United States District Court, N.D. California, San Jose Division
ORDER DENYING PLAINTIFF’S MOTION TO DISMISS
DEFENDANT’S AMENDED COUNTERCLAIMS AND MOTION FOR
JUDGMENT ON THE PLEADINGS [RE: ECF 47]
BETH
LAB SON FREEMAN United States District Judge
This is
a case about two software applications for mobile devices
(“apps”) that depict popcorn. Plaintiff and
Counter-Defendant Diamond Foods, Inc.
(“Plaintiff”) offers an app in the “Food
& Drink” category of app stores that depicts
popcorn popping, which Plaintiff describes as a tool to
assist in microwaving popcorn to perfection. Defendant and
Counter-Claimant Hottrix, LLC (“Defendant”)
offers an app in the “Game” category that enables
users to do tricks with snack foods, including popcorn.
Plaintiff filed this suit as a declaratory action, claiming
that it does not infringe Defendant’s trade dress or
copyrights, and Defendant counterclaimed. Plaintiff now asks
the Court to dismiss Defendant’s counterclaims and
grant judgment in its favor on its declaratory relief action.
As stated below, although the Court agrees with many of
Plaintiff’s arguments, it DENIES the motion because
none of the asserted claims can be dismissed in their
entirety.
I.
BACKGROUND
A.
Plaintiff’s Allegations, Admitted by Defendant
Plaintiff
alleges and Defendant admits the following facts, which
provide background and are relevant to the Motion for
Judgment on the Pleadings. Plaintiff released “Perfect
Popcorn” as a free app in the “Food &
Drink” category on app stores. Compl. ¶¶ 4,
12, ECF 1.[1] The app displays a visual simulation of
popcorn kernels popping inside a user’s mobile device.
Id. ¶¶ 4, 15.
Defendant
Hottrix, LLC, sells apps that constitute “[h]ilarious
gags and mystifying tricks, ” including
“iMunchies, ” which it lists in the
“Games” category of Apple’s app store.
Id. ¶¶ 3, 17. iMunchies works as follows.
First, the user can select a snack or object from a list that
includes popcorn, M&Ms, “Healthy Nutmix, ”
“GummiBears, ” cough drops, chewing gum, money,
and other objects. Id. ¶ 19. When a user
selects popcorn, fully popped kernels appears on the
user’s mobile device screen. Id. ¶ 20. No
unpopped kernels are depicted. Id. ¶ 20.
The
user can then do several visual gags with the popcorn images.
For example, the user can make a customizable finger and
thumb appear at the top of the device and appear to pull a
piece of popcorn upward, allowing the user to convince
viewers that the on-screen fingers are his or her real
fingers. Id. ¶¶ 21, 22. The trick is even
more believable if the user has an actual piece of popcorn.
Id. ¶ 21. In addition, the user can tilt the
device to make the popcorn appear to pour from the screen
into his/her mouth, and can choose sound effects.
Id. ¶ 22. The app also offers “[e]xpert
video instructions for magicians and hipsters.”
Id. ¶ 22. Defendant claims copyrights in
iMunchies software (U.S. Copyright Registration No. TX
7-058-469). Id. ¶ 23; see also Am.
Countercl. ¶ 25.
Perfect
Popcorn and iMunchies are both available on Apple’s
iTunes store. Id. ¶ 24. As noted above, the two
apps are listed in different categories. Id.
¶¶ 3-4. In addition, the lists of apps that users
“also bought” with each app contain no
overlapping apps; the list for iMunchies consists entirely of
games, while Perfect Popcorn’s list is exclusively food
and drink apps. Id. ¶ 24.
On June
23, 2014, Defendant sent Plaintiff a letter asserting that
Perfect Popcorn was a derivative or copy of iMunchies and
that it infringes iMunchies’ trade dress. Id.
¶¶ 26-27, 29; see also Id. Exh. A. In the
letter, Defendant bragged about its reputation for being
litigious and threatened to sue if Plaintiff did not pay more
than $2 million and halt dissemination of Perfect Popcorn or
agree to a licensing fee of $40, 000 per month plus $0.15 per
download for a minimum of two years. Id.
¶¶ 25, 33.
Plaintiff
then initiated this declaratory relief lawsuit on July 11,
2014, seeking declaratory judgments of (1) non-infringement
of copyrights, (2) non-infringement of trademarks/trade
dress, (3) no unfair business practices, and (4) no
interference with contractual relations. See ECF 1.
