Design Furnishings v. Zen Path

Citation
Design Furnishings, Inc. v. Zen Path LLC, 2010 WL 4321568 (E.D. Cal. Oct. 21, 2010) (full-text).

Factual Background
Plaintiff, Design Furnishings, Inc., and Defendant, Zen Path, LLC, both sell wicker patio furniture on eBay made by the same Chinese manufacturer. In or about June of 2010, Defendant sent Plaintiff a notice indicating that its sales of furniture infringed on Defendant’s copyright and/or patent rights, and that the images used in connection with sales infringed on Defendant’s copyrights. After receiving the notice, Plaintiff stopped using the pictures in connection with its sales, but refused to stop selling the furniture without proof of Defendant’s intellectual property rights. On August 27, 2010, Defendant filed the following copyright applications intending to cover the furniture at issue:


 * 1) A round sectional wicker furniture collection;
 * 2) A U-shaped sectional wicker furniture collection;
 * 3) A modern boxy sectional wicker furniture collection; and,
 * 4) A Capri sectional wicker furniture collection.

The applications identified the subject works as “sculpture/3-D artwork, Ornamental Design” and attached pictures of the furniture. Defendant subsequently notified eBay that Plaintiff was violating its copyrights by selling the same furniture through the use of its site, and eBay removed the listings and suspended Plaintiff’s account.

State Court Proceedings
Following the removal of approximately thirty-five auctions, and an account suspension, which prevented even the listing of non-furniture items, Plaintiff filed an action in state court asserting claims for (1) misrepresentation of intellectual property infringement in violation of 17 U.S.C. § 512(f) of the Digital Millennium Copyright Act, (2) tortious interference with a contract, (3) tortious interference with prospective economic advantage, (4) violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200-17210, and (5) declaratory and injunctive relief.

The state court granted Plaintiff’s motion for a temporary restraining order enjoining Defendant from submitting additional notices to eBay regarding Plaintiff’s alleged infringement, and from defaming Plaintiff, but denied Plaintiff’s motion to order Defendant to notify eBay that Plaintiff had not infringed on Defendant’s intellectual property rights. The Defendant removed the action to the district court, and Plaintiff’s temporary restraining order was extended until Plaintiff could file a motion for, and Defendant could file a motion in opposition of, a preliminary injunction.

Federal District Court Proceedings
A preliminary injunction will be granted if a plaintiff can establish that it is likely to prevail on the merits, that it is likely to suffer irreparable harm in the absence of such an injunction, and where “the balance of equities” tips in its favor and that an injunction is in the public interest. The DMCA provides that

"[a]ny person who knowingly materially misrepresents under this section . . . that material or activity is infringing . . . shall be liable for any damages . . . incurred by the alleged infringer . . . who is injured by such misrepresentation, as the result of the service provider . . . removing or disabling access to the material or activity claimed to be infringing . . .."

Therefore, in order to prove its case on the merits, Plaintiff would be required to show that Defendant did more than mistakenly send notices to eBay, it would be required to show that Defendant sent knowingly misrepresented notices.

The Copyright Act excludes from protection any “useful article” &mdash; defined as an article having “an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” A “purely utilitarian article – such as bedroom furniture – receives no protection.” Defendant’s applications for copyrights claimed that the works were “Sculptures/3-D artwork, Ornamental Designs” showing that they knew the limits of copyright protection and sought to draft their copyright applications around those limitations. However, the court noted that the inclusion of the pictures of the furniture indicated that the Defendant sought protection of the “industrial design” of the furniture. This “internal contradiction in the applications” was enough for the court to raise a strong inference that the Defendant subjectively knew it did not have a copyright infringement claim when it notified eBay &mdash; leading the court to find that the Plaintiff had a likelihood of success on the merits.

In establishing the remaining elements required to extend Plaintiff’s temporary restraining order, the court had no difficulty in finding damages or a balance of equities tipping in Plaintiff’s favor, where 95% of its sales were through eBay and where the effect of Defendant’s notices was the complete suspension of all eBay activities for the Plaintiff.

The court further ruled that absent eBay’s policy to take advantage of the DMCA safe harbor by removing Plaintiff’s auctions, it would have been the Defendant’s burden to prove infringement and therefore it served public policy to extend Plaintiff’s restraining order. As such, Plaintiff was granted until November 8 to file a motion for preliminary injunction and Defendant was allowed until November 22 to oppose that motion, with a hearing on the matter set for December 6, 2010.