Unicolors, Inc. v. Apollo Apparel Group LLC et al

Filing 102

FINDINGS OF FACT AND CONCLUSIONS OF LAW by Judge Michael W. Fitzgerald. (lom)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10
11

UNICOLORS, INC.,
Plaintiff,

12
13

v.

14
15
16

NB BROTHER CORP., et al.,
Defendants.

17
18

) Case No. CV 16-02268-MWF (JPRx)
)
)
) FINDINGS OF FACT AND
) CONCLUSIONS OF LAW
)
)
)
)
)
)
)
)
)
)
)

19
20

This matter came on for trial before the Court sitting without a jury on August 22

21

and 23, 2017. Following the presentation of evidence and the parties’ closing arguments,

22

the matter was taken under submission.

23

Having carefully reviewed the record and the arguments of counsel, as presented at

24

the trial and in their written submissions, the Court now makes the following findings of

25

fact and reaches the following conclusions of law under Rule 52 of the Federal Rules of

26

Civil Procedure. Any finding of fact that constitutes a conclusion of law is also hereby

27

adopted as a conclusion of law, and any conclusion of law that constitutes a finding of fact

28

is also hereby adopted as a finding of fact.

-1-

1
2
3

The following witnesses were called and examined by the parties in the order
recited below:
On August 22, 2017, Chan Yong Jeong appeared on behalf of Plaintiff Unicolors,

4

Inc. (“Unicolors”) and gave an opening statement. Miles L. Prince appeared on behalf of

5

Defendant NB Brother Corp. (“NB Brother”) and gave an opening statement.

6

On the same day, following opening statements, Mr. Jeong examined Nader

7

Pazirandeh, the president of Unicolors. Mr. Prince cross-examined Mr. Pazirandeh; Mr.

8

Jeong conducted a redirect examination; and Mr. Prince conduced a recross. Mr. Jeong

9

next examined Sung “Jonathan” Rho, a “design advisor” and president of a company

10

called Design Guard, Inc., who provides freelance “design advisory” services to Unicolors

11

in exchange for a fixed monthly fee. Mr. Prince cross-examined Mr. Rho.

12

On August 23, 2017, Mr. Prince examined Allen Yang, the founder and owner of

13

NB Brothers. Mr. Jeong cross examined Mr. Yang; Mr. Prince conducted a redirect

14

examination; and Mr. Jeong conducted a recross.

15

On August 23, 2017, following Mr. Yang’s testimony, Mr. Jeong made a closing

16

argument on behalf of Unicolors and Mr. Prince made a closing argument on behalf of NB

17

Brother.
I.

18
19

A.

20
21

FINDINGS OF FACT

Background
1. Unicolors

1.

Unicolors is based in Los Angeles, California. Mr. Pazirandeh, who has been

22

working for Unicolors since 1999, testified that the “heart of [Unicolors’] business is

23

creating designs.”

24

2.

Unicolors employs 25 designers who create designs that can ultimately be

25

printed on fabric, and about eight salespeople who then present the designs, either already

26

printed on fabric or in digital form, to Unicolors’ customers.

27
28

-2-

1

3.

Unicolors obtains copyright registrations for most of its designs, except for

2

the ones that it doesn’t “see any future” for. In order to save money, Unicolors registers

3

as many designs as possible on a single copyright certificate.

4

4.

Unicolors makes money primarily by selling fabric by the yard and licensing

5

its designs (also on a per-yard basis) to garment manufacturers, and sometimes sells

6

finished garments. Its customers are primarily garment manufacturers who make and sell

7

clothing to retailers.

8
9
10
11

5.

Unicolors tries to avoid selling fabric or licensing its designs to importers of

finished garments, though Mr. Pazirandeh understands that sometimes “importers get
ahold of [Unicolors’] designs.”
6.

