Trade West, Inc. v. Oriental Trading Company, Inc.
Filing
43
ORDER GRANTING IN PART, DENYING IN PART DEFENDANT'S MOTION TO DISMISS AND STRIKE PLAINTIFF TRADE WEST, INC.'S COMPLAINT re 27 Motion to Dismiss. Signed by JUDGE LESLIE E. KOBAYASHI on 03/30/2017. -- OTC' s Partial Motion to Dismiss and to Strike Plaintiff Trade West, Inc's Complaint, filed October 31, 2016, is HEREBY GRANTED IN PART AND DENIED IN PART. The Motion is DENIED as to Count VI, and GRANTED insofar as Count VII is HEREBY DISMISSED WITH OUT PREJUDICE. Trade West is granted leave to file an amended complaint, consistent with the terms of this Order. Trade West must file its amended complaint by April 28, 2017. (eps, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF).
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
TRADE WEST, INC.,
)
)
Plaintiff,
)
)
vs.
)
)
ORIENTAL TRADING COMPANY,
)
INC.,
)
)
Defendant.
)
_____________________________ )
CIVIL 16-00474 LEK-KSC
ORDER GRANTING IN PART, DENYING IN PART DEFENDANT’S MOTION
TO DISMISS AND STRIKE PLAINTIFF TRADE WEST, INC.’S COMPLAINT
Before the Court is Defendant Oriental Trading Company,
Inc.’s (“OTC”) Partial Motion to Dismiss and to Strike Plaintiff
Trade West, Inc’s Complaint (“Motion”), filed on October 31,
2016.
[Dkt. no. 27.]
Plaintiff Trade West, Inc. (“Trade West”)
filed its memorandum in opposition on January 23, 2017, and OTC
filed its reply on January 30, 2017.
[Dkt. nos. 32, 33.]
On
February 9, 2017, Plaintiff filed notice of its intent to rely on
uncited authorities.
[Dkt. no. 36.]
hearing on February 13, 2017.
This matter came on for
At the hearing, the Court granted
Trade West leave to file additional exhibits, and Trade West did
so on February 14, 2017.
[Dkt. no. 38.]
On February 27, 2017,
OTC filed its response to Trade West’s supplemental filing.
[Dkt. no. 39.]
After careful consideration of the Motion, supporting
and opposing memoranda, the arguments of counsel, and the
relevant legal authority, OTC’s Motion is HEREBY GRANTED IN PART
AND DENIED IN PART for the reasons set forth below.
BACKGROUND
This lawsuit follows a previous case between the
parties regarding similar copyright and trademark infringement
claims.
[CV 05-00149 LEK-KJM.]
In 2007, the parties settled and
United States District Judge David Alan Ezra filed an Order of
Dismissal on July 24, 2007.1
[Id., dkt. nos. 71 (Settlement
Agreement, filed under seal), 72.]
Trade West now claims that OTC has again infringed on
Trade West’s registered trademark and copyrighted designs by
“displaying, distributing, offering for sale and selling
artificial flower leis and artificial flower hair clips,” and
that these activities constitute a breach of the 2007 Settlement
Agreement.
[Complaint for Breach of Settlement and for
Infringement (“Complaint”), filed 8/26/16 (dkt. no. 1), at ¶¶ 4,
33.]
The Complaint alleges the following claims: trademark
infringement and counterfeiting of hibiscus and fern design, in
violation of 15 U.S.C. § 1114 (“Count I”); unfair competition by
false designation of origin and by trademark and trade dress
infringement, in violation of 15 U.S.C. § 1125 (“Count II”);
1
CV 05-00149 was reassigned to this Court on June 3, 2016.
[Dkt. no. 76.]
2
deceptive trade practices, in violation of Haw. Rev. Stat.
§ 481A-3 (“Count III”); common law unfair competition, palming
off, trademark infringement (“Count IV”); unfair competition and
practices, in violation of Haw. Rev. Stat. § 480-2 (“Count V”);
copyright infringement (“Count VI”); breach of contract
(“Count VII”); and a claim for punitive damages (“Count VIII”).
Trade West prays for the following relief: various
forms of injunctive relief; general, special, statutory, treble,
and punitive damages; attorneys’ fees and costs; and any other
appropriate relief.
