Opinion
03 Civ. 1377 (JFK)
July 17, 2003
KAPLAN LEVENSON LLP, Paul R. Levenson, Ashima Aggarwal, New York, for Plaintiff
THE DWECK LAW FIRM, LLP, Richard A. Hubell, New York, for Defendant
FINDINGS OF FACT AND CONCLUSIONS OF LAW ORDER
FINDINGS OF FACT AND CONCLUSIONS OF LAW PRELIMINARY STATEMENT
Plaintiff Pem-America, Inc. ("Pem-America") seeks a preliminary injunction claiming that Sunham Home Fashions, LLC ("Sunham") is infringing Pem-America's copyright for the textile design "Velvet Garden," registered as U.S. Copyright VA 1-068-022, by the manufacture, import, distribution and sale of its "Sage Garden" and "Canterbury" products (collectively, the "Sunham Products"). The products at issue are quilts and comforters, terms the Court will use interchangeably.
An evidentiary hearing was held on April 1, 2, 4, 8, and 9, May 15 and 19 and June 3 and 11, 2003. Plaintiff called six witnesses. Defendant called four witnesses.
FINDINGS OF FACT
(1) Plaintiff, Pem-America, is a New York corporation in the business of designing and importing home textiles, including quilts and related products, for distribution and sale in the United States. Wang Ji is the President and sole owner of America-America (Tr. 265) and Larry Shapow ("Shapow") is America's-America's Vice President of Product Development. (Tr. 8). Shapow started working for America-America in or about late January 2001. (Tr. 8, 9). Before joining America-America, Shapow worked in the textile business as a buyer for over thirteen years. (Tr. 9) His responsibilities at America-America include the development of new products, ideas and designs. (Tr. 11).
References to the hearing transcript are designated Tr. followed by the page number. References to hearing testimony from June 3, 2003 and June 11, 2003 will be referenced by the date followed by Tr.
(2) America-America was established in 1993. (Tr. 265). In its first year, America-America had approximately $1.8 million in gross sales. In fiscal year 2001-2002, America's-America's gross sales were approximately $63 million. (Tr. 266, 267). In 2003, America-America projects approximately $80 million in sales. (Tr. 271). Pem-America sells home textiles to department stores, catalogs and other mass merchants. Its major customers include the May Corporation and Federated Department Stores ("Federated"). (Tr. 267-69). America-America also sells branded merchandise and is a major supplier of quilts sold under the Polo Ralph Lauren Home and Tommy Hilfiger labels. (Tr. 270).
(3) Defendant, Sunham, is a limited liability company and, is also in the business of designing and importing home textiles including quilts and related products for distribution and sale in the United States. The parties are direct competitors that import and sell the same type of products to the same type of customers. (Tr. 9, 10, 121). Howard Yung is the Chief Executive Officer of Sunham (Tr. 469) and David Wright is Sunham's Vice-President. (Tr. 165). Wright's responsibilities include purchasing, managing the import and warehouse departments, the Shanghai office, merchandise procurement, the timeliness and accuracy of incoming and outgoing shipments, and managing all non-management personnel at Sunham. (Tr. 165).
(4) For five years, Peter Peck ("Peck") has been Sunham's National Sales Manager. (Tr. 481).
(5) The parties have been involved in other lawsuits against each other, see e.g. Sunham Home Fashions LLC v. Pem-America .02 Civ. 6284 (JFK) and 02 Civ. 7721 (JFK).
(6) America-America sells Velvet Garden, which is a quilt/comforter. It has a design with machine-stitched "tack-down" ribbon embroidery on sage green velvet fabric. (Tr. 11; PX I). Ownership of the copyright to the Velvet Garden quilt/comforter design is registered to America-America under Copyright Reg. No. VA-1-068-022, issued January 10, 2002. (PX3).
Plaintiff's hearing exhibits are referenced as PX and by number and defendant's hearing exhibits are referenced as DX and by letter.
