United States District Court, D. Maryland
MEMORANDUM OPINION AND ORDER
XINIS UNITED STATES DISTRICT JUDGE.
before the Court is a partial Motion to Dismiss filed by
Defendants Raul Pacheco Quintanilla and Defendant Institute
for IntangibleSpring Corporation. The issues are fully
briefed and the Court now rules pursuant to Local Rule 105.6
because no hearing is necessary. The Court GRANTS in part and
DENIES in part the Defendants' motion.
RoyaltyStat, LCC (“RoyaltyStat”) is a limited
liability company organized under the laws of the State of
Maryland. RoyaltyStat provides its clients with a database of
intellectual property royalty rates used for pricing and
valuation in connection with litigation, corporate
bankruptcy, business development, and mergers and
acquisitions. ECF No. 1 at ¶ 5. On May 7, 2009,
Plaintiff registered the text of the RoyaltyStat database,
the “RoyaltyStat Royalty Tableau, ” with the
United States Copyright Office, ECF No. 1 at Exhibit C.
Plaintiff also currently seeks copyright registration in the
“[s]election, coordination, and arrangement in material
and data” and the “original text, material and
data, ” for the 2015 RoyaltyStat Royalty Tableau, ECF
No. 1 at Exhibit D.
Institute for IntangibleSpring Corp.
(“IntangibleSpring”) is a corporation organized
under the laws of the Republic of Panama. Defendant Raul
Pacheco Quintanilla (“Pacheco”), a resident of
Mexico, previously worked as an independent contractor for
RoyaltyStat and is a shareholder of IntangibleSpring. ECF No.
36. Pacheco was terminated for supposedly embezzling funds
from Plaintiff. ECF No. 1 at ¶¶ 27 & 28.
Plaintiff alleges that on three separate occasions in 2010
and 2011, prior to Pacheco's termination, Pacheco
downloaded RoyaltyStat's customer list and proprietary
data, and then formed a competitor business in August 2012,
IntangibleSpring, and some time thereafter began using this
information in violation of the Copyright Act, Lanham Act,
Maryland Uniform Trade Secrets Act, and common law contract
claims. See generally ECF No. 1. Plaintiff first
learned of Defendants' use of Plaintiff's business
information in April 2013, and filed this suit on December
23, 2015. Id.
STANDARD OF REVIEW
motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6) is properly granted when the
complaint fails to include sufficient factual allegations to
render the plaintiff's claims facially plausible or
permit reasonable inference that the defendant is liable for
the alleged misconduct. See Ashcroft v. Iqbal, 556
U.S. 662, 678-79 (2009). A court may also grant a 12(b)(6)
motion on statute of limitations grounds, but “only
‘if the time bar is apparent on the face of the
complaint.' ” Semenova v. Maryland Transit
Admin., 845 F.3d 564, 567 (4th Cir. 2017) (quoting
Dean v. Pilgrim's Pride Corp., 395 F.3d 471, 474
(4th Cir. 2005). In assessing the complaint, the Court takes
as true all well-pleaded factual allegations and makes all
reasonable inferences in the favor of the plaintiff.
Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180
(4th Cir. 1999).
the plaintiff's well-pleaded facts are afforded deference
at this stage, the Court does not credit legal conclusions,
even when the plaintiff purports them to be allegations of
fact. See Iqbal, 556 U.S. at 678-79; Giarrantano
v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). From the
facts averred, the Court must be able to infer “more
than the mere possibility of misconduct”; the complaint
must contain factual pleadings that show the plaintiff is
entitled to relief. See Ruffin v. Lockheed Martin
Corp., 126 F.Supp.3d 521, 526 (D. Md. 2015) (quoting
Iqbal, 556 U.S. at 678), aff'd 659 F.
App'x 744 (4th Cir. 2016).
Court may properly take judicial notice of matters in
documents attached to the complaint where incorporated and
authentic. See Fed. R. Civ. P. 10(c); see also
Blankenship v. Manchin, 471 F.3d 523, 526 n. 1 (4th Cir.
2006). Here, the Court will consider the 2009 copyright
registration of Plaintiff's database, TX0007233781 (the
“‘781 Registration”), because this document
is authentic, incorporated by the Complaint, and integral to
both Plaintiff's claims and Defendants' proffered
Count 1: Violation of the Copyright Act, 17 U.S.C. § 101
Copyright Act protects “original works of authorship
fixed in any tangible medium of expression.” 17 U.S.C.
§ 102. “This protection commences as soon as the
original work is created and fixed in some tangible form . .
. [and a] copyright owner may seek judicial enforcement of
his property rights against subsequent infringers, so long as
he has registered the work with the Copyright Office prior to
filing the copyright infringement action.”
Metropolitan Reg'l Info. Sys., Inc. v. American Home
Realty Network, Inc. (“MRIS”), 722 F.3d 591,
596 (4th Cir. 2013). To state a prima facie case for
copyright infringement, a plaintiff must allege facts
establishing that (1) plaintiff owned copyrighted material
and (2) the infringer copied protected elements of that
material. Ale House Mgmt., Inc. v. Raleigh Ale House,
Inc., 205 F.3d 137, 143 (4th Cir. 2000); Lyons
P'ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789,
801 (4th Cir. 2001) (stating that “[t]o establish a
claim for copyright infringement, a plaintiff must prove that
it owned a valid copyright and that the defendant copied the
original elements of that copyright.”).
copyright certificate of registration constitutes
“prima facie evidence of the validity of the copyright
and of the facts stated in the certificate.” 17 U.S.C.
§ 410(c). A plaintiff may establish that defendant
copied its protected material either directly or indirectly
with proof that “the defendant had access to the
plaintiff's work and produced a work that is
substantially similar to the plaintiff's work.”
M. Kramer Mfg. Co., Inc. v. Andrews, 783 F.2d 421,
445 (4th Cir. 1986). Here, Plaintiff alleges that its
database content is protected by a copyright, the ‘781
Registration, and that Pacheco's copying the contents
into the IntangibleSpring database infringed upon the
‘781 Registration. 17 U.S.C. § 501; ECF No. 1. at
¶¶ 42-48. Thus, Plaintiff has stated a claim
properly for copyright infringement.
raise three arguments in opposition. First, Defendants
contend that because the RoyaltyStat database is no more than
a “collection of facts obtained from SEC filings,
” the database lacks the requisite
“originality” to be copyrightable under Feist
Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S.
340, 359-60 (1991). See ECF No. 49-1 at 8. Second,
Defendants assert that because Plaintiff's copyright is
for text only, Plaintiff may not claim copyright protection
for the database itself. ECF No. 49-1 at ...