In the instant Motion, OTC argues that: 1) Trade West
fails to state a claim for copyright infringement because OTC’s
products and Trade West’s copyrights are not substantially
similar; 2) Trade West lacks standing to sue for breach of
contract; and 3) the portions of Trade West’s breach of contract
claim based on copyright infringement are preempted by the
federal Copyright Act.
OTC urges this Court to: 1) dismiss Trade
West’s copyright infringement claim (Count VI) with prejudice;
2) dismiss Trade West’s breach of contract claim (Count VII); and
3) if it does not dismiss Trade West’s breach of contract claim,
strike from the claim any references to Trade West’s copyright
infringement claims or Trade West’s copyrights and OTC’s alleged
use thereof.
The Motion is DENIED as to Count VI, and GRANTED
insofar as Count VII is DISMISSED WITHOUT PREJUDICE, with leave
3
to amend by April 28, 2017.
DISCUSSION
I.
Scope of Documents Considered
At the outset, this Court must determine whether it is
necessary to convert the instant Motion into a motion for summary
judgment.
As a general rule, this Court’s scope of review in
considering a motion to dismiss is limited to the allegations in
the complaint.
See Daniels-Hall v. Nat’l Educ. Ass’n., 629 F.3d
992, 998 (9th Cir. 2010).
“[A] court may consider evidence on
which the complaint necessarily relies if: (1) the complaint
refers to the document; (2) the document is central to the
plaintiff’s claim; and (3) no party questions the authenticity of
the copy attached to the 12(b)(6) motion.”
internal quotation marks omitted).
Id. (citations and
Ordinarily, consideration of
other materials requires the district court to convert a motion
to dismiss to a motion for summary judgment.
Yamalov v. Bank of
Am. Corp., CV. No. 10–00590 DAE–BMK, 2011 WL 1875901, at *7 n.7
(D. Hawai`i May 16, 2011) (citing Parrino v. FHP, Inc., 146 F.3d
699, 706 n.4 (9th Cir. 1998)).2
The Motion includes: two of Trade West’s copyright
registrations with the United States Copyright Office, VA 244 981
(artificial hibiscus flower lei) and VA 244 983 (artificial
2
Parrino was superseded by statute on other grounds, as
stated in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676,
681-82 (9th Cir. 2006) (per curiam).
4
hibiscus hair clip); [Motion, Decl. of Robert Siffring in Supp.
of Motion (“Siffring Decl.”), Exhs. A-B;] photographs of OTC’s
item numbers 34/1528 (artificial hibiscus lei) and 34/1526
(artificial hibiscus hair clip); [Motion, Decl. of Andrea Pallios
Roberts in Supp. of Motion (“Roberts Decl.”) at ¶¶ 2-3, Exhs. 12;] excerpts from various books, encyclopedias, and guides; [id.,
Exhs. 3-11;] and printouts from various websites; [id., Exhs. 1215].
OTC argues that Exhibits 3-15 depict how the hibiscus
flower appears in nature.
OTC filed a request for judicial notice in support of
the Motion (“RJN”) on October 31, 2016.
[Dkt. no. 28.]
OTC
first asks this Court to take judicial notice, pursuant to Fed.
R. Evid. 201(b), of Exhibits A and B to the Siffring Declaration
and Exhibits 1-15 to the Roberts Declaration.
However, as
previously noted, a court may consider exhibits attached to a
motion to dismiss under certain circumstances.
is unnecessary in such instances.
Judicial notice
After reviewing Exhibits A and
B and Exhibits 1-15 and comparing them to the allegations in the
Complaint, this Court FINDS that the Complaint refers to Trade
West’s copyright registration for VA 244 981 and VA 244 983
(Exhibits A-B); [Complaint at ¶¶ 22, 29;] and OTC item numbers
34/1528 (artificial hibiscus lei) and 34/1526 (artificial
hibiscus hair clip) (Exhibits 1-2); [id. at ¶¶ 4, 6, 29].
document is also central to Trade West’s claims.
5
Each
Further, Trade
West’s memorandum in opposition did not raise any challenges to
the authenticity of these exhibits.
