In re Idearc, Inc.

Full title: IN RE: IDEARC, INC., et al., Debtor

Court: United States Bankruptcy Court, N.D. Texas, Dallas Division

Date published: Jan 21, 2011

CASE NO. 09-31828-BJH-11 (Bankr. N.D. Tex. Jan. 21, 2011)

Opinion

CASE NO. 09-31828-BJH-11.

January 21, 2011

MEMORANDUM OPINION AND ORDER

BARBARA HOUSER, Bankruptcy Judge

Before the Court is a motion for summary judgment (the "Motion") filed by Idearc, Inc. ("Idearc" or "the Debtor") with respect to a proof of claim filed by Lisa McConnell, Inc. d/b/a Imagine One ("Image"). The proof of claim, filed on August 5, 2009 (the "Claim"), asserts a claim for $374,250,000.00, with a stated basis of "copyright infringement."

Copyright disputes between the parties began many years ago. In 1997, Image filed an action alleging copyright infringement against GTE Directories Corporation and its subsidiaries ("GTE") in the United States District Court for the Southern District of California. It is undisputed that Idearc is GTE's successor-in-interest. Similarly, Image filed, in 2000, an action against Bell Atlantic Directory Services, Inc. and Bell Atlantic Yellow Pages Company ("Bell Atlantic") in the United States District Court for the Southern District of New York. It is also undisputed that Idearc is Bell Atlantic's successor-in-interest. Both of Image's lawsuits against Idearc's predecessors-in-interest were settled (the GTE lawsuit was settled in 1998 and the Bell Atlantic lawsuit was settled in 2001) and the settlements were embodied in fully executed settlement agreements (the "Settlement Agreements"). It is further undisputed that both Settlement Agreements contain provisions that state that their terms are binding upon the executing parties' successors-in-interest, and thus are binding on Idearc.

In January of 2009, Image filed a lawsuit against Idearc in the United States District Court for the Southern District of California (the "Complaint") seeking damages for one count each of copyright infringement, vicarious copyright infringement, contributory copyright infringement, false designation of origin under 15 U.S.C. § 1125(a), and unfair competition under Section 17200 of California's Business Professions Code. That lawsuit had barely progressed when Idearc filed its voluntary petition for relief under chapter 11 in this Court on March 31, 2009. On August 5, 2009, Image filed its Claim in Idearc's bankruptcy case based on the allegations in the Complaint. The Complaint alleges that pursuant to the Settlement Agreements:

Idearc's predecessors "took a temporary license from Image One, giving Defendants time to remove Plaintiff's images from Defendants' directories. Said license expired more than four years prior to the filing of this Complaint. However, Defendants have continued to infringe, or have resumed infringing, Plaintiff's copyrights by copying the protected work."

Compl. ¶ 14.

Idearc argues, essentially, that the license was instead perpetual and remains in effect, and therefore the Claim should be disallowed, and Idearc is entitled to recovery of the attorney's fees it has incurred in defending against the Complaint (and the Claim), both under the terms of the Settlement Agreements and pursuant to the Copyright Act.

I. LEGAL ANALYSIS

A. Evidentiary Objections

As a preliminary matter, the Court notes that Idearc has moved to strike portions of Image's summary judgment evidence. Specifically, Idearc has moved to strike substantial portions of the declaration of Walter E. Menck, Image's attorney of record (the "Menck Declaration"), and the declaration of Robert Gould, Image's Chief Executive Officer (the "Gould Declaration"). Idearc argues that ¶¶ 4-9, 14 and 17 of the Menck Declaration and ¶¶ 9, 10 and 12 of the Gould Declaration constitute statements of legal opinion that purport to construe the Settlement Agreements, which are the province of the Court and are thus impermissible. Idearc also argues that ¶¶ 5-7, 9, 10, 14, 15 and 17 of the Menck Declaration and ¶¶ 4-15, 17-19 of the Gould Declaration contain statements that "parrot the allegations in Image One's Complaint and legal pleadings or consist of argumentative and conclusory statements that lack any evidentiary foundation and cannot properly be considered on summary judgment." Motion to Strike, p. 3.

The Court agrees with Idearc that much of the Menck Declaration either (i) contains legal conclusions respecting contract interpretation, which is the province of the Court, (ii) is irrelevant because it sets forth only what Image "contends," which does not make the underlying factual statement more or less likely to be true, or (iii) is conclusory and fails to establish Menck's competence to testify to the facts set forth in the Declaration. Therefore, the Court will strike portions of paragraphs 4 and 9, ¹ and the entirety of paragraphs 5, 6, 7, 8, 10, 14, 15 and 17. The same may be said with respect to the Gould Declaration, and the Court will strike portions of paragraphs 9, 11, and 14² and the entirety of paragraphs 10, 12, 13, 17 and 18. The balance of Idearc's objections are overruled.

1 As to paragraph 4, the Court strikes the phrase "identifying the purpose of the ongoing use licenses" because Menck's Declaration does not establish that he was involved in the negotiations of the Settlement Agreements. Therefore Menck lacks competence to testify to the reason the settling parties included Section 7 in the Settlement Agreements. In fact, the Settlement Agreements indicate that the attorney representing Image at the time of the Settlement Agreements was William L. Miltner, of the firm Perkins Miltner. As to paragraph 9, the Court strikes the first sentence in its entirety on the ground that it contains legal conclusions that are the province of the Court, is conclusory, and is irrelevant to the extent it merely states what Image alleges in its Complaint. The Court also strikes the third sentence for the same reasons.

2 As to paragraph 9, the Court strikes the first two sentences in their entirety, on the ground that they contain legal conclusions that are the province of the Court, are conclusory, and are irrelevant to the extent they merely state what Image alleges in its Complaint. The Court will also strike the phrase "in view of Debtors' continuing acts of infringement" from the third sentence, for the same reasons. As to paragraph 11, the Court strikes the sentence that reads "Debtors consequently had access and an opportunity to copy Image One's work" on the ground that it contains a legal conclusion that is the province of the Court. As to paragraph 14, the Court strikes the second sentence, on the ground that it is lacking foundation and is irrelevant to the extent it states what Image alleges in its Complaint.

B. The Summary Judgment Standard

Summary judgment is proper where it appears from the record that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c);³ Int'l Turbine Servs., Inc. v. VASP Brazilian Airlines, 278 F.3d 494, 497 (5^th Cir. 2002); Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 533 (5^th Cir. 1996) ("Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."). Federal Rule of Civil Procedure 56 provides that a party may move for summary judgment as to any claim, counterclaim or declaratory judgment or any part thereof. Fed.R.Civ.P. 56(a), (b). Thus, a partial summary judgment is appropriate to narrow issues for trial when the standards of Rule 56 are satisfied. Calpetco 1981 v. Marshall Exploration, Inc., 989 F.2d 1408, 1415 (5th Cir. 1993); Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995) ("A plaintiff seeking to defeat a motion for summary judgment, of course, must do more than make broad factual allegations and invoke the appropriate statute. The plaintiff must also show, by affidavits or as otherwise provided in Rule 56 of the Federal Rules of Civil Procedure, that there are specific factual issues that can only be resolved at trial." (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)). As the Fifth Circuit noted in Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5^th Cir 1996)

3 As of December 1, 2010, Rule 56 was amended and the language permitting the Court to grant summary judgment if the motion and supporting materials show that the movant is entitled to it now appears in subsections (a) and (e) of Rule 56.

If the movant satisfies its initial burden of demonstrating the absence of a material fact issue, the non-movant must identify specific evidence in the summary judgment record demonstrating that there is a material fact issue concerning the essential elements of its case for which it will bear the burden of proof at trial. . . . In short, conclusory allegations, speculation, and unsubstantiated assertions are inadequate to satisfy the nonmovant's burden.

Id. at 1429 (quoting Forsyth v. Barr, 19 F.3d 1527, 1533 (5^th Cir. 1994)).

C. The Copyright Claims as to Registered Works

Idearc first argues that Image's claims are barred by the Settlement Agreements. Section 6 of each Settlement Agreement provides, in part, as follows:

Effective upon payment. . . . Image One hereby grants to GTE [and Bell Atlantic] and, as of the date of any merger with or acquisition of or by GTE [or Bell Atlantic], any and all successors in interest to all or a portion of GTE [or Bell Atlantic] or the assets thereof and new Subsidiaries of GTE [or Bell Atlantic]: a fully paid-up, irrevocable, nonexclusive, perpetual, worldwide, unrestricted and royalty-free license, with the express right to grant sublicenses to their Distributors, Printers and Customers (all of the foregoing being without accounting to Image One), to use, reproduce, copy, print, distribute, perform, publish, display, create derivative works, in any form (including electronic and digital form) and perform any and all acts which in the absence of this license would be an infringement, including contributory and vicarious infringement, for any and all Image One advertisements, templates and other intellectual property:

(a) Created by or for Image One at any time prior to December 31, 1998 and included or used by or for GTE [or Bell Atlantic] at any time in advertising, including Yellow Pages-type advertising, in any form (including electronic and digital form), or the subject of related services; and

(b) Created by or for Image One at any time after December 31, 1998 but prior to December 31, 2001 and included or used by or for GTE [or Bell Atlantic] at any time in advertising, including Yellow Pages-type advertising, in any form (including electronic and digital form), or the subject of any and all services related to such advertising; provided, however, Image One shall reserve for itself, as a sole and exclusive remedy, the right to enforce its copyrights and contractual rights, created after December 31, 1998, against Customers who provide any infringing advertisements or portions thereof to GTE [or Bell Atlantic].

