1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Jason Scott Collection Incorporated, No. CV-17-02712-PHX-JJT
10 Plaintiff, ORDER
11 v.
12 Trendily Furniture LLC, et al.,
13 Defendants. 14 15 After holding a bench trial on June 23 and 24, 2020 (Docs. 115-16, 122-23), the 16 Court now provides its Findings of Fact and Conclusions of Law. In this Order, the Court 17 will also resolve Plaintiff’s Motion to Enforce Court’s Order and for Sanctions (Doc. 126), 18 to which Defendants filed a Response (Doc. 127) and Plaintiff filed a Reply (Doc. 128). 19 I. BACKGROUND 20 In this dispute between furniture manufacturers, Plaintiff Jason Scott Collection Inc. 21 (“JSC”) sued Defendants Trendily Furniture, LLC, Trendily Home Collection, LLC 22 (collectively, “Trendily”), and Rahul Malhotra, alleging Defendants intentionally copied 23 Plaintiff’s designs for a dining table, desk, and buffet, and raising claims of copyright 24 infringement, trade dress infringement, and unfair competition. 25 Jason Scott Forsberg—Plaintiff’s founder, owner, and furniture designer—began 26 creating furniture from reclaimed teak in Indonesia in 1998. His first furniture line—the 27 Jason Scott Collection—features large-scale furniture adorned with intricate wood 28 carvings and decorative metal. The furniture at issue—the Sacred Heart Dining Table, Iron 1 Star Desk, and Borgota Buffet (the “JSC Pieces”)—is part of this collection. Mr. Forsberg 2 testified that he independently created all the furniture designs using inspiration from 3 everything around him. Mr. Forsberg designed the JSC Pieces in 2003, and Plaintiff, an 4 Arizona corporation, has sold them to furniture retailers continuously since 2004. The JSC 5 Pieces have been featured in print and television advertisements, online, and in trade show 6 displays. Plaintiff only sells to authorized furniture retailers. 7 Trendily also manufactures and sells furniture and is based in Dallas, Texas. 8 Mr. Malhotra is a Trendily owner and has operational control over its business. 9 Mr. Malhotra makes decisions about which pieces of furniture Trendily will manufacture 10 in its factory, located in India. In September 2016, Mr. Malhotra sent photos of the JSC 11 Pieces to Trendily’s factory and directed the factory to produce copies for sale by Trendily. 12 In a prior Order (Doc. 86), the Court granted summary judgment to Plaintiff on its 13 copyright infringement claim, ordering Defendants to pay Plaintiff $19,995 in damages, 14 refrain from selling any infringing products, and destroy the remaining infringing products. 15 The Court dismissed as moot Plaintiff’s unfair competition claim to the extent it sought an 16 order requiring labelling of Defendants’ infringing products. As for Plaintiff’s trade dress 17 infringement claim, the Court found that a genuine dispute of material fact remained as to 18 whether the look of Plaintiff’s products has acquired secondary meaning such that 19 customers can identify the products’ source by their look—an essential element of trade 20 dress. The Court held a bench trial on Plaintiff’s trade dress infringement claim on June 23 21 and 24, 2020. (Docs. 122-23, Transcript (“Tr.”).) In conjunction with the bench trial, the 22 parties filed Trial Memoranda (Docs. 97, 100), Proposed Findings of Fact and Conclusions 23 of Law (Docs. 98, 101), and Post-Trial Briefs (Docs. 124, 125). 24 II. FINDINGS OF FACT AND CONCLUSIONS OF LAW 25 A. Legal Standard for a Trade Dress Infringement Claim 26 The Lanham Act creates a cause of action for a party that is injured by another’s use 27 of “any word, term, name, symbol, or device, or any combination thereof . . . which is 28 likely to cause confusion, or to cause mistake . . . as to the origin . . . of his or her goods[.]” 1 15 U.S.C. § 1125(a)(1)(A). The statute provides protection for trade dress—the “total 2 image of a product.” Millennium Labs., Inc. v. Ameritox, Ltd., 817 F.3d 1123, 1126 (9th 3 Cir. 2016) (citing Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002, 1005 n.3 (9th 4 Cir. 1998)). “Trade dress refers generally to the total image, design, and appearance of a 5 product and may include features such as size, shape, color, color combinations, texture or 6 graphics.” Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). 7 The Lanham Act protects against unfair competition through trade dress infringement even 8 if the trade dress is not registered with the United States Patent and Trademark Office. 9 Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1046-47 n.8 (9th 10 Cir. 1999) (citing section 43(a) of the Lanham Act). “Trade dress protection is broader in 11 scope than trademark protection, both because it protects aspects of packaging and product 12 design that cannot be registered for trademark protection and because evaluation of trade 13 dress infringement claims requires the court to focus on plaintiff’s entire selling image, 14 rather than the narrower single facet of trademark.” Vision Sports, Inc. v. Melville Corp., 15 888 F.2d 609, 613 (9th Cir. 1989) (citing J. McCarthy, Trademarks and Unfair Competition 16 § 8:1, at 282-83 (2d ed. 1984)). 