(7) Velvet Garden is sold by America-America as part of a set known in the industry as a "bed-in-a-bag," that includes matching accessories like bed skirts, shams and sheets. (Tr. 11, 12).
(8) The Sunham Products are also quilts/comforters. (PXs 7, 10) . Like Velvet Garden, the Sunham Products both utilize tack-down ribbon embroidery on sage green velvet material. Sage Garden and Canterbury each feature floral motifs in pastel ribbon in a "block pattern" with off-white borders. (Id.).
(9) The parties strongly disagree as to how the Velvet Garden design was created. America-America urges that it is the "author" and owner of the design because it was created as a "work-for-hire." America-America contends that the design was the product of two earlier, never-sold, designs supplied to America-America by one of its Chinese vendors, Best Eastern Home Textiles Co., Ltd. ("Best Eastern"), as works-for-hire, in or about early February 2001, which were modified and combined into a single design at the suggestion of Shapow.
(10) Sunham contends that the "author" and owner of the Velvet Garden design is Nancy Lambert ("Lambert") and that Lambert designed the two previous, never-sold designs that were the basis for Velvet Garden in or about late February to early March 2001, while she was America's-America's Vice President for Design. Sunham further maintains that her design services were rendered as an independent contractor.
(11) Best Eastern is located in Qingdao Province, China and supplies America-America with bedding products and designs therefor. (Tr. 15, 16, 272). Best Eastern is owned by Yang Mao Dong. (Tr. 17).
(12) In January and February 2001, Best Eastern supplied America-America with the underlying designs for "Velvet Garden." One of these samples was designated by Best Eastern as "Y0101." It was renamed "Cottage Ribbon." Another sample was called "Velvet Garden" by plaintiff. (Tr. 19, 43-46, 298, 299). These samples (collectively, the "Underlying Designs") were provided to America-America under an oral work for hire agreement between Best Eastern and America-America. This agreement was subsequently confirmed in writing (PX19, 20), albeit as Sunham points out after the commencement of this litigation.
(13) When the samples referred to in paragraph 12 were provided to America-America, Yang Mao Dong told them that the designs were original and created specially for America-America. (Tr. 356-358). Proof that design "Y0101," the "Cottage Ribbon" design, was in America's-America's possession by February 12, 2001 is supplied by a fax of that date between America-America and Best Eastern referring specifically to the design. (PX27).
(14) In deciding the factual issues as to the design of Velvet Garden, the credibility of Larry Shapow and Nancy Lambert is key. The former still works for America-America as its Vice President of Product Development. Lambert formerly was plaintiff's Vice President of Design. (Tr. 612). Shapow's testimony must be viewed in the context of his position with America-America and his obvious desire for it to prevail in this lawsuit. Lambert who served as Vice President resigned without notice from America-America after over three years there on February 15, 2003. (Tr. 552, 573, 574, PX25). Although not a party to this litigation, Lambert obviously harbors hostility towards America-America as is demonstrated in her February 15, 2003 letter of resignation. (PX25). She now has a substantial interest concerning the subject of her testimony. Initially, she made no claim to the ownership of the Velvet Garden copyright, but after her testimony she filed a lawsuit claiming such ownership. (PX29). Her testimony on other collateral matters such as whether she functioned "freelance" for America-America (Tr. 616, PX29) and relating to payments concerning her vacation, sick and personal days was, to be charitable, not convincing — in fact it was contradictory. (Tr. 562, 563, 613-615, 623).
(15) The Court credits and accepts the Shapow testimony and rejects Lambert's version of the events. This finding obviates the need for the Court to resolve the issue of whether Lambert was an employee of America-America or an independent contractor. Parenthetically, on this issue, the scales tip towards employee. (6/3, Tr. 640, 651).
