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Garnier-Theibaut, Inc. v. Castello 1935 Inc.

United States District Court, D. Maryland, Southern Division

May 17, 2018

GARNIER-THEIBAUT, INC., Plaintiff,
v.
CASTELLO 1935 INC., ET. AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge

         Defendants Castello 1935 Inc. (“Castello”) and Richard William Campbell (“Campbell”) entered into a contract to manufacture napkins and tablecloths for a Maryland hotel. Plaintiff Garnier-Theibaut, Inc. (“GT”) alleges those napkins and tablecloths embodied direct copies of GT's copyrighted design. Accordingly, GT filed this litigation on December 7, 2017. Compl., ECF No. 1. It brings four counts against Castello and Campbell: Copyright Infringement (Count I), Impoundment and Destruction (Count II), Trade Dress Infringement (Count III), and Interference with Business Expectancy (Count IV). Am. Compl., ECF No. 16. Defendants have filed a motion to dismiss all of plaintiff's claims. Defs.' Mot., ECF No. 17. Because GT adequately pleads all of its claims, defendants' motion will be denied. Defense counsel Eric Menhart's motion to withdraw his appearance will be granted. Defendant Castello must retain counsel as this case proceeds. McGowan v. Cross, 991 F.2d 790 (Table), 1993 WL 125416, at *1 n.1 (4th Cir. 1993) (“Corporations and partnerships, as artificial entities, may not appear pro se but must instead appear through counsel.”). Defendants will answer the Amended Complaint by June 7, 2018 and I will then hold a Federal Rule of Civil Procedure 16 telephone conference.

         Background

         Plaintiff GT, a New York corporation, and defendant Castello, a Virginia business entity, are both engaged in manufacturing and distributing linens for use in the hospitality industry.[1]Am. Compl. ¶¶ 4-5. In 2017, Castello, through defendant Campbell, an officer of Castello, entered into an agreement with The Hotel at UMCP ABC, LLC (the “Hotel”) to manufacture and sell napkins and tablecloths to the Hotel. Am. Compl. ¶¶ 5-6, 15. The Hotel initially planned to award this contract to GT, but awarded it instead to defendants because defendants agreed to directly copy the designs of GT's linens, which are protected by copyright, for a less expensive price. Id. ¶¶ 6, 15. The focus of this litigation is defendants' copying of GT's copyrighted design. Id. ¶ 15.

         GT owns a federal copyright in a visual work (“Organic”) that is used in the weaving of textiles, including dinner napkins and tablecloths sold to businesses within the hospitality industry. Id. ¶¶ 2, 4. The copyright registration on “Organic” (No. VA 2-072-446) became effective on October 24, 2017. Id. at Ex. A. “Organic” was created and first published by GT in 2007 for use in its high-end linen collection and is described as “a bold pattern of unique irregularly sized rectangular fields enclosing fitted, curved elements evocative of tribal or aboriginal works.” Id. ¶¶ 7-8. “Organic” can be reproduced in any color or any material and can be used as a single piece or in multiple copies of the weave. Id. ¶ 8. GT uses Jaquard weaving to manufacture linens bearing the “Organic” visual work. Id. ¶ 9. These linens containing the “Organic” design are referred to as the “Organic Products.” Id.

         GT offered its Organic Products to the Hotel for sale, a contract worth approximately $134, 669.85. Id. ¶ 15. Castello, however, received the contract instead by directly copying GT's Organic Products and selling them to the Hotel, through Campbell, at a lower price than the price quoted by GT. Id. ¶¶ 15-17. Campbell, on behalf of Castello, first met with the Hotel in 2017. Id. The Hotel provided Campbell with one of GT's original products bearing the “Organic” design, and Campbell advised the Hotel that Castello could copy the design and offer the linens at a lower price than GT. Id. Defendants were aware at the time they agreed to copy the design that it was protected by copyright. Id. ¶ 6. In fact, Castello's agreement with the Hotel contains a provision shifting the liability for copyright infringement to the Hotel. Id. Castello continues to use the copied design to advertise items for sale to others. Id. ¶ 15.