17 To sustain a claim for trade dress infringement, a plaintiff must prove: (1) the trade 18 dress is nonfunctional; (2) the trade dress serves a source-identifying role either because it 19 is inherently distinctive or has acquired secondary meaning; and (3) the defendant’s 20 product creates a likelihood of customer confusion. Clicks Billiards, 251 F.3d at 1258. 21 Here, the parties do not dispute that Plaintiff’s trade dress is nonfunctional, so the Court is 22 tasked with examining whether Plaintiff has proven the remaining two issues. 23 B. Secondary Meaning 24 A plaintiff must show that its trade dress has acquired secondary meaning— “a 25 mental recognition in buyers’ and potential buyers’ minds that products connected with the 26 [trade dress] are associated with the same source.” Japan Telecom v. Japan Telecom Am., 27 287 F.3d 866, 873 (9th Cir. 2002). “Secondary meaning can be established in many ways, 28 including (but not limited to) direct consumer testimony; survey evidence; exclusivity, 1 manner, and length of use of a mark; amount and manner of advertising; amount of sales 2 and number of customers; established place in the market; and proof of intentional copying 3 by the defendant.” Filipino Yellow Pages, Inc. v. Asian Journal Publ’ns, Inc., 198 F.3d 4 1143, 1151 (9th Cir. 1999). “[W]hen . . . the relevant market includes both distributors and 5 ultimate purchasers, the state of mind of dealers is important in determining if secondary 6 meaning exists.” Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 295 (7th Cir. 7 1998). 8 1. Intentional Copying 9 First, Plaintiff has shown that Defendants intentionally copied the look of Plaintiff’s 10 furniture pieces, which in this instance is substantial evidence of the secondary meaning of 11 Plaintiff’s trade dress. “Proof of copying strongly supports an inference of secondary 12 meaning.” Adidas America, Inc. v. Skechers USA, Inc., 890 F.3d 747, 755 (9th Cir. 2018). 13 “When [copying] has been established, the inference is usually plain that the imitator 14 intends such a result.” Audio Fidelity, Inc. v. High Fidelity Recordings, Inc., 283 F.2d 551, 15 557-58 (9th Cir. 1960). In other words, “[t]here is no logical reason for the precise copying 16 save an attempt to realize upon a secondary meaning that is in existence.” Id. at 558. 17 Here, the evidence shows that in September 2016, Mr. Malhotra had a meeting with 18 Ron McBee, owner of Western Heritage Furniture in Weatherford, Texas, one of 19 Trendily’s retail customers. Mr. McBee gave Mr. Malhotra printouts of photographs of 20 Plaintiff’s dining table, desk, and buffet and asked Mr. Malhotra to manufacture the 21 furniture for Western Heritage. Mr. Malhotra sent the photographs to Trendily’s factory, 22 and carpenters there copied the photographs and then produced copies of the JSC Pieces. 23 Mr. Malhotra named the resulting furniture (the “Accused Pieces”) the “M.J. Collection.” 24 The Accused Pieces are nearly identical imitations of the JSC Pieces. The M.J. Dining 25 Table is a copy of JSC’s Sacred Heart Dining Table, the M.J. Desk is a copy of JSC’s Iron 26 Star Desk, and the M.J. Side Board is a copy of JSC’s Borgota Buffet. Mr. Malhotra then 27 proceeded to sell the Accused Pieces. 28 1 Mr. Forsberg first became aware of the Accused Pieces in December 2016 when 2 Sally Brumbaugh, co-owner of Plaintiff’s largest dealer, Brumbaugh’s Furniture in Fort 3 Worth, Texas, asked Mr. Forsberg why he was selling furniture to her competitor. 4 Ms. Brumbaugh and Mr. Forsberg initially mistook the furniture as being the JSC Pieces 5 but later learned they were the Accused Pieces. On May 15, 2017, Mr. Forsberg registered 6 copyrights in the JSC Pieces for “[d]ecorative sculptural designs on furniture.” On May 24, 7 2017, Mr. Forsberg’s counsel sent a cease and desist letter to Mr. Malhotra, and on June 27, 8 2017, Mr. Forsberg’s counsel sent a second cease and desist letter to Mr. Malhotra and 9 attached copies of the Certificates of Registration for the JSC Pieces’ copyrights. 10 Mr. Malhotra received both cease and desist letters but continued to sell the Accused Pieces 11 until Plaintiff filed this lawsuit. 12 Defendants point out that Mr. Malhotra testified it is common practice in the 13 furniture industry to copy furniture designs and that he was not familiar with Plaintiff 14 before he received the first cease and desist letter in May 2017. Defendants thus argue that 15 Mr. Malhotra could not have intentionally imitated Plaintiff’s products or capitalized on 16 Plaintiff’s goodwill if he did not know who Plaintiff was. This assertion is belied by the 17 evidence, however. 