(16) Accordingly, the Court finds that samples of the underlying designs were received by America-America from Best Eastern in or before February 2001. Shapow suggested the Underlying Designs be combined and modified into the single Velvet Garden design registered as VA-1-068-022. Tr. 24-25; 6/3 Tr. 52-53. Shapow's testimony is supported by documentary evidence of the existence of the Cottage Ribbon (Y0101) sample in America's-America's possession at least as early as February 11, 2001 (PX 27), more than two weeks before Lambert's trip to Shanghai. Additional support can be found in Wang Ji's fax to Best Eastern communicating instructions to combine and modify the Underlying Designs into a single design. DXs X and X1. Based on this evidence, the Court finds that Velvet Garden was created jointly by Best Eastern and Larry Shapow.
(17) Sunham's Products were designed in or about July of 2002. (Tr. 425, 431).
(18) America's-America's first shipment of Velvet Garden was to Hecht's Company ("Hecht's"), and Velvet Garden was available for retail purchase, in September 2001. (Tr. 32, 120; PX 14). That same month, Velvet Garden was featured prominently on the front cover of Hecht's catalog. (Tr. 33-34). Hecht's subsequently sold out of its Velvet Garden inventory, reordered more Velvet Garden product and continued to reorder Velvet Garden throughout the balance of 2001 and thereafter. (Tr. 35-36).
(19) Sunham was selling products to Hecht's, including its "Hope Chest" quilt, in September 2001, and had products advertised in the same Hecht's September 2001 catalog that featured Velvet Garden on its cover. (Tr. 484-485). Sunham normally receives and reviews copies of catalogs that include its products. (Tr. 484). Peck, Sunham's Sales Manager, admitted seeing Velvet Garden in a Hecht's catalog by the summer 2002, and admitted there is a strong possibility that he saw Velvet Garden advertised in Hecht's September 2001 catalog. (Tr. 483, 485). The Sunham Products were not created until July 2002, at the earliest. (Tr. 425).
(20) America-America sold Velvet Garden in 2001 and early 2002 to several additional retailers. (Tr. 36). As of January 2002, six months before the first of the Sunham Products was designed, Velvet Garden was sold to all divisions of the May Corporation except one, including Hecht's, Foley's, Robinson-May, Kaufmanns, Famous-Barr, Filene's and Meyer Frank. (Tr. 14, 121, 123). It has also since been sold to Macy's West, Gottschalks, Catalogers, National Wildlife, Elder-Beerman, Linen Source and others. (Tr. 14, 125-126). Each of these retailers advertised Velvet Garden in catalogs and circulars throughout 2002. (Tr. 37).
(21) Although ribbon embroidery is now a prevalent technique in the bedding textile product market (Tr. 205), this was not the case when America-America introduced Velvet Garden.
(22) Velvet Garden was the first "top of bed" textile product to feature "tack-down" style ribbon embroidery. (Tr. 207-208). That embroidery is the predominant feature of Velvet Garden and both of Sunham's Products, all of which use it in alternating floral motifs on green velvet blocks divided by ivory ground cloth and surrounded by decorated ivory borders. (PXs 1, 7, 10).
(23) The use of tack-down ribbon embroidery in Velvet Garden, and the combination and arrangement of that embroidery and the other design elements of Velvet Garden, was not shown to exist in any prior art.
CONCLUSIONS OF LAW
Standard for Granting a Preliminary Injunction
In order to obtain a preliminary injunction in this Circuit, a party must demonstrate in the absence of the injunction (1) that the party will suffer irreparable harm and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor. Random House. Inc. v. Rosetta Books LLC, 283 F.3d 490, 491 (2d Cir. 2002); Hasbro Bradley. Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985). When a preliminary injunction is sought to protect a copyright, irreparable harm may ordinarily be presumed upon a showing of a prima facie case of copyright infringement. See Wainwright Sec. Inc. v. Wall St. Transcript Corp., 558 F.2d 91, 94 (2d Cir. 1977). "A prima facie case of copyright infringement consists of proof that the plaintiff owns a valid copyright and the defendant has engaged in unauthorized copying." Hasbro Bradley, 780 F.2d at 192; see also Novelty Textile Mills. Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1092 (2d Cir. 1977); Harrison/Erickson, Inc. v. Chicago Bulls Ltd. P'ship, 1991 WL 51118, *4 (S.D.N.Y.).