In addition to sending salespeople out to meet with customers, Unicolors

12

maintains a large showroom containing fabrics printed with its designs. Mr. Pazirandeh

13

testified that “designers from everywhere … come and go through” the various design

14

samples. Unicolors does not keep records of who visits its showroom. Mr. Pazirandeh

15

would not knowingly allow an importer of finished garments into the showroom, but

16

Unicolors takes no specific steps to prevent it.
2. NB Brother

17
18

7.

NB Brother, a garment importing company founded in 2009, has an office in

19

Hacienda Heights, California and a warehouse in Vernon, California. Prior to July 2017,

20

NB Brother’s warehouse was located on Olympic Boulevard in Los Angeles, California.

21

NB Brother has two employees, and Mr. Yang is its owner.

22

8.

Since its inception, NB Brother has been in the business of importing

23

finished garments. It has never designed or manufactured fabric or finished garments, or

24

commissioned the manufacture of finished products constructed of particular fabrics.

25
26
27
28

9.

From 2014 through 2016, NB Brother had approximately 20 to 30 customers,

most of whom are located in downtown Los Angeles.
10.

Yang testified that NB Brother purchases all of its finished garments from

clothing wholesalers in China. The wholesalers maintain storefronts in a structure similar

-3-

1

to, but many times larger than, an American-style mall, which contains many different

2

wholesalers. Mr. Yang periodically travels to China to purchase finished garments on

3

behalf of NB Brother.

4

11.

The clothing wholesalers that NB Brother purchases from represent that they

5

manufacture the garments themselves in their own factories, and that NB Brother is

6

permitted to resell the garments in the United States.

7

12.

NB Brother first purchases clothing from the Chinese wholesalers and then

8

presents the clothing to its customers in Los Angeles. It does not solicit specific customer

9

requests and then attempt to locate clothing that satisfies those requests. Mr. Yang

10

testified that if NB Brother’s customers “want the items [NB Brother] already ha[s] in

11

stock, [NB Brother] will sell it to them. [If] [t]hey are not interested, then they won’t buy

12

from [NB Brother].”

13

B.

The Alleged Copyright Infringement

14

13.

Unicolors has valid ownership of SM1357 (the “Subject Design”), registered

15

with the United States Copyright Office under Registration Number VA 1-901-365, and

16

the Subject Design is original. This is a picture of the Subject Design (Plaintiff’s Exhibit

17

2):

18
19
20
21
22
23
24
25
26

14.

Unicolors created the Subject Design in 2013 and obtained a copyright on

27

January 6, 2014. Unicolors provided fabric samples bearing the Subject Design to

28

prospective customers, which were primarily companies that supplied clothing to Los

-4-

1

Angeles and New York retailers. Between December 2014 and May 2015, Unicolors

2

sold 36,614.10 yards of fabric bearing the Subject Design to various manufacturer-

3

customers.

4

15.

In April 2015, NB Brother purchased 1,300 pair of “NH-52”-style women’s

5

shorts (the “NH-52 Shorts”) from Chinese vendor Yiwu Longshun Import and Export Co.,

6

Ltd. (“Longshun”) for $1.65 per unit. On May 20, 2015, NB Brother resold all 1,300 pair

7

NH-52 Shorts to a company called “Superline” for $1.85 per unit. This is a picture of a

8

pair of NH-52 Shorts (Plaintiff’s Exhibit 16):

9
10
11
12
13
14
15
16
17
18
19

16.

Yang did not specifically recall purchasing the NH-52 Shorts from

20

Longshun, but he recalled that, prior to NB Brother being sued in this action, his general

21

practice when purchasing patterned clothing was to ask the representatives of Chinese

22

vendors such as Longshun whether there was “anything wrong with [the] merchandise”

23

and whether it was “okay for [him] to sell [the merchandise] in the U.S.,” in an effort to

24

avoid copyright infringement. Yang was consistently told that “it’s not a problem,” and

25

he had no reason to suspect otherwise because “no problems arose with respect to those

26

issues.”

27
28

17.

