618 F.3d 417 (4th Cir. 2010), 07-2180, Universal Furniture International, Inc. v. Collezione Europa USA, Inc.

Docket Nº:07-2180, 09-1437.
Citation:618 F.3d 417
Opinion Judge:PER CURIAM:
Party Name:UNIVERSAL FURNITURE INTERNATIONAL, INCORPORATED, Plaintiff-Appellee, v. COLLEZIONE EUROPA USA, INCORPORATED, Defendant-Appellant. Universal Furniture International, Incorporated, Plaintiff-Appellee, v. Collezione Europa USA, Incorporated, Defendant-Appellant.
Attorney:Nicholas Mesiti, Heslin, Rothenberg, Farley & Mesiti, PC, Albany, New York, for Appellant. William M. Bryner, Kilpatrick & Stockton, LLP, Winston-Salem, North Carolina, for Appellee. Brett M. Hutton, Heslin, Rothenberg, Farley & Mesiti, PC, Albany, New York, for Appellant. George L. Little, Jr., ...
Judge Panel:Before MICHAEL, MOTZ, and KING, Circuit Judges.
Case Date:August 20, 2010
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
FREE EXCERPT

Page 417

618 F.3d 417 (4th Cir. 2010)

UNIVERSAL FURNITURE INTERNATIONAL, INCORPORATED, Plaintiff-Appellee,

v.

COLLEZIONE EUROPA USA, INCORPORATED, Defendant-Appellant.

Universal Furniture International, Incorporated, Plaintiff-Appellee,

v.

Collezione Europa USA, Incorporated, Defendant-Appellant.

Nos. 07-2180, 09-1437.

United States Court of Appeals, Fourth Circuit

August 20, 2010

Argued: Dec. 2, 2009.

Page 418

[Copyrighted Material Omitted]

Page 419

[Copyrighted Material Omitted]

Page 420

[Copyrighted Material Omitted]

Page 421

[Copyrighted Material Omitted]

Page 422

[Copyrighted Material Omitted]

Page 423

ARGUED:

Nicholas Mesiti, Heslin, Rothenberg, Farley & Mesiti, PC, Albany, New York, for Appellant.

Page 424

William M. Bryner, Kilpatrick & Stockton, LLP, Winston-Salem, North Carolina, for Appellee.

ON BRIEF:

Brett M. Hutton, Heslin, Rothenberg, Farley & Mesiti, PC, Albany, New York, for Appellant.

George L. Little, Jr., Laura C. Miller, Kilpatrick & Stockton, LLP, Winston-Salem, North Carolina; W. Swain Wood, Wood Jackson, PLLC, Raleigh, North Carolina, for Appellee.

Before MICHAEL, MOTZ, and KING, Circuit Judges.

OPINION

PER CURIAM:

Appellant Collezione Europa USA, Incorporated (" Collezione" ), and its adversary in this proceeding, appellee Universal Furniture International, Incorporated (" Universal" ), are competing furniture companies. In 2004, Universal sued Collezione in the Middle District of North Carolina, alleging infringement under the Copyright Act with respect to two of Universal's furniture collections, as well as violations of the Lanham Act and the North Carolina Unfair and Deceptive Trade Practices Act (the " UDTPA" ). In opposing the copyright claim, Collezione argued that the furniture at issue is not copyrightable. The district court disagreed, however, concluding that Universal possessed valid copyrights in its furniture designs and that Collezione had infringed those copyrights. See Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., No. 1:04-cv-00977, 2007 WL 2712926 (M.D.N.C. Sept. 14, 2007) (the " Liability Opinion " ).1 The court also concluded in its Liability Opinion that Collezione had misrepresented Universal's furniture lines as its own, in contravention of both the Lanham Act and the UDTPA. After conducting a thorough hearing on the damages issues, the court awarded more than $11 million to Universal. See Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., 599 F.Supp.2d 648 (M.D.N.C.2009) (the " Damages Opinion " ).2

Collezione has appealed from the rulings made in the Liability Opinion, in favor of Universal, under the Copyright Act, the Lanham Act, and the UDTPA. Furthermore, Collezione contends that the court erred in the Damages Opinion in excluding its proof of deductible expenses. As explained below, we affirm.

I.

A.

Universal and Collezione have been embroiled in litigation since 2004 over Collezione's alleged copying of two of Universal's furniture collections. Collezione has a reputation as being a knock-off furniture company: that is, one that imitates the designs of its competitors for a lower cost. Indeed, Collezione's president acknowledged that his company routinely imitated other companies' furniture designs.

Universal is a North Carolina-based business that designs, imports, and distributes furniture that is manufactured outside this country. In 1994, Universal's predecessor, Universal Furniture Industries, Incorporated (" UFI" ), entered into a design-service agreement with the Norman Hekler design firm (the " 1994 service agreement" ). Through a subsequent merger in

Page 425

1998 (the " 1998 merger" ), UFI became Universal Furniture Limited (" UFL" ). In 2001, Universal entered into an asset-purchase agreement with UFL (the " 2001 asset agreement" ). Among the assets purchased by Universal were all of UFL's intellectual property rights, including the 1994 service agreement.

