Court: District Court, N.D. California; January 11, 2016; Federal District Court
The court order denies Defendant NetSeer, Inc.'s motion for summary judgment on the copyright infringement claims brought by Plaintiff Media.net Advertising FZ-LLC, while granting in part Defendant's motion to dismiss the state law claims. Media.net's First Amended Complaint includes two copyright infringement claims, alongside claims for intentional interference with business contracts, prospective relationships, and violations of California's Unfair Competition Law. The Plaintiff, a provider of online contextual advertising services, claims that it published an Original Media.net Results Page on February 1, 2014, followed by a Revised version on May 28, 2014, both of which are copyrighted. Media.net alleges that Defendant copied its HTML code to create its own search results page, gaining an unfair competitive advantage and undermining Media.net's relationship with key partners like Microsoft. This alleged infringement has reportedly forced Media.net to lower its rates and has diminished its market reputation, resulting in significant revenue losses. The court's decision reflects the complexity of the issues at hand, emphasizing the need for further proceedings regarding the state law claims while allowing the copyright claims to proceed.
Under Federal Rule of Civil Procedure 56(a), a party can obtain summary judgment if they demonstrate that there is no genuine dispute regarding any material fact. The burden lies with the movant to identify evidence from pleadings, depositions, interrogatories, admissions, and affidavits that show the absence of a genuine issue of material fact. A material fact influences the case outcome, and a genuine dispute exists if reasonable evidence could lead a jury to favor the non-moving party. The court must view evidence in the light most favorable to the opposing party and draw reasonable inferences for them. If the moving party carries the burden of proof at trial, they must show no reasonable jury could find otherwise. Conversely, if the non-moving party bears the burden, the movant can succeed by highlighting the lack of evidence for the non-moving party’s claims. The opposing party cannot rely solely on allegations or denials but must present specific facts indicating a genuine issue for trial.
Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss can be filed for failure to state a claim. This motion evaluates if the complaint alleges sufficient facts to support a plausible claim for relief. A claim is plausible when the factual content allows the court to reasonably infer the defendant's liability. While detailed factual allegations are not necessary, a mere formulaic recitation of elements is insufficient; allegations must elevate the right to relief beyond mere speculation.
The plausibility standard does not equate to a probability requirement; rather, it demands more than mere possibility of unlawful action by a defendant. In evaluating a Rule 12(b)(6) motion, courts accept the complaint's factual allegations as true and interpret them favorably for the nonmoving party. A claim can only be dismissed if it is clear that the plaintiff could not prove any set of facts supporting the claim for relief. Courts are obliged to permit the plaintiff to amend their claims if there is any potential for correction.
The United States Copyright Office, which has specialized expertise in copyright protection, administers copyright registration and collaborates with Congress on copyright law matters. The Register of Copyrights advises Congress on national and international copyright issues. Following a congressional overhaul of copyright statutes, the Copyright Office recommended clarifying confusion in lower courts regarding copyrightability standards. The Copyright Office publishes a Compendium, providing legal interpretations and guidance on copyright registrations, first published in 1967 and revised through various editions, with the third edition released in draft form in 2014 and finalized on December 22, 2014, after public feedback.
The Ninth Circuit has determined that the decisions and opinions of the Copyright Office do not receive Chevron deference, which is typically extended to certain agency interpretations. Instead, such interpretations are evaluated under Skidmore deference, which considers the persuasiveness of the agency's reasoning and consistency with prior interpretations. Specifically, the court will defer to the Copyright Office's views only to the extent they are compelling. The court acknowledges the Copyright Office's authority to interpret copyright laws and emphasizes that its reasonable interpretations should be afforded judicial deference. In this context, the Ninth Circuit agrees with the D.C. Circuit that the Copyright Office's interpretations, if reasonable, merit deference based on its expertise.
In the present case, the court finds that the interpretations in the most recent Compendium are reasonable and undisputed by either party. Regarding copyright infringement claims, the Plaintiff must demonstrate ownership of a valid copyright and that the Defendant copied original elements of the work. The Defendant's Motion for Summary Judgment challenges the first element, asserting that the Plaintiff's copyright registrations lack copyrightable material, particularly arguing that the look and feel of the Plaintiff's webpages do not qualify for copyright protection. The Plaintiff's First Amended Complaint alleges that the Defendant infringed upon both the look and feel of its webpages and other elements.