This Court therefore
CONCLUDES that it can consider Exhibits A and B to the Siffring
Declaration and Exhibits 1 and 2 to the Roberts Declaration
without converting the Motion into a motion for summary judgment,
and DENIES AS MOOT OTC’s RJN as to these exhibits.
Exhibits 3-15 to the Roberts Declaration are pictures
of hibiscus flowers found in encyclopedias, books, and websites.
These pictures depict how the flowers appear in nature.
Trade
West’s memorandum in opposition did not raise any challenges to
the authenticity of Exhibits 3-15.
Rule 201(b) states: “The court may judicially notice a
fact that is not subject to reasonable dispute because it: (1) is
generally known within the trial court’s territorial
jurisdiction; or (2) can be accurately and readily determined
from sources whose accuracy cannot reasonably be questioned.”
This district court has recognized that courts may take judicial
notice of plant life.
See Coyle v. Gardner, 298 F. Supp. 609,
618 (D. Hawai`i 1969) (taking judicial notice that a plumeria is
a plant which “will often sprout from itself if a branch is just
thrown on the ground, and which requires no ‘cultivation’”).
This Court FINDS that the appearance of hibiscus flowers as they
appear in nature is a fact that is subject to judicial notice
pursuant to both Rule 201(a) and (b).
6
This Court therefore
GRANTS OTC’s RJN insofar as it will take judicial notice – for
purposes of the instant Motion only – of Exhibits 3-15 to the
Roberts Declaration.
OTC’s RJN also asks this Court to take judicial notice,
pursuant to Rule 201(b), of the information on the CV 05-00149
docket.
Trade West also asks this Court to take judicial notice
of the proceedings in CV 05-00149.
[Mem. in Opp. at 2.]
A court may take judicial notice of the existence
of matters of public record, such as a prior order
or decision, but not the truth of the facts cited
therein. See Lee v. City of Los Angeles, 250 F.3d
668, 689–690 (9th Cir. 2001); see also Interstate
Natural Gas Co. v. S. Cal. Gas Co., 2009 F.2d 380,
385 (9th Cir. 1953) (holding a court may take
judicial notice of records and reports of
administrative bodies).
Schoenwandt v. Hawaii Paroling Auth., Civ. No. 14–00444 HG BMK,
2014 WL 5822860, at *3 n.4 (D. Hawai`i Nov. 10, 2014) (some
citations omitted).
This Court GRANTS the parties’ request insofar as it
will take judicial notice – for purposes of the instant Motion
only – of the 2007 Settlement Agreement and the proceedings
before this Court in 2016 regarding the alleged breach of the
agreement, [CV 05-00149, dkt. nos. 75, 79, 82, 84, 88-89].
The
Court, however, DENIES the parties’ request, to the extent that
they ask this Court to take judicial notice of the truth of facts
discussed in those documents.
See Lee, 250 F.3d at 689-90.
OTC’s RJN is therefore GRANTED IN PART AND DENIED IN
7
PART.
This Court GRANTS the RJN as to: Exhibits 3-15 to the
Roberts Declaration; the 2007 Settlement Agreement; and the
proceedings in CV 05-00149 in response to Trade West’s request
for mediation.
Further, this Court can consider these materials
without converting the Motion into a motion for summary judgment.
Cf. Thomas v. Fin. Recovery Servs., No. EDCV 12–1339 PSG (Opx),
2013 WL 387968, at *2 (C.D. Cal. Jan. 31, 2013) (“It is wellsettled that . . . matters that are subject to judicial notice
may also be considered in evaluating a motion for judgment on the
pleadings.” (citing Buraye v. Equifax, 625 F. Supp. 2d 894,
896–97 (C.D. Cal. 2008); Amfac Mortg. Corp. v. Ariz. Mall of
Tempe, Inc., 583 F.2d 426, 429–30 & n.2 (9th Cir. 1978))).
This Court now turns to the merits of OTC’s Motion.
II.
Count VI - Copyright Infringement Claim
In Count VI, Trade West alleges that OTC has made,
sold, and distributed products that are substantially similar to
some of Trade West’s copyrighted designs, including those
registered under certificate of registration numbers VA 244 981
(artificial hibiscus lei) and VA 244 983 (artificial hibiscus
hair clip).