Yang testified that he had never visited the design rooms of Unicolors or any

other fabric producer, and had never heard of Unicolors before this lawsuit.

-5-

1

18.

Unicolors commenced this action against NB Brother and several other

2

defendants in April 2016. Unicolors alleged that, by purchasing and selling the NH-52

3

Shorts without Unicolors’ permission, NB Brother is liable under theories of direct,

4

vicarious, and/or contributory copyright infringement.

5
6
7
8
9

19.

Until being sued by Unicolors here, NB Brother had never been sued for

copyright infringement.
20.

Since being sued by Unicolors, NB Brother has required Chinese wholesalers

to provide proof of U.S. copyright registrations before purchasing patterned garments.
21.

Applying the law as stated below, the Court FINDS that the patterns are

10

substantially similar, such that the pattern of Exhibit 16 was copied from Exhibit 2. The

11

question, then, is whether NB Brother is liable for that copying.
II.

12

CONCLUSIONS OF LAW

13

A.

First Claim: Direct Copyright Infringement

14

1.

To prevail on a direct copyright infringement claim, a plaintiff must show (1)

15

that it owns a valid copyright on the allegedly infringed work, and (2) that the defendant

16

“copied” protected elements of that work. See, e.g., Three Boys Music Corp. v. Bolton,

17

212 F.3d 477, 481 (9th Cir. 2000); 4 Nimmer on Copyright § 13.01 (“Reduced to most

18

fundamental terms, there are only two elements necessary to the plaintiff’s case in an

19

infringement action: ownership of the copyright by the plaintiff and copying by the

20

defendant.”). It is undisputed that Unicolors owns a valid copyright on the Subject

21

Design. The focus is thus on the issue of “copying.”

22

2.

Absent direct evidence of copying, which Unicolors did not present, a

23

plaintiff can establish “copying” by showing (1) that the defendant had access to

24

plaintiff’s work and (2) that the two works are “substantially similar.” L.A. Printex

25

Industries, Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012).

26

3.

Some courts have held that, “in rare cases, a plaintiff can prove copying even

27

without proof of access if he can show that the two works are not only similar, but are so

28

strikingly similar as to preclude the [possibility] of independent creation.” Gable v. Nat’l

-6-

1

Broadcasting Co., 727 F. Supp. 2d 815, 823 (C.D. Cal. 2010) (citing Meta-Film Assoc.,

2

Inc. v. MCA Inc., 586 F. Supp. 1346, 1355 (C.D. Cal. 1984)). This rule only applies

3

where, “as a matter of logic, the only explanation [for the similarities] between the two

4

works must be ‘copying rather than … coincidence, independent creation, or prior

5

common source.’” 4 Nimmer on Copyright § 13.02 (2017) (internal quotation marks and

6

citations omitted). Unicolors argues that the pattern of the Subject Design and the NH-52

7

Shorts are so “strikingly similar” that a showing of access is unnecessary. The Court

8

disagrees. A side-by-side comparison of the two designs reveals many similarities; they

9

are both Aztec-style patterns containing a mix of angular shapes such as triangles and

10

diamonds. But there are also differences in the color scheme and in the arrangement of

11

the various shapes. For example, the Subject Design contains two rows of long, narrow

12

triangles with their points facing one another, bisected by a row of horizontal diamonds;

13

the NH-52 Shorts do not. While the patterns of the NH-52 Shorts and the Subject Design

14

share common elements, they are not the same. Accordingly, the Court declines to find

15

infringement under the “striking similarity” theory; a showing of both access and

16

substantial similarity is required.

17

4.

“To prove access, a plaintiff must show a reasonable possibility, not merely a

18

bare possibility, that an alleged infringer had the chance to view the protected work.” L.A.