         GT filed its initial complaint on December 7, 2017. Compl., ECF No. 1. Consistent with the order that I issued at the start of this case governing the filing of motions, ECF No. 6, a pre-motion status conference was held on January 16, 2018, resulting in an Order permitting GT to file an amended complaint and permitting defendants to file a motion to dismiss. ECF No. 14, 15. GT filed its amended complaint on January 26, 2018. Am. Compl., ECF No. 16. Defendants have moved to dismiss. Defs.' Mot., ECF No. 17.

         Standard of Review

         Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule's purpose “is to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)). To that end, the Court bears in mind the requirements of Fed.R.Civ.P. 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), and must state “a plausible claim for relief, ” as “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, ” Iqbal, 556 U.S. at 678-79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from Iqbal and Twombly). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         Although at this stage of the proceedings, I accept the well pleaded facts alleged in GT's Complaint as true, see Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir. 2011), when reviewing a motion to dismiss, I “may consider documents attached to the complaint, ” such as the copyright registration, “as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed.” Sposato v. First Mariner Bank, No. CCB-12-1569, 2013 WL 1308582, at *2 (D. Md. Mar. 28, 2013); see CACI Int'l v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009); see also Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”).

         Discussion

         Count I: Copyright Infringement

         The Copyright Act confers on the copyright holder “‘exclusive' rights to use and to authorize the use of his work.” CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544, 549 (4th Cir. 2004) (quoting Sony Corp. v. Universal City Studios, Inc., 464 U.S 417, 432-33 (1984)). The holder's rights include distribution and performance or display of the original, reproduction of the original, and production of derivative works. 17 U.S.C. § 106; id.; Avtec Sys., Inc. v. Peiffer, 21 F.3d 568, 571 (4th Cir. 1994). Additionally, the Copyright Act provides that “anyone who violates any of the exclusive rights of the copyright owner…is an infringer of the copyright.” 17 U.S.C. § 501(a). To establish a claim for copyright infringement under the Copyright Act, a plaintiff must show two things: (1) it owned a valid copyright, and (2) the defendant(s) encroached upon the rights conferred by copyright ownership. 17 U.S.C. § 501(a); Peiffer, 21 F.3d at 571.

         At issue in this case is the validity of GT's copyright.[2] Defendants contend GT does not have a valid copyright on the “Organic” design because the design is embodied on “useful articles” which are not protected under copyright law, the design is unoriginal, and GT has not established ownership of the copyright. To claim a valid copyright, GT must show the design is both (1) original and (2), in the case of a useful article, physically or conceptually separable from the utilitarian aspects of the item. Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 429 (4th Cir. 2010). Additionally, GT must show ownership of the copyright. Id. at 428. A plaintiff can rely on the certificate of copyright registration as prima facie evidence of validity, provided the registration was made before or within five years after the first publication of the work. 17 U.S.C. § 410(c). GT, however, cannot rely on its certificate of registration because the first publication of “Organic” was in 2007 while its registration was not issued until 2017. Am. Compl. at Ex. A.

         First, GT must show the design is original, which “implicates only a light burden” satisfied by showing “the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.” Collezione Europa USA, Inc., 618 F.3d at 430 (citations and internal quotation marks omitted). A “slight amount” of creativity is sufficient to establish originality; “[t]he vast majority of works make the grade quite easily, as they possess some creative spark.” Id.

         GT's Amended Complaint sufficiently alleges the “Organic” design is original. GT claims it created the design independently, either on its own or through work for hire. Am. Compl. ¶ 20. Additionally, GT's description of the design as a “bold pattern of unique irregularly sized rectangular fields enclosing fitted, curved elements evocative of tribal or aboriginal works” makes it plausible that “Organic” possesses “at least some minimal degree of creativity. Id. ¶ 8; see Collezione Europa USA, Inc., 618 F.3d at 430.

         Second, because a useful article[3] is at issue, GT must show the useful article is eligible for protection under copyright law as a pictorial, graphic, or sculptural work by showing the item “incorporates pictorial, graphic, or sculptural features that can be identified separately from and are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. § 101.

         This is known as the “conceptual separability test.” In analyzing conceptual separability, the Fourth Circuit has cited favorably to this ...


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