Friday, January 20, 2012

Pleading "copying or substantial similarity" fails to satisfy Iqbal

Dorchen/Martin Associates, Inc. v. Brook of Cheboygan, Inc., 2012 WL 137829 (E.D. Mich.)
D/M, which provides architectural and design services, sued The Brook and Practical Engineers for copyright infringement, violation of the Lanham Act, and civil conspiracy, based on the allegations that Practical Engineers performed architectural and engineering services for The Brook and produced a design for an assisted living facility project that was allegedly substantially similar to the product D/M furnished to a nonparty that has the same officers and directors as The Brook.
D/M provided a design for The Brook of Houghton Lake, the nonparty, for a project in Houghton Lake, Michigan. Its design contained a copyright notice and was registered.  Defendant The Brook decided to build an assisted living facility in Cheboygan.  D/M alleged that it told The Brook that use or reuse of its work product from the Houghton Lake project was prohibited.  Though The Brook’s VP told D/M that its design product would only be used to show the exterior appearance of the facility, D/M alleged that Practical Engineering had access to the copyrighted work and copied it, evidenced by the substantial similarity of the completed project.
The court found that the complaint was deficient in pleading actionable infringement.  “Copyright infringement lends itself readily to abusive litigation, since the high cost of trying such a case can force a defendant who might otherwise be successful in trial to settle in order to avoid the time and expenditure of a resource intensive case.”  Thus, greater particularity was required to allege “plausible grounds” for relief.
Defendants argued that D/M failed to identify original material in its architectural work, which was identified as the “overall form as well as the arrangement and composition of spaces and elements in the design, but does not include individual standard features.”  However, defendants didn’t explain what features might be unprotectable based on functionality, merger, or the like, and consideration of those arguments would require the court to go outside the pleadings.
However, the court agreed that, without a description of the manner in which the defendants’ work infringed, it was not required to accept bare legal conclusions of infringement/substantial similarity.  D/M was allowed leave to remedy this deficiency by providing more factual details.
The Lanham Act claim, however, was fatally flawed because of Dastar.  “[T]aking tangible goods and reselling them as your own constitutes a Lanham Act violation; taking the intellectual property contained in those goods and incorporating it into your own goods does not.”  D/M fruitlessly argued that Dastar only dealt with works in the public domain, and that whether its work product constituted “tangible goods” was a factual question that couldn’t be decided on a motion to dismiss.  The court distinguished an earlier decision involving architectural plans where the defendant “removed” the plaintiff’s name and seal (this seems to mean traced the plans without tracing the name and seal; that really should’ve been barred by Dastar too unless it counted as false advertising).  There was no allegation that defendants used D/M’s materials as their own; instead D/M alleged that defendants copied or had access to D/M’s materials resulting in a substantially similar design.  This camouflaged copyright claim couldn’t survive.
Defendants also argued that the civil conspiracy claim was preempted by §301 of the Copyright Act.  The court agreed, on these alleged facts.

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