On
September 18, 2014, Defendant answered and asserted five
counterclaims: (1) copyright infringement under 17 U.S.C.
§ 101, et seq., (2) trade dress infringement
under 25 U.S.C. § 1125(a)(1), (3) common law trade dress
infringement, (4) intentional interference with prospective
economic advantage, and (5) unfair competition under
California Business & Professions Code § 17200.
Answer and Counterclaims, ECF 14.
Plaintiff
answered on November 13, 2014, ECF 18, and filed an amended
answer on January 22, 2015, ECF 27. Plaintiff then moved for
judgment on the pleadings, ECF 30, which the Court granted
with leave to amend. ECF 41. Defendant filed its First
Amended Answer and Counterclaims (“FACC”) on
September 16, 2015. ECF 46.
B.
Defendant’s Allegations in First Amended
Counterclaims
Defendant
alleges the following in its FACC. Defendant published the
iMunchies App on August 14, 2008. Id. ¶ 22.
Plaintiff did not offer Perfect Popcorn until 2014.
Id. ¶ 32. By September 8, 2014, when a user
searched for “popcorn” in iTunes, Perfect Popcorn
appeared first in the search results for iPhone Apps and
iMunchies was visible only in the expanded search results.
Id. ¶ 36.
Defendant
describes iMunchies as follows: When a user chooses the
popcorn option in the iMunchies App, it displays a moving
image of “popcorn popping” and filling the screen
as if the device were the container. Id. ¶ 22.
Defendant alleges that the “depiction of popcorn
popping” is more than a “realistic
depiction.” Id. ¶ 26. It is
“stylized, idealized, and particular.”
Id. ¶ 26. Nine features distinguish this
depiction from a “mere video recording of popcorn
popping”: (1) the popped kernels are all
“approximately white” and fully popped; (2) the
app appears to randomly repeat a limited repertoire of fully
popped kernels; (3) the kernels pop sequentially; (4) every
popped kernel is visible when it pops; (5) the virtual
container is shallow; (6) the container is
vertically-oriented; (7) all kernels are identical in size,
regardless of how near or far they are in the container; (8)
each popped kernel appears to be brightly illuminated from
one direction and continues to be illuminated from the same
direction even when the kernel moves; and (9) the viewer sees
directly into the side of the virtual container. Id.
¶ 26. The overall visual impression created by the
combination and arrangement of these elements constitutes
Defendant’s trade dress. Id. ¶ 27.
Defendant
alleges that Perfect Popcorn includes each of these features
and that Perfect Popcorn’s visual display is
substantially similar to the iMunchies App’s popcorn
option. Id. ¶ 34.[2]On this basis, Defendant asserts
four counterclaims in the FACC: (1) copyright infringement
under 17 U.S.C. § 101, et seq., (2) trade dress
infringement under 25 U.S.C. § 1125(a)(1), (3) common
law trade dress infringement, and (4) unfair competition
under California Business & Professions Code §
17200. Defendant did not re-assert a claim of intentional
interference with prospective economic advantage.
Plaintiff
now asks the Court to dismiss Defendant’s counterclaims
under Rule 12(b)(6) and for judgment on the pleadings on its
declaratory relief claims under Rule 12(c). Mot., ECF 47.
II.
REQUEST FOR JUDICIAL NOTICE
As a
general rule, a district court may not consider any material
beyond the pleadings when ruling on a Rule 12(b)(6) motion.
Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005,
1016 n.9 (9th Cir. 2012). There are, however, two exceptions:
documents incorporated by reference into the complaint and
matters which may be judicially noticed, both of which a
court must consider. See, e.g., Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
Under
the incorporation by reference doctrine, the Court may
consider materials whose contents are alleged in the
complaint if the complaint “necessarily relies”
on them and neither their authenticity nor their relevance is
contested. Coto Settlement v. Eisenberg, 593 F.3d
1031, 1038 (9th Cir. 2010). The purpose of this rule is to
“prevent plaintiffs from surviving a Rule 12(b)(6)
motion by deliberately omitting documents upon which their
claims are based.” Swartz v. KPMG
LLP, 476 F.3d 756, 763 (9th Cir. 2007) (internal
quotation marks omitted).
