Video Pipeline v. Buena Vista Home Entertainment, Civil No. 00-5236 (JBS).

Citation210 F.Supp.2d 552
Decision Date26 July 2002
Docket NumberCivil No. 00-5236 (JBS).
PartiesVIDEO PIPELINE, INC., Plaintiff, v. BUENA VISTA HOME ENTERTAINMENT, INC., Defendant. Buena Vista Home Entertainment, Inc., and Miramax Film Corporation, Counterclaim Plaintiffs, v. Video Pipeline, Counterclaim Defendant.
CourtU.S. District Court — District of New Jersey

Gary D. Fry, Esquire, Paul R. Fitzmaurice, Esquire, Pelino & Lentz, P.C., Philadelphia, PA, for Plaintiff and Counterclaim Defendant Video Pipeline, Inc.

Gary A. Rosen, Esquire, Patrick M. Madamba, Jr., Esquire, Akin, Gump, Strauss, Hauer & Feld, LLP, Philadelphia, PA, for Defendant/Counterclaim Plaintiff Buena Vista Home Entertainment, Inc., and Counterclaim Plaintiff Miramax Film Corporation.

OPINION

SIMANDLE, District Judge.

This matter comes before the Court upon motion by plaintiff Video Pipeline, Inc. ("Plaintiff" or "Video Pipeline") to dismiss counterclaims asserted by defendant Buena Vista Home Entertainment, Inc. and counterclaim co-plaintiff Miramax Film Corporation (collectively "Defendant" or "BVHE"). Plaintiff Video Pipeline compiles and organizes previews of home video products to home video wholesaler and retailer customers. Defendant BVHE manufactures, distributes, and sells home video versions of copyrighted motion pictures, and is the exclusive licensee of Walt Disney Pictures and Television ("Disney"). Plaintiff Video Pipeline originally brought suit for a declaratory judgment that its use of defendant BVHE's trailers did not constitute copyright infringement. After plaintiff amended its complaint, Defendant BVHE subsequently brought amended counterclaims asserting copyright infringement, federal unfair competition/false designation of origin, state law unfair competition, breach of contract, unjust enrichment, conversion, and replevin.

In the present motion, plaintiff Video Pipeline seeks dismissal of defendant BVHE's counterclaims asserting violations under the Lanham Act (Count III), state law unfair competition (Count IV), breach of contract (Count V), conversion (count VII), and replevin (Count VIII), for failure to state a claim. Additionally, plaintiff contends that the state law claims of unfair competition, breach of contract, unjust enrichment (Count VI), conversion and replevin are federally preempted by the Federal Copyright Act. Plaintiff also argues that its home video retailer customers are making fair use of the promotional previews and plaintiff's clip previews. For the reasons discussed herein, plaintiff's motion to dismiss will be granted in part and denied in part.

BACKGROUND

Plaintiff Video Pipeline filed the underlying complaint against defendant BVHE on October 24, 2000, seeking a declaratory judgment that plaintiff's streaming of Promotional Previews provided by defendant BVHE, which Video Pipeline makes available on "Video Pipeline.com" to Internet customers of plaintiff's video retailer clients, does not infringe any copyright or violate any rights of defendant BVHE. (Amended Compl.) Plaintiff Video Pipeline also seeks a declaratory judgment that the similar streaming of previews it subsequently created from copies of certain home videos sold by BVHE to home video distributors and retailers (plaintiff's "clip previews") constitutes fair use and does not violate any of defendant BVHE's rights. (Amended Compl.)

On November 7, 1998, Video Pipeline and BVHE had entered into a Master Clip License Agreement permitting Video Pipeline to exhibit certain videotape previews provided by BVHE. (Agreement, Pl.'s Br. Ex. A.) Plaintiff Video Pipeline began making these Promotional Previews available on the Internet websites of various home video wholesaler and retailer customers. (Def.'s Amended Counterclaims, ¶ 14; Horovitz Aff. ¶¶ 17, 21.)

Subsequent to filing suit, Video Pipeline returned defendant BVHE's promotional materials and began creating previews from copies of movies sold by BVHE to retailer clients (hereinafter "clip previews"), which were streamed and accessed by Internet customers via the website "Video Pipeline.com." (Amended Compl. ¶¶ 41, 43.) On or about May 9, 2001, plaintiff Video Pipeline discontinued streaming the clip previews on the Internet. (Amended Compl. ¶ 45.) Defendant BVHE previously filed a motion for preliminary injunction, seeking to enjoin plaintiff Video Pipeline from streaming the clip previews it created out of motion pictures upon which BVHE owns the copyright. The voluntary stay was effective until March 28, 2002, when this Court granted defendant's preliminary injunction motion. (Video Pipeline, Inc. v. Buena Vista Home Entm't, Inc., 192 F.Supp.2d 321 (D.N.J.2002).)

