Universal Furniture International, Inc. v. Collezione Europa USA, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1144
UNIVERSAL FURNITURE INTERNATIONAL,
INCORPORATED,
Plaintiff - Appellant,
versus
COLLEZIONE EUROPA USA, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the Middle
District of North Carolina, at Durham. Frank W. Bullock, Jr.,
District Judge. (1:04-cv-00977-FWB)
Argued: May 26, 2006 Decided: August 29, 2006
Before MICHAEL and KING, Circuit Judges, and Joseph F. ANDERSON,
Jr., Chief United States District Judge for the District of South
Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Adam Howard Charnes, KILPATRICK STOCKTON, L.L.P., Winston-
Salem, North Carolina, for Appellant. Nicholas Mesiti, HESLIN,
ROTHENBERG, FARLEY & MESITI, P.C., Albany, New York, for Appellee.
ON BRIEF: George L. Little, Jr., William M. Bryner, KILPATRICK
STOCKTON, L.L.P., Winston-Salem, North Carolina; W. Swain Wood,
WOOD & CO., L.L.P., Raleigh, North Carolina, for Appellant. Brett
M. Hutton, HESLIN, ROTHENBERG, FARLEY & MESITI, P.C., Albany, New
York, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
2
PER CURIAM:
This matter comes before the court on a limited review of the
district court’s denial of plaintiff’s motion for preliminary
injunction. On the facts presented on appeal, we find no error by
the district court, and therefore, we affirm.
In this copyright infringement action, plaintiff Universal
Furniture International, Inc. (“Universal”) sought a preliminary
injunction barring defendant Collezione Europa USA, Inc.
(“Collezione”) from promoting or selling two furniture lines that
Universal contends violate its copyrights in its Grand Inheritance
and English Manor collections. The district court, adopting the
Report and Recommendation of the magistrate judge, denied
Universal’s motion for a preliminary injunction after concluding
that Universal failed to show a probability of success on the
merits.
I.
Universal and Collezione are competing furniture manufacturers
with divergent business models: Universal develops high-end
original furniture designs, whereas Collezione markets lower-cost
models of existing designs. Universal’s designer derived nearly all
of the design elements of the Grand Inheritance and English Manor
furniture collections from the public domain, using mainly
eighteenth and nineteenth century designs. In 2003, Universal
3
obtained Certificates of Registration from the U.S. Copyright Office
for these collections, which covered “decorative sculptural designs
on furniture; adaptation of preexisting decorative designs;
compilation of decorative designs on suites of furniture.”
In October 2004, Universal discovered that Collezione’s 20200
collection displayed pieces from Universal’s English Manor
collection. Collezione also showcased a 20000 collection that
Universal claims was strikingly similar to its Grand Inheritance
collection. Collezione concedes it intended to sell pieces
substantially similar to Universal’s two collections before becoming
aware that the collections were copyrighted. To avoid a copyright
infringement suit, Collezione agreed with Universal in late October
2004 not to develop or market its 20000 and 20200 collections.
Thereafter, Collezione redesigned its 20000 and 20200 collections.
Settlement talks between the parties continued until March
2005, when Collezione began marketing its redesigned collections.
Although Collezione’s designer changed various sculptural features
and design elements, Universal contends that the redesigned
collections are still substantially similar to its copyrighted
English Manor and Grand Inheritance collections. According to
Universal’s expert, Collezione made only modest changes that
retained the “overall aesthetic impression of the Universal
collections’ ornamentation.”
4
Universal filed suit and moved for a preliminary injunction
barring Collezione’s promotion and sale of the 20000 and 20200
collections. Collezione answered and opposed the motion.
