From Casetext: Smarter Legal Research

National Business Dev. v. American Credit

United States Court of Appeals, Sixth Circuit
Oct 31, 2008
299 F. App'x 509 (6th Cir. 2008)

Summary

holding that Twombly governed the plaintiff's pleading of copyright infringement claim, and the complaint cannot survive a Rule 12(b) motion because the plaintiff failed to even allege which, if any, of defendants' materials were infringing

Summary of this case from Terraspan, LLC v. Rave, LLC

Opinion

Nos. 07-2290, 08-1184.

October 31, 2008.

On Appeal from the United States District Court for the Eastern District of Michigan.

Jeffrey P. Thennisch, Hattem A. Beydoun, Dobrusin Thennisch, Pontiac, MI, for Plaintiff-Appellant.

Robert C.J. Tuttle, Robert C. Brandenburg, John E. Nemazi, Brooks Kushman, Southfield, MI, for Defendants-Appellees.

Before: KEITH, MERRITT, and GIBBONS, Circuit Judges.


These two cases present three issues on appeal. In the first case, No. 07-2290, plaintiff, National Business Development Services, Inc., appeals the district court's orders dismissing its claims for unfair competition and copyright infringement. In the second case, No. 08-1184, plaintiff appeals the district court's subsequent decision to award attorney's fees to defendants. For the reasons stated by the district court, we affirm.

Background

National Business Development Services, Inc. is a company that helps consumers manage their credit and repair their credit history. In 1998, its predecessor in interest, National Credit Repair Services, Inc., developed a series of educational materials (including workbooks and audio-tapes), which it registered with the U.S. Copyright Office. On March 15, 2007, plaintiff sued American Credit Education and Consulting, Inc., along with twelve other corporate and individual defendants, alleging that defendants had unlawfully used plaintiffs copyrighted educational materials.

On May 23, 2007, the district court dismissed plaintiffs unfair competition claim, concluding that when a Lanham Act claim is based on the alleged use of copyrighted materials, that claim must be pursued under copyright law unless the plaintiff has pleaded the physical taking and repackaging of plaintiffs materials. Because plaintiff did not make these allegations, the court concluded that plaintiff had failed to state a cause of action.

On August 8, 2007, the district court dismissed plaintiffs copyright infringement claim, concluding that plaintiff had failed to allege which action or publication by the defendant had infringed the plaintiffs copyright. In doing so, the court concluded that plaintiff had no evidence that defendants had infringed its copyrights and was trying to use discovery to determine whether defendants had in fact done anything wrong.

Defendants then moved for attorney's fees and were awarded $19,183.62 based on the district court's determination that plaintiffs copyright infringement claim "was frivolous, unreasonable, and deserving of deterrent action."

Discussion

A. Lanham Act Claim

In Dastar Corp. v. Twentieth Century Fox Film Corp., the Supreme Court held that § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), did not apply to a case in which the defendant had taken video content from an old television series (which had entered the public domain when its copyright expired), made minor alterations to it, and published a new video set under its own name. 539 U.S. 23, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). The Court distinguished the case from a hypothetical one in which the plaintiff "had bought some of [defendant's] videotapes and merely repackaged them as its own," which would have constituted a Lanham Act violation. Id. at 31, 123 S.Ct. 2041. The Court considered the meaning of the phrase "origin of goods" in § 43(a) and concluded that it "refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods." Id. at 37, 123 S.Ct. 2041. In other words, taking tangible goods and reselling them as your own constitutes a Lanham Act violation; taking the intellectual property contained in those goods and incorporating it into your own goods does not. See Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 149 (5th Cir. 2004); Zyla v. Wadsworth, Div. of Thomson Corp., 360 F.3d 243, 252 (1st Cir. 2004). The district court accurately applied the holding of Dastar, noting:

Plaintiff has not accused Defendants of taking Plaintiffs physical materials, repackaging them, and selling them under Defendants' name. Rather, Plaintiff has accused Defendants of incorporating Plaintiffs copyrighted materials into Defendants' materials. As the Fifth Circuit held in Lee, this type of claim is governed by copyright law, not the Lanham Act. Therefore, Plaintiff has failed to plead a cause of action under the Lanham Act.

