739 F.Supp.2d 927
United States District Court,
CVENT, INC., Plaintiff,
EVENTBRITE, INC., et al., Defendants.
No. 1:10–cv–00481 (LMB/IDD).
Sept. 15, 2010.
Oliver Garcia, Thomas Edward Shakow, Aegis Law Group, LLP, Washington, DC, for Plaintiff.
Deneen J. Melander, Robbins, Russell, Englert, Orseck, Untereiner & Sauber, LLP, Kevin Edward Byrnes, Schnader, Harrison, Segal & Lewis, LLP, Washington, DC, for Defedants.
LEONIE M. BRINKEMA, District Judge.
Before the Court is defendant Eventbrite's motion to dismiss several of the counts in the plaintiff's first amended complaint for failure to state a claim. For the reasons stated in open court and in this opinion, the defendant's motion will be granted in part and denied in part.
This case arises out of the alleged intellectual property theft of data from plaintiff Cvent's website by Eventbrite and an individual by the name of Stephan Foley, using a method known as “scraping.” Cvent, Inc. is a Delaware software company with its principal place of business in McLean, Virginia, which licenses web-hosted software for use by companies and their meeting planners. Cvent is the owner and operator of a website at www.cvent.com, which, among other things, assists customers in locating venues for and organizing large-scale events. As part of that business; Cvent has created a web-based database of meeting venues around the world, called the Cvent Supplier Network, which includes detailed information about each venue, such as the availability and capacity of meeting rooms and venue amenities and services. Cvent has also undertaken development of a “Destination Guide,” an informational resource of city-specific profiles designed for meeting and event planners. The complaint alleges that Cvent has invested substantial sums of money into developing its website, including the Cvent Supplier Network and the Destination Guide pages, and that it has obtained and registered copyrights for its website, which are displayed on its website pages. Cvent currently holds three copyright registrations for its website content that are relevant to this case, each of which was filed in late April 2010.
Defendant Eventbrite, Inc. is a Delaware corporation with its principal place of business in San Francisco, California, which maintains an online event planning, sales, and registration service hosted on its website, www.eventbrite.com. Cvent alleges that in September and October 2008, Eventbrite set out to create a set of pages (a “Venue Directory”) on its website containing a collection of publicly available information about hotels, restaurants, bars, and meeting venues in various cities. Most of the information in Eventbrite's Venue Directory is publicly available from the website of each hotel and restaurant. Cvent alleges that rather than aggregating that information itself, Eventbrite hired Stephan Foley, a computer engineer, to “scrape” (i.e. copy) the information directly from Cvent's website. Cvent further alleges that Eventbrite then reformatted the material into its own layouts and made it available on the Eventbrite website. Eventbrite compensated Foley in November 2008 for his work in scraping the venue information from the Cvent website.
On May 10, 2010, Cvent filed a complaint against Eventbrite and unknown Does 1–10. On July 28, 2010, following expedited discovery as to the identifies of Does 1–10, Cvent filed a first amended complaint, naming only Eventbrite and Stephan Foley as defendants. The first amended complaint sets out eight claims for relief, on the following grounds:
1. Copyright Infringement, 17 U.S.C. § 101 et seq.
2. Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 3. Violation of the Virginia Computer Crimes Act, Va.Code Ann. § 18.2–152.3 et seq.
4. Lanham Act “reverse passing off,” 15 U.S.C. § 1125(a)
6. Unjust Enrichment
7. Business Conspiracy, Va.Code Ann. § 18.2–499 et seq.
8. Common Law Conspiracy
Cvent seeks a permanent injunction prohibiting defendants from accessing its website without authorization and enjoining defendants from copying, using, or creating derivative works from any Cvent website content. Plaintiff also requests an order impounding and destroying all infringing copies of Cvent's copyrighted works, along with an order directing Eventbrite to engage in corrective advertising, and also seeks damages, interest, and attorneys fees in an amount exceeding $3,000,000. The requested damages include compensatory damages, lost profits, disgorgement of defendants' profits, statutory damages pursuant to the Copyright Act, treble damages pursuant to the Lanham Act and Va.Code Ann. § 18.2–500, and exemplary damages not in excess of $350,000 because of defendants' willful and malicious conduct.