The district court, in adopting the recommendation of the
magistrate judge, denied Universal’s motion for a preliminary
injunction. The court determined that the balance of hardships
stood in equipoise and that Universal, therefore, had to demonstrate
a stronger probability of success than if the balance had tipped in
its favor. Based on the sparse record available at the preliminary
stage of litigation, the court concluded that the validity of
Universal’s copyrights was questionable, at least insofar as the
copyrights concerned Universal’s compilations of adapted public-
domain designs. The court based its conclusion on the “conceptual
separability” test, expressing doubt that the design compilations
were conceptually separable from the furniture’s utilitarian
functions. The court found this doubt, combined with the sparsity
of the record, counseled against granting the preliminary injunction
and potentially enlarging the law of copyright protection beyond its
intended borders. Universal then filed this interlocutory appeal
challenging the district court’s denial of its motion for a
preliminary injunction.
5
II.
We review the district court’s denial of Universal’s motion for
a preliminary injunction for abuse of discretion. See Quince Orchard
Valley Citizens Ass’n, Inc. v. Hodel, 872 F.2d 75, 78 (4th Cir.
1989). A district court abuses its discretion “‘by applying an
incorrect preliminary injunction standard, by resting its decision
on a clearly erroneous finding of a material fact, or by
misapprehending the law with respect to [the] underlying issues in
litigation.’” Id. (quoting Goldie’s Bookstore, Inc. v. Superior Ct.
of California, 739 F.2d 466, 470 (9th Cir. 1984)).
Section 502(a) of the Copyright Act, 17 U.S.C. § 502(a),
authorizes a federal court to “grant temporary and final injunctions
on such terms as it may deem reasonable to prevent or restrain
infringement of a copyright.” In this circuit, a district court
deciding a motion for preliminary injunction should consider four
factors: (1) the plaintiff’s likelihood of success on the merits of
the underlying dispute; (2) the possibility of irreparable harm to
the plaintiff if preliminary relief is denied; (3) the harm to the
defendant if an injunction is issued; and (4) the public interest.
See Blackwelder Furniture Co. v. Seilig Mfg. Co., 550 F.2d 189, 196
(4th Cir. 1977). The factors are weighed on a sliding scale, with
the two more important factors being those of irreparable injury to
the plaintiff without a decree and of likely harm to the defendant
with a decree. If the balance of harm is not shown to be in
6
plaintiff’s favor, the importance of plaintiff’s showing a
likelihood of success on the merits increases. Id. at 195.
Applying the Blackwelder standard, the district court found
that the balance of hardships stood in equipoise, and that
therefore, Universal had failed to show that the balance of harm
tipped in its favor. Consequently, the district court found that
Universal had to demonstrate a probability of success by showing a
clear and strong case. Ultimately, the district court found that
Universal could not meet this standard.
Registration of a copyright constitutes prima facie evidence
of the validity of a copyright in any judicial proceeding brought
within five years of the copyright’s first publication. 17 U.S.C.
§ 410(c). Universal contends that it was entitled to a presumption
of irreparable harm based on its prima facie claim of copyright
infringement. See Serv. & Training, Inc. v. Data Gen. Corp., 963
F.2d 680, 690 (4th Cir. 1992). To negate this prima facie claim,
and its attendant presumption of irreparable harm, Collezione need
only present some evidence that “casts doubt on the question” of
copyright validity. Diamond Star Bldg. Corp. v. Freed, 30 F.3d 503,
505 n.1 (4th Cir. 1994); see also Lamps Plus, Inc. v. Seattle
Lighting Fixture Co., 345 F.3d 1140, 1144 (9th Cir. 2003). The
relative ease of this rebuttal is premised, in part, on the lack of
attention that the Copyright Office generally gives applications for
registration. See, e.g., Carol Barnhart, Inc. v. Econ. Cover Corp.,
7
594 F. Supp. 364, 367 (E.D.N.Y. 1984) (“The Copyright Office’s
scrutiny of an article for registration is not like the intense and
prolonged scrutiny required for patent and trademark registration.
Elements of copyrightability are viewed as largely legal questions
and therefore equally within the expertise of the courts.”).
