Mays & Associates, Inc. v. Euler, No. CIV. RDB 05-437.

• Decision Date: 18 May 2005
• Docket Number: No. CIV. RDB 05-437.
• Parties: MAYS & ASSOCIATES INC. Plaintiff, v. Robin N. EULER and David R. Euler, Defendants.
• Court: U.S. District Court — District of Maryland

370 F.Supp.2d 362

MAYS & ASSOCIATES INC. Plaintiff, v. Robin N. EULER and David R. Euler, Defendants.

No. CIV. RDB 05-437.

United States District Court, D. Maryland.

May 18, 2005.

Paul George Skalny, Brian Lee Oliner, Davis Agnor Rapaport and Skalny LLC, Columbia, MD, for Plaintiff.

Gabriel Antonio Terrasa, John M. Singleton, Singleton Gendler PA, Owings Mills, MD, for Defendants.

MEMORANDUM OPINION

BENNETT, District Judge.

Pending before this Court is the Motion to Dismiss of the Defendants Robin and David Euler, filed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, on the basis of lack of subject matter jurisdiction, and pursuant to Rule 12(b)(6), for failure to state a claim upon which relief may be granted. Also pending is Plaintiff Mays & Associates' Motion for Preliminary Injunction and Motion to Amend its Complaint. This Court must first address Defendants' Motion to Dismiss as it challenges this Court's jurisdiction over this action. Plaintiff alleges that this Court has jurisdiction pursuant to 28 U.S.C. § 1331,¹ based on claims brought under the Copyright Act, 17 U.S.C. §§ 101 et seq. and the Lanham Act, 15 U.S.C. §§ 1051 et seq., and pursuant to 28 U.S.C. § 1338.² In addition, Plaintiff's Complaint contains various state law claims, including unfair competition, misappropriation of trade secrets, conversion, tortious interference with prospective advantage, tortious interference with contractual relations, and breach of fiduciary duty.³ Defendants' Motion to Dismiss has been fully briefed and, on May 6, 2005, this Court conducted a hearing on that motion. For reasons of efficiency, this Court also addressed Plaintiff's Motion for Preliminary Injunction in the event that it was determined that there was jurisdiction over this action. For the reasons stated below, Defendants' Motion to Dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(6) is GRANTED and this case shall be DISMISSED.⁴

BACKGROUND

This Court reviews the facts of this case in the light most favorable to the Plaintiff. Mays & Associates ("Mays") is a Maryland based, full service web and print design, marketing and communications company developing high impact creative strategies in print, television, radio, interactive, multi-media, and website design. It is a small company consisting of four full time employees in addition to approximately six strategic partners who work on certain client projects with the company. Robin Euler, one of the Defendants in this case, worked as a graphic designer at Mays until January 5, 2005. While the parties are in dispute over exactly what role Ms. Euler played while employed at Mays, this dispute does not impact the questions before the Court. It is undisputed that Ms. Euler was not asked to, nor did she, sign a non-compete agreement or a trade secret agreement with Mays during the entire term of her employment.

After terminating her employment with Mays on January 5, 2005, Ms. Euler established Red Robin Design, a Carroll County, Maryland graphic and web design boutique that specializes in creating logos, websites, and marketing materials for small to medium-size businesses and individuals. On the Reb Robin Design website (www.redrobindesign. com), Ms. Euler has a section showing her portfolio of work, including website design, logos, print ads, and large format graphics, some of which were projects completed for Mays' clients while Ms. Euler was an employee at Mays.⁵ For these works, Ms. Euler has posted the following disclaimer: "Disclaimer: The project shown here was designed and executed by owner, Robin N. Euler, while on staff as Senior Graphic & Web Designer for Mays & Associates, Inc. This image is not intended for sale or distribution, and we do not take the credit for handling this particular account through Red Robin Design. It is only intended to be used as an example of Robin N. Euler's creative work."