NetSeer is accused of misappropriating Media.net’s copyrighted elements, including source code, design, and overall aesthetic of its search-results pages. Media.net acknowledges that the "look and feel" of its search results is not copyrightable and did not seek copyright for the perceived content on these pages. Consequently, Media.net's copyrights do not extend to the layout or format, allowing others, including NetSeer, to create similar pages. The copyright registrations only protect the HTML code and related text, not the resulting web page's appearance. The Copyright Office's Compendium clarifies that website layout and feel are uncopyrightable. Media.net has shifted its copyright claim to focus on the HTML code as the sole copyrightable subject matter.
Under the Copyright Act, original works fixed in a tangible medium are protected, with the Register of Copyrights evaluating submissions for copyrightability. A registered copyright serves as prima facie evidence of validity, creating a rebuttable presumption. The burden of proof lies with the party challenging the validity of the copyright to provide evidence, after which the burden shifts back to the plaintiff to prove its validity if the presumption is successfully rebutted.
In Entm’t Research Grp. v. Genesis Creative Grp., the Ninth Circuit established that once a defendant successfully rebuts the statutory presumption of copyright validity, the burden shifts back to the plaintiff to prove the validity of their copyright claims. The First Amended Complaint (FAC) asserts that the plaintiff possesses copyright registrations for both the Original and Revised Media.net Results Pages, supported by attached registration certificates, which create a presumption of validity for the T26 and '131 registrations. While the 1984 Compendium II does not explicitly address the copyrightability of HTML code, it is suggested that the Copyright Office considered this issue during the registration process. Notably, the Compendium underwent revisions over two and a half years, culminating in a final version released shortly after the plaintiff's registrations took effect, reinforcing the validity presumption.
The defendant contends that the plaintiff's registrations lack copyrightable subject matter, claiming the HTML code consists solely of uncopyrightable Cascading Style Sheets (CSS). To support this argument, the defendant references a declaration from Edward R. Tittel, who analyzed the HTML and concluded it primarily comprises CSS within HTML documents. Conversely, the plaintiff argues that its HTML code qualifies as a "literary work" under section 102(a) of the Copyright Act, asserting that copyright protection applies to original works fixed in a tangible medium of expression, which includes literary works.
Dr. John C. Mitchell, a Stanford University computer science professor, provided a declaration asserting that the Plaintiff's HTML code embodies a significant degree of expressive conduct, particularly through the naming of class styles in CSS, which can be creatively defined by the programmer. This creativity, according to the Plaintiff, is essential for establishing copyrightability. HTML serves as the foundational markup language for website design, defining the structure and layout of content viewed by users. Initially, HTML had dual purposes: presenting content and detailing its presentation attributes. Since 1996, CSS has been utilized to separate content from presentation, controlling the visual aspects of a webpage without including actual content. CSS rules, which dictate the style inheritance and presentation, are demarcated by specific tags and selectors, with class names being arbitrarily defined by users, although they are generally chosen to reflect functionality. Mr. Shelton clarified that CSS is not embedded within HTML documents but is typically stored externally and linked to HTML files, meaning presentation styles exist separately from the HTML content. In cases where no CSS styles are defined, browsers default to their preset styles. Additionally, both HTML and CSS allow for comments, which aid developers but are not displayed on the webpage, with specific syntax for each format.
Copyright law requires originality, defined as the author's independent creation of a work that possesses at least a minimal degree of creativity. The threshold for creativity is low; even slight creative expression qualifies for copyright protection. However, creativity must exceed trivial variations, demonstrating a recognizable personal touch. The Copyright Office distinguishes what can and cannot be copyrighted, asserting that HTML code can be registered as a literary work if it is human-created and demonstrates sufficient creative expression, despite the underlying webpage design being non-copyrightable. The Office typically rejects copyright claims based solely on CSS, as processes and methods are not copyrightable.
In this case, parts of the Plaintiff's HTML code are deemed copyrightable due to the use of class names, which allow for creative choices. The example provided, ".inset," illustrates that developers can choose from various names without affecting style, indicating creativity in selection. Additionally, the Plaintiff's HTML includes comments that explain code elements, which also require creativity, as developers have the freedom to write anything. The Defendants failed to present evidence that either the naming of classes or the content of comments is so routine that it lacks creative merit.
