenses for CaseWorks, which used Scanning Enabler as part of its functionality. These
`
`counties are defendants in this action (generally, the “County Defendants”).2
`
`In 2012, Haddley began working for NCT. While Haddley worked there, NCT
`
`licensed Scanning Enabler to Clay County and Steele County, Minnesota. (Id. ¶¶ 60, 98.)
`
`To download and access Scanning Enabler, a purchaser was required to enter a unique
`
`license key. (See id. ¶ 63.) Plaintiff alleges that Defendants Clay and Steele Counties
`
`exceeded the licenses by downloading too many copies of Scanning Enabler. (Id. ¶¶ 67,
`
`103.) Additionally, Plaintiff alleges that six of the County Defendants3 accessed Steele
`
`and Clay counties’ servers to copy Scanning Enabler without paying for additional
`
`
`(Footnote Continued From Previous Page)
`
` 2
`
`The County Defendants are the Minnesota counties of Kittson, Mahnomen,
`
`Marshall, Norman, Polk, Red Lake, Roseau, Kandiyohi, Rice, Scott, Stearns,
`Washington, Becker, Clay, Dodge, Isanti, Otter Tail, Mower, Steele, and Waseca.
`
`
`
`The six counties are Becker, Dodge, Isanti, Otter Tail, Mower, and Waseca.
`
`3
`
` 3
`
`
`
`
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 4 of 15
`
`licenses. Plaintiff also alleges that NCT was actively involved in enabling this system of
`
`shared licenses. (See, e.g., id. ¶ 84.)
`
`Near the end of 2012, Haddley apparently learned that some of the County
`
`Defendants were allegedly using unlicensed versions of Scanning Enabler. (Id. ¶ 131.)
`
`Haddley raised the issue with NCT. Haddley and NCT attempted to resolve the issue, but
`
`could not reach an agreement to remedy Haddley’s concerns. With the issues unresolved,
`
`NCT fired Haddley without cause. (Id. at ¶ 139.) NCT then hired Defendant dataBridge
`
`to create a replacement product for Scanning Enabler. The replacement product was
`
`distributed to the County Defendants. (Id. ¶ 166-67.)
`
`II.
`
`Procedural History
`
`On August 24, 2015, Haddley filed a pro se complaint against eight of the County
`
`Defendants4 (the “Isanti Matter”).5 In that complaint, Haddley brought claims related to
`
`the Isanti Defendants’ use of Scanning Enabler. On September 16, 2015, NCT moved to
`
`intervene pursuant to its contractual duty to defend the Isanti Defendants. (Isanti, Doc.
`
`No. 26.) Plaintiff, still pro se, opposed the motion. (Isanti, Doc. No. 36.) On
`
`November 18, 2015, the magistrate judge denied the motion. (Isanti, Doc. No. 49.) In
`
`the Isanti Matter, Haddley has obtained counsel, discovery has closed, and the parties
`
`have cross-moved for summary judgment.
`
`
`4
`The eight defendants are Becker, Clay, Dodge, Isanti, Otter Tail, Mower, Steele,
`and Waseca (generally, the “Isanti Defendants”).
`
` 5
`
`Haddley v. Isanti et al., Civ. No. 15-2106 (D. Minn). The Court will cite to
`
`documents in the Isanti Matter as “Isanti, Doc. No. __.”
`
`
`
`4
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 5 of 15
`
`After hiring counsel, Haddley filed a new complaint here, which was later
`
`amended. In the Amended Complaint, Plaintiff brings three claims: (1) a claim against
`
`NCT and its sole shareholder, Vaughn Mulcrone, for copyright infringement for
`
`providing copies of Scanning Enabler to the Isanti Defendants; (2) a claim against all
`
`defendants for copyright infringement stemming from the creation and use of the
`
`replacement product for Scanning Enabler; and (3) a claim against NCT, Mulcrone, and
`
`the Isanti Defendants alleging that they undertook efforts to circumvent Scanning
`
`Enabler’s license-key system.
