Elsevier Ltd. v. Chitika, Inc.

2011 Copr.L.Dec. P 30,166

826 F.Supp.2d 398

ELSEVIER LTD., and John Wiley & Sons, Inc.

v.CHITIKA, INC., Clicksor.com, Inc., and Kapil Dev Saggi.

Civil Action No. 11–10026–RGS.

United States District Court, D. Massachusetts.

Dec. 2, 2011.

William S. Strong, Kotin, Crabtree & Strong LLP, Boston, MA, for Elsevier Ltd.

Edward J. Naughton, Steven M. Veenema, Brown Rudnick LLP, Boston, MA, for Chitika, Inc.

MEMORANDUM AND ORDER ON DEFENDANT CHITIKA'S MOTION FOR JUDGMENT ON THE PLEADINGS

STEARNS, District Judge.

In this copyright infringement case, plaintiffs Elsevier Ltd. and John Wiley & Sons, Inc. (Wiley), claim that defendant Chitika, Inc., is liable for contributory infringement of plaintiffs' books. Presently before the court is Chitika's motion for judgment on the pleadings. The court heard oral argument on November 29, 2011.

BACKGROUND

The facts, in the light most favorable to plaintiffs as the nonmoving party, are as follows.¹ Plaintiff Elsevier is a publishing corporation organized under the laws of England and headquartered in London. Am. Compl. ¶ 1. Plaintiff Wiley is a publishing corporation organized under the laws of New York, with its principal place of business in Hoboken, New Jersey. Id. ¶ 2. Defendant Chitika is “a data analytics company in the business of on-line advertising.” ² Answer ¶ 4. It is organized under the laws of Delaware and headquartered in Westborough, Massachusetts. Id. ¶ 4. Defendant Kapil Dev Saggi, a citizen and resident of India, operated the website www. pharmatext. org (the Pharmatext website). Am. Compl. ¶ 18.³

The Pharmatext home page was titled “Pharmatext.org, Free Pharma E-Books.” Id. ¶ 20, Ex. B. Below this title “were pictures of the front covers of various books available through Pharmatext, and various ways of finding links to these and other ‘free’ books. Among the methods available for linking to ‘free’ books was a box in which one could enter a title and conduct a search for that title.” Id. “If a book was available through Pharmatext, a picture of its front cover appeared on the screen along with a hypertext link called ‘Download.’ If one clicked on ‘Download,’ one would be linked through to a page through which it was possible to download the entire text of the book at no cost.” Id. ¶ 21.⁴

Plaintiffs allege that “[v]isitors to Pharmatext were greeted with heavy third-party advertising. Since nothing was paid by Pharmatext users for infringing copies, advertising appeared to be Pharmatext's only source of income, with the possible exception of ‘donations' which were solicited on the site.” Id. ¶ 24. Plaintiffs further allege that according to their “information and belief, many of these third-party ads were placed on the Pharmatext site by defendants Chitika and Clicksor ⁵ Chitika holds itself out to the public as ‘a proven channel for targeting on-line consumers and qualified buyers.’ ” Id. ¶ 25, quoting http:// chitika. com/ blog/ about- us. ⁶ Chitika receives payments from advertisers and pays Pharmatext a share of those payments in exchange for the right to display ads on the Pharmatext website. Am. Compl. ¶ 26; Answer ¶ 26. Chitika alleges that over approximately twenty-nine months, from August of 2008 through December of 2010, its payments to Pharmatext “amounted to $513.93, or approximately $17.72 per month on average.” Answer ¶ 26.⁷

Plaintiffs became concerned that unauthorized copies of their books were available through the Pharmatext website. Am. Compl. ¶ 22. They asked David Burke, a resident of Massachusetts, to investigate. On or about August 1, 2010, Burke succeeded in downloading entire copies of plaintiffs' books to his computer, without having to make any payment. Id. Plaintiffs at no time authorized anyone to store their books online or to deliver copies as downloads to users of the Pharmatext website. Id. ¶ 23.

On January 6, 2011, plaintiffs filed an action against defendants for copyright infringement. Plaintiffs allege two counts of copyright infringement: Count I pertains to the Development and Validation of Analytical Methods, edited by Christopher M. Riley and Thomas W. Rosanske; ⁸ Count II pertains to the Wiley Guide to Chemical Incompatibilities, edited by Richard Pohanish and Stanley A. Greene.⁹ Id. ¶ 27. Plaintiffs allege that “Defendant Saggi is directly liable for the infringement carried out via Pharmatext.” Id. ¶ 31.¹⁰ Plaintiffs further allege that Chitika is “liable for contributory infringement,” insofar as it “directly profited from the infringement carried out through Pharmatext,” and “enabled Pharmatext to stay in the infringement business by supplying it with income.” Id. ¶ 33.

