Fraternity Collection, LLC v. Fargnoli, 2015 WL 1486375, No.
3:13–CV–664 (S.D. Miss. Mar. 31, 2015)
Fraternity Collection designs and sells shirt, including the
“Pocket Shirt,” a custom article of clothing in which customers pick a
particular style of shirt and then select one of almost 200 designs to be the
shirt pocket. Fraternity Collection
collaborated with Elise Fargnoli, a clothing designer who runs the “Francesca
Joy” brand, to design two new series of Pocket Shirts: one called “Francesca
Joy” and another containing sorority themes (using unlicensed sorority images).
Fraternity Collection thought it would be the exclusive seller of these designs;
the first line was sold beginning in 2012, while the second was only ever
designed. In 2013, Fraternity Collection
learned that Fargnoli was selling her Francesca Joy designs to a competitor,
despite promised exclusivity. While their business relationship was ongoing, Fraternity
Collection got a license to sell products containing fraternity and sorority
logos and hired a graphic artist to design sorority-themed Pocket Shirts. In
June 2013, Fraternity Collection stopped doing business with Fargnoli and
claimed to have paid her all her royalties.
By September 2013, Fargnoli returned to selling her clothing
at Fraternity Collection’s
competitor, Fashion Greek (finding these items sent me to a side of Tumblr
I’d never seen). She used the terms “#fratcollection” and “#fraternitycollection”
in her social media accounts to promote those designs. She also sent Fraternity Collection a cease
and desist letter demanding that it stop selling the Francesca Joy line of
Pocket Shirts and Fraternity Collection’s new sorority-themed Pocket Shirts.
Fraternity Collection responded with its own demand that Fargnoli stop implying
a relationship with Fraternity Collection on social media. “Among other things,
Fargnoli is mad about Fraternity Collection advertisements which contain the
Francesca Joy line of Pocket Shirts, while Fraternity Collection is mad that
Fargnoli’s ‘Francesca Joy’ Facebook page contains an album of models wearing
Fraternity Collection merchandise.”
Fraternity Collection sued for a declaratory judgment that its advertisements
can contain Fargnoli-designed Pocket Shirts since they were properly licensed
at the time of their manufacture and are no longer for sale and that its own
sorority-themed Pocket Shirts are not a knockoff of Fargnoli’s sorority-themed
Pocket Shirts. Further, it sought damages for Fargnoli’s allegedly infringing use
of the terms “#fratcollection” and “#fraternitycollection” on social media.
Fargnoli counterclaimed, alleging that Fraternity
Collection’s advertising of the Francesca Joy line and use of its own
sorority-themed designs on Pocket Shirts constituted reverse passing off, false
advertising, false designation of origin, unfair competition, trademark
infringement, copyright infringement, breach of contract, intentional
interference with existing business relations, and breach of the covenant of
good faith and fair dealing, as well as vicarious copyright infringement by
Fraternity’s resellers. (One gets the
sense that the district court was not enthused about this hairball, and really,
this does seem to be a failure on both sides to walk away tall.)
Fargnoli argued that the Lanham Act allegations failed to
state a claim for false advertising, but it did. “The Court accepts for present purposes the
notion that hashtagging a competitor’s name or product in social media posts
could, in certain circumstances, deceive consumers.” General factual allegations of injury can
suffice on a motion to dismiss. This also preserved state-law trademark
infringement claims.
Meanwhile, the court did dismiss Fargnoli’s claims for
reverse passing off, false advertising, false designation of origin, unfair
competition, and trademark infringement, all of which relied on Fraternity
Collection’s failure to attribute Fargnoli’s incorporated pocket designs to her. Dastar
controlled: Fargnoli did not produce the tangible goods offered for sale, and
thus the Lanham Act didn’t permit her to sue Fraternity Collection for not
attributing its incorporated designs to her. “Fraternity Collection’s
descriptions were not false and did not cause consumer confusion because it was
the producer of the goods in question.”
Moreover, she could not reframe a mere authorship claim as a
§43(a)(1)(B) claim, because authorship isn’t a covered “nature, characteristic,
or quality” under those sections.
And here’s a wrinkle I’ve long wondered about, raised but
not very well addressed: Fraternity Collection argued that this also required
dismissal of equivalent state law claims. Fargnoli disagreed, but had no
authority for her disagreement, so the court went ahead and dismissed the state
law claims too. For “authorship” claims
in particular, copyright preemption (as informed by Dastar) seems to dictate this result, but why would the state
courts necessarily change other aspects of their law as interpretations of the
meaning of “origin” in the federal statute changed?
Copyright: Fraternity Collection argued that the copyright
claims failed in part because she had no attribution right, the shirts were
useful articles, and there could be no vicarious/contributory infringement
under first sale. To summarize, Fargnoli
argued that Fraternity Collection made unauthorized reproductions,
distributions, and public displays of her original designs, and that its
sorority designs were unauthorized reproductions, derivative works, distributions,
and public displays; she further alleged vicarious and contributory liability
for ads from Fraternity Collection’s marketing and sales partners containing
her original works and Fraternity Collection’s sorority line.
There’s no right of attribution in the Copyright Act, but
that didn’t matter. As for useful
articles, 17 U.S.C. §113(c) provides that
In the case of a work lawfully
reproduced in useful articles that have been offered for sale or other
distribution to the public, copyright does not include any right to prevent the
making, distribution, or display of pictures or photographs of such articles in
connection with advertisements or commentaries related to the distribution or
display of such articles, or in connection with news reports.
And here the court just struck out, conflating whether the
designs here are separable and thus copyrightable (obviously yes) with whether
§113(c)’s limits, which are only
necessary once there is a separable copyrightable work embedded in the useful
article, would apply (also obviously yes!).
The court observed that separability
can be a fact-intensive endeavor, and thus determined that the issue should
wait until evidence has been gathered. But absolutely no evidence is required
here as to the Francesca Joy designs: Fargnoli pled that the infringing acts
were reproduction, distribution, and display of the copyrighted works as they
were embodied in the clothing. The whole
point of §113(c) is to allow people dealing with lawfully made copies embodied
in useful articles to take and use pictures of those useful articles,
necessarily including the copyrighted work.
The claims about the allegedly infringing derivative work sorority
designs do require more evidence, but not the Francesca Joy designs.
Also, the vicarious and contributory infringement claims
were too fact-specific for a motion to dismiss. The breach of contract/duty of
good faith and fair dealing claims also survived, but not intentional
interference. There was no allegation about how Fraternity Collection
interfered with other business relationships; questions about exclusivity would
be dealt with in other counts. Fargnoli’s
complaints about “theft” of her intellectual property were copyright claims.
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