Creativity in formulating HTML code and associated comments is recognized, contrasting with the lack of creativity seen in the alphabetical arrangement of a telephone directory, as established in Feist Publications. The Supreme Court in Feist concluded that the mere listing of names and numbers, without any creative selection or arrangement, lacked originality and thus was not copyrightable. In contrast, the case at hand involves a developer's creative choices in HTML and CSS, particularly regarding class names, which must match to apply styles correctly. The integration of HTML and CSS is such that one cannot be assessed without considering the other. For instance, the use of the class name .spons-link in both HTML and CSS illustrates this interdependence. The copyright registrations include both HTML and CSS, affirming that the creative elements in class names contribute to the overall copyrightable nature of the HTML code, despite the Copyright Office's general stance that CSS alone may not be copyrightable. Therefore, the court finds that the copyright registrations encompass valid copyrightable subject matter. In a separate motion, the defendant seeks dismissal of copyright claims, arguing that the plaintiff's allegations do not specify which parts of the HTML code were copied. A successful copyright infringement claim requires proof of ownership and violation of an exclusive right under 17 U.S.C. § 106.
Plaintiff must establish valid copyright ownership to proceed with copyright infringement claims. Citing case law, it is noted that the plaintiff has sufficiently alleged ownership of copyright in the HTML code of the Original and Revised Media.net Results Pages, referencing copyright registration applications and exclusive rights to distribution and reproduction. The First Amended Complaint (FAC) claims that the HTML code is copyrightable under 17 U.S.C. § 102(a) and asserts that the plaintiff is the exclusive assignee of the entire copyright interest in both versions of the Results Page.
To prove infringement, the plaintiff alleges that the defendant directly copied a substantial portion of the HTML source code and original elements from these pages, thereby violating the plaintiff's exclusive rights. The plaintiff’s claims include a line-by-line comparison of the HTML codes and assert substantial similarity between the works. However, the FAC lacks detail on how the defendant accessed the plaintiff's copyrighted material, which is crucial for establishing infringement, as copying is usually proven indirectly through evidence of access and similarity.
Defendant's motion to dismiss is granted due to Plaintiff's failure to adequately allege access to the HTML code purportedly copied, as the allegations lack specificity regarding which portions of the code were infringed. Plaintiff's assertion that the list in the First Amended Complaint (FAC) is merely exemplary suggests there may be additional infringed sections not identified. The Court allows Plaintiff to amend the complaint to specify the sections of the HTML code and to provide facts regarding Defendant’s access.
Regarding state law claims, Defendant argues they should be dismissed because the Copyright Act preempts them. Plaintiff asserts three claims under California law: intentional interference with a business contract, intentional interference with a prospective business relationship, and violation of California’s Unfair Competition Law (UCL). The Supremacy Clause invalidates state laws that conflict with federal law, including the Copyright Act, which preempts state claims equivalent to exclusive rights under copyright. However, state laws are not preempted if they address rights not equivalent to those covered by the Copyright Act. For preemption to apply, the content of the alleged violation must fall within the copyright subject matter as outlined in 17 U.S.C. 102 and 103.
The right claimed under state law must align with the exclusive rights established in Section 106 of the Copyright Act. If a state law claim incorporates an "extra element" that differentiates it from copyright protections, then it is not subject to preemption by the Copyright Act. This extra element must alter the nature of the action, making it distinct from a copyright infringement claim. In this case, the defendant argues that the essence of the three state law claims revolves around the misappropriation of the plaintiff's intellectual property, specifically its source code and design. The plaintiff counters by asserting that its claims contain extra elements preventing preemption, although specific details are not provided. Additionally, the plaintiff argues that the Copyright Act does not cover its contracts with third parties.