On Friday, February 11, 2005, Mays submitted 30 copyright applications to the United States Copyright Office seeking to register certain works created for clients of Mays during Robin Euler's employment with Mays. On Monday, February 14, 2005, Mays filed its Complaint in this Court and a Motion for Preliminary Injunction. The Complaint alleges the following Counts: CountI — Violation of Copyright Act (17 U.S.C. §§ 101, et seq.); Count II — Unfair Competition in Violation of the Lanham Act (15 U.S.C. § 1125), Count III — Unfair Competition (Common Law); Count IV — Misappropriation of Trade Secrets under the Maryland Trade Secrets Act; CountV — Conversion, Count VI — Tortious Interference with Prospective Advantage, Count VII — Tortious Interference with Contractual Relations; and Count VIII — Breach of Fiduciary Duty.

As of the date of the hearing, May 6, 2005, Plaintiff had received four copyright registrations from the United States Copyright Office for certain audio visual works from the thirty applications submitted on February 11, 2005. Subsequent to that hearing, Plaintiff moved for leave to file a supplemental motion noting some additional certificates of registration having been issued.⁶ There are remaining copyright applications still pending with the Copyright Office. Regardless of the issuance of any certificates or the pendency of any applications, at the hearing before this Court the parties agreed that only two works for which the Plaintiff has applied for copyrights remain at issue in this matter — the website designed for the Young School and a print advertisement created for Vectorworks.⁷ All of Plaintiff's claims relate to these two works. It is undisputed that copyright applications for these works have been filed, but the Copyright Office has not issued certificates of registration or denied same with respect to these two works.

STANDARD OF REVIEW

The burden is on the plaintiff to prove that subject matter jurisdiction properly exists in the federal court. See Evans v. B.F. Perkins Co., a Div. of Standex Int'l Corp., 166 F.3d 642, 647 (4th Cir.1999). In a 12(b)(1) motion, the court "may consider evidence outside the pleadings" to help determine whether it has jurisdiction over the case before it. Richmond Fredericksburg & Potomac R.R. Co. v. U.S., 945 F.2d 765, 768 (4th Cir.1991). The district court should grant the Rule 12(b)(1) motion to dismiss "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Evans, 166 F.3d at 647 (quoting Richmond, 945 F.2d at 768).

A Rule 12(b)(6) motion to dismiss should be granted only if, after accepting the plaintiff's well-pleaded allegations as true, it appears certain that the plaintiff can prove no set of facts in support of his claim entitling him to relief. Marketing Prods. Mgmt., LLC v. Healthandbeautydirect.com, Inc., 333 F.Supp.2d 418, 420 (D.Md.2004); (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir.1999)). In reviewing the complaint, the court accepts all well-pled allegations of the complaint as true and construes the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 473 (4th Cir.1997); Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993).

DISCUSSION

As noted above, Plaintiff alleges that this Court has jurisdiction pursuant to 28 U.S.C. § 1331, based on claims brought under the Copyright Act, 17 U.S.C. §§ 101 et seq., and the Lanham Act, 15 U.S.C. §§ 1051 et seq., and pursuant to 28 U.S.C. § 1338.⁸ Plaintiff alleges that Defendants violated the Copyright Act by using certain graphic works on the Red Robin Design website that belong to Mays without its authorization. Plaintiff also alleges that Defendants violated the Lanham Act because of Red Robin Design's use of these images have caused, or are likely to cause, confusion, mistake or to deceive others in the marketplace as to the origin, sponsorship, or approval of the services or commercial activities being offered by the Defendants. Defendants argue in their Motion to Dismiss that this Court lacks subject matter jurisdiction over Plaintiff's Copyright Act claim because Plaintiff has merely applied for a copyright, on the eve of filing this suit, but has not actually received a registered copyright for either of the two works that Defendants are allegedly currently infringing. Defendants further claim that Plaintiff's Lanham Act claim cannot be maintained because it is preempted by copyright law and does not state a claim upon which relief can be granted. The Court will address each of these assertions in turn.

1. Plaintiff's Copyright Act Claim Pursuant to 17 U.S.C. § 411(a) (Count I)

It is axiomatic that copyright registration is a jurisdictional prerequisite to bringing an action for infringement under the Copyright Act. See 17 U.S.C. §§ 101 et seq.; Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 658 (4th Cir.1993); Xoom, Inc. v. Imageline, Inc., 323 F.3d 279, 283 (4th Cir.2003). In both of these cases the Fourth Circuit noted the precise language of the Copyright Act, which provides:

Except for an action brought for a violation of the rights of the author under section 106A(a), and subject to the provisions of subsection (b), no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute an action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but...