Plaintiff
asks the Court to take judicial notice of copies of Perfect
Popcorn and iMunchies that were downloaded to an iPhone and
lodged with the Court. Mot. at 8. Defendant does not
object.[3] Because the apps are referenced in-and in
fact form the basis of-the pleadings and Defendant contests
neither their authenticity nor their relevance, the Court
GRANTS Plaintiff’s RJN of the two apps as downloaded to
the iPhone lodged with the Court. See Knievel v.
ESPN, 393 F.3d 1068, 1077 (9th Cir. 2005) (judicially
noticing web pages that surrounded web pages included in
complaint); see also City of Inglewood v. Teixeira,
No. CV1501815MWFMRWX, 2015 WL 5025839, at *2 (C.D. Cal. Aug.
20, 2015) (judicially noticing YouTube videos because a
defendant cannot “seek to delay potential resolution .
. . by asserting that this Court may not review the material
it claims is infringing and has specifically identified in
its Complaint.”).
III.
MOTION TO DISMISS
The
Court begins with Plaintiff’s Motion to Dismiss, which
seeks dismissal of Defendant’s amended counterclaims in
their entirety. To survive a Rule 12(b)(6) motion to dismiss,
“a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
When considering a motion to dismiss, the Court
“accept[s] factual allegations in the complaint as true
and construe[s] the pleadings in the light most favorable to
the nonmoving party.” Manzarek v. St. Paul Fire
& Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.
2008). The Court “need not, however, accept as true
allegations that contradict matters properly subject to
judicial notice or by exhibit.” Sprewell v. Golden
State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
A.
Copyright
To
state a copyright infringement claim, a plaintiff must allege
“(1) ownership of a valid copyright, and (2) copying of
constituent elements of the work that are original.”
Feist Publ'ns, Inc. v. Rural Tele. Serv. Co.,
499 U.S. 340, 361 (1991). Plaintiff does not challenge the
sufficiency of the allegations regarding the first element.
The second element requires allegations “that the works
in question are substantially similar in their protected
elements and that the infringing party had access to the
copyrighted work.” Rice v. Fox Broad. Co., 330
F.3d 1170, 1174 (9th Cir. 2003) (internal citation omitted).
The parties’ dispute centers on the sufficiency of
Defendant’s allegations of substantial similarity of
protected elements.
To
determine whether two works are substantially similar, the
Ninth Circuit applies a two-part analysis: “an
objective extrinsic test and a subjective intrinsic
test.” Swirksy v. Carey, 376 F.3d 841, 845
(9th Cir. 2004); see also Apple Computer, Inc. v.
Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994).
“The extrinsic test considers whether two works share a
similarity of ideas and expression as measured by external,
objective criteria.” Swirsky, 376 F.3d at 845.
The intrinsic test then considers whether
“subjectively[, ] the ‘ordinary, reasonable
person would find the total concept and feel of the [two
works] to be substantially similar’” or virtually
identical. Swirsky, 376 F.3d at 847 (quoting
Three Boys Music Corp. v. Bolton, 212 F.3d 477, 485
(9th Cir. 2000)); see also Mattel, 616 F.3d at 914.
The subjective inquiry “must be left to the jury,
” Swirksy, 376 F.3d at 845, or is “most
often [asked] of juries, ” Mattel, Inc. v.
MGA Entm't, Inc., 616 F.3d 904, 914 (9th Cir. 2010).
The Court therefore applies the extrinsic test.
1.
Protectable Elements
The
Court begins by considering which of Defendant’s
alleged expressive elements are protectable. “Because
the requirement is one of substantial similarity to
protected elements of the copyrighted work, it is
essential to distinguish between the protected and
unprotected material in a plaintiff's work.”
Swirsky, 376 F.3d at 845 (emphasis in original).
“[A] court must filter out and disregard the
non-protectible elements . . .” Cavalier v. Random
House, Inc., 297 F.3d 815, 823 (9th Cir. 2002). The
Court engages in this “dissection to determine the
scope of copyright protection before . . . consider[ing the
work] ‘as a whole.’” Apple, 35
F.3d at 1443.
Plaintiff
argues that Defendant seeks to protect an idea: realistically
depicting popcorn popping on and filling the screen of a
mobile device as if the device were a container. Mot. at 11
(citing FACC ¶ 22). Plaintiff contends that each of
Defendant’s allegedly expressive elements necessarily
follows from that idea and therefore cannot be protected
under the closely-related doctrines of merger and
scènes à faire.
