Opinion
Civil Action No. 3:00-CV-0314-L
February 28, 2002
MEMORANDUM OPINION AND ORDER
Before the court are Defendants Motion for Summary Judgment, filed August 31, 2000; Plaintiff's Motion for Leave to Amend Complaint, filed March 13, 2001; Defendant Terry Hendricks Pathos' Supplemental Motion for Summary Judgment, filed January 14, 2002; and Plaintiff's Motion to Strike Under FRCP 12(f), filed February 8, 2002. After careful consideration of the motions, responses, reply, evidence submitted, and applicable law, the court denies Plaintiff's motion for leave to amend, grants Defendant's summary judgment motion, grants Defendant's supplemental motion for summary judgment, and denies as moot Plaintiff's motion to strike.
Plaintiff's original complaint names Terry Hendricks Pathos ("Pathos") and NKN Technologies, Inc. ("NKN Technologies") as Defendants in this action. On March 12, 2001, the court dismissed this action against NKN Technologies with prejudice pursuant to the parties' stipulation of dismissal. Pathos is the only remaining Defendant. When the court uses the term "Defendant" it is referring to Pathos, unless otherwise stated.
The official title of Plaintiff's motion is "Motion for Leave to Amend Complaint for Contributory and Vicarious Copyright Infringement; and Common Law Unfair Competition; and Dilution." The court observes that such a title is unnecessarily lengthy and cumbersome and serves no discernible purpose in resolving the motion. Parties are therefore strongly encouraged to avoid such overkill in designating or titling their motions.
Plaintiff Sefton did not file a reply to Defendant Pathos's Response and Opposition to Plaintiff's Motion for Leave to Amend. The court refers to the reply filed by Defendant in connection with her summary judgment motion.
I. Factual and Procedural Background
The facts are basically undisputed or, where they are disputed, presented in the light most favorable to Plaintiff as the nonmovant.
This is an action for copyright infringement, unfair competition, misappropriation and business disparagement. Plaintiff David Sefton ("Plaintiff" or "Sefton") is a professional photographer who takes sexually-oriented photographs. In November 1996, Sefton learned that certain digital images from his copyrighted collection were being displayed on an adult website owned and operated by Webbworld, Inc. ("Webbworld"). Through its website, "netpics.com" ("Netpics"), Webbworld offered sexually-oriented photographs and digital images, which it obtained from adult-oriented newsgroups, to Internet users for a monthly subscription fee. To obtain the images, Webbworld downloaded digital files containing photographic images from various newsgroups onto its computers. According to Plaintiff, between late 1996 and early 1997, Webbworld wrongfully reproduced or copied certain of his copyrighted digital images and made them available on Netpics to Internet users for a fee.
Webbworld ceased operating in February 1997 after its equipment was seized by law enforcement officials in connection with a criminal investigation of the company on charges of child pornography.
Newsgroups are Internet forums or on-line discussion groups wherein participants discuss topics of common interest. See Webopedia, available at http://www.webopedia.com/Term/n/newsgroups.html; http://www.webopedia.com/Term/f/forum.html.
The term "download" means to copy (transfer) data (usually an entire file) from one computer to the memory of another device (such as a smaller computer). Merriam-Webster's Collegiate Dictionary 349 (10th ed. 1997). The opposite of download is "upload" which means to send a file from your computer to another computer. See generally AM Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011 n. 1 (9th Cir. 2001) (internal quotations and citations omitted); see also Webopedia, available at http://www.webopedia.com/Term/d/download.html.
National Knowledge Networks, Inc. ("Networks") served as the Internet service provider (ISP) to Webbworld between late summer 1996 and February 13, 1997. Networks provided Webbworld with a connection to the Internet's World Wide Web. During this period, Defendant Terry Hendricks Pathos ("Defendant" or "Pathos") was president of Networks and a shareholder of the company. Networks is not a party to this litigation.