19

Printex, 676 F.3d at 846 (internal quotation marks and citations omitted). “Absent direct

20

evidence of access, a plaintiff can prove access using circumstantial evidence of either (1)

21

a ‘chain of events’ linking the plaintiff’s work and the defendant’s access, or (2)

22

‘widespread dissemination’ of the plaintiff’s work.” Id. (quoting Three Boys Music, 212

23

F.3d at 482). However, “[a]ccess may not be inferred through mere speculation or

24

conjecture.” 4 Nimmer on Copyrights § 13.02 (2017) (citations omitted).

25

5.

For the duration of this action – indeed through the bench trial – the parties

26

have seemingly been laboring under the assumption that the key issue, apart from the

27

degree of similarity between the Subject Design and the NH-52 Shorts patterns, is whether

28

or not NB Brother had access to and copied the Subject Design. Mr. Yang’s

-7-

1

uncontroverted testimony made clear that NB Brother is solely in the business of

2

purchasing finished garments from China and reselling them in the U.S. NB Brother does

3

not design or manufacture clothing, does not commission the manufacture of clothing out

4

of selected fabrics, and does not visit the showrooms of any fabric designers, including

5

Unicolors. There is no evidence that NB Brother itself gained access to the Subject

6

Design and then copied it.

7

6.

The better question, which neither party has addressed, is whether Longshun

8

had access to, and thus may have copied, the Subject Design. Unicolors has not presented

9

any direct evidence that Longshun accessed the Subject Design prior to selling the NH-52

10

Shorts to NB Brother, and it also hasn’t presented any circumstantial evidence that would

11

render the notion of Longshun accessing the Subject Design anything more than

12

speculation or conjecture.

13

7.

Unicolors has not presented evidence of any “chain of events” linking the

14

Subject Design and the NH-52 Shorts. In connection with its summary judgment motion,

15

the only arguments Unicolors made regarding access were that (1) it sold a total of

16

36,614.10 yards of fabric printed with the Subject Design between December 2014 and

17

May 2015, and (2) NB Brother’s principal place of business is 1.6 miles away from

18

Unicolors’ principal place of business. Unicolors presented no new theories or evidence

19

of access at trial. The distance between NB Brother’s and Unicolors’ offices has no

20

bearing on the question of Longshun’s opportunity to access the Subject Design, as

21

Longshun is based in China and NB Brother purchased the NH-52 Shorts from Longshun

22

as finished products rather than asking Longshun to manufacture shorts out of fabric

23

imprinted with a pattern similar to the Subject Design. Unicolors has not established

24

Longshun’s access to the Subject Design under a “widespread dissemination” theory

25

either. In its statement of uncontroverted facts filed in connection with its summary

26

judgment motion, Unicolors stated that it “provided fabric samples [of the Subject Design]

27

to prospective customers, who are primarily suppliers to the Los Angeles and New York

28

fashion industry,” and then sold “approximately 36,614.10 yards of the fabric” to some of

-8-

1

those customers. Unicolors has presented no evidence that 36,000 or 37,000 yards of

2

fabric is a substantial amount in the context of wholesale textile sales. Without anything

3

else (and Unicolors has not presented anything else), it would be mere speculation to

4

conclude that Longshun, a Chinese company, had the opportunity to view and copy the

5

Subject Design as a result of Unicolors’ sale of 36,614.10 yards of fabric in the U.S.
8.

6

Therefore, the Court concludes that Unicolors has failed to establish that NB

7

Brother (independently or through Longshun) copied the Subject Design. NB Brother is

8

thus not liable for direct copyright infringement.

9

B.

Second Claim: Vicarious Copyright Infringement

10

9.

“A defendant is vicariously liable for copyright infringement if he enjoys a

11

direct financial benefit from another’s infringing activity and ‘has the right and ability to

12

supervise’ the infringing activity.” Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir.

13

2004) (quoting A&M Records, Inc. v. Naptster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001))

14

(additional citations omitted) (emphasis in original). “Those elements constitute

15

independent requirements; each must be demonstrated to render the defendant vicariously

16

liable.” 3 Nimmer on Copyright § 12.04 (2017).

17

10.