`
`DISCUSSION
`
`Defendants moved to dismiss for lack of subject matter jurisdiction. (Doc.
`
`No. 44.) Plaintiff has moved to consolidate this case with the Isanti Matter. (Doc. No.
`
`51.) Defendants also moved to dismiss for failure to state a claim for Count 2 as to the
`
`County Defendants and for Count 3 as to the Isanti Defendants.
`
`I.
`
`Motion to Dismiss for Lack of Subject Matter Jurisdiction
`
`A motion to dismiss under Rule 12(b)(1) challenges the Court’s subject matter
`
`jurisdiction. Fed. R. Civ. P. 12(b)(1). To survive a motion under Rule 12(b)(1), the party
`
`asserting jurisdiction has the burden of proving jurisdiction. V S Ltd. P’ship v. Dep’t of
`
`Hous. & Urban Dev., 235 F.3d 1109, 1112 (8th Cir. 2000). “Subject-matter jurisdiction
`
`is a threshold requirement which must be assured in every federal case.” Kronholm v.
`
`Fed. Deposit Ins. Corp., 915 F.2d 1171, 1174 (8th Cir. 1990).
`
`A Rule 12(b)(1) motion may challenge a plaintiff’s complaint either on its face or
`
`on the factual truthfulness of its averments. Osborn v. United States, 918 F.2d 724, 729
`
`
`
`5
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 6 of 15
`
`n.6 (8th Cir. 1990). When a defendant brings a facial challenge—that is, even if the
`
`allegations were true, they lack an essential element for jurisdiction—a court reviews the
`
`pleadings alone and assumes the allegations are true. Titus v. Sullivan, 4 F.3d 590, 593
`
`(8th Cir. 1993); accord Osborn, 918 F.2d at 729 n.6. In a factual challenge to
`
`jurisdiction, the court may consider matters outside the pleadings and weigh the accuracy
`
`of the allegations. Titus, 4 F.3d at 593; accord Osborn, 918 F.2d at 729 n.6.
`
`Defendants move to dismiss on the basis that Plaintiff’s copyright registration
`
`certificate is materially inaccurate. Specifically, Defendants argue that Plaintiff’s
`
`registration certificate incorrectly identifies Haddley as the author of Scanning Enabler,
`
`instead of Blue Duck Pty.—the Australian entity that Plaintiff used to market and sell the
`
`program. Before a plaintiff may file a lawsuit for copyright infringement, the plaintiff
`
`must register his copyright. 17 U.S.C. § 411.6 If a registration certificate is inaccurate, a
`
`plaintiff may still proceed with a civil action unless the inaccurate information was
`
`provided with knowledge of the inaccuracy and the inaccuracy of the information would
`
`have caused the Register of Copyrights to refuse to issue the registration certificate. 17
`
`
`6
`The holder of a foreign copyright does not need to register before filing suit,
`unless he is seeking statutory damages or attorney fees. 17 U.S.C. § 412; see also The
`Football Ass’n Premier League Ltd. v. YouTube, Inc., 633 F. Supp. 2d 159, 162
`(S.D.N.Y. 2009) (“Section 412 has no exception excusing foreign works from its
`mandate: it requires registration to obtain statutory damages for both domestic and
`foreign works.”).
`
`
`
`
`6
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 7 of 15
`
`U.S.C. § 411(b). The misrepresentation must be inaccurate and material. See, e.g.,
`
`DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 622 (7th Cir. 2013).7
`
`When a copyright is registered within five years of the material’s first publication,
`
`there is a presumption that the copyright is valid and the information contained in the
`
`registration certificate is accurate. 17 U.S.C. § 410(c). This presumption shifts the
`
`burden to the defendant to prove invalidity. Progressive Lighting, Inc. v. Lowe’s Home
`
`Centers, Inc., 549 F. App’x 913, 918 (11th Cir. 2013). Here, however, Haddley received
`
`his registration certificate in 2014, more than five years after he first published Scanning
`
`Enabler in 2007. (Am. Compl. ¶ 38, Ex. A.) As a result, Haddley bears the burden of
`
`showing that the copyright is valid and that the information contained in the certificate is
`
`accurate.
