Small Business Bodyguard Inc. v. House of Moxie, Inc.
230 F. Supp. 3d 290
S.D.N.Y.2017Background
- Small Business Bodyguard, Inc. (SBBI, successor to Rachel Rodgers Consulting) and House of Moxie, Inc. (HOM) formed a joint venture to sell an e-book/product called "Small Business Bodyguard;" profits were split 50/50 under a May 2013 Joint Venture Agreement (JVA).
- Parties executed a June 7, 2014 Joint-Venture Dissolution Agreement (JVDA): SBBI purchased HOM’s JV interest, granted HOM a three-year limited license to sell the product (with commission and tracking provisions), and included mutual non‑disparagement and promotional-materials restrictions.
- Disputes arose over licensing/affiliate links, commission calculations (finance fees on installment payments), trademark/copyright authorship and registrations, a brief HOM-created copycat sales website (operational a few days and producing one $495 sale), DMCA takedown notices, and public statements by HOM/Ashirley Ambirge (blog, Facebook, emails).
- SBBI sued for contract breaches, copyright infringement (SR and TX registrations), defamation, unfair competition, and related claims; HOM counterclaimed for breaches of the JVDA, fiduciary duty, and legal malpractice against Rodgers/RRLO.
- On cross-motions for summary judgment, the court: granted SBBI statutory‑damages copyright claim on the SR registration (Count 5); dismissed many of SBBI’s contract, defamation, unfair competition, and declaratory claims (Counts 1,2,3,4,6,7,8,9); and resolved parts of several HOM counterclaims (including small damages award of $74.91 for a late commission payment). Remaining issues to try: statutory damages amount (Count 5), DMCA takedown interference, certain referral-tracking/reporting obligations, and malpractice as to the S‑corp election filing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HOM breached the JVDA by operating a copycat HOM SBB website (Count 1) | SBBI: HOM’s replica site violated JVDA and caused damages (traffic, reputation, lost sales). | HOM: site was short‑lived, produced one sale and HOM was entitled to commissions; no damages to SBBI. | Dismissed for SBBI (no admissible evidence of actual damages). |
| Whether HOM infringed SBBI’s SR copyright by reproducing e‑book excerpts (Count 5) | SBBI: SR registration valid; HOM reproduced copyrighted text on the HOM site beyond license. | HOM: license to sell included right to reproduce materials; registration/authorship issues invalidate SR. | SBBI wins: SR registration valid; HOM exceeded license and infringed; statutory damages to be determined at trial. |
| Whether HOM’s August 2014 TX registration infringement claim (Count 6) allows statutory damages | SBBI: TX registration assigned; HOM infringed. | HOM: statutory damages barred because registration not within 3 months of first publication. | Dismissed for SBBI: statutory damages unavailable because registration was after the 3‑month window; summary judgment for HOM on Count 6. |
| Whether HOM’s public and private statements breached JVDA or were defamatory (Counts 2 & 7) | SBBI: blog posts, Facebook post, and emails were defamatory/inflammatory and violated JVDA. | HOM: statements were opinion/hyperbole, not "of and concerning" SBBI/Rodgers, or privileged; no damages shown. | Summary judgment for HOM: statements are non‑actionable opinion/hyperbole or not sufficiently "of and concerning" and SBBI failed to prove damages. |
| Whether SBBI misused DMCA takedowns and thereby breached or interfered with HOM’s license (part of HOM counterclaim) | HOM: SBBI’s takedown requests wrongly deactivated unrelated HOM sites and interfered with license. | SBBI: initial DMCA takedown legitimately targeted an infringing replica sales page; later BlueHost actions followed its policy. | Genuine issue of material fact remains about the second notice and whether SBBI improperly kept non‑infringing pages deactivated; proceeds to trial. |
| Whether Rodgers/RRLO committed malpractice re: S‑corporation election and trademark filings (counterclaims) | HOM: Rodgers failed to file S‑corp election and delayed notice of PTO office action, causing damages. | Rodgers: produced evidence the S‑corp form was transmitted (ifax); trademark office action was timely addressed by successor counsel. | Malpractice claim on S‑corp filing survives (disputed fact whether Rodgers filed); trademark malpractice claim fails (no causation/damages). |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden on movant)
- Johnson v. Nextel Commc’ns, Inc., 660 F.3d 131 (elements of breach of contract)
- Kwan v. Schlein, 634 F.3d 224 (copyright infringement elements)
- Tasini v. New York Times Co., 206 F.3d 161 (license exceeded may give rise to infringement claim)
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (originality requirement in copyright)