Free Order on Motion for Summary Judgment - District Court of Colorado - Colorado

Case 1:03-cv-02512-WYD-PAC

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge Wiley Y. Daniel Civil Action No. 03-D-2512 (PAC) KAREN DUDNIKOV and MICHAEL MEADORS, Plaintiffs, v. MGA ENTERTAINMENT, INC., a California corporation Defendant.

ORDER AFFIRMING AND ADOPTING UNITED STATES MAGISTRATE JUDGE'S RECOMMENDATION

I.

INTRODUCTION THIS MATTER is before the Court in connection with Defendant MGA

Entertainment Inc.' Motion for Summary Judgment filed December 22, 2004. The s Motion was referred to Magistrate Judge Patricia A. Coan for a recommendation by Order of Reference dated December 17, 2003. Magistrate Judge Coan issued a Recommendation (" Recommendation" on May 6, 2005 that the Motion be granted and ) summary judgment enter in favor of MGA. That Recommendation is incorporated herein by reference. See 28 U.S.C § 636(b)(1)(A); FED. R. CIV. P. 72(a); D.C.COLO.LCivR. 72.1(C)(1). On May 18, 2005, Plaintiffs filed a timely Objection to the Recommendation (" Objection" Defendant filed a Response to Plaintiffs' ). Objection (" Response" on June 6, 2005. Plaintiffs' ) Objection necessitates a de novo determination as to those specified proposed findings or recommendations to

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which objection is made since the nature of the matter is dispositive. FED. R. CIV. P. 72(b); 28 U.S.C. § 636(b)(1). II. BACKGROUND Plaintiffs are wife and husband who operate a home-based business which offers items on the eBay internet auction site. MGA Entertainment, Inc. (" MGA" is the ) exclusive owner of all rights in and to the Bratz® characters and property. Plaintiffs bring this pro se action for a declaratory judgment, tortious business interference, outrageous conduct, negligent representation, and fraudulent representation, alleging that MGA improperly terminated their on-line auction listing with eBay using eBay' s Verified Rights Owner' Program (" s VeRO" In the auction, Plaintiffs were attempting to ). sell a fleece hat with a Bratz® applique affixed to it. MGA utilized the VeRO program to issue a Notice of Claimed Infringement (" NOCI" stating that Plaintiffs were infringing on ) MGA' copyright, trademark, manufacturing, distribution, licensing, and merchandising s rights. Plaintiffs allege that MGA' notification was made without regard to trademark or s copyright law in an attempt to control the on-line auction market. Defendant seeks summary judgment as to each of Plaintiffs' claim. III. ANALYSIS The purpose of summary judgment is to determine whether trial is necessary. White v. York Int' Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary judgment is l. appropriate when the moving party has established " that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). The burden of showing the absence of a genuine issue of material

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fact for trial can be discharged by demonstrating " that there is an absence of evidence to support the nonmoving party' case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 s (1986). The court views the evidence of record and draws all reasonable inferences in the light most favorable to the nonmoving party. Thomas v. International Business Machines, 48 F.3d 478, 484 (10th Cir. 1995). To defeat a properly supported motion for summary judgment, " nonmoving party must, at a minimum, direct the court to facts the which establish a genuine issue for trial." White v. York Int'Corp., 45 F.3d 357, 360 l (10th Cir. 1995) (emphasis in original). The nonmoving party must go beyond the pleadings and present " significant probative evidence tending to support the complaint." White, 45 F.3d at 360 (internal citations omitted). Summary judgment should be granted " against a party who fails to make a showing sufficient to establish the existence of an element essential to that party' case." Celotex, 477 U.S. at 322. s Magistrate Judge Coan found that MGA has established that there are no genuine issues of material fact for trial. Specifically, Magistrate Judge Coan concluded that (1) with regard to Plaintiffs' allegation of perjury MGA " acted within its rights when it issued the NOCI which suspended the auctions on plaintiffs' fleece hat,"and therefore did not knowingly misrepresent that Plaintiffs were infringing MGA' rights, (2) Plaintiffs' s failed to present evidence in support of essential elements of their tort claims for tortious interference and outrageous conduct, and (3) Plaintiffs' asserted no separate legal grounds for seeking a declaratory judgment. Recommendation, at 7, 10. A. Plaintiffs' Claim for Perjury Under the Digital Millennium Copyright Act - 17 U.S.C. § 512