Idearc argues, citing Section 6, that Image's claim must be limited to those works registered after December 31, 2001, because Idearc holds a perpetual license in all Image works created on or before December 31, 2001. Idearc asserts that because Image's Complaint fails to identify any post-2001 copyrighted works that have been infringed by Idearc, Image's claim should be disallowed.⁴

4 Idearc also points out that the Complaint asserts that the Settlement Agreements granted Idearc "a temporary license from Image One" and that the "license expired more than four years prior to the filing" of the Complaint. The Court agrees with Idearc that this allegation of the Complaint is irreconcilable with the plain language of the Settlement Agreements and there is no evidentiary support for Image's allegation. To the extent that Image argues that the licenses were in fact temporary and have expired, Image has failed to raise a genuine issue of material fact on this point.

The Court does not find Image's Complaint to be as circumscribed as Idearc contends it is. While the Complaint is aptly described by the adage "clear as mud," the Court believes that the allegations in the Complaint, read in the light most favorable to Image, go beyond alleging only infringements of the 451 works attached to the Complaint as examples of the alleged infringements. However, the Court will begin its analysis as if the Complaint does indeed allege infringement of only "Registered Works," as defined in the Complaint and as appear on Exhibit 1 to the Notice of Lodgment, which identifies 451 of such Registered Works.

Idearc contends, and Image does not dispute, that only three of the copyright registrations listed on Exhibit 1 to the Notice of Lodgment post-date December 31, 2001. Idearc points out that of those three works created after December 31, 2001, two are described in records maintained by the United States Copyright Office as comprising revisions to works created prior to December 31, 2001; thus, Idearc contends that those two works also fall squarely within the scope of the licenses granted to Idearc in the Settlement Agreements.⁵ Idearc does not address the last of the three works registered post-December 31, 2001.

5 Idearc's "Statement of Material Undisputed Facts" contained on pp. 2-9 of its brief identifies those two works as the "Cowboy Moving Storage Inc., Designer furniture self storage" template appearing in its appendix at pp. 72, 365, and the "Pearl City transmission template," appearing in its appendix at pp. 124, 366. The Court notes that the Copyright Office records for only the Pearl City transmission template indicate that there had been a "previous registration" of some portion of that template. The date of the previous registration is not identified. The Copyright Office records for the "Cowboy Moving Storage Inc. Designer furniture self storage" template does not indicate a previous registration; rather it states as the "Basis of Claim" only "New Matter: revisions to preexisting photo, additions compilation of text." The Court further notes that the registration listed immediately above the "Cowboy Moving Storage Inc. Designer furniture self storage" ad is also a 2002 registration (which Idearc does not mention), titled the "Cosmopolitan escorts template," and that record indicates that there is a previous registration.

As to these three works registered after December 31, 2001, the Court concludes that Idearc's Motion must be denied. First, as to the one work that Idearc concedes (1) was registered post-December 31, 2001 and (2) that Copyright Office records do not indicate that it is based on any pre-existing work, Idearc has advanced no reason why it is entitled to judgment in its favor.

Second, as to the two works (1) that were registered post-December 31, 2001 and (2) for which Copyright Office records indicate that the 2002 registrations are comprised in part of works created prior to December 31, 2001, Idearc has not articulated to the Court, in its Motion or its briefing, why the fact that two of the 2002 registrations indicate that the registrations at issue are partially comprised of material that was previously registered is legally significant, or whether or not such registrations "relate back" to the prior date of registration. The Court notes the existence of the body of law regarding derivative works, not briefed by either party, that appears to provide a legal basis for the conclusion that a registration in 2002 of a work that modifies a preexisting work, registered prior to 2002, is a 2002 registration despite embodying some aspects of a preexisting work. Under Section 103 of the Copyright Act, copyright protection is available for derivative works.⁶ Therefore, the fact that two of the works registered post-December 31, 2001 refer to works which may have been⁷ originally registered pre-December 31, 2001 does not mean that they were not copyright-able independently in 2002. See generally Knickerbocker Toy Co. v. Winterbrook Corp., 554 F. Supp. 1309, 1317-18 (D.N.H. 1982) (the fact that dolls "are based on prior works does not a fortiori compel the conclusion that the dolls are not original. Works substantially derived from prior works, whether the preexisting works are copyrighted or in the public domain, are also subject to copyright protection so long as the derivative work itself is original."). Therefore, Idearc's Motion is denied as to the three works that Idearc concedes were registered post-December 31, 2001.

6 Section 103(a) of the Copyright Act provides that the "subject matter of copyright as specified by section 102 includes compilations and derivative works, but protection for a work employing preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully." Section 103(b) provides that "the copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material." Section 101 of the Copyright Act defines a "derivative work" as a work based upon one or more preexisting works . . . A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a `derivative work.'"

7 As to the two works for which the Copyright Office records show that they are revisions to pre-existing works, the Copyright Office records do not show the date of the registration of the preexisting work. Theoretically, the preexisting work could also have been registered post-December 31, 2001.

Idearc also argues that its own search of an on-line database maintained by the United States Copyright Office has shown that Image has obtained only one copyright registration after 2001, dated in 2008, but that registration is purportedly based on a previous registration dating back to 1997 and so it is "necessarily within the perpetual license granted by the . . . Settlement Agreements." Reorganized Debtors' Mem. Of Law in Supp. of its Mot. For (1) Summ. J. Disallowing the Proof of Claim filed by Lisa McConnell, Inc. d/b/a Image One; and (2) a Decl. J. That Reorganized Debtors are Entitled to Recovery of All Atty's Fees, Costs and Expenses Incurred in Defending Against Image One's Claims ("Idearc's Brief"), p. 12. For the same reason as noted above, the Court cannot conclude as a matter of law that this work is necessarily within the scope of the license granted in the Settlement Agreements.⁸

8 Moreover, paragraph 19 of the Gould Affidavit states that he has created, on behalf of Image, at least 200 original works of art since 2002, and that "a few of those have been registered," although most have not. As noted above, Idearc moved to strike portions of the Gould Affidavit, but as set forth above, the Court overrules Idearc's objection to paragraph 19.

With respect to the other 448 works, the Court similarly concludes that summary judgment must be denied, because the Court concludes that the Settlement Agreements are ambiguous with respect to the interplay between Sections 6 and 7 of the Settlement Agreements.

The determination of whether an ambiguity exists in a contract is a question of law for the court. F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958, 963 (9^th Cir. 2010). A contract is ambiguous when it is reasonably susceptible to more than one reading. In re Tobacco Cases I, 111 Cal. Rptr.3d 313 (Cal. App. 4^th Dist. 2010). If a contract is ambiguous, then the court cannot resolve a dispute over the proper interpretation of the contract on a summary judgment motion, because ambiguity in a contract raises a question of intent, which is a question of fact precluding summary judgment. Maffei v. Northern Ins. Co. Of New York, 12 F.3d 892, 898 (9^th Cir. 1993). However, the foregoing rule assumes that there is at least some evidentiary support for the competing interpretations of the contract's language, National Union Fire Ins. Co. Of Pittsburgh, Pa v. Argonaut Ins. Co., 701 F.2d 95, 97 (9^th Cir. 1983), and under California law, a party may present extrinsic evidence to show that a facially unambiguous contract is susceptible to another interpretation. Maffei, 12 F.3d at 898. As the Ninth Circuit has noted,

The interpretation of contracts under California law involves a complex interplay of questions of fact and questions of law. The trial court must first decide whether the contested terms are ambiguous. Under California law, the determination of whether a written contract is ambiguous is a question of law that must be decided by the court. Even if the written agreement is clear and unambiguous on its face, the trial judge must receive relevant extrinsic evidence that can prove a meaning to which the language of the contract is "reasonably susceptible." If the court finds after considering this preliminary evidence that the language of the contract is not reasonably susceptible of interpretation and is unambiguous, extrinsic evidence cannot be received for the purpose of varying the terms of the contract. The case may then be disposed of by summary judgment[,] because interpretation of the unambiguous contract is solely a question of law.

