David G. Campbell, United States District Judge.
Defendant Sony Music Entertainment ("Sony") has filed a motion to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim. Doc. 35. Defendants Deepfreeze Entertainment, LLC ("Deepfreeze") and Robert Carr have also filed a motion to dismiss for failure to state a claim. Doc. 51. The motions are fully briefed. The Court will deny the motions, but allow jurisdictional discovery so that the personal jurisdiction issues may be addressed in a more complete factual context.
Plaintiff Wake Up and Ball, LLC ("Wake Up") is an Arizona limited liability company with its principal place of business in Maricopa County, Arizona. Doc. 25, ¶ 1. Wake Up's business model is based on the discovery, production, and distribution of hip-hop musicians and sound recordings. Id., ¶ 17. Alonzo Harris and Kareem Rogers formed Wake Up on December 9, 2013. Id., ¶¶ 16, 31. Felipe Delgado was a former principal member of Wake Up, but left in October 2014. Id., ¶ 16.
According to Wake Up, Delgado approached hip-hop artist Robert Carr (a.k.a. "Judge da Boss") after Carr recorded the composition "Judge da Boss, Hell Yeah" in October 2013. Id., ¶¶ 18, 20. Delgado allegedly
Wake Up claims that on February 7, 2014, Harris had his attorney draft a recording contract for Carr to sign, and that throughout February and March the two parties exchanged several drafts and met many times. Id., ¶¶ 45, 46. During the negotiations, Harris expressed his desire to own both the lyrics and beat to the Hell Yeah composition, and Carr verbally indicated that he owned the rights to the lyrics and beat and was free to sign a recording contract with Wake Up. Id., ¶¶ 47, 48. In March, Harris learned that Marshae Green had obtained the rights to the lyrics and beat of the Hell Yeah composition. Id., ¶ 49. Green later notified Wake Up that Carr had signed with Defendant Deepfreeze, an Arizona company with its principal place of business in Glendale, as his managing company. Id., ¶¶ 3, 53. Deepfreeze expressed its desire to purchase rights to the Hell Yeah video from Wake Up, and the two parties negotiated over the sale price but did not reach an agreement. Id., ¶¶ 54-56.
On May 8, 2014, Harris learned that Carr had signed with Defendant Sony, a Delaware corporation with its principal place of business in New York. Id., ¶¶ 2, 59. On August 9, the Hell Yeah video was published on YouTube, apparently by Delgado on behalf of Wake Up. Id., ¶ 62. Wake Up claims that Sony caused the video to be removed from YouTube the same day. Id., ¶ 63. Wake Up further claims that on September 21, 2014, Sony published the video on several websites and online services, including MTV and iTunes. Id., ¶ 64. Wake Up applied for and obtained a copyright registration for the Hell Yeah video effective September 29, 2014. Id., ¶ 68. It claims that it provided notice to Sony of its infringement of Wake Up's copyright, but that Sony disregarded the notification. Id., ¶¶ 14, 15. The video has remained publically available ever since. Id., ¶ 64.
Wake Up filed suit against Sony, Deepfreeze, and Robert Carr. Wake Up seeks relief for copyright infringement against Sony and Deepfreeze, and seeks declaratory judgment as to its copyright ownership. Additionally, Wake Up has pled a claim for fraud and misrepresentation against Carr. Id., ¶¶ 80-88.
"Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons." Daimler AG v. Bauman, ___ U.S. ___, 134 S.Ct. 746, 753, 187 L.Ed.2d 624 (2014). Arizona has authorized its courts to exercise jurisdiction to the maximum extent permitted by the Due Process Clause of the Constitution. See Ariz. R. Civ. P. 4.2(a). Under the Due Process Clause, a federal district court may exercise jurisdiction over a person who is not physically present within the territorial jurisdiction of the court. Walden v. Fiore, ___ U.S. ___, 134 S.Ct. 1115,
In this circuit, specific jurisdiction exists only if: (1) the defendant purposefully availed himself of the privileges of conducting activities in the forum, thereby invoking the benefits and protections of its laws, or purposely directed conduct at the forum that had effects in the forum; (2) the claim arises out of the defendant's forum-related activities; and (3) the exercise of jurisdiction comports with fair play and substantial justice — in other words, it is reasonable. In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 741-42 (9th Cir.2013). In tort cases, the inquiry under the first part is whether a defendant purposefully directed his activities at the forum state. Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006). This requirement, sometimes referred to as the "effects test," "requires that the defendant allegedly have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 803 (9th Cir.2004) (quoting Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir.2002) (citing Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984))).
