LovePop, Inc. v. PaperPopCards Inc. (17-cv-11017).

Judge Saris denied in part and granted in part PaperPop’s motion to dismiss copyright claims relating to three-dimensional pop-up cards. PaperPop contended that the card designs consisted largely of unprotectable elements under the merger and/or scènes à faire doctrines.  Judge Saris had previously denied the motion with respect to three card designs; she here rejected these arguments with respect to cards depicting a French flower cart and a bouquet of balloons extending from a decorative box to have ample room for interpretation, and that the accused designs were similar enough to merit trial.  She determined that a nativity design was a closer question, as such a design is virtually certain to contain elements such as a manger, a Baby Jesus, Mary, Joseph, the three Wise Men, and livestock in a barn; however, there are many different ways to present these elements, and enough similarities existed in the presentations to survive a 12(b)(6) challenge.  Judge Saris granted the motion with respect to a Menorah design, finding all of the similar elements to be substantially dictated by the indispensable elements of a menorah and the remaining elements so dissimilar as to preclude a finding of copying of protectable elements.  With respect to several cards depicting willow trees or the like, Judge Saris noted that reproduction of natural phenomena such as a tree can enjoy copyright protection, but that proof of copying is difficult, as the alleged copier may well have drawn inspiration from the natural phenomenon itself rather than the copyrighted work.  She determined that these cards presented a close call better resolved by the trier of fact, and denied the motion to dismiss as to these designs.  Finally, LovePop challenged six promotional videos depicting PaperPop cards being slowly opened to reveal the pop-up design.  PaperPop asserted that the cards being opened were its own, and that the videos differed in lighting, camera angle, etc., so as not to be copies of LovePop’s videos.  At oral argument, LovePop shifted its argument to derivation, arguing that the similarity of the cards depicted rendered the PaperPop videos unauthorized derivative works.  Judge Saris found that this reframing raised issues not adequately briefed, and denied the motion to dismiss without prejudice.

Malden Transportation, Inc. et al. v. Uber Technologies, Inc. et al. (16-cv-12538).

In a series of consolidated cases (discussed further here and here), a large number of Boston-area cab companies accuse Uber, as well as Uber founders Travis Kalanick and Garrett Camp, of unfair competition in violation of Massachusetts state and common law, and some of the plaintiffs further allege that Uber violated state and federal antitrust law, interfered with advantageous business relationships, engaged in civil conspiracy and aided and abetted unfair competition. Kalanick and Camp both moved to dismiss the claims against them as individuals.  Judge Gorton granted this motion, finding that the plaintiffs had failed to allege specific facts demonstrating either general or specific jurisdiction – the complaint alleged only that the two formed Uber while in California and that Uber had undertaken activities in Massachusetts, but failed to identify any activities the individuals, as opposed to the company, had directed towards this forum.

As to the claims against Uber, Massachusetts passed a law in August 2016, the “TNC Act,” that pre-empts local municipalities from regulating ride-sharing companies like Uber, and the plaintiffs agree that this precludes Uber’s post-enactment activity. With respect to the pre-enactment activity, Judge Gorton found that, absent the TNC Act, Uber’s activities fell within the Boston municipal taxi regulations.  Accordingly, allegations that Uber did not comply with the taxi regulations or incur the concomitant costs to gain an unfair advantage and cause economic injury sufficiently stated a cause of action for the statutory and common-law unfair competition claims.  The court likewise denied the motion to dismiss with respect to claims that Uber conspired with its independent contractor drivers to violate the taxi rules.  Judge Gorton allowed Uber’s motion to dismiss claims that Uber and its drivers, as an employer and employees (as opposed to independent contractors – it is not yet clear what status the drivers will ultimately be deemed to have held), conspired to violate the taxi regulations, because with the individual founders having been dismissed, this would effectively allege that Uber conspired with itself to do so, a claim that is untenable.  Judge Gorton dismissed claims for interference with advantageous business relationships because the complaint did not allege interference with any specific anticipated business relationship, and the plaintiffs’ allegations regarding interference with people seeking for-hire ride services generally was not sufficiently specific.  Finally, Judge Gorton also dismissed the antitrust claims.  Those claims were based on a predatory pricing theory whereby a company sells products or services below its costs, hoping to drive competitors out of the market, at which point the company can raise its prices due to its monopoly position.  The complaint did allege that Uber had lost “billions of dollars” (which seems to be accurate), but this was found to lack the particularity required of the antitrust laws.

Monsarrat v. Brian Zaiger dba (17-cv-10356).

Jonathan Monsarrat had sued Brian Zaiger, alleged to be the owner and administrator of the website Encyclopedia Dramatica, for copyright infringement relating to a June 2000 MIT graduation photograph published on Encyclopedia Dramatica. Encyclopedia Dramatica, which Monsarrat characterizes as similar to Wikipedia but hosting offensive and unsourced articles catering to internet “trolling” culture, is accused of altering a photograph of Monsarrat in an MIT mascot costume to associate the mascot, and thus Monsarrat, with an internet meme “pedobear,” a mascot for pedophiles.  Monsarrat initially served a take-down notice relating to the altered photo in January 2011; the website was then taken down in its entirety, only to resurface under a different country domain.  Over the course of the next several years, Monsarrat sent several take-down notices to domain registrars and agents, but could not identify Zaiger as the owner of the site due to Zaiger’s use of anonymous acronyms to disguise his identity.