I. Ownership of a Valid Copyright Originality of the Design
Ordinarily a copyright will be presumed valid if the claimant can produce a copyright certificate. 17 U.S.C. § 401 (c); see also Gaste v. Kaiserman, 863 F.2d 1061, 1064 (2d Cir. 1988). To this end, America-America has produced U.S. Copyright VA 1-068-022 for Velvet Garden. (PX 3). Because the production of the certificates creates only a presumption of validity, the defendant can attempt to rebut the presumption and force the plaintiffs to prove the copyrights are valid.See Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 908 (2d Cir. 1980).
Sunham contends that Velvet Garden is not an "original work" and is not, therefore, entitled to copyright protection. See Def. Prop. Findings of Fact Concl. of Law, pp. 6, 13-15. "The sine qua non of copyright is originality." Feist Publ'ns. Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991). The degree of originality that a work must possess is not great, however. See Key Publ'ns, Inc. v. Chinatown Today Pub. Enters. Inc., 945 F.2d 509, 513 (2d Cir. 1991) ("This requirement of originality . . . is not particularly rigorous."). In Feist, the Supreme Court discussed the degree of originality required to sustain a claim for copyright protection:
Original as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. To be sure, the requisite level of creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade quite easily, as they possess some creative spark, no matter how crude, humble or obvious it might be. Originality does not signify novelty; a work may be original even though it closely resembles other works so long as the similarity is fortuitous, not the result of copying.Id. (citations and quotation marks omitted); see also Rogers v. Koons, 960 F.2d 301, 307 (2d Cir. 1992) ("[T]he quantity of originality that need be shown is modest — only a dash of it will do."); Thomas Wilson Co., Inc. v. Irving J. Dorfman Co., Inc., 433 F.2d 409, 411 (2d Cir. 1970) ("[T]he required creativity for copyright is modest at best.").
The gravamen of Sunham's claim is that Velvet Garden is a derivative work based on the Underlying Designs. According to Sunham, the minor changes made to the Underlying Designs by Shapow do not infuse Velvet Garden with enough originality to constitute a copyrightable work. See Def. Prop. Findings of Fact Concl. of Law, pp. 13-14. It is certainly true that Velvet garden is a derivative work. Its copyright registration form does not attempt to hide this fact. (PX 3). Velvet Garden is derivative of other block designs in the public domain. Velvet Garden is not, however, derivative of the Underlying Designs.
It is clear based on the testimony of many of the witnesses — including but not limited to Christina Horner ("Horner"), Lambert and Shapow — that a design changes and evolves as it is created. Based on this fact, the Underlying Designs are not so much works independent of Velvet Garden as they are the rough drafts of the eventual Velvet Garden. This interpretation is supported by the testimony of Shapow who referred to the Underlying Designs as earlier "uncorrected versions of Velvet Garden." (Tr. 21; see also Tr. 70, 117). More importantly, the Underlying Designs were used only to develop Velvet Garden and were never sold or otherwise distributed on their own. (Tr. 118). Nor were either of the other designs ever submitted for copyright registration. (Tr. 117). A design is not deemed derivative of another design if the prior design was never copyrighted nor in the public domain. See Peter Pan Fabrics. Inc. v. Rosstex Fabrics. Inc., 733 F. Supp. 174, 177 (S.D.N.Y. 1990).
