Mercer Publishing Inc., Smart Cookie Ink, LLC and Testingmom.com, LLC all make materials for elementary school children studying for standardized academic placement tests.  Mercer sued Smart Cookie and Testingmom.com in the Western District of Washington for copyright infringement, alleging that both Smart Cookie and Testingmom.com copied, published and distributed copyrighted study materials created by Mercer.

Mercer brought a motion to dismiss Smart Cookie’s and Testingmom.com’s amended counterclaims.  The district court denied Mercer’s motion, ruling that the Noerr-Pennington doctrine (discussed below) did not provide Mercer with immunity and that the defendants’ counterclaims raised factual issues that could not be resolved on a motion to dismiss.  Likewise, the district court denied Smart Cookie’s and Testingmom.com’s motion for summary judgment, ruling that genuine issues of material fact precluded summary judgment in the defendants’ favor.

The Noerr-Pennington Doctrine

The Noerr-Pennington doctrine is derived from the Petition Clause of the First Amendment and provides that those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct.

(7/25/2012 Order pdf p.5.)

The Noerr-Pennington doctrine was first created by the U.S. Supreme Court in the antitrust context.  The Ninth Circuit extended the doctrine to include immunity from federal and state statutory and common-law liability.  The Noerr-Pennington doctrine protects First Amendment petitioning activity and prevents burdens from being imposed on the protected activity.  Reasonably based suits advance some First Amendment interests, even when unsuccessful.  The Noerr-Pennington doctrine provides immunity if there is any way to construe the statute at issue such that the protected activity might not be a violation of that statute.

Mercer previously moved to dismiss the defendants’ counterclaims alleging that Mercer’s conduct violated the Washington Consumer Protection Act (CPA) and constituted intentional interference with business expectancy and contractual relations.  The district court dismissed those counterclaims, ruling that the Noerr-Pennington doctrine provided Mercer with immunity from those counterclaims.  Mercer’s activities that were protected by the Noerr-Pennington doctrine (i.e., use of judicial and pre-litigation procedures to resolve purported copyright disputes) did not clearly violate the CPA or constitute intentional interference with business expectancy and contractual relations.  The district court granted Smart Cookie and Testingmom.com leave to amend their counterclaims. 

The district court ruled that the Noerr-Pennington doctrine did not protect Mercer from Smart Cookie’s counterclaims against Mercer for copyright misrepresentation under the Digital Millennium Copyright Act (DMCA).  “Copyright misrepresentation under the DMCA is properly pleaded when the alleged facts plausibly suggest that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine.”  (7/25/2012 Order pdf page 11).  The district court ruled that the DMCA explicitly imposes liability on anyone who knowingly makes a material misrepresentation in a DMCA notice, that Smart Cookie pleaded sufficient facts to support a DMCA claim and that therefore the Noerr-Pennington doctrine does not provide Mercer with immunity from the DMCA counterclaims.

Mercer moved to dismiss Smart Cookie’s and Testingmom.com’s amended counterclaims, again arguing immunity under the Noerr-Pennington doctrine.  This time, the district court ruled in the defendants’ favor.  The “sham litigation” exception is an exception to the Noerr-Pennington doctrine.  Under that exception, defendants can assert counterclaims to plaintiff’s litigation activities that are “objectively baseless.”

Objectively baseless litigation is defined as litigation in which no reasonable litigant could realistically expect success on the merits.

(11/13/2012 Order pdf page 3).

Smart Cookie and Testingmom.com alleged that Mercer’s copyright claims were objectively baseless, alleging that Mercer does not own valid copyrights, made material misrepresentations to the Copyright Office, that Mercer’s materials are not sufficiently original to qualify for copyright protection and that some of the materials for which Mercer claims copyright protection are either public domain or third party materials.  If the defendants’ claims were proven true, Mercer would not have a valid copyright and could not reasonably expect to succeed on the merits. 

The district court ruled that the sham litigation exception applied and denied Mercer’s motion to dismiss defendants’ amended counterclaims of CPA violations and tortious interference.  The district court denied Mercer’s motion to dismiss the defendants’ false advertising counterclaims under the Lanham Act, ruling that that the defendants’ counterclaims raised factual issues that could not be resolved on a 12(b)(6) motion to dismiss.

In a separate order, the district court denied Smart Cookie’s and Testingmom.com’s motion for summary judgment.  The defendants asked the district court to rule that Mercer never registered its copyrights and, accordingly, cannot pursue its copyright infringement actions against the defendants.  The district court denied the motion.  Mercer strenuously disputed the registration issue, producing copyright registration certificates.  The district court ruled that Mercer made a prima facie showing of valid copyright registration and that the copyright registration dispute should be decided at trial.

These cases are two separate cases, but were consolidated.  They are Mercer Publishing Inc. v. Smart Cookie Ink, LLC, No. C12-0188JLR and Mercer Publishing Inc. v. Testingmom.com, LLC, No. C12-0550JLR, Western  District of Washington.  The three orders discussed in this post are Order on Plaintiff’s Motion to Dismiss Counterclaims dated 7/25/2012, Order Denying Motion to Dismiss dated 11/13/2012 and Order Denying Summary Judgment dated 11/21/2012.