Habersham Plantation Corporation et al v. Art & Frame Direct, Inc., et al

Filing 232

ORDER granting in part and denying in part 223 Motion for Permanent Injunction and Award of Prejudgment Interest. Signed by Judge James I. Cohn on 12/15/2011. (prd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 10-61532-CIV-COHN
HABERSHAM PLANTATION CORPORATION,
a Georgia corporation, and HABERSHAM
INVESTMENT PARTNERSHIP, L.P., a
Georgia corporation,

Magistrate Judge Seltzer

Plaintiffs,
v.
ART & FRAME DIRECT, INC., a Florida corporation,
WORLD OF DECOR, INC., a California corporation,
THE LIQUIDATION STATION INC., GLOBAL
IMPORTING, INC., WORLD OF DECOR BLUE
HERON, LLC, CLOSING FOREVER, LLC,
DECORATOR’S RESERVE, INC., ART & FRAME
DIRECT/TIMELESS INDUSTRIES GEORGIA, INC.,
WORLD OF DECOR, INC., a Florida corporation,
Defendants.
__________________________________________/
ORDER GRANTING IN PART MOTION FOR PERMANENT INJUNCTION
ORDER GRANTING IN PART MOTION FOR PREJUDGMENT INTEREST
THIS CAUSE came before the Court upon Plaintiffs’ Motion for Entry of
Permanent Injunction and Award of Prejudgment Interest [DE 223], Defendants’
Response in Opposition [DE 227], and Plaintiffs’ Reply Memorandum [DE 229]. The
Court has carefully considered the filings and is otherwise fully advised in the premises.
I. BACKGROUND
On September 28, 2011, the Court entered a final judgment in favor of
Habersham Plantation Corporation and Habersham Investment Partnership, L.P.
(“Plaintiffs”), and against Defendants Art & Frame Direct, Inc., et al. Plaintiffs obtained a
jury verdict for $1,376,000 in damages resulting from infringement of 13 of 16

copyrighted furniture designs [DE 212], out of a total of 19 claims asserted in the
Complaint [DE 1]. On October 26, 2011, Plaintiffs filed the present motion for a
permanent injunction and for prejudgment interest. Defendants oppose the motion.
II. DISCUSSION
A. Permanent Injunction
Plaintiffs seek a permanent injunction prohibiting Defendants from copying,
manufacturing, or selling any of Defendants’ products which have been found by the
jury to infringe the Plaintiffs’ designs, prohibiting Defendants from using the phrases
“Habersham” or “Habersham Style,” and for Defendants to destroy the over one
hundred pieces of similar furniture in their inventory.1 Defendants argue that Plaintiffs
have waived this relief by not seeking it in the Pretrial Stipulation nor by requesting such
relief at trial, and do not meet the legal standard to obtain such relief.
As to the waiver argument, the Court notes that Plaintiffs did seek this relief in
their Complaint [DE 1], though there is no specific reference in the Joint Pretrial
Stipulation regarding injunctive relief, but rather a reference that the Complaint raises
the issues for trial [DE 169 at 9]. Defendants contend Plaintiffs cannot obtain this relief
pursuant to Fed. R. Civ. P. 59(e). Under Rule 59(e), there are “three major grounds
which justify reconsideration: (1) an intervening change in controlling law; (2) the
availability of new evidence; and (3) the need to correct clear error or prevent manifest
injustice.” Association For Disabled Americans, Inc. v. Amoco Oil Co., 211 F.R.D. 457,
477 (S.D.Fla. 2002). Such a motion must be filed within 28 days of entry of judgment.
1

The proposed relief contains several other prohibitions on Defendants’ actions.
See Exhibit B to Motion [DE 223-2].
2