18 At trial, the Court heard evidence that Plaintiff and Defendants share two of the 19 same largest customers—Brumbaugh’s Furniture and Hill Country Interiors, both in 20 Texas—where Plaintiff’s products make up approximately 80 percent of the showroom 21 floor at Brumbaugh’s and 40 percent of the showroom floor at Hill Country. Mr. Malhotra 22 testified he has been to both stores, and Chris Sanders, Trendily’s exclusive sales 23 representative, testified he knew of Plaintiff within months of starting his job, including by 24 seeing Plaintiff’s product on the showroom floors of these shared retailers. The only 25 reasonable inference is that Defendants were familiar with Plaintiff’s products at the time 26 they copied them. Indeed, all of the furniture retailers and sales representatives testified 27 that Plaintiff is well-known in the market, and it strains credulity that Mr. Malhotra— 28 whose companies operate in the same market—did not know of Plaintiff. 1 Likewise, Mr. Malhotra’s testimony that he did not know who Mr. Forsberg was 2 before receiving the cease and desist letter is not credible in view of evidence that he 3 recognized Mr. Forsberg and kicked him out of Trendily’s warehouse before the letter was 4 sent. Bill Holland, of Hill Country Interiors, spoke with Mr. Malhotra and wrote in an e- 5 mail to Mr. Forsberg that Mr. Malhotra “thought that you may be wanting to talk to him 6 according to his sources that day you were there and possibly offering him $$$ to not 7 manufacture this collection.” (Trial Ex. 12.) 8 In sum, Plaintiff has shown by a preponderance of the evidence that Defendants 9 knew who Plaintiff was when they intentionally copied Plaintiff’s furniture. As other courts 10 have found in similar circumstances, the Court finds “no logical reason for the precise 11 copying save an attempt to realize upon a secondary meaning that is in existence.” Audio 12 Fidelity, 283 F.2d at 558. 13 2. Other Factors 14 The Court’s finding that Plaintiff’s trade dress has the requisite secondary meaning 15 such that Defendants intentionally capitalized on Plaintiff’s goodwill by copying the 16 precise look of Plaintiff’s products is bolstered by evidence of the exclusivity, manner, and 17 length of use of Plaintiff’s trade dress; advertising and display at trade shows; Plaintiff’s 18 established place in the high-end furniture market; and recognition of the trade dress by 19 retail and end customers of high-end furniture. At trial, Plaintiff produced evidence that the 20 JSC Pieces have a unique look, have been continuously manufactured and sold since 2004 21 under Plaintiff’s mark, and have been prominently displayed at trade shows. Mr. Forsberg 22 has made numerous presentations to customers at retail stores, and the presentations were 23 advertised under Plaintiff’s mark with photographs of the furniture. Retailers have also 24 used the JSC Pieces in social media and e-mail blasts, identifying it by Plaintiff’s mark. 25 And Mr. Forsberg has won numerous design awards for his furniture, including Master of 26 the Southwest. All of these facts are proof of secondary meaning. See Cosmos Jewelry Ltd. 27 v. Po Sun Hon Co., 470 F. Supp. 2d 1072, 1080, 1086 (C.D. Cal. 2007). 28 1 The retailers and sales representatives who testified in this case, at deposition and 2 trial, all recognized Plaintiff’s furniture pieces by their look. Defendants essentially argue 3 that it is only the opinions of end customers of the furniture that matter, not retailers. The 4 Court disagrees. The opinions of retailers are relevant in ascertaining whether a product’s 5 look identifies its source. See Thomas & Betts Corp., 138 F.3d at 295. Indeed, the retailers 6 and sales representatives who testified work with and sell high-end furniture as a 7 profession, and the Court thus gives weight to their opinions. Moreover, as Plaintiff pointed 8 out at trial, if an exclusive retailer of a product sees a copy of the product—which the 9 retailer recognizes by look—in the window of another furniture store, the retailer may 10 believe it has lost exclusivity. That is what Ms. Brumbaugh testified happened with respect 11 to Plaintiff’s furniture when she saw Defendants’ copies. Retailers such as Ms. Brumbaugh 12 also testified that end customers often ask for Plaintiff’s furniture by name. By contrast, 13 Defendants produced no convincing evidence that knowledgeable customers in Plaintiff’s 14 market of high-end furniture cannot identify the furniture by its look. 15 The evidence also shows that Plaintiff’s mark is widely associated with 16 Mr. Forsberg’s story—that he met his wife in Indonesia and their son was born there; the 17 furniture is hand-carved in a small Indonesian village; Plaintiff is the largest employer in 18 the village, employing 175 to 200 people at a time; and Mr. Forsberg has funded a school 19 and provided electricity to the village, among other facts. Based on this evidence, 20 Defendants argue that customers associate Plaintiff with Mr. Forsberg’s story more than 21 anything else. But in the context of trade dress, the