1:15-cv-09518
N.D. Ill.Dec 13, 2018Background
- Plaintiff UIRC-GSA Holdings, Inc. owns registered copyrights in a Private Placement Memorandum (PPM I) and an Indenture of Trust used to market bonds that financed acquisition of GSA‑leased properties.
- Defendant William Blair & Company served as placement agent for both plaintiff’s bond offering and a separate Rainier GSA Portfolio I offering; Michael Kalt was Blair’s relationship manager on both engagements.
- Plaintiff alleges Blair (and Kalt) obtained a copy of PPM I without authorization and copied original portions into Rainier’s confidential placement memorandum and indenture, which were distributed to investors.
- Plaintiff asserts direct copyright infringement (Count VI) and contributory and vicarious infringement against Kalt (Counts VII–VIII).
- Defendants moved to dismiss under Rule 12(b)(6), arguing (a) the challenged text is unprotectable (facts, functional phrases, or fragments) and (b) the works are not substantially similar.
- The court denied the motion, finding the complaint plausibly alleges ownership of a valid copyright and copying of original elements; Counts VII–VIII survive because they depend on Count VI.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of copyright ownership | Plaintiff: PPM I and Indenture contain original expression (including collocations and definitions) and are registered. | Defendants: challenged portions are unprotectable (facts, fragmented phrases, or function‑dictated expressions). | Court: At pleading stage, plausible that documents contain the requisite "modicum of creativity"; dismissal denied. |
| Copying / substantial similarity | Plaintiff: Blair had access and Rainier documents appropriate distinctive wording/structure from PPM I; examples show similar clauses and arrangement. | Defendants: works are not substantially similar; any overlap reflects industry terms/facts, not protectible expression. | Court: Ordinary reasonable person could conclude appropriation of protectible expression based on side‑by‑side comparisons; plausibly pleaded copying. |
| Contributory infringement (against Kalt) | Plaintiff: Kalt encouraged/assisted Blair’s infringement; liability follows if underlying infringement is proved. | Defendants: Counts VII–VIII rise and fall with Count VI; dismissal appropriate if Count VI fails. | Court: Because Count VI survives, contributory claim against Kalt also survives the motion to dismiss. |
| Vicarious infringement (against Kalt) | Plaintiff: Kalt had the right and ability to supervise and a direct financial interest in the Rainier offering. | Defendants: same dependency argument on Count VI; lack of underlying infringement defeats vicarious claim. | Court: Vicarious claim survives at pleading stage because underlying infringement claim survives. |
Key Cases Cited
- Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) (copyright requires a minimal degree of creativity; facts and short phrases are not protected)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible and give fair notice)
- Peters v. West, 692 F.3d 629 (7th Cir. 2012) (proof of copying can be shown by access plus probative similarity)
- Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502 (7th Cir. 1994) (substantial similarity measured by whether an ordinary reasonable person would conclude appropriation of protectible expression)
- Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) (facts are not copyrightable)
- Alberto‑Culver Co. v. Andrea Dumon, Inc., 466 F.2d 705 (7th Cir. 1972) (short phrases and fragmented expressions generally unprotectable but context matters)
- Incredible Techs., Inc. v. Virtual Techs., Inc., 400 F.3d 1007 (7th Cir. 2005) (expressions dictated solely by function are unprotectable)
- Seng‑Tiong Ho v. Taflove, 648 F.3d 489 (7th Cir. 2011) (subjects that can be expressed only in limited ways have limited protection)
- Continental Casualty Co. v. Beardsley, 253 F.2d 702 (2d Cir. 1958) (forms and instruments may be copyrightable; originality can exist in arrangement and wording)