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SellPoolSuppliesOnline.com LLC v. Ugly Pools Arizona Inc.

United States District Court, D. Arizona

September 24, 2018

SellPoolSuppliesOnline.com LLC, Plaintiff,
v.
Ugly Pools Arizona Inc., et al., Defendants.

          ORDER

          Bridget S. Bade United States Magistrate Judge

         Plaintiff SellPoolSuppliesOnline.com LLC (“Plaintiff” or “SPSO”) and Defendants Ugly Pools Arizona, Inc. and Brian Morris (“Defendants”) have filed second cross-motions for summary judgment on Count One of the First Amended Complaint (“FAC”), in which Plaintiff asserted a claim for copyright infringement under the United States Copyright Act, 17 U.S.C. § 501(a) (the “Copyright Act”). (Docs. 78, 79.) For the reasons below, the Court grants Defendants' motion and denies Plaintiff's motion.

         I. Factual and Procedural Background

         Plaintiff asserted the following three counts in the FAC: (1) copyright infringement under the Copyright Act, 17 U.S.C. § 501(a) (Count One); (2) unfair competition under Arizona law (Count Two); and (3) violation of the Digital Millennium Copyright Act, integrity of copyright management information under 17 U.S.C. § 1202 (Count Three). (Doc. 39.) The parties previously filed cross-motions for summary judgment on all three counts of the FAC, including Count One. (Docs. 43, 45.) On June 9, 2017, the Court denied both motions for summary judgment on Count One without prejudice.[1] (Doc. 64 at 42.) The Court granted summary judgment in favor of Defendants on Count Two. (Id.) The Court granted summary judgment in favor of Defendants on Plaintiff's removal claim under 17 U.S.C. § 1202(b), asserted in Count Three. (Doc. 64 at 42.) The Court denied both motions for summary judgment on Plaintiff's falsification claim under 17 U.S.C. § 1202(a), asserted in Count Three. (Id.) This order addresses only the parties' second cross-motions for summary judgment on Count One. In a separate order the Court addresses Defendants' third motion for summary judgment on Plaintiff's falsification claim, asserted in Count Three. (Doc. 86.)

         A. General Background Regarding the Copyright Dispute

         Plaintiff describes its business as licensing pre-made websites that it refers to as “the Platform.” (Doc. 78-1 ¶ 1.)[2] Plaintiff alleges that the Platform consists of “a compilation of programs, representations, originally authored works, writings, hundreds of photos taken by the principals of SPSO, and computer architecture and design, which provide SPSO licensees the infrastructure to configure, implement, and maintain fully functional and attractive websites based on the Platform that are personalized to each customer's business.” (Id., ¶ 2.) As delivered to customers, the Platform incorporates and effectively uses search engine optimization (“SEO”) and provides “drop-ship” delivery that dispenses with the need for customers to maintain inventory. (Id.) Plaintiff alleges that it spent three years and “hundreds of thousands of dollars developing the Platform.” (Id., ¶ 3.) However, Plaintiff has admitted that “much of the website code” is licensed from BigCommerce, a non-party entity that provides “backend electronic storefront” services. (Doc. 53, Ex. Q.)

         In July 2014, SPSO employed Mark Kesler as a salesperson to sell licenses to use the Platform; the licenses sold for an average of $15, 000. (Doc. 78-1 ¶¶ 5, 6.) Plaintiff alleges that it charged monthly maintenance fees and required licensees to host their websites on SPSO's servers. (Id., ¶ 7.) Plaintiff paid Kesler a commission for each license he sold, and Kesler purchased a license for use on his own site, “allpoolandspaparts.com” (“Kesler's site”). (Id., ¶ 8.)

         During 2014, Kesler introduced Defendant Brian Morris, owner of Defendant Ugly Pools Arizona, Inc., and the trade name “We Fix Ugly Pools” (“WFUP”), to Plaintiff as a potential licensee. (Id., ¶ 13.) Defendants build and remodel swimming pools, and sell pool supplies and accessories in Maricopa County, Arizona and surrounding areas. (Id., ¶ 14.) Defendants represented themselves to Plaintiff as prospective customers who were considering purchasing a license of SPSO's Platform to create a website for their business. (Id., 15.)