Plaintiff filed this lawsuit on February 11, 2000, asserting claims against Pathos and NKN Technologies under federal law for copyright infringement, contributory infringement and vicarious infringement pursuant to the Copyright Act, 17 U.S.C. § 101 et seq., and under state law for misappropriation, business disparagement and unfair competition. Pathos moves for summary judgment on all of Plaintiff's claims. Sefton moves for leave to amend his original complaint to allege newly discovered facts, and to withdraw claims he no longer desires to pursue. The court addresses the parties' motions in turn below.
As previously stated, NKN Technologies has since been dismissed from this lawsuit.
II. Defendant's Summary Judgment Motion
A. Summary Judgment Standard
Summary judgment shall be rendered when 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 judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
B. Analysis
1. Plaintiff's Suit Against Pathos
Pathos disputes the viability of this action against her, contending that she is not a proper party in the capacity in which she has been sued, that is, as President of NKN Technologies. Pathos explains that Sefton erroneously sued NKN Technologies believing it to be Webbworld's Internet service provider when in fact that service was provided by Networks, a completely separate corporate entity. Pathos contends that because NKN Technologies was not Webbworld's ISP, or otherwise involved with Webbworld at the time of the alleged infringement, NKN Technologies is not a proper party to this lawsuit. Pathos therefore concludes that because NIKN Technologies is not a proper party, she likewise is not a proper party in her capacity as president of the company. Sefton disagrees, contending that Pathos's liability is not limited to her actions as an officer of NKN Technologies, but extends to those actions taken while she was a corporate officer of Networks.
It is not altogether clear from Sefton's prolix and rambling complaint whether he is asserting claims against Pathos solely in her capacity as president of NKN Technologies. If it were, the court would not hesitate granting summary judgment on this ground; however, Plaintiff's claims against Pathos appear to be based on conduct that occurred while she was a corporate officer of Networks. Under Texas law, a corporate officer may be held individually liable for a corporation's tortious conduct if she knowingly participates in the conduct or has knowledge of the tortious conduct, either actual or constructive. Portlock v. Perry, 852 S.W.2d 578, 582 (Tex.App.-Dallas 1993, writ denied); see also Leyendecker Assocs., Inc. v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984) (a corporation's employee is personally liable for tortious acts which he directs or participates in during his employment); United States Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 221 (Tex.App.-Waco 1993, writ denied) (corporate agent who knowingly participates in the tortious conduct of a corporation may be held liable as a joint tortfeasor). Although Plaintiff's Complaint is by no means a model of pellucid draftsmanship, it arguably alleges conduct for which Pathos could be held personally liable as a joint tortfeasor with Networks. Specifically, the Complaint alleges that Pathos contributed to the reproduction of copyrighted works and received earnings from Webbworld's infringing activities while she was a corporate officer of Networks, and that she had the right, authority and ability to supervise and control the operation of Netpics, including the placement of Sefton's photographic images on the website. The court will therefore indulge every reasonable inference in favor of Plaintiff and assume, for purposes of Defendant's summary judgment motion, that Pathos is a proper party to this litigation.
2. Plaintiff's Federal Claims Against Pathos
a. Direct copyright infringement
Sefton's Complaint purports to assert a claim against Pathos for direct copyright infringement, although it does not specifically allege that Pathos copied or in any way knowingly participated in the copying of Sefton's copyrighted material. Because there was some ambiguity whether Pathos is included in Sefton's direct infringement claim, and since the summary judgment briefing did not address the matter, the court directed the parties to submit supplemental briefing on this claim.