question is whether customers associate 22 the look of Plaintiff’s furniture with Plaintiff, that is, whether the look of the JSC Pieces 23 identifies its source. Plaintiff has provided ample evidence of that through the means 24 identified above. If anything, the evidence of Mr. Forsberg’s story, which Defendants ask 25 the Court to focus on, bolsters the amount of goodwill on which Defendants sought to 26 capitalize by precisely copying Plaintiff’s furniture. The story does not negate the 27 association of the look of the JSC Pieces with their source—Plaintiff. For all of these 28 1 reasons, Plaintiff has demonstrated that its trade dress has acquired a secondary meaning 2 such that it serves a source-identifying role. 3 C. Likelihood of Customer Confusion 4 Under the third element of a trade dress infringement claim, a plaintiff must 5 demonstrate customers are likely to assume a product comes from a source other than its 6 actual source due to the similarity of trade dress between the product and another. 7 Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 845 (9th Cir. 1987). 8 “Likelihood of confusion in the trade dress context is evaluated by reference to the same 9 factors used in the ordinary trademark context: strength of trade dress, similarity between 10 plaintiff’s and defendant’s trade dress, evidence of actual confusion, marketing channels 11 used, type of goods and likely degree of purchaser care, and the defendant’s intent in 12 selecting its trade dress.” Vision Sports, 888 F.2d at 616 (citing AMF Inc. v. Sleekcraft 13 Boats, 599 F.2d 341, 348-49 (9th Cir. 1979)). “[T]he greater the similarity between the two 14 marks at issue, the greater the likelihood of confusion.” GoTo.com, Inc. v. Walt Disney Co., 15 202 F.3d 1199, 1206 (9th Cir. 2000). Hence, “in some cases it may be unnecessary to 16 undertake an extended analysis to infer confusion, e.g., where there is no difference 17 between the marks of directly competitive goods/services.” Adidas-Salomon AG v. Target 18 Corp., 228 F. Supp. 2d 1192, 1211-12 (D. Or. 2002) (internal quotations omitted). 19 For the purpose of trade dress infringement, customer confusion can occur at the 20 initial interest, point-of-sale, or post-sale stages of customer exposure to the accused 21 product. A customer can be confused as to the source of a product at the initial interest 22 stage even if “the consumer quickly becomes aware of the source’s actual identity and no 23 purchase is made as a result of the confusion.” Interstellar Starship Servs., Ltd. v. Epix 24 Inc., 184 F.3d 1107, 1110 (9th Cir. 1999). And “post-sale confusion occurs when 25 consumers view a product outside the context in which it is originally distributed and 26 confuse it with another, similar product.” Adidas-Salomon, 228 F. Supp. 2d at 1212. 27 Here, the question of whether the evidence demonstrates customer confusion 28 between the overall impression of the Accused Pieces and JSC Pieces is not a close call 1 due to the identity between the designs. Defendants admittedly, intentionally, and precisely 2 copied the JSC Pieces in look, color, size, and detail. As Plaintiff points out, the likelihood 3 of confusion is compounded by the fact that Defendants copied multiple furniture pieces, 4 creating their own line of copies of the JSC Pieces. See Lisa Frank, Inc. v. Impact Int’l, 5 799 F. Supp. 980, 997 (D. Ariz. 1992). In the context of secondary meaning, the Court 6 already discussed the strength of Plaintiff’s trade dress arising from the length and breadth 7 of its use in the high-end furniture market. And the evidence shows the great overlap of 8 marketing channels for Defendants’ and Plaintiff’s products. 9 As for evidence of actual customer confusion, this dispute began with actual 10 confusion among retailers in the high-end furniture business, including that of 11 Ms. Brumbaugh, questioning why the JSC Pieces were in a competing store when they 12 were in fact the Accused Pieces, and Mr. Forsberg’s own confusion. Other retailers, 13 including Bo Runyon and Shawn Beach, also testified they believed the Accused Pieces 14 were real JSC Pieces. The fact that professionals in the high-end furniture business could 15 not tell the difference between the trade dress of the Accused Pieces and JSC Pieces 16 strongly implies that ordinary customers could not, and Defendants provided no evidence 17 to the contrary. For all of these reasons, the Court finds Plaintiff’s evidence clearly 18 demonstrates a likelihood of customer confusion, and having demonstrated all of the 19 elements of its trade dress infringement claim, Plaintiff is entitled to judgment that 20 Defendants are liable for trade dress infringement for the manufacture and sale of the 21 Accused Pieces. 