         Plaintiff provided Defendants access to Kesler's copy of the Platform to assist them in making a purchasing decision. (Id., ¶ 16.) Plaintiff alleges that “Defendants were aware that they would have to purchase a license to be authorized to have further access to the Platform-that is, to use it commercially-and that the SPSO license governed the nature of their use of the Platform.” (Id.) Unbeknownst to Plaintiff, Defendants and Kesler were working together and had formed a partnership for Morris to manage and redesign Kesler's site. (Id., ¶ 18, Ex. 2 at 37.) Plaintiff alleges that Defendants downloaded “a complete copy of SPSO's Platform.” (Id., ¶ 20.) Plaintiff alleges that after the download, Defendants stopped communicating with Plaintiff. (Id.)

         Plaintiff alleges that nearly one year later, Defendants published a website located at allpoolsupplies.com (“APS”), which was nearly identical to the Platform. (Id., ¶ 22.) Plaintiff asserts that Defendants admitted to copying the Platform and creating APS, a derivative site. (Id.) The site was “launched live on the internet as a fully functioning site through which customers could, and did place orders.” (Id., ¶ 24.) Plaintiff alleges that Defendants' site “wholly incorporated the original photos which are registered with the U.S. Copyright Office under Registration Number TX 8-268-803 (“Registered Photos”) and other content from the Platform into APS.” (Id., ¶¶ 28-29). Plaintiff alleges that Kesler's license was granted specifically for use on his site located at “allpoolandspaparts.com” and that the license strictly limited use of the Platform to that site. (Id., ¶¶ 9, 30.) Plaintiff discovered Defendants' allegedly infringing website on July 15, 2015 and notified Defendants of the alleged infringement that same day. (Id., ¶ 35.)

         B. Background related to Plaintiff's Copyright Registration

         On September 13, 2015, four days before filings its original complaint, Plaintiff filed a copyright registration application with the copyright office for a work titled “SPSO Website www.poolandspapartsnow.com” (the “Work”).[3] (Doc. 53, Ex. A.) The registration application identified the Work's year of completion as 2015, and the date of first publication as August 26, 2015. (Id.) The application identified the copyright claim in the Work as including “new material” identified as “text, photograph(s), computer program” and excluding “text, photograph(s), computer program, artwork.” (Doc. 50, Ex. 9; Doc. 80 ¶ 31.)[4]

         On September 20, 2016, the copyright office contacted Plaintiff's counsel regarding “problems” with information in the application related to the identity of the original copyright owner. (Doc. 53, Ex. E; Doc. 53-5 at 2.) Plaintiff responded that SPSO was the owner of the text, photographs, and computer programs claimed in the application. (Doc. 53, Ex. E; Doc. 53-5 at 3-5.)

         On October 6, 2016, the copyright office again contacted Plaintiff and asked “[s]ince this application is to register the website as it appeared (published) on 8/26/2015, was any of the computer code or were any of the photographs from an earlier version of the website?” (Doc. 53, Ex. F; Doc. 80 ¶ 33.) The copyright office explained that any photographs or code that appeared in earlier website versions “must be excluded from this claim since the extent of claim for a revised, or derivative, work is based only on the new and revised material contained in the later version of the work.” (Doc. 53, Ex. F.) Plaintiff's counsel responded that some of the deposit's content “may have been from an earlier version of the website BUT we need special dispensation because this is the first time registration of the website and no copy (i.e., mirror or backup) of the prior website exists.” (Doc. 53, Ex. H; Doc. 80 ¶ 34.)