The effects test does not "`stand for the broad proposition that a foreign act with foreseeable effects in the forum state always gives rise to specific jurisdiction.'" Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 675 (9th Cir.2012) (quoting Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1087 (9th Cir.2000)). Nor does the effects test mean that specific jurisdiction may be based solely on a defendant's knowledge that the subject of his tortious activity resides in a particular state. See Walden, 134 S.Ct. at 1125. The Court must always focus on the "`relationship among the defendant, the forum, and the litigation' [which] is the essential foundation of in personam jurisdiction." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)). "The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way." Walden, 134 S.Ct. at 1125.
"When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir.2006). "Where, as here, the defendant's motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir.2011). "[When] the pleadings and other submitted materials raise issues of credibility or disputed questions of fact with regard to jurisdiction, the district court has the discretion to take evidence at a preliminary hearing in order to resolve the contested issues." Data Disc, Inc. v. Sys. Tech. Assocs., Inc, 557 F.2d 1280, 1285 (9th Cir. 1977). Discovery may be granted where "pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary." Id. at 1285, n. 1.
Wake Up must first show that Sony purposefully directed its infringing activity at Arizona. To do so, Wake Up must show that Sony committed an intentional act, expressly aimed at the forum state, causing harm that the defendant knows is likely to be suffered in the forum state. Schwarzenegger, 374 F.3d at 803. Sony does not dispute that the first requirement is satisfied — Sony acted intentionally when it published the Hell Yeah music video on a number of publically available websites. Doc. 35 at 14, 15. The Court will address the other two requirements.
Wake Up must make a prima facie showing that Sony expressly aimed the publishing of the music video at Arizona. This requires "`something more' than mere foreseeability." Schwarzenegger, 374 F.3d at 805. The Ninth Circuit considers a number of factors, including the "interactivity of the defendant's website," "the geographic scope of the defendant's commercial ambitions," and "whether the defendant `individually targeted' a plaintiff known to be a forum resident." Mavrix, 647 F.3d at 1229.
Wake Up argues that several facts show something more than mere foreseeability. Wake Up alleges that "Sony intentionally uploaded and published Wake Up's copyrighted work to various online and worldwide websites available within the state of Arizona with the intent that the work be viewed by third parties, including Arizona residents." Doc. 25, ¶ 10. Wake Up explains that its copyright claim arises directly from Sony's publishing of Wake Up's copyrighted video to publically accessible websites available in Arizona. Id., ¶ 11. Wake Up further alleges that Sony, through its dealings and negotiations with Arizona residents Deepfreeze and Carr, and by obtaining copies of Wake Up's copyrighted work and publishing it on worldwide websites available in Arizona, knew or should have known that its actions would harm Arizona residents. Id., ¶ 13. Wake Up also argues that "Sony negotiated with an Arizona company for the recording services of an Arizona artist ..., [acquiring] possession of the [music video] and purportedly the right to exploit it." Doc. 54 at 13. Wake Up further argues that Sony published the video in Arizona and "promoted its artist in Arizona, in a manner targeted at Arizona" in order to reach Arizona consumers. Id.
Alonzo Harris, a member of Wake Up, states in his declaration that the "agreement between Carr, Deepfreeze and Sony required Sony to market and promote Carr." Doc. 54-1, ¶ 18. Harris was aware of a number of Arizona performances by Carr after he signed with Sony including a Hell Yeah music video release party where the music video was allegedly shown and an "`Arizona Take Over Tour' promoted by Sony's `Louder than Life' brand." Id. Wake Up has provided a number of exhibits that document these and other Phoenix-area "Judge da Boss" events. Doc. 54-1.
Deepfreeze, Carr, and Sony also entered into an April 20, 2014 "Recording Agreement." Doc. 35-3. Section 9, titled "Brand Equity," requires Carr to pay Sony a certain percentage of all gross revenues in connection with certain activities, including "touring and other live performance engagements" and "the use of [Carr's] name, likeness and/or logos on websites[.]" Id. at 6. An August 25, 2014 amendment to the agreement identifies the Hell Yeah music video as "Existing Materials" and requires Sony to pay Deepfreeze a "video advance" as "reimbursement for costs incurred by [Deepfreeze] in connection with the Existing Materials." Id. at 15. The amendment requires the Hell Yeah music video to be characterized as "works made for hire" for Sony, Id. which, according to the recording
Standing alone, the fact that Sony negotiated with an Arizona company regarding an Arizona-based artist would not be enough to establish express aiming at Arizona under post-Walden minimum contacts analysis. See Burger King Corp. v. Rudzewicz 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (holding that a contract with an out-of-state party cannot alone establish sufficient minimum contacts in that party's home forum). Nor would the fact that Sony placed the Hell Yeah video on publically available websites accessible in Arizona be sufficient. See Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1129 (9th Cir.2010) ("[M]aintenance of a passive website alone cannot satisfy the express aiming prong").
