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Goldstein v. Metropolitan Regional Information Systems, Inc.

United States District Court, D. Maryland

August 11, 2016

ALAN J. GOLDSTEIN, Plaintiff,
v.
METROPOLITAN REGIONAL INFORMATION SYSTEMS, INC., Defendant.

          MEMORANDUM OPINION

          THEODORE D. CHUANG, UNITED STATES DISTRICT JUDGE

         This copyright infringement action is before the Court on Defendant Metropolitan Regional Information Systems, Inc.'s Motion to Dismiss. Having reviewed the Complaint and the briefs, the Court finds no hearing necessary. See D. Md. Local R. 105.6 (2016). For the reasons set forth below, the Motion is GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         Plaintiff Alan J. Goldstein is a professional photographer who holds a copyright, effective March 18, 2009, for a 2007 photograph he took of the Silver Spring Metro Station in Silver Spring, Maryland (the "Metro Photograph"). Goldstein displays the photograph on his website, www.goldsteinphoto.com, where the photograph appears with the watermark "© www.goldsteinphoto.com" centered at the bottom of the image. Compl. ¶ 15, ECF No. 1; Id. Ex. 2: Website Screenshot, ECF No. 1-2. Defendant Metropolitan Regional Information Systems, Inc. ("MRIS") operates an online real estate listing service that allows subscribers, mainly real estate brokers, to post listings for available properties for a fee. Subscribers agree to assign to MRIS the copyright in any photograph they upload to the database.

         In May 2014, Goldstein learned that his Metro Photograph had been uploaded to the MRIS database without his knowledge or consent, either by MRIS itself, one of its agents, a subscriber, or an agent of a subscriber, at various points in 2013 and 2014. The uploaded Metro Photograph still had Goldstein's original watermark, but also had the additional watermark "© 2013 MRIS" or "© 2014 MRIS, " depending on the year the image was uploaded, placed in the bottom left corner of the image. In a letter dated August 11, 2014, Goldstein's attorney informed MRIS that the Metro Photograph was being used on its site without Goldstein's authorization and demanded that MRIS cease use of the image immediately. Despite this notice, the Metro Photograph continued to be displayed on and uploaded to the MRIS site during 2014 and continuing into 2015, at which point the MRIS watermark was updated to "© 2015 MRIS." Goldstein asserts that as a result of the unlawful inclusion of the Metro Photograph on the MRIS database, the Metro Photograph has been uploaded to additional real estate websites and used in additional real estate promotional materials without his permission. Goldstein also asserts that MRIS has obtained at least one copyright registration for its website, and that the site as it was registered included the Metro Photograph.

         On August 13, 2015, Goldstein filed this suit alleging five causes of action: (1) direct copyright infringement, in violation of 17 U.S.C. § 501 (2012); (2) contributory copyright infringement, in violation of 17 U.S.C. § 501; (3) a violation of the Digital Millennium Copyright Act ("DMCA"), specifically of 17 U.S.C. § 1202(a); (4) another violation of the DMCA, specifically of 17 U.S.C. § 1202(b); and (5) a violation of the Lanham Act, 15 U.S.C. 1125(a)(1) (2012). On September 4, 2015, MRIS filed a Motion to Dismiss that included nine exhibits, all of which MRIS asserts are integral to Goldstein's Complaint. Alternatively, MRIS argues that its Motion should be converted to one for summary judgment. Goldstein filed a Memorandum in Opposition to the Motion on September 21, 2015. On October 8, 2015, MRIS filed a Reply Memorandum.

         DISCUSSION

         MRIS seeks dismissal of Goldstein's Complaint under Federal Rule of Civil Procedure 12(b)(6) on the grounds that: (1) Goldstein fails to allege adequate facts to state a plausible claim of direct infringement; (2) Goldstein fails to allege adequate facts to state a plausible claim of contributory infringement; (3) MRIS is shielded from liability for direct and contributory copyright infringement by the safe harbor provision of the DMCA; (4) Goldstein fails to allege adequate facts to state a plausible claim under the DMCA; and (5) Goldstein's Lanham Act claim fails as a matter of law.

         I. Legal Standards

         To defeat a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is plausible when the facts pleaded allow "the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Legal conclusions or conclusory statements do not suffice. Id. The Court must examine the complaint as a whole, consider the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Comm'rs of Davidson Cty., 407 F.3d 266, 268 (4th Cir. 2005).

