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Narrative ARK Entertainmnet LLC v. Archie Comic Publications, Inc.

United States District Court, S.D. New York

September 5, 2017

NARRATIVE ARK ENTERTAINMNET LLC, Plaintiff,
v.
ARCHIE COMIC PUBLICATIONS, INC. and SEGA OF AMERICA, INC., Defendants. ARCHIE COMIC PUBLICATIONS, INC., Counterclaim Plaintiff and Third-Party Plaintiff,
v.
NARRATIVE ARK ENTERTAINMNET LLC, Counterclaim Defendant, SCOTT D. FULOP, Third-Party Defendant.

          OPINION AND ORDER

          VINCENT L. BRICCETTI UNITED STATES DISTRICT JUDGE.

         Plaintiff Narrative Ark Entertainment, LLC (“Narrative Ark”) brings this action against Archie Comic Publications, Inc. (“Archie”) and Sega of America, Inc. (“Sega”), alleging claims of copyright infringement, violations of the Lanham Act, 15 U.S.C. § 1125(a), deceptive business practices under the New York General Business Law, and common law claims of unfair competition and unjust enrichment. Narrative Ark also seeks a declaratory judgment that certain of Archie's copyright registrations are invalid.

         Archie brings a counterclaim against Narrative Ark and a third-party complaint against third-party defendant Scott D. Fulop, seeking a declaratory judgment that certain of Narrative Ark's copyright registrations are invalid. Archie also brings a third-party claim for slander of title against Fulop.

         Before the Court are (i) Archie's partial motion to dismiss Narrative Ark's Lanham Act, unfair competition, and unjust enrichment claims pursuant to Rule 12(b)(6) (Doc. #41); (ii) Sega's motion to dismiss the amended complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) or, in the alternative, for a more definitive statement pursuant to Rule 12(e) (Doc. #47); and (iii) Fulop's motion to strike or dismiss the amended third-party complaint pursuant to Rule 12(b)(6) and other grounds (Doc. #78).

         For the reasons set forth below, Archie's motion is GRANTED; Sega's motion to dismiss is GRANTED and its motion for a more definitive statement is DENIED as moot; and Fulop's motion is DENIED.

         The Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1338, and 1367.

         BACKGROUND

         The following factual background is drawn from the amended complaint, amended third-party complaint, and the parties' submissions in support of and in opposition to the pending motions. In deciding the pending motions, the Court accepts as true all well-pleaded factual allegations in the amended complaint and amended third-party complaint, and draws all reasonable inferences in plaintiff's and third-party plaintiff's favor.

         Archie is based in New York and is a publisher of comic books. Sega is located in California and is primarily a video game publisher. In 1992, Archie entered into a license with Sega to create and sell comic books based on some of Sega's characters, including “Sonic the Hedgehog.” In exchange for the right to develop and market comic books based on “Sonic the Hedgehog, ” Archie agreed to pay Sega royalties based on the works Archie developed.

         Narrative Ark is a New York limited liability company, and Scott D. Fulop is Narrative Ark's principal.

         Archie employed Fulop as a staff editor from around August 1988 to May 1991, and again from around February 1994 to January 1996. After his employment with Archie ended in 1996, Fulop claims to have created and developed, either individually or in collaboration with other freelance writers and artists, various comic book stories, characters, and artwork, including new and original characters, for the “Sonic the Hedgehog” comic book series. Fulop claims he was paid a fixed sum as a freelancer for first publication rights in North America for each story or artwork Archie accepted. Fulop also claims he never entered into a work-for-hire agreement with Archie.

         In addition to solo assignments, Fulop collaborated as a co-author with Kenneth Penders, who also worked as a freelance writer and artist for Archie, on several projects for the “Sonic the Hedgehog” comic book series. Sometime after 1998, Fulop ceased freelance writing for Archie.

         In 2009, Penders informed Fulop that Archie was beginning to reprint certain stories written by Fulop and Penders, as well as continuing to use some characters created by Fulop and Penders in other media.

         Penders filed and obtained copyright registrations in 2009 and 2010 for a number of stories written or illustrated by Penders, and in some instances co-written by Fulop or co-written by Fulop and other writers during their tenures as freelance writers and artists for Archie. Four of Penders's copyright registrations list Fulop as one of the copyright claimants. In addition, Fulop filed and obtained copyright registrations in 2010 for other works he created for Archie.