The products at issue include those that OTC
identifies with the item numbers 34/1547, 34/1528, 34/1526, and
IN-13601273.
[Complaint at ¶ 4.]
Trade West points out,
however, that the claims in the Complaint are not limited to
these item numbers.
[Id. at ¶ 5.]
8
According to Trade West, these acts constitute
infringements of Trade West’s copyrighted designs.
OTC argues
that Trade West fails to state a claim for copyright infringement
because OTC’s products and Trade West’s copyrighted designs are
not substantially similar.
The Ninth Circuit has stated that “[t]here is ample
authority for holding that when the copyrighted work and the
alleged infringement are both before the court, capable of
examination and comparison, non-infringement can be determined on
a motion to dismiss.”
Christianson v. West Pub. Co., 149 F.2d
202, 203 & n.2 (9th Cir. 1945) (some citations omitted) (citing
Van Camp Sea Food Co. v. West-gate Sea Products Co., 9 Cir., 28
F.2d 957, certiorari denied 279 U.S. 841, 49 S. Ct. 263, 73 L.
Ed. 987 (1928)); accord Nelson v. PRN Prods., 873 F.2d 1141,
1143-44 (8th Cir. 1989) (affirming dismissal of copyright
infringement claim and stating that “[t]he trial judge could
properly determine the matter of substantial similarity as a
matter of law and did so by granting defendants’ motion to
dismiss” because both works were before the court).
Therefore,
since both Trade West’s copyrighted works and OTC’s alleged
infringements are before the Court, capable of examination and
comparison, the Court CONCLUDES that it can determine the
sufficiency of the infringement claim on OTC’s motion to dismiss.
9
This Court has stated that:
“To establish infringement, two elements must be
proven: (1) ownership of a valid copyright, and
(2) copying of constituent elements of the work
that are original.” Feist Publ’ns, Inc. v. Rural
Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991)
(citation omitted); see also Rice v. Fox Broad.
Co., 330 F.3d 1170, 1174 (9th Cir. 2003).
Plaintiff can establish the second element by
demonstrating that Defendant had access to
Plaintiff’s work and that the two works are
substantially similar. L.A. Printex Indus. v.
Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir.
2012) (citation omitted).
Trendex Fabrics, Ltd. v. Kim, Civil No. 13–00253–LEK–RLP, 2013 WL
5947027, at *3 (D. Hawai`i Nov. 5, 2013).
As to the first element, OTC disputes Trade West’s
ownership of a valid copyright.
OTC alleges that Trade West
attempts to claim ownership of the exclusive right to the idea of
using hibiscus flowers in artificial leis or hair clips and the
expression that naturally flows from that idea.
OTC argues that
the Copyright Act does not protect ideas or the expression that
naturally flows from an idea, such as the natural form of a
hibiscus flower.
Therefore, OTC argues that Trade West’s
copyright claims fail as a matter of law.
This Court disagrees with OTC.
Section 410(c) of the
Copyright Act states that a certificate of registration is prima
facie evidence of the validity of the copyright if registration
occurred “before or within five years after first publication of
the work.”
17 U.S.C. § 410(c).
According to VA 244 981, the
10
creation of Trade West’s artificial hibiscus lei was completed in
1986, and the first publication was on September 19, 1986.
[Siffring Decl., Exh. A.]
According to VA 244 983, the creation
of Trade West’s artificial flower hair clip was completed in
1986, and the first publication was on May 30, 1986.
Exh. B.]
[Id.,
The registrations clearly occurred before or within
five years after the first publications of the works.
Therefore,
this Court FINDS that the certificates constitute prima facie
evidence of the validity of Trade West’s copyrights.
“A certificate of copyright registration, therefore,
shifts to the defendant the burden to prove the invalidity of the
plaintiff’s copyrights.”
Entm’t Research Grp., Inc. v. Genesis
Creative Grp., Inc., 122 F.3d 1211, 1217 (9th Cir. 1997)
(citations and internal quotation marks omitted).
Thus, OTC has
the burden to prove the invalidity of Trade West’s copyrights.
OTC can rebut this presumption of validity by “offer[ing] some
evidence or proof to dispute or deny [Trade West’s] prima facie
case of infringement.”
