Thursday, October 20, 2011

Unsuccessful copying isn't unfair competition

Jewel Source, Inc. v. Primus Jewels, LLC, 2011 WL 4634019 (S.D.N.Y.)

Jewel pleaded itself out of court. Jewel sued Primus for copyright infringement, unfair competition, tortious interference, and related claims. Primus moved to dismiss, and the court granted the motion.

Jewel alleged that it makes “distinctive” jewelry, which it sells to wholesalers and retailers. The court was disturbed by the lack of detail here. But the complaint alleged that Primus bought pieces bearing Jewel’s mark, took photos of them, sent the photos to wholesalers and retailers—including Jewel’s customers—and claimed that it had made the pieces. These customers contacted Jewel and told it what Primus was doing. Jewel also submitted an affidavit adding some facts: Primus sent an email to QVC including pictures of Jewel merchandise, which it claimed to have produced, and offered to provide the jewelry on the cheap. QVC responded that it had already bought such items from another supplier, and Primus replied, “I know. That is precisely our point.” Primus further indicated that it had “long carefully studied and made product for [QVC's] existing vendors.” QVC declined, stating that it is “protective of [its] vendor community,” then contacted Jewel. The court noted that, even if it considered the facts in the affidavit, it would still have granted the motion (converted, in that case, into a motion for summary judgment).

First, Jewel didn’t plead copyright registrations. Jewel argued that its works weren’t US works and thus required no registration. But a US work means a work first published in the US or published simultaneously in the US and another country. Taking the facts in the complaint as true, Jewel published its works in the US. “To the extent the complaint contains any factual matter, it asserts that Jewel has its ‘principal place of business’ in New York.” Since Jewel sells to wholesalers and retailers, it’s publishing, and such sale occurs principally in New York. Bye-bye copyright claims.

Jewel’s unfair competition claim failed for other reasons. “The complaint fails to provide adequate factual detail concerning why Primus's actions would likely confuse consumers. What detail it provides, moreover, leads to the opposite conclusion.” The only allegations were that customers contacted Jewel to warn it, showing that they weren’t confused. This also defeated the fraudulent misrepresentation claim: Jewel didn’t allege that anyone justifiably relied on Primus’s representations. Likewise for the intentional interference with contractual relations. “Just as Primus confused no customers, it also convinced no one it could manufacture Jewel's styles.”

The tortious interference with prospective business relations and prima facie tort claims failed because Jewel didn’t plead that Primus acted solely from malice/disinterested malevolence, as opposed to a desire to turn a profit, and unlawful motive is an element of both torts.

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