Mahon v. Mainsail LLC

Background

Mark Mahon brought five copyright-infringement actions concerning his motion picture and screenplay, “Strength and Honor.” The actions named Mainsail LLC and other Mainsail defendants, YouTube-related defendants, Alphabet-related defendants, and Apple-related defendants. Mahon also asserted claims against Mainsail for contributory copyright infringement, illicit trafficking in counterfeit labels, fraud, and conversion.

The court had previously dismissed some claims with leave to amend and had allowed Mahon to conduct jurisdictional discovery concerning Entertainment One. In the amended pleadings, Mahon alleged that Mainsail directed or participated in distribution of the Film after he sent cease-and-desist letters, and that copies were later distributed through other companies and digital platforms.

Mainsail’s Motion

The court denied Mainsail’s motion as to contributory copyright infringement. It found plausible Mahon’s allegations that Mainsail directed Visual Data to distribute copies, licensed or enabled distribution by others, and knew its conduct could be unauthorized. The court also construed the allegations as sufficient to state claims for vicarious and willful copyright infringement. Vicarious infringement generally concerns a defendant’s ability to supervise infringing conduct and receipt of a financial benefit; willful infringement requires intentional or reckless conduct. The court directed Mahon to plead those as separate claims in an amended complaint.

The court granted Mainsail’s motion to dismiss the illicit-trafficking claims. Mahon had not alleged that Mainsail committed a qualifying trafficking act involving counterfeit labels within the relevant three-year period. The court allowed amendment if Mahon could allege, in good faith, that Mainsail possessed or transferred counterfeit labels during that period. It also stated that, if discovery revealed previously unknown facts, Mahon could seek permission to add the claim before trial under the federal amendment rule.

The court granted Mainsail’s motion to dismiss the fraud claim, with leave to amend. Although the alleged nondisclosure concerning Visual Data’s shipment of Film copies to Mainsail in 2017 was plausibly actionable, Mahon did not allege that he relied on the nondisclosure or suffered an injury from such reliance. The court stated that allegations of reliance could make the claim plausible. It rejected as legally insufficient the fraud theories based on statements or evidence presented in the earlier state-court litigation.

The court denied Mainsail’s motion as to conversion. Mahon alleged that Mainsail obtained physical master copies of the Film from Visual Data in 2017 and did not return them. The court concluded that these allegations supplied an additional element beyond rights in intangible copyrighted material and allowed a conversion claim to proceed concerning the physical property.

YouTube’s Motion

The court denied YouTube’s motion as to direct copyright infringement. Although Mahon bought the Film in Ireland, he alleged that YouTube’s operations might have commingled United States and Irish activities and that copies could have originated from servers in the United States. The court held that these allegations were not implausible at the pleading stage, particularly because YouTube would have superior knowledge of its server and distribution structure. The court also explained that exportation from the United States may support a copyright claim even when the copy is sold abroad, if the copy was made through infringement.

The court granted YouTube’s motion as to contributory copyright infringement because Mahon alleged no facts showing that YouTube contributed to another party’s direct infringement. The court granted that dismissal without leave to amend.

Alphabet’s Motion

The court granted Alphabet’s motion to dismiss. Mahon did not allege facts linking his purchase from Google Play in Ireland to operations in the United States or showing that Alphabet or Google exported the Film from the United States. The court also found no allegations against Alphabet’s parent company and no facts supporting contributory infringement. The dismissal was without leave to amend, and the clerk was ordered to close Case No. 20-cv-01530.

Apple Distribution International’s Motion

Apple Distribution International Ltd. moved to dismiss for lack of personal jurisdiction, meaning that it argued the court lacked authority to decide claims against it. The court concluded that Mahon’s allegations concerned ADI’s activities in Ireland and did not show that ADI had committed an actionable wrong in the Northern District of California. The court therefore dismissed Mahon’s claims against ADI for lack of personal jurisdiction with prejudice, granted ADI’s motion without leave to amend, denied jurisdictional discovery, and ordered the clerk to terminate ADI as a defendant.

Disposition

Judge Rogers ordered that Mainsail’s motion was granted as to the illicit-trafficking and fraud claims, with leave to amend, and denied as to contributory copyright infringement and conversion. YouTube’s motion was denied as to direct infringement and granted as to contributory infringement without leave to amend. Alphabet’s motion was granted without leave to amend. ADI’s motion was granted without leave to amend, and the claims against ADI were dismissed for lack of personal jurisdiction with prejudice. Mahon was given twenty-one days to file an amended complaint or notify the court that he would stand on the complaint as modified by the order.