See id. at 1217-18 (some citations
omitted) (citing North Coast Indus. v. Jason Maxwell, Inc., 972
F.2d 1031, 1033 (9th Cir. 1992)).
Here, OTC does not offer any
evidence or proof to dispute or deny Trade West’s prima facie
case of infringement.
Therefore, the Court CONCLUDES – for
purposes of the instant Motion – that OTC has not rebutted the
presumption of validity of Trade West’s copyrights.
11
Accordingly,
the Court CONCLUDES – for purposes of the instant Motion – that
Trade West is the valid copyright owner of the artificial
hibiscus leis and hair clips at issue in this case.
OTC next argues that Trade West fails to state a claim
for copyright infringement because OTC’s products and Trade
West’s copyrighted designs are not substantially similar.
OTC
first points out that Trade West fails to allege in its Complaint
what it believes the similarities to be.
Upon review of the
Complaint, however, this Court FINDS that Trade West “pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for” creating products
that are substantially similar to Trade West’s copyrighted
designs.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citation omitted).
In the Ninth Circuit, a plaintiff establishes
substantial similarity by demonstrating that the allegedly
infringing work is both objectively similar (the “extrinsic
test”) and subjectively similar (the “intrinsic test”) to the
copyrighted work.
Sid & Marty Krofft Television Prods., Inc. v.
McDonald’s Corp., 562 F.2d 1157, 1164 (9th Cir. 1977), superseded
on other grounds by 17 U.S.C. § 504(b).
“The intrinsic test,
which is based on the ordinary person’s subjective impressions of
the compared works as a whole, is typically a question reserved
for the jury.”
Erickson v. Blake, 839 F. Supp. 2d 1132, 1135 (D.
12
Or. 2012) (citing Swirsky v. Carey, 376 F.3d 841, 845 (9th Cir.
2004)).
“Whether there is sufficient objective similarity under
the extrinsic test, however, may be decided by the court as a
matter of law on a motion to dismiss.”
Id. at 1135-36 (some
citations omitted) (citing Christianson v. West Pub. Co., 149
F.2d 202, 203 (9th Cir. 1945)).
“When applying the extrinsic
test, the court must analytically dissect the works to evaluate
any similarities on an element-by-element basis.”
Id. at 1136
(citing Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435,
1443 (9th Cir. 1994)).
OTC argues that the only similarities between OTC’s
products and Trade West’s copyrighted designs fall within one of
the two categories: those that reflect the features of the
hibiscus flower as it exists in nature, or those that are
functional.
OTC argues that Trade West cannot maintain an
infringement claim based upon either of these similarities.
Therefore, OTC urges this Court to dismiss Trade West’s copyright
infringement claim with prejudice, because there is no
substantial similarity of protectable subject matter.
A.
Product Descriptions
OTC’s artificial hibiscus lei features single
artificial hibiscus flowers, without leaves, spread evenly around
the lei, with gaps between the flowers on the lei.
Decl., Exh. 1.]
[Roberts
OTC’s artificial hibiscus hair clip features
13
three artificial hibiscus flowers, with leaves, attached to a
clip.
[Id., Exh. 2.]
Except for the leaves, the hibiscus flower
in both OTC’s lei and its hair clip has the same design.
in Supp. of Motion at 3.]
[Mem.
The flowers on both the leis and hair
clips have multiple, colorful petals with scalloped edges and
veining.
The flowers also have yellow pistils protruding from
the centers of the petals, with yellow stamens placed randomly
along the pistils.
[Roberts Decl., Exhs. 1-2.]
Trade West
points out that, “on some of the leis, the petals have a
different color on the outer and inner portions of the petal[s].”
[Mem. in Supp. of Motion at 3.]
On the hair clips, the hibiscus
flower sits atop the leaves, which are green with jagged edges
and veining.
B.
[Roberts Decl., Exh. 2.]
Substantial Similarity Between Leis
OTC argues that the way it designed the hibiscus flower
for its leis reflects how the flower appears in nature, and
therefore no substantial similarity of protectable subject matter
between Trade West’s leis and OTC’s leis exists.
At the hearing,
Trade West highlighted the issue of OTC copying the color
assortment3 of Trade West’s flowers used to make leis,
particularly the blue and white hibiscus flowers.