         Fulop organized Narrative Ark in October 2014. On October 5, 2015, Fulop transferred and assigned all of his copyrighted works and other intellectual property rights to Narrative Ark.

         Narrative Ark alleges (i) Archie and Sega have produced and distributed publications, books, and advertisements in which the stories, characters, and artwork Narrative Ark claims to own have been used beyond the scope of the rights Fulop granted to Archie and without further compensation to Fulop or Narrative Ark; (ii) Archie and Sega have claimed false authorship and ownership of these works; and (iii) Archie has asserted false claims of authorship and ownership of the works in certain applications for copyright registration filed with the United States Copyright Office.

         Based on these allegations, Narrative Ark asserts causes of action against Archie and Sega for direct and contributory copyright infringement, and seeks a declaratory judgment that Archie's above-mentioned copyright registrations are invalid.

         Narrative Ark also asserts causes of action against Archie for violations of the Lanham Act, deceptive practices under New York General Business Law Section 349, unfair competition, and unjust enrichment.

         Archie moved to dismiss the amended complaint as to Narrative Ark's claims for violations of the Lanham Act, deceptive practices under General Business Law Section 349, unfair competition, and unjust enrichment. Archie answered Narrative Ark's other claims, and brought an amended counterclaim against Narrative Ark and an amended third-party complaint against Fulop seeking a declaratory judgment of invalidity of Narrative Ark's copyright registrations. Archie also brings an amended third-party claim for slander of title against Fulop. Thereafter, Fulop moved to dismiss the amended third-party complaint arguing, among other things, (i) Archie failed to timely file its third-party complaint under Rule 14, (ii) Archie is not the owner of the property at issue in this case, (iii) Archie failed to state a claim upon which relief can be granted, and (iv) the claims against Fulop do not arise out of the subject matter of Narrative Ark's claims against Archie.

         Sega also moved to dismiss the amended complaint, arguing Narrative Ark cannot establish any basis for this Court to exercise personal jurisdiction over Sega. In the alternative, if Sega's motion to dismiss is denied, Sega seeks a more definitive statement from Narrative Ark that clarifies Narrative Ark's factual and legal claims asserted against Sega.

         DISCUSSION

         I. Legal Standards

         A. Rule 12(b)(2)

         On a motion to dismiss under Rule 12(b)(2), the “plaintiff bears the burden of showing that the court has jurisdiction over the defendant.” In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003). Prior to discovery, a plaintiff may defeat a motion to dismiss “by pleading in good faith legally sufficient allegations of jurisdiction.” Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990) (internal citation omitted). A plaintiff can make this showing through “affidavits and supporting materials containing an averment of facts that, if credited . . . would suffice to establish jurisdiction over the defendant.” Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001). When there has been no hearing on the merits, “all pleadings and affidavits must be construed in the light most favorable to [plaintiff] and all doubts must be resolved in . . . plaintiff's favor.” Landoil Res. Corp. v. Alexander & Alexander Servs. Inc., 918 F.2d 1039, 1043 (2d Cir. 1990).

         B. Rule 12(b)(6)

         In deciding a Rule 12(b)(6) motion, the Court evaluates the sufficiency of the operative complaint under the “two-pronged approach” articulated by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). First, plaintiff's legal conclusions and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are not entitled to the assumption of truth and are thus not sufficient to withstand a motion to dismiss. Id. at 678; Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). Second, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. at 679.

         To survive a Rule 12(b)(6) motion, the allegations in the complaint must meet a standard of “plausibility.” Ashcroft v. Iqbal, 556 U.S. at 678; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 564 (2007). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

         C. Rule 12(f)

         Under Rule 12(f), “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “Motions to strike are generally looked upon with disfavor.” Chenensky v. N.Y. Life Ins. Co., 2011 WL 1795305, at *1 (S.D.N.Y. Apr. 27, 2011) (internal quotation marks omitted). A motion to strike “will be denied, unless it can be shown that no evidence in support of the allegation would be admissible.” Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).

         District courts have discretion in resolving Rule 12(f) motions. See, e.g., In re Platinum & Palladium Commodities Litig., 828 F.Supp.2d 588, 593 (S.D.N.Y. 2011).

         II. Analysis

         A. Archie's Partial Motion to Dismiss the Amended Complaint

         1. Lan ...


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