On August 10, 2010, Eventbrite filed a Motion to Dismiss Claims Two through Eight of plaintiff's first amended complaint, pursuant to Fed.R.Civ.P. 12(b)(6), alleging that those claims are either barred, preempted by federal law, or otherwise fail to state a cause of action. Eventbrite further moves to strike event's prayers for attorneys' fees, statutory damages, punitive damages, and treble damages, arguing that those forms of relief are not available pursuant to event's first claim for relief (copyright infringement). In particular, Eventbrite argues that Cvent has not alleged any post-registration copyright infringement in its complaint, and that statutory damages and attorneys' fees are therefore not appropriate under the Copyright Act.[FN1]
Under Fed.R.Civ.P. 12(b)(6), a complaint should not be dismissed “unless it appears certain that [plaintiff] can prove no set of facts that would support his claim and would entitle him to relief.” Smith v. Sydnor, 184 F.3d 356, 361 (4th Cir. 1999). The Court must accept all of the complaint's well-pleaded allegations as true and view them in a light most favorable to the plaintiff. Smith, 184 F.3d at 361. However, that requirement applies only to facts, not to legal conclusions. Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A court need not accept legal conclusions drawn from the facts, nor must it accept unwarranted inferences or unreasonable conclusions. E. Shore Markets, Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). In addition, “if the well-pled facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—that the pleader is entitled to relief.” Iqbal, 129 S.Ct. at 1950. “Factual allegations must be enough to raise a right of relief above the speculative level, on the assumption that all of the allegations in the complaint are true.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
The gravamen of Cvent's complaint is, at its core, a claim for intellectual property theft and copyright infringement. Accordingly, Eventbrite does not move to dismiss plaintiff's Copyright Act claim (Claim One), nor could it plausibly do so under Fed.R.Civ.P. 12(b)(6). However, plaintiff has also raised seven other claims premised upon state and federal law, both statutory and common law, all of which Eventbrite moves to dismiss.
Eventbrite has moved to dismiss plaintiff's Virginia Computer Crimes Act (Claim Three), Lanham Act (Claim Four), and unjust enrichment (Claim Six) claims on the theory that they are all preempted by the federal Copyright Act. Eventbrite has also moved to dismiss plaintiff's Computer Fraud and Abuse Act (Claim Two), Breach of Contract (Claim Five), Business Conspiracy (Claim Seven), and Common Law (Claim Eight) claims on the grounds that, for various reasons, they each fail to state a legal claim upon which relief can be granted. Finally, Eventbrite moves to strike portions of plaintiff's prayer for relief. This Court will consider each of Eventbrite's motions in turn.
Eventbrite moves to dismiss the Computer Fraud and Abuse Act (CFAA) claim on the ground that the CFAA only prohibits hacking or other unauthorized access to files, while the material that Eventbrite is alleged to have scraped from Cvent's website is publicly available, and Eventbrite was thus authorized to access it.
The CFAA is a civil and criminal anti-hacking statute designed to prohibit the use of hacking techniques to gain unauthorized access to electronic data. By its terms, the statute forbids “intentionally access[ing] a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing] ... information from any protected computer.” 18 U.S.C. § 1030(a)(2). “Exceed[ing] authorized access” is explicitly defined as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accessor is not entitled to obtain or alter.” 18 U.S.C. § 1030(e)(6). Eventbrite moves to dismiss this count on the ground that although Cvent may have pled facts giving rise to a plausible inference that defendants made an unauthorized use of the material on the Cvent website, the complaint does not allege sufficient facts to support a claim that defendants obtained unauthorized access to that information. Rather, the data which Eventbrite is alleged to have stripped from Cvent's website is publicly available on the Internet, without requiring any login, password, or other individualized grant of access. By definition, therefore, Eventbrite argues it could not have “exceeded” its authority to access that data.
Eventbrite moves to dismiss plaintiff's claim for violation of the Virginia Computer Crimes Act (VCCA), arguing that it is preempted by the federal Copyright Act. Section 301(a) of the Copyright Act states:
[A]ll legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 [of the Copyright Act] 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.
17 U.S.C. § 301(a). A state law claim is preempted by the Copyright Act if (1) the work at issue is “within the scope of the ‘subject matter of copyright’ as specified in 17 U.S.C.A. §§ 102, 103 and (2) the rights granted under state law are equivalent to any exclusive rights within the scope of federal copyright [law] as set out in 17 U.S.C.A. § 106.” Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 228 (4th Cir. 1993). A right under state law is “equivalent” to a right under federal copyright law if that right “may be abridged by an act which, in and of itself, would infringe one of the exclusive rights [granted in the Copyright Act].” Id.