Sony disputes the facts that Wake Up asserts in its claim of purposeful direction. Sony denies that it promoted or paid for Carr's performances at events in Arizona. Doc. 62 at 10. Joanne Madhere, Director of Product/Label Management at RED, a subsidiary of Sony, submitted a declaration with Sony's reply brief. Doc. 62-2. She clearly states:
Id., ¶ 4. Sony also denies that it demanded that YouTube remove the Hell Yeah video posted by Wake Up in August 2014. Madhere states that "to [her] knowledge Sony
Given this dispute of facts, the Court concludes that the parties should be permitted to conduct jurisdictional discovery related to purposeful direction before the Court makes a final decision on personal jurisdiction. The limited nature of that discovery is described at the end of this order.
Wake Up must also make a prima facie showing that Sony knew it was causing harm likely to be suffered in Arizona. This "element is satisfied when defendant's intentional act has `foreseeable effects' in the forum" and can even be established if "the bulk of the harm occurs outside of the forum." Brayton, 606 F.3d at 1131.
Wake Up alleges that it placed the Hell Yeah video on YouTube on August 9, 2014, and that Sony "caused YouTube to remove or block the video" the same day. Doc. 25, ¶¶ 62, 63. Wake Up argues that upon viewing the video and demanding that Wake Up take it down, Sony "knew that its infringing conduct would damage Wake Up in Arizona." Doc. 54 at 14. Alonzo Harris's declaration supports this argument. Doc. 54-1, ¶ 17. He states that he was contacted by Marshae Green, "on behalf of Deepfreeze, who demanded that the [v]ideo be removed from the internet [because] Sony discovered the [v]ideo and was demanding that it be taken down." Id.
Evidence that Sony took steps to get the video taken down, whether directly or through Deepfreeze, would suggest that Sony was aware of, or should have been aware of, a potential copyright dispute involving Arizona entities. Harm to an Arizona entity through Sony's copyright infringement would be foreseeable. Because these facts are also disputed, they too may be the subject of the jurisdictional discovery described at the end of this order.
The Ninth Circuit interprets 28 U.S.C. § 1400(a) "to allow venue in any judicial district where... the defendant would be subject to personal jurisdiction." Brayton, 606 F.3d at 1126. Thus, if personal jurisdiction exists in Arizona, then venue for this copyright action does as well. As this issue will turn on whether Sony is subject to personal jurisdiction here, and discovery is needed on that issue, it does not provide an independent basis for dismissal and the Court will deny Sony's venue motion.
When analyzing a complaint for failure to state a claim for relief under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, Nat'l Ass'n for the Advancement of Psychoanalysis v.
"To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'ns., Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). A copyright registration is "prima facie evidence of the validity of the copyright and the facts stated in the certificate." 17 U.S.C. § 410(c). In Exhibit A to its complaint, Wake Up provides its Certificate of Registration for the work "Judge Da Boss Hell Yeah (Video)." Doc. 25-1. Irin Daniels is listed as the author of the video, and the sole copyright claimant is Wake Up. Id. Wake Up alleges that "Sony intentionally uploaded and published Wake Up's copyrighted work to various online and worldwide websites available within the state of Arizona." Doc. 25, ¶ 10. Wake Up denies ever assigning or licensing any rights to the Hell Yeah music Video to Deepfreeze, Carr or Sony. Id., ¶ 65. Wake Up has pled a prima facie case of copyright infringement.
Sony does not address Wake Up's registration of its copyright. Instead, Sony alleges that the Hell Yeah music video was a joint work and therefore Sony's publishing of the video constitutes a valid use by a joint owner of a copyrighted work.
