Fortress Iron L.P. v. Fairway Building Products, LLC

Filing 41

MEMORANDUM AND ORDER denying 19 Motion for Preliminary Injunction. Ordered by Senior Judge Joseph F. Bataillon. (ADB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

FORTRESS IRON L.P.,
Plaintiff,

8:18CV76

vs.
MEMORANDUM AND ORDER
FAIRWAY BUILDING PRODUCTS, LLC,
Defendant.

This matter is before the court on plaintiff Fortress Iron, L.P.’s (“Fortress”) motion
for preliminary injunction, Filing No. 19. The court heard oral argument on the motion
on June 28, 2018.
I.

BACKGROUND
Fortress is a designer and manufacturer of metal railings. Fortress alleges it

authored original installation instructions for installing its railings, posted the information
on its website, and included the instruction on the outside of the packaging for the
railings.

In October 2017, defendant Fairway Building Products, LLC (“Fairway”)

brought its metal railings to market and posted instructions on its website and on its
packages. Fortress contends Fairway’s instructions copy its instructions and infringe its
copyright on the instructions.

Fortress moves for a preliminary injunction enjoining

Fairway from using Fortress’s instructions and infringing Fortress’s copyright.
In support of the motion, Fortress has shown the instructions were created inhouse by Fortress employees at a significant cost of money and time. Filing No. 21-1,
Index of Evid., Ex. A, Declaration of Matt Sherstad (“Sherstad Decl.”) at 1. Fortress
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learned in late 2017 that Fairway was marketing an allegedly identical railing product
with identical packaging and installation instructions.

Id., Ex. A, Sherstad Decl. at 2.

Fortress lowered its prices in order to compete with Fairway’s products. Filing No. 37-5,
Index of Evid., Ex. H, Declaration of Jim Ganninger at 1. Fortress applied for and
received United States Copyright Registration No. TX0008468254 on January 26, 2018
for its instructions.

Filing No. 21-3, Index of Evid., Ex. C, Copyright Registration

Certificate. At oral argument, Fortress’s counsel stated that its price reductions resulted
in lost profits to the company of approximately $45,000 dollars per month for the two
months that Fairway sold products with infringing instructions after Fortress registered
its copyright.1
Fortress’s instructions and Fairway’s allegedly infringing instructions appear
identical in many respects. Compare Filing No. 1, Complaint, Ex. A, FE26 Installation
Instructions with id., Ex. B, Fairway Steel-Level Stair-Instructions. On February 20,
2018, Fortress filed this copyright infringement action against Fairway under the
Copyright Act of 1976, 17 U.S.C. §§ 101 et seq.
In opposition to Fortress’s motion, Fairway has shown that it became aware of
the filing of the plaintiff’s complaint several days after it was filed. Filing No. 28-1, Index
of Evid., Ex. A, Declaration of Greg Burkholder (“Burkholder Decl.”) at 1.

Without

admitting liability, Fairway removed the challenged instructions from its website on or
about March 1, 2018, and halted production and shipment of its metal railings from its

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Subject to certain exceptions, the copyright owner may not sue for infringement under the
federal Copyright Act until the owner has delivered “the deposit, application, and fee required for
registration” to the United States Copyright Office. 17 U.S.C § 411(a); Reed Elsevier, Inc. v. Muchnick,
559 U.S. 154, 157 (2010).