City of Santa Clara v. Watkins, 984 F.2d 1008, 1012 (9^th Cir. 1993) (quoting Brobeck, Phleger Harrison v. Telex Corp., 602 F.2d 866, 871-72 (9^th Cir. 1979)).

Here, Idearc argues that Section 6 of each Settlement Agreement is clear and explicit in the grant of an unrestricted, perpetual license with respect to all works created prior to December 31, 2001. Image disagrees, asserting that Section 7 of each Settlement Agreement qualifies the scope of the licenses granted by Section 6. Section 7 of both Settlement Agreements provides:

Without admitting liability, the purpose of Section 6 is to enable GTE [and Bell Atlantic] to exercise good faith efforts to establish policies, procedures and educational programs intended to minimize the potential of future acts of infringement of Image One copyrighted works.

Image contends that the purpose of the license granted by Section 6 was expressly limited and qualified by Section 7 of each Settlement Agreement and that Idearc exceeded the scope of the permitted use of the license and has breached Section 7. Idearc responds that nothing in either Settlement Agreement states that Section 7 imposes a condition on Section 6, and that instead the Settlement Agreements provide that the licenses become effective upon payment. Idearc takes the position that Section 7 "merely state[s] the parties hortatory, general intent with respect to `future' works created after 2001, and [is] too vague to create any enforceable rights in either party." Idearc's Reply Mem., p. 4.⁹ Idearc further argues that even if some enforceable obligation exists by virtue of Section 7, it would be a separate contractual covenant, not a condition to the continued irrevocability and permanence of the license. Id.

9 The full title of Idearc's reply brief is "Reorganized Debtors' Reply Memorandum of Law in Further Support of Their Motion for (1) Summary Judgment Disallowing the Proof of Claim Filed by Lisa McConnell, Inc., d/b/a Image One; and (2) a Declaratory Judgment that Reorganized Debtors are Entitled to Recovery of All Attorney's Fees, Costs and Expenses Incurred in Defending Against Image One's Claims." It will be referred to in this Memorandum Opinion and Order as "Idearc's Reply Mem."

Under California law, "the whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other." Cal. Civ. Code § 1641 (West 2010); Smith v. Simmons, 638 F.Supp.2d 1180 (E.D. Cal. 2009); Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970 (9^th Cir. 1996); National City Police Officers' Ass'n v. City of National City, 105 Cal. Rptr. 2d 237 (2001). Contractual clauses are not to be construed in isolation under California law. In re Montgomery, 310 B.R. 169 (Bankr. C.D. Cal. 2004). The fact that one provision is clear and explicit does not mean that the provision alone must govern its interpretation; the whole of the contract must be considered. Alperson v. Minisch Co., 250 Cal App. 2d 84 (1967). Moreover, a contract should not be interpreted in a way that renders some clauses nugatory, inoperative or meaningless. City of Atascadero v. Merrill Lynch, Pierce, Fenner Smith, Inc., 80 Cal. Rptr.2d 329 (App. 1^st Dist. 1998).

Accordingly, the Court must attempt to construe the Settlement Agreements considering both Sections 6 and 7, and the Court rejects Idearc's argument that because the plain language of Section 6 is clear and explicit, Section 7 essentially means nothing. However, neither party has provided any evidence with respect to what it might mean. Both sides have presented legal argument, but in the absence of any evidence, the Court is unable to interpret its meaning or conclude as a matter of law that it either did or did not qualify the license granted by Section 6. Idearc cites to the unreported decision in A.S.D. v. Western Municipal Water Dist. Of Riverside County, No. E030189, 2002 WL 31820335 at *8 (Cal. App. 4^th Dist. Dec. 17, 2002) for the proposition that "a recital of intent . . . cannot created any rights beyond those established by the operative contract." However, the A.S.D. case is distinguishable. In that case, the contract contained both preliminary recitals and then operative provisions. On appeal, the defendant argued that language in one of the recitals defined one of the operative provisions of the contract and should have been considered by the trial court in its interpretation of the operative provision. The appellate court disagreed, stating that a recital merely establishes the factual setting of a contract. As such, the court stated, recitals

do not ordinarily form any part of the real agreement. Generally, they do not have the force of contractual stipulations. However, recitals may have a material influence in construing the contract and determining the intent of the parties, and in such respect they should, so far as possible, be reconciled with the operative clauses and be given effect. Generally, if the recitals in a contract are clear and the operative part is ambiguous, the recitals govern the construction; but if the recitals are ambiguous and the operative part is clear, the operative part must prevail. If both the recitals and the operative part are clear, but they are inconsistent with each other, the operative part must prevail . . . Similarly, [r]ecitals in a contract, such as `whereas' clauses, are merely explanations of the circumstances surrounding the execution of the contract, and are not binding obligations unless referred to in the operative provisions of the contract. For example, a recital of intent in a `whereas' clause of a contract cannot create any rights beyond those established by the operative terms of the contract. However, recitals in a contract should be reconciled with the operative clauses of the contract, and given effect, as far as possible. Thus, although `whereas' clauses cannot be permitted to control over the express provisions of a contract, such recitals may be read in conjunction with the operative portions of the contract in order to ascertain the parties' intention.

A.S.D., 2002 WL 31820335 at *8. Similarly, the court in Devan Motors of Fairfield, Inc. v. Infiniti Div. Of Nissan N. Am., 579 F.Supp. 2d 294 (D. Conn. 2008) rejected a party's attempt to rely upon a description of the relevant contract's purpose, which was contained in prefatory statements under the caption "Introduction," to interpret the specific operative provisions of the contract there at issue.

Here, however, the Settlement Agreements contain several prefatory recitals, and Section 7 does not appear among them. Rather, it appears immediately following Section 6 in the body of the Settlement Agreements, and appears to be intended as an operative provision. As there are recitals in the Settlement Agreement, and Section 7 does not appear in the recitals, and because the statement of purpose contained in Section 7 explicitly refers to, and immediately follows, Section 6, its placement in the Settlement Agreement suggests that Section 7 is not a general, prefatory statement merely giving the background of the Settlement Agreements, but is rather intended as an operative provision.

The Court therefore concludes, in the absence of any evidence by either side as to what the parties intended the interplay between Sections 6 and 7 to be, that the interplay between Sections 6 and 7 creates an ambiguity that precludes interpretation of the Settlement Agreements as a matter of law. Accordingly, summary judgment must be denied.

D. The Copyright Claims as to Subject Works

As noted above, Idearc asserts that because Image's Complaint fails to identify any post-2001 copyrighted works that have been infringed by Idearc, Image's claim should be disallowed, pointing to the 451 works attached as Exhibit 1 to the Notice of Lodgment filed contemporaneously with the Complaint as examples of the alleged infringements. The Court believes, however, that the Complaint, while hardly a model of clarity, fairly alleges infringements beyond the Registered Works identified on Exhibit 1 to the Notice of Lodgment when read in the light most favorable to Image.

The Complaint contains several definitions. Paragraph 7 of the Complaint alleges that Image, by "combining high-end three-dimensional graphic art in yellow page advertising . . . created a new type advertisement in an old and familiar medium. These unique advertisements created by Image One are the subject of this Complaint (herein after referred to as the `Subject Works')." Therefore, paragraph 7 alleges that the "Subject Works" are the basis for its Complaint. Paragraph 11 alleges that Image "is in the process of registering, and plans to register, additional template and individual advertisements which are also the subject of this action in view of Defendants' continuing acts of infringement. All such registered templates and individual advertisements are . . . referred to as "Registered Works." Exhibit 1 to the Notice of Lodgment filed contemporaneously with the Complaint attaches the list (451 items) of Registered Works. Paragraph 15 of the Complaint alleges that Image has reviewed a sampling of Idearc's telephone directories and has determined that Idearc has been publishing ads which Image believes, "and based therefore alleges, infringe on Image One's Registered Works (hereinafter referred to as "Infringing Works"). Exhibit 2 to the Notice of Lodgment are copies of the allegedly Infringing Works. Thus, the Complaint identifies, in paragraph 15, the Infringing Works as also being Registered Works. Yet paragraph 18 alleges that Idearc copied certain of the Subject Works, and that Idearc "copied the Subject and Registered Works for the specific purposes of infringing Image One's copyrights and selling illegal and unauthorized copies of the Subject and Registered Works." Paragraph 19 then identifies three types of infringing ads published by Idearc — Type A infringements are those which unlawfully use Image's Registered Works. Type B infringements are alleged to be advertisements that were created by Image One for a client, but which have been illegally altered and republished by Idearc (the Complaint does not identify whether these acts occurred with respect to Registered Works or Subject Works). Type C infringements are advertisements which also improperly use Image's Registered Works. Paragraph 21 alleges that the consequence of Idearc's wrongful conduct has been to deprive Image of the benefits of selling its Subject Works and other products. Paragraph 22 alleges that Image "has lost, and will continue to lose, substantial revenues from the sale of the Subject and Registered Works and other products. . . ." Count 1 of the Complaint, entitled "Copyright Infringement," complains that Idearc has "knowingly and willfully copied Image One's Subject and Registered Works," Compl., ¶ 29, and that Idearc "copied the Subject and Registered Works for the specific purpose of infringing Image One's copyrights and selling illegal and unauthorized copies of the Subject and Registered Works." Id. Count 2, entitled "Vicarious Copyright Infringement," appears to seek damages based only upon infringement of Registered Works. Compl. ¶¶ 41, 42. Count 3, entitled "Contributory Copyright Infringement," similarly appears to seek damages based solely on infringements of Registered Works. Compl. ¶¶ 51, 52.

