IP Law Daily, COPYRIGHT—D. Ariz: Consensus grows on covering derivative works within the DMCA, (Sep 25, 2024)

By Matthew Hersh, J.D.

The court also grapples with line between claims cognizable under trademark law and claims cognizable only under copyright law.

The creator of original content for teaching breastfeeding techniques and other forms of care for newborn infants was entitled to assert a claim under the DMCA that a competitor distributed copies with false copyright management information even though the allegedly infringing copies were only derived from the original and were not identical to that original, the federal court for Phoenix has held. The court, in joining an increasing consensus of district courts on the issue, also addressed in its short opinion several issues concerning the line dividing a copyright claim, a trademark claim, and a claim brought under the common law (New Parent World, LLC v. True To Life Productions, Inc., No. 3:23-cv-08089-DGC (D. Ariz. Sept. 24, 2024)).

The lawsuit was brought by My Baby Experts, a New Jersey company that, according to the complaint, “has been in the business of creating important original content, including audio and audio-visual works, focused on teaching breastfeeding techniques and improved newborn care to new parents since at least the year 2004.” The lawsuit targets True to Life Productions, an Arizona company that produces, according to its website, “educational videos that make a difference in the lives of mothers, fathers, and their children.”

The New Jersey company at first licensed its videos to the Arizona company. However, it later came to believe that the Arizona company was violating the terms of the license by, among other things, making the works available for free, altering or removing the copyright notice, and making “knock off” videos. The New Jersey company sued the Arizona company, as well as several other companies involved in distributing the allegedly infringing videos, for copyright infringement, violations of the Digital Millennium Copyright Act, breach of contract, false designation of origin, unfair competition, and unjust enrichment.

The Arizona company moved to dismiss certain of the claims, leading to this opinion.

DMCA claims. The court refused to dismiss the claims under the DMCA. The New Jersey company accused its Arizona competitor of removing its copyright management information, or CMI, and replacing it with its own. The Arizona company claimed that the DMCA did not apply because the works that it distributed were not identical to the New Jersey company’s works, but rather mere derivatives. The court rejected the argument. To be sure, the court noted, a California district court did find that the DMCA is limited to identical copies and not derivatives. But that case has since been widely criticized and later decisions have not followed it, the court observed. (IP Law Dailycovered one of those decisions just last month.) What is more, the court reasoned, “construing the statute to apply only to identical copies would narrow it considerably and lead to unreasonable results.” Derivative works were entitled to the same protection under the DMCA as identical copies, the court concluded.

False designation of origin. Although the DMCA claim would go forward, the same would not hold for the trademark claim. Section 43 of the Lanham Act, 15 U.S.C. § 43(a), prohibits “a false designation of origin, false or misleading description of fact, and/or false or misleading representation of fact” in connection with the sale of goods. The New Jersey company argued that the Arizona company did just that by distributing lesson plans, under its own name, derived from the purloined audiovisual works. But what the New Jersey company allegedly distributed was not its competitor’s goods, the court observed, but merely its own goods containing its competitor’s intellectual property. If true, that was an infringement of copyright, not trademark. “The Lanham Act does not do the work of the Copyright Act,” the court noted. That is, “it does not protect the originality or creativity of a plaintiff whose intellectual property is incorporated into a defendant’s product.” This claim would be dismissed.

Unfair competition. But while the trademark claim would fail, its related claim of unfair competition under Arizona law would move forward. The claim here was that the Arizona company not only distributed the New Jersey company’s intellectual property but that it did so in order to maintain its customer base right when its contract with the New Jersey company was about to expire. The Arizona company argued that this was preempted by the Copyright Act. But in fact, the court noted, it was a claim of “palming off” that—at least under the facts of this case—went behind the mere conduct protected by the Copyright Act. As the court noted, it could “reasonably infer from these allegations that Defendants misled customers to believe the products were Plaintiff’s—a claim of palming off not preempted by federal copyright law.” The claim would stay in the case for now.

Unjust enrichment. Finally, the court found that the unjust enrichment claim would stay in the case—but only for extremely narrow purposes. To the extent the unjust enrichment claim was based on the same facts alleged in the copyright infringement claim—the use of the works in ways that the Copyright Act proscribes—then the claim would be preempted. But the unjust enrichment claim was also tendered as an alternative to the breach of contract claim, the court noted. To the extent that it was brought only on this limited basis, the court reasoned, it could remain in the case. But “[a]t summary judgment and trial,” the court warned, “it must be based on the wrongs alleged in the breach of contract claim (which Defendants do not claim are preempted), not on Defendants’ mere use of Plaintiff’s copyright-protected information (a claim that would be preempted).”

The Case is No. 3:23-cv-08089-DGC.

Judge: Campbell, D.

Attorneys: Krystle Delgado (Delgado Entertainment Law PLLC) for New Parent World LLC. Aaron K. Haar (Jaburg & Wilk PC) for True To Life Productions Inc.

Companies: New Parent World LLC; True To Life Productions Inc.

Cases: Copyright TechnologyInternet Trademark ArizonaNews GCNNews