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manufacturing operation in China pending a rewrite of the new instructions. Id. at 1-2.
On or about March 7, 2018, Fairway drafted new instructions and computer-aided
design (CAD) drawings (“new instructions”) in about four hours. Id. at 2; see Filing No.
28- 2 Ex. B, new instructions.
Fairway was officially served with the Complaint on March 19, 2018. Filing No.
28-1, Ex. A, Burkholder Decl. at 2. On or about March 22, 2018, Fairway uploaded the
New Instructions to its website. Id. at 2. On or about April 19, 2018, Fairway began
including the new instructions in all of its metal railing packaging. Id. at 2. For purposes
of this motion, Fortress does not contend the new instructions infringe its copyright.
Fairway has shown that fewer than 5000 products with the old instructions
remain in inventory. Id. at 3. Fairway inserted copies of the new instructions in the
packages of its unsold inventory of railings that contain the allegedly infringing
instructions and posted a yellow “ATTENTION” notice on the outside of the packaging,
instructing the customer to disregard the old instructions and follow the new instructions
when installing the product. Id. at 2; see Filing No. 28-3, Ex. C, Photos of Notice & New
Instructions; Filing No. 28-4, Ex. D, Notice to Use New Instructions. Fairway has only
shipped products with its new instructions since May 8, 2018. Filing No. 28-1, Ex. A,
Burkholder Decl. at 2. Fairway has also shown that it would be costly to repackage the
products entirely because the equipment it requires to do so remains in China, where it
manufactures and packages its products. Id. at 2-4.
Fortress seeks an order enjoining Fairway from distributing the remaining
inventory unless it is fully re-packaged. Fairway opposes the motion and challenges the
validity of Fortress's copyright, contending that parts of Fortress's copyrighted
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instructions are functional or otherwise uncopyrightable and asserting affirmative
defenses of merger and functionality. Fairway argues that Fortress cannot show
irreparable harm or probability of success on the merits. Further, it argues that
Fortress’s delay in seeking injunctive relief undermines its claim of irreparable harm.
II.

LAW
The extraordinary remedy of an injunction should not be granted unless the

movant has demonstrated: (1) the threat of irreparable harm to the movant; (2) the
state of the balance between this harm and the injury that granting the injunction will
inflict on other parties; (3) the probability that the movant will succeed on the merits; and
(4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th
Cir. 1981) (en banc); Roudachevski v. All-American Care Ctrs., Inc., 648 F.3d 701, 705
(8th Cir. 2011). The burden of establishing the propriety of an injunction is on the
movant. Roudachevski, 648 F.3d at 705.
The Copyright Act provides that courts may grant injunctive relief “on such terms
as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C.
§ 502(a). Injunctions under the Copyright Act are governed by traditional equitable
considerations. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93 (2006)
(rejecting categorical rules for injunctions in patent cases).2 The Supreme Court “has
consistently rejected invitations to replace traditional equitable considerations with a rule

2

See also Winter v. Nat. Res. Defense Council, Inc., 555 U.S. 7, 22 (2008) (reaffirming the
equitable nature of the four-factor framework and applying it to a case involving a preliminary injunction).

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that an injunction automatically follows a determination that a copyright has been
infringed.” Id. at 392-93.3
In deciding whether to grant a preliminary injunction, likelihood of success on the
merits is the most significant factor. Laclede Gas Co. v. St. Charles Cnty., 713 F.3d
413, 419-20 (8th Cir. 2013). “To that end, the absence of a likelihood of success on the
merits strongly suggests that preliminary injunctive relief should be denied.’” Barrett v.
Claycomb, 705 F.3d 315, 320 (8th Cir. 2013) (quoting CDI Energy Servs., Inc. v. W.
River Pumps, Inc., 567 F.3d 398, 402 (8th Cir. 2009)). A party seeking injunctive relief
must show a fair chance of prevailing where a preliminary injunction is sought to enjoin
something other than government action based on presumptively reasoned democratic
processes. Richland/Wilkin Joint Powers Auth. v. U.S. Army Corps of Eng’rs, 826 F.3d
1030, 1040 (8th Cir. 2016).
A preliminary injunction cannot issue without a showing of irreparable harm.
Dataphase, 640 F.2d at 114 n.9.

It is the movant's burden to “demonstrate that

irreparable injury is likely in the absence of an injunction.”

