Chic Home Design, LLC v. New Journey Group Limited et al

Filing 47

OPINION AND ORDER: re: 37 MOTION for Summary Judgment filed by New Journey Group Limited. For the foregoing reasons, New Journey's motion for summary judgment is DENIED. Chic Home's cross-motion for summary judgment is GRANTED, and New Journey's counterclaim for tortious interference is dismissed. The Clerk of Court is directed to close the motion at Docket Number 37. SO ORDERED. (Signed by Judge J. Paul Oetken on 8/30/2017) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CHIC HOME DESIGN, LLC, and THE
LUXURY BEDDING CO.,
Plaintiffs,
15-CV-9468 (JPO)

-v-

OPINION AND ORDER

NEW JOURNEY GROUP LIMITED d/b/a KING
LINEN, COZI HOME, CHEZMOI, and ECITY
DIRECT,
Defendants.
J. PAUL OETKEN, District Judge:

This is a case about textile design copyrights. Plaintiffs Chic Home Design, LLC and
The Luxury Bedding Co. (collectively, “Chic Home”) claim to own copyrights to three textile
patterns named “Livingston Comforter,” “Euphoria Yellow,” and “Pink Floral.” Chic Home
accuses Defendant New Journey Group Limited (“New Journey”) of infringing those copyrights.
New Journey claims that Chic Home’s copyright was improperly registered and is therefore
invalid. New Journey also asserts a counterclaim for tortious interference with contract.
New Journey has filed a motion for summary judgment. For the reasons that follow, that
motion is denied. Chic Home also moves for summary judgment on the tortious interference
counterclaim. That motion is granted.
I.

Background
A.

Factual Background

Our story begins in China. There, a company named Nantong Thongzhou Booming
Home Textile Co., Ltd. (“Booming”) designed and manufactured bedding sets. One of its

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customers was Chic Home, the plaintiff in this case. Chic Home sells bedding online and in its
store in Brooklyn.
In 2012, Booming began manufacturing the three disputed textile designs for Chic Home.
Chic Home’s version of events is as follows: Chic Home obtained computer-aided designs files
(“CADs”) for the Livingston Comforter and Euphoria Yellow designs from Booming, and
obtained the CAD for the Pink Floral design from a third party. (Dkt. No. 42 at 2–3.) Then,
Chic Home’s president, Morad Nasiri, worked with Booming to change certain colors and
trimmings for each of the designs. (Id. at 3.) After the designs were finalized, Booming began
manufacturing the three bedding sets for Chic Home. Booming made repeated assurances to
Chic Home that it was selling these comforter sets exclusively to Chic Home, and not to any
other bedding merchants in the United States. (Dkt. No. 43 ¶¶ 5‒6.) At his deposition, Nasiri
testified that he believed that Chic Home owned the rights to the three designs. (Dkt. No. 43-2 at
13:14–14:24.)
On September 20, 2014, however, Booming entered into a contract with New Journey,
transferring to New Journey the rights to twenty-eight designs, including the three designs
disputed in this case. (Dkt. No. 38-5.) Since then, New Journey manufactured and sold bedding
products using those three designs. (See Dkt. No. 42 at 1 (quoting Dkt. No. 43-6).) New
Journey stopped manufacturing the designs when this lawsuit was filed. (Dkt. No. 43-6 at
25:17–25:22.)
On October 31, 2014, Chic Home registered a copyright for the Livingston Comforter
design. (Dkt. No. 43-4.) In the “Author” field, it lists Jingjing Zhang, a Chinese employee of
Booming. (Id.) In the “Copyright Claimant” field, it asserts that the copyright was transferred
“[b]y written agreement.” (Id.) On January 7, 2016, Chic Home registered a copyright for the

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Euphoria Yellow and Pink Floral designs, providing substantially the same information as for the
Livingston Comforter registration. (Id.)
B.

