Health Grades v. Robert Wood Johnson Univ. Hosp.

• Decision Date: 19 June 2009
• Docket Number: Civil Action No. 06-cv-02351-JLK.
• Citation: 634 F.Supp.2d 1226
• Parties: HEALTH GRADES, INC., a Delaware corporation, Plaintiff, v. ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, INC., a New Jersey corporation, Defendant.
• Court: U.S. District Court — District of Colorado

634 F.Supp.2d 1226

HEALTH GRADES, INC., a Delaware corporation, Plaintiff, v. ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, INC., a New Jersey corporation, Defendant.

Civil Action No. 06-cv-02351-JLK.

United States District Court, D. Colorado.

June 19, 2009.

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Kris John Kostolansky, Rothgerber Johnson & Lyons, LLP, Denver, CO, for Plaintiff.

Donald A. Degnan, Holland & Hart, LLP, Boulder, CO, Jeanne Melissa Hamburg, Norris, McLaughlin & Marcus, P.A., New York, NY, Joseph Thomas Jaros, Holland & Hart, LLP, Denver, CO, for Defendant.

ORDER ON MOTION TO DISMISS

KANE, District Judge.

Plaintiff Health Grades, Inc. (Health Grades) asserts claims against Defendant Robert Wood Johnson University Hospital, Inc. (RWJ) for copyright infringement, trademark infringement and breach of contract arising from RWJ's unauthorized publication of Health Grades ratings and awards for RWJ's healthcare services. RWJ has moved to dismiss Health Grades' complaint for failure to state a claim pursuant to Rule 12(b)(6). Health Grades opposes RWJ's motion and has filed an alternative Rule 56(f) motion seeking discovery in the event I convert RWJ's 12(b)(6) motion into a motion for summary judgment. For the reasons stated below, I deny RWJ's motion to dismiss in part and grant it in part and deny Health Grades' alternative Rule 56(f) motion as moot.

Background

For purposes of deciding RWJ's motion to dismiss, I assume the facts alleged by Health Grades in its complaint are true. According to these allegations, Health Grades is a Delaware corporation based in Golden, Colorado. It is in the business of developing and distributing objective ratings of hospitals, physicians and other healthcare providers. Its "1-3-5 Star" ratings and provider awards are based on data and information obtained from a variety of sources, most of which are publically available. Health Grades determines its ratings and awards for individual providers by analyzing these data using its own proprietary methodologies.

Health Grades publishes its ratings and awards for healthcare providers, along with other information, on its website. Health Grades has registered copyrights with respect to the information contained at its website, including for its healthcare ratings and awards. Health Grades also owns and has registered the trademark "Health Grades" and a service mark consisting of a check mark, oval and star design with the United States Patent and Trademark Office. All of these registrations are valid and were in full force and effect at all times relevant to this action.

Members of the public may access and view the ratings, awards and other information on Health Grades' website by executing a "click-through" Limited License and User Agreement (Limited License) set out on the website. The Limited License grants "a personal, revocable, nonexclusive, non-transferable license to access and view this Site and the Site Materials, and to copy, download, store and/or print only a single copy of any Site Materials, solely for your noncommercial use and not for resale or distribution to anyone else."¹ Complaint ¶ 7 (quoting Limited License and User Agreement). The Limited License also, among other things, notifies site visitors entering into the agreement that the Site Materials are protected by international copyright and trademark law and that any copying, reproduction, modification, adaptation, translation or distribution of the materials on the site, including Health Grades' 1-3-5 Star rating system and methodology, beyond the limited, noncommercial license it grants is prohibited without Health Grades' prior written permission.

Health Grades enters into additional licensing agreements with healthcare providers that authorize them to use Health Grades' ratings, awards and other information to promote their healthcare services in return for payment of a licensing fee. These additional licensing agreements generate the revenue necessary to sustain Health Grades' business.

RWJ is a hospital located in Hamilton, New Jersey. From 2004 through 2006, RWJ, through its authorized employees, accessed the Health Grades website more than 200 times after entering into the required Limited License.² RWJ then proceeded to use materials from the Health Grades' website, specifically including Health Grades' name and the ratings and awards it had given RWJ, in at least nine press releases and articles promoting the hospital and/or its services. Health Grades' name and its ratings of and awards to RWJ were also published on the RWJ Hamilton website. RWJ did not have permission from Health Grades to use its name, ratings or awards in this manner.

