Michael Grecco Prods., Inc. v. RGB Ventures, LLC

• Decision Date: 14 September 2017
• Docket Number: Case No. 3:16-cv-1335-J-34PDB
• Parties: MICHAEL GRECCO PRODUCTIONS, INC., Plaintiff, v. RGB VENTURES, LLC, Defendant.
• Court: U.S. District Court — Middle District of Florida

MICHAEL GRECCO PRODUCTIONS, INC., Plaintiff, v. RGB VENTURES, LLC, Defendant.

Case No. 3:16-cv-1335-J-34PDB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION

September 14, 2017

ORDER

THIS CAUSE is before the Court on Defendant's [sic] RGB Ventures, LLC's Motion to Dismiss Plaintiff's Amended Complaint (Doc. No. 13; Motion), filed on January 10, 2017. On January 24, 2017, Plaintiff Michael Grecco Productions, Inc. filed its Response and Memorandum of Law in Opposition to Defendant's Motion to Dismiss (Doc. No. 18; Response). Accordingly, this matter is ripe for review.

I. Background

A. Factual Allegations¹

Plaintiff Michael Grecco Productions, Inc. (Grecco) brings this copyright infringement and breach of contract action against Defendant RGB Ventures, LLC (RGB). See Plaintiff's First Amended Complaint and Jury Demand (Doc. No. 7; Complaint). According to the Complaint, Grecco is owned by Michael Grecco, a commercial photographer and film director known for his celebrity portraits, magazinecovers, editorial images, and advertising spreads. Id. ¶ 8. Grecco is the "exclusive owner of all rights, title, and interests" to certain images, for which Grecco obtained registrations from the United States Copyright Office, including specific images identified in the Complaint (the Infringed Images). Complaint ¶¶ 16-18.² RGB owns and operates a number of websites where it "reproduces, displays, distributes[,] and sublicenses rights to media images[,]" copyrighted and owned by others. Id. ¶ 9. On or about July 2, 2012, Grecco and RGB entered into an "Exclusive Contributor Agreement" and a "Non-Exclusive Contributor Agreement" (together, the Agreements), whereby Grecco granted limited licenses in over 1,700 of its copyrighted images, including the Infringed Images, to RGB for the purpose of sub-licensing and distributing the images either directly or through specifically identified agents referred to as "Third Party Distributors" (TPDs). See id. ¶¶ 10-12; see also Complaint, Exhibit A: Exclusive Contributor Agreement and Non-Exclusive Contributor Agreement (Doc. No. 7-1; Agreements).

Pursuant to the Agreements, RGB was obligated to "track and remit royalty payments" to Grecco based on "revenue earned from fees paid for sublicenses [in its copyrighted images] by end user customers." Id. ¶ 10. Grecco alleges that the TPDs acted as RGB's agents in "promoting, marketing, distributing[,] and granting sublicenses" to use Grecco's copyrighted images. Id. ¶ 13. The Agreements contain a number of provisions³ which are relevant to the resolution of the pending Motion:

• Section I-M: "Third Party Distributor" means any affiliate, partner, distributor or marketing entity with which [RGB] enters into a marketing and sublicense agreements [sic] for the promotion, distribution and licensing of Content.

• Section II-G: Credit. [RGB] shall advise its licensees and Third Party Distributors to include a credit notice as designated by [Grecco] where appropriate and practical along with the Content. As mutually agreed upon between [Grecco] and [RGB], [RGB] may choose to brand [Grecco's] Content under a "house" brand on a case by case basis. Such notice may include [RGB's] name or Third Party Distributor[s'] name as the source of the Content . . .

• Section III-C: Distribution and Licensing Terms. [RGB] shall have complete and sole discretion regarding the terms, conditions and pricing of the Content licensed or sublicensed to third parties. [RGB] shall have complete and sole discretion as to delivery methods and distribution of the Content. [Grecco] acknowledges that [RGB] may rate, comment upon, and evaluate Content, add or amend keywords, tags, titles, descriptions and metadata to Content, and digitally watermark the Content in both a visible and invisible manner.

• Section III-D: No Responsibility for Misuse of Content. [Grecco] acknowledges that the Content provided pursuant to this Agreement may be licensed by third parties in accordance with the terms of an End User License Agreement (EULA). [RBG] cannot take responsibility for the compliance by licensees of the terms of such agreements, and [Grecco] acknowledges and agrees to the possibility of Content being used in a manner that is not contemplated in this Agreement or the EULA . . .

• Section V-C: Survival Term. Upon expiration or termination of this Agreement, [RGB] may continue to exercise the licensing rights granted herein for . . . (18) months . . .

• Section V-D: Survival. Sections I, III, IV, VII, IX, X, and XI . . . will survive the termination or expiration of this Agreement and continue in full force and effect, but all other rights and obligations of the Parties shall cease immediately.

• Section XI-B: Independent Contractor. Nothing in this Agreement creates a partnership, agency relationship, employer-employee relationship, or a joint venture between the Parties.

