Northern California Record

Sunday, July 21, 2019

Judge tosses Proforma's counterclaim against Fotohaus in copyright action over photo use

Lawsuits

By Scott Holland | Apr 18, 2019


SAN JOSE – A federal judge has dismissed a counterclaim in a legal dispute over rights to a photograph.

Judge Beth Labson Freeman of the San Jose Division of the U.S. District Court for the Northern District of California granted Fotohaus' motion to dismiss with prejudice defendant PFG Ventures' counterclaim for intentional interference with contractual relations on April 4. PFG Ventures is also known as Proforma.

Daniel Foster is the sole member and manager of Fotohaus LLC, which owns the copyright to his image titled “Typing on a Laptop.” He accused Proforma Inc. of using the picture without permission after Aug. 31, 2014, by building it into a template that franchisees used for developing websites.

Fotohaus filed a copyright infringement suit on March 23, 2018, then sent a cease and desist letter three days later. On Oct. 8, 2018, Proforma filed a counterclaim alleging Fotohaus illegally interfered with the contracts it has with franchisees. It said the franchisees had no control over the images, and had no control over its use or display, and therefore should not have been listed as defendants in Fotohaus’ lawsuit.

On Oct. 29, Fotohaus moved to dismiss the counterclaim, arguing it is barred by the California litigation privilege and the Noerr-Pennington Doctrine, and also saying Proforma’s allegations are insufficient.

According to Freeman, the act that forms the basis for Proforma’s counterclaim is Fotohaus’ decision to file a copyright infringement claim, “which is unquestionably protected.”

Proforma insisted Fotohaus had seven months to investigate whether it or the franchisees owned the websites in question, and that it had no good faith basis to include franchisees as defendants or the cease and desist letter.

“The only actions Proforma points to as intentionally interfering with its contractual relations are Fotohaus’s filing of the lawsuit and the cease and desist letter, which Fotohaus sent three days after filing the lawsuit,” Freeman wrote. “The privilege undoubtedly applies to these two communications.”

Freeman said Proforma attempted to argue its counterclaim was not based on the lawsuit, but noted the way it replied to Fotohaus’ motion to dismiss shows that position is invalid.

“To the extent it claims that Fotohaus’ cease and desist letter is the basis for the counterclaim,” Freeman wrote, “this too is protected because it was in connection to judicial proceedings by litigants for the purpose of achieving the objects of the litigation.”

Freeman said Proforma cited other cases involving copyright claims and cease and desist letters, but in all of those cases the communications preceded litigation, and in this instance Fotohoaus’ letter “was sent after the litigation was filed, and thus was necessarily in good faith contemplation of litigation. Otherwise, whether Fotohaus actually believed it could win on its claim against the Franchisees — that is, whether it brought the claim itself in good faith — plays no role in the court’s analysis of whether the litigation privilege applies.”

Since Proforma has not — and seemingly cannot — identify other threats on the part of Fotohaus, Freeman said, allowing leave to amend the counterclaim would be futile. Further, since the California litigation privilege protected Fotohaus’ lawsuit from Proforma’s counterclaim, Freeman said she didn’t need to consider Fotohaus’ argument that Proforma’s claim wasn’t legally sufficient.

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