USCA Second Circuit, April 7, 2010

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  • Addressing an issue of first impression in this circuit, the Second Circuit holds that a district court can resolve the question of substantial similarity on a motion to dismiss when the similarity of the two works concerns only non-copyrightable elements and where no reasonable jury could find that the two works are substantially similar.

In August 2004, plaintiff Peter F. Gaito Architecture, LLC (“Gaito”) and defendant Simone Development Corp. (“Simone”) entered into an agreement to jointly submit a proposal for a real estate development. Based on the parties’ agreement, plaintiff drafted architectural plans which generally included all of the design contents, concepts, zoning information and statistics for a residential high-rise tower, retail space, and pedestrian plaza. The City of New Rochelle awarded the project to the group for an estimated price of $175 million. Plaintiff subsequently registered its designs for the project with the U.S. Copyright Office. Based on these designs, defendants entered into a Memorandum of Understanding with New Rochelle as the developer for the project. Several months later, a dispute arose between plaintiff and defendants concerning plaintiff’s compensation for the project. Because of that dispute, defendants terminated their relationship with plaintiff, and instead retained the services of defendants SLCE Architects, LLP (“SLCE”).

Plaintiff filed suit against defendants, alleging violations of the Copyright Act and claims for quantum meruit and unjust enrichment under New York State law. The plaintiff alleged that the defendants unlawfully used plaintiff’s copyrighted designs for the project without plaintiff’s authorization, and that SLCE developed a “re-design” for the project based in large part on plaintiff’s designs. Plaintiff’s amended complaint identified 35 alleged similarities between plaintiff’s designs and the SLCE re-design, including similarities as to location, features and functions, and parameters. Defendants moved to dismiss the action, principally arguing that, even assuming defendants had access to plaintiff’s design, there is no substantial similarity between the protectible elements of those designs and SLCE’s re-designs. The district court granted defendants’ motion to dismiss and the U.S. Court of Appeals for the Second Circuit affirmed.

For purposes of defendants’ motion to dismiss, the court assumed that actual copying by defendants occurred. Accordingly, the principal issue raised on appeal was whether a substantial similarity existed between defendants’ designs and the protectible elements of plaintiff’s design. To that end, the court considered, as a matter of first impression in this circuit, whether it is proper to make a determination as to substantial similarity on a Rule 12(b)(6) motion to dismiss.

At the outset, the court acknowledged that the question of substantial similarity typically presents an extremely close question of fact, traditionally reserved for a jury. Nevertheless, the question of substantial similarity, indicated the court, is entirely appropriate for a district court to resolve as a matter of law under two circumstances: first, where the similarity between two works concerns only non-copyrightable elements of the plaintiff’s work; and second, where no reasonable jury, properly instructed, could find that two works are substantially similar. Accordingly, the court determined that the issue presented here was entirely appropriate for the district court to consider at the pleading stage on a motion to dismiss because the court had before it all that was necessary to make such an evaluation.

According to the court, this approach is not only consistent with circuit precedent, but also with the position taken by many of the district courts in the Second Circuit. Moreover, the court offered that several sister circuits have likewise endorsed the practice of considering the question of substantial similarity on a motion to dismiss.

The court, however, acknowledged limitations to this approach in certain instances. Indeed, in some instances of alleged copyright infringement, the question of substantial similarity cannot be addressed without the aid of discovery or expert testimony. As such, the court instructed that nothing in its opinion should be read to indicate that the question of non-infringement is always properly considered at the pleadings stage without the aid of discovery. But where, as here, the district court has before it all that is necessary to make a comparison of the works in question, it may resolve the issue of substantial similarity as a matter of law.

Having concluded that the district court did not err in considering the question of substantial similarity on defendants’ motion to dismiss, the court compared the two works and affirmed dismissal of the copyright infringement claims.