After plaintiff Video Pipeline was granted leave to amend its complaint on June 11, 2001, and defendant BVHE thereafter filed its amended answer and counterclaims. Plaintiff filed this motion to dismiss the amended counterclaims, asserting that defendant BVHE has failed to state a claim for certain federal and state law claims, and that defendant's state law claims are preempted by the federal Copyright Act.

DISCUSSION
I. Motion to Dismiss Standard

The defendants have moved to dismiss the Second Amended Complaint pursuant to Rule 12(b)(6), Fed.R.Civ.P. A motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted does not attack the merits of the case, but merely tests the legal sufficiency of the Complaint. See Nami v. Fauver, 82 F.3d 63, 65 (3d Cir.1996). When considering a Rule 12(b)(6) motion, the reviewing court must accept as true all well-pleaded allegations in the Complaint and view them in the light most favorable to the plaintiff. See Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994); Palladino ex rel. U.S. v. VNA of Southern New Jersey, Inc., 68 F.Supp.2d 455 (D.N.J.1999). Here, in a motion to dismiss counterclaims, the allegations must be viewed in the light most favorable to defendant, the non-movant.

In considering the motion, a district court must also accept as true any and all reasonable inferences derived from those facts. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir.1994); Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir.1991). A court may not dismiss the Complaint "unless it appears beyond doubt that the [non-movant] can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Therefore, in deciding a motion to dismiss, a court should look to the face of the complaint and decide whether, taking all of the allegations of fact as true and construing them in a light most favorable to plaintiff as non-movant, the complaint's allegations state valid legal claims. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990).

II. Analysis

Plaintiff Video Pipeline asserts that defendant's amended counterclaims under the Lanham Act, state law unfair competition, breach of contract, conversion, and replevin fail to state a claim for which relief can be granted. In addition, plaintiff contends that the Copyright Act federally preempts defendant's state law claims of unfair competition, breach of contract, unjust enrichment, conversion, and replevin. Plaintiff Video Pipeline also argues that its fair use defense precludes it from liability under the Copyright Act.

A. Defendant BVHE's Claim Under the Lanham Act

Video Pipeline argues that Count III of BVHE's counterclaim fails to state a claim under the Lanham Act. In Count III of BVHE's amended counterclaims, BVHE contends that Video Pipeline engaged in unfair competition and/or false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Answer & Amended Counterclaims, ¶¶ 53-62. To prove unfair competition under the Lanham Act, the claimant must prove that (1) he or she owns the mark in question; (2) the mark is valid and legally protectable; and (3) the alleged infringer's use of the mark to identify goods or services is likely to create confusion concerning their origin. See Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 104 F.Supp.2d 427, 456 (D.N.J.2000) [hereinafter Checkpoint Sys. I], aff'd, 269 F.3d 270 (3d Cir.2001) [hereinafter Checkpoint Sys. II].

BVHE has sufficiently alleged in its Amended Counterclaims that The Walt Disney Company together with its subsidiaries and affiliates ("TWDC"), is the owner of the following trademarks: "Walt Disney," "Buena Vista," "Hollywood Pictures," and "Touchstone," and that Miramax is the owner of the "Miramax" trademark. See Answer & Amended Counterclaims, ¶ 54. BVHE, as the exclusive licensee of Walt Disney Pictures and Television in the home video market, see id. ¶ 7, also alleges that each of these trademarks is the subject of a trademark registration granted by the United States Patent and Trademark Office. See id. If the mark at issue is federally registered and has become incontestible, then validity, legal protectability, and ownership are proved. Commerce Nat'l Ins. Svcs. v. Commerce Ins. Agency, Inc., 214 F.3d 432, 438 (3d Cir.2000) (citing Ford Motor Co. v. Summit Motor Prods., 930 F.2d 277, 292 (3d Cir.), cert. denied sub nom. Altran Corp. v. Ford Motor Co., 502 U.S. 939, 112 S.Ct. 373, 116 L.Ed.2d 324 (1991)). Here, neither Video Pipeline nor BVHE disputes the first two elements. Because TWDC owns the marks at issue, the marks are therefore valid and legally protectable. Accordingly, the first two elements of BVHE's Lanham Act claim have been sufficiently alleged.

Under the third element, to prove likelihood of confusion, a claimant must show that "`consumers viewing the mark would probably assume the product or service it represents is associated with the source of a different product or service identified by a similar mark.'" Checkpoint Sys. II, 269 F.3d at 280 (citing Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 1229 (3d Cir.1978))....

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