Plaintiffs argue that there is new evidence as to the number of pieces of
infringing furniture in Defendants’ inventory. See Email from Defendants’ counsel to
Plaintiffs’ counsel, Exhibit A to Motion [DE 223-1]. Plaintiffs contend that not until after
trial did they learn of the extent of infringing furniture pieces in the possession of
Defendants. The Court concludes that this evidence is newly available evidence that
allows Plaintiffs to invoke Rule 59(e) to seek the additional relief of a permanent
injunction against Defendants.
In Ebay, Inc. v. Mercexchange, L.L.C., 547 U.S. 388, 392-93 (2006), the United
States Supreme Court held that a permanent injunction is not automatically imposed
upon a jury verdict of infringement (patent or copyright). Rather, a district court must
exercise its discretion consistent with traditional principles of equity. 547 U.S. at 394. A
“plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that
remedies available at law, such as monetary damages, are inadequate to compensate
for that injury; (3) that, considering the balance of hardships between the plaintiff and
defendant, a remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction.” Id. at 391.
Plaintiffs cite to the testimony of Tom Skipper to support their claim of irreparable
injury, wherein Skipper testified that retailers will substitute less expensive products for
products such as Habersham. Exhibit F to Reply Memorandum [DE 229-1]. Such
substitution would therefore extend damages beyond the legal remedy of Plaintiffs
obtaining damages for sales made by Defendants. If additional, unquantifiable sales
would be lost due to the public perception that cheaper, similar products are available,
Plaintiffs would suffer both reduced sales and reduced sale prices. Defendants argue
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that the testimony referenced by Plaintiffs is speculative and cannot form the basis for
an irreparable harm finding. Although a close question, the Court concludes that
Plaintiffs have shown that they have suffered an irreparable injury.
Turning next to the adequacy of legal remedies, Defendants contend that the
jury award in this case, in an amount “over three fourths of the total gross revenue or
net sales of the defendants,” is more than adequate compensation. Plaintiffs rely on
similar arguments in the above discussion of irreparable injury, in that there is additional
loss of product goodwill that cannot be quantified. Whether such an injury can be
redressed by money damages is a close question. Nevertheless, the Court agrees with
Plaintiffs that based upon the record at trial and the newly available evidence in Exhibit
A, remedies available at law are inadequate to compensate for their injuries.
In considering the balance of hardships between Plaintiffs and Defendants, the
Court notes that since the filing of the Complaint, Defendants agreed to stop selling
their infringing furniture. Plaintiffs contend that an injunction is necessary to preserve
this status quo with little hardship to Defendants. Defendants argue that there is no
evidence that they sold the products prior to this action with knowledge of infringement.
Plaintiffs point out that evidence of intent was appropriately excluded from trial under
the Copyright Act. The Court concludes that Plaintiffs have shown that a remedy in
equity is warranted to maintain the status quo, now that infringement has been proven.
Finally, the public interest would not be disserved by a permanent injunction, as the
public benefits in the long run by enforcement of copyrights and a ban on selling
infringing items. The Court will therefore issue a permanent injunction.

