United States District Court, D. New Jersey
Basner, Esq. CLEMENTE MUELLER PA Attorney for Plaintiffs.
McKinley, Esq. LAULETTA BIRNBAUM LLC Attorney for Defendants.
B. SIMANDLE U.S. DISTRICT JUDGE.
case arises out of the alleged copyright infringement and
breach of contract by Defendants North Star Creations, LLC;
Rooted Made; Rooted USA; Bernadette Godwin, and Eric
Bernstein. The action was brought by Fish Kiss, LLC, a
corporation founded by Anne Klein who was later added as a
plaintiff (collectively, “Plaintiffs”). [Docket
a lack of specificity as to the copyright claim, lack of
standing, and lack of an enforceable contract, Defendants
moved to dismiss all counts of Plaintiffs' complaint
pursuant to Fed.R.Civ.P. 12(b)(6) or in the alternative, for
an order requiring Plaintiffs to submit a more definite
statement pursuant to Fed.R.Civ.P. 12(e). [Docket Items 13
(“First Motion to Dismiss”) and 51 (“Second
Motion to Dismiss”).] Additionally, Defendants have
alternatively moved for summary judgment under Fed.R.Civ.P.
56 with regard to Count 5.
issues to be decided include whether violation of the scope
of an exclusive license can serve as the basis for a breach
of contract claim; whether the “first sale”
doctrine is applicable to Plaintiffs' copyright
infringement claims; whether Plaintiffs have adequately pled
their copyright infringement claims; the adequacy of the
claims pled against the Individual Defendants; whether
Plaintiffs state a claim under the Lanham Act (or whether
summary judgment is warranted on that claim); and whether
Plaintiffs have standing to pursue a claim under the New
Jersey Consumer Fraud Act. For the reasons discussed below,
the Court will grant in part and deny in part Defendants'
Second Motion to Dismiss.
Anne Klein is the President of Fish Kiss, LLC (“Fish
Kiss”). Fish Kiss is a “small lifestyle brand
company that specializes in the creation of unique designs
and artwork.” [Docket Item 45 at 1.] Fish Kiss owns
fifty-one artwork designs for which each design is
copyrighted (Copyright Registration no. VA 2-049-471).
Id. at 2. Bernadette Godwin (“Godwin”)
and Eric Bernstein (“Bernstein”)(collectively,
“Individual Defendants”) are the owners of North
Star, LLC (“North Star”). Id. at 15.
North Star LLC is a manufacturer of textile products. The
Individual Defendants, North Star, and its subsidiaries,
RootedUSA and Rooted Made, are collectively referred to as
“Defendants.” Id. at 2.
January 1, 2016, Plaintiffs and Defendants executed a
one-year license agreement (“License Agreement”)
for Fish Kiss Artwork. Id. at 3. The License
Agreement granted Defendants the exclusive right to
manufacture and sell Christmas stockings, Christmas tree
skirts, adult kitchen aprons, cotton tea/dish towels and
decorative pillows bearing Fish Kiss artwork (“Licensed
Products”). Id. The term of the License
Agreement began on January 1, 2016 and continued until
January 1, 2017 with no residual sell-off period after
termination. Id. Under the License Agreement, Klein
had the right to review and approve new iterations of the
Licensed Products for sample approval before they were
permitted to be offered for sale. Id. Under the
License Agreement, the Licensed Products were to consistently
bear Fish Kiss branding, labeling, and packaging.
Id. at 4. Under the Schedule of Artwork annexed to
the License Agreement, Defendants were to pay Klein royalties
of 15% of wholesale cost of Christmas stockings, Christmas
tree skirts, adult kitchen aprons, and cotton tea/dish
towels, and 20% of wholesale cost of decorative pillows.
Id. Defendants were required to remit royalty
payments within thirty days of the shipment of Licensed
Products to Defendants' customers. Id.
represented to Plaintiffs that they had total sales in the
amount of $13, 895.00 from the Licensed Products from January
1, 2016 to December 31, 2016. Id. Plaintiffs allege
that Defendants have willfully misrepresented the amount of
sales of Licensed Products to avoid paying Klein appropriate
royalties due. Id. at 5. As evidence, Plaintiffs
submit that, in May 2016, Defendants requested an order for
1, 000 additional wrappers. Id. Defendants sold the
wrappers for approximately $5.50 to $6.00 each. Id.