Procedural History

Chic Home filed this suit on December 3, 2015. (Dkt. No. 1.) The operative complaint is
the Second Amended Complaint (the “Complaint”), filed on July 27, 2016. (Dkt. No. 28
(“Compl.”).) The Complaint asserts three claims for copyright infringement, one for each of the
three designs. New Journey filed an answer on August 2, 2016. (Dkt. No. 29.) In addition to
disputing the validity of the three copyrights, New Journey asserted a counterclaim against Chic
Home for tortious interference with New Journey’s contractual relationship with Booming. (Id.)
New Journey filed this motion for summary judgment on February 3, 2017. (Dkt. No.
37.) Chic Home has not filed a formal cross-motion for summary judgment on the tortious
interference counterclaim, but its opposition brief nevertheless seeks summary judgment on the
issue. (See Dkt. No. 42.)
II.

Summary Judgment Standard
Summary judgment is appropriate where “there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is
material if it “might affect the outcome of the suit under the governing law.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if, considering the record as
a whole, a rational jury could find in favor of the non-moving party. Ricci v. DeStefano, 557
U.S. 557, 586 (2009) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986)).
“On summary judgment, the party bearing the burden of proof at trial must provide
evidence on each element of its claim or defense.” Cohen Lans LLP v. Naseman, No. 14 Civ.
4045, 2017 WL 477775, at *3 (S.D.N.Y. Feb. 3, 2017) (citing Celotex Corp. v. Catrett, 477 U.S.
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317, 322–23 (1986)). “If the party with the burden of proof makes the requisite initial showing,
the burden shifts to the opposing party to identify specific facts demonstrating a genuine issue
for trial, i.e., that reasonable jurors could differ about the evidence.” Clopay Plastic Prods. Co.
v. Excelsior Packaging Grp., Inc., No. 12 Civ. 5262, 2014 WL 4652548, at *3 (S.D.N.Y. Sept.
18, 2014). The court views all evidence “in the light most favorable to the non-moving party,”
and summary judgment may be granted only if “no reasonable trier of fact could find in favor of
the nonmoving party.” Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (quoting Lunds, Inc. v.
Chemical Bank, 870 F.2d 840, 844 (2d Cir. 1989)) (internal quotation marks omitted).
III.

Discussion
There are two issues before the Court on this motion: whether New Journey infringed on

Chic Home’s copyright and whether Chic Home interfered with the contract between New
Journey and Booming. Each is discussed in turn.
A.

Copyright Infringement

“To prove an infringement under the Copyright Act, a plaintiff must show both (1)
ownership of the copyright and (2) that the defendant used the copyrighted material without
permission.” Electrolux Home Prods., Inc. v. BuyRite Appliances, LLC, No. 14 Civ. 2461, 2014
WL 5140327, at *2 (E.D.N.Y. Oct. 14, 2014) (citing Rogers v. Koons, 960 F.2d 301, 306 (2d
Cir. 1992)). Since New Journey admits that it used the three designs without Chic Home’s
permission, the only question here is whether Chic Home’s copyright is valid.
Both original works and derivative works are copyrightable. Chic Home could own a
copyright if it was the original author of the three designs. It could also own a copyright if it
authored derivative designs based on pre-existing works. Nimmer on Copyright § 3.01 (2017)
(citing 17 U.S.C. § 101)). A derivative work is “any work based in whole, or in substantial part,