In its order of January 3, 2002, the court directed the parties to address whether Plaintiff's Complaint asserted a claim for direct copyright infringement, and if so, whether any genuine issue of material fact existed as to that claim. On January 14, 2002, Defendant filed her Supplemental Motion for Summary Judgment. Sefton filed his supplemental response in opposition to Defendant's summary judgment motion on January 25, 2002. On January 28, 2002, Defendant filed Objections to Plaintiff's Summary Judgment Evidence and Response to Request to Strike Defendant's "Affidavit." In its January 3rd order, the court stated that this round of briefing was to be limited to the issue of direct copyright infringement, and that it would not consider evidence presented to supplement the record in general. To the extent that either party's supplemental evidence does not comply with the court's order, it will be disregarded. Defendant's objections are therefore overruled as moot, and Sefton's motion to strike is denied as moot.
Sefton maintains that his Complaint does assert a claim against Pathos for direct copyright infringement. He argues that his copyrighted photographic images were copied onto servers under the physical control of Pathos, and that Pathos allowed the reproduction and distribution of his images in violation of the copyright laws. According to Sefton, Pathos performed maintenance and technical services on the infringing servers, provided Webbworld with specialized equipment to allow a connection to the Internet's World Wide Web, and "backed up" the Webbworld's system. Pathos, on the other hand, argues that Plaintiff's Complaint does not state a claim for direct copyright infringement, and even it does, there is no genuine issue of material fact for trial.
To prevail on a claim for direct copyright infringement, Plaintiff must show 1) ownership of copyrighted material and 2) copying by Pathos. Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 790 (5th Cir. 1999). A copy is legally actionable if 1) the alleged infringer actually used the copyrighted material to create her own work, and 2) substantial similarity exists between the two works. Id. (citation omitted). Plaintiff's Complaint fails to allege facts sufficient to establish the second element of this claim, that is, copying by Pathos. Indeed, Plaintiff's allegations concerning this claim revolve around Webbworld's alleged copying, reproduction and distribution of Sefton's copyrighted material. For example, Plaintiff's Complaint alleges:
90. The inventory of computer graphics files available on Netpics changes over time, and Plaintiff (sic) copyrighted photographs have been (sic) available on Netpics. As a result, Webbworld infringed upon numerous other Plaintiff (sic) copyrighted works (sic), facilitated by the Defendants (sic) equipment and expertise.
91. On information and belief, the Netpics website, hosted by NKN, made unauthorized copies of Plaintiff's copyrighted photographs available to subscribers.
92. Webbworld, through NKN's Internet connection, has had access to Plaintiff's copyrighted photographic images.
93. Webbworld, through NKN's Internet connection, has had access to one or more Internet sites, alt.binaries newsgroups and other sources containing unauthorized copies of Plaintiff's photographic images.
94. The images contained in the computer graphic files from the Netpics.com Internet site were not original works of authorship of Webbworld or NKN.
96. Webbworld nor NKN have ever obtained authority from Plaintiff to include a copy of any Plaintiff image in any computer graphics file or advertisement.
Pl.'s Comp. at 32-33. Although the Complaint states that Pathos and NKN Technologies would sometimes be collectively referred to therein as "NKN," Pl.'s Compl. ¶ 14, it fails to allege any specific facts against Pathos, unlike his claims for contributory and vicarious infringement where it does. Because Plaintiff's Complaint fails to allege facts to establish a claim against Pathos for direct copyright infringement, Pathos is entitled to dismissal of this claim.
Even if the court were to assume arguendo that Plaintiff's Complaint stated a claim for direct copyright infringement, Sefton has failed to raise a genuine issue of material fact that Pathos copied his copyrighted material. Instead, Sefton presents testimony that is speculative and based on impermissible inferences or assumptions. Pathos has presented unrefuted testimony that she never copied any work owned by Plaintift and that to her knowledge no person under her supervision or control copied any work owned by Sefton. Pathos is therefore entitled to judgment as a matter of law.
b. Contributory Copyright Infringement
Plaintiff asserts a claim against Pathos for contributory copyright infringement. To prevail on this claim, Sefton must show that Pathos "with knowledge of the infringing activity, induce[d], cause[d] or materially contribute[d] to infringing conduct of another." See Alcatel, 166 F.3d at 790 (citation omitted). Pathos contends that there is no evidence in the record to establish this claim against her. The court agrees.