The Ninth Circuit uses a three-factor test for determining joint authorship: (1) an author "superintends the work by exercising control;" (2) "putative coauthors [must] make objective manifestations of a shared intent to be coauthors;" and (3) "the audience appeal of the work must turn on both contributions" such that "the share of each in its success cannot be appraised." Id. at 1235; see Richlin v. Metro-Goldwyn-Mayer Pictures, Inc., 531 F.3d 962, 968 (9th Cir.2008). Taking Wake Up's well-pled factual allegations as true, the Court concludes that Wake Up has sufficiently alleged that Irin Daniels was the sole author of the Hell Yeah music
Furthermore, Wake Up alleges that none of the parties objectively manifested an intent for Carr to be treated as a co-author of the video. Id., ¶¶ 28, 29, 39, 43, 44. Nor did he refer to himself as a co-author of the video, present himself as a co-author of the video, or act as the co-author of the video. These allegations are sufficient to establish, at the pleading stage, that Daniels and Carr did not objectively manifest their shared intent to be co-authors.
Wake Up sufficiently alleges that the music video was not a joint work. Sony's arguments will be relevant at later stages of the litigation.
Sony argues that Wake Up provided Carr with a non-exclusive license to use the Hell Yeah video and that this is a complete defense to copyright infringement claims. Doc. 35 at 16-17. The Copyright Act states that the copyright owner of an "audiovisual work" has the "exclusive rights to copy, distribute or display the copyrighted work publically," and requires any transfer of ownership to be executed in a signed writing. Effects Assoc., Inc. v. Cohen, 908 F.2d 555, 556 (9th Cir.1990) (citing 17 U.S.C. §§ 106, 204). A narrow exception from § 204's writing requirement is provided for nonexclusive licenses. Id. at 558. "Generally, a `copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement.'" Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1121 (9th Cir. 1999) (quoting Graham v. James, 144 F.3d 229, 236 (2d Cir.1998)).
"A non-exclusive license [may be] implied from conduct." Effects, 908 F.2d at 558 (quoting 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 10.03[A], at 10-36 (1989)). "[A]n implied license is granted when `(1) a person (the licensee) requests the creation of a work, (2) the creator (the licensor) makes that particular work and delivers it to the licensee who requested it, and (3) the licensor intends that the licensee-requestor copy and distribute his work.'" Asset Marketing Sys., Inc. v. Gagnon, 542 F.3d 748, 754-55 (9th Cir.2008) (quoting I.A.E., Inc. v. Shaver, 74 F.3d 768, 776 (7th Cir.1996)). The Court finds that Wake Up's pleadings are sufficient to demonstrate that it did not grant a non-exclusive license to Carr to use and distribute the Hell Yeah music video.
Defendants Deepfreeze and Carr (collectively "Defendants") move to dismiss Wake Up's claim of copyright infringement against Deepfreeze and its claim of Fraud against Carr. Doc. 51. Defendants argue that Wake Up has "failed to prove that Carr and Deepfreeze ... were not in fact co-authors of the video," and that Wake Up "failed to meet its burden to plead facts in support of the elements of fraud." Doc. 51 at 5.
As discussed above, Wake Up has established a prima facie case of copyright infringement. Defendants argue that (1) Carr maintained an ownership interest in the use and exploitation of his image, his musical composition, and his sound recordings and never assigned ownership of these interests to Wake Up, and (2) Carr and Deepfreeze "jointly participated in co-authorship and creative input in the production and making of the video produced by Irin Daniels." Id. at 2, 3.
Defendants' first argument fails to rebut Wake Up's prima facie case of copyright ownership. Wake Up's allegations concerning the filming of the music video suggest that Carr willingly participated in the filming and never made any objections to the use of his image or his composition. Doc. 25, ¶¶ 20-44. Lawful use of Carr's image and his musical composition is a factual dispute. At the pleading stage, the Court is required to construe allegations in the light most favorable to the non-moving party. Cousins, 568 F.3d at 1067. The Court thus finds that Wake Up's pleadings regarding Carr's participation in the music video are sufficient to survive Defendants' argument.
Defendants' second argument is that Carr and Deepfreeze are co-authors of the Hell Yeah music video. The Court rejects this argument at the pleading stage for reasons discussed above.
Defendants argue that Wake Up has failed to plead its fraud claims against
Wake Up's complaint includes sufficient detail. See Doc. 25. Wake Up describes the content of Carr's alleged fraudulent misrepresentations and the identities of the relevant parties:
Id., ¶¶ 81, 82, 84, 85. Although Wake Up does not include specific dates for each communication (id., ¶¶ 20, 22, 25, 27, 28, 30), the alleged statements fall between October 2013, the month that Carr allegedly recorded the Hell Yeah composition, and December 9, 2013, the date that Harris allegedly formed Wake Up (id., ¶¶ 18, 31). These allegations sufficiently identify the alleged fraud for Carr to respond.