Winter, 555 U.S. at 22

(emphasis in original). “To succeed in demonstrating a threat of irreparable harm, ‘a
party must show that the harm is certain and great and of such imminence that there is

3

Several circuit courts have found that eBay's holding requires courts to view as suspect any
general rule creating a presumption or an inference in favor of automatically imposing an injunction. See
e.g., Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 215-17 (3d Cir. 2014) (finding, under
eBay, that a party bringing a claim under the Lanham Act is not entitled to a presumption of irreparable
harm when seeking a preliminary injunction and must demonstrate that irreparable harm is likely); Flexible
Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 995 (9th Cir. 2011) (finding the Ninth Circuit’s “longstanding practice of presuming irreparable harm upon the showing of likelihood of success on the merits
in a copyright infringement case is no longer good law” under eBay and Winter); Salinger v. Colting, 607
F.3d 68, 77–78 (2d Cir. 2010) (applying eBay's holding to preliminary injunctions issued for alleged
copyright infringement).

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a clear and present need for equitable relief.’” Roudachevski, 648 F.3d at 706 (quoting
Iowa Utils. Bd. v. Fed. Commc'ns Comm'n, 109 F.3d 418, 425 (8th Cir. 1996)). Harm is
not irreparable when a party can be fully compensated for its injuries through an award
of damages. Gen. Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir.
2009) (finding no error in district court's determination that harm from “lost customer
relationships was equivalent to a claim of lost profits” and “could therefore be
compensated” as money damages); see also Bandag, Inc. v. Jack's Tire & Oil, Inc., 190
F.3d 924, 926 (8th Cir. 1999) (noting that the basis of injunctive relief in the federal
courts has always been irreparable harm and inadequacy of legal remedies).
“Even when a plaintiff has a strong claim on the merits, preliminary injunctive
relief is improper absent a showing of a threat of irreparable harm.” Roudachevski, 648
F.3d at 706. A failure to show irreparable harm is an independently sufficient ground
upon which to deny a preliminary injunction. Novus Franchising, Inc. v. Dawson, 725
F.3d 885, 893 (8th Cir. 2013); see Harry Brown's, L.L.C., 563 F.3d at 319.
A showing of irreparable harm does not automatically mandate a ruling in the
plaintiff’s favor; the court must proceed to balance the harm to the defendant in granting
the injunction. Hill v. Xyquad, Inc., 939 F.2d 627, 630-31 (8th Cir. 1991). The primary
question when issuing a preliminary injunction is whether the “balance of equities so
favors the movant that justice requires the court to intervene to preserve the status quo
until the merits are determined.” Dataphase, 640 F.2d at 113. In the Eighth Circuit,
courts look at the threat to each of the parties' rights that would result from granting or
denying the injunction to determine the harms that must be weighed. Baker Elec. Co-

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op., Inc. v. Chaske, 28 F.3d 1466, 1473 (8th Cir. 1994). Courts must also consider the
potential economic harm to each of the parties and to interested third parties. Id.
A district court must also consider whether the issuance of a preliminary
injunction serves the public interest before granting preliminary injunctive relief.
Dataphase, 640 F.2d at 114. There is a public interest in upholding copyright
protections. See Taylor Corp. v. Four Seasons Greetings, LLC, 403 F.3d 958, 968 (8th
Cir. 2005) (involving permanent injunction). In appropriate cases, the value placed on
free competition must be weighed against any individual's [intellectual property] interest.
See Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 505 (8th Cir.
1987) (involving a trademark infringement action and noting strong public interest in low
prices, avoiding monopolies and encouraging, not stifling, competition).
To establish copyright infringement, a plaintiff must show ownership of a valid
copyright and that the defendant copied original elements of its work.

Mulcahy v.

Cheetah Learning LLC, 386 F.3d 849, 852 (8th Cir. 2004) (citing Feist Publ'ns, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). To establish copying, the plaintiff
generally must show that the defendant had access to the material and that there is a
substantial similarity between the two works. Moore v. Columbia Pictures Industries,
Inc., 972 F.2d 939, 941–42 (8th Cir. 1992).
The merger doctrine is an affirmative defense closely related to the canon of
copyright law that ideas are not copyrightable. See 17 U.S.C. § 102(b); Toro Co. v. R &
R Prods. Co., 787 F.2d 1208, 1212 (8th Cir. 1986).

