Iconbazaar, L.L.C. v. America Online, Inc.

• Decision Date: 26 February 2004
• Docket Number: No. 1:02 CV 1022.,1:02 CV 1022.
• Citation: 308 F.Supp.2d 630
• Court: U.S. District Court — Middle District of North Carolina
• Parties: ICONBAZAAR, L.L.C., Plaintiff, v. AMERICA ONLINE, INC., Defendant.

308 F.Supp.2d 630

ICONBAZAAR, L.L.C., Plaintiff, v. AMERICA ONLINE, INC., Defendant.

No. 1:02 CV 1022.

United States District Court, M.D. North Carolina.

February 26, 2004.

Scott K. Tippett, House & Tippett, Winston-Salem, NC, for plaintiff.

David Kushner, Brooks, Pierce, McLendon, Humphrey, & Leonard, L.L.P., Raleigh, NC, Jennifer Van Zant, Brooks, Pierce, McLendon, Humphrey, & Leonard, Greensboro, NC, for defendant.

MEMORANDUM OPINION

TILLEY, Chief Judge.

This case is before the Court on Defendant's Motion to Dismiss Plaintiff's First Amended Complaint. [Doc. # 13]. Defendant's prior Motion to Dismiss [Doc. # 6] is now MOOT. For the reasons set forth below, the Defendant's Motion to Dismiss Plaintiff's First Amended Complaint will be GRANTED IN PART AND DENIED IN PART. Specifically, the motion will be GRANTED as to both the state law unfair and deceptive trade practices claim and any trademark claims, and DENIED as to the federal copyright claim.

I.

The facts in the light most favorable to the Plaintiff are as follows: Plaintiff Iconbazaar, L.L.C. is a North Carolina company that owns intellectual property rights in various computer graphic images, or "icons". These images were created by one of Iconbazaar's founders, Christopher Ralph, and subsequently assigned to Iconbazaar. Iconbazaar maintains a website, www.iconbazaar.com, through which patrons may license the use of any of thousands of these graphic images.

Iconbazaar alleges that Defendant America Online, Inc. ("AOL") used one of its images without prior approval. Specifically, Iconbazaar alleges that AOL used a dragonfly image, DRGFLY02.GIF, in its AOL Instant Messenger program without Iconbazaar's knowledge or consent. AOL's use of the dragonfly image began in November or December of 1999, when it released AOL Instant Messenger Version 3.5.1670. As part of a promotion, AOL distributed free copies of the program throughout the United States via mail and print media.

Iconbazaar filed a Complaint¹ against AOL on November 26, 2002, alleging copyright infringement and state law unfair and deceptive trade practices. The Complaint also included a statement that Iconbazaar had common law trademark rights in the image, and a request for injunctive relief under trademark law, but did not include a separate count for trademark violations. AOL moved to dismiss the Complaint. [Doc. # 6]. On June 25, 2003, Iconbazaar responded by filing both a response to AOL's motion and an Amended Complaint. AOL then moved to dismiss the Amended Complaint. [Doc. # 13].

II.

The only motion currently at issue is the Motion to Dismiss the Plaintiff's First Amended Complaint. [Doc. # 13]. An amended pleading supercedes the original pleading, leaving the original with no legal effect. Young v. City of Mount Ranier, 238 F.3d 567, 572 (4th Cir.2001). Because Iconbazaar's original Complaint is without legal effect, AOL's first Motion to Dismiss [Doc. # 6] and any responses to that motion are now MOOT. As to the remaining motion, each of the claims for which AOL seeks dismissal will be discussed below, in turn.

A.

AOL contends that Count One, Iconbazaar's copyright claim, should be dismissed for three reasons. The first two reasons for dismissal are brought pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. First, AOL claims that the dragonfly image was not registered with the Copyright Office prior to the filing of this infringement action. Second, AOL claims that only Christopher Ralph, and not Iconbazaar, has standing to pursue any copyright action. As a third grounds for dismissal, if this Court should find subject matter jurisdiction exists, AOL contends that Count One should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. For the reasons stated below, the Motion to Dismiss the First Amended Complaint will be DENIED as to Count One.

1.

AOL first argues that this Court does not have subject matter over the copyright claim because Iconbazaar failed to timely register its dragonfly image. Neither party disputes that the work in question must be registered with the Copyright Office before an action for copyright infringement may be brought. See 17 U.S.C. § 411(a);² Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 658 (4th Cir.1993). Likewise, neither party disputes that registration is a jurisdictional prerequisite. See Xoom, Inc. v. Imageline, Inc., 323 F.3d 279, 283 (4th Cir.2003). The dispute boils down to the issue of when a work is considered "registered" for purposes of copyright law. Iconbazaar contends that registration is complete upon sending an application to the Copyright Office, which it alleges was done sometime "[p]rior to the institution of this action."³ In contrast, AOL contends that registration is not complete until a party has received, or been denied, a registration certificate.