Velvet Garden contains a sufficient degree of originality to be copyrightable. The combination of colors, use of velveteen and the tack-down ribbon embroidery are enough to satisfy the standard set forth in Feist and merit copyright protection. See Boissori v. Banian. Ltd., 273 F.3d 262 (2d Cir. 2001) (holding that a particular combination of colors and a pattern were origincil and deserving of copyright protection); see also Knitwaves, Inc. v. Lollytogs. Ltd., 71 F.3d 996 (2d Cir. 1995); Novelty Textile Mills. Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1093 n. 5 (2d Cir. 1977).
B. Defense of Fraud on the Copyright Office
In an attempt to discredit America's-America's copyright registration for Velvet Garden, Sunham claims that "almost every statement contained [in the copyright registration] is inaccurate. According to the defendant, these inaccuracies constitute a fraud on the Copyright Office. Def. Prop. Findings of Fact Concl. of Law, p. 30. If a copyright applicant perpetrates a fraud on the Copyright Office, the copyright is deemed invalid and incapable of supporting an infringement action. See Whimsicality. Inc. v. Ruble's Costume Co. Inc., 891 F.2d 452, 455-56 (2d Cir. 1989) (finding claimant committed fraud on the Copyright Office by designating its product as a "soft statue" instead of a costume). The misrepresentation must be significant and knowing to rise to the level of fraud and invalidate the copyright. "Only the `knowing failure to advise the Copyright Office of facts which might have occasioned a rejection of the application constitute[s] reason for holding the registration invalid and thus incapable of supporting an infringement action.'" Eckes v. Card Prices Update, 736 F.2d 859, 861-62 (2d Cir. 1984) (quoting Russ Berrie Co., Inc. v. Jerry Eisner Co., Inc. 482 F. Supp. 980, 988 (S.D.N.Y. 1980)). Where the misrepresentation can be construed as inadvertent, innocent or unintentional, it is insufficient to rebut the presumption of validity. Lida v. Texollini, Inc., 768 F. Supp. 439, 442 (S.D.N.Y. 1991).
Sunham points to the fact that the registration refers to the design as a fabric design instead of a comforter design as a prime example of fraud committed by America-America. Def. Prop. Findings of Fact Concl. of Law, p. 30. Sunham also directs the Court to an inaccuracy in the publication date. Id. These mistakes are easily explained, innocent and trivial. They do not amount to a fraud on the Copyright Office. None of the alleged inaccuracies were intentional or committed with the intent of misleading the Copyright Office. Nor is it likely that any of them would have occasioned the rejection of the copyright application.
C. Scope of the Copyright Protection
Sunham argues that even if Velvet Garden merits copyright protection, the extent of that protection is "thin at best." See Def. Prop. Findings of Fact Concl. of Law, p. 16. As a derivative work, Sunham notes, Velvet Garden contains only slight originality and therefore enjoys only slight protection. See Feist, 499 U.S. at 362 ("Where the quantum of originality is slight and the resulting copyright is `thin,' infringement will be established only by very close copying because the majority of the work is unprotectable."); Folio Impressions. Inc. v. Byer Cal., 937 F.2d 759, 765 (2d Cir. 1991). Nonetheless, derivative works as a class of works do enjoy copyright protection. See Durham Indus. Inc. v. Tomy Corp., 630 F.2d 905, 909 (2d Cir. 1980) (stating that derivative works are entitled to copyright protection); see also Weissman v. Freeman, 868 F.2d 1313, 1321 (2d Cir. 1989); Gilliam v. Am. Broad. Cos. Inc., 538 F.2d 14, 19-20 (2d Cir. 1976). This protection, however, extends only to the original material added to the derivative work by its author. See Durham Indus, 630 F.2d at 909 ("The scope of protection afforded a derivative work must reflect the degree to which it relies on preexisting material and must not in any way affect the scope of any copyright protection in that preexisting material.").
