Mercedes Benz, USA, LLC. v. Lewis

MERCEDES BENZ, USA, LLC., Plaintiff, v. JAMES LEWIS, JEFF SOTO and MAXX GRAMAJO, DANIEL BOMBARDIER, Defendants.

Case No. 19-10948

Case No. 19-10949

Case No. 19-10951

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

September 11, 2019

HON. AVERN COHN

MEMORANDUM AND ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS

I. Introduction

These are declaratory judgment actions arising out of alleged copyright infringement violations. Plaintiff Mercedes Benz USA, LLC (Mercedes) filed three (3) declaratory judgment actions in this district against defendants who are artists and represented by the same counsel.¹ In broad terms, Mercedes obtained a permit to photograph various locations in downtown Detroit in conjunction with advertising one of its vehicles. Mercedes posted six (6) of the photographs on Instagram which depict in whole or in part murals painted on public buildings in Detroit by defendants. Defendants, through counsel, sent letters to Mercedes contending that the use of defendants' murals violates copyright law. Mercedes responded by seeking declaratory relief.

Defendants are: James Lewis (Lewis), Daniel Bombardier (Bombardier), Jeff Soto (Soto) and Maxx Gramajo (Gramajo).

Before the Court are motions to dismiss filed by each defendant, as follows:

Lewis' motion to dismiss, Doc. 8 in case no. 19-10948

Bombardier's motion to dismiss, Doc. 12 in case no. 19-10951

Soto and Gramajo's motion to dismiss, Doc. 9 in case no. 19-10949

All of the defendants argue that the declaratory judgment complaints fail to state a claim because (1) the case is not ripe as defendants have not registered copyrights, (2) Mercedes has failed to state a claim under the Architectural Works Copyright Protection Act (AWCPA), 17 U.S.C. § 120(a). Soto and Gramajo also argue that the Court lacks personal jurisdiction over them.

For the reasons that follow, the motions will be denied. As will be explained, Mercedes has alleged a plausible claim for declaratory relief against defendants and the Court has personal jurisdiction over all of the defendants.

II. Background

A. General

Mercedes sells and distributes vehicles, including the G 500 Series vehicle (the "G 500"). In January 2018, Mercedes attended the North American International Auto Show in Detroit, Michigan, to unveil the G 500, then its newest model luxury SUV. During that time, Mercedes obtained a permit from the City of Detroit to photograph the G 500 in specific downtown areas. The permit authorized Mercedes to photograph its G 500 in several locations, including the area between the Eastern Market and 1314 Gratiot Avenue, where defendants' murals are located Mercedes commissioned photographs of its G 500 throughout the city of Detroit. On January 26, 2018, Mercedes posted six of those photos on an Instagram account, @mercedesbenz.

1. Lewis

As to Lewis, among the photos Mercedes posted was a picture depicting the G 500 driving near 2001 Wilkins Street. The photo partially depicted Lewis' mural in the background. The post stated, "[t]his off-road legend is always ready for some urban exploration to mix things up" and was designed to highlight the G 500's versatility.

Lewis created the Mural in 2016 during the second year of the now annual art festival, Murals in the Market. The festival aims to revitalize the Eastern Market district of Detroit and turn it "into a must-see destination for arts, as well as food...." Complaint at ¶¶ 42-43, 45. Lewis' mural was painted on the façade of a building, was integrated into that building, and became a permanent fixture of the Eastern Market's cityscape.

2. Bombardier

Another photo Mercedes posted was a picture of the G 500 driving in front of Mike's Coney Island Restaurant. The photo partially depicted Bombardier's mural in the background. The post stated "[t]his off-road legend is always ready for some urban exploration to mix things up" and was designed to highlight the G 500's versatility.

Bombardier created the mural in 2017 during the third year of the Murals in the Market. The mural was painted on the side of façade of a building, was integrated into that building, and became a permanent fixture of the Eastern Market's cityscape.

3. Soto and Gramajo

Another photo Mercedes posted was a picture depicting the G 500 driving in frontof the Gratiot Central Market. The photo partially depicted a mural painted by Soto and Gramajo in the background. Again, the post stated: "[t]his off-road legend is always ready for some urban exploration to mix things up" and was designed to highlight the G 500's versatility.