22 D. Damages 23 1. Unclean Hands 24 As a threshold damages issue, Defendants argue that Plaintiff engaged in 25 misconduct that should bar recovery for trade dress infringement, citing the proposition 26 that “the doctrine of unclean hands ‘bars relief to a plaintiff who has violated conscience, 27 good faith or other equitable principles in his prior conduct, as well as to a plaintiff who 28 1 has dirtied his hands in acquiring the right presently asserted.’” (Doc. 124 at 18 (quoting 2 Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 173 (9th Cir. 1989)).) 3 As allegations of misconduct, Defendants first assert that Plaintiff acted improperly 4 by seeking judicial recognition of unregistered trade dress in this lawsuit and by waiting to 5 register its copyrights until Mr. Forsberg found evidence they were infringed. (Doc. 124 at 6 18-19.) As the Court stated above, section 43(a) of the Lanham Act protects against unfair 7 competition through trade dress infringement even if the trade dress is not registered with 8 the United States Patent and Trademark Office. Brookfield Commc’ns., 174 F.3d at 1046- 9 47 n.8. And as the Court stated in its summary judgment Order (Doc. 86 at 5 n.3), if a 10 certificate of copyright registration is made within five years of the first publication of a 11 work, it “shall constitute prima facie evidence of the validity of the copyright and of the 12 facts stated in the certificate.” 17 U.S.C. § 410(c). If the copyright registration occurred 13 more than five years after the first publication, a court has discretion to choose what 14 evidentiary weight to give to the certificate of registration. Id. Because Plaintiff’s copyright 15 registration occurred more than five years after the first production of the JSC Pieces, the 16 Court exercised its discretion to consider the certificate of registration as well as other 17 evidence pertaining to copyright validity. There was nothing improper about Plaintiff 18 bringing an action to enforce its copyright and trade dress rights, even if late-registered or 19 unregistered. Defendants’ assertion thus lacks merit. 20 Second, Defendants point out that Mr. Forsberg testified that he violated his own 21 conscience in the way he obtained evidence against Defendants in this case, which 22 constitutes unclean hands. (Doc. 124 at 18-19.) Specifically, Defendants contend that 23 Mr. Forsberg’s acts of investigating Defendants’ infringement by allegedly going to 24 Defendants’ warehouse incognito and by asking a retailer to record a conversation with 25 Mr. Malhotra were untoward. Even if these acts constituted unclean hands, they are not the 26 kind of acts contemplated under the doctrine because they were not acts in the acquisition 27 of the right Plaintiff presently asserts. Plaintiff acquired the copyright and trade dress rights 28 through years of work and use. Indeed, the very case Defendants cite for the doctrine of 1 unclean hands concludes the same. Dollar Sys., 890 F.2d at 173 (finding that the alleged 2 misconduct was not related to right asserted); see also Slep-Tone Entm’t Corp. v. Granito, 3 No. CV-12-298-TUC-DCB, 2013 WL 3816737, at *2 (D. Ariz. July 23, 2013) (“In the 4 Ninth Circuit, what is material is not that the plaintiff’s hands are dirty, but that he dirtied 5 them in acquiring the right he now asserts.” (internal quotations omitted)). Defendants’ 6 invocation of the unclean hands doctrine thus fails. 7 2. Defendants’ Profits 8 For prevailing on a claim of trade dress infringement, the Lanham Act provides “the 9 plaintiff shall be entitled, . . . subject to the principles of equity, to recover “(1) defendant’s 10 profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 11 15 U.S.C. § 1117(a). At summary judgment, the Court already awarded Plaintiff damages 12 constituting Defendants’ profits in conjunction with Plaintiff’s copyright infringement 13 claim, and the parties agree that the same would not be available again for Plaintiff’s trade 14 dress infringement claim. Plaintiff points out that Defendants’ profits should be included 15 in any calculation of treble damages, which the Court will discuss further below. 16 3. Plaintiff’s Reasonably Foreseeable Damages 17 With regard to the second type of damages Plaintiff is entitled to under section 18 1117(a),
19 The district court assesses “any damages sustained by the plaintiff” in the 20 same manner as in tort damages: the reasonably foreseeable harms caused by the wrong. . . . The trier of fact must distinguish between proof of the fact of 21 damages and the amount of damages because a [trade dress] holder is held to 22 a lower standard in proving the exact amount of actual damages. In measuring harm to goodwill, a [trier of fact] may consider a plaintiff’s 23 expenditures in building its reputation in order to estimate the harm to its 24 reputation after a defendant’s bad acts. Upon proving causation, the plaintiff’s evidentiary burden relaxes considerably. To support a [trier of 25 fact’s] actual damages award, there need only be substantial evidence to 26 permit the [trier of fact] to draw reasonable inference and make a fair and reasonable assessment. 