Laatz v. Zazzle, Inc.

Background

Nicky Laatz created the Blooming Elegant Trio of fonts and the software used to implement them. She sold licenses through Creative Market. In May 2017, Mohamed Mr. Alkhatib, a Zazzle senior network engineer, bought a license using a Zazzle company credit card and downloaded the software for Zazzle. Zazzle stored the software on its servers and allowed users to use the fonts through its online design tool without independently obtaining the font software.

Laatz alleged that the license allowed only one user to use the software and that Zazzle violated the license by placing the software on multiple servers, allowing other people to access it, and using the fonts for its users. She also alleged fraudulent misrepresentation, fraudulent concealment, promissory fraud, copyright infringement, trademark infringement, and breach of contract. Her motion sought summary judgment on every claim except trademark infringement.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. The court does not decide witness credibility or weigh competing evidence at this stage. Instead, it asks whether a reasonable jury could rule for the opposing party.

Contract claim

The court considered whether the defendants agreed to the documents that Laatz claimed made up the license: the Creative Market Shop Page, Service Terms, License Terms, and License FAQ. It held that creating a Creative Market account manifested assent to the Service Terms, and that the Service Terms clearly incorporated the License Terms. The court also found no genuine dispute regarding assent to terms appearing on the Shop Page.

The court did not find that the defendants assented to the License FAQ. It concluded that links to the FAQ did not clearly show that the FAQ contained contractual terms or require the purchaser to click through to them. The court therefore granted Laatz's motion in part regarding assent to the Service Terms, License Terms, and Shop Page, while denying it regarding the License FAQ.

The court denied summary judgment on whether Zazzle breached the license. Although the evidence showed that Alkhatib downloaded the software and that Zazzle used servers and rendered the fonts for users, the court found that the record lacked enough technical context to establish as a matter of law that Zazzle's conduct breached the license. The court also denied summary judgment on Laatz's contract claim against Alkhatib because disputed facts remained about whether he disclosed that he was acting as Zazzle's agent.

Fraud claims

The court denied summary judgment on Laatz's claims for fraudulent misrepresentation, fraudulent concealment, and promissory fraud. It found substantial factual disputes about the required elements, including whether anyone at Zazzle knew about an earlier inquiry concerning a server-based license and whether Alkhatib intended to defraud Laatz. Because Laatz had not established intent to defraud, an element required for each fraud claim, the court did not examine the remaining elements.

Copyright claim

The court denied summary judgment on Laatz's copyright-infringement claim. Although Laatz had copyright registrations for the font software, Zazzle presented an expert opinion that her work using FontLab 7.1 was not sufficiently original to create copyrightable software. Laatz presented conflicting expert opinions. Because this conflicting testimony created a genuine dispute about copyright validity, the court could not decide the claim as a matter of law.

Other arguments and evidentiary rulings

The defendants preserved arguments that Laatz's claims were time-barred, that she lacked standing for the state-law claims, and that those claims were preempted by the Copyright Act. The court did not consider those arguments in this decision because the motion addressed whether the undisputed facts established the specified claims.

The court also ruled on the parties' evidentiary objections. It excluded some compromise-negotiation material, hearsay, portions of a supplemental declaration, and an undisclosed expert declaration, while allowing or partially allowing other evidence.

Disposition

The court ordered that Laatz's motion for partial summary judgment on the breach-of-contract claim was GRANTED IN PART as to assent to the Service Terms, License Terms, and Shop Page, and otherwise DENIED. It DENIED the motion on the three fraud claims and the copyright-infringement claim. The order was signed by United States District Judge Beth Labson Freeman on January 9, 2024.