Soto and Gramajo created the mural in 2015 during the first year of the Murals in the Market. The mural was painted on the side of façade of a market building, was integrated into that building, and became a permanent fixture of the Eastern Market's cityscape.

B. The Fall Out and Litigation

Over a year after Mercedes posted the pictures, defendants hired an attorney who sent letters to Mercedes in which they "threatened to file a copyright infringement lawsuit against Mercedes based on Mercedes depiction of the ... mural." Complaint at ¶ 6. Mercedes says that as a "courtesy" it removed the photographs from Instagram. Complaint at ¶ 6. However, defendants continued to make threats, expressing a "desire to 'expose' Mercedes, use formal discovery to learn information other people can use to sue Mercedes, and tell a jury that Mercedes made $80 million selling the G series truck in an effort to wipe out Mercedes revenue from sales of the G Series." Id. at ¶ 7.

Shortly after receiving the letters, Mercedes filed these declaratory judgment actions, contending (1) Mercedes made fair use of defendants' murals, (2) defendants' murals are exempt from protection under the AWCPA, (3) Mercedes did not violate the Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq., (4) Mercedes did not violate any of defendants' alleged rights.

III. Legal Standard

In assessing a Rule 12(b)(6) motion, the district court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded factual allegations as true. Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 512 (6th Cir. 2001). The defendant bears the burden of demonstrating that the plaintiff has failed to state a claim upon which relief can be granted. Crugher v. Prelesnik, 761 F.3d 610, 614 (6th Cir. 2014). To withstand a Rule 12(b)(6) motion, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007)). "A claim has facial plausibility when the [party] pleads factual content that allows the court to draw the reasonable inference that the [opposing party] is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. 555-56). However, "[t]hreadbare recitals of all the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. 662, 678 (2009).

"In deciding a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), th[e] Court may only consider 'the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings, and matters of which the [Court] may take judicial notice.'" Murray v. Geithner, 624 F. Supp. 2d 667, 671 (E.D. Mich. 2009) (citing 2 James Wm. Moore et al., Moore's Federal Practice 12.342 (3d ed. 2000).

IV. Analysis

A. Ripeness/Registration

Defendants argue that Mercedes cannot not seek declaratory relief unless andthey decide to register copyrights. In other words, they contend that this action is not "ripe" until and unless defendants register their murals with the copyright office because registration is a prerequisite to suit. This argument is not well taken. A declaratory judgment action is proper when "there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Commodities Exp. Co. v. Detroit Int'l Bridge Co., 695 F.3d 518, 525 (6th Cir. 2012). If the alleged facts "'demonstrate that the defendant could file a coercive action arising under federal law,'" the court's jurisdiction is properly invoked. Severe Records, LLC v. Rich, 658 F.3d 571, 581 (6th Cir. 2011).

Here, defendants threatened to sue for copyright infringement. The complaint alleges that defendants made adverse claims against Mercedes based on their claimed rights in the murals and threatened to sue Mercedes. Under the standard for declaratory relief, the complaint states a ripe claim.

Defendants argue that there can be no case or controversy unless they decide to register copyrights. Courts have held otherwise. See Otter Prods., LLC v. Stage Two Nine, LLC, 2019 WL 570642, at *6-7 (D. Colo. Jan. 15, 2019), report and recommendation adopted, 2019 WL 568477 (Feb. 12, 2019) (rejecting argument that lack of registration precludes a declaratory judgment action for non-infringement); Archie Comic Publ'ns, Inc. v. DeCarlo, 2001 WL 946496, at *1 (S.D.N.Y. Aug. 21, 2001) (same); Bhl Boresight, Inc. v. Geo-Steering Sols., Inc., 2017 WL 1177966, at *3-4 (S.D. Tex. Mar. 29, 2017) (same); Telebrands Corp. v. Exceptional Prods., Inc., 2011 WL 6029402, at *3 (D.N.J. Dec. 5, 2011) (same); Corwin v. Quinonez, 858 F. Supp. 2d 903, 908-09 (N.D. Oh. Mar. 12, 2012) (same).

Defendants' reliance on the Supreme Court's recent decision in Fourth Estate Publishing Ben. Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881 (2019), does not alter this conclusion. Fourth Estate did not address an action seeking a declaration of non-infringement. Rather, it holds only that section 411(a) typically "bars a copyright owner from suing for infringement 'until registration ... has been made.'" Id. at 888.3 But even then,...