27 28 1 Skydive Ariz., Inc. v. Quattrocchi, 673 F.3d 1105, 1112 (9th Cir. 2012) (internal quotations 2 omitted) (emphasis in original). Plaintiff contends that its reasonably foreseeable damages 3 from Defendants’ targeting of the same retail market with lower-priced copies of Plaintiff’s 4 products and the resulting litigation arose from two sources, the loss of Plaintiff’s business 5 account with furniture retailer Coyote Candle and Plaintiff’s inability to increase the price 6 of its furniture beginning in 2017. (Doc. 125 at 12-14.) 7 a. Coyote Candle 8 Coyote Candle is a furniture retailer in Lubbock, Texas, and customer of both 9 Plaintiff and Trendily, and its involvement in this lawsuit centers on its owner, Ben Aufill. 10 Brian Forsberg, Jason’s brother, was Plaintiff’s furniture delivery driver in Texas, and over 11 a period of years delivering Plaintiff’s furniture to Coyote Candle, Brian developed a close 12 personal friendship with Mr. Aufill. By 2017, Trendily had produced the Accused Pieces 13 and Western Heritage—which has never been a customer of Plaintiff—placed the Accused 14 Pieces in its store in Weatherford, Texas, for sale. Brian testified that Mr. Aufill mentioned 15 to him that somebody had knocked off Plaintiff’s furniture and another retailer was selling 16 it, and while Brian did not pay too much attention at first, in May 2017, he stopped at a 17 Motel 6 in Weatherford between deliveries and had a hunch that he should check out 18 Western Heritage in case it was the store Mr. Aufill had mentioned. 19 After he saw the Accused Pieces at Western Heritage, he texted photos to his brother 20 Jason, and the brothers were both extremely upset. Jason asked Brian to find out who made 21 the Accused Pieces, and Brian asked Mr. Aufill, who responded by text message that it was 22 Trendily. (Tr. at 279; Trial Ex. 22.) Earlier in May 2017, Mr. Aufill sent Brian a text saying 23 that he would stop buying Plaintiff’s products if Brian mentioned that Mr. Aufill tipped 24 him off about the knockoffs. (Tr. at 280; Trial Ex. 22 (Brian: “Can you tell me the name of 25 the company and owner of guy knocking off Jason in India.” Mr. Aufill: “I’ll tell you 26 but…..you [sic] if you mention my name I’ll come kick your ass and stop buying Jason 27 Scott and no more Tex mex tacos at the race car shop!”).) Brian also testified that, after he 28 disclosed to Jason that Mr. Aufill said it was Trendily, Brian did not do another delivery 1 of Plaintiff’s furniture to Coyote Candle up to the time he retired as delivery driver in 2 September 2018, and he lost his friendship with Mr. Aufill. 3 Plaintiff argues that, because of Mr. Aufill’s involvement in informing Plaintiff that 4 Defendants copied the JSC Pieces, Plaintiff lost its business with Coyote Candle. 5 Defendants counter that (1) Defendants did not gain business with Coyote Candle in 6 Plaintiff’s place, so they are not liable for any loss in Plaintiff’s business; (2) the loss of 7 business was likely due to a decrease in demand for high-end furniture in the Lubbock 8 market due to decreasing gas prices; and (3) Mr. Malhotra testified that when he asked 9 Mr. Aufill a week before the trial if he stopped ordering from Plaintiff “because of 10 Trendily,” Mr. Aufill laughed and said he had just ordered a piece from Plaintiff in the last 11 week (Tr. at 352). 12 Defendants’ first argument is beside the point; Plaintiff asserts that it lost its 13 business with Coyote Candle because of Mr. Aufill’s necessary involvement in the dispute 14 arising from Defendants’ infringement, and not because Defendants stole Plaintiff’s 15 business with Defendants’ infringing furniture.1 Defendants’ second point is speculative 16 and not supported by any evidence, economic or otherwise. Plaintiff has produced actual 17 evidence of Mr. Aufill’s intent not to buy from Plaintiff again because of the disclosure of 18 his name in conjunction with this lawsuit—which would never have occurred but for 19 Defendants’ infringement—and that evidence is not countered by Defendants’ speculative, 20 unsubstantiated economic evidence. Plaintiff’s position is bolstered by evidence that, over 21 the course of its business history, it has rarely lost customers. 22 Defendants’ third argument goes more to the amount of damages than 23 foreseeability. Plaintiff provided evidence that, between 2013 and 2016, it had average 24 annual profits in the sale of furniture to Coyote Candle of $44,249, and it has not had 25 business with Coyote Candle from May 2017, when Brian revealed to Jason that Mr. Aufill