The defendant would like the Court to consider the changes made by Shapow to the Underlying Designs — in particular the original Velvet Garden — to be the only original aspects of the Velvet Garden design. Once again, this argument is premised on Sunham's belief that Velvet Garden is derivative of the two Best Eastern designs on which it is based. For the reasons set forth above, the Court does not accept this rationale. As stated, the Velvet Garden design is derivative of other block designs, but not of the Underlying Designs. In light of this fact, the copyright protection to which Velvet Garden is entitled is not nearly as thin as Sunham would like the Court to believe. Velvet Garden holds no copyright over the block pattern, but it is entitled to copyright protection for the combination of colors, materials, the floral motif and the use of tack-down ribbon embroidery.
Even if Velvet Garden were derivative of the Underlying Designs, which it is not, it would still enjoy copyright protection for more elements than just those changed by Shapow. The Underlying Designs constitute works-made-for-hire. A work is deemed to have been made for hire if (1) it is made by an employee within the scope of the employee's employment, or (2) it is specially ordered or commissioned, fits within one of the specifically enunciated categories set forth in 17 U.S.C. § 101(2), and the parties expressly agree in a written instrument that the work shall be considered one made for hire.See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730 (1989). The copyright statute does not define "employee", therefore courts must use the principles of common law agency to determine whether a work was created by an employee or an independent contractor. Id. at 751.
In this case, Yang Mao Dong and his company were employed to design comforters for America-America. Best Eastern's employment was governed by an oral agreement that its designs would constitute works-made-for-hire. Conceding that the written works-made-for-hire agreements (PXs 19, 20) were not signed until after this litigation began, Sunham nevertheless lacks the necessary standing to contest the agreements. Where there is no dispute between the copyright owner and the original author about the status of the copyright, a third-party infringer has no right to challenge the transfer solely as a means of avoiding a suit for infringement. See Eden Toys, Inc. v. Florelee Undergarment Co. Inc., 697 F.2d 27, 36 (2d Cir. 1982). Thus, the Court must view America-America as the owner of any possible copyrights in the Underlying Designs and entitled to copyright protection for the original elements in those designs.
II. Unauthorized Copying
A. The Ability to Infer Copying
Copying may be inferred upon a showing that the defendant had the opportunity to copy the work and there is a sufficient level of similarity between the works to prove that the defendant engaged in copying rather than creating the work independently. See Castle Rock Entm't, Inc. v. Carol Pub. Group. Inc., 150 F.3d 130, 137 (2d Cir. 1998); Walker v. Time Life Films. Inc., 784 F.2d 44, 48 (2d Cir. 1976).
1. Opportunity
Opportunity to copy may be proven by demonstrating that the defendant had access to the plaintiff's work. See Laureyssens v. Idea Group. Inc., 964 F.2d 131, 140 (2d Cir. 1992). Access can be either in the form of direct access or stem from the wide dissemination of a design. See ABKCO Music. Inc. v. Harrisongs, Ltd., 722 F.2d 988, 998 (2d Cir. 1983);Arnstein v. Porter, 154 F.2d 464, 469 (2d Cir. 1946). As is discussed in the Findings of Fact, Velvet Garden was first made available for retail purchase in September 2001. The comforter was featured on the front cover of Hecht's catalog that month; a catalog received and reviewed by the defendant. Moreover, Velvet Garden was one of the leading — if not the leading — selling "bed-in-a-bag" products in 2002. (Tr. 37, 485). All of this amounts to enough evidence to conclude that Sunham had access to Velvet Garden, and therefore, the opportunity to copy the comforter's design.
2. Sufficient Similarity
The plaintiff must also show the existence of "such similarities between the works which will, under all the circumstances, make independent creation unlikely." Laureyssens, 964 F.2d at 140. These similarities may be, but need not be, substantial. That is a concern to be discussed infra. Here, the concern is not with whether the similarities constitute infringement, but rather whether they are probative of copying. Id. The similarities in color, material, ribbon, pattern and embroidery are more than enough to satisfy the requirement of sufficient similarity. Thus, the Court finds there to be enough evidence to infer copying.