Sefton contends that Defendant's summary judgment motion is premature because he has not yet had an opportunity to examine "critical evidence" from the Fort Worth Police Department or obtain necessary discovery from Defendant, including deposition testimony and written discovery. Pl.'s Resp. at 2. The court is unpersuaded. Plaintiff does not contend that the absence of this information prevents him from presenting facts essential to justify his opposition to Defendant's motion. Rather, he asserts that "[a]lmost all concerns raised in [Defendant's] counsel (sic) motion for summary judgment would be answered after . . . a forensic investigation of the computers held in the possession of the Fort Worth Police." Id. Plaintiff, however, has not shown that the evidence he desires to examine would establish, or raise a genuine issue of material fact, that Pathos had knowledge of Webbworld's alleged infringing activity, or that she caused, induced or materially contributed to the alleged infringement. Additionally, Plaintiff has not requested a continuance of the summary judgment proceedings under Fed.R.Civ.P. 56(f). Rule 56(f) requires the filing of an affidavit which sets forth specific facts why the nonmovant cannot oppose the summary judgment motion. Union City Barge Line, Inc. v. Union Carbide Corp., 823 F.2d 129, 136 (5th Cir. 1987). Plaintiff filed no such affidavit. Moreover, the court notes that discovery closed in this case on October 2, 2000, and Plaintiff has at no time since the close of discovery requested to supplement the record with any new or additional evidence. Finally, Plaintiff has not been diligent in his pursuit of additional discovery, and he is therefore not entitled to a Rule 56(f) continuance. See Wichita Falls Office Assocs. v. Banc One Corp., 978 F.2d 915, 919 (5th Cir. 1992).
Sefton alleges that Webbworld infringed his copyrighted photographic images. For purposes of Defendant's motion, the court will assume that this allegation is true. As previously stated, to prevail on a claim of contributory infringement, Sefton must show that Pathos had knowledge of the alleged infringing activity. This he has failed to do. It is undisputed that Sefton never telephoned or sent written correspondence, such as a letter, to Pathos or Networks complaining about Webbworld's alleged copyright infringement. The record establishes that Sefton sent one communication by electronic mail to Networks in January 1997, complaining that Netpics was infringing his copyright to certain photographic images; however, there is no evidence in the record that the company ever received it. Indeed, Pathos has presented unrefuted testimony that neither she nor Networks received any communication from Sefton in 1996 or 1997 informing them of Webbworld's alleged infringement.
Plaintiff makes the bald assertion that Pathos had knowledge of Webbworld's alleged infringing activity because she knew that every image on Netpics was "pirated," but points to no evidence in the record to establish this contention. As previously stated, unsupported assertions are not competent summary judgment evidence and are insufficient to defeat a summary judgment motion. Equally unavailing is Plaintiff's argument that Pathos should have known about the alleged infringement based on an injunction issued against Webbworld in January 1997 for its infringement of copyrighted images owned by Playboy Enterprises, Inc. ("Playboy"). The summary judgment record, however, establishes that Pathos was not aware that an injunction had issued against Webbworld in 1996, and Plaintiff presents no evidence that would raise a genuine issue of material fact as to her knowledge of the injunction.
Plaintiff refers to an injunction issued against Webbworld in the case styled, Playboy Enters., Inc. v. Webbworld, Inc. 991 F. Supp. 543 (N.D. Tex. 1997). In that case, Playboy, an adult magazine publisher, brought suit against Webbworld and its principals for copyright infringement, trademark infringement, and unfair competition. As in this case, Playboy alleged that Webbworld owned and operated an Internet website that offered sexually-oriented photographs and images to subscribers for a monthly fee, and that Webbworld had impermissibly reproduced, distributed and displayed images substantially identical to those appearing in Playboy's copyrighted publications. On January 6, 1997, the court entered an agreed preliminary injunction prohibiting Webbworld from directly or indirectly infringing Playboy's copyright and trademark registrations. See Playboy, 991 F. Supp. at 548.