26 1 The Court finds little merit in Defendants’ argument that Plaintiff could have chosen not to include evidence of Mr. Aufill’s text messages in this case and proven its case through 27 other evidence, thereby preserving its relationship with Mr. Aufill. The information from Mr. Aufill was precisely how the Forsberg brothers initially discovered Defendants were 28 infringing. 1 had tipped him off, until the trial in mid-2020. (Tr. at 145-47; Trial Ex. 23.) With regard to 2 foreseeability, Defendants’ act of producing and selling precise copies of the furniture of 3 Plaintiff, who operates in the same market and shares some of the same customers, 4 foreseeably leads to placing the shared customers in a difficult position—as Mr. Aufill was 5 placed—and damaging the business relationships—as Plaintiff’s relationship with Coyote 6 Candle was damaged. Plaintiff has therefore demonstrated that it is more likely than not 7 that its loss of the Coyote Candle business was a foreseeable result of Defendants’ 8 infringement and the ensuing lawsuit resulting from Defendants’ decision not to comply 9 with the cease and desist letters. 10 As for the amount of damages, Plaintiff’s evidence satisfactorily demonstrates its 11 request for lost annual profits of $44,249 over three years, totaling $132,747. 12 b. Price Increase 13 Plaintiff also asserts it suffered damages as a result of Defendants’ infringement by 14 not increasing its prices under the threat of copies of its furniture on the market. As 15 evidence, Plaintiff points to Mr. Forsberg’s testimony that he used his discretion not to 16 implement a price increase until the end of this litigation. (Tr. at 148-54.) Mr. Forsberg 17 consulted with his regional salesperson, Mr. Williamson, in coming to that decision. (Tr. at 18 151-52.) Mr. Williamson testified that, in 2017, he advised Mr. Forsberg that “if there was 19 any possible way for him to put [a price increase] off for a while, that would be in 20 everyone’s best interest given the knock-offs that were out there floating around until we 21 were able to find a resolution on that.” (Tr. at 313.) 22 Problematically, although Mr. Forsberg is in a sense testifying as to his business 23 judgment in not increasing the prices of his furniture during the pendency of this litigation, 24 there is little in the way of corroborating evidence that the market would not have supported 25 a price increase. Mr. Forsberg’s decision not to do so, in and of itself, is not sufficient for 26 the Court to find that the lack of a price increase was a foreseeable result of Defendants’ 27 infringement. As Defendants point out, Plaintiff obtained an injunction on Defendants’ 28 production of the Accused Pieces in 2017 (Doc. 39), and other evidence shows retailers 1 were satisfied that Plaintiff was enforcing its copyright and trade dress protections through 2 this litigation. The Court thus finds that Plaintiff has failed to demonstrate causation with 3 regard to its request for damages resulting from the lack of price increases for its furniture. 4 4. Treble Damages Enhancement 5 Section 1117(a) allows a court to enhance the damages arising from infringement, 6 up to three times the actual damages, “according to the circumstances of the case.” 7 15 U.S.C. § 1117(a). Courts have applied the enhancement “to address a variety of 8 undercompensated harm, including where there is difficulty in assessing damage, and 9 where lost profits are insufficient to address the on-going harm,” or to “advance the cause 10 of deterring Defendants and others similarly situated from repeating the type of unfair and 11 deceptive behavior.” OminGen Research, LLC v. Wang, 2017 WL 5505041, at *17-18 12 (D. Or. Nov. 16, 2017). Here, the Court does not find the damages assessed serve to 13 undercompensate Plaintiff for the harm caused, and the injunctive relief and money 14 damages awarded are sufficient to deter Defendants and others from similar behavior. 15 Accordingly, the Court declines to enhance the damages under section 1117(a). 16 5. Attorneys’ Fees 17 Section 1117(a) also provides that Plaintiff is entitled to recover attorneys’ fees “in 18 exceptional cases.” 15 U.S.C. § 1117(a). A court determines if a case is exceptional in this 19 context by considering the “totality of the circumstances” and evaluating if the case is “one 20 that stands out from others with respect to the substantive strength of the party’s litigating 21 position (considering both the governing law and facts of the case) or the unreasonable 22 manner in which the case was litigated.” SunEarth, Inc. v. Sun Earth Solar Power Co., 23 Ltd., 839 F.3d 1179, 180-81 (9th Cir. 2016). 24 The evidence shows that Defendants intentionally and precisely copied Plaintiff’s 25 furniture designs. After Plaintiff sent Defendants cease and desist letters, Defendants 26 continued to pitch the Accused Pieces to their retail customers and displayed the Accused 27 Pieces in their Dallas showroom and on their website. Defendants only ceased 28 manufacturing the Accused Pieces after they were served with Plaintiff’s Complaint in this 1 lawsuit on August 16, 2017. By that time, Defendants had manufactured a total of 18 2 Accused Pieces (six of each item) and had sold six M.J. Dining Tables, four M.J. Office 3 Desks, and five M.J. Side Boards. 