MG Design Associates, Corp. v. CoStar Realty Information, Inc.
MG Design Associates, Corp. v. CoStar Realty Information, Inc.
Opinion of the Court
OPINION AND ORDER
Believing Defendants used its work to construct a tradeshow exhibit, Plaintiff MG Design Associates, Corp. (“MG”) brings suit against Defendants CoStar Realty In
BACKGROUND
MG and Atlantic both design and construct trade show exhibits. In 2014, CoStar, a real estate information company acquired Apartments, which runs the website Apartments.com. Before the events at issue here, MG had a 15-year business relationship with Apartments. In April 2015, Apartments’ Tradeshow Manager, Sharon Patenaude,
After CoStar paid the invoice for the Renderings, CoStar hired Atlantic to construct an exhibit at the Las Vegas conference (the “Las Vegas Exhibit”), using the Renderings “as the basis” for the construction. Doc. 1 ¶ 46. Atlantic then advertised on its website that it designed the Las Vegas Exhibit. The Renderings bore a legend on each page stating “[a]ll designs and ideas ... are the creative property of [MG],” the paid invoice stated that the Renderings “remain the property of [MG],” and both the invoice and the Renderings stated that the Renderings “may not be reproduced in any manner without the express approval of [MG].” Doe. 1 ¶¶ 38, 45; Doc. 1-2. MG never received a request from anyone to use the Render
MG is an Illinois corporation with its principal place of business in Pleasant Prairie, Wisconsin. Doc. 1 ¶ 10. CoStar is a Delaware corporation with its corporate headquarters in Washington, D.C. Doc. 1 ¶ 11; Doc. 12-1 (Campbell Declaration) ¶ 2. CoStar has an office in Chicago, Illinois and is registered to do business in Illinois. Doc. 1 ¶ 11. Apartments is a Delaware limited liability company, and CoStar is Apartments’ sole member. Doc. 12-1 ¶¶ 3-4. Although MG alleges that Apartments’ primary office is in Chicago, Doc. 1 ¶ 12, Apartments’ corporate executives, including its Chief Executive Officer, Executive Vice President of Operations, Executive Vice President of Accounting and Finance, and General Counsel and Secretary have “directed, controlled, and coordinated its business from Washington, D.C,” Doc. 12-1 ¶ 7. Apartments’ only other corporate officer, its President, resided in Illinois until January 2016. Doc. 12-1 ¶ 9. Between- April 2014 and the summer of 2015, Apartments maintained its departments for product design and development, multi-family field sales, finance, and customer service in Chicago. Id. ¶ 11. Apartments then moved the “majority of [its] departments,” including its finance, marketing, and customer service departments, to Atlanta, Georgia between the summer of 2015 and January 2016. Id. ¶ 12. It is unclear whether any departments remain in Chicago. See id. Atlantic is a Virginia corporation with its principal place of business in Chantilly, Virginia, Doc. 24-1 (Beach Declaration) ¶ 2, and competes with MG in their design field and for clients, id. ¶ 9.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(2) challenges whether the Court has jurisdiction over a party. The party asserting jurisdiction has the burden of proof. See Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010). The Court may consider affidavits and other competent evidence submitted by the parties. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). If the Court rules on the motion without a hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. GCIU-Emp’r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). The Court will “read the complaint liberally, in its entirety, and with every inference drawn in favor of’ the plaintiff. Cent. States, Se. & Sw. Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 878 (7th Cir. 2006) (quoting Textor v. Bd. of Regents of N. Ill. Univ., 711 F.2d 1387, 1393 (7th Cir. 1983)). “[O]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction,” however, “the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 783. Any dispute concerning relevant facts is resolved in the plaintiffs favor. Id. at 782-83.