Finally, Sefton points to no evidence which demonstrates that Pathos induced, caused, or materially contributed to Webbworld's alleged infringement of his photographic images. There is no dispute that the digital images made available on Netpics were stored in the memory of computers owned, controlled and operated by Webbworld. The record also establishes that Pathos did not assist Webbworld in the operation of Netpics, and that she had no knowledge of the method used by Webbworld to obtain the content for its website. Moreover, Sefton has not shown that Pathos in any way encouraged or assisted Webbworld in the alleged infringement. Sefton has failed to raise a genuine issue of material fact on this element of his claim. Sefton has wholly failed to present competent summary judgment evidence showing the existence of a genuine issue of material fact on his claim of contributory copyright infringement, Pathos is therefore entitled to judgment as a matter of law on this claim.
The court notes that Pathos objects to Plaintiff's summary judgment evidence (specifically, Plaintiff's affidavit and the affidavit of Bentley Ives), contending that it is replete with conclusory allegations, legal opinions and conclusions, unsupported speculation, impermissible hearsay, irrelevant information and personal opinions. Pathos requests that the court either disregard or strike such evidence from the record. Conclusory allegations, unsupported speculation, unsubstantiated assertions, and impermissible hearsay are not competent summary judgment evidence, and the court did not rely on such material in ruling on Defendant's motion. Defendant's request is therefore moot.
c. Vicarious Infringement
Sefton also asserts a claim against Pathos for vicarious infringement, contending that she is vicariously liable for Webbworld's alleged infringement. To prevail on this claim, Sefton must prove that Pathos 1) had a direct financial interest in the infringing activity, and 2) had the right and ability to supervise the infringing party's acts or activity which caused the infringement. See Playboy Enterprises, Inc. v. Webbworld, Inc., 991 F. Supp. 543, 553 (N.D. Tex. 1997) ( citing Swallow Turn v. Wilson, 831 F. Supp. 575, 579 (E.D. Tex. 1993)). Plaintiff has failed to raise a genuine issue of material fact on either element of his claim.
The record is devoid of any evidence which shows that Pathos had the right, ability and authority to control the operations of the Netpics site, or the actions of Webbworld's employees. Pathos did not create, control, or monitor the content of the Netpics site, and did not render any services to Webbworld in connection with the website. Further, there is no evidence that Pathos in any way participated in the operation of the website, or the method used by Webbworld to obtain the digital images displayed on it. There is simply no evidence to establish that Pathos had the requisite supervisory authority over the alleged infringing activity to hold her vicariously liable for Webbworld's actions. Moreover, Plaintiff presents no evidence which establishes that Pathos had or received a direct financial interest from Webbworld's infringing activity.
Sefton contends that Pathos should be held vicariously liable based on her ability to control and supervise employees of the ISP, that is, Networks. According to Sefton, unidentified employees at Networks knew of Webbworld's alleged infringing activities and assisted Webbworld in developing a compliance program which allowed them to scan copyrighted images on Netpics and remove them before they could be posted to the website. First, Networks is not a party to this litigation, and therefore is not before the court. Second, even if it were, officers of a corporation are insulated from personal liability arising from activities performed in the scope of their duties for the corporation, unless they knowingly participated in the corporation's tortious conduct. See Portlock, 852 S.W.2d at 582; see also Delaney v. Fidelity Lease Ltd., 526 S.W.2d 543, 546 (Tex. 1975). Sefton offers no competent summary judgment evidence which shows that Pathos supervised employees who assisted Webbworld in its infringing activity, or otherwise knowingly participated in Networks' alleged tortious conduct.
