Scentsy, Inc. v. Harmony Brands, LLC , 585 F. App'x 621 ( 2014 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT NOV 04 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
SCENTSY, INC., an Idaho corporation, No. 13-35416
Plaintiff - Appellant, D.C. No. 1:11-cv-00249-BLW
v.
MEMORANDUM*
HARMONY BRANDS, LLC, a Utah
limited liability company,
Defendant - Appellee.
SCENTSY, INC., an Idaho corporation, No. 13-35779
Plaintiff - Appellant, D.C. No. 1:11-cv-00249-BLW
v.
HARMONY BRANDS, LLC, a Utah
limited liability company,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Idaho
B. Lynn Winmill, Chief District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Argued and Submitted August 29, 2014
Seattle, Washington
Before: NOONAN, HAWKINS, and GOULD, Circuit Judges.
Scentsy, Inc. appeals from the district court’s grant of summary judgment on
Scentsy’s trade dress infringement and copyright infringement claims and award of
attorneys’ fees to Harmony Brands, LLC. We have jurisdiction under 28 U.S.C. §
1291. We affirm in part, reverse in part, and remand this matter to the district
court for further proceedings.1
I
We review the grant of summary judgment de novo. Suzuki Motor Corp. v.
Consumers Union of U.S., Inc., 330 F.3d 1110, 1131 (9th Cir. 2003).
The district court’s conclusion that Scentsy’s designs were functional was
not error; we agree with the district court that a reasonable jury could not conclude
that the trade dress elements at issue are non-functional: The aesthetically pleasing
nature of the designs constitutes part of the actual benefit that the consumer wishes
to purchase, “as distinguished from an assurance that a particular entity made,
sponsored, or endorsed a product.” Rachel v. Banana Republic, Inc., 831 F.2d
1503, 1506–07 (9th Cir. 1987) (internal quotation marks and citation omitted).
1
Because the parties are familiar with the facts, we do not relate them
here except as necessary to explain our decision.
2
Because functional elements are not protectable as trade dress, we affirm the
district court’s judgment as to trade dress infringement claims.
Regarding Scentsy’s claims under the Copyright Act, we hold that the
district court erred in granting summary judgment on the issue of indirect copying.
We agree with the district court’s conclusion regarding the extrinsic test that the
designs at issue are subject to broad copyright protection. But after filtering out
elements of the designs that relate only to similarity of unprotectable ideas, such as
the use of a base and heating element, a melting tray, and holes for releasing heat
from the warmers, we conclude that it should have been left for a jury to consider
substantial similarity. See Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904, 913–14
(9th Cir. 2010); Funky Films, Inc. v. Time Warner Entm’t Co., L.P., 462 F.3d 1072,
1077 (9th Cir. 2006); Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir. 1996). There
is enough similar protectable expression here that the issue of substantial similarity
should not have been decided on summary judgment. The intrinsic test question,
“whether an ordinary reasonable observer would consider the copyrighted and
challenged works substantially similar,” Mattel, Inc., 616 F.3d at 914, here is most
appropriately answered by a jury viewing the case as a whole, after having been
correctly instructed. We do not agree with the district court’s conclusion that no
reasonable jury could have found the challenged products of Harmony
3
substantially similar to the copyrighted products of Scentsy. As we have
previously explained, “on a summary judgment motion, a court’s attempt to apply
[the intrinsic tests’s] subjective and fact-oriented standard, bypassing decision by
the trier of fact, is not correct.” L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676
F.3d 841, 852 (9th Cir. 2012). We reverse the district court’s judgment as to the
issue of indirect copying; whether Harmony’s designs are substantially similar to
Scentsy’s copyrighted designs is a question for trial.2
II
We review de novo whether an action under the Lanham Act is
“exceptional”; once we conclude whether that an action is exceptional, we review
the district court’s award of attorneys’ fees for an abuse of discretion. Secalt S.A.
v. Wuxi Shenxi Constr. Mach. Co., Ltd., 668 F.3d 677, 687 (9th Cir. 2012). An
action is exceptional when the plaintiff’s case is “groundless, unreasonable,
vexatious, or pursued in bad faith.” Id. (internal quotation marks and citation
omitted). Because the doctrine of aesthetic functionality and the protectability of
2
Harmony contends that the district court did not apply the intrinsic
test but was rather applying the extrinsic test. We reject this argument. The
district court specifically described what it was doing as addressing the intrinsic
component of the extrinsic/intrinsic test. Moreover, the district court reached this
part of its analysis, only after previously concluding that the copyrighted wax
warmers of Scentsy were entitled to broad copyright protection.
4
aesthetic features as trade dress is not always clear, we hold that the trade dress
claims were not exceptional and reverse the district court’s decision to award fees
under the Lanham Act. Because we reverse the grant of summary judgment on the
copyright claims, it necessarily follows that the fees award under the Copyright
Act is also reversed.
* * *
We remand to the district court for further proceedings consistent with this
disposition. The parties shall bear their own costs on appeal.
AFFIRMED in part, REVERSED in part, and REMANDED.
5