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B. Scope of Permanent Injunction
Defendants object to two subsections of Plaintiffs’ proposed permanent
injunction, Exhibit B to the Motion, as overbroad. The first concerns Plaintiffs insertion
of the term “materially” to modify “copied or derived,” in paragraph 1.c of the proposed
permanent injunction. Defendants contend that because Plaintiffs’ copyrights
themselves are compilations and/or derivative of earlier designs, therefore having “thin”
protection, it is improper for the Plaintiffs to use an injunction to expand the protection
for its thin derivations from competition from other derivative designs. Plaintiffs do not
address the inclusion of the word “materially” in their reply. The Court agrees with
Defendants that paragraph 1.c of the proposed injunction is overbroad and shall not be
included.
Defendants next object to paragraph 1.d, which forbids Defendants from using
the phrases “Habersham” or “Habersham style” to describe, identify or designate any
furniture products. Defendants contend that the Court’s dismissal of the trademark
claims at the summary judgment stage makes such relief inappropriate. The Court
agrees and will strike paragraph 1.d from the permanent injunction.
Finally, the Court will make one further change and give the parties a suggestion.
In paragraph 2 of the proposed injunction, Defendants would be ordered to destroy all
infringing products within 30 days from the date of the order. Rather than destroy the
furniture, the Court encourages the parties to agree to have Defendants donate the
furniture in Plaintiffs’ name to homeless shelters, foster homes, group homes, homes
built by organizations for low-income residents, nursing homes or similar residences for
disadvantaged persons. This relief would not harm the copyright or goodwill of
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Plaintiffs. The Court will change the deadline to 90 days in order to facilitate agreement
about the Court’s suggestion.
C. Prejudgment Interest
Plaintiffs seek an award of prejudgment interest under the Copyright Act.
Although the Act does not expressly authorize prejudgment interest, such authority “can
be inferred from congressional purpose and general principles.” TMTV Corp., v. Mass
Productions, Inc., 645 F.3d 464, 474 (1st Cir. 2011) (noting that “a number of circuits
support prejudgment interest awards for copyright infringement; and circuit cases where
such awards have been disallowed do not in general apply a categorical ban.”).2
Defendants first argue that Plaintiffs have waived this relief by not seeking it
within the Joint Pretrial Stipulation, nor by raising the issue with the Court after the jury
verdict. The Court notes that Plaintiffs did plead for such relief in the Complaint, and
did attempt to raise the issue at trial. See Trial Transcript, Vol. 4, p. 800, Exhibit 2 to
Defendants’ Response [DE 227-2] (Defendants objected to having the expert testimony
on prejudgment interest come before the jury). The Court’s ruling left the matter for the
Court to decide. Since the right to prejudgment interest is not certain until after the jury
verdict, Plaintiffs have not waived their right to seek such relief.
An award of prejudgment interest serves to make a copyright holder whole, “for
damages properly include the forgone use of money of which the [copyright owner] was
wrongly deprived.” General Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56 (1983)
(patent case). Whether prejudgment interest should be awarded on a damage recovery
2

Neither side cites to an Eleventh Circuit decision regarding prejudgment
interest in a Copyright Act case, nor was the Court able to find one.
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“is a question of fairness resting within the District Court’s sound discretion.” Osterneck
v. E.T. Barwick Industries, Inc., 825 F.2d 1521, 1536 (11th Cir. 1987) (quoting Wolf V.
Frank, 477 F.2d 467, 479 (5th Cir.), cert. denied, 414 U.S. 975 (1973)) (both securities
actions). The Court concludes that an award of prejudgment interest in this copyright
action is warranted to fully compensate Plaintiffs for the damages that occurred in this
case.
Plaintiffs seek the award to begin three years prior to the filing of their Complaint
on August 20, 2010. Defendants oppose this relief and contend that Plaintiffs should
not be rewarded for their delay in filing this action. Plaintiffs correctly note that the jury
specifically found that Defendants failed to prove that Plaintiffs knew or should have
known about the Defendants’ sale of the accused furniture more than three years
before the filing of the Complaint. Jury Verdict, p. 4 [DE 212]. The Court concludes
that the appropriate date to begin prejudgment interest is three years prior to the filing
of the Complaint.
As to the rate of interest, Plaintiffs seek an award utilizing the Florida state
statutory rates, which varied during the relevant period from 11% in 2007 to 6% in 2011.
Defendants ask the Court to use the far lower federal post-judgment rate, which has
ranged from 5% at the beginning of 2007 to less than 0.4% at the end of 2008, a level
below which it has remained through today. Plaintiffs contend that using the postjudgment rate would allow Defendants to keep their pre-recession profits while
imposing later occurring, historically low interest rates upon Plaintiffs. See TMTV,
Corp., 645 F.3d at 475.
A third and more fair option exists. In the admiralty context, the Eleventh Circuit
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has held that it is the general rule to award prejudgment interest by using the prime rate
during the relevant period. Sunderland Marine Mut. Ins. Co., Ltd. v. Weeks Marine
Constr. Co., 338 F.3d 1276, 1280 (11th Cir. 2003) (cases cited therein). The prime rate
at the end of 2007 was 7.25% (as compared to the Florida rate of 11%), while it was
4.0% at the end of 2008 (Florida rate still 11%), and 3.25% thereafter (Florida rate was
8% in 2009 and 6% thereafter).
In exercising its discretion under the Copyright Act and relevant case law, the
Court will utilize the prime rate to determine prejudgment interest, based upon the
damage award chart provided by Plaintiffs.3 See Exhibit E to Motion. The prime rate is
not so low as to make an award of prejudgment interest negligible, nor is it as high as
the Florida rate, which could unfairly reward Plaintiffs’ delay in filing this action. The
Court will use the average prime rate for each calendar year, with simple interest
compounded annually.4 For 2007, because prejudgment interest begins on August 20,
2007, three years prior to the filing of the Complaint, an average rate of 7.69%5 will be
used on the damages of $100,000, for an amount of $7,690. For 2008, the average