Sefton has failed to raise a genuine issue of material fact on either of the requisite elements necessary to establish a claim for vicarious copyright infringement. Pathos is therefore entitled to judgment as a matter of law on this claim.
3. Plaintiff's State Law Claims
Plaintiff asserts state law claims for misappropriation, business disparagement and unfair competition. The court addresses each of these claims in turn below.
a. Misappropriation
Misappropriation is a branch of the tort of unfair competition which involves the appropriation and use of a unique pecuniary interest created by another through the expenditure of labor, skill and money. See Seatrax, Inc. v. Sonbeck Int'l Inc., 200 F.3d 358, 368 (5th Cir. 2000). To prevail on this claim, Sefton must show that 1) he created a product through extensive time, labor, skill and money, 2) Pathos used the product in competition with him, thereby giving her a special competitive advantage (that is, a "free ride") because she was burdened with little or none of the expense incurred by Sefton in creating the product, and (3) he was commercially damaged by such use. See United States Sporting Products, Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 218 (Tex.App.-Waco 1993, writ denied). Plaintiff has failed to meet his burden. First, Sefton has failed to allege facts to support a claim of misappropriation. Second, Sefton has failed to point to any evidence in the record which establishes this claim, or raise a genuine issue of material fact as to any element of the claim. Plaintiffs claim for misappropriation therefore fails as a matter of law, and Pathos is entitled to judgment as a matter of law on this claim.
b. Business Disparagement
Although Plaintiff's Complaint asserts a claim for business disparagement, it alleges no facts to support this claim. To establish a claim for business disparagement, Sefton must allege I) that Pathos published disparaging and false words, 2) with malice, 3) which caused special damages, and 4) lack of privilege. See Hurlbut v. Gulf Atlantic Life Ins., 749 S.W.2d 762, 766 (Tex. 1987). Plaintiff's Complaint wholly fails to do so. Moreover, there is no evidence in the record to establish a claim of business disparagement against Pathos, and Sefton has failed to show that a genuine issue of material fact exists for trial. For these reasons, Pathos is entitled to judgment as a matter of law on this claim.
c. Unfair Competition
Similarly, while Plaintiff's Complaint asserts a claim for unfair competition, it fails to allege facts to support the claim. According to his Complaint, Sefton bases this claim on an unauthorized use of his trade name. To establish a claim of unfair competition based on the unauthorized use of a trade name, Sefton must show that 1) his trade name has acquired a secondary meaning through usage, and 2) the similarity of the name used by Pathos would be likely to confuse the public. See Graham v. Mary Kay, Inc., 25 S.W.3d 749, 754 (Tex.App.-Houston [14th Dist.] 2000, pet. denied); Hudgens v. Goen, 673 S.W.2d 420, 423 (Tex.App.-Fort Worth 1984, writ ref'd n.r.c.). Sefton has neither alleged facts to establish the necessary elements of this claim nor presented evidence which shows that a genuine issue of material fact exists for trial. Pathos is entitled to judgment as a matter of law on this claim.
4. Statute of Limitations
As an additional ground, Pathos contends that Plaintiff's claims, state and federal, are barred in whole or part by the applicable statute of limitations. The court agrees, and, therefore, even if his claims could survive the merits, they are barred by the applicable statutes of limitations.