         In its Motion, MRIS relies on facts asserted in exhibits attached to its Motion, which include: a declaration from Brian R. Westley, MRIS's legal counsel, that details MRIS's response to the August 11, 2014 letter from Goldstein's counsel and later correspondence between the parties; copies of written correspondence between the attorneys related to possible settlement; a declaration from Darren Lee Bailey, MRIS's Director of Application Management, that describes how the MRIS system works generally and, in particular, how images are uploaded to the system; copies of various parts of MRIS's terms of use; and a printout of a webpage from the United States Copyright Office indicating that the website MRIS.com has filed a designation of agent for notifications of infringement under the Copyright Act. MRIS claims that this evidence may be considered by the Court on the Motion to Dismiss because the evidence is "integral to the complaint and authentic." Mem. Supp. Mot. Dismiss ("Mot. Dismiss") at 6, ECF No. 11-1.

         "[A]s a general rule, extrinsic evidence should not be considered at the 12(b)(6) stage." Am. Chiropractic Assoc., Inc. v. Trigon Healthcare Inc., 367 F.3d 212, 234 (4th Cir. 2004) (internal quotation marks and citation omitted). A court may consider documents attached to a motion to dismiss only if those documents were "integral to and explicitly relied on in the complaint, " if the plaintiff had "actual notice" of those documents, and if the plaintiff does not challenge their authenticity. Id. This standard is not met here. Goldstein's claims are based on the repeated uploading of his copyrighted image to the MRIS database and MRIS's insertion of its own copyright watermark on that image. In light of Goldstein's claims, it cannot fairly be argued that the Complaint explicitly relied on the additional settlement correspondence, MRIS's terms of use, or MRIS's designation of an agent for notifications of infringement. Further, any claim that Goldstein explicitly relied on, or had notice of, declarations of MRIS's attorney and its Director of Application Management executed after the Complaint was filed would be frivolous. These documents plainly cannot be considered integral to the Complaint and so will not be considered in evaluating the Motion to Dismiss.

         Alternatively, MRIS suggests that this Court convert the Motion into one for summary judgment, at which point the Court could consider the exhibits. However, Goldstein, citing Federal Rule of Civil Procedure 56(d), asserts that summary judgment would be premature because he has not yet had time to conduct discovery. Pl's Opp'n Mot. Dismiss ("Opp'n") at 8 n.2, ECF No. 15. Although a party may move for summary judgment before the commencement of discovery, "summary judgment [must] be refused where the nonmoving party has not had the opportunity to discover information that is essential to his opposition." Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir. 2002) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986)). That is the situation here. MRIS's exhibits are aimed at establishing that the images on its website are uploaded solely by users and that any addition of MRIS's own copyright to those images is done automatically, conditions that MRIS argues would permit MRIS to take refuge in the DMCA's safe harbor defense to claims of copyright infringement, discussed in more detail below. See infra part IV. However, Goldstein has yet to have the opportunity to engage in discovery to test these assertions and, more broadly, to uncover evidence relating to the issue of MRIS's knowledge about and involvement in the uploading of the Metro Photograph, an issue relevant to the DMCA safe harbor provision. Conversion to summary judgment now would short-circuit this necessary stage of the litigation. The Court therefore rejects MRIS's request to convert its Motion to Dismiss into a Motion for Summary Judgment.

         II. Count I: Direct Infringement

         MRIS asserts that the Complaint fails to state a claim for direct infringement of Goldstein's copyright because Goldstein has not alleged "volitional conduct" by MRIS. Mot. Dismiss at 17. To state a claim of direct copyright infringement, a plaintiff must allege facts that, when credited, establish that the plaintiff owns a valid copyright in the work allegedly infringed upon and that the defendant has copied "constituent elements of the work that are original." Feist Publ'ns, Inc. v. Rural Tel. Svc. Co., Inc., 499 U.S. 340, 361 (1991). Here, Goldstein has asserted that he has a valid copyright in the Metro Photograph and provides a document supporting that assertion. See 17 U.S.C. § 410(c) ("In any judicial proceedings the certificate of registration made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright[.]"). There is no dispute that the Metro Photograph has been uploaded to the MRIS website or that the photograph, which appears on the site in its entirety, contains constituent elements of the work that are original. See Feist, 499 U.S. at 345 (stating that, for copyright purposes, something is original if it was "independently created by the author" and "possesses at least some minimal degree of creativity").