As should be obvious from the above review of the Complaint, Image's allegations are less than crisp. However, as noted earlier, the Court believes that when read in the light most favorable to Image, the allegations in the Complaint go beyond alleging infringement only of works that Image has registered with the United States Copyright Office.¹⁰ To the extent that Image sues for infringement of copyrighted works that have not been registered, Idearc argued at the hearing on the Motion that it is entitled to summary judgment because registration of a copyright is a statutory prerequisite to a suit for its infringement, citing to 17 U.S.C. § 411(a). That statute provides, in part:

10 Idearc's Motion does not address any issues that arise as a result of the Complaint alleging infringement of unregistered works, because Idearc reads the Complaint as alleging infringement of the 451 Registered Works attached as Exhibit 1 to the Notice of Lodgment. However, both parties presented oral argument on these issues at the hearing on Idearc's Motion.

(A) Except for an action brought for a violation of the rights of the author under Section 106A(a), and subject to the provisions of subsection (b), no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.

Image has several responses. First, Image argues that Section 411(a) of the Copyright Act provides for an exception to the registration of a work as a prerequisite to suit — that is, for actions brought for a violation of the rights of an author under 17 U.S.C. § 106A.¹¹ Section 106A is the result of the enactment of the Visual Artists Rights Act of 1990 ("VARA"), and it provides to authors of a work of visual art certain rights — among them, the rights of attribution and integrity. Image argues that while it failed to specifically cite to Section 106A in its Complaint, the factual allegations in the Complaint fairly raise such a claim.

11 Subsections (a) and (b) of Section 106A provide:
(a) Rights of attribution and integrity. — Subject to section 107 and independent of the exclusive rights provided in section 106, the author of a work of visual art —

(1) shall have the right —

(A) to claim authorship of that work, and

(B) to prevent the use of his or her name as the author of any work of visual art which he or she did not create;

(2) shall have the right to prevent the use of his or her name as the author of the work of visual art in the event of a distortion, mutilation, or other modification of the work which would be prejudicial to his or her honor or reputation; and

(3) subject to the limitations set forth in section 113(d), shall have the right —

(A) to prevent any intentional distortion, mutilation, or other modification of that work which would be prejudicial to his or her honor or reputation, and any intentional distortion, mutilation, or modification of that work is a violation of that right, and

(B) to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right.

(b) Scope and exercise of rights. — Only the author of a work of visual art has the rights conferred by subsection (a) in that work, whether or not the author is the copyright owner. The authors of a joint work of visual art are co-owners of the rights conferred by subsection (a) in that work.

The Court disagrees. First, the Court notes that it was surprised during oral argument on Idearc's Motion to learn that Image believes it has asserted a claim under VARA. Nowhere in the Complaint is VARA mentioned. The Complaint never uses the words author, attribution, integrity, distortion, mutilation, or modification — the "buzz" words in the statute that one would expect to find in a complaint alleging a statutory violation. The Complaint does not allege that Image is an "author." The Complaint does allege that Image has "created and published unique and original images and composites, including advertisement templates, graphic designs, text and artwork, intended for use as a business," Compl. ¶ 6, and that Image "creates new and original artwork . . .". Compl. ¶ 8. However, the declaration of Robert Gould, Image's CEO, alleges that he "created the original artwork." Decl. of Robert Gould, ¶ 15. The Complaint may be attempting to allege that Image is the "author" of the works, but Gould's Declaration refutes that allegation. Moreover, the Complaint does not allege, and Image does not argue, that the works at issue in the Complaint constitute works of visual art as that term is defined by the Copyright Act. A "work of visual art" is defined by 17 U.S.C. § 101 to be:

(1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author . . .; or

(2) a still photographic image produced for exhibition purposes only, consisting in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author.

By comparison, a "work of visual art" does NOT include "(ii) any merchandising item or advertising, promotional, descriptive, covering or packaging material or container . . ." 17 U.S.C. § 101. A work created for the purpose of promoting and advertising is not a "work of visual art" subject to protection under VARA. Pollara v. Seymour, 344 F.3d 265 (2^nd Cir. 2003). The Court concludes, therefore, that Image's Complaint does not fairly allege a claim under VARA, and Image has not come forward with any evidence in response to the Motion to raise a genuine issue of material fact with respect to any such claim. Thus, to the extent that the Complaint is read to allege infringements of works which are not registered with the Copyright Office, and Image responds that registration is not required because it has asserted a claim under VARA, Idearc is entitled to summary judgment.¹²

12 At oral argument on the Motion, Image orally moved for leave to amend its Complaint to include a claim under VARA to the extent that the Court did not believe it had alleged such a claim. The Court indicated that it would not consider an oral motion for leave to amend, since Idearc's counsel stated that it too was surprised to learn during the hearing that Image was asserting a claim under VARA. The Court therefore directed Image's counsel to file a motion seeking leave to amend its Complaint so that Idearc would have the opportunity to respond. Image has not, to date, filed such a motion.
Further, the Court indicated at the hearing that the filing of a motion for leave to amend would not affect the Court's consideration of the pending, briefed and fully argued Motion. A plaintiff may not amend its complaint through argument in a brief opposing summary judgment. Thampi v. Manatee County Bd. Of Comm'rs, 384 Fed Appx. 983, 988 (11^th Cir. 2010). The Complaint was filed two years ago. Although its prosecution was stayed by Idearc's bankruptcy filing, Image never sought relief from the automatic stay to continue its litigation, or for the limited purpose of conducting discovery. When a party seeks to amend its complaint at a late stage of the litigation, there is an increased burden to show justification for failing to move earlier, and Image has not provided any explanation for its delay. Southwest Intelecom Inc. v. Compass Bank, 253 Fed. Appx. 372, 376 (5^th Cir. 2007) ("when, as here, motions to amend are particularly late, the movant must `meet the burden of showing that the delay was due to oversight, inadvertence, or excusable neglect, a burden which properly shifts to the party seeking to amend where apparent lack of diligence exists.'").

Image's second response is that while it has only registered four works since 2002, it may still register more works and amend its Complaint to include them, and therefore summary judgment at this stage is inappropriate. Specifically, Image argues:

Image may well need to register additional copyrights for the more than 200 original artworks it has created after 2002. The Plaintiff can discover an infringement, file a complaint, then file a registration with the U.S. copyright office [sic]. Case law indicates that courts allow a plaintiff subsequent to the initial filing of a complaint, to register and deposit work, and thereafter appropriately amend the complaint, without the necessity of filing a new action.

Image Opp. To Debtors' Mot. For Summ. J. And Attorney's Fees, p. 12.

In response, Idearc argues that

it is irrelevant that Image One claims to have additional works that it intends to register at some indeterminate, future date and then seek leave to sue upon. Even if leave were granted over Idearc's objection Section 411(a) of the Copyright Act makes clear that the complaint as to those registrations cannot be deemed to have been filed before registration, and it is clearly too late, after confirmation of the Debtors' plan of reorganization, for Image One to be bringing such claims now.

Idearc's Reply Mem., p. 7. Further, Idearc argues, citing 17 U.S.C. § 412(2), that

any claim Image might assert based on newly registered works would be limited to seeking actual damages and profits; there could be no recovery of statutory damages and attorney's fees for infringements that commenced prior to registration if the plaintiff fails to register its copyright within three months of the date of its initial publication of the copyrighted work.

Idearc's Reply Mem., p. 7, n. 8.

Both parties are asking this Court to engage in speculation and to render what would essentially be advisory rulings. Image has not registered more works with the Copyright Office. Image has not sought leave to amend to add claims based on those not-yet-newly-registered works. Idearc has not moved for summary judgment with respect to Image's right to statutory damages on its hypothetical newly-amended complaint based upon those not-yet-newly registered works. The Court declines to offer an opinion as to how it may or may not rule with respect to those as-yet-unfiled motions. Rather, the Court will rule only upon the motion before it — ie., Idearc's Motion with respect to the Complaint to the extent it attempts to allege infringement of works which have not yet been registered with the Copyright Office. And, as noted earlier, the Court concludes that Idearc is entitled to summary judgment to the extent that the Complaint is read to allege infringements of works which are not registered with the Copyright Office.