Under the Copyright Act (“Act”), “useful articles” as a whole,
such as furniture, are not eligible for copyright protection, but
individual design elements may be eligible only if, and only to the
extent that they “can be identified separately from, and are capable
of existing independently of, the utilitarian aspects of the
article.” 17 U.S.C. § 101. This test is known as the conceptual
separability test.
Applying these standards, the district court found that
Collezione presented sufficient rebuttal evidence to defeat
Universal’s prima facie claim of infringement, questioning both the
originality and the conceptual separability of the registered works.
The court found Universal was therefore not entitled to a
presumption of irreparable harm. We agree.
A.
Universal originally argued that its compilations of adapted
public domain designs meet the conceptual separability test. Under
this analysis, Universal argues that a design compilation is
8
copyrightable so long as it is original, regardless of whether its
constituent designs meet the conceptual separability test.
We find that the definition of compilation in 17 U.S.C. § 101does not constitute a separate category eligible for copyright
protection independently of Sections 102 and 103. A reading of
sections 101 through 103 of the Act clarifies that “copyright
protection subsists ... in original works of authorship ...
[including] pictorial, graphic, and sculptural works,” including
compilations that meet the definition of “works of authorship.”
Therefore, a compilation of design elements on furniture is not
copyrightable if it is not an original work conceptually separable
from the useful article’s functionality.
The court in Lamps Plus faced an analogous situation. In that
case, the court held that plaintiff’s “mechanical combination of
four preexisting ceiling-lamp elements with a preexisting table-lamp
base did not result in the expression of an original work.” Lamps
Plus, 345 F.3d at 1147. In declaring the lamp-compilation
unprotectable, the court discussed both its lack of originality and
its lack of conceptual separability. The court found that
plaintiff’s assembling of preexisting components did not create “an
original work of authorship as required by § 101. [It] did not
create any of the ‘design . . . features that can be identified
separately from, and are capable of existing independently of, the
utilitarian aspects’ of any of the lamp’s component parts.” Id.
9
(quoting 17 U.S.C. § 101). The court thereby incorporated the
conceptual separability test into the originality test when
assessing the copyrightability of the lamp as a sculptural
compilation.
The cases cited by Universal to the contrary (e.g., Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) and
Harper House, Inc. v. Thomas Nelson, Inc., 889 F.2d 197 (9th Cir.
1989)) are inapposite because they involve compilations of literary
works and data, not compilations of sculptural designs.
B.
Applying the conceptual separability test in the instant case,
the magistrate judge expressed doubt that Universal’s compilations
are conceptually separable from the furniture they adorn. For this
reason, the magistrate judge concluded, and the district court held,
that Universal failed to demonstrate the requisite likelihood of
success on the merits, foreclosing a preliminary injunction at that
early stage of litigation. We agree with the lower court’s
conclusion.
As we explained in Superior Form Builders, Inc. v. Dan Chase
Taxidermy Supply Co., Inc., 74 F.3d 488 (4th Cir. 1996), the Act
makes a critical distinction between a utilitarian object and a
decorative sculptural object:
10
[T]he industrial design of a unique, aesthetically
pleasing chair cannot be separated from the chair’s
utilitarian function and, therefore, is not subject to
copyright protection. But the design of a statue
portraying a dancer, created merely for its expressive
form, continues to be copyrightable even when it has been
included as the base of a lamp which is utilitarian. The
objective in designing a chair is to create a utilitarian
object, albeit an aesthetically pleasing one; the
objective in creating a statue of a dancer is to express
the idea of a dancer.
Id. at 493 (citation omitted). Applying this analysis on the
limited facts presented, we cannot say that the district court
abused its discretion in finding Universal’s design compilations not
conceptually separable from the functional elements of the
furniture. We agree with the district court that the furniture
would almost certainly not be marketable to any significant segment
of the community if it had no utilitarian use and only aesthetic
qualities. See 1 Melville B. Nimmer and David Nimmer on Copyright
§ 2.08[B] (2006).