B. Defense of Independent Creation
A defendant may overcome the inference of copying that is created by a showing of access and sufficient similarity if it can establish that its product was created independently. See Judith Ripka Designs. Ltd, v. Preville, 935 F. Supp. 237, 247 (S.D.N.Y. 1996). Through the testimony of one its designers, Horner, Sunham attempts to refute America's-America's claim of copying and claim independent creation. The Court is not persuaded. As likable as Horner was as a witness, neither she nor any other witness for the defendant was able to provide the Court with evidence or even an acceptable explanation for differences between the draft designs offered and the final Sunham Products. In particular, the change from pull-through ribbon embroidery to the same tack-down style used in Velvet Garden. Nor was a legitimate explanation offered for the change in colors to the same sage green used in Velvet Garden. The Court, therefore, does not believe the Sunham Products were independently created. Furthermore, the degree of similarity between Velvet Garden and the Sunham Products is so strong, contemplating the possibility of independent creation strains the imagination if not the bounds of plausibility. See Gaste, 863 F.2d at 1068.
III. Infringement
In order for copying to rise to the level of infringement, the party exerting the copyright must establish that the copying was improper and unlawful. This is accomplished by demonstrating that the second work is "substantially similar" to the protected expression in the copyrighted work. See Knitwaves, Inc. v. Lollytogs, Ltd., 71 F.3d at 1002;Fisher-Price, Inc. v. Weil-Made Toys Mfg. Corp., 25 F.3d 119, 122-23 (2d Cir. 1994). The test for substantial similarity is whether an average lay observer would be disposed to overlook any dissimilarities between the works and regard their aesthetic appeal as the same, unless he set out to detect disparities. See Streetwise Maps, Inc. v. Vandam, Inc., 159 F.3d 739, 747 (2d Cir. 1998); Peter Pan Fabrics. Inc. v. Martin Weiner Corp., 274 F.2d 487, 489 (2d Cir. 1960). This inquiry and evaluation must be made on a case-by-case basis, as the comparison is necessarily individualized. Sandoval v. New Line Cinema Corp., 147 F.3d 215, 217 (2d Cir. 1998).
Having examined the comforters at issue several times throughout the course of the seemingly never-ending hearing, the Court finds each of the Sunham Products to bear a substantial similarity to Velvet Garden. The selection, arrangement and combination of design elements — most notably the use of tack-down ribbon embroidery, the floral motifs, pastel ribbon on sage green velveteen with off-white borders — result in the Sunham Products having a substantially similar look, feel and overall aesthetic appeal as Velvet Garden. This view finds a great deal of support in the fact that certain retailers have ordered Velvet Garden to fill its demand for Sage Garden when Sunham is unable to ship enough of its product to meet the retailers' needs. (Tr. 126-27). This fact speaks volumes as to how retailers and average consumers view the similarities among the three products.
Sunham contends that because Velvet Garden is a derivative work, the Court must rely on the "more discerning observer" test rather than the "average lay observer" test. See Def. Prop. Findings of Fact Concl. of Law, p. 19. Under the more discerning observer test advocated by the defendant, the Court can only make the substantial similarity determination "by taking into account the totality of the expression plaintiff added to the unprotectible parts of the work." Id. at p. 20. Put more directly, the substantial similarity of the allegedly infringing work must be to the original aspects of the copyrighted design.
Because the Court finds the combination of the use of tack-down ribbon embroidery, the pastel colored floral motif and sage green velveteen with an off-white border to be original elements of Velvet Garden, there is sufficient evidence of infringement even under the more discerning test advocated by the defendant. As already discussed, the Court views Velvet Garden to be derivative of other block designs, not the Underlying Designs. The specific differences cited by Sunham, see Def. Prop. Findings of Fact Concl. of Law, pp. 21-22 (including the size of the blocks, arrangement of the flowers and variations in the border treatments), are too minor and too trivial to overcome the fact that the original elements of each of the comforters are substantially similar. In fact, the differences serve only to emphasize the extent to which the defendant has . . . copied from the plaintiff." Maiden Mills. Inc. v. Regency Mills. Inc., 626 F.2d 1112, 1114 (2d Cir. 1980).