4 Defendants have repeatedly argued that furniture manufacturers copy other furniture 5 designs all the time. This is certainly no defense to copyright and trade dress infringement, 6 which the Court has found Defendants engaged in by precisely copying every aspect of the 7 JSC Pieces. In evaluating whether this case is exceptional, the Court must consider that 8 Defendants’ copying was willful, see Earthquake Sound Corp. v. Bumper Indus., 352 F.3d 9 1210, 1216 (9th Cir. 2003), and that it continued after Plaintiff sent two cease and desist 10 letters, see San Diego Comic Convention v. Dan Farr Prods., 2018 WL 4078639, at *8 11 (S.D. Cal. Aug. 23, 2018). And, as the Court will discuss below, Defendants have resisted 12 compliance with the Court’s injunction requiring the destruction of the remaining Accused 13 Pieces. For all these reasons, the Court finds this is an exceptional case warranting an award 14 of reasonable attorneys’ fees under section 1117(a). 15 6. Damages Summary 16 In sum, in addition to the lost profits of $19,995 the Court already awarded in the 17 summary judgment Order and Defendants apparently already paid, and the injunctive relief 18 set forth in the summary judgment Order, Plaintiff is entitled to $132,747 in damages for 19 Defendants’ trade dress infringement. Plaintiff is also entitled to an award of reasonable 20 attorneys’ fees provided it files an Application for Attorneys’ Fees in compliance with the 21 Local Rules. 22 III. COMPLIANCE WITH THE COURT’S PRIOR INJUNCTION 23 Plaintiff also filed a Motion to Enforce Court’s Order and for Sanctions (Doc. 126), 24 which Defendants oppose (Doc. 127). In these briefs, the parties dispute the meaning of 25 “destroy” in the Court’s Order granting Plaintiff summary judgment on its copyright 26 infringement claim, in which the Court said “Defendants must destroy any Accused 27 Products in their possession.” Defendants have proposed to sand down or disassemble the 28 infringing furniture, and Plaintiff argues that neither proposal constitutes destruction. 1 The Court is of course no expert in furniture, construction or destruction, but the 2 Court agrees with Plaintiff that “destroy” means render inoperable and injure beyond 3 repair. Sanding down a piece of furniture does render it inoperable, and neither does 4 disassembling it if it can simply be reassembled. Thus, neither of the methods of 5 destruction suggested by Defendants is sufficient. 6 Assuming the destruction dispute is still ongoing, the Court will now order that 7 Defendants either destroy—render completely inoperable and beyond repair—the furniture 8 in the presence of a witness representing Plaintiff, or allow Plaintiff to take custody of the 9 furniture to destroy it, in which instance a witness for Defendants may be present for the 10 destruction. Because final judgment will only now be entered in this lawsuit, the Court 11 declines to sanction Defendants in the form of Plaintiff’s attorneys’ fees for having to file 12 the Motion to Enforce Court’s Order. 13 IT IS THEREFORE ORDERED finding Plaintiff is entitled to judgment on its 14 trade dress infringement claim and awarding Plaintiff $132,747 in damages plus reasonable 15 attorneys’ fees. Within 21 days of the date of this Order, Plaintiff may file an Application 16 for Attorneys’ Fees in compliance with the Local Rules. 17 IT IS FURTHER ORDERED granting in part and denying in part Plaintiff’s 18 Motion to Enforce Court’s Order and for Sanctions (Doc. 126). Within 28 days of the date 19 of this Order, Defendants shall destroy the remaining Accused Pieces by rendering them 20 inoperable and beyond repair, and Defendants shall either permit a witness representing 21 Plaintiff to be present for the destruction or give the Accused Pieces to Plaintiff for 22 destruction, in which event a representative of Defendants may be present for the 23 destruction. Plaintiff’s request for attorneys’ fees in conjunction with this Motion is denied. 24 IT IS FURTHER ORDERED that the Clerk of Court shall enter judgment, as 25 follows, and close this case: Judgment is granted in favor of Plaintiff and against 26 Defendants on Plaintiff’s copyright infringement claim, and Defendants are ordered to pay 27 $19,995 in damages to Plaintiff. Defendants are permanently enjoined from selling any 28 Accused Products in the future and must destroy the Accused Products in their possession. 1|| Judgment is also granted in favor of Plaintiff and against Defendants on Plaintiff's trade 2|| dress infringement claim, and Defendants are ordered to pay $132,747 in damages plus 3 || reasonable attorneys’ fees to Plaintiff. The Court dismisses as moot Plaintiff's unfair 4|| competition claim to the extent it sought an order requiring labelling of Defendants’ || infringing products. 6 Dated this 8th day of March, 2021. ON iy. g wefeholee— United StatesDistrict Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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