United States District Court, E.D. Pennsylvania
For JOEL GORDON, doing business as JOEL GORDON PHOTOGRAPHY, Plaintiff: MAURICE HARMON, HARMON & SEIDMAN LLC, NEW HOPE, PA.
For PEARSON EDUCATION, INC., Defendant: DAVID W. MARSTON, JR., LEAD ATTORNEY, MORGAN, LEWIS AND BOCKIUS LLP, PHILADELPHIA, PA.
RONALD L. BUCKWALTER, SENIOR UNITED STATES DISTRICT JUDGE.
Currently pending before the Court is a Motion to Dismiss Count II of the Complaint by Defendant Pearson Education, Inc. For the following reasons, the Motion is granted in part and denied in part.
I. FACTUAL BACKGROUND
According to the facts set forth in the Complaint, Plaintiff Joel Gordon is a professional photographer who makes his living by creating and licensing photographs. (Compl. ¶ 1.) Defendant Pearson Education, Inc. (" Pearson" ) is a sophisticated and highly-profitable global publishing company which creates and sells educational textbooks. (Id. ¶ 2.)
Gordon is the author and owner of certain photographs and Susan Lerner is the author and owner of other photographs (collectively " Photographs" ). Prior to this action, Lerner transferred to Gordon the exclusive right to grant licenses for reproduction, distribution, and display of her photographs. (Id. ¶ 6.) Each of the Photographs has been registered with the United States Copyright Office, except for two which have pending registrations and for which Gordon delivered completed applications, deposits, and fees to the United States Copyright Office before the filing of the Complaint. (Id. ¶ 7.)
Between 1989 and 2012, in response to permission requests from Pearson, Gordon sold Pearson limited licenses to use copies of the Photographs in particular educational publications identified by Pearson's requests and Gordon's licenses. The licenses that Gordon granted to Pearson were expressly limited by the number of copies, distribution area, language, duration, and/or media. (Id. ¶ 8.) Pearson represented to Gordon that it intended to use the Photographs within the negotiated license terms. (Id. ¶ 9.) When determining the license fee, Gordon relied on Pearson's representations. (Id. ¶ 10.)
According to Gordon, however, Pearson knew that its actual uses would exceed its represented uses and that Pearson intended to obtain access to the Photographs at a lower cost than it would have paid had it been honest in its dealings (Id. ¶ ¶ 11-12.) Indeed, shortly after obtaining the licenses from Gordon, Pearson exceeded the licenses and infringed Gordon's copyrights in numerous ways, including: (a) printing more copies of the Photographs than Gordon authorized; (b) distributing publications containing the Photographs outside the authorized distribution area; (c) publishing the Photographs in electronic, ancillary, or derivative publications without permission; (d) publishing the Photographs in international editions and foreign publications without permission; (e) publishing the Photographs beyond the specified time limits; and/or (f) publishing and distributing Gordon's works in subsequent editions, foreign language translations, and various other publications without obtaining authorization. (Id. ¶ 13.)
Gordon alleges that Pearson's practice of requesting and paying for a license for limited uses, and then exceeding those authorized uses, extends beyond the publications referenced above. (Id. ¶ 16.) Indeed, according to the Complaint, Pearson's business model is built on a foundation of pervasive and willful copyright infringement that deprived Gordon, and hundreds of other photographers and visual art licensors, of their rightful compensation, and unjustly enriched Pearson with outlandish profits in the process. (Id.) Currently, there are several parallel cases of copyright infringement pending
against Pearson. (Id. ¶ ¶ 17-18.) On May 3, 2010, and January 13, 2011, Julie Orr, Pearson's Curriculum Group's Image Manager, Rights and Permissions, testified that Pearson had published photographs in its textbooks in some instances without obtaining an permission and had printed in excess of license limits in situations where licenses were obtained. (Id. ¶ 19.) On June 16, 2010, Maureen Griffin, Pearson's Curriculum Group's Photo Commissions Editor, testified that Pearson had published photographs in its textbooks " before the FTP [file to printer] date" and that " the number of textbooks printed exceeded the licenses we obtained." (Id. ¶ 20.) Numerous other photographers and stock photographers and stock photography agencies have brought actions against Pearson alleging copyright infringement claims nearly identical to those asserted by Gordon in this action. (Id. ¶ 21.)
According to the Complaint, Pearson also engages in indirect copyright infringement. Pearson facilities the international distribution of its publications, in part, through its international rights management group (" IRMG" ) located in Indiana and New Jersey. The IRMG website indicates that it is the IRMG's " mission to maximize the number of translations and local versions published that are based upon products of Pearson Education," and that IRMG " arranges for approximately 4,000 third-party licenses annually, which includes translations in approximately 50 languages read around the world." The IRMG website also indicates that its team " frequently travels to countries to visit with local publishing partners who are interested in obtaining foreign rights to our books." (Id. ¶ 25.) According to the Complaint, Pearson reproduced and distributed the Photographs without Plaintiff's permission to other entities, subsidiary companies, divisions, affiliates, and/or third parties (" Third Parties" ). (Id. ¶ 26.) The alleged unauthorized reproduction and distribution to the Third Parties took place in the United States. (Id.) The Third Parties then translated the publications at issue into additional languages or published them in local adaptations or reprints and included the Photographs in these publications without Plaintiff's permission. (Id. ¶ 27.) Gordon alleges that Pearson knew when it reproduced and distributed the Photographs that the Third Parties would reproduce and distribute the Photographs without Plaintiff's authorization.
Plaintiff Gordon initiated the current action on April 22, 2014, setting forth two causes of action. Count I asserts that Pearson's acts constitute infringements of Gordon's copyrights in the Photographs in violation of 17 U.S.C. § § 501 et seq. (Compl. ¶ ¶ 35-37.) Count II contends that Pearson's acts also constitute contributory and/or vicarious infringement of Gordon's copyrights in the Photographs in violation of 17 U.S.C. § § 501 et seq. (Compl. ¶ ¶ 38-40.)
On October 20, 2014, Defendant filed the current Motion to Dismiss Count II of the Complaint. Plaintiff filed a Response on November 3, 2014, and Defendant submitted a Reply Brief on November 13, 2014, making the Motion ripe for judicial review.
II. STANDARD OF REVIEW
Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. Civ. P.12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the United States Supreme Court recognized that " a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do." Id. at 555. Following these basic dictates, the Supreme Court, in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), subsequently defined a two-pronged approach to a court's review of a motion to dismiss. " First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678. Thus, although " Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 678-79.
Second, the Supreme Court emphasized that " only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. " Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. A complaint does not show an entitlement to relief when the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct. Id.; see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232-34 (3d Cir. 2008) (holding that: (1) factual allegations of complaint must provide notice to defendant; (2) complaint must allege facts suggestive of the proscribed conduct; and (3) the complaint's " 'factual allegations must be enough to raise a right to relief above the speculative level.'" (quoting Twombly, 550 U.S. at 555)).
Notwithstanding these new dictates, the basic tenets of the Rule 12(b)(6) standard of review have remained static. Spence v. Brownsville Area Sch. Dist., No. Civ.A.08-626, 2008 WL 2779079, at *2 (W.D. Pa. July 15, 2008). The general rules of pleading still require only a short and plain statement of the claim showing that the pleader is entitled to relief and need not contain detailed factual allegations.
Phillips, 515 F.3d at 233. Further, the court must " accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff." Buck v. Hampton Twp. Sch. Dist.,452 F.3d 256, 260 (3d Cir. 2006). Finally, the court must " determine whether, ...