IV. Balance of the Hardships
In order to have a preliminary injunction entered, the plaintiff must prove that the balance of the hardships that would result from the injunction not issuing outweigh the hardships on the defendant should one issue. TCPIP Holding v. Haar Communications, 244 F.3d 88, 92 (2d Cir. 2001). As previously discussed, where, as here, infringement has been established, harm is presumed and need not be specifically proven. See Wainwright Sec., 558 F.2d at 94. Recognizing this reality, it is apparent that the balance of the hardships tip in favor of granting the preliminary injunction.
The success of Pem-America's best selling product is compromised by the continued presence of the Sunham Products in the market. Several retailers have already requested that America-America lower the price of Velvet Garden to be more in-line with the prices of the Sunham Products. (Tr. 495-98, 523-25). It only stands to reason that America-America is losing sales to the Sunham Products. Conversely, Sunham has already begun to phase its products out of its portfolio. (Tr. 218). In addition, the equities favor issuing the injunction. The work of developing the design was borne largely by the plaintiff and any harm defendant suffers is primarily of its own doing. See Smithkline Beecham Consumer Healthcare. L.P. v. Watson Pharms., Inc., 63 F. Supp. 467 (S.D.N.Y. 1999).
Preliminary Injunction
For the reasons set forth above, the Court finds that the plaintiff has demonstrated both irreparable harm and a likelihood of success on the merits with respect to its copyright infringement claim against the defendant. Plaintiff has also, for good measure, established that a balance of the hardships tips in its favor. A preliminary injunction is therefore appropriate in this case.
IT IS ORDERED that:
(1) Sunham, its parents, subsidiaries, affiliates, divisions, officers, agents, servants, employees, and attorneys, and all persons in active concert or privity with any of them, are enjoined and restrained during the pendency of this action from directly or indirectly manufacturing, advertising, promoting, importing, selling, offering for sale, distributing, disposing of or commercially exploiting the "Sage Garden" and "Canterbury" quilt designs and related products;
(2) Sunham shall forthwith deliver up to the Plaintiff a list of all entities that have purchased for resale the infringing products which are the subject of this lawsuit;
(3) Sunham, shall recall from each such purchaser all "Sage Garden" and "Canterbury" products remaining in their inventory, and deliver up the same to be impounded during the pendency of this action;
(4) within thirty (30) days of the date of this Order, Sunham shall simultaneously serve upon plaintiff's counsel and file with the Court a duly executed affidavit or declaration (a) attesting to the fact that a thorough and diligent search was made for all Sunham Products (identifying the persons responsible for conducting and supervising the search and listing the names and addresses of all locations, at which searches were conducted); (b) attesting to all acts taken to effect the recall required hereby; (c) setting forth an itemized list of (i) all products recovered as a result of the recall 1 and the quantities of each, and (ii) all other Sunham Products in Sunham's inventory, and the quantities of each; (d) attesting to the fact that all products identified in the recall and inventory lists have been collected and are maintained at a storage location to be identified with particularity; and (e) attesting to the fact that the items thus impounded by defendant constitute all of the subject merchandise identified and recovered as a result of the search and recall and, that to Sunham's knowledge, all such merchandise in Sunham's or its customers' possession, custody or control has been identified, recovered, collected and impounded;
(5) within thirty (30) days of the date of this Order, Pem-America shall post security in the form of a $25,000 bond;
(6) the parties shall appear before the Court on September 30, 2003 at 10:00 a.m. for a status conference; in the interim the parties are directed to continue their efforts with the Southern District: of New York's Mediation Office.