In support of its motion to dismiss, Eventbrite relies upon the Fourth Circuit's decision in Rosciszewski, which held that where a claim under the Virginia Computer Crimes Act does not require proof of elements beyond those necessary to prove copyright infringement, that claim is preempted by federal copyright law. The elements of a violation of the VCCA are that the defendant (1) uses a computer or computer network; (2) without authority; and (3) either obtains property or services by false pretenses, embezzles or commits larceny, or converts the property of another. Va.Code § 18.2–152.3. In comparing those elements to the scope of the federal Copyright Act under 17 U.S.C.A. § 106, the Fourth Circuit in Rosciszewski determined that “the protection of computer programs from unauthorized copying granted under [the VCCA] is equivalent to the exclusive right of the copyright owner to reproduce a copyrighted work under the Copyright Act. Therefore, [a VCCA cause of action] is preempted to the extent that it is based on reproduction of the copyrighted computer program.” Id. at 230.
In light of the Fourth Circuit's holding, the only basis for finding that the VCCA claim is not preempted would be if the VCCA. violations alleged here are distinguishable in some way from the software copying alleged in Rosciszewski. Cvent argues that this case is distinguishable from Rosciszewski because the VCCA has been amended since the Rosciszewski decision. The earlier version of the VCCA differed from the current version of the statute in one primary respect: the earlier version simply required proof that the defendant used a computer or computer network without authority and with the intent to obtain property or services by false pretenses, to embezzle or commit larceny, or to convert the property of another. See id. By contrast, the statute as amended in 2005 now requires that the defendant must actually commit larceny, false pretenses, embezzlement, or conversion to be liable. See Va.Code Ann. § 18.2–152.3 et seq. Cvent thus attempts to distinguish Rosciszewski, arguing that the current version of the statute presents a distinct claim for relief that is qualitatively different from a claim for alleged copyright infringement.
In its reply, however, Eventbrite properly relies upon State Analysis, cited on page 9 of this Memorandum Opinion, in which this Court found a VCCA claim even under the current amended statute preempted by the Copyright Act. The plaintiff in State Analysis similarly argued that its VCCA claim was based on elements beyond mere copying, including the elements of false pretenses, embezzlement, and/or conversion, and that the claim was therefore not preempted by federal copyright law. Id. at 320. Yet the complaint consistently alleged facts relating to the plaintiff's copyright ownership and the defendant's alleged infringement. Accordingly, this Court found that “[o]n the facts as pled by StateScape, it is difficult to see how any claim under the VCCA would contain any elements making it qualitatively different from the Copyright Act claims,” and dismissed the claim as preempted. Id.
This case is functionally indistinguishable from State Analysis. Cvent's first amended complaint alleges facts almost exclusively relating to Cvent's ownership of copyrights for its website and Eventbrite's alleged infringement of those copyrights by means of unlawful “scraping” techniques. At no point does the complaint plead specific facts giving rise to a plausible inference of larceny, false pretenses, embezzlement, or conversion, as required by the plain text of the VCCA. In fact, Cvent's claim in this case reduces to nothing more than a copyright infringement allegation, dressed up in VCCA garb. As such, the VCCA claim is preempted by the Copyright Act and will be dismissed.
Eventbrite next moves to dismiss the Lanham Act claim for “reverse passing off” on the ground that it is barred by Dastar v. Twentieth Century Fox Film Corp., 539 U.S. 23, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). In Dastar, the Supreme Court held that although the Lanham Act forbids a reverse passing off of works created by another, that rule regarding the misuse of trademarks is trumped by copyright law, such that if a copyrighted work passes into the public domain, a Lanham Act claim will no longer lie. The Dastar Court also limited the scope of the Lanham Act to “tangible goods offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” Id. at 32, 123 S.Ct. 2041. The rationale for doing so was that otherwise, a Lanham Act reverse passing off claim would be functionally indistinguishable from a copyright infringement claim.
Following Dastar, many courts have rejected claims of “reverse passing off” based on copying the intellectual property of another and passing it off as one's own. For example, in Smartix International Corp. v. MasterCard International, LLC, No. 06–CV–05174–GBD, 2008 WL 4444554 (S.D.N.Y. Sept. 30, 2008), the court rejected Lanham Act claims based on the allegation that the defendant stole confidential and proprietary materials from the plaintiff's computer server. Similarly, in General Universal Systems, Inc. v. Lee, 379 F.3d 131, 148–49 (5th Cir. 2004), the court held that a defendant's copying a freight tracking software program and marketing it as its own did not give rise to a Lanham Act claim. See also Bob Creeden & Assocs., Ltd. v. Infosoft, Inc., 326 F.Supp.2d 876, 879 (N.D. Ill. 2004); Larkin Group, Inc. v. Aquatic Design Consultants, Inc., 323 F. Supp. 2d 1121 (D. Kan. 2004); McArdle v. Mattel Inc., 456 F. Supp. 2d 769, 783–84 (E.D. Tex. 2006). However, other courts have reached the opposite conclusion, allowing Lanham Act claims to proceed under similar factual circumstances. See, e.g., Cable v. Agence France Presse, No. 09 C 8031, 2010 WL 2902074, at *4–*5 (N.D. Ill. July 20, 2010) (rejecting Dastar challenge in a case involving electronic data stripping); Experian Mktg. Solutions, Inc. v. U.S. Data Corp., No. 8:09 CV 24, 2009 WL 2902957, at *9–*10 (D. Neb. Sept. 8, 2009) (sustaining reverse passing off claim for redistribution of proprietary databases, noting that plaintiff did not allege “copying the ideas embodied in the databases” but “rather they allege[d] improper use of the actual files”).