Plaintiffs allege that the May 2016 sale alone would equal
$5, 550 to $6, 000 in sales. Id. Nevertheless, in
September 2016, Defendants sent Plaintiffs a proposal for
renewal of the license, representing that their year-to-date
sales of Licensed Products through August 31, 2016 amounted
only to $5, 408. Id. Plaintiffs also point to an
email Klein received in January 2017 from North Star sales
representative Dan Kennedy, stating that he alone sold $11,
000 worth of Licensed Products. Id. at 4. Plaintiffs
allege that they have discovered an additional $10, 561.50 in
sales of Licensed Products unaccounted for in the $13, 895
figure presented by Defendants. [Id.]
received payments in the amount of $2, 143.65 as royalties
for the time period of January 1, 2016 to December 31, 2016.
Id. Plaintiffs allege that Defendants did not make
royalty payments from sales made in November of 2016 until
January 28, 2017, in violation of the License Agreement.
Id. at 5. Plaintiffs allege that one of
Defendants' customers, Quaile Connect, LLC, placed orders
for Licensed Products on January 6, 2017. Id. at 5.
Plaintiffs allege that Defendants sold Licensed Product to
ETShops in February 2017. Id. Plaintiffs allege that
Defendants posted an unauthorized alteration of a Fish Kiss
Christmas Tree Skirt on eBay, id., and that
Defendants sold new iterations of Licensed Products on eBay
and Amazon without the approval of Plaintiffs. Id.
February 9, 2017, Plaintiffs sent a letter to Defendants
alleging that Defendants violated the copyrights and demanded
that Defendants cease manufacture, sale, and distribution of
the Licensed Products. Id. at 7. The letter also
requested a recalculation of Defendant's sales of
Licensed Products as well as proper payment of royalties.
Id. at 8.
subsequently filed the original complaint on October 12,
2017. [Docket Item 1.] Count 1 alleges a breach of contract
for Defendants' failure to make timely royalty payments.
Id. at 10. Count 2 alleges breach of contract for
Defendants' failure to cease use and sale of licensed
products upon termination of the license. Id. at 11.
Count 3 alleges breach of contract for Defendants'
failure to obtain approval of modified licensed products
prior to distribution as well as failure to include Fish Kiss
branding, labeling, and packaging. Id. at 12. Counts
4 and 5 allege copyright infringement for Defendant's
violation of the license agreement under 12 U.S.C. §
504(b) and for violation of Plaintiffs' exclusive rights
under 12 U.S.C. § 106, respectively. Id. at 18.
Count 6 alleges vicarious and/or contributory liability for
copyright infringement against the Individual Defendants.
Id. at 18. Count 8 alleges False Advertising under
the Lanham Act, 15 U.S.C. § 1125(a)(1), in connection
with Defendants using a “Made in America”
designation on the Licensed Products, as Plaintiffs allege
that Defendants manufactured Licensed Products at least
partially outside the United States. Id. at 19.
Count 9 alleges violations of the New Jersey Consumer Fraud
Act, N.J.S.A. 56-8-2 (“CFA”), in connection with
the “Made in America” designation.
then filed a motion to dismiss several of Plaintiffs'
claims pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state
a claim upon which relief may be granted. [Docket Item 13
(“First Motion to Dismiss”).] With regard to
Counts 8 and 9, Defendants asserted in the First Motion to
Dismiss that they manufacture all of their products in a
facility in Medford, New Jersey. Id. at 16.
Defendants requested dismissal of Count 8 for failure to
state a claim or, in the alternative, summary judgment
pursuant to Fed.R.Civ.P. 56. Id. at 13. Defendants
also sought dismissal of Count 9 for lack of standing.
Id. at 16. Defendants argued that because the
Licensing Agreement was between Anne Klein and Defendants
[Docket Item 1-11], Fish Kiss did not have standing as the
real party in interest under Fed.R.Civ.P. 17(a) with regard
to the contractual claims. [Docket Item 13 at 7.] Defendants
also requested dismissal of Plaintiffs' copyright claims
(Counts 4 & 5) pursuant to the first sale doctrine, 17
U.S.C. § 109(a). Id. at 10. Defendants
requested dismissal (or, in the alternative, a more definite
statement of a pleading pursuant to Fed.R.Civ.P. 12(e)) with
regards to Plaintiff's copyright infringement claims
(Counts 4-6). Id. at 12. Defendants also requested
dismissal of Count 6 (claims against the Individual
of a Response, Plaintiffs filed their First Amended Complaint
(“FAC”) on December 20, 2017. [Docket Item 14.]