It is established that the plaintiff's HTML code qualifies for copyright protection. The preemption analysis hinges on whether the claimed right is fundamentally different from those protected by the Copyright Act. For intentional interference with a contract under California law, the plaintiff must demonstrate several elements, including a valid contract, the defendant's knowledge of it, intentional actions to induce a breach, actual breach, and resulting damages. However, tortious interference claims are often preempted by the Copyright Act, as they do not present rights that are qualitatively different from copyright rights. Courts have ruled that tortious interference claims based on copyright infringement activities are generally preempted since they are intrinsically linked to the unauthorized publication and derivative use of copyrighted materials, thereby failing to introduce distinct elements.
In Row Publishers, Inc. v. Nation Enterprises, the court examined the relationship between state law rights and copyright protections, specifically addressing whether state claims for tortious interference with contracts are preempted by the Copyright Act. The court concluded that if unauthorized actions—like reproduction or distribution—lead to the loss of contractual benefits, the rights under tort law do not qualitatively differ from copyright rights, suggesting that preemption is justified. The court noted that while state law claims require awareness and intentional interference with a contract, this does not exclude them from preemption since they fundamentally depend on copyright violations.
The excerpt then contrasts this reasoning with the Ninth Circuit's decision in Altera Corp. v. Clear Logic, where the court found that the Copyright Act did not preempt a state law claim of intentional interference with contractual relations. In that case, the plaintiff's claim was based on a license agreement that limited software use, and the court determined that the claim involved an "extra element" beyond copyright protections, focusing on the unauthorized use of the software's end-product rather than the software's reproduction itself. Thus, the Ninth Circuit held that state law tort claims regarding unauthorized use of a software product are not covered by the Copyright Act's rights.
The state claim primarily concerns a licensing violation rather than copyright infringement. The Ninth Circuit's ruling in MDY Industries LLC v. 1072Blizzard Entertainment, Inc. emphasized that the case involved a licensing agreement restricting users from employing bots in an online game. The court determined that since the creator of the game sought to enforce these contractual rights, which did not equate to exclusive copyright rights, the Copyright Act did not preempt the tortious interference claim.
Unlike MDY Industries and Altera Corporation, where claims were based on breaches of licensing agreements, the Plaintiff's claim here centers on the unauthorized reproduction of its registered HTML code, constituting a copyright infringement claim. The Ninth Circuit's precedent, which suggests that most courts find the Copyright Act does not preempt contractual rights enforcement, does not apply in this case since the right at issue is a copyright right, not a contractual one.
Furthermore, the Plaintiff's argument that an additional element of intent exists does not alter the fundamental nature of the claim, which is rooted in copyright violation. Relevant case law, such as Worth v. Universal Pictures, and Zito v. Steeplechase Films, illustrates that additional intent elements do not change the underlying nature of claims directly related to copyright infringement, and conversion claims are also generally preempted despite any added intent.
The defendant's intent does not constitute an additional element that alters the nature of the claim from unauthorized copying. The Court concludes that the Copyright Act preempts the plaintiff's claim for intentional interference with contract. To establish a claim of intentional interference with prospective economic advantage, a plaintiff must demonstrate: (1) an economic relationship with a third party likely to yield future benefits, (2) the defendant’s knowledge of this relationship, (3) intentional wrongful conduct aimed at disrupting the relationship, (4) actual disruption or interference, and (5) economic harm as a proximate result of the defendant’s actions. The plaintiff argues that this claim should remain unpreempted due to the defendant's interference with existing contractual relations and the assertion that the interference was done in violation of the Unfair Competition Law (UCL). However, the Court maintains that this argument does not sufficiently differentiate the claim from copyright infringement, as it fundamentally relies on the defendant’s unauthorized copying of the plaintiff's HTML code, violating the Copyright Act. Consequently, the claim does not introduce any qualitatively different elements. The Court similarly finds that the UCL claims are preempted by the Copyright Act. The UCL prohibits unlawful, unfair, or fraudulent business practices, treating violations of other laws as independently actionable. Determining whether the Copyright Act preempts a UCL claim requires analyzing each unfair competition theory to see if it presents qualitatively different elements. The plaintiff alleges violations across all three prongs of the UCL.
