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United Fabrics International, Inc. v. G-Iii Apparel Group, Ltd.

United States District Court, Ninth Circuit

December 27, 2013

UNITED FABRICS INTERNATIONAL, INC., Plaintiff,
v.
G-III APPAREL GROUP, LTD. d.b.a.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT [50] AND DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT [72]

OTIS D. WRIGHT, II, District Judge.

I. INTRODUCTION

Before the Court are two Motions for Partial Summary Judgment filed by the parties in this copyright infringement action. Plaintiff United Fabrics International, Inc. ("UFI") seeks summary judgment on the issues of infringement, secondary infringement, and willfulness. (ECF No. 50.) Defendants G-III Apparel Group, Ltd. ("G-III) and McKlein Company LLC ("McKlein") seek summary judgment on the same issues as well as the availability of actual damages and profits as remedies. (ECF No. 72.) The Court finds that there is no genuine issue of material fact regarding the infringement of UFI's copyright in this case. However, the Court finds that there are triable issues as to whether the infringement was willful or innocent, and whether Defendants are liable for vicarious or contributory infringement. Moreover, the question of whether UFI can recover actual damages and profits turns on the nature of the infringement. Accordingly, the Court GRANTS IN PART and DENIES IN PART Plaintiff UFI's Motion for Partial Summary Judgment, and DENIES Defendants' Motion for Partial Summary Judgment.[1]

II. FACTUAL BACKGROUND

UFI filed the Complaint against Defendants G-III and McKlein (collectively "Defendants") on Febraury 5, 2013. (ECF No. 1.) The Complaint raises claims for Copyright Infringement and Vicarious and/or Contributory Copyright Infringement.

UFI creates and purchases exclusive rights to two-dimensional works of art, and files and receives copyright registrations for these works. (Simantob Decl. ¶ 2.)[2] UFI also creates original fabric prints and sells fabric bearing those prints to its customer base, which is composed mainly of companies that make and sell garments to retailers. ( Id. ) The copyright at issue in this case is a textile design UFI refers to as "AFFIRMATIVE, " which was registered with the United States Copyright Office on July 29, 2009, and allocated Registration Number VAu 994-780 (hereinafter "Subject Design"). ( Id. ¶ 6, Ex. 1.) UFI began sampling and selling the Subject Design in June 2009 and has since sold tens of thousands of yards of fabric bearing the Subject Design to numerous customers. ( Id. ¶ 7, Ex. 2.)

G-III is a company consisting of multiple divisions, including AM Retail Group. (Minniti Decl. ¶ 1, Monico Decl. ¶ 1.) AM Retail Group is located in Brooklyn Park, Minnesota and operates retail stores under the name Wilson's Leather. (Minniti Decl. ¶¶ 1-5; Monico Decl. ¶¶ 1-5.) McKlein works with AM Retail Group to supply handbags and wallets to Wilson's Leather. ( Id.; P. Saetia Decl. ¶¶ 3-14.)

The parties are in agreement that handbags and wallets bearing the Subject Design (the "Accused Products") were available for sale by G-III at Wilson's Leather retail stores. (Simantob Decl. ¶ 10, Ex. 6; ECF No. 60 ¶ 18.) UFI did not authorize use of the Subject Design on the Accused Products. (Simantob Decl. ¶ 11; ECF No. 60 ¶ 18.) Defendants claim that they had no knowledge that the Subject Design was copyrighted by UFI. (Minniti Decl. ¶¶ 3-8; Monico Decl. ¶¶ 3-8.) However, UFI asserts that G-III was aware of the copyright because G-III sampled the Subject Design prior to UFI discovering the Accused Products for sale at Wilson's Leather. (UFI Mot. 8:7-13, 17:13-23.)

To support its theory, UFI points out that at least one division of G-III has been a customer of UFI since as early as 2007. (Simantob Decl. ¶ 9.) UFI claims that in July 2009, the Jessica Howard division of G-III ordered a sample of the Subject Design. ( Id. at Ex. 5.) An invoice dated July 14, 2010 also reflects that four yards of suede fabric bearing the Subject Design were sent to someone named Mitchell at the Jessica Howard division of G-III. (Simantob Decl. ¶ 9, Ex. 5.) Another order was apparently placed on August 8, 2010 by someone named Laura for four yards of the Subject Design in the same color scheme on sateen fabric. ( Id. )

Defendants rebut UFI's evidence of sampling the Subject Design by asserting that the individuals at G-III responsible for purchasing the Accused Products had no contact with the Jessica Howard division. (Minniti Decl. ¶ 5, Monico Decl. ¶ 5.) The Jessica Howard division is located in New York City, while AM Retail Group, the division responsible for Wilson's Leather, is based in Minnesota. (Minniti Decl. ¶ 5.) G-III asserts that the design for the Accused Products was selected by AM Retail Group employees after being provided with options from McKlein. ( Id. ¶¶ 2-3; Monico Decl. ¶¶ 2-3.) McKlein in turn received the fabric design options from Cheng Shun Textiles, a Chinese company. (P. Saetia Decl. ¶¶ 5, 14.) According to Defendants, the Accused Products were purchased on a good faith belief that the fabric design was not subject to any copyright restrictions. ( Id. ¶ 18; Minniti Decl. ¶ 6; Monico Decl. ¶ 6.)

After discovering the Accused Products for sale at Wilson's Leather stores, UFI sent G-III a cease and desist letter on December 5, 2012. (Burroughs Decl. ¶¶ 3, Ex. 9.) After an investigation, G-III indicates that it pulled the Accused Products from the sales floor in February 2013, but admits that some sales of the Accused Products occurred as late as March 2013. (Brooks Decl. ¶ 6, Ex. 6.)

The present Motions for Partial Summary Judgment were filed on November 4, 2013 and November 18, 2013. Since the Motions concern the same issues of fact and law, the Court determined that the Motions should be considered simultaneously. Several exhibits and portions of declarations submitted in support of and in opposition to the Motions have been filed under seal because they contain certain confidential information, such as proprietary customer lists and pricing.

III. LEGAL STANDARD

Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and identify specific facts through admissible evidence that show a genuine issue for trial. Id.; Fed.R.Civ.P. 56(c). Conclusory or speculative testimony in ...


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