         On October 14, 2016, the copyright office denied the requested exception. (Doc. 53, Ex. I; Doc. 80 ¶ 35.) The copyright office explained that “[w]e can only register the website as it appeared on the date on which it was printed, not for any past or future versions.” (Doc. 53, Ex. I; Doc. 80 ¶ 35.) The copyright office also stated “if any of the content of the website ever appeared online or in any other form previous to the version submitted, please authorize me to exclude all of the preexisting material and to limit the claim to the new and revised material in this version of the website.” (Doc. 53, Ex. I; Doc. 80 ¶ 35.) In response, Plaintiff's counsel inquired “[o]n what grounds is special dispensation denied? Websites aren't copyrighted usually until they are mature. Therefore, this policy excludes almost every conceivable website that is nontrivial from being copyrighted.” (Doc. 53, Ex. J; Doc. 80 ¶ 36.)

         On November 16, 2016, before the copyright office responded to Plaintiff's inquiry about the denial of its request for a special dispensation, Plaintiff submitted to the copyright office an affidavit from one of its principals, Aaron Hagen. (Doc. 53, Exs. K, L; Doc. 80 ¶ 38; Doc. 72, Ex. A at 4.) The Hagen affidavit stated that “SPSO first published the Platform on or about July 3, 2014. It was completed on or about June 25, 2014.” (Doc. 53, Ex. K at ¶ 4; Doc. 80 ¶ 38.) The Hagen affidavit further stated that “[t]he sample of the Platform provided to the United States Copyright Office with SPSO's Copyright application in 2015 is the same as the website first appeared when published on July 3, 2014.” (Doc. 53, Ex. K at ¶ 5; Doc. 80 ¶ 39.) In an accompanying email, Plaintiff's counsel confirmed that “[t]he Deposit that was submitted correctly represents the copy that was first published on July 3, 2014. Counsel did not have sufficient facts at the time of application.” (Doc. 53, Ex. L; Doc. 80 ¶ 40.)

         On November 17, 2016, a supervisor at the copyright office contacted Plaintiff's counsel, stating “[t]he signed affidavit that you provided states that the website was completed on June 25, 2014 and published on July 3, 2014. The original application lists the Year of Completion as 2015 and the date of first publication as August 36 [sic], 2015. Please confirm that we should update the information on your original application with that which is provided in the [affidavit]. Please do note that the copyright notice on the bottom of each webpage submitted as deposit material bears the year 2015.” (Doc. 53, Ex. Q at 1-2; Doc. 80 ¶ 41.) Plaintiff's counsel responded, “[y]es the information should be updated as per the affidavit.” (Doc. 53, Ex. Q at 2; Doc. 80 ¶ 41.)

         On November 17, 2016, Plaintiff also informed the copyright office that its copyright claim was for “the photographs and computer code related to the photographs that enabled the latter to present a 360 degree view of the product to a prospective customer. The Hagens also provided text descriptions of the products. That is the extent of the claim.” (Doc. 53, Ex. Q; Doc. 80 ¶ 42.) Plaintiff explained that “[m]uch of the website code is licensed from a third party (i.e. BigCommerce) and SPSO obviously makes no claims with respect to that.” (Doc. 53, Ex. Q; Doc. 80 ¶ 42.) A few days later, Plaintiff advised the copyright office that it was “no longer interested in registering the code . . . .” (Doc. 53, Ex. CC; Doc. 80 ¶ 43.) Plaintiff specified that it was “interested in registering the website as is with the current deposit and the modifications to the application already agreed to.” (Doc. 53, Ex. CC; Doc. 80 ¶ 43.)

         On November 29, 2016, the copyright office issued a certificate of registration. (Doc. 50, Ex. 1; Doc. 80 ¶ 44.) The certificate of registration identifies the year of completion as 2014, the date of first publication as July 3, 2014, and the authors of the text and photographs as Aaron Hagen and David Hagen. (Doc. 50, Ex. 1.) It identifies the title of the Work as the SPSO Website www.poolandspapartsnow.com. (Id.) Under the heading “limitation of copyright claim, ” the certificate of registration lists “new material included in the claim” as “text, photographs.” (Id.)