a. State Law Claims
Insofar as his state law claims, Sefton does not dispute that they are subject to a two-year limitations period; rather, he argues that he did not become aware of the facts giving rise to the state claims until October 1998. Sefton therefore contends that the statute of limitations period runs from October 1998. "when he determined that NKN provided far more than hosting services to netpicks.com. . . ." Pl.'s Mem. in Opp. to Def.'s Summ. J. Mot. at 13. Plaintiffs attempt to rely on the discovery rule is unavailing. The discovery rule exception to the statute of limitations defers the accrual of a cause of action until the plaintiff knew or, in exercising reasonable diligence, should have known of facts giving rise to the cause of action. Computer Assocs. Int'l, Inc. v. Alt at, Inc., 918 S.W.2d 453, 455 (Tex. 1996). Application of the discovery rule is generally permitted in cases where the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable. Id. The Texas Supreme Court has stated that the discovery rule exception should be permitted only in circumstances where "it is difficult for the injured party to learn of the negligent act or omission. Id. Sefton concedes that he became aware of Webbworld's infringing activity in late 1996. Sefton's state law claims arise out of the same facts as his claims for copyright infringement. Therefore, he should have known of the facts giving rise to his state law claims when he became aware of Webbworld's infringing activity. Plaintiffs Complaint alleges no facts which indicate that his state law claims are subject to the discovery rule exception, and cites no authority which holds that the rule is applicable to such claims. In any event, under Fed.R.Civ.P. 8, Plaintiff must plead sufficient facts to put the defense on notice of the theories on which the complaint is based. Here, Sefton has failed to allege facts sufficient to give Defendant notice of his reliance on the discovery rule exception. Cf Colonial Penn Ins. Co. v. Market Planners Ins. Agency, Inc., 1 F.3d 374, 376 (5th Cir. 1993) (suit not barred by statute of limitations where plaintiff alleged facts sufficient to give notice of its reliance discovery rule and fraudulent concealment). Sefton therefore should not be allowed to benefit from the discovery rule exception.
Plaintiffs state law claims for misappropriation, business disparagement and unfair competition are all subject to a two-year limitations period. See Tex. Civ. Prac. Rem. Code § 16.003 (two-year limitations period for injury to or conversion of the property of another); Daboub v. Gibbons, 42 F.3d 285, 290 (5th Cir. 1995) (two-year limitations period for unfair competition, misappropriation and conversion); Dickson Construction, Inc. v. F.D.I.C., 960 S.W.2d 845, 850 (Tex.App.-Texarkana 1997, no writ) (two-year limitations period for business disparagement). Plaintiff complains of conduct by Pathos that occurred on or before the date Netpics. was shut down, that is, February 13, 1997. As such, Sefton had to have filed his claims on or before February 12, 1999. Plaintiff did not file the instant lawsuit until February 11, 2000, nearly one year after the statute of limitations period had expired. Sefton's state law claims are therefore barred as a matter of law.
b. Federal Claims
Regarding Plaintiff's federal copyright infringement claims, Pathos contends that they are barred in part by a three-year statute of limitations. See 17 U.S.C. § 507(b). Thus, says Pathos, any claim of infringement that occurred before February 11. 1997 is barred by limitations. Plaintiff does not identify which of his images were allegedly copied by Webbworld, or when they were copied. Plaintiff concedes that the only infringements that could survive limitations would be those occurring during the two-day period between February 11, 1997 (three years before suit was filed) and February 13, 1997 (when Netpics was shutdown). Because Plaintiff has failed to allege that any infringing activity occurred after February 13. 1997, the court finds that his copyright infringement claims are time-barred.
5. Plaintiff's Claims for Statutory Damages and Attorneys' Fees
Plaintiff seeks statutory damages and attorneys' fees under federal copyright laws. Having determined that Pathos is entitled to judgment as a matter of law on Plaintiff's copyright infringement claims, Plaintiff's claims for statutory damages and attorneys' fees are denied. In any event, Plaintiff did not register the images involved in this lawsuit with the Copyright Office until over 90 days after the alleged infringement. Plaintiff is therefore not entitled to recover statutory damages or attorneys' fees. See 17 U.S.C. § 412(1).