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upon a pre-existing (or ‘underlying’) work,” and is copyrightable “if it satisfies the requirements
of originality [in the Copyright Act] and is not itself an infringing work.” Id.
Another important distinction is that between owning a copyright and holding a valid
copyright registration. “[A] copyright ‘automatically inheres in a work the moment it is created,
which is to say when it is fixed . . . for the first time.’” Family Dollar Stores, Inc. v. United
Fabrics Int’l, Inc., 896 F. Supp. 2d 223, 229 (S.D.N.Y. 2012) (quoting Nimmer on Copyright
§ 7.16[A][1]). Thus, a copyright exists in the ether even if it is never registered. However, an
author must hold a valid registration with the U.S. Copyright Office in order to sue someone for
infringement. The Copyright Act provides that “no civil action for infringement of the copyright
in any United States work shall be instituted until . . . registration of the copyright claim has been
made” with the Copyright Office. 17 U.S.C. § 411(a); see also Reed Elsevier, Inc. v. Muchnick,
559 U.S. 154, 157‒58 (2010).
The Copyright Act also provides that a “certificate of a registration made before or within
five years after first publication of the work shall constitute prima facie evidence of the validity
of the copyright and of the facts stated in the certificate.” 17 U.S.C § 410(c). “Possession of a
certificate of registration provides its holder with a rebuttable presumption of ownership of a
valid copyright . . . [and] that all facts stated in the certificate are true.” R.F.M.A.S., Inc. v. So,
619 F. Supp. 2d 39, 52 (S.D.N.Y. 2009). In other words, a valid registration does two things: It
allows the registrant to sue, and it gives the registrant an evidentiary advantage in that litigation.
The presumption of validity can be rebutted by, among other things, “failure to register [a
derivative design] as a derivative work.” Ranieri v. Adirondack Dev. Grp., LLC, 164 F. Supp. 3d
305, 328 (N.D.N.Y. 2016). But rebutting the presumption does not invalidate the copyright or
the registration—it only negates the registrant’s evidentiary advantage. See Gibson Tex, Inc. v.

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Sears Roebuck & Co., 11 F. Supp. 2d 439, 443 (S.D.N.Y. 1998). Generally speaking, “a
misstatement or clerical error in the registration application, if unaccompanied by fraud, should
neither invalidate the copyright nor render the registration certificate incapable of supporting an
infringement action.” Nimmer on Copyright § 7.20[B][1]; see also 17 U.S.C. § 411(b)(1). As
long as there was no fraud on the Copyright Office and a corrected application would still be
eligible for copyright, the registration remains valid. Id.
1.

Chic Home’s Copyright

In this case, Chic Home’s lawsuit transformed from claiming an original-design
copyright to claiming a derivative-design copyright. The copyright registrations and the
Complaint intimate that Chic Home obtained the copyright to the three designs by written
transfer from Booming, which implies that Booming authored an original work and sold it to
Chic Home. In the “Author” field, the registrations list Jingjing Zhang, a Chinese employee of
Booming. (Dkt. No. 43-4.) In the “Copyright Claimant” field, the registrations assert that the
copyright was transferred to Chic Home “[b]y written agreement.” (Id.) None of the
registrations are categorized as derivative works. Continuing this theme, the Complaint attaches
a purported contract between Booming and Chic Home to prove that Chic Home owns the
copyrights. (Compl. ¶ 1 & Ex. 1.)
In keeping with this framing of the case, New Journey’s moving brief argues that
Booming never transferred ownership of the three designs to Chic Home, and that the copyright
registration is therefore invalid. (Dkt. No. 39 at 6–8.) New Journey supports this position with
affidavits from Booming employees stating that the rights to the three designs were never
transferred to Chic Home. (Dkt. No. 38 Exs. G, H.) New Journey also points out that, while
there is a contract between Booming and Chic Home transferring some textile designs, none of
the three disputed designs were part of that contract. (Dkt. No. 39 at 7.)
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In response, Chic Home takes a new tack, reframing the copyright registrations as
covering derivative works for which Chic Home is author. (See Dkt. No. 42.) Instead of
claiming that it bought the rights to the designs from Booming, Chic Home now claims that, by
instructing Booming on how to modify the original CADs, Chic Home created derivative works,
the copyrights of which it owned and registered. Therefore, even if Booming owned the original
CADs and never transferred them to Chic Home, Chic Home still owns the “enhanced”
designs—the modified CADs produced with extensive input by Chic Home. (Dkt. No. 42 at 7.)
In its reply brief, New Journey argues that the registrations are for original works, not
derivative works. (Dkt. No. 45 at 1–3.) In support of its position, New Journey points to the fact
that the registrations assert that Chic Home obtained the copyrights by written transfer and that a
Booming employee was the original author. New Journey also argues that the “enhanced”
bedding designs do not qualify as derivative works because they are too similar to the original
bedding designs. (Dkt. No. 45 at 3–4.)
2.