Based upon the evidence presented at trial and in connection with Unicolors’

18

motion for summary judgment, the only possible primary actor through whom NB Brother

19

could be liable for vicarious infringement is Longshun. However, given the lack of

20

evidence regarding Longshun’s access to the Subject Design, Unicolors has not

21

established that there is any underlying infringement and thus cannot possibly succeed on

22

a vicarious infringement claim against NB Brother. Moreover, even if Unicolors could

23

establish that Longshun copied the Subject Design, there is no evidence that NB Brother,

24

a U.S.-based importer of finished garments with two employees, has the “right and ability

25

to supervise” the activities of Longshun, a Chinese vendor. Accordingly, NB Brother is

26

not liable for vicarious copyright infringement.

27

///

28

///

-9-

1

C.

Third Claim: Contributory Copyright Infringement

2

11.

“One who, with knowledge of the infringing activity, induces, causes or

3

materially contributes to the infringing conduct of another may be liable as a contributory

4

copyright infringer.” Ellison, 357 F.3d at 1076 (internal quotation marks and citations

5

omitted) (emphasis in original). “Put differently, liability exists if the defendant engages

6

in ‘personal conduct that encourages or assists the infringement.’” Napster, 239 F.3d at

7

1019 (quoting Matthew Bender & Co. v. West Publ’g Co., 158 F.3d 693, 706 (2d Cir.

8

1998)).

9

12.

As with vicarious infringement, a prerequisite for contributory infringement

10

is some underlying direct infringement. Again, based upon the evidence presented,

11

Longshun is the only possible actor through whom Unicolors could hope to establish NB

12

Brother’s liability for contributory infringement, and Unicolors has failed to establish that

13

Longshun copied the Subject Design. Moreover, even if Unicolors could establish that

14

Longshun copied the Subject Design, there is no evidence that NB Brother acted with the

15

requisite mental state to be contributorily liable for Longshun’s infringement.

16

“Contributory liability requires that the secondary infringer know or have reason to know

17

of direct infringement.” Id. at 1020 (internal quotation marks and citations omitted).

18

While NB Brother’s pre-lawsuit approach of verbally asking Chinese manufacturers such

19

as Longshun whether it was “okay” to sell their garments in the United States cannot be

20

called a belt-and-suspenders approach to avoiding copyright infringement, NB Brother

21

was consistently told that it was “not a problem” and had no “problems” until this lawsuit.

22

Thus, even if Unicolors had established underlying infringement, it did not establish that

23

NB Brother knew or had reason to know of that infringement. Accordingly, NB Brother

24

is not liable for contributory copyright infringement.

25

III.

VERDICT

26

The Court FINDS and RULES as follows:

27

On Unicolors’ First Claim for direct copyright infringement, Unicolors failed to

28

establish that either NB Brother or Longshun, the Chinese vendor from which NB Brother

-10-

1

purchased the NH-52 Shorts, copied the Subject Design, and thus failed to establish direct

2

infringement. The Court thus finds in favor of NB Brother.

3

On Unicolors’ Second Claim for vicarious copyright infringement, Unicolors failed

4

to establish any underlying infringement by Longshun, the only entity through which NB

5

Brother could be held vicariously liable, or that Unicolors had the right and ability to

6

supervise Longshun’s activities, and thus failed to establish vicarious infringement. The

7

Court thus finds in favor of NB Brother.

8

On Unicolors’ Third Claim for contributory copyright infringement, Unicolors

9

failed to establish any underlying infringement by Longshun, the only entity through

10

which NB Brother could be held contributorily liable, or that NB Brother knew or should

11

have known of any infringement, and thus failed to establish contributory infringement.

12

The Court thus finds in favor of NB Brother.

13
14

The Court will enter a separate judgment pursuant to Federal Rules of Civil
Procedure 54 and 58(b).

15
16
17
18

Dated: October 3, 2017.
MICHAEL W. FITZGERALD
United States District Judge

19
20
21
22
23
24
25
26
27
28

-11-