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Virtual Studios v. Couristan

May 16, 2011

VIRTUAL STUDIOS, PLAINTIFF,
v.
COURISTAN, INC., DEFENDANT.



The opinion of the court was delivered by: Linares, District Judge.

NOT FOR PUBLICATION

OPINION

This matter comes before the Court on a motion to dismiss Plaintiff's Complaint filed by Defendant Couristan, Inc. pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court has considered the submissions made in support of and in opposition to the instant motion and decides the matter without oral argument. Fed. R. Civ. P. 78. This motion is returnable today. Based on the reasons that follow, Defendant's motion to dismiss Plaintiff's breach of contract claim on the basis of copyright preemption is denied without prejudice.

BACKGROUND

Plaintiff, Virtual Studios, Inc. ("Virtual"), provides services within the graphic arts industry. (Compl., ¶ 3). Virtual has developed a software program that allows the manipulation of digital room scenes created by Virtual so as to display particular carpet and rug products in its manufacturer's sales, advertising and marketing materials. (Compl., ¶ 4).

Virtual and Defendant, Couristan Industries, Inc. ("Couristan"), began doing business together in 2002. (Compl., ¶ 6). Under the terms of their agreement, Couristan would select certain room scenes and would provide Virtual with samples of its products which would then be photographed; Virtual would then digitally manipulate the images of those products onto the images of its room scenes which could then be used by Couristan for purposes of advertising, sales and marketing and could be placed on various websites utilized by Couristan. (Compl., ¶ 7). The terms of their agreement included, inter alia, certain "Terms and Conditions" contained on the reverse side of all invoices submitted by Virtual to Couristan, including but not limited to the following: "Virtual Studios will provide its Client with the unlimited use of all photographs for a period of 1 year from the day of completion and payment of services as stated below." (Compl., ¶ 9). Couristan assented to the foregoing "Terms and Conditions." (Compl., ¶ 10). As an additional term of the agreement between the parties, Couristan agreed that Virtual had the sole and exclusive right to manipulate the room scene images by imposing thereon various images of rugs and carpeting products manufactured by Couristan. (Compl., ¶ 11).

Couristan stopped doing business with Virtual in 2007. (Compl., ¶ 12). Shortly thereafter, Virtual discovered that Couristan had continued (and continues) to use the images generated by Visual pursuant to the parties' agreement. (Compl., ¶ 13). Couristan has refused to compensate Virtual for use of such images beyond the one year limitation provided for in the "Terms and Conditions." (Compl., ¶ 14). In addition, Virtual discovered that, at some point in or around 2009, Couristan had, on its own initiative and without Virtual's knowledge or consent, undertaken to superimpose its own images onto the room scene images provided by Virtual. (Compl., ¶ 15).

In light of the foregoing, Virtual commenced the instant cause of action in January 2011.

Virtual's Complaint alleges two claims against Couristan: (1) copyright infringement, and (2) breach of contract. This Court's jurisdiction over Virtual's Complaint is premised on 28 U.S.C. §§ 1331, 1367 and 1332. Defendant Couristan filed a motion to dismiss Plaintiff's breach of contract claim pursuant to Federal Rule of Civil Procedure 12(b)(6) on April 21, 2011.

LEGAL STANDARD

For a complaint to survive dismissal, it "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, a court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the non-moving party. See Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). Additionally, in evaluating a plaintiff's claims, generally "a court looks only to the facts alleged in the complaint and its attachments without reference to other parts of the record." Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).

ANALYSIS

Couristan seeks dismissal of Virtual's breach of contract claim on the basis that it is preempted by federal copyright law. In particular, Couristan argues that "[b]ecause the rights asserted in Virtual's breach of contract claim are equivalent to rights protected under federal copyright law, Virtual's breach of contract claim is preempted by Section 301 of the Copyright Act, 17 U.S.C. § 301." (Def. Br. at 5). Plaintiff, on the other hand, maintains that: (1) Plaintiff is asserting contractual rights "outside of and different" from those implicated in its copyright claim, and (2) in any event, dismissal of this claim on the basis of federal preemption would be premature.

Under the Copyright Act, 17 U.S.C. ยง 301, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 . . . are governed exclusively by this title. Thereafter, no person is ...


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