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiffs complaint and draws all reasonable inferences from those facts in the plaintiffs favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim’s basis but must also be facially plausible. Ashcroft v. Iqbal,
ANALYSIS
I. Personal Jurisdiction
CoStar, Apartments, and Atlantic each argue that the Court does not have personal jurisdiction over them. Because Defendants raise a jurisdictional issue with respect to MG’s claims, the Court addresses it first. Bunker Ramo Corp. v. United Bus. Forms, Inc., 713 F.2d 1272, 1279 (7th Cir. 1983). MG brings claims under the Copyright Act and state law. The Copyright Act does not authorize nationwide service of process, and so the Court may exercise jurisdiction over Defendants only if authorized both by the United States Constitution and Illinois law. Monster Energy Co. v. Wensheng, 136 F.Supp.3d 897, 902 (N.D. Ill. 2015); see also United Airlines, Inc. v. Zaman, 152 F.Supp.3d 1041, 1046-47 (N.D. Ill. 2015) (“When subject matter jurisdiction rests on a federal question ... and supplemental jurisdiction, and no special federal rule for personal jurisdiction applies, as here; this Court may exercise personal jurisdiction over Defendant only if it is (1) proper under the forum state’s personal jurisdiction statute and (2) comports with the requirements of the Due Process Clause.”).
Illinois “permits its courts to exercise personal jurisdiction on any basis permitted by the constitutions of both Illinois and the United States.” be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011); 735 Ill. Comp. Stat. 5/2-209. To the extent the federal constitutional and Illinois statutory inquiries diverge, “the Illinois constitutional standard is likely more restrictive than its federal counterpart,” but both essentially focus on whether exercising jurisdiction over a defendant is fair and reasonable and thus a single inquiry suffices. KM Enters, Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 732 (7th Cir. 2013); C.H. Johnson Consulting, Inc. v. Roosevelt Rds. Naval Station Lands & Facilities Redevelopment Auth., No. 1:12-cv-08759, 2013 WL 5926062, at *2 (N.D. Ill. Nov. 5, 2013). The Court, therefore, asks one constitutional question: do Defendants have “certain minimum contacts with [Illinois] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice[?]’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Minimum contacts exist where “the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1984).
Personal jurisdiction comes in two forms: general and specific. uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010). General jurisdiction arises when the defendant has “continuous and systematic” contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A defendant is subject to general jurisdiction only where its contacts with the forum state are so substantial that it can be considered “constructively present” or “at home” in the state. Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct.
To find specific jurisdiction:
(1) the defendant must have purposefully availed himself of the privilege of conducting business in the forum state or purposefully directed his activities at the state, (2) the alleged injury must have arisen from the defendant’s forum-related activities, and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice.
Felland v. Clifton, 682 F.3d 665, 674 (7th Cir. 2012) (citations omitted). “Whether a defendant has purposefully directed activities at a forum ‘depends in large part on the type of claim at issue’ ” and “whether the conduct underlying the claims was purposely directed at the forum state.” Monster Energy Co., 136 F.Supp.3d at 903 (quoting Felland, 682 F.3d at 674). There is no “‘pendent’ or ‘supplemental’ theory of specific personal jurisdiction,” and “personal jurisdiction over the defendant must be established as to each claim asserted.” In re Testosterone Replacement Therapy Prod. Liab. Litig. Coordinated Pretrial Proceedings, 164 F.Supp.3d 1040, 1048-49 (N.D. Ill. 2016) (rejecting plaintiffs’ attempts to establish personal jurisdiction over defendants by invoking similarities between defendants’ conduct against other plaintiffs that established specific jurisdiction and defendants’ conduct against other plaintiffs that was related to conduct that created personal jurisdiction); see also Zivitz v. Greenburg, No. 98 C 5350, 1999 WL 984397, at *7 n.3 (N.D. Ill. Oct. 25, 1999) (common claims against multiple defendants could only proceed where personal jurisdiction existed independently for each claim over each defendant).
