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Ariel (UK) Limited v. Reuters Group, PLC, et al.

The Second Circuit Court of Appeals affirmed the District Court for the Southern District of New York’s judgment granting defendants’ motion to dismiss plaintiff Ariel (UK) Limited’s copyright claim with prejudice, dismissing plaintiff’s claims for breach of contract and declaratory relief, without prejudice, and declining to exercise pendent jurisdiction over plaintiff’s state law claims.

The Second Circuit, limiting its review to the complaint and any undisputed documents attached to it, found that plaintiff’s pleadings and the licensing agreement upon which plaintiff bases its contract claims demonstrate that defendants are valid licensees of the works plaintiff claims defendants infringed. The court, citing to Second Circuit case law, held that the district court properly relied on plaintiff’s allegations to determine that defendants were licensees. Thus, the court found no error in the district court’s holding that, as a matter of law, the defendants could not be sued for copyright infringement.

The Second Circuit rejected plaintiff’s argument on appeal that it alleged, in the alternative, that defendants were not licensees, because it is belied by the record. Plaintiff “consistently argued that defendants were licensees, and any argument to the contrary amounted to nothing more than a late-breaking claim that it was entitled to rescission.” The Second Circuit held that the district court did not err in finding that rescission was not justified because plaintiff had not pled a breach of a condition precedent or one that was so fundamental, that, if proven would trigger a rescission right. Accordingly, “rescission was not ‘plausible’ on its face, and the district court did not err in dismissing it.”

Finally, the Second Circuit held that the district court did not exceed its allowable discretion in not sua sponte granting plaintiff leave to amend because plaintiff failed to show how new facts could not have been pled originally or how new facts or allegations could salvage its copyright claim.