We agree.

B. Copyright Infringement Claim

Plaintiffs complaint states, in relevant part that: "At some time in the past, at a time not presently known[,] the individual Defendants . . . began to advertise, promote or offer for sale to the general public, educational materials, brochures, and other derivative works, which incorporate the copyrighted materials of the Plaintiff in the Registered Copyrighted Works." At no point does the complaint identify any specific works by defendants that infringe on plaintiffs copyright. The Supreme Court recently clarified the pleading standards required by the Federal Rules of Civil Procedure: "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the `grounds' of his `entitlement]' to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (citations omitted) (alteration in original). As the district court noted:

In the instant case, Plaintiffs complaint contains a blanket assertion of entitlement to relief, but does not contain any factual allegations supporting that assertion. There is neither (1) an identification of a work produced by Defendants that infringes upon Plaintiffs copyrighted work, nor (2) a description of the manner in which Defendants' works infringe upon Plaintiffs work. . . . [T]he Court is not required to accept Plaintiffs bare legal conclusions. Plaintiffs complaint amounts to no more than a speculative claim that Defendants may have produced some work that in some way infringed upon Plaintiffs works. This pleading is insufficient, and Plaintiffs action must be dismissed.

We agree.

Plaintiff asked this court to determine whether Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007), rather than Bell Atlantic, should be used to determine the specificity with which a complaint must be filed. Plaintiff specifically asserted that Erickson, which was issued by the Supreme Court after Bell Atlantic, set forth a more liberal standard.

The district court correctly applied Bell Atlantic, as the facts of the instant case are more akin to those at issue in Bell Atlantic. Erickson concerned a pro se litigant, "and `a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.'" Erickson, 127 S.Ct. at 2200. Bell Atlantic, however, concerned an anti-trust matter, where the case emphasized the heightened possibility for abuse among lawsuits of this specie. Bell Atlantic, 127 S.Ct. at 1965, 1970 n. 10, 1973 n. 14 (finding that "[o]n certain subjects understood to raise a high risk of abusive litigation, a plaintiff must state factual allegations with greater particularity than Rule 8 requires . . .") . Copyright infringement, like anti-trust actions, lends itself readily to abusive litigation, since the high cost of trying such a case can force a defendant who might otherwise be successful in trial to settle in order to avoid the time and expenditure of a resource intensive case. Therefore, greater particularity in pleading, through showing "plausible grounds," is required. "Asking for plausible grounds . . . simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement." Id. at 1965.

In this case, plaintiff did no more than plead bare legal conclusions. It failed to even allege which, if any, of defendants' materials were infringing. Therefore, it cannot survive a Rule 12(b)(6) motion.

C. Attorney's Fees

The Copyright Act provides that "[i]n any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States" and that "the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505. In exercising this discretion, courts may consider factors such as "`frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.'" Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 1033 n. 19, 127 L.Ed.2d 455 (1994) (quoting Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d Cir. 1986)).

The district court considered these factors and held that the copyright infringement claim "was frivolous, unreasonable, and deserving of deterrent action." In doing so, it concluded that plaintiff had "filed a complaint with no genuine idea as to whether a claim existed" and, in failing to obtain the deposit materials, had exhibited a general indifference to the merits of the claim. These findings of fact are not "clearly erroneous," nor did the court "improperly appl[y] the law," nor did it use "an erroneous legal standard," United States v. Spikes, 158 F.3d 913, 927 (6th Cir. 1998) (quotation omitted). Therefore, we affirm the award of attorney's fees.

Conclusion

For the foregoing reasons, the decisions of the district court are AFFIRMED.


Summaries of

National Business Dev. v. American Credit

United States Court of Appeals, Sixth Circuit
Oct 31, 2008
299 F. App'x 509 (6th Cir. 2008)

holding that Twombly governed the plaintiff's pleading of copyright infringement claim, and the complaint cannot survive a Rule 12(b) motion because the plaintiff failed to even allege which, if any, of defendants' materials were infringing

Summary of this case from Terraspan, LLC v. Rave, LLC

finding Rule 11(c) sanctions improper where "Plaintiff believed that some of its copyrighted materials had been infringed, and, like the plaintiff in Tahfs, hoped that discovery would fill in the complaint's shortcomings.