`
`Defendants argue that Haddley’s registration certificate incorrectly identifies
`
`himself as the author of Scanning Enabler. Defendants’ argument is premised on the
`
`7
`The Court notes that 17 U.S.C. § 411(b) provides a specific procedure for
`situations when a party claims that a registration certificate is invalid (a procedure the
`parties have failed to discuss and seemingly ignored). Under 17 U.S.C. § 411(b), “In any
`case in which inaccurate information [in the registration certificate] is alleged, the court
`shall request the Register of Copyrights to advise the court whether the inaccurate
`information, if known, would have caused the Register of Copyrights to refuse
`registration.” The purpose of the provision is to prevent courts from invalidating
`copyrights without receiving input from the Register—the very thing that Defendants
`invited the Court to do here. Despite the mandatory provision, courts can still determine
`the timing of when it will contact the Register. DeliverMed Holdings, LLC v.
`Schaltenbrand, 734 F.3d 616, 625 (7th Cir. 2013) (“[C]ourts can demand that the party
`seeking invalidation first establish that the other preconditions to invalidity are satisfied
`before obtaining the Register’s advice on materiality.”). Here, the Court will wait to
`contact the Register until there is a showing that ownership information was inaccurate
`and that Haddley provided the information with knowledge of the inaccuracy.
`
`
`
`7
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 8 of 15
`
`Work-for-Hire doctrine, which provides that generally an employer owns the copyrights
`
`for the materials that its employees create. See generally Melville B. Nimmer & David
`
`Nimmer, Nimmer on Copyright § 5.03 (2016). In response, Haddley argues that even if
`
`he were an employee of Blue Duck Pty.—an entity that he solely owned—Blue Duck
`
`Pty. and he could have agreed that he would be the owner of the copyright.
`
`
`
`In addressing whether Haddley owns the copyright for Scanning Enabler, the
`
`Court must first determine whether Australian or U.S. law applies. As a general matter,
`
`the law governing the substantive rights of the copyright holder is drawn from the
`
`country where the infringement took place. Itar-Tass Russian News Agency v. Russian
`
`Kurier, Inc., 153 F.3d 82, 89 (2d Cir. 1998). The law governing ownership, however, is
`
`drawn from the country with the most significant relationship. Id. at 91; see also
`
`Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011) (“Initial ownership
`
`of a copyrighted work is determined by the laws in the work’s country of origin.”). Here,
`
`because the work was first published in Australia to a person then domiciled in Australia,
`
`Australia “is the appropriate source of law to determine the issues of ownership.” See
`
`Itar-Tass Russian News Agency, 153 F.3d at 90 (“Since the works at issue were created
`
`by Russian nationals and first published in Russia, Russian law is the appropriate source
`
`of law to determine issues of ownership of rights.”).