Validity of the Registrations

When viewed as registering derivative works, Chic Home’s registrations are clearly
inaccurate in three ways. First, the registrations do not classify the designs as derivative works.
Second, the registrations list a Booming employee as the author instead of a Chic Home
employee. Third, the registrations say that Chic Home obtained the copyright by written
transfer, which is inconsistent with Chic Home’s claim that it was the owner of the derivative
work from its inception. (See Dkt. No. 43-4.) 1

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This conclusion is based solely on the copyright registrations, and not Chic
Home’s applications to the Copyright Office. Neither party has submitted copies of Chic
Home’s copyright applications, and the Court has not reviewed them.
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Anticipating this problem, Morad Nasiri, Chic Home’s president, states in his declaration
that when Chic Home registered the three designs, it intended to copyright both the original
works (which it believed it owned by virtue of Chic Home’s dealings with Booming) and the
“enhanced” designs that were produced using Chic Home’s input. (Dkt. No. 43 ¶¶ 19–21.) As
to the mistakes regarding authorship, transfer, and classification, Nasiri declares that Chic Home
did not provide the wrong information intentionally or knowingly. (Id. ¶¶ 20–21.)
Summary judgment would be appropriate here if the Court concluded that the
inaccuracies in the registrations constitute fraud upon the Copyright Office. If that were the
case, the registrations would be invalid and the suit dismissed for failure to comply with the
registration prerequisite of 17 U.S.C. § 411(a). However, the Second Circuit has held that
“[o]nly the ‘knowing failure to advise the Copyright Office of facts which might have
occasioned a rejection of the application constitute[s] reason for holding the registration invalid
and thus incapable of supporting an infringement action.’” Eckes v. Card Prices Update, 736
F.2d 859, 861‒62 (2d Cir. 1984) (second alteration in original) (quoting Russ Berrie & Co. v.
Jerry Elsner Co., 482 F. Supp. 980, 988 (S.D.N.Y. 1980)). “The ultimate question the Court
must resolve is whether an error, misstatement or omission in an application for registration
invalidates the copyright. Courts considering the issue have generally followed a liberal
approach to upholding erroneous registration applications.” Eyal R.D. Corp. v. Jewelex New
York, Ltd., 576 F. Supp. 2d 626, 640 (S.D.N.Y. 2008).
Viewing the facts in the light most favorable to Chic Home, the Court concludes that
there remains a genuine dispute over whether Chic Home really intended to register a derivative
work. Likewise, there is a genuine dispute, as discussed below, over whether the “enhanced”

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designs were copyrightable as derivative works. 2 Chic Home, by submitting a sworn declaration
from Nasiri, adduced evidence that it authored a derivative work, that it intended to register a
derivative work, and that the errors were not intentional. That evidence is enough to stave off
summary judgment on the issue of the registration’s validity.
The decision in JBJ Fabrics, Inc. v. Brylane, Inc., 714 F. Supp. 107 (S.D.N.Y. 1989), is
instructive here. In that case, the copyright registrant claimed to own a derivative design and
sued an alleged infringer. The defendant moved for summary judgment, arguing that the
registration was invalid because the registrant did not categorize it as a derivative work. The
court held that “[t]he fact that the design was not registered as a derivative work does not
automatically invalidate plaintiff’s registration” unless “plaintiff deliberately falsified its
registration.” Id. at 109. The court therefore denied summary judgment because “whether
plaintiff had the requisite scienter for a finding of fraud is a factual issue which cannot be
resolved on [a] motion for summary judgment.” Id; see also Gibson Tex, 11 F. Supp. 2d at 443
(“There is no evidence that Gibson’s failure to inform the Copyright Office of the work’s
derivative nature was motivated by scienter rising to the level of deliberate misrepresentation.

