DynaStudy, Inc. v. Hous. Indep. Sch. Dist.

325 F.Supp.3d 767

DYNASTUDY, INC., Plaintiff,

v.HOUSTON INDEPENDENT SCHOOL DISTRICT, Defendant.

CIVIL ACTION NO. H-16-1442

United States District Court, S.D. Texas, Houston Division.

Signed April 6, 2017

Gary R. Sorden, Mandi M. Phillips, Timothy J. H. Craddock, Darin Michael Klemchuk, Klemchuk LLP, Dallas, TX, for Plaintiff.

Cheyenne Jayne Pate, Bracewell LLP, Dallas, TX, Jonathan R. Spivey, LaTasha Mabry Snipes, Stacianne Morgan Wilson, Bracewell LLP, Houston, TX, for Defendant.

MEMORANDUM AND ORDER

EWING WERLEIN, JR., UNITED STATES DISTRICT JUDGE

Pending is Defendant Houston Independent School District's Renewed Motion to Dismiss Pursuant to Rule 12(b)(6) and Motion to Strike Pursuant to Rule 12(f) (Document No. 28).¹ After carefully considering the motion, response, reply, and applicable law, the Court concludes as follows.

I. Background

Plaintiff DynaStudy, Inc. ("Plaintiff") is a Texas-based educational publishing company that produces student study aids for a variety of subjects and grade levels based on Texas's state standards.² Plaintiff sells its study aids to school districts, either in print form or through digital licensing, but prohibits reproduction and distribution of its copyrighted materials.³ Plaintiff has registered numerous copyrights with the United States Copyright Office, including copyrights in its End-of-Course Review Guides ("EOC") for Biology, Chemistry, Physics, and English I.⁴ Plaintiff also owns the federally-registered trademark "DynaNotes."⁵

Plaintiff alleges that Defendant Houston Independent School District ("Defendant"), one of its customers, "has participated in an ongoing pattern and practice of infringing [these] intellectual property rights, ... despite the fact that [Plaintiff] has repeatedly placed Defendant on notice of such ongoing and repeated infringement."⁶ Plaintiff alleges upon information and belief that "Defendant's schools, teachers, and administrators have and continue to unlawfully reproduce, distribute, adapt, and publicly display [Plaintiff's] Copyrighted Works."⁷ Plaintiff alleges the following specific instances of infringement by Defendant's employees:

• Teacher Dennis Huffman at Lanier Middle School "posted a nearly identical copy of [Plaintiff's] Grade 8 Science for STAAR guide online for anyone to download," and when Plaintiff contacted Defendant, Defendant represented that Huffman had received the copyrighted material "from someone by email."⁸

• Teacher Nicole Diluglio at the High School for the Performing and Visual Arts "posted the DynaNotes Biology EOC online for anyone to download."⁹ The High School for the Performing and Visual Arts had never purchased any copy of the EOC and had no right of access to it, and upon inquiry Defendant represented that Diluglio received the copyrighted material "from a colleague."¹⁰

• Teacher Thomas Dohoney at Westside High School "plagiarized a significant portion of DynaStudy's Physics EOC and Chemistry EOC student course notes and then posted these unauthorized derivative works online at Defendant's website for anyone to download," after removing Plaintiff's copyright notices.¹¹ Plaintiff's website was included at the bottom of each page that Dohoney distributed.¹²

• Teacher Marla Maharaj at DeBakey High School "posted a full version of DynaStudy's Biology EOC student course notes online at Defendant's website."¹³

• Teacher Amanda Schultz-Weaver at Reagan High School "posted a copy of DynaStudy's Biology EOC student course notes online," from which copy Plaintiff's copyrights and trademarks had been removed.¹⁴ Numerous other school districts and organizations infringed on Plaintiff's copyright by posting and reposting this document.¹⁵ The document appears to have been created by teacher Michael Partridge at Reagan High School, which never purchased Plaintiff's Biology EOC Student Course.¹⁶

• When Plaintiff's sales representative met with administrator Jacqueline Thompson at Yates High School to showcase Plaintiff's course notes, Thompson asked her to leave some examples for teachers to review, assuring her that the materials would not be copied.¹⁷ When the representative returned to collect the notes, they had tape over the language at the bottom stating, "COPYING THIS MATERIAL IS STRICTLY PROHIBITED," and Thompson did not deny that the works had been copied, although she professed to not know who had copied them.¹⁸