`
`
`
`The parties provided only limited briefing on Australia’s copyright-ownership law,
`
`but Defendants cite to the Australian Copyright Council as authoritative. (Defs.’ MTD
`
`Memo. at 13.) According to the Australian Copyright Council, an employer will own the
`
`copyright for the software developed by an employee during the course of the employee’s
`
`
`
`8
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 9 of 15
`
`usual duties. Australian Copyright Council, Software & Apps, G050v12 (Dec. 2014), at
`
`3. Parties, however, can designate by agreement who owns the copyright. Australian
`
`Copyright Council, Ownership of Copyright, G058v08 (Nov. 2014), at 1-2; see also
`
`Australian Copyright Council, Software & Apps, G050v12 (Dec. 2014), at 3 (“In most
`
`cases there will be an agreement . . . setting out who owns copyright in the material.”);
`
`Australian Government, Attorney-General’s Department, Short Guide to Copyright, at 7
`
`(“All copyright ownership rules (except those that relate to moral rights) may be varied
`
`by agreement.”). Thus, Haddley and the Australian entity that he solely owned could
`
`have agreed that Haddley would retain the copyright for Scanning Enabler. See Jules
`
`Jordan Video, Inc. v. 144942 Can. Inc., 617 F.3d 1146, 1156 (9th Cir. 2010) (concluding
`
`that the owner of a “one-man shop” could decide whether he or the entity owned the
`
`copyright). Because Haddley could have retained ownership in the copyright, the Court
`
`concludes that Plaintiff has adequately plead standing to bring his claims for copyright
`
`infringement.8 Thus, the Court denies Defendants’ Motion to Dismiss for Lack of
`
`Subject Matter Jurisdiction.
`
`
`8
`Plaintiff still has the burden of demonstrating that an agreement existed between
`Haddley and Blue Duck Pty., Ltd regarding the copyright ownership of Scanning
`Enabler. If Plaintiff fails to demonstrate such an agreement existed, the Court will
`reexamine whether Haddley’s registration certificate is invalid because of a material
`misstatement. See Jules Jordan, 617 F.3d at 1156 (noting that the district court allowed
`the case to proceed despite questions of fact regarding the registration certificate, but left
`open the opportunity to revisit the issue if the plaintiff failed to “perfect standing prior to
`the close” of the plaintiffs’ case in chief).
`
`
`
`9
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 10 of 15
`
`II. Motion to Consolidate
`
`Plaintiff moves to consolidate this case with the Isanti Matter. Under Federal Rule
`
`of Civil Procedure 42(a), courts have broad discretion to consolidate pending actions that
`
`involve a common question of fact or law. Fed. R. Civ. P. 42(a); see also Doe YZ v.
`
`Shattuck–St. Mary’s Sch., Civ. No. 15-1151, 2016 WL 6594077, at *1 (D. Minn. Nov. 4,
`
`2016). The party seeking consolidation bears the burden of showing that consolidation
`
`promotes judicial convenience and economy. Shattuck–St. Mary’s Sch., 2016 WL
`
`6594077, at *1. But even if consolidation would promote judicial economy,
`
`consolidation is inappropriate when it unfairly prejudices a party. Id.
`
`Here, Plaintiff argues that common issues of fact and law exist between the two
`
`cases. Defendants oppose the motion, arguing that the Isanti Defendants are in a different
`
`factual and legal position than the Defendants in this case. In addition, Defendants argue
`
`that the Isanti Defendants will be prejudiced because the parties have completed
`
`discovery in the Isanti Matter and that case is ripe for summary judgment.
`
`
`
`The Court concludes that common issues of fact and law exist between this case
`
`and the Isanti Matter. The underlying facts of this case focus on NCT’s use and
`
`replacement of Scanning Enabler in its CaseWorks product. The exact same facts
`
`underlie Haddley’s claims in the Isanti Matter, where Haddley alleges that the Isanti
`
`Defendants exceeded the contracted-for number of licenses of Scanning Enabler.
`
`Moreover, both matters focus on whether the defendants infringed Haddley’s copyrights.
`
`The Court is unpersuaded by Defendants’ argument that the two cases are legally or
`
`factually distinct. Indeed, Defendants have moved to dismiss a claim in this case on the
`
`
`
`10
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 11 of 15
`
`basis that Haddley is bringing the exact same claim in the Isanti Matter. (See Defs.’
`
`MTD Memo. at 25 (“Plaintiff includes the County of Isanti Defendants as defendants in
`
`Count 3 . . . even though he has already made the same claims against them in the first
`
`lawsuit.”).)