         Thus, the only issue in contention is whether Goldstein has alleged that MRIS engaged in "volitional conduct" in copying the Metro Photograph to MRIS's webpage. In asserting that Goldstein has failed adequately to plead that MRIS engaged in volitional conduct, MRIS relies heavily on Costar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004). In Costar, the defendant, LoopNet, was an online real estate listing service that allowed users to post real estate listings with photographs, required those users to certify that the photographs were not copyrighted by others, and conducted a cursory check of photographs for any explicit copyright markings before allowing them to be posted. Id. at 556. A number of photographs copyrighted by Costar, but which bore no copyright marks, were posted on LoopNet without Costar's permission. See Costar Group Inc. v. LoopNet, Inc., 164 F.Supp.2d 688, 698 (D. Md. 2001). The issue on appeal was whether LoopNet's general practice of checking for copyright markings before allowing images to be posted amounted to "volitional conduct" such that LoopNet was open to liability for direct copyright infringement for using Costar's unmarked photographs without permission. In affirming the district court's grant of summary judgment to LoopNet, the United States Court of Appeals for the Fourth Circuit held that direct copyright infringement requires "actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner." Costar, 373 F.3d at 550. The Court further stated that there must be "some aspect of volition and meaningful causation, " rather than simply "passive ownership and management of an electronic Internet facility" in order for direct infringement liability to attach. Id. Applying this standard, the Fourth Circuit concluded that even though LoopNet conducted a cursory check of uploaded images for copyright marks, LoopNet was a passive Internet service provider ("ISP") that could not be held liable for direct infringement of Costar's copyright when Costar's unmarked photographs appeared on its website. Id. at 556.

         MRIS argues that Costar is on all fours with the present case. Costar, however, was decided at the summary judgment stage. On a motion to dismiss, where the Court considers only the allegations in the Complaint and views those allegations in the light most favorable to the nonmoving party, Goldstein's Complaint has stated a claim. Goldstein alleges that MRIS or an agent of MRIS uploaded the Metro Photograph and includes in support of that allegation Exhibit 3 to the Complaint, a screenshot of a slide in a slideshow that was available on the MRIS website on August 11, 2014. That slide contains only the Metro Photograph, annotated with Goldstein's watermark and MRIS's added watermark "© 2014 MRIS, " and does not contain any reference to a particular real estate agent or broker, or to a particular property. Drawing all inferences in Goldstein's favor, this Exhibit, particularly with the markings added by MRIS, supports the reasonable inference that MRIS or its agent, rather than an outside user of MRIS, engaged in direct infringement by copying Goldstein's copyrighted photograph to its website. See Lambeth, 407 F.3d at 268 (holding that a claim should be dismissed under Rule 12(b)(6) "only if it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief.").

         Moreover, Goldstein's Complaint alleges three crucial facts not present in Costar: (1) when MRIS received it, the Metro Photograph, on its face, was marked as copyrighted by Goldstein; (2) MRIS, unlike LoopNet, took the affirmative step of marking the Metro Photograph as subject to its own copyright; and (3) MRIS then copyrighted its entire website, including the Metro Photograph. Thus, based on the allegations in the Complaint, MRIS's actions went well beyond the "passive ownership and management" of a website that was at issue in Costar. Rather than simply providing a passive venue for others to post photographs, MRIS doubly asserted a copyright in the Metro Photograph by stamping that facially copyrighted photograph with its own copyright markings and then copyrighting the entire website containing that photograph. Based on these actions, the Court cannot, at the motion to dismiss stage, rule out the possibility that MRIS engaged in the necessary volitional conduct to establish direct copyright infringement. Thus, the Motion is denied as to Count I.

         III. Count II: Contributory and Vicarious Infringement

         MRIS also argues that the Complaint fails to state a claim for contributory infringement. Although the copyright statute does not expressly provide for "imposition of liability for copyright infringement on certain parties who have not themselves engaged in infringing activity, " the United States Supreme Court has made clear that common law principles of contributory or vicarious liability, which are "imposed in virtually all areas of the law, " can be applied in the copyright context. Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 435 (1984). As copyright law has developed in the context of the internet, three sub-species of vicarious liability have developed, all of which Goldstein pleads here. The Court addresses each in turn.

         A. Contributory Infringement

         To state a viable claim for contributory copyright infringement, a plaintiff must allege facts that, taken as true, establish that the defendant knew or had reason to know of the infringing activity and either induced, caused, or materially contributed to that infringing activity. See ...


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