When Monsarrat ultimately filed suit on March 2, 2017, Zaiger moved to dismiss the complaint as time-barred, which Judge Saris has granted. The complaint made clear that Monsarrat knew of the alleged copyright infringement since at least 2012, well earlier than the three-year statute of limitations permits. Judge Saris rejected Monsarrat’s argument that the limitations period does not begin until the identity of the infringer is known to the accuser, noting that suits against unnamed parties are common.  Zaiger’s counterclaim under 17 U.S.C. 512(f), alleging knowing misrepresentation that the photograph is infringing, remain in effect.

Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd. et al. (17-cv-11008).

Janssen Biotech brought this case asserting infringement of a patent related to the manufacture of Remicade®, a biologic medicine used to treat rheumatoid arthritis, plaque psoriasis, Crohn’s disease, and other disorders involving the immune response. Celltrion moved to dismiss, on the grounds that not all co-owners of the patent were joined as plaintiffs – the assignments from some of the inventors was to “the COMPANY,” which was defined elsewhere in the assignment agreement as Centocor, the predecessor to Janssen, and Johnson & Johnson and its existing and future subsidiaries, divisions and affiliates, none of whom were named as plaintiffs.  Judge Wolf, interpreting the agreement under New Jersey law, found that this language did not apply to the assignment itself.  The assignment clause required assignment of any invention made by the employee “during [his] employment with the COMPANY;” yet the inventors worked for only one company and did not work for Johnson & Johnson, which created ambiguity as to what was meant.  Looking to extrinsic evidence to understand what the parties to the contract intended, Judge Wolf determined that the assignment was intended to be only to Centocor, making Janssen the sole assignee.  Accordingly, the motion to dismiss was denied.

FWK Holdings LLC v. Shire PLC et al. (Direct Purchaser Antitrust Class Action Complaint) (16-cv-12653).

FWK Holdings brought this class action antitrust suit, alleging an illegal reverse payment settlement between Shire defendants and Actavis defendants relating to the drug Intuniv, which is used to treat hypertension and ADHD. Each defendant moved to dismiss the complaint for failure to state a claim.  The case was reassigned to Massachusetts, as it was related to an existing Massachusetts case, Picone et al. v. Shire I.S., Inc. et al. (16-cv-12396).  In the complaint, the plaintiffs allege that Actavis had introduced compelling evidence at an ANDA trial that Shire’s patents listed in the FDA’s Orange Book as covering Intuniv were invalid, and that in April, 2013, Actavis and Shire settled the litigation by having Actavis, the first generic to file an ANDA, agree to delay entry into the generic market until December of 2014 in return for Shire implicitly agreeing not to launch an “authorized generic” (“AG”) during the 180-day period of generic exclusivity for Actavis that followed.  The agreement allowed Shire to market its own AG, but prevented it from marketing an AG through a third party; the defendants assert that Shire had in fact agreed not to market an AG itself but avoided putting that into the agreement to avoid antitrust scrutiny.  The plaintiffs allege that this scheme constituted an anticompetitive reverse payment agreement, banned under prevailing law, that resulted in Shire earning $424 million in additional sales free from generic competition and in Actavis generating $84.5 million in profits during its period of generic exclusivity.  This scheme purportedly cost American purchasers of the drug half a billion dollars.  The complaint alleges restraint of trade in violation of Section 1 of the Sherman Act and monopolization in violation of Section 2 of the Sherman Act.

Judge Burroughs recognized that reverse payments, while potentially actionable, are not ipso facto antitrust violations.  Courts are to make a rule of reason analysis, looking at the size of the payment in relation to anticipated future litigation costs, and existence, or lack thereof, of other convincing justification to determine whether the payment was made to prevent the risk of competition.  She noted that the First Circuit had stated in dictum that no-AG agreements can constitute illegal reverse payments, a position expressly held by other courts, and determined that it formed a sufficient basis for an antitrust complaint here.  Applying the rule of reason, Judge Burroughs noted that the plaintiffs had alleged that Shire’s alleged retention of the right to market an AG was illusory, given that common industry practice (and Shire’s own past practice) was to launch such products through bona fide third parties to avoid Medicaid pricing regulations, that Shire had, prior to the settlement, planned to launch an AG through a third party, and that following settlement, Shire never launched an AG.  These allegations, combined with the allegation that the defendants settled the underlying litigation only following a trial at which Shire seemed poised to lose, plausibly alleged that an implicit no-AG agreement existed.  Accordingly, the motion to dismiss was denied.

Small Justice LLC v. Xcentric Ventures, LLC (1st Cir. Oct. 11, 2017).

