Klauber claimed that Russell-Newman (apparently now defunct) and Bon-Ton Stores infringed its copyrights in certain lace patterns by selling women’s underwear incorporating substantially similar patterns. Klauber co-authored lace designs numbered 7087, 7088, and 7089; the last two are registered, and 7087, which was allegedly infringed, is allegedly a derivative work of them. A related case was filed in 2009, which was dismissed by stipulation based on a settlement agreement. Klauber filed a new complaint alleging breach of the settlement agreement, new acts of copyright infringement, and false advertising under the Lanham Act. Bon-Ton successfully moved to dismiss.
The court first rejected Klauber’s argument that Bon-Ton was jointly and severally liable for payments Russell-Newman agreed to make in the settlement agreement; the obligation was only on Russell-Newman.
Bon-Ton lost its general legal arguments on the copyright claims, but still won. First, it argued that the copyright infringement claim based on the 7087 pattern should be dismissed because 7087 wasn’t registered. However, the owner of a derivative work can bring a copyright claim against an alleged infringer based on any infringement of the preexisting, registered work from which the derivative work is derived. The infringement claim must be based on a comparison of the accused work with the registered work. Here, the 7087 pattern was a derivative work of 7088—actually, just a section of the larger 7088 design. (Is that even a derivative work? How does blowing up part of a design evince copyrightable additional creativity?) “[A]ll of the elements of the unregistered 7087 design are contained in the registered 7088 design,” allowing an infringement claim to be maintained based on infringement of the underlying registered work through copying of the derivative work. Plaintiff and defendant's patterns:
Further, Klauber adequately pled that Bon-Ton had access because it became aware of Klauber’s copyrights at least as early as the time the first, settled action was filed. The complaint adequately pled substantial similarity by pleading that Bon-Ton made “a copy” of Klauber’s designs. However, as a matter of law, the allegedly infringing garments were not substantially similar. This determination is usually reserved for the trier of fact, but can be resolved as a matter of law when no properly instructed jury could reasonably find substantial similarity. The court refused to apply a “more discerning” observer standard because that only applies when the copyrighted work incorporates elements from the public domain (as they all do). Bon-Ton argued that both patterns contained the unprotected idea of roses and leaves arranged in a curved or lace pattern. But dissection is ordinarily not required; the “more discerning” test is limited to cases in which some elements of the work have been copied from the public domain (which is apparently different from being ideas). The use of flowers here wasn’t simply an unprotectable depiction of a flower as it would appear in nature, but rather an artistic rendering with its own unique qualities.
Still, an ordinary observer couldn’t find substantial similarity here. Quoting the Second Circuit, the court noted that only a visual comparison was required, and that “[g]ood eyes and common sense may be as useful as deep study of reported and unreported cases, which themselves are tied to highly particularized facts.” The plant sprigs in Klauber’s designs were much longer, featured many more leaves, and were more stylized than those in the allegedly infringing design, curling into semi-circles. The flowers in Klauber’s designs were buds, while Bon-Ton’s were blossoms. 7088 had a border of small, interconnected dots of fabric, while Bon-Ton’s design didn’t. The leaves in Klauber’s designs were solid, while Bon-Ton’s had a small center gap, presumably showing the leaf spine. There were enough differences in individual elements that the total concept and feel and aesthetic appeal of the works differed. No reasonable jury could find that an average lay observer would recognize Bon-Ton’s design as having been appropriated from Klauber’s designs. Other fabric cases finding infringement had relied in part on the presence of a similar or identical color scheme, not an issue here.
The court refused to apply Dastar to bar Klauber’s Lanham Act claim, but still rejected it. Klauber pressed only a §43(a)(1)(B) claim, premised on the idea that Bon-Ton offered for sale underwear “prominently showing, as the waistband, a copy of Klauber's 7087 lace,” but consumers who ordered the underwear would receive underwear with a different lace in the waistband.
Advertised & close-up:
Section 43(a)(1)(B) provides a cause of action for such “bait and switch.” And this claim wasn’t based on false representations or attributions of authorship of ideas or expressions, so it wasn’t Dastar-barred. The reason given is weird, though, and doesn’t actually distinguish authorship from non-authorship claims: Klauber alleged that Bon-Ton’s false advertising caused “confusion, mistake and deception in the minds of the purchasing public as to the identity and source of the lace in Bon-Ton's product,” which has caused Plaintiff damage. But put that way, it’s saying that Bon-Ton falsely advertised that it was the source of the lace in its products, which seems … not unlike the precise claim rejected by Dastar, which held that as long as Dastar was the physical origin of the product then there wasn’t any misrepresentation of origin. It’s hard to see how “identity” or “source” could mean something different here. See also Specialized Seating v. Greenwich Indus. (7th Cir. 2010) (holding that the key, for Dastar purposes, is whether the defendant is the source of the overall product and not the components).
Bon-Ton then argued that Klauber lacked standing, in that it failed to allege a reasonable interest to be protected against the alleged false advertising and a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising. A more substantial showing is required when the parties’ products aren’t obviously in competition and there’s no comparative advertising. The court agreed that the complaint lacked sufficient allegations of injury to Klauber. The complaint alleged that the consuming public would be deceived into buying Bon-Ton’s product. (Materiality?) But that wasn’t enough to make out a plausible claim for injury, given that Klauber makes lace and doesn’t compete directly with Bon-Ton.
In its briefing, Klauber argued that it sells the lace pattern at issue exclusively to the well-known brand Hanky Panky “for use in its famous and iconic lace panty.” (So, not a false advertising claim but a trade dress claim?) Hanky Panky, which does directly compete with Bon-Ton, would supposedly be damaged by Bon-Ton’s ads, which would in turn damage Klauber because Hanky Panky wouldn’t want to pay for exclusive rights to Klauber’s design if competitors are selling the same designs. Also, consumers might mistakenly attribute Bon-Ton’s bait and switch ads to Hanky Panky, since the design at issue was well known, and consumers would get angry when they didn’t receive the advertised product and would blame Hanky Panky. (Hunh?) “Whatever the merits of this theory of injury, it is not pleaded … and may not be relied on now to defeat Bon-Ton's motion to dismiss.”