On January 6, 2011, following an ex parte motion hearing, the court (Woodlock, J.) granted plaintiffs' motion for a temporary restraining order, stating that “Defendant Whois Privacy Protection Service, Inc. shall not assign to any third party, including but not limited to the operator of the website identified by the domain name www. pharmatext. org; ownership or control of that domain name.” ¹¹ See Dkt. # 9 (Temporary Restraining Order). On January 14, 2011, this court (Stearns, J.) held a hearing on plaintiffs' motion for a preliminary injunction. At the hearing, plaintiffs' counsel stated that the defendants had been served and were aware of the scheduled hearing; however, representatives for the defendants did not appear. The court granted the motion for a preliminary injunction and ordered defendant Whois Privacy Protection Service, Inc. to “take all steps necessary to disable” the Pharmatext website. See Dkt. # 13 (Order on Plaintiffs' Motion for a Preliminary Injunction).

On March 16, 2011, plaintiffs filed an Amended Complaint. On May 27, 2011, Chitika filed an Answer to the Amended Complaint. On June 3, 2011, Chitika filed the present motion for judgment on the pleadings, arguing that plaintiffs have not stated a cognizable claim for contributory infringement.

DISCUSSION

A motion to dismiss brought after a complaint is answered is appropriately treated as a motion for judgment on the pleadings. See Fed.R.Civ.P. 12(c) (“After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.”). “In the archetypical case, the fate of such a motion will depend upon whether the pleadings, taken as a whole, reveal any potential dispute about one or more of the material facts.” Gulf Coast Bank & Trust Co. v. Reder, 355 F.3d 35, 38 (1st Cir.2004); see also Aponte–Torres, 445 F.3d at 54 (“Like Rule 12(b)(6), Rule 12(c) does not allow for any resolution of contested facts; rather, a court may enter judgment on the pleadings only if the uncontested and properly considered facts conclusively establish the movant's entitlement to a favorable judgment.”).

“[T]o survive a Rule 12(b)(6) motion (and, by extension, a Rule 12(c) motion) a complaint must contain factual allegations that ‘raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true....’ ” Perez–Acevedo v. Rivero–Cubano, 520 F.3d 26, 29 (1st Cir.2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “In reviewing a motion under Rule 12(c), as in reviewing a Rule 12(b)(6) motion, [a court] may consider ‘documents the authenticity of which are not disputed by the parties; ... documents central to the plaintiffs' claim; [and] documents sufficiently referred to in the complaint.’ ” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir.2007), quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993).

I. Direct Infringement

Chitika first argues that plaintiffs have failed to allege a viable claim for direct infringement, which is a prerequisite to a claim for contributory infringement.¹² See Metro–Goldwyn–Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (“One infringes contributorily by intentionally inducing or encouraging direct infringement.”); A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n. 2 (9th Cir.2001) (“Secondary liability for copyright infringement does not exist in the absence of direct infringement by a third party.”).

Chitika contends that plaintiffs have not alleged any act of direct infringement occurring within the United States. “It is well established that copyright laws generally do not have extraterritorial application.” Update Art, Inc. v. Modiin Publ'g, Ltd., 843 F.2d 67, 73 (2d Cir.1988). “[I]n order for U.S. copyright law to apply, at least one alleged infringement must be completed entirely within the United States.” Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir.1995).

Read in the light most favorable to plaintiffs, the Amended Complaint appears to allege infringement of two exclusive rights under copyright: the right to distribute copies of the copyrighted works, 17 U.S.C. § 106(3), and the right to display copies of the copyrighted works publicly, id. § 106(5). See Am. Compl. ¶¶ 28–29. Chitika argues that “[b]ecause the plaintiffs here have not alleged and cannot allege that the purportedly infringing copies of their books were made in the United States,” U.S. copyright law has no application. Def.'s Mem. at 8. “Similarly, with regard to their distribution right, the plaintiffs have alleged only that the unauthorized copies are made ‘available’ for download from unidentified servers in unspecified locations.” Id., citing Am. Compl. ¶¶ 20–22.

Plaintiffs, for their part, contend that the “test downloads” performed by their investigator, David Burke, constitute direct infringement. In support of this argument, plaintiffs rely on Arista Records LLC v. Lime Group LLC, 2011 WL 1641978, at *8 (S.D.N.Y. Apr. 29, 2011) (stating that “[c]ourts have consistently relied upon evidence of downloads by a plaintiff's investigator to establish both unauthorized copying and distribution of a plaintiff's work.”). However, in Arista Records...