Ningob Mizhihe I&E Co., LTD v. Does 1-200

Background

Ningbo Mizhihe I&E Co., Ltd. sued the defendants, including Does 1-200, Dreshow, 4Memorys, and Deng Kai, alleging copyright infringement involving unicorn-related designs on children’s apparel, bags, luggage, and other products. The defendants filed three counterclaims after the court set aside a default entered against them.

The defendants alleged that Deng Kai owned rights in promotional “Unicorn Images” used to sell unicorn-themed goods through the Dreshow and 4Memorys stores on Amazon. They alleged that Ningbo sent Amazon copyright takedown notices concerning the defendants’ products, causing Amazon to remove listings and disable the defendants’ online store. They also alleged that Ningbo later used one of the Unicorn Images to sell a unicorn-themed keychain, without authorization, and that Amazon removed Ningbo’s listing after Kai initiated an intellectual-property dispute.

The Motion to Dismiss

Ningbo moved under Rule 12(b)(6), which allows dismissal when a pleading does not state a legally sufficient claim. The court applied the rule that a claim must contain enough factual content to make liability plausible, rather than relying only on labels, conclusions, or a formulaic statement of legal elements.

Counterclaim I: Digital Millennium Copyright Act

The defendants claimed that Ningbo knowingly misrepresented to Amazon that the defendants’ products infringed Ningbo’s copyrights, in violation of 17 U.S.C. § 512(f). The court explained that the statute requires a knowing material misrepresentation and that a copyright owner is not liable merely because its belief that material infringes copyright later proves mistaken, so long as the owner subjectively held that belief.

The court rejected the counterclaim for two reasons. First, the defendants did not dispute that Ningbo owned the copyrights identified in the takedown notice. Their argument focused instead on alleged misrepresentations to the Copyright Office concerning the originality or enforceability of those copyrights. The court said that issue could be raised as a defense to copyright liability, but not as a Digital Millennium Copyright Act counterclaim based on the notice to Amazon. Second, the defendants did not plead facts plausibly showing that Ningbo knew its copyright claims were unenforceable. Allegations that similar unicorn designs were widely available supported, at most, an accusation that Ningbo failed to investigate adequately, which the court said was negligence rather than the required knowledge. The court dismissed this counterclaim.

Counterclaim II: Lanham Act

The defendants also claimed that Ningbo’s use of the Unicorn Images violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), by misleading consumers about the source of the product or image. The court explained that the statute’s reference to the “origin” of goods generally concerns the producer of the tangible goods offered for sale.

The court found that the defendants had not clearly identified the rights they sought to protect in the images. They did not claim to own or manufacture the unicorn-themed keychain that Ningbo sold, and they did not dispute that Ningbo produced the keychain. The court therefore found that Ningbo was the source of the physical product, or that the defendants had not alleged otherwise.

The defendants also appeared to argue that use of the images falsely suggested that the keychain itself came from Deng Kai. The court treated this as a possible “reverse passing off” theory, meaning a claim that one party presented another party’s goods as its own, but found the allegations too thin. The defendants did not adequately explain how using photographs, rather than selling goods they owned or manufactured, would confuse consumers about the origin of the keychain. The court also noted the absence of allegations such as a misleading watermark and found the claim of public recognition for the images conclusory. The court dismissed this counterclaim.

Counterclaim III: New York Unfair Competition

The defendants’ New York unfair-competition counterclaim was based on the same alleged use of the Unicorn Images. The court stated that the governing standard was virtually identical to the Lanham Act standard. Because the defendants failed to state a Lanham Act claim, the court held that the parallel New York claim also failed and dismissed it.

Disposition

Judge Alvin K. Hellerstein granted Ningbo’s motion to dismiss the defendants’ counterclaims. The order dismissed the Digital Millennium Copyright Act, Lanham Act, and New York unfair-competition counterclaims. The court stated that the pleadings were closed, directed the parties to appear for a status conference concerning the schedule for the remainder of the litigation, and directed the Clerk to terminate the motion.