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

Filing 102

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

Download PDF
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-

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?