E. Claims under the Lanham Act

Section 43(a) of the Lanham Act provides in part as follows:

(a) Civil action

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which —

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a). Section 32 of the Lanham Act provides protection to registered marks; Section 43(a) protects against infringement of unregistered marks and trade dress; it also protects against a wider range of practices, such as false advertising and product disparagement. Brookfield Commun., Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1047 n. 8 (9^th Cir. 1999).

Here, Idearc contends that the Complaint sets forth two theories for liability under the Lanham Act — infringement of "trade dress" and "passing off." As to both theories, Idearc first argues that the claims are barred by the Settlement Agreements because Section 6 of each Settlement Agreement granted Idearc an unqualified license to, among other things, create derivative works, in any form (including electronic and digital form) and perform any and all acts which in the absence of this license would be an infringement."

For the reasons set forth above, however, the Court finds that the interplay between Section 6 and Section 7 of each Settlement Agreement creates an ambiguity that precludes this Court from construing the Settlement Agreements as a matter of law. Accordingly, the Motion must be denied as to this argument.

1. Trade dress infringement

As to the trade dress theory of liability, Idearc next argues that the Complaint alleges no facts from which Idearc could be found liable.¹³ Specifically, Idearc first argues that a claim for trade dress infringement must plead "a precise expression of the character and scope of the claimed trade dress." Idearc's Brief, p. 13. Although Idearc concedes that Image alleges that its advertisements are `high-end,' `inherently distinctive,' and `unique and distinctive," those descriptions are "uninformative puffery." Idearc's Brief, p. 14. Additionally, Idearc asserts that the Complaint's reference to `three-dimensional' images is insufficient, because although the examples attached to the Notice of Lodgment contain some photographs of 3D objects, such photographs are common in all sorts of advertising and cannot constitute the type of distinctive feature necessary to amount to protected trade dress.¹⁴

13 Procedurally, this is somewhat anomalous in the current context of an objection to a proof of claim. Idearc has moved for summary judgment on its objection to the Claim, but essentially asserts a standard that would normally apply to a motion to dismiss a complaint for failure to state a claim.

14 Idearc has presented no evidence to support its factual assertion and no citation to legal authority for its legal conclusion.

Second, Idearc argues that a claim for trade dress infringement must also plead "sufficient facts for the court to determine whether the trade dress [is] nonfunctional." Idearc's Brief, p. 14. Idearc argues that the statement in the Complaint that the features of Image's advertisements make them "four times more effective" than other advertising establishes as a matter of law that Image's alleged trade dress is functional¹⁵ — a conclusion which precludes Image's Lanham Act claim.

15 Under 17 U.S.C. § 1125(a)(3), the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.

Image's brief in response to the Motion does not address these claims at all. Image has offered no legal argument, or citations to authority, respecting its Lanham Act claims.¹⁶

16 The Court inquired of Image at the hearing on the Motion as to whether Image in fact opposed Idearc's Motion as to the Lanham Act claims. Counsel for Image indicated that Image believed it had opposed the Motion by filing its "Statement in Response to Debtor's Material Undisputed Facts in Opposition" to Idearc's Motion (the "Statement"). The Statement, however, does not purport to refute anything but facts, and takes no issue with the legal arguments in Idearc's brief. When the Court pointed this out, Image's counsel asked for the opportunity to file a brief, but to date it has not done so.

Turning first to the "trade dress" theory of the Lanham Act claim, the Court notes that the term "trade dress" refers to the total image of a product; its design and features along with the elements that serve to identify the product to consumers, Autodesk, Inc. v. Dassault Systemes Solidworks Corp., 685 F. Supp. 2d 1001 (N.D. Cal. 2009); Sherwood 48 Assoc. v. Sony Corp. Of America, No. 02-9100, 2003 WL 22229422 (2^nd Cir. Sept. 29, 2003), and may include features such as size, shape, color, color combinations, texture or graphics. Smith Hawken, Ltd. v. Gardendance, Inc., No. C04-1664-SBA, 2004 WL 2496163 at *3 (N.D. Cal. Nov. 5, 2004). In evaluating a trade dress claim, "a court must not focus on individual elements, `but rather on the overall visual impression that the combination and arrangement of those elements create' . . . trade dress is the composite tapestry of visual effects." Sleep Science Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770 at *3 (N.D. Cal. May 10, 2010) (quoting Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1259 (9^th Cir. 2001). Trade dress constitutes a "symbol" or "device" within the meaning of the Lanham Act. Wal-Mart Stores v. Samara Bros., 529 U.S. 205, 210 (2000).

To state a claim for trade dress infringement, the plaintiff must allege facts showing (1) distinctiveness, either inherent or acquired through secondary meaning, ¹⁷ (2) nonfunctionality, and (3) a likelihood of confusion by consumers through the infringing use. DocMagic, Inc. v. Ellie Mae, Inc., No. C 09-04017 MHP, 2010 WL 3987495 (N.D. Cal. Oct. 12, 2010). The plaintiff must also provide "detail and clarify the total appearance of the product that the plaintiff claims is the trade dress at issue." Autodestk, Inc. v. Dassault Sys. SolidWorks, Corp., No. C 08-04397 WHA, 2008 WL 6742224 at *5 (N.D. Cal. Dec. 18, 2008). In other words, the plaintiff must plead a "precise expression of the character and scope of the claimed trade dress." Sherwood 48 Assoc. v. Sony Corp. Of America, No. 02-9100, 2003 WL 22229422 at *2 (2^nd Cir. Sept. 29, 2003).

17 Trade dress is distinctive when it identifies the particular source of the product or distinguishes it from other products. Autodesk, Inc. 685 F.Supp.2d at 1013. Distinctiveness through secondary meaning is acquired when the purchasing public associates the mark or dress with a single producer or source rather than with the product itself. Id. Distinctiveness through secondary meaning is properly alleged where the plaintiff alleges that its use of the trade dress at issue was long-standing and exclusive and that users of the product knew that the goods or services were being provided by the plaintiff based on the trade dress, such that the trade dress primarily identified the source of the product, rather than merely identifying the product itself. DocMagic, 2010 WL 3987495 at *10.

As noted above, Idearc contends that the Complaint does not adequately describe the alleged trade dress, because the Complaint's description of the alleged trade dress, i.e., the adjectives "unique," "high-end" and "distinctive" are uninformative, and because the examples of "three-dimensional images" attached to the Notice of Lodgment merely contain photographs of 3D objects, which are common in advertisements and therefore "cannot constitute the type of distinctive feature necessary to amount to protected trade dress."¹⁸ For the reasons explained more fully below, the Court agrees that Image has not adequately described its trade dress in the Complaint and has failed to raise a genuine issue of material fact that its claimed "trade dress" is protectable under the Lanham Act.

18 Idearc's argument appears to be that because the Complaint does not adequately describe the trade dress, the trade dress may not be protectable as such because it may not be "distinctive."

In Sherwood 48 Associates v. Sony Corp. Of America, No. 02-9100, 2003 WL 22229422 (2^nd Cir. 2003), the Second Circuit affirmed the grant of judgment on the pleadings under Rule 12(c) where the plaintiff described the alleged trade dress in their complaint as simply "the unique configuration and ornamentation" and the "advertising and signage display" on several buildings in Times Square, New York. The Circuit characterized the plaintiffs' description as "vague and overbroad" with respect to the alleged trade dress, and noted that the plaintiffs had "fail[ed] to identify the specific elements that comprise each building's identifiable trade dress." Id. at *2. In Smith Hawken, Ltd. v. Gardendance, Inc., No. C04-1664-SBA, 2004 WL 2496163 (N.D. Cal. Nov. 5, 2004), the court dismissed a complaint which "offered no explanation as to the nature, scope or elements making up its allegedly protectable `trade dress,'" in part because the plaintiff failed to plead with specificity how the trade dress was unique and inherently distinctive and merely mimicked the language of the statute. In Accuimage Diagnostics Corp. v. Terarecon, Inc., 260 F. Supp. 2d 941 (N.D. Cal. 2003), the plaintiff alleged that (1) its software produced a calcium scoring and diagnostic report that was proprietary, unique and distinctive in the medical imaging applications industry, (2) the look and feel of the reports generated by the software were non-functional, (3) the defendant's report copied the overall look and feel of plaintiff's report such that the two reports were virtually indistinguishable, and (4) consumers would likely be confused. The court found these allegations insufficient to state a claim for trade dress infringement, because the plaintiff did not plead with specificity how its reports were unique and inherently distinctive, and plaintiff did not provide detail about "the layout and appearance of the report." In Sleep Science Partners v. Lieberman, No. 09-04200 CW, 2010 WL 1881770 at *3 (N.D. Cal. May 10, 2010), the plaintiff sought trade dress protection of its website. The court described the allegations of the complaint in that case as follows:

[The plaintiff] pleads that its website's features include (1) the ability to view SSP's television commercial; (2) user testimonials; (3) the screening questionnaire; and (4) the PureSleep Method." Compl. ¶ 31. It also alleges that other components of the website's "design, look and feel are more subtle including, but not limited to, the size and location of text, the size and location of graphics, the features that it offers and the location of hyperlinks of those features." Id. Plaintiff then describes several other website design elements. Compl. ¶ 51. Although it has cataloged several components of its website, Plaintiff has not clearly articulated which of them constitute its purported trade dress. Notably, Plaintiff employs language suggesting that these components are only some among many, which raises a question of whether it intends to redefine its trade dress at a future stage of litigation. Without an adequate definition of the elements comprising the website's "look and feel," [the defendant] is not given adequate notice.

