682 F.Supp.3d 791
N.D. Cal.2023Background
- Plaintiff Nicky Laatz is a professional font designer who created the "Blooming Elegant Trio" (three fonts plus the implementing font software) in 2016 and offered them for license on Creative Market under a standard single‑seat license.
- Creative Market’s Service Terms, License Terms, Shop Page, and License FAQ comprise the operative license that restricted use to one user (installation on up to two computers) and barred shared/server use.
- In May 2017 Zazzle employee Mohamed Alkhatib purchased a single‑seat license via Creative Market, allegedly concealing that he acted for Zazzle; Plaintiff alleges Alkhatib or Zazzle copied the font software onto Zazzle servers and made the fonts available via Zazzle’s design tool to designers and customers for commercial use without additional payment to Laatz.
- Plaintiff discovered the use in 2020, demanded cessation; Zazzle asked about buying a perpetual/server license but refused to provide usage data or pay for prior use; Zazzle later replaced the fonts with alleged imitations.
- Laatz sued (filed Aug. 24, 2022) asserting copyright infringement, trademark infringement, breach of contract, and three California fraud claims; the court denied Defendants’ motion to dismiss (Order dated July 17, 2023), allowing all claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Copyright ownership of font software | Laatz hand‑coded glyph reference points, font‑wide variables, and wrote custom code incorporated into the packaged font software, so she owns a copyrightable computer program | Defendants: FontLab generated the code; typeface design is uncopyrightable and Laatz didn’t author the software code | Court: Accepting FAC allegations, Laatz plausibly alleged ownership of copyrightable font software; ownership question reserved for later factfinding |
| Copying / infringement | Zazzle (via Alkhatib) copied the Blooming Elegant Software onto multiple servers and distributed it to users, and Morgana is a copied/derivative work | Defendants: License and pleadings concern uncopyrightable font design, not protected software | Court: FAC alleges unauthorized copying/distribution of the software and plausible copying of Morgana; infringement claim survives |
| Preemption of state fraud and contract claims by Copyright Act | Laatz: fraud and contract claims include extra elements (misrepresentation, duty, contract rights) qualitatively different from copyright | Defendants: State claims rest on same acts as infringement and are therefore preempted under §301 | Court: Fraud claims premised on misrepresentations made to obtain the license are not equivalent to copyright claims; contract contains restrictions beyond reproduction/distribution, so state claims are not preempted |
| Breach of contract — standing and agent liability | Laatz: she is the Shop Owner/seller on Creative Market and thus a party to the License; Alkhatib concealed acting for Zazzle (undisclosed principal) so he can be liable | Defendants: Laatz lacks privity; Alkhatib acted on Zazzle’s behalf and cannot be individually liable | Court: On the pleadings it is reasonable to infer Laatz is the Shop Owner and a contracting party; allegations that Alkhatib concealed Zazzle as principal plausibly defeat automatic agent immunity at this stage |
| Fraud claims — particularity, intent, reliance, duty to disclose | Laatz pleaded who, what, when, where, and why: Alkhatib purchased under single‑seat license while concealing Zazzle purpose; Laatz relied and suffered damages | Defendants: Insufficient Rule 9(b) detail; no duty to disclose; lack of actual knowledge by Alkhatib of terms | Court: Allegations satisfy Rule 9(b) and California fraud elements (including duty to disclose where seller knew facts were material and inaccessible to Laatz); promissory fraud and misrepresentation adequately pled |
| Trademark — nominative fair use defense | Laatz: owns BLOOMING ELEGANT mark and Zazzle’s use goes beyond mere identification and suggests commercial exploitation | Defendants: Use was nominative fair use to identify the font trio | Court: On pleadings, cannot conclude nominative fair use applies as a matter of law; trademark claim survives past motion to dismiss |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim for relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (evaluate plausibility of allegations under Rule 12(b)(6))
- Williams v. Gaye, 895 F.3d 1106 (9th Cir. 2018) (elements for copyright infringement: ownership and copying)
- Ryan v. Editions Ltd. W., Inc., 786 F.3d 754 (9th Cir. 2015) (two‑part test for Copyright Act preemption)
- Valente‑Kritzer Video v. Pinckney, 881 F.2d 772 (9th Cir. 1989) (fraud claims can survive copyright preemption when misrepresentation is an extra element)
- Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079 (9th Cir. 2005) (contractual use restrictions can be qualitatively different from federal copyright rights)
- Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018) (judicial notice and incorporation‑by‑reference doctrines on Rule 12(b)(6) review)
- Jacobsen v. Katzer, 609 F. Supp. 2d 925 (N.D. Cal. 2009) (example of contract vs. copyright preemption analysis)
- Applied Underwriters, Inc. v. Lichtenegger, 913 F.3d 884 (9th Cir. 2019) (nominative fair use test in trademark cases)