Yurman Design Inc. v. PAJ Inc.

• Decision Date: 28 February 2001
• Docket Number: DEFENDANT-APPELLANT-CROSS-APPELLEE,PLAINTIFF-APPELLEE-CROSS-APPELLANT,Docket Nos. 00-7765
• Citation: 262 F.3d 101
• Parties: (2nd Cir. 2001) YURMAN DESIGN, INC., v. PAJ, INC., DOING BUSINESS AS PRIME ART & JEWEL,(L), 00-7805(XAP) August Term: 2000 Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 101

262 F.3d 101 (2nd Cir. 2001)

YURMAN DESIGN, INC. PLAINTIFF-APPELLEE-CROSS-APPELLANT, v. PAJ, INC., DOING BUSINESS AS PRIME ART & JEWEL, DEFENDANT-APPELLANT-CROSS-APPELLEE.

Docket Nos. 00-7765(L), 00-7805(XAP)

August Term: 2000

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: February 28, 2001

Decided August 10, 2001

Appeal from a judgment entered by the United States District Court for the Southern District of New York (Sweet, J.), awarding plaintiff monetary and injunctive relief on claims of copyright infringement, trade dress infringement under the Lanham Act, and violations of New York's unfair competition law.

Affirmed in part and reversed in part.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Maxim H. Waldbaum, Salans Hertzfeld Heilbronn Christy & Viener, New York, NY (Lori D. Greendorfer, on the brief), for Plaintiff-Appellee-Cross-Appellant.

Peter T. Cobrin, Cobrin & Gittes, New York, NY (Oren J. Warshavsky, on the brief), for Defendant-Appellant-Cross-Appellee.

Before: Jacobs, Straub, and Pooler, Circuit Judges.

Dennis Jacobs, Circuit Judge

Defendant PAJ, Inc. ("PAJ") appeals from a judgment entered by the United States District Court for the Southern District of New York (Sweet, J.), following a jury verdict that found PAJ liable to plaintiff Yurman Design, Inc. ("Yurman") on claims of (1) copyright infringement, (2) trade dress infringement under the Lanham Act, and (3) unfair competition under New York law--all of these claims arising out of PAJ's manufacture and sale of jewelry featuring the use of twisted, multi-strand cable together with other design elements, including gemstones. Yurman cross-appeals post-trial rulings by the district court (1) refusing to award attorneys' fees on the Lanham Act claim, and (2) vacating the jury's award of punitive damages on the state law unfair competition claim.

On the appeal, we affirm the judgment as to the copyright claims but reverse as to the Lanham Act and state law unfair competition claims. That resolution moots the cross-appeal.

BACKGROUND

Yurman, a firm based in New York City, has been designing, manufacturing and marketing fine jewelry since approximately 1982. Its president and founder, David Yurman, has made the firm famous for its lines of twisted cable pieces. The firm markets its jewelry products under the brand name DAVID YURMAN(TM).

PAJ, founded in 1978, is a smaller jewelry company based in Dallas, Texas. PAJ entered the cable jewelry market in 1998. In the fall of that year, Yurman advised PAJ in a letter that PAJ was producing and selling a line of costume jewelry that copied Yurman designs, and demanded that PAJ cease and desist. PAJ failed to respond to the cease and desist letter by a two-week deadline, and Yurman filed this suit alleging copyright, Lanham Act, and state law unfair competition violations. As to the copyright claims, Yurman charged that PAJ had infringed five Yurman copyrights in earring and bracelet designs by marketing five jewelry pieces with substantially similar designs. Yurman also alleged that a single trade dress was discernible in its five copyrighted designs as well as in 13 other Yurman bracelets, earrings and rings, and that 21 PAJ pieces violated the Lanham Act because their similarities to this trade dress were likely to cause confusion concerning the jewelry's source. Finally, Yurman alleged that PAJ violated New York's unfair competition law because the trade dress violation was committed in bad faith and caused actual confusion among consumers.

On November 1, 1999, following a seven day trial, the jury returned a special verdict largely favorable to Yurman. On the copyright claims, the panel concluded that four PAJ products infringed four Yurman copyrighted designs. As to copyright damages, the Copyright Act affords a plaintiff the option of seeking either actual damages suffered plus profits earned by the infringer or "statutory damages." 17 U.S.C. § 504. Yurman elected to seek statutory damages, which at the time allowed an award of up to $100,000 per work infringed if the violation was willful, or up to $20,000 per work if it was not. See 17 U.S.C.A. §§ 504(c)(1)-(2) (West 1996 & Supp. 1999).¹ The jury found that PAJ had infringed each of Yurman's four copyrights willfully, and awarded a total $275,000. By way of injunctive relief for those copyright violations, Judge Sweet prohibited PAJ from manufacturing or selling its four infringing products, and ordered the company to destroy all infringing pieces within its control. See Yurman Design v. PAJ, Inc., 93 F. Supp. 2d 449, 466 (S.D.N.Y. 2000).