There is no controlling precedent in the Fourth Circuit on point, nor has this Court ever confronted this precise issue. However, Cvent appears to have the better of the argument, at least insofar as its complaint does not assert that Eventbrite has passed off its ideas as its own, but rather that Eventbrite has re-branded and re-packaged its product (the CSN venue database) and sold it as its own. See First Am. Compl. ¶ 82–84. Admittedly, the Supreme Court's “tangible goods” language in the Dastar opinion is confusing, and tends to suggest that electronic products are not covered by the Lanham Act. However, the Dastar opinion also makes clear that the Court used that language simply to distinguish goods and products offered for sale (which receive Lanham Act protection) from any “idea, concept, or communication embodied in those goods” (which are protected only by copyright laws). Dastar, 539 U.S. at 37, 123 S.Ct. 2041.
Thus, to the extent that Cvent is pleading its Lanham Act claim as an alternative to its copyright claim, it should be permitted to proceed. See J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27:77.1 (2006) (“In many cases a Lanham Act false designation claim accompanies a copyright infringement claim in the complaint because it is unclear if the copyright is valid, is owned by this plaintiff, or is infringed. The Lanham Act claim is included as a back up in case the copyright claim fails.”). Accordingly, Cvent's motion to dismiss the Lanham Act claim will be denied.
Eventbrite next moves to dismiss plaintiff's breach of contract claim for failure to state a plausible entitlement to relief. Eventbrite sets forth three arguments in support of that motion: (1) any contract claim against Eventbrite is preempted by federal copyright law; (2) Eventbrite is not a party to any contract; and (3) no contract exists.
Eventbrite also argues that this Court should dismiss plaintiff's unjust enrichment claim on the ground that it is preempted by the Copyright Act. Citing Microstrategy, Inc. v. Netsolve, Inc., 368 F.Supp.2d 533 (E.D.Va.2005) (Lee, J.), Eventbrite contends that state law unjust enrichment claims are preempted to the extent that they are based entirely on an allegation of copying protected works. Specifically, Eventbrite alleges that “Cvent's purported claim is based entirely on its allegation that Eventbrite copied material from Cvent's website and sold it as its own. As that allegation contains no elements other than bare copying and distribution, it is preempted.” Def.'s Mot. to Dismiss Pl.'s First Am. Compl. at 7.
Eventbrite's argument is certainly correct in the mine run of cases. See 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 1.01[B] (g) (2003) ( “[A] state law cause of action for unjust enrichment [is] pre-empted insofar as it applies to copyright subject matter.”). However, as noted above with respect to the Lanham Act claim, to the extent that Cvent is alleging unjust enrichment based upon Eventbrite's derivation of commercial benefit from its unauthorized scraping and repackaging of Cvent's products (including the CSN database), that states a claim for relief that is separate and distinct from a claim for copyright infringement based upon the alleged theft of event's copyrightable ideas. See Pl.'s First Am. Compl. ¶ 103 (“Defendants have accepted and retained the benefits of their unauthorized scraping, copying, and sale of valuable Cvent property and products in circumstances which render it inequitable for them to retain those benefits at event's expense without payment to Cvent.”) (emphasis added). As this Court noted in Microstrategy, a plaintiff's unjust enrichment claim “may survive a preemption challenge if plaintiffs can demonstrate that defendants were unjustly enriched by ‘material beyond copyright protection.’ ” 368 F.Supp.2d at 537. Accordingly, Eventbrite's argument is premature at this time, and its motion to dismiss plaintiff's unjust enrichment claim will be denied.