Steven Russell was the Hekler designer who created the two Universal collections that are the subject of this dispute: the Grand Inheritance Collection (the " GIC" ) and the English Manor Collection (the " EMC" ). Russell designed the GIC in 2001 and the EMC in 2002, and both collections were manufactured for Universal by a Chinese corporation called Lacquercraft. The GIC line became available to the public in April 2001 and the EMC line became available in April 2003.

Russell began his design process for the GIC and EMC lines by consulting public domain sources such as furniture books and antiques magazines. Russell then did " conceptual doodles" by hand until he came up with designs that were pleasing to his eye. J.A. 651-52. Russell asserted that he did not simply replicate research references in his designs. Rather, he used the references as inspiration and combined elements from the public domain to " create a different look than has been seen before." Id. at 805. Russell's objective was to blend looks from historical periods (rather than reproduce a particular period) and to " bring something new to the party on an historical theme." Id. at 673. Although he was influenced by functional concerns in designing the furniture, Russell was also motivated by aesthetic goals (such as making the furniture attractive to consumers).

In May and November 2003, Universal filed registration forms with the Copyright Office seeking copyright protection for the GIC and EMC lines. A supplementary registration form filed in July 2003 for the GIC line described the subject of the registration as the " decorative sculptural designs on furniture; adaptation of preexisting decorative designs; compilation of decorative designs on suites of furniture." J.A. 1233. Similarly, the EMC registration form noted that, although the collection contained " public domain elemental designs," Universal sought copyright protection in the " [o]riginal decorative designs appearing on suites of furniture including original adaptations of public domain designs and original compilations of decorative designs." Id. at 1234B. The Copyright Office issued registrations to Universal for the GIC and EMC lines on the same day it received the applications.

In 2004, Rhodes Furniture-a major purchaser of the EMC and GIC lines-approached Collezione seeking a cheaper alternative to Universal's furniture. As a result, Collezione agreed to design furniture that would mimic the EMC and GIC lines. Collezione's Chief Financial Officer Paul Frankel admitted that Collezione intended to sell furniture similar to the GIC and EMC lines. Unaware that Universal had obtained its copyrights, Frankel nevertheless believed that the GIC and EMC designs were not entitled to copyright protection and that Collezione had the right to mimic them.

In 2004, Collezione introduced one collection (the " 20000" ) to imitate the GIC line and another collection (the " 20200" ) to imitate the EMC line. Collezione displayed the 20200 collection at the High Point, North Carolina furniture market in October 2004. Upon learning that Collezione was displaying furniture that was nearly identical to the EMC line, Universal's Senior Vice President Stephen Giles visited the High Point market. Giles was shocked by the similarity between Collezione's

Page 426

20200 collection and the EMC line, and also concluded that Collezione was displaying furniture actually manufactured by Universal. Indeed, Giles believed that Collezione had simply removed Universal stickers from some pieces. In some instances, he noticed stickers (which he had designed) bearing the name of Universal's manufacturer, Lacquercraft. Giles took photographs of what he observed and provided the evidence to Universal's Vice President Victor Hsu.

Claiming a violation of its copyrights, Universal promptly sent Collezione a cease and desist letter. Universal also filed suit against Collezione in October 2004 in the Middle District of North Carolina, alleging violations of the Copyright and Lanham Acts as well as state law violations of the UDTPA. Although Collezione believed that Universal's GIC and EMC lines were not entitled to copyright protection, it agreed to redesign its 20000 and 20200 collections to distinguish them from the GIC and EMC lines. Collezione also agreed to submit the redesigns to Universal before marketing them, but it later displayed the redesigns at a San Francisco furniture market and in the magazine Furniture Today without first submitting them to Universal. When the redesigns were finally submitted to Universal, they were still substantially similar to the GIC and EMC designs.

B.

In May 2005, Universal sought a preliminary injunction in the district court barring Collezione's promotion and sale of its 20000 and 20200 collections. The court denied the motion, however, observing that the design compilations on Universal's furniture likely were not conceptually separable from the furniture's utilitarian function, rendering them unprotectable. We affirmed the district court's ruling on the preliminary injunction. See Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., 196 Fed.Appx. 166 (4th Cir.2006). In so doing, however, we emphasized the sparse record and stated that our intention was not to " categorically exclude Universal's and other comparable design compilations from copyright protection." Id. at 171.

In May 2007, Universal's lawsuit against Collezione proceeded to a five-day bench trial in Greensboro on the liability issues. The district court thereafter ruled, in its Liability Opinion, that Universal owned its copyrights and that the GIC and EMC designs were copyrightable. More specifically, the court found that the designs-but not...

To continue reading

FREE SIGN UP