`
`
`
`Having concluded that the two cases involve common issues of fact and law, the
`
`Court also finds that judicial economy would be furthered by consolidating the two cases.
`
`Plaintiff has brought similar claims against overlapping defendants in two separate
`
`matters. Litigating the matters separately would waste limited judicial resources. As a
`
`result, the Court concludes that judicial economy would be promoted by consolidating
`
`the two matters.
`
`
`
`Despite finding that judicial economy will be promoted, the Court must also
`
`examine whether a party will be prejudiced by the consolidation. Defendants argue that
`
`consolidation will cause prejudice because the Isanti Matter has completed discovery
`
`while this case has only started. But Defendants cannot avoid consolidation simply
`
`because discovery is concluded, especially when much of the discovery will be
`
`overlapping. See 9A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
`
`Federal Practice & Procedure § 2382 (3d ed. 1998 & Supp. 2017) (“Actions pending at
`
`different stages of discovery may be consolidated, although any savings of time and
`
`expense well may be diminished.”); see also Doc. No. 62, Tr. at 39 ([Plaintiff’s Counsel]:
`
`“We won’t have to do any more discovery with the [Isanti] Defendants, so they can just
`
`sit and wait for the rest of the discovery to complete as to the rest of the case.”). In
`
`addition, the Isanti Defendants are defendants in both actions, and the parties are
`
`
`
`11
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 12 of 15
`
`represented by the same respective counsel in both actions. See Shattuck–St. Mary’s
`
`Sch., 2016 WL 6594077, at *2 (noting that consolidation was appropriate in part because
`
`counsel for both matters were the same). The Court therefore concludes that Defendants
`
`will not be unfairly prejudiced by consolidating the matters.
`
`Thus, consolidating the Isanti Matter and this case is appropriate. Accordingly,
`
`Plaintiff is instructed to file a consolidated complaint not inconsistent with this order
`
`within thirty days of this order.
`
`III. Motion to Dismiss for Failure to State a Claim
`
`In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in
`
`the complaint to be true and construes all reasonable inferences from those facts in the
`
`light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th
`
`Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory
`
`allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th
`
`Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v.
`
`City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court deciding a motion to
`
`dismiss may consider the complaint, matters of public record, orders, materials embraced
`
`by the complaint, and exhibits attached to the complaint. See Porous Media Corp. v. Pall
`
`Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).
`
`To survive a motion to dismiss, a complaint must contain “enough facts to state a
`
`claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
`
`570 (2007). Although a complaint need not contain “detailed factual allegations,” it must
`
`contain facts with enough specificity “to raise a right to relief above the speculative
`
`
`
`12
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 13 of 15
`
`level.” Id. at 555. As the Supreme Court reiterated, “[t]hreadbare recitals of the elements
`
`of a cause of action, supported by mere conclusory statements,” will not pass muster
`
`under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S.
`
`at 555). In sum, this standard “calls for enough fact[s] to raise a reasonable expectation
`
`that discovery will reveal evidence of [the claim].” Twombly, 550 U.S. at 556.
`
`
`
`Defendants move to dismiss Count 2 for the County Defendants. Count 2 is a
`
`claim based on the creation and use of a replacement product for Scanning Enabler.
`
`Specific to the County Defendants, Plaintiff’s claim is premised on the County
`
`Defendants’ downloading and use of the replacement product. “Plaintiffs must satisfy
`
`two requirements to present a prima facie case of direct infringement: (1) they must
`
`show ownership of the allegedly infringed material and (2) they must demonstrate that
`
`the alleged infringers violate at least one exclusive right granted to copyright holders
`
`under 17 U.S.C. § 106.” A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th
`
`Cir. 2001); accord Mulcahy v. Cheetah Learning LLC, 386 F.3d 849, 852 (8th Cir. 2004).
`
`Here, Plaintiff alleges that NCT, Mulcrone, and dataBridge infringed on Haddley’s
`
`copyright by creating a replacement product for Scanning Enabler. (Am. Compl.