III. Plaintiff's Motion for Leave to Amend
Sefton seeks leave to amend his complaint to narrow his legal claims, including his state law causes of action, to specify the images found at the Fort Worth Police Department and his claimed damages. Pathos objects, contending that the relief requested would require modification of the court's Scheduling Order and that Plaintiff has not shown the requisite good cause for amendment. See Fed.R.Civ.P. 16(b) (once the court enters a scheduling order, such order "shall not be modified except upon a showing of good cause and by leave of the district judge. . . ."). Although use of the "good cause" standard to resolve Plaintiff's motion to amend has some appeal, the court ultimately rejects this approach. Since amendment of pleadings is governed by Fed.R.Civ.P. 15(a), the court believes the appropriate standard is that set forth in Rule 15(a) and the applicable case authority, and will accordingly use that standard in determining Plaintiff's motion.
Pathos cites no authority from the Fifth Circuit or Supreme Court that the "good cause" standard required under Rule 16(b) should apply.
Under Rule 15(a), other than in circumstances which do not apply here, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Although Rule 15(a)
evinces a bias in favor of granting leave to amend, such leave is not automatic. In deciding whether to allow amendment, a district court may consider such factors as undue delay, bad faith or dilatory motive on the party of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment.Price v. Pinnacle Brands, Inc., 138 F.3d 602, 608 (5th Cir. 1998) (internal quotations, footnotes, brackets and citations omitted); see also Foman v. Davis, 371 U.S. 178, 182 (1962). A motion for leave should not be denied "unless there is a substantial reason to do so." Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994); Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998). Although not specifically stated in the standard previously set forth, the Fifth Circuit has repeatedly recognized that the untimeliness of a motion to amend is a valid reason to deny it. Leffall, 28 F.3d at 524; Avatar Exploration, Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314, 320 (5th Cir. 1991); Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981). For the reasons stated herein, the court determines that Plaintiff's motion for leave to amend should be denied.
First, the proposed amendment is untimely. The court initially set this action for trial on its four-week docket commencing April 2, 2001. See Scheduling Order, filed April 5, 2000. By the same order, the court set July 7, 2000 as the deadline for amendment of pleadings and set October 2, 2001 as the discovery deadline. Sefton filed his motion requesting amendment of pleadings on March 13, 2001, more than eight months after the court's pleading deadline, and nearly six months after Defendant's summary judgment motion became ripe for disposition. Sefton states that on February 24, 2001, he learned that numerous misrepresentations were made during the initial phase of discovery which impacted the direction and timeliness of his motion for leave to amend. See Pl's Mot. for Leave at 1. Sefton, however, offers no explanation for his delay in discovering any such misrepresentations. Untimeliness alone is a valid reason to deny leave to amend. See Leffall, Avatar, and Gregory, supra. As Sefton offers no adequate basis for his failure to amend within the deadlines established by the court, the court declines to allow Sefton to amend his Original Complaint.
Second, the court has reviewed Plaintiff's proposed amended complaint and finds that amendment would be futile. Plaintiffs proposed amended complaint asserts no facts to support a claim for which Pathos could be held liable. Based on the untimeliness of Sefton's motion to amend and futility of amendment, denial of Plaintiff's motion is appropriate. Accordingly, Plaintiff's Motion for Leave to Amend Complaint is denied.
IV. Conclusion
For the reasons stated, Sefton has failed to raise a genuine issue of material fact regarding his claim for contributory copyright infringement, vicarious copyright infringement, misappropriation, business disparagement, and unfair competition. Therefore Pathos is entitled to judgment as a matter of law on each of Sefton's asserted claims. In addition, because Plaintiff's motion for leave to amend is untimely and the proposed amendment does not assert facts for which Pathos may be held personally liable, denial of Plaintiff's motion for leave to amend is appropriate. Finally, denial of Plaintiff's Motion to Strike is appropriate because the court did not consider any evidence which did not comply with its order of January 3, 2002. Accordingly, Pathos's Motion for Summary Judgment is granted; Pathos's Supplemental Motion for Summary Judgment is granted; Plaintiff's Motion to Strike is denied as moot; and Plaintiff's Motion to Amend Complaint is denied. Judgment will issue by separate document pursuant to Fed.R.Civ.P. 58.