A. CoStar and Apartments
The Court considers whether CoStar and Apartments each have had minimum contacts with Illinois, determining whether they each have a “substantial connection” with Illinois, or, if their actions otherwise connect them to Illinois in a “meaningful way” by focusing on (1) the relevance of their contacts with Illinois and (2) how meaningful those contacts were
MG first argues that the Court has specific jurisdiction because “[t]he transaction that is the root of this dispute is design work performed by MG Design, an Illinois corporation.” Doc. 31 at 6. But MG’s actions cannot establish specific jurisdiction over Apartments and CoStar using only MG’s state of incorporation because “the plaintiff cannot be the only link between the defendant and the forum.” Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 802 (7th Cir. 2014) (quoting Walden, 134 S.Ct. at 1122).
MG next points to its deal with Apartments to design the Renderings for the marketing space in Las Vegas, arguing that the actions of CoStar and Apartment’s alleged agent—Patenaude, CoStar’s Tra-deshow Manager and coordinator of the Apartments exhibit for the Las Vegas conference—show the necessary contacts with Illinois. Importantly, Patenaude was stationed in Illinois to work for CoStar and Apartments,
The Court also notes that the parties ignore MG’s breach of contract claim against CoStar and Apartments. “With respect to interstate contractual obligations, parties who reach out beyond one state and create continuing relation
CoStar and Apartments do not raise any issue with fair play and substantial justice, see generally Doc. 35 at 5-6, and there is no reason to think that because Defendants have, or at least had until recently,
B. Atlantic
Atlantic argues'that MG does not allege that Atlantic had sufficient contacts with Illinois to authorize specific jurisdiction. In response, MG argues that it has sufficiently alleged facts for specific jurisdiction over Atlantic because it alleges (1) MG, an Illinois corporation, felt its injury in Illinois and (2) Atlantic intentionally interfered with MG’s contractual and business relationships with companies conducting business in Illinois and doing business with an Illinois corporation and demonstrated an intent to affect an Illinois interest.
MG alleges that Atlantic interfered with MG’s business relationships with CoStar and Apartments by taking MG’s work and then wrongfully using the Renderings for Atlantic’s profit in violation of copyright and state law.
Post-Walden, courts in this district have held that a defendant purposely directs its conduct at Illinois and reasonably should foresee being brought to court there when the defendant reaches into Illinois by infringing the intellectual property rights of a plaintiff “at home” in the state, attempting to exploit the infringing conduct with knowledge that the plaintiff would be injured in Illinois. E.g., IPOX Schuster, LLC v. Nikko Asset Mgmt. Co., 191 F.Supp.3d 790, 800-01, 2016 WL 3194445, at *5 (N.D. Ill. 2016) (defendant was subject to specific jurisdiction in Illinois after it infringed the trademarks of a plaintiff with a principal place of business in Illinois and exploited the stolen trademarks knowing that plaintiff would suffer in Illinois). “As a matter of policy, the law ought not require a holder of intellectual property ... to go to the home forum of one who has, in effect, reached into the holder’s home forum to take its property. When an out-of-state entity chooses to trade on the [property] of an entity in the forum state... it has, in the Court’s view, established a relationship not just with the in
II. Direct and Vicarious Copyright Infringement (Count I & Count II)
MG alleges that Defendants constructed the Las Vegas Exhibit by deriving the work from the Renderings, in violation of MG’s exclusive rights in its copyright. To state a claim for copyright infringement, MG must allege (1) that MG owns a valid copyright and (2) that Defendants copied “constituent elements of the work that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); see also Hart v. Amazon.com, Inc., No. 15-C-01217, 2015 WL 8489973, at *5 (N.D. Ill. Dec. 8, 2015) (“To state a claim for contributory and vicarious copyright infringement, a plaintiff must plead sufficient facts for a valid claim of direct copyright infringement.”). In addition, “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim[.]” 17 U.S.C. § 411(a). Compliance with the registration requirement in § 411(a) “is not a condition of copyright protection but is a prerequisite to suing for infringement.” Brooks-Ngwenya v. Indianapolis Pub. Sch., 564 F.3d 804, 806 (7th Cir. 2009). “[T]he condition must be fulfilled before the litigation begins. Satisfaction of the condition while the suit is pending does not avoid the need to start anew.” Brooks-Ngwenya v. Thompson, 202 Fed.Appx. 125, 127 (7th Cir. 2006); see also TriTeq Lock & Sec. LLC v. Innovative Secured Sols., LLC, No. 10 CV 1304, 2012 WL 394229, at *4 (N.D. Ill. Feb. 1, 2012) (“To state a claim for copyright infringement, a plaintiff must allege ... copyright registration (unless the work is a foreign work, the alleged infringement concerns rights of attribution and integrity of a
Instead, MG argues that it alleges a “right of attribution” claim under the Visual Artists Rights Act of 1990 (“VARA”), 17 U.S.C. § 106A. No copyright registration, or application, is required “for an action brought for a violation of the rights of the author under section 106A(a).” Kelley v. Chicago Park Dist., 635 F.3d 290, 291 (7th Cir. 2011); TriTeq Lock & Sec. LLC, 2012 WL 394229, at *4 (copyright registration is not necessary if “the alleged infringement concerns rights of attribution and integrity of a work of visual art”).