It is immaterial for our purposes that the district court erred
by applying the inapplicable, and arguably more stringent, test of
conceptual separability adapted from an Illinois district court and
later reversed by the Seventh Circuit (i.e., whether the design
compilations, once detached from the furniture, constitute “a work
of art as traditionally conceived”). The record at this preliminary
injunction stage supports a finding that Universal’s compilations
would not satisfy the Superior Form Builders test previously set
forth by this court that the design must reflect the “designer’s
11
artistic judgment exercised independently of functional influences.”
Superior Form Builders, 74 F.3d at 494 (quoting Brandir Int’l, Inc.
v. Cascade Pac. Lumber Co., 834 F.2d 1142, 1145 (2d Cir. 1987)).
By affirming on the basis of Superior Form Builders, we do not
intend to categorically exclude Universal’s and other comparable
design compilations from copyright protection. Rather, we affirm
on the failure of appellant to demonstrate the district court abused
its discretion in denying a preliminary injunction based on the
uncertainty that these compilations are in fact copyrightable, owing
to the lack of controlling case law and the sparsity of the record.
It is our opinion that granting Universal’s motion would potentially
enlarge the law of copyright beyond its intended borders by
extending copyright protection to two entire furniture collections
based on their “ornate, opulent” look alone.
C.
Universal next argues that the district court erred by not
considering the copyrightability of individual design elements. The
copyright registrations for both the English Manor and Grand
Inheritance collections encompassed the compilations and the
individual elements comprising these compilations, whether original
elements or elements adapted from the public domain.
12
Initially, we note that Universal’s failure to object to the
magistrate judge’s report as to the copyrightability of individual
design elements likely renders its argument waived. See Wells v.
Shriners Hosp., 109 F.3d 198, 200 (4th Cir. 1997). Aside from the
waiver, however, we conclude that the district court did not abuse
its discretion by considering only the copyrightability of the
compilations. Universal consistently framed its case as a
compilations-only case in seeking an injunction covering two entire
furniture collections, not just individual design elements on those
collections.
Had the district court evaluated the constituent elements, it
would almost certainly have reached the identical decision on the
same basic reasoning. Universal cannot show on this sparse record
the requisite likelihood of success necessary for the broad
preliminary injunction.
D.
The district court properly declined to consider whether
Collezione substantially copied Universal’s two collections. The
two elements of copyright infringement are: (1) ownership of a
valid copyright by the party complaining of infringement, and (2)
unauthorized copying of the protected work by the infringing party.
See Keeler Brass Co. v. Cont’l Brass Co., 862 F.2d 1063, 1065 (4th
13
Cir. 1988). Based on the record, we cannot say that the district
court abused its discretion in finding that Universal was not able
to demonstrate it had valid copyrights. Without valid copyrights,
Universal cannot prevail on its infringement claims, no matter how
closely Collezione copied its two collections.
E.
Universal contends that the district court erred by finding
the balance of hardships “in equipoise,” and on this basis requiring
Universal to show a strong likelihood of success. We find the
district court did not err in its analysis of the respective harms
that the parties would suffer in the context of a preliminary
injunction motion.
The district court found that in addition to lost sales,
Universal showed an immediate threat of irreparable injury to its
reputation and customer relations due to impending sales of
Collezione’s allegedly similar, but cheaper furniture. Similarly,
the district court found that if Collezione were enjoined from
selling its 20000 and 20200 collections, it would be required to
cancel or recall all of its outstanding orders, which would injure
its reputation and customer relations and would likely subject it
to claims by its suppliers for noncompleted sales. In noting the
factual similarity to Magnussen Furniture, Inc. v. Collezione
14
Europa USA, Inc., 116 F.3d 472 (4th Cir. 1997)(unpublished opinion),
the district court found the balance of hardships between the
parties to be equal. We cannot say that the district court erred
in its analysis on this issue.
III.
Based on the record at this preliminary stage of the
litigation, we find the district court did not abuse its discretion
in denying Universal's motion for a preliminary injunction.
AFFIRMED
15