Antitrust Law Daily Wrap Up, RICO—EDPa: Publisher States Claims for Copyright Infringement by Book “Bootleggers,” But Fails to Allege New Jersey RICO Violations with Particularity, (Apr 17, 2013)

By Thomas Long, J.D.

Teri Woods Publishing and its principal, author Teri Woods (collectively referred to as "TWP"), can go forward with copyright infringement claims against a book manufacturing and printing company (Gasch Printing) and other defendants for allegedly producing "bootleg" copies of TWP’s books, the federal district court in Philadelphia has decided (Teri Woods Publishing, LLC v. Williams, April 12, 2013, Kelly, R.). TWP failed, however, to plead fraud-based New Jersey RICO claims with the particularity required by Federal Rule of Civil Procedure 9(b), so those claims were dismissed.

TWP asserted ownership of the copyrights to certain literary works, including the books "Dutch I"; "Dutch II" a/k/a "Dutch II: Angel’s Revenge"; "Dutch III: International Gangster"; "Deadly Reigns I"; "Deadly Reigns II"; and "Deadly Reigns III." According to TWP, Gasch was hired by another defendant to illegally manufacture bootleg copies of TWP’s copyrighted works. TWP allegedly became aware of Gasch’s illegal activities via a phone conversation in 2011 with a principal of Gasch.

In August 2012, TWP filed suit against Gasch and six other defendants, alleging, among other things, copyright infringement and violation of the New Jersey RICO statute. Gasch filed a motion to dismiss the claims.

Copyright infringement. The court determined that TWP sufficiently stated claims for copyright infringement. TWP alleged ownership of copyrights pertaining to certain literary works, which Gasch allegedly infringed by "engaging in the unlawful manufacturing, sale and distribution" of the works. Gasch’s violations allegedly had been repeated numerous times and were continuous and ongoing. TWP asserted that, as result of the infringement, it had sustained pecuniary damages and harm to its reputation and goodwill.

Gasch contended that TWP failed to demonstrate ownership of the copyrighted materials at issue in the case. Specifically, Gasch questioned whether TWP actually owned the copyrights for several titles listed by TWP. In response, TWP provided documentation showing that rights to some of the disputed works had been relinquished to it. In the court’s view, at this early stage in the litigation, TWP satisfied the requirements for demonstrating ownership. In addition, discovery would give Gasch ample opportunity to examine the ownership of the copyrights, the court said.

Accounting, permanent injunction. TWP asserted that it was entitled to a complete accounting from Gasch, and it also sought a permanent injunction barring Gasch from manufacturing, distributing, and selling any of TWP’s copyrighted materials. The court determined that TWP failed to plead that it did not have adequate remedies at law available under its copyright infringement claims. Therefore, TWP was precluded from seeking equitable relief.

New Jersey RICO. TWP asserted that Gasch, along with the other defendants, violated the New Jersey RICO statute. According to the court, TWP’s RICO claims were sounded in fraud, and TWP failed to meet the heightened pleading standards of Federal Rule of Civil Procedure 9(b) for such claims.

The New Jersey RICO statute made it a crime for a person to be employed by or associated with an "enterprise" and to engage or participate or become involved in the business of the enterprise through a "pattern of racketeering activity." Persons harmed by a violation could sue under the statute for restitution and damages.

Rule 9(b) requires a plaintiff to, at minimum, support allegations of fraud with all the essential factual background that would be included in the first paragraph of a newspaper story: the "who, what, when, where, and how" of the events at issue. Even when a complaint lacked this information, the standard could be satisfied by the inclusion of some measure of substantiation into the fraud claims.

It was evident that TWP’s RICO claims sounded in fraud, the court said. However, TWP set forth only generalized facts and failed to plead with the specificity required by Rule 9(b). TWP asserted a "blanket list" of acts in support of the RICO claims against all of the defendants. The actions listed were vague and conclusory, according to the court. The complaint grouped the defendants together under generalized allegations and conclusions and did not outline the specific role played by each defendant in the alleged fraudulent acts. There were no specific allegations as to how the illegal acts were committed by each defendant. The complaint did not allege where the illegal activities occurred. TWP also neglected to specify a time-period as to when the asserted events took place.

Accordingly, the New Jersey RICO claims were dismissed due to TWP’s failure to properly provide Gasch with the type of notice required by Rule 9(b).

The case is Civil Action No. 12-04854.

Attorneys: Simon Rosen (Law Office of Simon Rosen) for Teri Woods Publishing, LLC. Robert Axenfeld (Offit Kurman) for Gasch Printing, LLC.

Companies: Teri Woods Publishing, LLC; Gasch Printing, LLC.

Cases: RICO PennsylvaniaNews