On the Lanham Act claim, the jury found that Yurman's trade dress was distinctive as to the jewelry's source, and that twenty PAJ bracelets, earrings and rings infringed the trade dress because they were likely to cause confusion concerning the source of PAJ's jewelry. Because the panel further found that PAJ violated Yurman's trade dress in bad faith, and actually caused confusion in the minds of consumers, the jury also found that PAJ violated New York's unfair competition law. Although the jury declined to require PAJ to disgorge any profits it made in connection with the trade dress and unfair competition violations, the panel did award Yurman $800,000 in punitive damages based on the state law claim.

The district court, in considering Yurman's request for equitable relief on the trade dress and state law claims, identified a hole in Yurman's case that it found problematic, and that we conclude is fatal: "try as it might, the Court [could not] divine precisely what [Yurman's] specific trade dress was." Yurman Design, 93 F. Supp. 2d at 466. Recognizing that Yurman's "inability to articulate the trade dress" posed "significant problems, for the Court in issuing an injunction," Judge Sweet devised what he called an "imperfect solution." Id. The injunction bars PAJ from manufacturing or selling its 20 infringing products, and orders the company to destroy all infringing pieces within its control. See id. at 466.

After the verdict, PAJ moved for judgment as a matter of law under Rule 50(b) on each of the claims and to set aside the jury's damages determinations. In a published opinion, the district court declined to disturb any of the liability findings, or the award of statutory damages on the copyright claims, but did vacate the state law punitive damages award. See id. at 455-63.

Yurman cross-moved for attorneys' fees under the Copyright Act and the Lanham Act. Judge Sweet granted an award of fees on the copyright claims but denied an award on the Lanham Act claim. See id. at 463-65.

DISCUSSION

PAJ's appeal chiefly concerns the district court's denial of its Rule 50(b) motion for judgment notwithstanding the verdict on all of the jury's liability determinations. In light of our disposition of that appeal, we need not consider Yurman's cross-appeal regarding attorneys' fees and punitive damages.

We review the denial of a Rule 50 motion de novo. See Diesel v. Town of Lewisboro, 232 F.3d 92, 103 (2d Cir. 2000). The motion may not be granted unless "the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable [persons] could have reached." This is Me, Inc. v. Taylor, 157 F.3d 139, 142 (2d Cir. 1998) (internal quotation marks omitted). This standard will be met "[o]nly if there is such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded men could not arrive at a verdict against" the moving party. Diesel, 232 F.3d at 103.

We consider, in order, PAJ's challenges to the judgment under the Copyright Act, the Lanham Act and New York's unfair competition law.

I.

A. Copyright Liability

To prevail on a claim of copyright infringement, the plaintiff must demonstrate both (1) ownership of a valid copyright and (2) infringement of the copyright by the defendant. See Hamil America, Inc. v. GFI, 193 F.3d 92, 98 (2d Cir. 1999). PAJ argues that Yurman failed to establish either element with respect to any of Yurman's four claims of infringement, and further, that Yurman's copyrights are invalid under the "merger doctrine." We disagree with all of these contentions.

1. Validity of the Copyrights

Under the Constitution and by statute, copyright validity depends upon originality. See Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345-47 (1991); U.S. Const. art. I, § 8, cl. 8 (authorizing Congress to "promote the Progress of... useful Arts, by securing for limited Times to Authors... the exclusive Right to their respective Writings"); 17 U.S.C. § 102. "Originality" in this context "means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity." Feist Publications, Inc., 499 U.S. at 345. The "requisite level of creativity is extremely low; even a slight amount will suffice." Id.

Because all four Yurman designs at issue are registered in the United States Register of Copyrights, there is a statutory presumption that the copyrights are valid. See Hamil America, 193 F.3d at 98; 17 U.S.C. § 410(c). PAJ, which bears the burden of proving the invalidity of a registered copyright, see Hamil America, 193 F.3d at 98, was required to show that there was "such an overwhelming amount of evidence" of nonoriginality "that reasonable and fair minded men could not" have found the four Yurman designs to be original. Diesel, 232 F.3d at 103 (internal quotation marks omitted); see Granite Computer Leasing Corp. v. Travelers Indem. Co., 894 F.2d 547, 551 (2d Cir. 1990) ("A verdict...