3

The Court recognizes that in 2004, this Court used the post-judgment rate in
awarding prejudgment interest in a patent case. However, the issue of how to calculate
prejudgment interest was not contested in that action. See Aqua Massage Intern., Inc.
v. Licht, 2004 WL 2359346, *3 (S.D. Fla. Oct. 12, 2004).
4

The Court takes judicial notice of the Prime Interest Rate History. See
http://www.wsjprimerate.us/wall_street_journal_prime_rate_history.htm.
5

This approximate average rate was calculated upon the following data: on
August 20, 2007, the prime rate was 8.25%; on September 18, 2007, it was 7.75%; on
October 31, 2007, it was 7.5%; and on December 11, 2007, it was 7.25%. See
http://www.wsjprimerate.us/wall_street_journal_prime_ rate_history.htm.
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rate over the course of the year was 5.1%,6 which yields $48,195 in prejudgment
interest on the damages of $945,000 (the total damages from infringed products in
2008 from Plaintiffs’ Exhibit E). For 2009, the rate of 3.25% yields $40,137.50 in
prejudgment interest on the damages of $1,235,000 (total damages from infringed
products in 2009 from Plaintiffs’ Exhibit E). For 2010, Plaintiffs have limited the award
of prejudgment interest for the Central Park 3 Drawer Chest, the Valencia 60" Dining
Table, and the Chantepie Kitchen Island to the date of the filing of the Complaint.
Therefore, the 2010 award is the sum of the 2009 award, $40,137.50, plus $4,038.28
for 133 days from August 20 until December 31, 2010, at 3.25%. For 2011, the award
is $33,203.07, consisting of the entire damage award of $1,376,000 at 3.25%, but
reduced to 271 days from January 1 through September 28, 2011. Thus, the total
prejudgment interest award is $173,401.35.

III. CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED as follows:
1.

Plaintiff’s Motion for Entry of Permanent Injunction and Award of Prejudgment
Interest [DE 223] is hereby GRANTED in part and DENIED in part, as
discussed above;

6

This approximate average rate was calculated upon the following data: on
January 1, 2008, the prime rate was 7.25%; on January 22, 2008, the rate was 6.50%;
on January 30, 2008, the rate was 6.00%; on March 18, 2008, the rate was 5.25%; on
April 30, 2008, the rate was 5.00%; on October 8, 2008, the rate was 4.50%; on
October 29, 2008, the rate was 4.00%; and on December 16, 2008, the rate dropped to
3.25%, where it has remained to this day. See http://www.wsjprimerate.us/wall_
street_journal_prime_rate_history.htm.
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2.

The Court will separately enter an amended judgment which includes
prejudgment interest and a permanent injunction.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida,

this 15th day of December, 2011.

copies to:
counsel of record on CM/ECF

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