Rights of attribution and integrity in a “work of visual art” are a “limited version of the civil-law concept of the ‘moral rights of the artist.’” Kelley, 635 F.3d at 291.
“Rights of attribution” generally include the artist’s right to be recognized as the author of his work, to publish anonymously and pseudonymously, to prevent attribution of his name to works he did not create, and to prevent his work from being attributed to other artists. “Rights of integrity” include the artist’s right to prevent the modification, mutilation, or distortion of his work, and in some cases (if the work is of recognized stature), to prevent its destruction.
Id. at 296 (citations omitted). “Rights of attribution” and “rights of integrity” are reserved for artists who create a “work of visual art.” 17 U.S.C. § 106A(a); Kelley, 635 F.3d at 298.
“A ‘work of visual art’ is—
(1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author; or
(2) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author.
A work of visual art does not include— ***
(B) any work made for hire;
[[Image here]]
A “work made for hire,” is—
(1) a work prepared by an employee within the scope of his or her employment ....
17 U.S.C. § 101. While MG alleges that Atlantic wrongly claims “performance” of the Las Vegas Exhibit’s design, MG also alleges that the Renderings “were created by an employee of MG Design working within the course and scope of his employment.” Doc. 1 ¶ 59. MG uses VARA’s definition of works “made for hire” near verbatim to describe the Renderings. See 17 U.S.C. § 101 (“A ‘work made for hire’ is ... a work prepared by an employee within the scope of his or her employment[.]”).
The Renderings’ purpose is also relevant to whether they are a work made for hire. If the purpose is “commercial promotion,” then the work does not confer rights of attribution and integrity. Martin v. City of Indianapolis, 982 F.Supp. 625, 635 (S.D. Ind. 1997), aff'd, 192 F.3d 608 (7th Cir. 1999). MG designed the renderings for Apartments’ trade show display; they were a design for a client’s commercial promotion and intended to profit MG and attract more business for MG and its
III. State Law Claims (Counts III-VI)
MG also brings claims for fraudulent misrepresentation and breach of contract against CoStar and Apartments and tortious interference with contract and prospective economic advantage against Atlantic. MG alleges that the Court has supplemental jurisdiction over these state law claims pursuant to 28 U.S.C. § 1367. MG does not allege that diversity jurisdiction exists, and the Court cannot proceed on the assumption that it does. See Downs v. IndyMac Mortg. Servs., FSB, 560 Fed.Appx. 589, 591 (7th Cir. 2014) (refusing to find diversity jurisdiction when it was not pleaded in the complaint). Because the Court dismisses the copyright claims over which it has original jurisdiction at this time, the Court declines to exercise supplemental jurisdiction over MG’s state law claims. See 28 U.S.C. § 1367(c); Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir. 1999) (“[I]t is the well-established law of this circuit that the usual practice is to dismiss without prejudice state supplemental claims whenever all federal claims have been dismissed prior to trial.”). The Court therefore dismisses the state law claims against Defendants without prejudice and defers consideration of arguments on these claims until MG adequately alleges a basis for the Court’s subject matter jurisdiction.
