Media.Net Adver. FZ-LLC v. NetSeer, Inc., Case No. 14-cv-03883-EMC

• Decision Date: 12 January 2016
• Docket Number: Case No. 14-cv-03883-EMC
• Citation: 156 F.Supp.3d 1052,117 U.S.P.Q.2d 1701
• Parties: Media.net Advertising FZ-LLC, Plaintiff, v. NetSeer, Inc., Defendant.
• Court: U.S. District Court — Northern District of California

156 F.Supp.3d 1052

117 U.S.P.Q.2d 1701

Media.net Advertising FZ-LLC, Plaintiff,

v.NetSeer, Inc., Defendant.

Case No. 14-cv-03883-EMC

United States District Court, N.D. California.

Signed January 12, 2016

Leeor Neta, Newman Du Wors LLP, Emeryville, CA, Derek Linke, Newman Du Wors LLP, Seattle, WA, for Plaintiff.

Vernon H. Granneman, Pillsbury Winthrop Shaw Pittman LLP, Palo Alto, CA, for Defendant.

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART DEFENDANT'S MOTION TO DISMISS

EDWARD M. CHEN

, United States District Judge

I. INTRODUCTION

Plaintiff Media.net Advertising FZ-LLC initiated this lawsuit against Defendant NetSeer, Inc. The First Amended Complaint (“FAC”) asserts two claims of copyright infringement, as well as claims of intentional interference with business contract, intentional interference with prospective business relationship, and violations of California's Unfair Competition Law (“UCL”), California Business and Professions Code section 17200 et seq.

Docket No. 32.

Defendant moves for summary judgment on the copyright infringement claims and to dismiss the state law claims. Docket No. 36. In the alternative, Defendant seeks dismissal of the copyright claims or a more definite statement. Id. Having considered the parties' briefs and oral argument, as well as the relevant legal authority, the Court hereby DENIES Defendant's Motion for Summary Judgment and GRANTS IN PART Defendant's Motion to Dismiss.

II. BACKGROUND

Plaintiff is a leading provider of online contextual-advertising services and offers its customers a website-based advertisement creation platform (the “Platform”) which allows its users to create custom advertisements. Id. ¶¶ 1, 21, 24. Website publishers using the Platform can place a Media.net ad unit on their websites so that when a website visitor clicks on the ad unit, the visitor is taken to a “search-results page” which displays relevant advertisements. Id. ¶ 26. For example, if a website visitor clicked on a keyword relating to travel, the search results page could show advertisements promoting deals on hotel rooms. See, e.g., Ex. C, FAC. Plaintiff published the original version of its search results page (“Original Media.net Results Page”) on February 1, 2014. Id. ¶ 28. On May 28, 2014, Plaintiff published a revised search results page (“Revised Media.net Results Page”), which is derivative of the Original. Id. ¶¶ 33-34.

Plaintiff obtained a copyright registration for its Original Media.net Results Page with registration number TX 7-896-126 (the “'126 Registration”) and for its Revised Media.net Results Page with registration number TX 7-896-131 (the “'131 Registration”). Id. ¶¶ 32, 37; Exs. A-B, FAC. Both registrations became effective on August 16, 2014. '126 Reg.; '131 Reg. The certificates list “Media.Net Software Services (India) Private Limited” as the author, which created “HTML Code and text,” and list “Media.net Advertising FZ-LLC” as the claimant. Id.

Defendant is a competing contextual-advertising provider. FAC ¶¶ 38-39. Defendant also provides advertising units that its customers can place on their websites. Id. ¶ 39. Like Plaintiff's Platform, when a user clicks on Defendant's advertising unit, the user is directed to a search-results page that offers relevant advertisements. Id. ¶ 40. Plaintiff alleges Defendant directly copied Plaintiff's hypertext markup language (“HTML”) code, including arbitrarily-named variables and portions of the code that have no function, and used it to create Defendant's own search results page. Id. ¶¶ 42-46.