Trade West
also argued that some of OTC’s petals have a lighter-colored
3
Trade West describes the copied color assortment as “red,
pink, orange, yellow, sky blue, [and] purple.” [Mem. in Opp. at
24.]
14
center and darker edges, like some of Trade West’s petals.
In
response, OTC argues that it did not copy Trade West’s color
assortment because, in nature, hibiscus flowers exist in all
different colors and color combinations.
Furthermore, OTC’s alternate argument is that any
similarities between its products and Trade West’s products that
do not reflect how the hibiscus flower appears in nature serve a
functional purpose.
OTC alleges that the manner and style in
which the flowers are attached to the lei are functional.
In
particular, OTC explains that it attaches the flowers
perpendicularly to the string to have the stamen of the hibiscus
remain distinctive, in a way that appears similar to Trade West’s
method of stringing leis.
If the string were to go through the
center of the flower, OTC claims that the stamen might need to be
removed, or would be less distinctive.
This method of stringing
also causes the flowers on the lei to rotate in different
directions around the string.
OTC argues that elements like the
base of the flower, the spacers between the flowers, and the
plastic pistil and stamen are functional, as are the practice of
cutting the petals from a single piece of fabric and the omission
of leaves from the flowers on the lei.
The Court is not persuaded by OTC’s functionality
arguments, particularly regarding its method of stringing its
leis.
It is readily apparent that the stamen is a distinctive
15
part of the hibiscus flower.
It is possible, however, for OTC to
use other methods of stringing its leis to maintain the
distinctiveness of the stamen.
See, e.g., BriansPhotoCraft,
Making a Haku Lei/Floral Hat Band with Paper Flowers & Paper
Leaves, YouTube (Mar. 6, 2013),
https://www.youtube.com/watch?v=ZUTVslRHgAc; wikiHow to Make a
Paper Lei, http://www.wikihow.com/Make-a-Paper-Lei (last visited
Mar. 30, 2017).
Because this Court rejects OTC’s functionality
argument, this Court CONCLUDES that Trade West’s Complaint
contains sufficient allegations of substantial similarity to
survive a motion to dismiss.
In light of this Court’s ruling on the functionality
issue, it does not need to address OTC’s alternate argument based
on how the hibiscus flowers appear in nature.
At a later stage,
such as in a motion for summary judgment, the parties may wish to
revisit the issue of whether the purported similarities between
Trade West’s and OTC’s hibiscus flowers reflect how the flower
actually appears in nature.
The Court therefore CONCLUDES that Trade West has
stated a plausible copyright infringement claim based on OTC’s
alleged infringement of Trade West’s artificial hibiscus lei
copyright.
See Iqbal, 556 U.S. at 678 (“To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
16
accepted as true, to ‘state a claim to relief that is plausible
on its face.’” (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570, 127 S. Ct. 1955 (2007))).
C.
Substantial Similarity Between Hair Clips
OTC argues that the way it designed the hibiscus flower
used to make its hair clips reflects how the flower appears in
nature, and therefore no substantial similarity of protectable
subject matter between Trade West’s hair clips and OTC’s hair
clips exists.
Although OTC may design the leaves as they appear
in nature, the leaves on OTC’s hair clips are not how they appear
in nature in relation to the hibiscus flower.
In nature, the
leaves are attached to the stem of the flower, not directly to
the flower.
See, e.g., Roberts Decl., Exhs. 3, 8, 9.
Furthermore, OTC argues that the leaves and the
arrangement of the flowers on the hair clip serve a functional
purpose.
On OTC’s hair clips, the artificial hibiscus sits atop
green leaves.
[Id., Exh. 2.]
The leaves are connected by one
piece of cloth, and have jagged edges and veining.
This Court
disagrees that the leaves serve a functional purpose.
The
inclusion of the leaves is not for functional purposes, but
rather, for aesthetic and artistic purposes.
both aesthetic and functional.
A feature cannot be
See Clicks Billiards, Inc. v.
Sixshooters, Inc., 251 F.3d 1252, 1260 (9th Cir. 2001) (“Nor has
this circuit adopted the ‘aesthetic functionality’ theory, that
17
is, the notion that a purely aesthetic feature can be
functional.” (citations omitted)).