CONCLUSION
The Court denies CoStar and Apartments’ motion to dismiss [11] and Atlantic’s motion to dismiss [23] as to personal jurisdiction, and the Court grants Defendants’ motions to dismiss as to the copyright claims, deferring consideration of MG’s state law claims until MG pleads a sufficient basis for subject matter jurisdiction. Because the dismissal is without prejudice, MG may file an amended complaint by January 6, 2017.
. The facts in the background section are taken from MG's complaint and exhibits attached thereto and are presumed true for the purpose of resolving Defendants’ motions to dismiss pursuant to Rule 12(b)(6). See Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011); Local 15, Int’l Bhd. of Elec. Workers, AFL-CIO v. Exelon Corp., 495 F.3d 779, 782 (7th Cir. 2007). Facts necessary to ruling on Defendants’ motions to dismiss pursuant to Rule 12(b)(2), including facts from affidavits and other materials outside the Complaint, appear below with citations to relevant source material.
. Patenaude affirms that she was an employee of CoStar, performing work for Apartments, during the events at issue. See generally Doc, 31-1 (First Patenaude Declaration); Doc. 35-1 (Second Patenaude Declaration).
, Although MG mentions in passing that it could show there is general jurisdiction over CoStar and Apartments, it makes no effort to show this is the case and instead argues for specific jurisdiction. See Doc. 31 at 6 (“While there is, arguably, sufficient grounds to assert general jurisdiction over the Defendants based upon information in Ms. Campbell’s Declaration (ECF No. 12, Ex. A), the overwhelming evidence makes clear that the principle of specific jurisdiction should subject CoStar and Apartments to the jurisdiction of this Court.’’). Because MG does not make additional arguments on general jurisdiction and it is not the Court's duly to do so for MG, the Court will only address the issue of specific jurisdiction.
. CoStar and Apartments do not challenge MG characterizing Patenaude as an "agent” of both Defendants.
. CoStar and Apartments’ affiant does not attest that Apartments moved all of its operations out of Chicago to Atlanta. Cf. Doc. 12-1 ¶ 12 ("Between the summer of 2015 and January 2016, the majority of departments for [Apartments] were relocated to Atlanta, Georgia.”).
. Both MG and Atlantic fail to discuss whether there is specific jurisdiction over the copyright claims, brought against all Defendants, including Atlantic, in Counts I and II. Atlantic's opening brief does not specifically address the copyright claims, arguing only that "MG has not alleged that Atlantic has any contacts (let alone substantial suit-related contacts) with the state of Illinois." Doc. 24 at 6 (emphasis in original) (footnote omitted). In its response, MG chooses to focus exclusively
. MG also alleges that Atlantic intentionally advertised that it created the design for the Las Vegas Exhibit, even though Atlantic based the designs on the Renderings and knew that MG created the Renderings. MG does not allege that Atlantic aimed its advertisements at Illinois, so the Court does not address whether the advertisements create sufficient contacts for specific jurisdiction.
. Atlantic provides an affidavit from its Chief Operating Officer, and former Chief Executive Officer and President, who attests that Atlantic ”offer[s] similar services and compete[s] for the same clients” as MG. Doc. 24-1 ¶ 9.
. Atlantic’s Chief Operating Officer attests that Atlantic did not know CoStar had an existing contract with MG, Doc. 24-1 ¶ 11, but this goes to the merits of MG's tortious interference claims rather than to the issue of personal jurisdiction over the tort claims.
Reference
- Full Case Name
- MG DESIGN ASSOCIATES, CORP. v. COSTAR REALTY INFORMATION, INC., Apartments, LLC d/b/a Apartments.com, and Northwind Enterprises, Inc. d/b/a Atlantic Exhibits
- Cited By
- 14 cases
- Status
- Published