Plaintiff further alleges Defendant's unauthorized use of the HTML code allowed it to gain an unfair competitive advantage. Id. ¶ 58. In particular, Plaintiff claims Defendant undermined Plaintiff's relationship with Microsoft by representing that Defendant's products could work just as well as Plaintiff but at a lower cost. Id. ¶¶ 60-61. Defendant's infringement improved its position in the contextual-advertising market and allowed it to earn revenue from customers it obtained as a result of using Plaintiff's product. Id. ¶ 67-69. Consequently, Plaintiff was forced to lower the rates it charged its customers, causing it to lose millions of dollars in revenue. Id. ¶ 65. Plaintiff's reputation as the leader in contextual-advertising services has diminished. Id. ¶ 71.

III. LEGAL STANDARD

A. Motion for Summary Judgment

Under Federal Rule of Civil Procedure 56(a)

, a party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact.” The movant bears the burden of “identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quotation marks omitted). A material fact is one that may affect the outcome of the case. George v. Morris , 736 F.3d 829, 834 (9th Cir.2013) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). A genuine dispute as to material fact exists if there is sufficient evidence such that a reasonable jury could find for the non-moving party. Anderson , 477 U.S. at 248, 106 S.Ct. 2505. This requires more than a “mere existence of a scintilla of evidence in support of the plaintiff's position[.]” Id. at 252, 106 S.Ct. 2505.

When determining whether there is a genuine issue of material fact, “a court must view the evidence ‘in the light most favorable to the opposing party.’ ” Tolan v. Cotton , ––– U.S. ––––, 134 S.Ct. 1861, 1866, 188 L.Ed.2d 895 (2014)

(quoting Adickes v. S.H. Kress & Co. , 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ). Courts should also draw reasonable inferences in favor of the non-moving party. Tolan , 134 S.Ct. at 1868. “ ‘Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.’ ” City of Pomona v. SQM N. Am. Corp. , 750 F.3d 1036, 1049–50 (9th Cir.)

cert. denied sub nom.

SQM N. Am. Corp. v. City of Pomona, Cal. , ––– U.S. ––––, 135 S.Ct. 870, 190 L.Ed.2d 703 (2014) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

If the moving party has “the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party.” Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir.2007)

. If, on the other hand, the burden of proof rests on the non-moving party, “the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case.” Id. “A party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing there is a genuine issue for trial.” Anderson , 477 U.S. at 256, 106 S.Ct. 2505.

B. Motion to Dismiss

Pursuant to Federal Rule of Civil Procedure 12(b)(6)

, a party may file a motion to dismiss on the failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion tests the sufficiency of a complaint by failing to allege “enough facts to state a claim to relief that is plausible on its face.” 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 plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). Although a complaint need not contain “detailed factual allegations,” a complaint that contains merely “a formulaic recitation of the elements of a cause of action will not do.” Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

Rather, “ ‘[f]actual allegations must be enough to raise a right to relief above the speculative level.’ ” Williams v. Gerber Prod. Co. , 552 F.3d 934, 938 (9th Cir.2008)

(quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ; see also

Twombly , 550 U.S. at 556, 127 S.Ct. 1955. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

In ruling on a Rule 12(b)(6)

motion, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir.2008). Courts may dismiss a claim “only if it appears beyond doubt that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief.” Cook v. Brewer , 637 F.3d 1002, 1004 (9th Cir.2011) (quotation marks omitted). Courts should grant the plaintiff leave to amend “ ‘if it appears at all possible that the plaintiff can correct the defect.’ ” Crowley v. Bannister , 734 F.3d 967, 977 (9th Cir.2013) (quoting Lopez v. Smith , 203 F.3d 1122, 1130 (9th Cir.2000) (en banc)).

IV. DISCUSSION

A. The Compendium

The United States Copyright Office is “ ‘the governmental agency that possesses special expertise in determining the bounds of copyright protection.’ ” Garcia v. Google, Inc. , 786 F.3d 733, 741 n. 7 (9th Cir.2015)

(quoting 2 Nimmer on Copyright § 7.16[B][3][b][vi] ). In addition to administering the system of copyright registration, the Copyright Office works closely with Congress on matters relating to copyright laws. 17 U.S.C. § 701(a) ; 2 Nimmer on Copyright § 7.26; see 17 U.S.C. § 701(b)(2)...