A UCL claim related to conduct covered by the Copyright Act is preempted if it relies on rights protected by that Act, as established in Sleep Sci. Partners v. Lieberman and further clarified by the Ninth Circuit in Kodadek v. MTV Networks, Inc. In Kodadek, the court found that a UCL claim based on unauthorized publication and sale of copyrighted works fell under the rights granted by the Copyright Act, leading to preemption. The plaintiff in the current case acknowledges this preemption regarding copyright infringement but argues that their UCL claim extends beyond that. However, the allegations in the FAC focus on the defendant’s unauthorized use of copyrighted material, which the plaintiff claims harms their business and competitive standing, thereby invoking California’s unfair competition law. The FAC does not present any additional allegations unrelated to copyright infringement, similar to findings in Young Money Entm’t, LLC v. Digerati Holdings, LLC, where a UCL claim was dismissed for being preempted. Furthermore, any UCL claims based on intentional interference have also been found preempted by the Copyright Act. Consequently, the court concludes that the Copyright Act preempts the plaintiff's UCL claim. Regarding motions for a more definite statement under Rule 12(e), such motions are rare and only appropriate when a complaint is so vague that a defendant cannot reasonably respond.
In *Craigslist, Inc. v. Autoposterpro, Inc.*, the court addressed a motion for a more definite statement under Rule 12(e), noting that such motions are typically applicable when a pleading is unintelligible rather than merely lacking detail. The defendant requested clarification on the copyright claims, asserting that the plaintiff's First Amended Complaint (FAC) was not sufficiently clear. However, the court found the FAC coherent enough for the defendant to understand the basis of the claims, specifically regarding alleged copyright infringement and misappropriation of HTML code. The court noted that while the FAC was generally intelligible, it did lack specifics on which parts of the HTML code were copied and how the defendant accessed it. As a result, the court granted the defendant's motion to dismiss the copyright claims with leave to amend, rendering the motion for a more definite statement moot and denying it. Additionally, the court dismissed the plaintiff's state law claims with prejudice, allowing for the possibility to amend the Unfair Competition Law (UCL) claim, provided it could stand independently of the copyright violation. The ruling concluded by affirming the denial of the defendant's motion for summary judgment on copyright claims and the motion for a more definite statement.
Courts may defer to an agency's interpretation of a statute when there is no express congressional delegation of interpretative authority, provided that the agency's expertise suggests Congress would expect the agency to address ambiguities with legal force. The Ninth Circuit aligns with other Courts of Appeal in deferring to the Copyright Office’s interpretations, applying Skidmore deference rather than Chevron deference. This means the Copyright Office's interpretations are given weight based on their persuasive power. Various circuits, including the Second, Sixth, Eleventh, and D.C. Circuits, recognize the Copyright Office's specialized experience in copyright law, leading to Skidmore deference for its rulings. The Third Circuit has also shown deference but did not specify the level. In copyright infringement cases, the initial question is the ownership of a valid copyright, which is a legal determination reserved for judges, not juries. The defendant does not contest ownership at this stage but retains the right to challenge it later if the court denies the motion.
Defendant challenges Dr. Mitchell’s testimony, claiming he examined materials not provided to them. Dr. Mitchell references "deposit materials," which Defendant asserts they requested, with Plaintiff's counsel previously indicating these materials were produced. However, Defendant is uncertain what Dr. Mitchell reviewed since he did not mention Exhibits C or D. At a December 7 hearing, Plaintiff's counsel clarified that the deposit materials are indeed Exhibits C and D, which were available to Defendant, and no evidence contradicts this. Consequently, Defendant's objection is overruled.
Mr. Shelton, an electrical engineer, demonstrated webpage creation as per a court order. He explained the hexadecimal notation for RGB color values. The document outlines the exclusive rights of copyright owners under 17 U.S.C. § 106, including reproduction, derivative works, distribution, public performance, and display of copyrighted works.
The excerpt references a case, MDY Indus. LLC, regarding prohibitions against using third-party software to modify the World of Warcraft experience. Plaintiff misapplies the Brackett v. Hilton Hotels Corp. case, which did not preempt state law claims of intentional interference with prospective economic advantage and contract relations, highlighting a defendant's breach of a contract's permitted use. The claim in the FAC is for intentional interference with a business relationship, while in the Reply, Plaintiff refers to it as intentional interference with prospective economic advantage. The FAC also alleges Defendant’s actions constitute unfair competition under California Business and Professions Code § 17200, although Plaintiff only addresses the unfair and unlawful aspects in its Opposition.