`
`¶ 161-65.) One of the rights of a copyright owner is the right to create derivative
`
`products. 17 U.S.C. § 106 (2); see also Mulcahy, 386 F.3d at 852 (“One who violates the
`
`copyright owner’s right to create derivative works is an infringer.”). Haddley goes on to
`
`allege that the County Defendants infringed Plaintiff’s copyright by using the
`
`replacement product. (Am. Compl. ¶¶ 167-68.) But merely buying an infringing product
`
`is not actionable. Foreign & Domestic Music Corp. v. Licht, 196 F.2d 627, 629 (2d Cir.
`
`
`
`13
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 14 of 15
`
`1952). Because Plaintiff’s claim in Count 2 against the County Defendants is premised
`
`merely on purchasing an infringing product, Plaintiff fails to state a claim. Thus, the
`
`Court dismisses Count 2 against the County Defendants.
`
`Defendants also move to dismiss Count 3 for the Isanti Defendants on the basis
`
`that Haddley has already brought the same claim against them in the Isanti Matter.
`
`Because the Court has ordered Plaintiff to file a consolidated complaint, the Court
`
`determines that Defendants’ motion on this issue is moot. The Court therefore denies
`
`Defendants’ motion to dismiss Count 3 for the Isanti Defendants.
`
`CONCLUSION
`
`
`
`Based on the foregoing, the Court finds that Plaintiff has adequately plead
`
`standing to pursue his copyright infringement claims, but the Court will revisit the issue
`
`if Plaintiff fails to prove that he is the owner of the copyright. The Court grants
`
`Defendants’ Motion to Dismiss Count 2 for the County Defendants, and the Court denies
`
`Defendants’ Motion to Dismiss Count 3 for the Isanti Defendants. The Court grants
`
`Plaintiff’s Motion to Consolidate.
`
`ORDER
`
`Based upon the foregoing, IT IS HEREBY ORDERED:
`
`1.
`
`Defendants’ Motion to Dismiss (Doc. No. [44]) is GRANTED IN PART
`
`and DENIED IN PART consistent with the memorandum above.
`
`2.
`
`Count 2 of Plaintiff’s Amended Complaint (Doc. No. [18]) is DISMISSED
`
`WITH PREJUDICE as to the County Defendants—the Minnesota counties of Kittson,
`
`
`
`14
`
`
`
`CASE 0:16-cv-01960-DWF-LIB Document 63 Filed 04/25/17 Page 15 of 15
`
`Mahnomen, Marshall, Norman, Polk, Red Lake, Roseau, Kandiyohi, Rice, Scott, Stearns,
`
`Washington, Becker, Clay, Dodge, Isanti, Otter Tail, Mower, Steele, and Waseca.
`
`3.
`
`4.
`
`Plaintiff’s Motion to Consolidate (Doc. No. [51]) is GRANTED.
`
`This matter and Haddley v. Isanti et al., Civil No. 15-2106 (DWF/LIB) are
`
`consolidated for all purposes under case number: Civil No. 16-1960 (DWF/LIB).
`
`5.
`
`Plaintiff shall file a consolidated complaint for the two matters consistent
`
`with this order within thirty days of this order.
`
`6.
`
`7.
`
`The caption for Civil No. 16-1960 (DWF/LIB) will remain the same.
`
`Upon the filing of the consolidated amended complaint in Civil
`
`No. 16-1960 (DWF/LIB), the parties shall file a dismissal document in Civil No. 15-2106
`
`(DWF/LIB).
`
`8.
`
`All pending matters, including discovery, in Civil No. 15-2106 (DWF/LIB)
`
`are STAYED unless the parties jointly stipulate to the matters continuing.
`
`
`Dated: April 25, 2017
`
`
`
`
`
`s/Donovan W. Frank
`DONOVAN W. FRANK
`United States District Judge
`
`
`
`15
`
`