There is a split of authority on when a copyright is registered for purposes of 17 U.S.C. § 411(a). Numerous district courts have found that a copyright is registered upon filing a completed application with the Copyright Office. See e.g., Well-Made Toy Mfg. Corp. v. Goffa Intern. Corp. 210 F.Supp.2d 147, 157 (E.D.N.Y.2002); Int'l Kitchen Exhaust Cleaning Ass'n v. Power Washers of N. Am., 81 F.Supp.2d 70 (D.D.C.2000); Havens v. Time Warner, Inc., 896 F.Supp. 141, 142-43 (S.D.N.Y. 1995); Tabra Inc. v. Treasures de Paradise Designs Inc., 20 U.S.P.Q.2d 1313, 1318 (N.D.Cal.1992). In addition, the foremost treaty on copyright law takes this position. 2-7 Nimmer on Copyright § 7.16(B)(1)(a)(i). The Fifth Circuit, citing Nimmer, also deems a copyright registered upon application. See e.g., Apple Barrel Prods., Inc. v. Beard, 730 F.2d 384, 387-87 (5th Cir.1984).

Numerous district courts have disagreed with the registration-upon-application approach. These courts require a plaintiff to show receipt, or denial, of a copyright registration certificate before bringing suit. See e.g., Goebel v. Manis, 39 F.Supp.2d 1318, 1320 (D.Kan.1999); Miller v. CP Chems., Inc., 808 F.Supp. 1238, 1241 (D.S.C.1992); Demetriades v. Kaufmann, 680 F.Supp. 658, 661 (S.D.N.Y.1988). See also, M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 n. 4 (11th Cir.1990) (discussing the requirement of "registration" and including a footnote citing, among others, several cases requiring registration certificates). Some courts have required certificates, even while admitting the inefficiency of this approach. See e.g., Ryan v. Carl Corp., 1998 WL 320817, **2-3, 1998 U.S. Dist. LEXIS 9012 at *7-8 (N.D.Cal.) (dismissing action for lack of a certificate and finding that courts are "not free to redraft statutes to make them more sensible or just.").

The Fourth Circuit has not directly addressed the issue. However, there is some support within the Circuit for the registration-on-application approach. Some district courts in the Fourth Circuit have found that registration upon application is the proper interpretation. See e.g., Berlyn, Inc. v. The Gazette Newspapers, Inc., 157 F.Supp.2d 609, 623 (D.Md.2001) (finding no jurisdiction where the plaintiff failed to allege that he had filed an application); Secure Servs. Tech., Inc. v. Time & Space Processing, Inc., 722 F.Supp. 1354 (E.D.Va.1989) (finding in dicta that any other approach would leave a plaintiff "in legal limbo" while the Copyright Office processed applications). Further, a Fourth Circuit case decided shortly after the 1976 Amendments to the Copyright Act has language which may be read to require less than a registration certificate for jurisdiction. Eltra Corp. v. Ringer, 579 F.2d 294, 296, n. 4 (4th Cir.1978). In Eltra Corp., a mandamus action to compel the Register to register a copyright, the Fourth Circuit included a footnote saying that "[t]he 1976 Amendments eliminate any need to secure registration as a prerequisite to an infringement suit and authorize suit for infringement, despite the Register's denial, so long as the Register is notified."

The goal of statutory interpretation is always to ascertain and implement the intent of Congress. Scott v. U.S., 328 F.3d 132, 138 (4th Cir.2003). In doing so, courts should begin with the words of the statute and give the words their common meaning. Id. at 139. Courts should strive to give effect to every word in the statute. Kofa v. U.S. I.N.S., 60 F.3d 1084, 1094 (4th Cir.1995). Only if the statute is ambiguous should a court look beyond the language of the statute. U.S. v. Akinkoye, 185 F.3d 192, 200 (4th Cir.1999).

Several statutory provisions within the Copyright Act are often cited as evidence of Congressional intent. Courts that require registration certificates often focus on language found in 17 U.S.C. § 410(a), which states that the Register of Copyrights "shall register the claim and issue to the applicant a certificate" when examination of the materials submitted shows that all "legal and formal requirements" have been met. This language has been interpreted as saying that registration is not issued until all materials have been examined, and not upon filing. See e.g., Ryan v. Carl Corp., 1998 WL 320817, *2, 1998 U.S. Dist. LEXIS 9012 at *5 (N.D.Cal.). However, this statute could be read to apply only to the requirements for issuance of a registration certificate, not to the requirements for instituting an action for infringement.

Courts finding registration complete upon application focus on language in 17 U.S.C. § 410(d), which states that the "effective date of a copyright registration is the day on which an application, deposit, and fee, which are later determined ... to be acceptable for registration, have all been received." This provision can either be read to say that registration is complete upon application, or to say that registration certificates will be backdated to the day on which a completed application is received.

Because these commonly cited provisions can be read in two...