See Agreements. In the Complaint, Grecco emphasizes that, although the Agreements permitted RGB to utilize the TPDs to secure sublicenses, RGB nevertheless maintained control of the terms of these sublicenses, regardless of whether a sublicense was granted by RGB directly or indirectly by the TPDs. See Complaint ¶¶ 14-15 (citing Agreements, Section III-C). Grecco and RGB terminated the Agreements on or about December 2, 2013. Id. ¶ 19.

During the term of the Agreements, the eighteen month survival period (the Survival Term), and subsequently, Grecco alleges RGB failed to pay Grecco in accordance with the terms of the Agreements. See id. ¶ 21. Specifically, Grecco cites to three instances where it was not compensated for the use of its copyrighted images: (1) in 2014, Grecco discovered its copyrighted image of musician Johnny Cash on an album cover, and the image was credited to one of RGB's authorized TPDs, but RGB had neither informed Grecco of the sublicense nor made any royalty payments resulting from it; (2) in 2016, Grecco discovered its copyrighted image of the band New Order in a magazine and later learned that the image had been sublicensed by an authorized TPD, but RGB again failed to inform Grecco of the sublicense or pay the required licensing fee; and (3) in 2016, Grecco discovered its copyrighted image of singer Michael Jackson in a book, and the book's publisher credited the image to an authorized TPD, but RGB failed to disclose this sublicense or pay Grecco the required licensing fee. See id. ¶¶ 22, 26-27. Grecco further alleges that, with the exception of one late payment for use of the Johnny Cash image, it "has not received any license fee for sublicenses of [the copyrighted images] by [RGB] or any [TPD]." Id. ¶ 25.

Additionally, during both the term of the Agreements as well as the Survival Term, RGB allegedly distributed the copyrighted images to and through ImageSelect BV (ImageSelect), an unauthorized third party distributor. See id. ¶ 31. Section III-A of the "Non-Exclusive Contributor Agreement" states in relevant part that "[i]n addition to [RGB's] non-exclusive direct licensing rights, [Grecco] grants [RGB] the non-exclusive right to sub-distribute [Grecco's] Content to the [TPDs] listed in Annex A." See Agreements. However, ImageSelect is not one of the authorized TPDs included in Annex A. See id. Later, following the expiration of the Survival Term, both RGB and ImageSelect allegedly infringed Grecco's copyrights in the copyrighted images by continuing to "reproduce[e], distribut[e], and publicly display[]" the copyrighted images on the internet. See Complaint ¶ 32. For example, in 2016, Grecco discovered that its copyrighted images of actor James Caan had been licensed by ImageSelect to an end user. Id. ¶ 33. Upon reviewing ImageSelect's website, Grecco determined that a number of its copyrighted images were still being reproduced, displayed, and held out for licensing on that website. Id. Notably, ImageSelect's website credited Grecco's copyrighted images to RGB. Id.

Similarly, after the expiration of the Survival Term, Grecco determined that RGB - "by and through the [TPDs]" - was continuing to reproduce, display, and hold out for licensing a number of its copyrighted images. See id. ¶ 34. According to the Complaint, Grecco's copyrighted images were displayed on the following authorized TPD websites: AAI Fotostock, AGB Photo, AGE FotoStock, Alamy, AllPhoto Images, All Posters/Art.com, Bew Photo, Daiichi Colour, Datacraft Co., Dinodia, Diomedia, Glow Images, Hill Creek Pictures, Mauritius Images, Maxx Images, and Top Photo Group. Id. Science Faction, another third party that Grecco alleges unlawfully reproduced, displayed, and held out forlicense its copyrighted images, was purportedly acquired by RGB as a wholly-owned subsidiary in or around 2012. Id. ¶ 35. To conceal both its own infringement and that of the TPDs, Grecco alleges RGB "provided the false copyright management information 'Superstock' or 'Superstock RM' when reproducing, displaying, and holding out for license" the Infringed Images. Id. ¶ 37.

B. Procedural History

Grecco filed the operative Complaint in this action on November 23, 2016. In the Complaint, Grecco brings five claims against RGB: (1) a claim for direct copyright infringement (Count I); (2) a claim for contributory copyright infringement (Count II); (3) a claim for vicarious copyright infringement (Count III); (4) a claim for violation of the Digital Millennium Copyright Act, 17 U.S.C. § 1201 et seq. (DMCA) (Count IV); and (5) a claim for breach of contract under Florida common law (Count V). See generally Complaint ¶¶ 42-85. On January 10, 2017, RGB filed the instant Motion. See generally Motion. In the Motion, RGB seeks dismissal of all claims pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure (Rule(s)), for failure to state a claim. See id. With respect to Count II, RGB alternatively seeks a more definite statement of the claim pursuant to Rule 12(e).⁴ Id. at 3, 8.

II. Standard of Review

In ruling on a motion to dismiss, the...