Sleep Science Partners, 2010 WL 1881770 at *3. The court dismissed the complaint, stating that a plaintiff "must articulate more clearly what constitutes its trade dress." Id. at *4.

Here, Image pleads much less. In fact, it does not articulate the elements comprising its alleged trade dress at all. It describes what it is seeking to protect as "unique and original images and composites," Compl. ¶ 6, "high-end three-dimensional graphic art," Compl. ¶ 7, "high-end graphics," Compl. ¶ 8, "unique and distinct images," Compl. ¶ 9, "original and innovative artwork" of "superior quality," Compl. ¶ 10, "high-end graphic advertisements," Compl. ¶ 26, "high-end, inherently distinctive, three-dimensional yellow page advertisements", Compl. ¶ 56, and as artwork having a "unique and distinctive configuration," Compl. ¶ 58. Nowhere does the Complaint specify why Image believes its artwork is "unique," "high-end," "distinctive," or "three-dimensional," or any of the elements that allegedly make it such.

Had this motion been filed as a motion to dismiss for failure to state a claim, the Court would be testing the sufficiency of the Complaint in light of the liberal pleading standards of Rule 12(b)(6). However, "there is a crucial difference in timing when the sufficiency of a complaint arises at the summary judgment stage after a plaintiff has had an opportunity for discovery." Carter v. Ford Motor Co., 561 F.3d 562, 567 (6^th Cir. 2009). At the summary judgment stage, the liberal pleading standards are inapplicable. Id. Here, Image has had the opportunity to conduct discovery.¹⁹ It has neither amended its Complaint nor sought leave to do so.²⁰ It has not briefed the sufficiency of its pleadings in response to Idearc's Motion, and it has not come forth with any evidence in the response to the Motion. The Court therefore concludes that summary judgment is appropriate in Idearc's favor with respect to Image's trade dress theory on the infringement claim pled in Count IV of the Complaint, for failure to allege, no less raise a genuine issue of disputed material fact with respect to, the protectability under the Lanham Act of Image's claimed trade dress.

19 As discussed more fully below, Image has conducted only limited discovery, pursuant to an alleged agreement with Idearc. As Image conceded at the hearing and in its pleadings, Image "did not want to throw good money after bad by conducting full blown discovery relating to allegations of infringement for yellow page directories throughout the United States." Image One's Opp. To Debtors' Mot. For Summ. J. And Attorney Fees, p. 3. Therefore, Image alleges that it has only reviewed a sampling of Idearc's directories. Although Image has filed a motion under Rule 56(f), the Court notes that the discovery which Image alleges it needs in that motion relates to communications from Idearc's art departments so Image can determine who made the decision to remove Image's copyright notices from Image's work and the circumstances under which that decision was allegedly made. Image also seeks to review all of Idearc's yellow page directories. Image does not identify how any of that discovery will help it to adequately describe its trade dress.

20 As noted elsewhere in this Memorandum Opinion and Order, Image orally moved at the hearing on the Motion for leave to amend its Complaint. However, it sought leave to amend to include a claim under VARA, not to amplify its allegations with respect to its claims under the Lanham Act.

In addition, the Court concludes that Image has also failed to adequately allege and raise a genuine issue of disputed material fact with respect to the nonfunctionality of its claimed trade dress. The purpose of the nonfunctionality requirement reflects the theory "that there exists a fundamental right to compete through imitation of a competitor's product, which right can only be temporarily denied by the patent or copyright laws." Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 515 (9^th Cir. 1989). Therefore, when a product is useful, trademark protection "cannot be used to extend the life of the useful invention by protecting the design from competition." Aurora World, Inc. v. Ty Inc., 719 F. Supp. 2d 1115, 1146 (C.D. Cal. 2009). As to functionality, a product feature is functional and cannot serve as a trademark if the product feature is "essential to the use or purpose of the article or if it affects the cost or quality of the article, that is, if exclusive use of the feature would put competitors at a significant, non-reputation-related disadvantage." Id. In determining functionality, the Ninth Circuit also considers the following factors: (1) whether advertising touts the utilitarian advantages of the design, (2) whether the particular design results from a comparatively simple or inexpensive method of manufacture, (3) whether the design yields a utilitarian advantage, and (4) whether alternative designs are available. Autodesk, Inc. V. Dassault Systems SolidWorks Corp., 685 F. Supp.2d 1001, 1008 (N.D. Cal. 2009).

Here, the Complaint alleges no facts, and Image has come forth with no evidence, to support a finding that its claimed trade dress is nonfunctional. Its Complaint is simply silent on this point. As nonfunctionality is an essential element of its trade dress infringement claim, Image's claim fails as a matter of law.

2. "Passing Off"

Idearc characterizes Image's Complaint as asserting a "passing off" theory under the Lanham Act. The act of "passing off" occurs "when a producer misrepresents his own goods or services as someone else's." Dastar v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28 n. 1 (2003). "Reverse passing off," which is also actionable, "is the opposite:[t]he producer misrepresents someone else's goods or services as his own." Id. Idearc asserts that Image's claim is "flatly precluded" by the decision of the United States Supreme Court in Dastar v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). Idearc asserts that the Dastar case held that the doctrine of "passing off" protects only " tangible goods that are offered for sale, and not . . . any idea, concept or communication embodied in those goods." Idearc's Brief, pp. 13-14.

The Court concludes that Idearc's Motion must be denied. First, taking Idearc at its word that Dastar limits Lanham Act protection to tangible goods, the Court simply has no idea whether the items that the Complaint alleges were passed off are tangible goods or not. The Complaint describes the subject of Image's claims as "unique advertisements," and Image says that it "creates new and original artwork to develop unique and distinct images which it then incorporates into templates for use in advertising." Compl. ¶ 8. The portion of the Complaint that relates specifically to the Lanham Act claims refers simply to "artwork." Compl. ¶¶ 58-61. Neither side has provided the Court with any evidence as to how the "artwork" or "templates" are created, processed, manufactured, or embodied — or whether they are embodied or not.²¹ The Court has no evidence as to whether Image's advertising "templates" are physical, tangible items or not. As a result, the Court is unable to assess whether the rule of Dastar as Idearc describes it even applies. Therefore, Idearc's Motion is denied as to the "passing off" claim asserted in the Complaint.

21 Image alleges, and Idearc does not dispute, that Image has obtained copyright registrations for some of its work. The Court notes that copyright protection only extends to "original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 102(a).

F. Claims under California Bus. Prof. Code § 17200

Idearc asserts, without citation to any authority whatsoever, that Image has not pled a proper claim under Section 17200 of California's Business Professions Code. The Complaint alleges that Idearc violated the statute by

selling advertisements to [Idearc's] customers that violated [Image's] copyright and in representing such advertisements to be the property of [Idearc] which [Idearc] further represented that they could sell to [Idearc's] purchasers. In thus unfairly, falsely and fraudulently representing [Image's] art work to be the property of [Idearc], and in misappropriating the use of said art work without [Image's] consent, [Idearc] engaged in unfair business practices.

Idearc advances three bases for its contention that Image's Complaint fails. First, Idearc argues that since Image's copyright claims are an essential predicate of this cause of action, the cause of action fails for the same reasons that Idearc contends Image's copyright claims fail. However, the Court has concluded that summary judgment is not appropriate with respect to the copyright claims. Thus, the Court rejects Idearc's first argument. Second, Idearc argues that Image fails to identify which Image One property Idearc misrepresented to be its own, and that even as to the specific examples in the Complaint, Image doesn't disclose whether it owns the layout, the image, or some other component and when the various elements were created, which, for reasons unarticulated by Idearc, Idearc contends "is important due to the settlement agreements." Last, Idearc argues that the Copyright Act preempts state laws that protect equivalent rights, ²² because Idearc argues that the theory of Image's Complaint precisely overlaps 17 U.S.C. § 196(3), which grants copyright owners the exclusive right to distribute copies of the copyrighted work to the public. Since Idearc contends that Image alleges improper application of a copyright notice, Idearc argues that Image's claim is preempted.