I first address Plaintiffs' objection to Magistrate Judge Coan' recommendation s -3-

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that summary judgment enter in favor of MGA as to Plaintiffs' perjury"claim. As an " initial matter, Magistrate Judge Coan determined that there is no general civil action for perjury and analyzed Plaintiffs' claim under 17 U.S.C. § 512(f) of the Digital Millennium Copyright Act [" DMCA" which prohibits a party from making knowing material ], misrepresentations that a material or activity is infringing. Recommendation at 4, 7. The DMCA also requires that a " notification of copyright infringement"include a statement that the complaining party has a " good faith belief that use of the material in the manner complained of is not authorized by the copyright owner." 17 U.S.C. § 512(c)(3)(A)(v). Magistrate Judge Coan found that MGA complied with the notice and takedown requirements under 17 U.S.C. § 512(c)(3)(A) and was entitled to suspend Plaintiffs' auction. In analyzing the requirements for notification under the DMCA, Magistrate Judge Coan relied on the Ninth Circuit' decision in Rossi v. Motion Picture s Ass' of America, 391 F.3d 1000 (9th Cir. 2004). In Rossi, the Ninth Circuit held that n the good faith standard under § 512(c) is a subjective rather than objective standard based on the fact that a cause of action for improper infringement notifications under § 512(f) is expressly limited to those situations where the copyright owner' notification is s a" knowing"and " material"misrepresentation. Rossi, 391 F.3d at 1004-05. Recommendation, at 7. Thus, as long as MGA acted in good faith belief that infringement was occurring, there is no cause of action under § 512(f). Plaintiffs' claim for perjury must be supported by substantial evidence that MGA knowingly and materially misrepresented Plaintiffs' infringement when it utilized eBay' VeRO program s to have the auction shut down. Because Plaintiffs failed to demonstrate that MGA

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knowingly and materially misrepresented that Plaintiffs' auction was infringing, Magistrate Judge Coan recommended that Plaintiffs' perjury"claim be dismissed. " Recommendation at 7. Plaintiffs first object that MGA should not be allowed the protections of the good faith belief standard under the DMCA because the communications that Plaintiffs received from MGA contained nothing regarding alleged copyright infringement. Objection, ¶¶ 15-17 at 5. However, MGA initiated the NOCI was based on the good faith belief of Senior Counsel David Oakes that Plaintiffs' auction violated MGA' s copyright rights as well as their trademark, manufacturing, distribution, licensing, and merchandising rights. Because MGA has asserted that it had a good faith belief that the Plaintiffs' auction was an infringement, Plaintiffs have the burden of demonstrating material facts showing otherwise. I agree with Magistrate Judge Coan that Plaintiffs failed to satisfy this burden. Plaintiffs also object to Magistrate Judge Coan' finding of good faith belief on s the part of MGA because they assert that MGA' agent, David Oakes, a lawyer trained s in IP law, should be held to a undefined " higher standard." Objection at ¶ 20. Plaintiffs have not presented any authority that supports applying a different standard than subjective good faith belief to lawyers trained in IP law. Furthermore, in Rossi, the Ninth Circuit clearly stated that " [m]easuring compliance with [an] . . . ` objective reasonableness' standard would be inconsistent with Congress' apparent intent [to] . . . s protect potential violators from subjectively improper actions by copyright owners." Rossi, 391 F.3d at 1005 (emphasis in original).