Eventbrite moves to dismiss plaintiff's state-law conspiracy claims on the ground that, simply put, one cannot conspire with oneself. Cvent alleges a conspiracy between only two actors: Eventbrite and Stephan Foley. Specifically, Cvent alleges that Eventbrite hired and paid Foley to scrape data from Cvent's website for use on Eventbrite's website. Courts have repeatedly held that “[a]cts of corporate agents are acts of the corporation itself.” ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 179 (4th Cir. 2002) (citing Bowman v. State Bank of Keysville, 229 Va. 534, 331 S.E.2d 797, 801 (1985)). Virginia courts have also specifically adopted the intracorporate immunity doctrine for Virginia conspiracy laws. See Fox v. Deese, 234 Va. 412, 362 S.E.2d 699, 708 (1987). As a result, it is black letter law that a claim that a corporation has conspired with its own agent fails as a matter of law.[FN3]
To avoid this line of reasoning, plaintiff repeatedly argues that Foley was merely an “outside contractor” of Eventbrite, not an employee, and that Foley did not take on any fiduciary duties or other obligations of loyalty or obedience toward Eventbrite. That argument is irrelevant under Virginia law, because the existence of an agency relationship for intracorporate immunity purposes hinges upon the substance, not the form, of the relationship between the corporation and the individual. See Am. Chiropractic Ass'n, Inc. v. Trigon Healthcare, Inc., 367 F.3d 212, 223–24 (4th Cir. 2004). If a corporation delegates a task to an individual (including an independent contractor) to serve corporate purposes, the individual acts with the same general objective as the corporation, and the corporation retains ultimate decisionmaking authority, then the individual and the corporation are for all intents and purposes the same entity. Under such circumstances, the individual and the corporation logically cannot conspire with one another. See Oksanen v. Page Memorial Hosp., 945 F.2d 696, 703 (4th Cir. 1991) (finding that a hospital lacked the legal capacity to conspire with members of an independent peer review committee who were acting on its behalf).
In this case, plaintiff alleges that Eventbrite hired Foley to mine data from Cvent's website for Eventbrite's commercial gain. The “scraped” data was used solely for Eventbrite's benefit, and indeed it is difficult to imagine any independent interest that defendant Foley might have had in acquiring it. Because the allegations in its complaint cannot plausibly allege a business conspiracy or a common law conspiracy between defendants Eventbrite and Foley, Eventbrite's motion to dismiss both of plaintiff's conspiracy claims will be granted.
Finally, Eventbrite argues that certain of Cvent's prayers for relief, including its request for treble damages under the Lanham Act and Va.Code Ann. § 18.2–500, and its request for statutory damages and attorneys' fees under the Copyright Act, should be stricken.
Because the Lanham Act claim will remain in this lawsuit, plaintiff's prayer for relief under that statute, including treble damages, still stands.
Cvent is also seeking both statutory damages and attorneys' fees in connection with its Copyright Act claim. Eventbrite moves to strike that prayer for relief on the ground that 17 U.S.C. § 412 bars any award of statutory damages or attorneys' fees if the work at issue was not registered at the time the infringement commenced. In this case, all copyrighted content on the www.cvent.com website, including Cvent's CSN venue location database, was registered in late April 2010, immediately before plaintiff commenced this litigation. However, plaintiff's first amended complaint alleges only that the defendant committed unlawful “scraping” of its website between August 2008 and October 2008. Eventbrite therefore correctly argues that on the allegations in the first amended complaint alone, plaintiff may only recover compensatory damages, not statutory damages or attorney's fees, for its copyright claims based on Eventbrite's alleged pre-registration infringement.
For these reasons, Eventbrite's motion to strike plaintiff's requested relief will be granted in part and denied in part. The motion will be granted in part as to statutory damages or attorney's fees claimed under the Copyright Act claim (Count One), and any other relief claimed with respect to Counts Two, Three, Five, Seven, and Eight. Defendant's motion to strike the remainder of plaintiff's prayer for relief, including the prayer for treble damages and attorneys' fees under the Lanham Act (Count Four) and equitable relief under the unjust enrichment claim (Count Six), will be denied.
For the reasons stated in open court and in this Memorandum Opinion, Eventbrite's motion to dismiss will be granted as to Counts Two, Three, Five, Seven, and Eight, and denied as to Counts Four and Six. Defendant's motion to strike portions of plaintiff's prayer for relief will be granted in part and denied in part, as described above.
[FN1] Defendant Foley has not joined in Eventbrite's motion to dismiss but has been granted an extension of time to file his answer, which is now due on September 17, 2010.
[FN3] The only exception is when the agent has an independent personal stake in the corporation's illegal objectives. See ePlus, 313 F.3d at 179. However, plaintiff has not alleged such an independent personal stake on defendant Foley's part.