22 Idearc cites to 17 U.S.C. § 301(a).

As to these latter two bases for summary judgment, the Court denies Idearc's Motion without prejudice. Further explanation is required. In this district, as in most others, a summary judgment motion "must be accompanied by a brief that sets forth the argument and authorities on which the party relies . . ." N.D. Tex. L.B.R. 7056-1.²³ The section of Idearc's brief addressing Image's claim under Section 17200 of California's Business Professions Code fails to cite even a single case. Idearc does not provide the Court with (1) the text of California's statute, (2) a recitation of the elements needed to plead and prove a claim under Section 17200, ²⁴ (3) any decisional authority with respect to the doctrine of preemption in general or the section of the Copyright Act addressing preemption, ²⁵ or (4) any decisional authority respecting the intersection of the Copyright Act and California's statute. The scant legal analysis that Idearc provides does not enable the Court to determine whether the gravamen of Image's unfair competition claim under California's statute is coterminous with a right protected by the Copyright Act, although the Court suspicions that it is. However, as counsel for Idearc is no doubt aware, the bankruptcy courts are specialized fora. The daily, monthly or even yearly work of the Court does not involve copyright law, the Lanham Act or California's unfair competition statute, no less the interplay between them. The Court is thus asked to interpret statutes in a completely foreign, and highly specialized, area of the law, in which there is a voluminous body of case law, and is asked to do so without any effective assistance from either party. The Court, which has over 3,500 active cases and another 120 adversary proceedings pending before it, declines to do so in the face of Idearc's failure to comply with the spirit, if not the letter, of the Local Rules.²⁶ See, e.g. Telles v. City of El Paso, No. EP-03-CA-0528-KC, 2006 WL 5159515 at *1 (W.D. Tex. Apr. 18, 2006) (denying without prejudice motions for summary judgment which failed to provide "citation to applicable legal authority, explanation of said authority and then application of the facts of the case with specific reference to record evidence to said authority").

23 The Motion was filed on August 23, 2010, a week prior to the enactment of the current version of the Local Bankruptcy Rules of the United States Bankruptcy Court for the Northern District of Texas. However, the prior version of the local rules incorporated District Court Local Civil Rule 7.1 of the United States District Court for the Northern District of Texas. District Court Local Civil Rule 7.1 provided that "an opposed motion must be accompanied by a brief that sets forth the moving party's contentions of fact and/or law, and argument and authorities. . . . "

24 The Court's independent research reveals that Section 301 of the Copyright Act will preempt a state law claim where two elements are satisfied: (1) the rights asserted by the plaintiff under the state law are rights that are equivalent to those protected by the Copyright Act, and (2) the work involved falls within the subject matter of the Copyright Act as set forth in 17 U.S.C. §§ 102 and 103. MB Technologies, Inc. v. Oracle Corp., 2010 WL 1576686 at *2 (N.D. Cal. Apr. 19, 2010). The state law claim will not be preempted, however, where the state law claim contains an element that "changes the nature of the action so that it is qualitatively different from a copyright infringement claim." Id. (quoting Summit Mach. Tool Mfg. Co. v. Victor CNC Sys., Inc., 7 F.3d 1434, 1440 (9^th Cir. 1993)).

25 The subject of preemption by the Copyright Act has engendered, in the most recent ten years, over 25 law review articles by the Court's count. See, e.g., Larry A. Silverman, Dryer v. NFL: Can the `Voice of God' Save NFL Films? Conflict Preemption under Copyright Law May be the Best Defense, 28 SPG Ent. Sports Law. 1 (Spring 2010); Thomas F. Cotter Irina Y. Dmitrieva, Integrating the Right of Publicity with First Amendment and Copyright Preemption Analysis, 22 Colum. J.L. Arts 165 (Winter 2010); James M. Chadwick, The Copyright Act's Preemption of Right of Publicity Claims, 25 JUL Comm. Law 3 (July 2008); Christina Bohannan, Copyright Preemption of Contracts, 67 Md. L. Rev. 616 (2008); Viva R. Moffat, Super-Copyright: Contracts, Preemption and the Structure of Copyright Policymaking, 41 U.C. Davis L. Rev. 45 (2007); J. Scott Anderson, Painstaking Semantics: Selecting Website Trade Dress Elements to Survive a Copyright Preemption Challenge, 7 J. Marshall Rev. Intell. Prop. 7 (Fall 2007).

26 The Court has expended enormous resources in addressing Idearc's Motion with respect to Image's Copyright and Lanham Act claims and notes that Idearc's Motion with respect to the Lanham Act claims suffered from many of the same infirmities. Inadequate briefing by the parties often results in delay, which runs counter to the Code's overriding policy that "bankruptcy cases be handled in a speedy and expeditious manner." In re Dittmar, 618 F.3d 1199, 1212 (10^th Cir. 2010). See also In re Gandy, 299 F.3d 489, 498 (5h Cir. 2002) ("a central purpose" of the Bankruptcy Code is "the expeditious and equitable distribution of the assets of the Debtor's estate").

G. The Conspiracy Claim

Idearc points out that a conspiracy claim is not an independent claim, but rather a basis for spreading liability for some other wrong. Since Idearc believes that all of Image's other claims fail, Idearc contends that the conspiracy claim fails. While the Court agrees with Idearc's initial premise, Idearc's Motion is largely denied with respect to Image's other substantive counts, as set forth in detail above. Therefore, the Court rejects Idearc's argument that the conspiracy claim fails because all other claims have fallen.

The only other basis for judgment in its favor on the conspiracy claim that Idearc advances is that although the Complaint alleges an "agreement," Image provides no facts to support that allegation and thus the Complaint should be dismissed. Idearc did not provide the Court with any legal authority in support of its assertion except Bell Atl. Corp. v. Twonbly, 550 U.S. 544 (2007). Twombly sets forth the appropriate standard under Fed.R.Civ.P. 12(b)(6). Idearc did not provide the Court with any legal authority respecting the elements of a conspiracy claim under California law, or any legal authority respecting what must be plead in order to adequately allege each of those elements. Image did not respond to Idearc's arguments in its opposition to the Motion. For the same reasons set forth in the Court's discussion of Idearc's Motion with respect to Section 17200 of California's Business and Professions Code, Idearc's Motion is denied without prejudice with respect to the conspiracy count of Image's Complaint. H. Attorney's Fees

Idearc contends that it is entitled to recovery of its attorney's fees as a matter of law on two theories. First, Idearc seeks a declaration that Image is liable for Idearc's attorney's fees because the filing of Image's Complaint is a breach of the Settlement Agreements. Each of the Settlement Agreements²⁷ contains a provision which states:

27 The quoted provision appears at Section 9 of the Settlement Agreement with GTE and at Section 8 of the Settlement Agreement with Bell Atlantic.

Each of the Parties agrees, promises and covenants to each other that it will not initiate, file or seek to initiate any arbitration or file any legal action in a court, tribunal, or any other forum against the other, for any claim, known or unknown, which presently exists, existed in the past or may arise in the future, which has been released pursuant to the terms of this Agreement. In the event a party to this Agreement hereafter commences any legal action against one of the other parties to enforce any of the terms of this Agreement, the prevailing party shall be indemnified by the losing party for all costs and expenses incurred, including reasonable attorney's fees.

Idearc argues that since Image alleges in its Complaint infringements of works "covered by the Settlement Agreements and to which Idearc holds an unqualified, perpetual license," Idearc's Brief, p. 20, Idearc is entitled to attorney's fees as damages for Image's breach of that provision.

Idearc does not parse through the language of that provision or further elucidate its basis for concluding that it is entitled to attorney's fees. To the extent that Idearc is arguing that it is entitled to be indemnified for its attorney's fees as the "prevailing party," the Court disagrees, as Idearc has not yet prevailed. To the extent that Idearc relies instead on the first sentence of the indemnification provision — i.e., Idearc contends that Image breached the promise not to assert a claim "which has been released pursuant to the terms of" the Settlement Agreements, that claim fails too because even assuming that the causes of action asserted in Image's Complaint constitute causes of action that were released under the definitional language contained in the indemnification provision, Idearc has not shown its entitlement to a recovery of attorney's fees as damages for breach of the Settlement Agreements in the present context. Further explanation is required.

Idearc's Motion is a motion for summary judgment on its objection to the Claim Image filed in Idearc's bankruptcy case. Idearc's objection to Image's Claim does not contain any request for affirmative relief against Image — i.e., Idearc's objection to claim simply seeks disallowance of the Claim. Therefore, the relief sought in the Motion goes beyond the relief sought in the underlying objection to claim. More importantly, Idearc's claim objection could not properly seek affirmative relief against Image such as damages for breach of contract. Federal Rule of Bankruptcy Procedure 3007(b) provides that a "party in interest shall not include a demand for relief of a kind specified in Rule 7001 in an objection to the allowance of a claim, but may include the objection in an adversary proceeding." Federal Rule of Bankruptcy Procedure 7001 provides that an adversary proceeding is, among other things, a proceeding to recovery money or property. The combined effect of these rules here is that if Idearc wanted damages for breach of the Settlement Agreements, it was required to file an adversary proceeding and is precluded from seeking such relief in its objection to Image's Claim.