2

The Court notes that § 411(b)(2) does not apply at this point. That section
provides that “[i]n any case in which inaccurate information [in a copyright registration] is
alleged, the court shall request the Register of Copyrights to advise the court whether the
inaccurate information, if known, would have caused the Register of Copyrights to refuse
registration.” 17 U.S.C. § 411(b)(2). “[T]here is no case law in the Second Circuit interpreting
or applying § 411(b)(2) and the procedure has been rarely invoked in general.” Palmer/Kane
LLC v. Rosen Book Works LLC, 188 F. Supp. 3d 347, 348 (S.D.N.Y. 2016). The Court agrees
with the Palmer/Kane court’s textual reading of the statute, in which the court concluded that the
referral provision “concerns inaccurate information that ‘was included on the application for
copyright registration with knowledge that it was inaccurate.’” Id. (quoting 17 U.S.C.
§ 411(b)(1)(A) (emphasis added)). As the issue of Chic Home’s scienter is in dispute, the Court
concludes that referral to the Copyright Office is not appropriate or required at this time. See
also Distribuidora De Discos Karen C. Por A. v. Universal Music Grp., Inc., No. 13 Civ. 7706,
2017 WL 1019697 (S.D.N.Y. Mar. 15, 2017).
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Therefore, it is inappropriate for the Court to grant summary judgment to defendants on this
claim.”).
Although Chic Home survives summary judgment, the original-to-derivative switcheroo
is not without consequence. Normally, the holder of a valid registration has the benefit of a
presumption that the registrant owns a valid copyright in the disputed works. However, given
that the registrations at issue in this case, if viewed as registering derivative works, have serious
errors, the presumption is rebutted and the evidentiary playing field is leveled. See Gibson Tex,
11 F. Supp. 2d at 442 (“Although the Court does not presume that Gibson’s copyright is valid,
[defendants] still must prove that Gibson’s design lacks the requisite originality for copyright
protection in order to prevail on their motion for summary judgment. Conversely, Gibson cannot
succeed on its summary judgment motion without showing that its design possesses sufficient
originality for copyright.”).
3.

Originality

In its reply brief, New Journey argues that even if the registrations did intend to copyright
derivative works, the “enhanced” designs are not copyrightable because they differ only trivially
from the original works. (Dkt. No. 45 at 3–4.) Nevertheless, the Court concludes that Chic
Home has adduced enough evidence of originality to create a genuine dispute on that issue.
“For a derivative work to have sufficient originality, its variation from the work from
which it is derived must be ‘substantial’ in nature, not ‘merely trivial.’” Gibson Tex, 11 F. Supp.
2d at 442 (quoting L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486, 490 (2d Cir. 1976)). “Although
this seems a difficult standard to meet, the requirement of substantial change is not much more
than a ‘prohibition of mechanical copying.’” Id. (quoting Batlin, 536 F.2d at 490). “In the
context of textile copyrights, the standard applied by the United States Court of Appeals for the