Plaintiff alleges that despite knowing of Plaintiff's intellectual property rights in its works and receiving repeated notices of ongoing infringement from 2012 to 2016, "Defendant's teachers and administrators continued to unlawfully distribute [Plaintiff's] materials amongst themselves" and to make unauthorized paper copies, and "Defendant has failed to take adequate steps to halt all infringement of [Plaintiff's] intellectual property rights."¹⁹

In this suit Plaintiff seeks injunctive relief and damages for Defendant's violation of its intellectual property rights.²⁰ Plaintiff's First Amended Complaint alleges claims for: (1) copyright infringement; (2) contributory copyright infringement; (3) vicarious copyright infringement; (4) violation of § 1202(B) of the Digital Millennium Copyright Act ("DMCA"); and (5) trademark infringement.²¹

Defendant moves to dismiss Counts 2-5 for failure to state a claim, to dismiss as time-barred the allegations related to Huffman, to dismiss with prejudice the claims alleged in Plaintiff's original Complaint but not realleged in its First Amended Complaint, and to strike certain allegations as immaterial, impertinent, and unduly prejudicial to Defendant.²²

II. Motion to Strike

Not as a separate focused motion, but rather as an add-on to several of its Rule 12(b)(6) arguments, Defendant moves under Rule 12(f) to strike Plaintiff's allegations in paragraphs 1, 25-27, 40-45, and the figures on pages 12-15 of Plaintiff's First Amended Complaint.²³ Rule 12(f) provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." FED. R. CIV. P. 12(f). Striking a pleading "is a drastic remedy to be resorted to only when required for the purposes of justice" and a motion to strike "should be granted only when the pleading to be stricken has no possible relation to the controversy." Augustus v. Bd. of Pub. Instruction, 306 F.2d 862, 868 (5th Cir. 1962) (quoting Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953) ); see also Encore Bank, N.A. v. Bank of Am., N.A., 918 F.Supp.2d 633, 642 (S.D. Tex. 2013) ("Motions to strike are usually viewed with disfavor and rarely granted since they seek a drastic remedy and are frequently sought merely to delay.").

After carefully reading Plaintiff's above-referenced allegations, it is evident that Defendant's conclusory arguments that they should be stricken as "immaterial, impertinent and unduly prejudicial" are wholly without merit under the standard of Rule 12(f). The allegations have at least some "possible relation to the controversy," Augustus, 306 F.2d at 868, and are not the kind of impertinent or scandalous pleadings that Rule 12(f) proscribes. "[T]he purposes of justice" therefore do not require striking any of Plaintiff's pleadings, id., and Defendant's motion to strike is denied.

III. Motion to Dismiss

A. Legal Standard

Rule 12(b)(6) provides for dismissal of an action for "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). When a district court reviews the sufficiency of a complaint before it receives any evidence either by affidavit or admission, its task is inevitably a limited one. See Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). The issue is not whether the plaintiff ultimately will prevail, but whether the plaintiff is entitled to offer evidence to support the claims. Id.

In considering a motion to dismiss under Rule 12(b)(6), the district court must construe the allegations in the complaint favorably to the pleader and must accept as true all well-pleaded facts in the complaint. See Lowrey v. Tex. A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). To survive dismissal, a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). While a complaint "does not need detailed factual allegations ... [the] allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 127 S.Ct. at 1964-65 (citations and internal footnote omitted).

B. Discussion

1. Plaintiff's Prior Claims

Defendant first seeks dismissal with prejudice of several claims alleged in Plaintiff's original Complaint, but which Plaintiff dropped from its First Amended Complaint.²⁴ Plaintiff filed its First Amended Complaint as a matter of right 21 days after service of Defendant's motion to dismiss under Rule 12(b)(1) and (6).²⁵ See FED. R. CIV. P. 15(a) (1) ("A party may amend its pleading once as a matter of course within: ... (B) if the pleading is one to which a responsive pleading is required, ... 21 days after service of a motion under Rule 12(b)...."). Defendant has cited no authority permitting the Court to adjudicate and dismiss with prejudice claims that Plaintiff is not asserting.²⁶ A plaintiff's voluntary dismissal of an action before the opposing party has served either an answer or a motion for summary judgment is without prejudice unless the plaintiff stipulates...