Perhaps recognizing this significant deficiency, Idearc instead contends that it need not file a breach of contract action against Image to recover these damages because California law permits enforcement of settlement agreements by motion procedure, citing to Weddington Prods., Inc. v. Flick, 60 Cal. App. 4^th 793, 809 (1998) and Malouf Bros. v. Dixon, 230 Cal. App. 3d 280, 283 (1991). However, both of the cases upon which Idearc relies in turn rely on a provision in the California Code of Civil Procedure as the source of authority for authorizing enforcement of a settlement agreement through motion practice rather than an independent lawsuit — i.e., Section 664.6 of the California Code of Civil Procedure. To the extent that Section 664.6 conflicts with the Federal Rules of Bankruptcy Procedure, it must yield. Renaissance Ribbons, Inc. v. Hadley Pollet, L.L.C., No. 2:07-CV-1271-JAM-DAD, 2008 WL 5179096 (E.D. Cal. Dec. 8, 2008) (unreported decision). Moreover, at least one bankruptcy case has held that Section 664.6 does not apply in a bankruptcy proceeding. In re Lipid Sciences, Inc., No. 08-45683 TD, 2009 WL 2849116 (Bankr. N.D. Cal. July 28, 2009). In addition, Section 664.6 would provide no assistance to Idearc, even if the Court were to find it governed in the context of the Motion. Section 664.6 provides:

If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

As should be clear from the plain language of the statute, it creates a summary, expeditious procedure to enforce settlement agreements in pending litigation, by the court in which the action is pending and which approved the settlement. It does not apply in a civil action unrelated to the alleged settlement and therefore containing no provision for continuing jurisdiction to enforce it. Walton v. Mueller, 180 Cal. App. 4^th 161 (App. 4^th Dist. 2006). In other words, had the parties to the Settlement Agreements provided in those Agreements for continuing jurisdiction to enforce its terms, then the courts which approved those settlements — i.e., the United States District Court for the Southern Districts of California and New York — could have enforced the Settlement Agreements through the motion for judgment contemplated by Section 664.6. However, "a party may not enforce a settlement agreement under Cal. Code Civ. Proc. § 664.6 through a new action." Renaissance Ribbons, 2008 WL 5179096 at *2; Viejo Bancorp v. Wood, 217 Cal. App. 3d 200, 208 (App. 4^th Dist. 1989) ("we hold, therefore, that a motion under Code of Civil Procedure section 664.6 cannot be made in a separate action to enter judgment pursuant to the terms of a settlement in a prior action").

Idearc also argues that it is entitled to recovery of its attorney's fees under the Copyright Act, which provides:

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.

See 17 U.S.C. § 505.

Because the Court has concluded that Idearc's Motion with respect to the copyright claims must be denied, Idearc is not yet the prevailing party, and may never be the prevailing party.²⁸ An award of attorney's fees under the Copyright Act would be premature. Thus, the Motion is denied as to Idearc's request for a recovery of attorney's fees.

28 The Court has, however, granted Idearc's Motion to the extent that Image's Complaint alleges infringement as to works which are not registered with the Copyright Office. However, the Court declines to exercise its discretion to award attorney's fees at this time on this singular, and not clearly pled, claim.

I. Image's Motion under Rule 56(f) ²⁹

29 As of December 1, 2010, the substance of Rule 56(f) now appears in Rule 56(d) of the Federal Rules of Civil Procedure.

Image requests, citing Rule 56(f), that the Court deny Idearc's Motion or continue it to allow Image to complete discovery in order to fully respond to Idearc's Motion. Image argues that Idearc's Motion is premature, as the parties have not completed discovery. Specifically, Image alleges that it has not yet reviewed the large number of yellow pages directories published by Idearc between 2006 and 2009. Image further asserts that it needs to review communications from Idearc's art department so it can determine "who made the decision" to remove Image's copyright notice from Image's artwork and replace it with Idearc's copyright notice, because "such information will tend to lead to the discovery of admissible evidence on the alleged copyright infringements and the alleged knowing and intentional acts by Idearc." Image's Request to Deny the Mot. Or Continue it to Allow Discovery, and/or Mot. To Suspend Hrg. Pending Completion of Discovery, p. 2.

The standard for resisting a summary judgment motion on the ground that more discovery is required is set forth as follows:

Because the burden on a party resisting summary judgment is not a heavy one, one must conclusively justify his entitlement to the shelter of rule 56(f) by presenting specific facts explaining the inability to make a substantive response as required by rule 56(e) and by specifically demonstrating `how postponement of a ruling on the motion will enable him, by discovery or other means, to rebut the movant's showing of the absence of a genuine issue of fact.' The nonmovant may not simply rely on vague assertions that additional discovery will produce needed, but unspecified, facts, particularly where, as here, ample time and opportunities for discovery have already lapsed. The determination of the adequacy of a nonmovant's rule 56(f) affidavits and the decision whether the grant a continuance thereon rests in the sound discretion of the trial court.

SEC v. Spence Green Chem. Co., 612 F.2d 896, 901 (5^th Cir. 1980) (citations omitted).

Rule 56(f) discovery motions are "broadly favored and should be liberally granted" because the rule is designed to "safeguard non-moving parties from summary judgment motions that they cannot adequately oppose." Culwell v. City of Fort Worth, 468 F.3d 868, 871 (5th Cir. 2006). However, a request to stay summary judgment must "set forth a plausible basis for believing that specified facts, susceptible of collection within a reasonable time frame, probably exist and indicate how the emergent facts, if adduced, will influence the outcome of the pending summary judgment motion." Raby v. Livingston, 600 F.3d 552, 561 (5^th Cir. 2010). Moreover, if it appears that further discovery will not provide evidence creating a genuine issue of material fact, the court may grant summary judgment. Id.

Here, the Court concludes that Image's request to either deny or continue the Motion to allow discovery is largely moot, because the Court has largely denied Idearc's Motion, as set forth above. To the extent, however, that the Court has granted Idearc's Motion — i.e., with respect to Image's Lanham Act claim on a "trade dress" theory, Image has not identified any discovery that it seeks with respect to its trade dress claim or how that discovery would help it to resist Idearc's Motion. Similarly, although the Court has granted Idearc's Motion to the extent that Image's Complaint alleges infringement as to works that are not registered with the Copyright Office, Image has not identified any discovery that would enable it to resist Idearc's Motion, and it appears that no amount of discovery will cure Image's failure to register its works prior to suit. Therefore, Image's request under Rule 56(f) is denied, because it is moot with respect to some claims, and because Image has failed to satisfy the Rule 56(f) standards on its other claims.

II. CONCLUSION

With respect to Image's claims for copyright infringement, vicarious copyright infringement and contributory copyright infringement, Idearc's Motion is denied as to works registered with the United States Copyright Office after December 31, 2001, as an infringement action with respect to those works is not barred by the Settlement Agreements, for the reasons set forth herein. Idearc's Motion is also denied with respect to works registered with the United States Copyright Office prior to December 31, 2001, as the Court concludes that the Settlement Agreements are ambiguous. To the extent that Image's Complaint alleges infringement as to works that are not registered with the Copyright Office, Idearc's Motion is granted.

With respect to Image's claim under the Lanham Act on a "trade dress" theory, Idearc's Motion is granted, because although the Court is unable to conclude that the claim is barred by the Settlement Agreement due to its ambiguity, Image has failed to raise a genuine issue of material fact that its works are distinctive and nonfunctional. With respect to Image's claim under the Lanham Act on a "passing off" theory, Idearc's Motion is denied as Idearc's Motion seeks judgment on the basis that a Lanham Act protects only tangible goods and Idearc has failed to offer evidence that Image's goods are not tangible.

With respect to Image's claims under California Business and Professions Code Section 17200, Idearc's Motion is denied without prejudice as Idearc has failed to comply with N.D. Tex. L.B.R. 7056-1.

With respect to Image's claim for civil conspiracy under California law, Idearc's Motion is denied without prejudice as Idearc has failed to comply with N.D. Tex. L.B.R. 7056-1.

Idearc's Motion is denied with respect to Idearc's request for attorney's fees.

Image's request under Rule 56(f) is denied as moot with respect to the claims identified above, and on the merits with respect to the trade dress infringement claim and the copyright infringement claims to the extent they are based upon works not registered with the United States Copyright Office.

SO ORDERED.

The following constitutes the ruling of the court and has the force and effect therein described. Signed January 21, 2011