The Court therefore CONCLUDES that Trade West has
stated a plausible copyright infringement claim based on OTC’s
alleged infringement of Trade West’s artificial hibiscus hair
clip copyright.
See Iqbal, 556 U.S. at 678.
OTC’s Motion is
DENIED as to Count VI.
III. Count VII - Breach of Contract Claim
OTC’s motion to dismiss Trade West’s breach of contract
claim centers on ripeness, which the parties characterize as
“standing.”
OTC argues that the action was prematurely filed
because Trade West allegedly did not satisfy the procedural
requirement in the 2007 Settlement Agreement of pursuing nonjudicial resolution of the dispute before filing a civil action.
This issue, however, is easily remedied, and has been remedied
since the filing of the Complaint.
The parties participated in
mediation with a private mediator, but were unsuccessful in
resolving the matter.
The required time period has lapsed since
the mediation proceedings to allow for a party to file suit, and
both parties concede that the action is now ripe.
Because Trade
West did not satisfy the 2007 Settlement Agreement’s non-judicial
dispute resolution requirement before filing the Complaint, this
Court GRANTS OTC’s Motion insofar as this Court DISMISSES
Count VII.
18
OTC argues that the dismissal should be with prejudice
because it would be futile to allow Trade West to amend
Count VII.
OTC asserts that the portions of Trade West’s breach
of contract claim based on copyright infringement are preempted
by the federal Copyright Act.
The Court CONCLUDES that amending
Count VII is not futile because: different remedies are available
to Trade West in a breach of contract claim, as compared to a
copyright infringement claim; and Trade West’s breach of contract
claim contains the “extra element” of “the bilateral expectation
of compensation.”
See Benay v. Warner Bros. Entm’t, Inc., 607
F.3d 620, 629 (9th Cir. 2010) (citation and internal quotation
marks omitted).
Therefore, the dismissal of Count VII is WITHOUT
PREJUDICE, and Trade West is GRANTED leave to amend its Complaint
to reflect its compliance with the 2007 Settlement Agreement’s
non-judicial dispute resolution requirement.4
In light of this
ruling, it is not necessary for this Court to address OTC’s
request to strike the portions of Trade West’s breach of contract
claim regarding copyright infringement.
OTC’s Motion is GRANTED IN PART AND DENIED IN PART as
to Count VII.
The Motion GRANTED insofar as Count VII is
DISMISSED, and the Motion is DENIED insofar as the dismissal is
4
The Court notes that, the better practice would have been
for Trade West to file a motion to enforce the 2007 Settlement
Agreement, and/or a complaint for declaratory and injunctive
relief.
19
WITHOUT PREJUDICE.
The Court ORDERS Trade West to file its amended
complaint by April 28, 2017.
This Court CAUTIONS Trade West
that, if it does not file its amended complaint by April 28,
2017, this Court will dismiss Count VII with prejudice.
This
Court also CAUTIONS Trade West that this Court has only given it
leave to cure the ripeness defect in Count VII.
If Trade West
wishes to add any new parties, claims, or theories of liability,
it must file a motion to amend, pursuant to Fed. R. Civ. P.
15(a)(2).
CONCLUSION
On the basis of the foregoing, OTC’s Partial Motion to
Dismiss and to Strike Plaintiff Trade West, Inc’s Complaint,
filed October 31, 2016, is HEREBY GRANTED IN PART AND DENIED IN
PART.
The Motion is DENIED as to Count VI, and GRANTED insofar
as Count VII is HEREBY DISMISSED WITHOUT PREJUDICE.
Trade West
is granted leave to file an amended complaint, consistent with
the terms of this Order.
Trade West must file its amended
complaint by April 28, 2017.
IT IS SO ORDERED.
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DATED AT HONOLULU, HAWAII, March 30, 2017.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
TRADE WEST, INC. VS. ORIENTAL TRADING COMPANY, INC.; CIVIL 1600474 LEK-KSC; ORDER GRANTING IN PART, DENYING IN PART
DEFENDANT’S MOTION TO DISMISS AND STRIKE PLAINTIFF TRADE WEST,
INC.’S COMPLAINT
21
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