Summary of this case from Prater v. Livingston Ave. Child Care, LLC

granting a motion to dismiss because the complaint failed to identify the work that was infringed

Summary of this case from Flava Works, Inc. v. Clavio

affirming fees where the plaintiff "filed a complaint with no genuine idea as to whether a claim existed and, in failing to obtain the deposit materials, had exhibited a general indifference to the merits of the claim"

Summary of this case from Miller v. Hurst

affirming fees where claim was "frivolous, unreasonable, and deserving of deterrent action" because plaintiff "filed a complaint with no genuine idea as to whether a claim existed and, in failing to obtain the deposit materials, had exhibited a general indifference to the merits of the claim"

Summary of this case from Ducks Unlimited, Inc. v. Boondux, LLC

affirming dismissal of plaintiff's infringement claim that contained "neither an identification of a work produced by Defendants that infringes upon Plaintiff's copyrighted work, nor a description of the manner in which Defendants' works infringe upon Plaintiff's work...."

Summary of this case from Art of Design, Inc. v. Pontoon Boat, LLC

affirming district court's dismissal of complaint that contained only bare legal conclusions and lacked factual allegations as to Defendants' allegedly infringing work

Summary of this case from Art of Design, Inc. v. Pontoon Boat, LLC

affirming district court dismissal of copyright infringement case on 12(b) grounds for failure to state a claim

Summary of this case from Ford Motor Co. v. Autel US Inc.

affirming fees where claim was "frivolous, unreasonable, and deserving of deterrent action" because plaintiff "filed a complaint with no genuine idea as to whether a claim existed and, in failing to obtain the deposit materials, had exhibited a general indifference to the merits of the claim"

Summary of this case from Compass Homes, Inc. v. Heritage Custom Homes, LLC

rejecting application of Erickson, noting it concerned pro se complaint, held to less stringent standard

Summary of this case from Cotton v. Cleveland Mun. School District

applying plausibility standard to claim of copyright infringement

Summary of this case from Productivity-Quality Sys., Inc. v. Cybermetrics Corp.

dismissing claim because "this type of claim is governed by copyright law, not the Lanham Act"

Summary of this case from Music City Metals Co. v. Cai

In National Business Development Services, Inc. v. American Credit Education and Consulting, Inc., 299 Fed. App'x. 509 (6th Cir. 2008), the Sixth Circuit upheld the dismissal of the plaintiff's complaint because it contained a "blanket assertion of entitlement to relief" without "any factual allegations supporting that assertion."

Summary of this case from Eggleston v. Daniels

In National Business, the complaint alleged only that: "'At some time in the past, at a time not presently known[,] the individual Defendants... began to advertise, promote or offer for sale to the general public, educational materials, brochures, and other derivative works, which incorporate the copyrighted materials of the Plaintiff in the Registered Copyrighted Works.'"

Summary of this case from Humantech, Inc. v. Caterpillar, Inc.

declining to apply a more lenient pro se standard than the heightened pleading requirement of Twombly to pro se copyright claim, noting Supreme Court's admonition that "[o]n certain subjects understood to raise a high risk of abusive litigation, a plaintiff must state factual allegations with greater particularity than Rule 8 requires . . ."

Summary of this case from Paehlke v. Edmondson
Case details for

National Business Dev. v. American Credit

Case Details

Full title:NATIONAL BUSINESS DEVELOPMENT SERVICES, INC., Plaintiff-Appellant, v…

Court:United States Court of Appeals, Sixth Circuit

Date published: Oct 31, 2008

Citations

299 F. App'x 509 (6th Cir. 2008)

Citing Cases

Tomelleri v. SunFrog, LLC

need only “raise a reasonable expectation that discovery will reveal evidence of” copying. Nat'l Bus. Dev. …

Gen. Motors LLC v. Dorman Prods., Inc.

" Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. Defendants suggest that Plaintiffs' claim of copyright…