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Plaintiffs also reiterate their theory that MGA is acting out of an improper desire to control secondary markets, as evidenced by MGA' failure to actively police on-line s auctioning for potential copyright infringements. Magistrate Judge Coan determined that this evidence has no bearing on the notice and takedown requirements under the DMCA, and I must agree. MGA' actions towards other eBay auctioneers is irrelevant s to a determination of good faith belief that the Plaintiffs' auction was infringing on MGA' s rights. Finally, Plaintiffs object to Magistrate Judge Coan' decision not to address s MGA' privilege defense because it is secondary to the good faith belief standard under s the DMCA, and because Plaintiffs " failed to address the substance of the privilege issue in their brief opposing MGA' motion." Recommendation, at 6 n. 7. In their objection s Plaintiffs dispute Magistrate Judge Coan' conclusions, but fail to articulate specific s facts in support of their objection. In any case, I agree with Magistrate Judge Coan that the issue of privilege is secondary to that of good faith belief under the DMCA, and that further discussion of the issue is unnecessary. Recommendation, at 6 n. 7. In order to properly support its Motion for Summary Judgment, MGA was required to show that it had a sufficient basis to form the required good faith belief that the Plaintiffs' auction infringed on its rights, and that its actions therefore complied with the notice and takedown requirements under th DMCA. I agree with Magistrate Judge Coan that MGA has met that burden. I further agree with Magistrate Judge Coan that Plaintiffs have failed to raise " genuine issue of material fact with regards to [MGA' a s] compliance with the DMCA." Rossi 391 F.3d at 1002. For those reasons, adopt

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Magistrate Judge Coan' recommendation that summary judgment enter against s Plaintiffs and in favor of MGA on Plaintiffs' claim for perjury under 17 U.S.C. § 512(f). B. State Tort Claims

Plaintiffs have voluntarily withdrawn their claims for negligent and fraudulent representation. Plaintiffs do not specifically object to the dismissal of their remaining state law tort claims except to note that " [t]he tort claims were dismissed largely because of the finding of a " good faith belief." Reversing that would alter these findings." Objection at 8. Improper interference is an essential element of a tortious interference claim. Because I agree with Magistrate Judge Coan' finding that s Defendant acted in good faith, I uphold dismissal of Plaintiffs' state law tort claims for tortious interference with contract/business relations, and outrageous conduct/intentional infliction of emotional distress. C. Declaratory Judgment

Finally, Plaintiffs object to dismissal of their request for declaratory judgment that the actions by MGA constitute perjury under the DMCA. Objection at 7. Magistrate Judge Coan recommended dismissal of the declaratory judgment claim because Plaintiffs " have offered no separate legal ground for this motion"and, therefore, declaratory judgment is not appropriate under either Fed. R. Civ. P. 57 or 28 U.S.C. § 2201. Recommendation at 10. In their objection Plaintiffs assert that Magistrate Judge Coan has failed to consider their complaint in the liberal manner due pro se plaintiffs. Plaintiffs rely on several cases which articulate the standard applicable to pleadings filed by pro se plaintiffs. Each of those cases involves motions to dismiss for failure to

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state a claim for which relief can be granted pursuant to FED.R.CIV.P. 12(b)(6). When faced with a motion for summary judgment, however, the court is not deciding if the pleadings outlined in the complaint are sufficient to state a claim, but whether or not the nonmoving party has presented sufficient facts to support those claims. Pro se plaintiffs' briefs are to be read liberally, and not held to as high a standard as those prepared by members of the legal profession; however, it is not the role of the court to play advocate for a pro se plaintiff. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). I find no evidence in the record that Magistrate Judge Coan did not read Plaintiffs' Complaint and all subsequent briefs liberally. It is not the place of Magistrate Judge Coan, or this Court, to articulate legal grounds for a declaratory judgment that the Plaintiffs have not themselves articulated. As the actions of MGA are in compliance with the notice and takedown requirements of 17 U.S.C. § 512, there is not longer a " case of actual controversy within [this] jurisdiction"in which the court " may declare the rights and other legal relations"of the Plaintiffs and MGA. 28 U.S.C. § 2201(a), FED.R.CIV.P. 57. I agree, therefore, with Magistrate Judge Coan that Plaintiffs motion for declaratory judgment is no longer appropriate and should be dismissed. IV. CONCLUSION In conclusion, for the reasons stated above, it is ORDERED that the Recommendation of May 6, 2005, is AFFIRMED AND ADOPTED. In accordance therewith, it is ORDERED that Defendant' Motion for Summary Judgment filed December 22, s 2004, is GRANTED. The Clerk of Courts shall enter judgment in favor of the Defendant

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and against Plaintiffs. Dated: August 17, 2005 BY THE COURT:

s/ Wiley Y. Daniel Wiley Y. Daniel U. S. District Judge

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