Plaintiffs Richard Goren, a Massachusetts attorney, his company Small Justice LLC, and Christian DuPont had sued defendants Xcentric Ventures, LLC and Ripoff for copyright infringement, libel, interference with a contract, and violation of Massachusetts’ unfair competition statute. Goren had represented DuPont in an unrelated matter; DuPont had subsequently authored two reports critical of Goren and posted them to Ripoff Report, a “consumer protection” website owned by Xcentric that allows users to post complaints about companies or individuals.  As part of the posting process, the user grants Ripoff Report an irrevocable exclusive license to the copyright, and further warns users that, once posted, the post will not be taken down even at the request of the poster.  When DuPont failed to appear in the libel suit that resulted, Goren was granted an injunction prohibiting DuPont from publishing the reports, and was awarded ownership of the copyright of the reports. He then filed the suit that is the subject of this appeal, seeking the enjoin Ripoff Report from continuing to post the complaints and to require them to take all actions necessary to have cached versions and links removed from Bing, Google, and Yahoo.

Xcentric moved to dismiss the complaint, which Judge Casper granted in part. Specifically, Judge Casper dismissed the libel, tortious interference, and parts of the unfair competition counts as blocked by the Communications Decency Act, 47 U.S.C. § 230, which shields interactive computer service providers from liability for information provided by another content provider.  The court rejected Goren’s argument that, by holding itself out as the copyright holder and by having “directed” internet search engines to list the postings, Ripoff Report itself became the information provider.  Following discovery, Judge Casper granted Xcentric summary judgment on the remaining copyright and Ch. 93A claims, finding the “browsewrap” license conclusive on the copyright claims.  Judge Casper modified the judgment to find that the browsewrap license failed to meet the requirements of transferring an exclusive copyright license, and that only an irrevocable non-exclusive license had been granted; this distinction did not, however, change the outcome.  Finally, Judge Casper awarded $124,000 in fees and costs to Xcentric pursuant to 17 U.S.C. § 505.

The First Circuit Court of Appeals reviewed the dismissal of the libel and tortious interference claims de novo and affirmed.  The § 230 immunity is to be liberally construed, to prevent deterrence of on-line speech; so construed, Xcentric could not be considered to be “responsible … for the creation” of the information, and immunity would apply.  Continuing to apply de novo review, the Court affirmed the copyright decision, rejecting Goren’s argument that the license “contract” failed because no consideration was given to DuPont – while consideration is necessary to support an irrevocable license, actually posting the complaints was sufficient consideration under the circumstances.  Notably, the Court determined that it need not decide whether a browsewrap agreement can satisfy the exclusive license writing requirement of 17 U.S.C. § 204, leaving this issue open in the First Circuit.

The Court reviewed the fee award for abuse of discretion. After quickly dismissing Goren’s contentions that Xcentric was not a prevailing party or that its fee motion was untimely, the Court looked to the Supreme Court’s Fogerty factors in analyzing the decision to award fees – “frivolousness, motivation, objective unreasonableness [both factual and legal] and the need in the particular circumstances to advance considerations of compensation and deterrence.”  Characterizing review of the application of these factors as “extremely deferential,”

The Court found no fault with Judge Casper’s characterization of the legal and factual basis for plaintiffs’ claims as “at best questionable,” with its noting that Xcentric fought the case for more than two years without the prospect of a damage award, or with its determination that Xcentric prevailed on all counts. Finally, the Court noted that a showing of bad faith on the plaintiffs’ part is not a requirement for a fee award pursuant to the statute.  The fee award was thus affirmed as well.

Trust Safe Pay, LLC v. Dynamic Diet, LLC (17-cv-10166).

Magistrate Judge Kelley granted defendants’ motion to dismiss the copyright infringement claims, citing the failure of the plaintiff to allege it held any validly registered copyrights and failure to identify any specific content that was alleged to be both original and copied. Trust Safe accuses its former employees of taking a confidential algorithm and using it to create a competing business, of copying Trust Safe’s website, and of tracking the website and changing its own in exactly the same way as Trust Safe’s site.  Applying the Twombly standard, Judge Kelley noted that the complaint asserts that Trust Safe is the assignee of three copyright registrations, but fails to allege that the applications, together with the deposit and fees, had been sent to the Copyright Office, which is required when relying on preregistration of a copyright.  She also found the failure to specify similarities between Trust Safe’s site and that the Defendant “frustrate[s] any effort to compare the parties’ materials” and thus fails to show copying.  Judge Kelley also dismissed the state statutory and common law trade secret counts for failure to adequately identify the trade secrets at issue – the recitation of an “algorithm,” without specifying what the algorithm was or what it did, was not sufficient.  Intentional fraud and M.G.L. 93A claims that depended on the trade secret misappropriation claim were also dismissed.  Because all of the claims were deemed plausible, albeit inadequately pled, all of the dismissals were without prejudice.  The case was before the Magistrate pursuant to 28 U.S.C. 636(c) and with the consent of the parties.