Under the merger doctrine,

copyright protection is denied to some expressions of ideas if the idea behind the
expression is such that it can be expressed in only a very limited number of ways. See
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id.; Schoolhouse, Inc. v. Anderson, 275 F.3d 726, 730 (8th Cir. 2002) (stating that
similarity in expression cannot be used to show copyright infringement when there is
only one way or only a few ways of expressing an idea). Likewise, functionality is an
affirmative defense. Warner Bros. Entm't v. X One X Prods., 840 F.3d 971, 980 (8th
Cir. 2016).
III.

DISCUSSION
It is plaintiff’s burden to show that any harm resulting from its loss of customers

or market share is irreparable. It has not met that burden. Fortress concedes that proof
of monetary damages, though difficult, will not be impossible. Fortress’s injuries are
quantifiable in terms of the monetary value of lost sales and can be recovered as money
damages.
For purposes of this motion, it is undisputed that Fairway is no longer infringing
Fortress’s copyrighted instructions. The allegedly infringing conduct was of limited
duration and damages for the conduct can reasonably be ascertained. The plaintiff has
not demonstrated any irreparable harm if injunctive relief is denied. For the most part,
the asserted injury—price erosion and the loss of some customers—has already
occurred. If Fortress can prove that the loss was due to Fairway’s alleged infringement
of its instructions, it will be entitled to damages. The court finds Fairway’s proposed
solution with respect to the Fairway products remaining in inventory is reasonable.
Because Fortress has an adequate remedy at law in an ultimate award of damages, the
court finds the motion should be denied.
For the record, the court will discuss the remaining Dataphase factors, though
the court’s findings on irreparable harm are dispositive of the motion. The plaintiff has
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demonstrated a fair chance of recovery on its claim. There is no real dispute on the
facts of copyright ownership/registration or copying and the plaintiff is likely to prove a
prima facie case.
The defendant, however, has asserted defenses of merger and functionality that
arguably challenge the validity of the copyright. There is some caselaw to support the
defendant’s position. At this point in the litigation, the court cannot say that the plaintiff’s
copyrighted instructions either are or are not deserving of copyright protection as a
matter of law. Fairway also argues that Fortress cannot show that the harm reflected in
its lost sales or price erosion is the result of the copying of the instructions, rather than
to having a competitor in the market, contending that the instructions are not a factor
that drives sales. The court finds there may be some merit to that position. Despite
questions on Fairway’s defenses and Fortress’s ability to prove causation, the court
finds the probability-of-success factor weighs slightly in the plaintiff’s favor.
With respect to the balance of harms, the defendant has shown that fewer than
5000 products with infringing instructions remain in inventory. Those products now
warn customers to disregard the infringing instructions and to follow the new
instructions. In view of Fairway’s actions to remedy the alleged infringement and the
availability of damages to compensate for any loss, Fortress cannot show that harm
resulting from a denial of the motion would outweigh the harm to the defendant in
granting it.
Fairway argues that Fortress’s delay in seeking injunctive relief weighs in its
favor in a balance of the equities. The court finds that the delay of several months at

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the most is not of sufficient duration to affect the court’s analysis. Accordingly, the court
finds the balance of harms factor weighs slightly in favor of the defendant.
There is a public interest in protecting copyrights, but that interest is dependent
on the likelihood that the copyright will be found valid and protectible.

There is a

countervailing public interest in promoting competition and preventing anti-competitive
business practices. There is some suggestion that Fortress seeks to protect its market
share. At this stage of the litigation, the court finds the public interest is a neutral factor
at best.
Applying the Dataphase factors, the court finds that Fortress has not
demonstrated the propriety of injunctive relief on its copyright claims.

The court

concludes that extraordinary relief in the form of an injunction is not warranted.
Accordingly,
IT IS ORDERED that the plaintiff’s motion for a preliminary injunction
(Filing No. 19) is denied.
Dated this 18th day of July, 2018.

BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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