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Two individual operators of websites accused of infringing hundreds of copyrights--product descriptions of household goods--can be held personally liable for that infringement, the U.S. District Court for the Northern District of Illinois held Aug. 26 (Asher Worldwide Enters. LLC v. Housewaresonly.com Inc., N.D. Ill., No. 1:12-cv-00568, 8/26/13).
The individual defendants comprised the defendant websites' entire workforce and were the corporate directors of the websites, the court noted. Thus, “it is reasonable to infer that the infringement actions of the corporations were committed by the [individual defendants] because they are in fact 'the corporation,' ” the court said. It accordingly declined to dismiss either the copyright infringement claims or the trademark infringement claims against the individual defendants.
Asher Worldwide Enterprises LLC is an Illinois-based company that sells discounted commercial kitchen equipment through the www.reliabuy.com website. The items sold on the Reliabuy website are accompanied by product descriptions that were created either by Asher employees or by third parties. Asher applied for copyright registrations for the descriptions.
Housewaresonly.com and RestaurantKitchenWarehouse.com are websites owned and operated by Stuart Rubin and Marcia Rubin. These websites also sell discount kitchen equipment to restaurants and directly compete with Reliabuy.
Between October 2009 and August 2010, nearly 100 of the copyrighted descriptions posted to Reliabuy.com appeared on Housewaresonly.com. In September 2010, the Reliabuy website was redesigned to provide more attention to sales of discounted commercial kitchen equipment. At the same time, the Rubins also launched their second website, RestaurantKitchenWarehouse.com. That site, too, focused on discounted commercial kitchen equipment. The Rubins' new site, Asher claims, contained more than 200 of Asher's copyrighted descriptions.
In 2011, Asher filed a lawsuit against Housewaresonly.com and RestaurantKitchenWarehouse.com. The suit, which asserted federal claims of copyright infringement and trademark infringement, was filed in the U.S. District Court for the Western District of Washington.
In early 2012, venue was deemed inappropriate due to the court's lack of jurisdiction over the websites. The case was thus transferred to the Northern District of Illinois.
Asher claimed that rather than entertain settlement offers, the Rubins instead began “winding up the affairs of Housewaresonly.com and moving themselves away from Chicago.” The Rubins also began deleting the assets of the websites during this time, Asher claimed. Asher then attempted to file an amended complaint that added the Rubins as individual defendants. Service on the individual defendants proved to be difficult, but Asher was ultimately able to effect service by providing notice to the website defendants' corporate counsel.
The Rubins moved to dismiss, arguing that they cannot be personally liable for infringement committed by the website defendants.
The test for when a corporate manager may be held personally liable for infringement committed by the company was first articulated inDangler v. Imperial Mach., Co., 11 F.2d 945, (7th Cir. 1926), the court noted. Over more than eight decades the test from Dangler has been distilled into the following general rule, Judge Thomas M. Durkin said:
for personal liability for corporate intellectual property infringement to extend to corporate officers, a special showing must be made that they acted willfully and knowingly and personally participated in the infringing activities or used the corporation to carry out their own deliberate infringement.
In this case, the complaint alleges that the Rubins acted wilfully and personally participated in the alleged infringing activities. Indeed, according to Asher, “the Rubins were not only the heads of the corporations, but they also comprised its entire workforce, which leads to the reasonable inference that they were personally involved in the corporation's infringements,” the court said. The court also noted that the apparent attempt to shutter the websites once the suit was first filed in Washington “lends further support to the claim that the corporation's conduct was fully under the control of the Rubins.” The court said:
Moreover, the suspicious nature of the timing and attempts to avoid service in connection with the federal suit leads to the inference that the Rubins knowingly and willfully participated in the infringements and were shutting down the corporations to avoid personal liability.
The court denied the Rubins' motion to dismiss, finding it “at least plausible” that the individual defendants personally participated in the alleged infringement.
Asher was represented by Philip P. Mann of Mann Law Group, Seattle. The defendants were represented by Jeffrey Strange, Wilmette, Ill.
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