Monday, April 17, 2017

Who registers the watchmen? court needs more info in (c) case

Sara Designs, Inc. v. A Classic Time Watch Co., --- F.Supp.3d ----, 2017 WL 627461, No. 16CV03638 (S.D.N.Y. Feb. 15, 2017)

Sara sued for copyright infringement, trade dress infringement, state trademark infringement and dilution, unfair trade practices, and deceptive practices and false advertising under New York General Business Law §§ 349 and 350. The court granted a motion to dismiss and denied a motion for a preliminary injunction.

Sara sells a highly successful series of wrap watches, including several styles of wrap watches using gradient chains, leather strands, adjustable links that include a lobster claw closure connected to the gradient chains with a ring, and an extension chain with a Sara Designs leaf-shaped logo connected to the watch. A representative from NY & Co. allegedly visited Sara’s booth at a trade show to ask whether it would lower prices or produce their product with lower-end materials under the NY & Co. brand. Sara declined, and NY & Co. allegedly had A Classic Time copy several of Sara’s watches. 

Bonus question: after Varsity Brands, are these watches protectable?

The copyright aspects had a problem: the complaint included certificates of copyright registration for several watches, “and numerous images of what appear to be internet screenshots of various iterations of Plaintiff’s watches and Defendants’ allegedly infringing watches.” But each of the submitted certificates of registration were text-only, and none were accompanied by any corresponding images of the work it purported to cover nor any specific descriptions of the work, other than the title of the work. The internet images of the allegedly infringed watches weren’t alleged to correspond to any particular registration number.

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from complaint

More allegedly infringing watches

The court ordered Sara to file a supplemental submission “clarifying the scope of the copyright application and grant covering the allegedly infringed watches.” The resulting declaration didn’t provide further evidence to show that the certificates of registration corresponded to the images of the various watches submitted with the complaint. For example, although Sara alleged that “the W03 All Chain Wrap Watch” was infringed, it didn’t submit a certificate of registration referencing any “W03” watch, nor did it allege a plausible basis for a determination that any of the certificates covered that watch. “The declaration proffers, without explanation, multiple and seemingly different watches as being covered by single certificates of registration, and refers to watch titles that differ from the titles in the certificates and the Complaint.” There was no plausible factual basis from which to infer that a valid copyright registration covered any of the specific watches shown in the screenshots.  The complaint was dismissed with leave to amend.

The trade dress claims were conclusory and insufficient.  The complaint failed to identify the “precise nature of the trade dress” allegedly at issuse, “and merely contains a high level description of features of several watches, such as ‘gradient chain,’ ‘lobster claw closure,’ and ‘leaf-shaped logo,’ without allegations as to whether and how those features are distinctive.” Sara also didn’t properly allege secondary meaning, merely “asserting in a conclusory manner” that Sara was “known primarily for its unique and famous Wrap Style Watches,” and that its trade dress was “widely recognized by consumers as being associated with Plaintiff and has developed secondary meaning in the marketplace.” The complaint didn’t plead facts about advertising expenditures, consumer surveys, marketing coverage or prior attempts to plagiarize Sara’s trade dress that would support a proper inference of secondary meaning.

State dilution claims require a plaintiff to show “(1) that it possesses a strong mark, one which has a distinctive quality or has acquired a secondary meaning such that the trade name has become so associated in the public’s mind with the plaintiff that it identifies goods sold by that entity as distinguished from goods sold by others, and (2) a likelihood of dilution by either blurring or tarnishment.” The allegedly infringing watches were marked with “NY & Co.” or “New York & Company” logos. If Sara ought to claim that the term “wrap style watch” or the appearance of its watches constituted protectable marks, it didn’t allege sufficient facts or legal theories to make infringement or dilution claims plausible.

Sara’s unjust enrichment claim was preempted by the Copyright Act, like the unfair competition claim to the extent that it was also based on misappropriation of copyright. The claims similar to the Lanham Act claim were dismissed for the reasons above, and for the additional reason that the complaint didn’t adequately allege bad faith. The deceptive practices/false advertising claims under GBL §§ 349-350 were dismissed for want of alleged facts supporting an inference of harm to the public interest or consumers outside of harm to Sara’s own products and its related property rights.

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