         C. The Court's Inquiry to the Copyright Office

         In their first cross-motions for summary judgment on Count One of the FAC, the parties disputed whether Plaintiff had properly registered its copyright and met the registration precondition for filing a copyright infringement suit. (Doc. 45 at 7; Doc. 49 at 2; Doc. 64 at 12-13; see also 17 U.S.C. § 411(a) (“no action for infringement of the copyright in any United States work may be instituted until registration of the copyright has been made in accordance with this title.”).) The Court found that Plaintiff's copyright registration was effective September 16, 2015, one day before Plaintiff filed its original complaint on September 17, 2015. (Doc. 64 at 12-13.)

         Defendants, however, argued that Plaintiff knowingly provided false information to the copyright office about the date of first publication and the contents of the deposit that it submitted to the copyright office. (Id. at 13; Doc. 53 at 2) Therefore, the Court also considered whether the registration should be considered invalid under 17 U.S.C. § 411(b). (Doc. 64 at 14-25.) The Court concluded that it was undisputed that the deposit did not match Plaintiff's copyright claim and that Plaintiff knew of the discrepancies, but nonetheless represented to the copyright office in the Hagen affidavit that the deposit (defined as the sample of the Platform provided to the copyright office in September 2015), was the same as the website appeared on July 3, 2014. (Id. at 18, 24.) The Court found that the statutory criteria for mandatory referral to the copyright office had been satisfied because the deposit did not match the material claimed in the application and Plaintiff did not argue that it unknowingly provided false information, but instead argued that the inclusion of additional material in the deposit was immaterial. The Court stated that:

It is undisputed that the [d]eposit material did not match the material claimed in [Plaintiff's] copyright application. The application was to register content (photographs and text) on the website as of the date of publication specified during the registration process, July 3, 2014, but Plaintiff deposited the content that appeared on the website on a later date. Plaintiff, however, represented to the copyright office that the [d]eposit was the same as the website appeared on July 3, 2014. Plaintiff does not argue that it unknowingly provided false information to the copyright office. Instead, Plaintiff argues that its inclusion of additional material in the [d]eposit is “of no moment.”

(Id. at 24.) Although Plaintiff argued that the inaccuracies in the information it presented to the copyright officer were “of no moment, ” or in other words, immaterial, the Court found that the statutory referral procedures of 17 U.S.C. § 411(b)(2) applied and required the Court to ask the Register of Copyrights if it considered the inaccurate information material to its decision to register the copyright. (Id. at 24-25.)

         Therefore, on June 27, 2017, the Court sent a request for the advice of the Register of Copyrights on the following question:

1. If the Register of Copyrights had known that the Deposit underlying Registration Number TX 8-268-803 does not depict the content that existed on the SPSO website www.poolandspaparts.now on July 3, 2014, which is the date of publication identified on the certificate of registration, but instead depicts a version of the website that includes copyrightable content that was added to the website at a later date, would the Register of Copyrights have refused to issue a registration with a July 3, 2014 publication date?

(Doc. 67.)

         On September 5, 2017, the Register of Copyrights responded to the Court's inquiry and stated that it would have refused registration of Plaintiff's copyright with a July 3, 2014 publication date had it known that the submitted website included copyrightable content that was added after July 3, 2014.[5] (Doc. 72-1 at 8.) The Register of Copyrights further stated that it “would have demanded a copy of the deposit as published on July 3, 2014 . . . .”[6] (Id.) The Register of Copyrights stated that, alternatively, it would have “asked Plaintiff to limit its claim to material published on August 26, 2015, and to revert back to the 2015 year of completion, and the August 26, 2015 date of publication, for the original application.” (Id.) If Plaintiff had “refused to limit the claim and revert back to the August 26, 2015 date of first publication and 2015 year of completion, the Acting Register would have refused registration.”[7] (Id.)

         After receiving the Register of Copyrights' response, the Court permitted the parties to file second motions for summary judgment on Plaintiff's copyright infringement claim asserted in Count One of the FAC. (Doc. 73.) The Court directed the parties to address how the Register of Copyrights' response to the Court's inquiry affected Plaintiff's copyright claim, including whether Plaintiff satisfied the registration precondition for bringing a civil action for copyright infringement. (Id. at 2.)

         II. Summary ...


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