In it, Anne Klein was named as a plaintiff, which addressed
Defendants' arguments under Fed.R.Civ.P. 17(a) as to Fish
Kiss's standing. Id. The FAC specified which
copyrighted materials were allegedly being infringed (namely:
products bearing Fish Kiss's Alabama, Arizona,
California, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Montana, Nebraska, New Hampshire, New
Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma,
Oregon, Pennsylvania, South Carolina, Tennessee, Texas,
Vermont, Virginia, West Virginia, Wisconsin, and Wyoming
designs). Id. at 9. Plaintiff withdrew Counts 8 and
9 without prejudice and reserved the right to reinstate the
claims upon the discovery of further corroborating evidence.
Id. at 19. Subsequently, Plaintiffs filed a Response
in Opposition to Defendants' Motion to Dismiss on
December 20, 2017, addressing the other arguments in
Defendants' First Motion to Dismiss. [Docket Item 15.]
filed an Answer to the FAC (including the assertion of
counterclaims against Plaintiffs). [Docket Item 16.]
apparent service of attempting to reinstate their false
advertising claims, Plaintiffs contacted Defendants'
cloth and fabric supplier via email on April 4, 2018,
inquiring whether their “canvas material in both optic
white and white is also milled in the U.S.A.” [Docket
Item 40-6 at 12]. In response, the supplier stated that they
“do not have any canvas fabrics that are Made in the
USA. This is due to the lack of woven mills that exist in the
USA today.” Id.
leave of the Court [Docket Item 44], Plaintiffs filed their
Second Amended Complaint on May 14, 2018. [Docket Item 45
(“SAC”).] In light, apparently, of the
information gained from the April 4, 2018 email exchange,
Plaintiffs reinstated as Counts 7 and 8 their False
Advertising and Unfair Trade Practices claims under the
Lanham Act, § 43(a), and the CFA, N.J.S.A. §
56:8-2, respectively. Id. at 15-16.
the SAC is now the operative Complaint in this case, the
Court restates its claims, briefly:
1. Breach of Contract Against NSC Defendants (for failure to
pay and make timely royalties due) [Docket Item 45 at 9-10];
2. Breach of Contract Against NSC Defendants (for failure to
cease use of Fish Kiss Artwork and Sale of Licensed Product
upon Termination of the Agreement) [id. at 10];
3. Breach of Contract Against the NSC Defendants (for failure
to obtain approval of licensed products prior to
distribution; failure to include Fish Kiss branding,
labeling, and packaging; and unauthorized modification of
Fish Kiss artwork) [id. at 10-11];
4. Copyright Infringement Against the NSC Defendants (for
copyright infringement of Fish Kiss Kentucky artwork)
[id. at 11-13];
5. Copyright Infringement Against the NSC Defendants (for
copyright infringement of Fish Kiss artwork) [id. at
6. Vicarious and/or Contributory Copyright Infringement
Against Defendants Godwin and Bernstein [id. at 15];
7. False Advertising under the Lanham Act, § 43(a)
Against the NSC Defendants [id. at 15-16]; and
8. “Violation of N.J. Unfair Trade Practices Act (N.J.
§ 56:8-2)” Against the NSC Defendants
[id. at 16-17].
response, Defendants filed the Second Motion to Dismiss the
SAC (along with a brief in support of that Motion) on June
29, 2018. [Docket Item 51.] The Second Motion (to dismiss the
SAC) is, for all intents and purposes, identical to the
motion to dismiss Plaintiffs' original complaint; it
omits only Defendants' motion to dismiss the case on the
grounds that Fish Kiss (but not Klein) lacked
standing. Again, in the interests of clarity,
the Court restates its essential arguments:
1. Count Two should be dismissed for failure to state a claim
because there can be no breach of contract after the License
2. Counts Four through Six should be dismissed under the
“first sale” doctrine;
3. Counts Three through Six should also be dismissed for
failure to allege sufficient detail about the nature of the
4. Count Seven should be dismissed because Plaintiffs'
claim of false advertising on Defendants' claim that the
products are “made in the USA” or “made in
America” cannot be sustained where the only allegation
is that the materials used to make Defendants' products
did not ...