Gold Value International Textile, Inc., DBA Fiesta Fabric, a California Corporation, Plaintiff-Appellant,
v.
Sanctuary Clothing, LLC, a California Limited Liability Company; Amazon.com, Inc., a Washington Corporation; Macy's, Inc., an Ohio Corporation; Nordstrom, Inc., a Washington Corporation; Bloomingdales, Inc., a New York Corporation; Dillards, Inc., an Arkansas Corporation; Zappos IP, Inc., a Nevada Corporation; Does, 1-10, Defendants-Appellees.
Argued
and Submitted December 6, 2018 Pasadena, California
Appeal
from the United States District Court for the Central
District of California D.C. No. 2:16-cv-00339-JAK-FFM John A.
Kronstadt, District Judge, Presiding
Scott
Alan Burroughs (argued) and Trevor W. Barrett,
Doniger/Burroughs, Venice, California, for
Plaintiff-Appellant.
Jessica Strom Rutherford (argued), Alexander Malbin, and
Edmund J. Ferdinand III, Ferdinand IP LLC, New York, New
York, for Defendants-Appellees.
Before: Diarmuid F. O'Scannlain and Sandra S. Ikuta,
Circuit Judges, and George Caram Steeh III, [*] District
Judge.
SUMMARY[**]
Copyright
The
panel affirmed the district court's summary judgment and
award of attorney's fees in favor of the defendants in an
action under the Copyright Act.
Gold
Value International Textile, Inc., doing business as Fiesta
Fabric, alleged that defendant Sanctuary Clothing, LLC,
copied its fabric design, which was used to manufacture a
blouse that was sold by defendant retail outlets. Sanctuary
filed a counterclaim, seeking invalidation of Fiesta's
copyright. Concluding that Fiesta's copyright
registration was invalid, the district court granted summary
judgment in favor of defendants.
The
panel affirmed the district court's conclusion that
Fiesta's copyright registration was invalid under 17
U.S.C. § 411(b) because Fiesta knowingly included
inaccurate information in its copyright application that
would have caused the Copyright Office to deny registration.
Specifically, Fiesta knowingly included previously published
designs in its application to register an unpublished
collection. In addition, the Register of Copyrights indicated
that it would not publish a single group of published and
unpublished works. Because a valid registration is a
precondition to bringing an action for infringement, the
panel affirmed the district court's grant of summary
judgment in favor of defendants.
The
panel further held that defendants were prevailing parties,
and the district court did not abuse its discretion in
awarding attorney's fees under 17 U.S.C. § 505 even
though defendants prevailed on a technical defense.
OPINION
STEEH,
District Judge:
Gold
Value International Textile, Inc., doing business as Fiesta
Fabric ("Fiesta"), brought this action for
copyright infringement against Sanctuary Clothing, LLC
("Sanctuary"), and several clothing retailers.
Fiesta alleges that Sanctuary copied its fabric design, which
was used to manufacture a blouse that was sold by the
defendant retail outlets. Sanctuary filed a counterclaim,
seeking invalidation of Fiesta's copyright. Concluding
that Fiesta's copyright registration was invalid, the
district court granted summary judgment in favor of
Defendants. The district court determined invalidity pursuant
to 17 U.S.C. § 411(b), finding that Fiesta knowingly
included inaccurate information in its copyright application
that would have caused the Copyright Office to deny
registration. Recognizing that a valid copyright registration
is a prerequisite to bringing suit, the district court
dismissed Fiesta's complaint. The court also awarded
attorney's fees and costs to Defendants. Fiesta appeals
the final judgment as of right. Finding no error in the
conclusions of the district court, we affirm.
BACKGROUND
Fiesta
is a California corporation that creates textile designs and
sells fabric to its customers, who use the fabric to make
clothing. Sanctuary is a clothing manufacturer; the remaining
defendants are retailers who purchased garments from
Sanctuary and sold them to customers. Fiesta alleges that it
owns the copyright in a two-dimensional textile design
entitled 1461-43 ("1461 Design"). According to
Fiesta, Sanctuary infringed its copyright by creating and
selling clothing to retailers featuring a design
substantially similar to the 1461 Design.
Effective
October 24, 2013, Fiesta registered the 1461 Design under
Copyright Registration No. VAu 1-151-509 ("'509
Registration"), as part of its "Grp.
029-Spring/Summer 2014" collection. In addition to the
1461 Design, the '509 Registration comprises thirty-three
fabric designs. In the copyright application, Fiesta's
president, Morris Ajnassian, certified that none of the works
in the collection had been published as of October 23, 2013.
The fabric designs were registered as an unpublished
collection.
Prior
to the registration, Fiesta sold samples of fabric bearing
the 1461 Design to "a limited group of existing and
potential customers for the limited purpose of securing full
production contracts for hundreds or thousands of yards of
fabric." Between March 12, 2013, and October 24, 2013,
Fiesta sold about 190 yards of fabric featuring the 1461
Design. Ajnassian testified that he knew that sample fabric
bearing the 1461 Design had been sold prior to approving the
copyright registration application, but that he did not
consider sampling to be publication.
PROCEDURAL
HISTORY
In
ruling on the parties' cross-motions for summary
judgment, the district court determined that because the 1461
Design had been sold prior to registration, it had been
published and, therefore, Fiesta's identification of the
1461 Design as unpublished in the copyright application was
inaccurate. Because Fiesta knew that the fabric had
previously been sold, the court concluded, it included
inaccurate information in its copyright application with
knowledge that it was inaccurate. The court deferred a final
ruling on whether Fiesta's copyright registration was
invalid, and submitted an inquiry to the Copyright Office
regarding whether the Register of Copyrights would have
rejected Fiesta's application if it had known of the
inaccuracy. Specifically, the district court inquired as
follows:
Would the Register of Copyrights have rejected
Plaintiff's Registration No. VAu 1-151-509 for
2-dimensional artwork ("Grp.029-Spring/Summer
2014," filed October 24, 2013) with respect to Design
1461? Thus, would it have done so if, at the time of the
application, the Register of Copyrights had known that,
although Plaintiff had characterized the work as an
unpublished collection that included the 1461 Design,
Plaintiff previously had published the 1461 Design when it
sold to its customers fabric samples that used the 1461
Design, without limiting further distribution or sale by
those customers?
The
Register of Copyrights responded that "had the Office
been aware that the 1461 Design had been previously
published, the Office would have refused registration of that
work using the unpublished collections option because the
work was registered as unpublished when in fact it had been
published." As the district court explained, "[t]he
Register noted that if it is made aware of an error at the
time of application, the general practice of the Copyright
Office is to correspond with the applicant and give an
opportunity to correct the error" within forty-five
days. The ...