In February 2005, Health Grades notified RWJ by letter that RWJ was infringing on Health Grades' copyrights and trademarks by using these materials in its advertisements and on the RWJ Hamilton website. Although RWJ represented in a subsequent letter that it would cease this conduct, it has continued to use Health Grades' materials.

On October 19, 2006, Health Grades filed this action against RWJ in Colorado state district court, asserting claims for copyright infringement, trademark infringement and breach of contract. After RWJ removed the action to this court, it filed the subject motion to dismiss each of these claims.

Standard of Review

My function in deciding RWJ's 12(b)(6) motion to dismiss is to assess whether Health Grades' complaint is legally sufficient to state one or more claims for which relief may be granted. Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002). In making this assessment, I accept all well-pleaded allegations of the complaint as true and view the allegations in the light most favorable to Health Grades, as the non-moving party. Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.1999). I must deny the motion "unless it appears beyond doubt that [Health Grades] can prove no set of facts in support of [its] claims which would entitle [it] to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Sutton, 173 F.3d at 1236.

In addition to the complaint, I may consider documents referred to in the complaint if the documents are central to the plaintiffs' claims and the parties do not dispute the documents' authenticity. Jacobsen, 287 F.3d at 941. Under this rule, I may consider the Limited Licenses referenced in and attached to the complaint, as well as the articles and press releases referenced in paragraph 11 of the complaint that RWJ attached to its motion to dismiss. I may not, however, consider or weigh any other potential evidence the parties might present at trial in deciding whether Health Grades has stated a claim. Id.

Discussion

RWJ seeks dismissal of each of Health Grades' claims, for copyright infringement, trademark infringement and breach of contract. Each claim is considered in turn below, as is Health Grades' alternative motion for discovery pursuant to Rule 56(f).

I. Copyright Infringement

To prevail on its claim of copyright infringement, Health Grades must establish that: (1) it owns a valid copyright; and (2) RWJ copied protected components of Health Grades' copyrighted material. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 831 (10th Cir.1993). "Copied" in this context is a short-hand reference for any use of protected materials that infringes on the copyright holder's exclusive rights in these materials as set forth in the Copyright Act. Gates, 9 F.3d at 832 n. 6. These exclusive rights include the right to reproduce the copyrighted work, to prepare derivative works based on it and to distribute copies of the work to the public. See id.; 17 U.S.C. § 106.

RWJ does not dispute that Health Grades has alleged facts that, taken as true, establish that Health Grades owns a valid copyright in its website. See Gates, 9 F.3d at 831-32 (certificate of registration is prima facie evidence of copyright validity). Nor does RWJ dispute that it copied components of this website when it reproduced and distributed Health Grades' ratings and awards in its promotional materials. RWJ asserts, however, that there is no circumstance under which Health Grades can prove that the specific components it copied, Health Grades' ratings and awards for RWJ, are protected under federal copyright law. If this is correct, then Health Grades' copyright infringement claim cannot stand.

RWJ first asserts Health Grades' ratings for RWJ's various services are not protected by copyright because they are facts. It is well-settled that "no author may copyright facts." Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 547, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985); see 17 U.S.C. § 102(b). At the same time, it is equally well-settled that compilations of facts are within the subject of copyright. Feist, 499 U.S. at 345, 111 S.Ct. 1282; 17 U.S.C. § 103. The viability of Health Grades' copyright infringement claim, therefore, turns initially on whether its ratings and awards, as described in the complaint, are unprotected facts or are protected factual compilations.³

The Supreme Court's decision in Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991), guides this analysis. In Feist, the Supreme Court considered whether the names, addresses and telephone numbers included in the white pages of a telephone directory were protected by copyright. To decide this question, the Court first discussed the reason that facts are not copyrightable. Id. at 345-48, 111 S.Ct. 1282. This reason lies in the sine qua non of copyright, which is that the work is original to the author. Id. at 345, 348, 111 S.Ct. 1282; see 17 U.S.C. § 102(a) (copyright protection extends only to "original works of authorship"). "Original,"...