Under
the merger doctrine, “courts will not protect a
copyrighted work from infringement if the idea underlying the
copyrighted work can be expressed in only one way, lest there
be a monopoly on the underlying idea.” Satava v.
Lowry, 323 F.3d 805, 812 n.5 (9th Cir. 2003). Plaintiff
relies on Satava to argue that the merger doctrine
applies here. In Satava, the Ninth Circuit
considered a glass-in-glass sculptor’s claim for
protection of a “vertically oriented, colorful,
fanciful jellyfish with tendril-like tentacles . . . encased
in . . . clear glass . . . [in] a bullet shape.”
Satava, 323 F.3d at 807. The Ninth Circuit held that
“no copyright protection may be afforded to the idea of
producing a glass-in-glass jellyfish sculpture or to elements
of expression that naturally follow from the idea of such a
sculpture.” Id. at 809-10. In other words, the
Ninth Circuit determined that the artist “may not
prevent others from copying aspects of his sculptures
resulting from either jellyfish physiology or from their
depiction in the glass-in-glass medium.” Id.
at 810. This included “jellyfish with tendril-like
tentacles or rounded bells, because many jellyfish possess
those body parts, ” “jellyfish in bright colors,
because many jellyfish are brightly colored, ”
“jellyfish swimming vertically, because jellyfish swim
vertically in nature and often are depicted swimming
vertically, ” “jellyfish within a clear outer
layer of glass, because clear glass is the most appropriate
setting for an aquatic animal, ” “jellyfish
‘almost filling the entire volume’ of the outer
glass shroud, because such proportion is standard in
glass-in-glass sculpture, ” and “tapering the
shape of their shrouds, because that shape is standard in
glass-in-glass sculpture.” Id. at 811.
Plaintiff
also argues that Defendant’s depiction is not
protectable under the scènes à faire doctrine,
which stands for the proposition that expressions that are
“indispensable and naturally associated with the
treatment of a given idea are treated like ideas and are
therefore not protected by copyright.” Rice,
330 F.3d at 1175 (internal quotation marks omitted). To argue
that the scènes à faire doctrine applies here,
Plaintiff offers Kim Seng Co. v. J & A Importers,
Inc., 810 F.Supp.2d 1046 (C.D. Cal. 2011), which
considered whether a photograph depicting a bowl filled with
rice sticks, topped by egg rolls, grilled meat, and assorted
garnishes on Chinese-Vietnamese food packaging was
protectable. Relying in part on the scènes à
faire doctrine, the court determined that “[a]ny
protectable elements . . . flow[ ] necessarily from the
subject matter of the photograph, ” which provides a
defense to infringement. Id. at 1057-58 (internal
citations omitted).
Plaintiff
contends that, as in Satava and Kim Seng,
Defendant’s alleged expression naturally results from
depicting the chosen subject (popcorn) on the chosen medium
(mobile device screen). Mot. at 12-13.
Defendant
responds that, unlike the parties claiming infringement in
Satava and Kim Seng, Defendant specifically
seeks to protect a depiction that is not
realistic-including, for example, no burnt, unpopped or
half-popped kernels and depicting sequential rather than
simultaneous popping-and therefore neither the merger nor
scènes à faire doctrine applies. Opp. at 10-12.
Defendant also points to Satava’s finding
that, notwithstanding the unprotectablity of the sculpture as
a whole, specific expressive elements like “the
distinctive curls of particular tendrils; the arrangement of
certain hues; [and] the unique shape of jellyfishes'
bells” were protectable. 323 F.3d at 812. Therefore,
Defendant argues that, even if the Court were to determine
that not all nine features are protectable, it should deny
this motion because at least some elements are protectable.
The
Court finds that, just as “no copyright protection may
be afforded to the idea of producing a glass-in-glass
jellyfish sculpture or to elements of expression that
naturally follow from the idea of such a sculpture, ”
id. at 809-810, no copyright protection may be
afforded to the idea of producing an app with popcorn popping
on a mobile device screen or to elements of expression that
“naturally follow” from such an idea. Thus,
Defendant’s allegation that both apps “display[ ]
moving images of popcorn popping on the screen and filling
the screen as if the device were the container” does
not suffice to state a copyright infringement
claim.[4] On the other hand, ...