The opinion of the court was delivered by: VICTOR B. Kenton United States Magistrate Judge
AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW
This is a copyright case concerning a daisy flower design, which was printed onto fabric and made into items of clothing, which were in turn sold to consumers. Royal Printex, Inc., a California corporation ("Royal"), claims declaratory relief re: non-infringement against Defendants and Counterclaimants Unicolors, Inc. ("Unicolors"). Royal also claims that Unicolors engaged in unfair competition. Unicolors raises the affirmative defenses of failure to state a cause of action; fraud and deceit of Plaintiffs; unclean hands; and fault of Plaintiff. Unicolors counterclaims for copyright infringement and contributory infringement against Royal, Comma Design, Inc., d.b.a. Julia ("Comma") and Rainbow Apparel, Inc. ("Rainbow")(the counterclaims against Comma and Rainbow are for contributory infringement).
The matter proceeded to bench trial on June 9, 10 and 12, 2009. The Court now issues its Findings of Fact and Conclusions of Law.
1. On December 15, 2006, the U.S. Copyright Office ("Copyright Office") received and registered a number of works, consisting of approximately 60 pattern designs, submitted by Unicolors (identified as "Unicolors Studio"). The date of first publication was identified as December 4, 2006. The pattern at issue in this case is contained within that registration, identified as VA 1-392-580, and the pattern bears the number 611135. It is, generally, a daisy flower design with a polka-dot background ("daisy design").
2. From on and after December 15, 2006, Unicolors sold, advertised and published the daisy design to potential customers.
3. On or about December 15, 2006, Counter-Defendant, K-Pak Clothing, Corp., a California corporation ("K-Pak")*fn1 received a computer-aided design ("CAD") bearing a flower and dot design ("flower design") from one of its customers, known as Rue-21. K-Pak requested that Royal print the flower design from the CAD onto fabric for one of K-Pak's customers. K-Pak never represented to Royal that either it or any party possessed a copyright registration on the flower design.
4. From approximately December 2006, K-Pak placed several orders with Royal to print the flower design onto approximately 1,900 yards of fabric for one of K-Pak's customers. In January 2007, Royal delivered the fabric bearing the flower design to K-Pak. Thereafter, K-Pak sold fabric bearing the flower design to one of its customers.
5. From January 2007 through approximately March 2007, Royal printed the flower design onto approximately 16,500 yards of fabric, and sold fabric bearing that design to two of its customers, Comma and J&K Textile, Inc., a California corporation ("J&K").
6. In March 2007, Comma and J&K fashioned the fabric with the flower design into garments which were sold to Rainbow Apparel, Inc. ("Rainbow"), and L.C. Purchasing, doing business as Miry Collection, Inc., a California corporation ("Miry"), and The Zenobia, Inc., a California corporation ("Zenobia").
7. In March and May 2007, Unicolors discovered garments bearing the flower design in the store or in the possession of Rainbow and Miry. Between May and June, 2007, Unicolors sent cease and desist letters to Miry and to Royal, alleging infringement of the daisy design.
8. In April 2007, Unicolors sent a cease and desist letter to Rainbow. As a result, Rainbow ceased selling garments bearing the flower design, and thereafter refused to honor its contractual commitments with Comma to pay for the garments.
9. On May 18, 2009, Comma and Royal entered into a settlement agreement and mutual release by which Royal paid Comma the sum of $75,000 as a compromised amount that Comma was unable to ...