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Second Circuit for originality of derivative works is particularly easy to satisfy.” Id. (collecting
cases).
Here, Chic Home has submitted a sworn affidavit by Nasiri detailing the changes made to
the original CAD files. These include changing colors, adjusting the embroidery, and adding
ruffles and buttons. (Dkt. No. 43 ¶ 16.) “Typically, when the originality of a copyrighted work
is at issue, it becomes a question of fact for the jury to resolve.” Vargas v. Pfizer, Inc., 418 F.
Supp. 2d 369, 372 (S.D.N.Y. 2005) (quoting Tin Pan Apple, Inc. v. Miller Brewing Co., Inc., No.
88 Civ. 4085, 1994 WL 62360, at *4 (S.D.N.Y. Feb. 24, 1994)) (quotation marks and alterations
omitted). The Court therefore concludes that there is a genuine dispute on the issue of
originality.
While Chic Home lives to litigate another day, its derivative copyright, if found valid,
might be a slim one. A derivative copyright “covers only those elements contained therein that
are original with the copyright claimant.” Nimmer on Copyright § 3.04[A]. “Where the
quantum of originality is slight and the resulting copyright is ‘thin,’ infringement will be
established only by very close copying because the majority of the work is unprotectable.”
Beaudin v. Ben & Jerry’s Homemade, Inc., 95 F.3d 1, 2 (2d Cir. 1996). For now, however,
summary judgment is not warranted.
B.

Tortious Interference

New Journey also moves for summary judgment on its counterclaim for tortious
interference with contract. (Dkt. No. 39 at 9‒10.) New Journey claims that by filing and
maintaining this lawsuit, Chic Home is interfering with New Journey’s contract with Booming.
New Journey alleges that the lawsuit “forced” it to stop manufacturing the three designs, which
“made it impossible for [New Journey] to uphold its end of the contract with [Booming] for the
manufacture of products.” (Dkt. No. 39 at 10.)
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Though Chic Home has not filed a formal motion for summary judgment on the tortious
interference crossclaim, its opposition brief requests summary judgment on the issue. New
Journey, in its reply brief, responds to Chic Home’s arguments on the merits (in part, and briefly)
but does not raise any procedural objection to the request for summary judgment. The Court
therefore construes Chic Home’s opposition brief as a cross-motion for summary judgment. See
e.g., Geller v. Prudential Ins. Co. of Am., 237 F. Supp. 2d 210, 212 n.2 (E.D.N.Y. 2002).
“Under New York law, the elements of a claim for tortious interference with contractual
relations are: i) the existence of a valid contract between the plaintiff and a third party; ii)
defendant’s knowledge of the contract; iii) defendant’s intentional inducement of the third party
to breach the contract or otherwise render performance impossible; and iv) damages to the
plaintiff.” Lennon v. Seaman, 63 F. Supp. 2d 428, 433 (S.D.N.Y. 1999) (citing Kronos, Inc. v.
AVX Corp., 81 N.Y.2d 90, 94 (1993)).
The weakest point of New Journey’s counterclaim is the third element. New Journey
does not contend that any contract was actually breached. Instead, it argues that actual breach is
not required, and that it is enough that the lawsuit made it “impossible” for the New JourneyBooming contract to continue. (Dkt. No. 39 at 10.) For starters, the Second Circuit has doubted
whether New York law allows tortious-interference-with-contractual-relations claims where
there has been no actual breach. See D’Andrea v. Rafla-Demetrious, 146 F.3d 63, 65 (2d Cir.
1998). But even if such claims were allowed, “a plaintiff must at least allege that the defendant’s
interference made the contract impossible to perform, or that the defendant induced the third
party to render performance impossible.” Nat’l Football League Properties, Inc. v. Dallas
Cowboys Football Club, Ltd., 922 F. Supp. 849, 856 (S.D.N.Y. 1996). A voluntary cessation of

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production for fear of losing a lawsuit is neither. If it were, virtually any lawsuit could be
grounds for a tortious interference claim.
Accordingly, Chic Home is entitled to summary judgment on the tortious interference
counterclaim.
IV.

Conclusion
For the foregoing reasons, New Journey’s motion for summary judgment is DENIED.

Chic Home’s cross-motion for summary judgment is GRANTED, and New Journey’s
counterclaim for tortious interference is dismissed.
The Clerk of Court is directed to close the motion at Docket Number 37.
SO ORDERED.
Dated: August 30, 2017
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

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