Dolori Fabrics, Inc. v. Limited, Inc.

Decision Date10 June 1987
Docket NumberNo. 86 Civ. 6689 (JEL).,86 Civ. 6689 (JEL).
PartiesDOLORI FABRICS, INC., Plaintiff, v. The LIMITED, INC., Lane Bryant, Inc., Brylane, Inc., Kenly Casuals, Inc., and Schneider Fabrics, Inc., Defendants.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

Schwartz & Schlacter, New York City by Jed R. Schlacter, for plaintiff.

Frank J. Colucci, P.C., New York City, for Brylane, Inc. and Lane Bryant, Inc.

Locker Greenberg & Brainin, New York City by Frederick B. Locker, for Kenly Casuals, Inc.

LUMBARD, Circuit Judge:*

Dolori Fabrics, Inc. commenced this action after its president, Donald Fixelle, purchased from two fashion catalogues dresses made from fabric which Dolori contends infringes upon one of its copyrighted designs. Dolori seeks damages and injunctive relief under the federal copyright laws, 17 U.S.C. § 101 et seq., against Brylane, Inc., the publisher of the catalogues and retailer of the allegedly infringing dresses; Lane Bryant, Inc., Brylane's sister company; The Limited, Inc., the parent corporation of Brylane and Lane Bryant; and Kenly Casuals, Inc., a/k/a Kenly Manufacturing Co., Inc., the manufacturer of the garments.1 Brylane cross-claims against Kenly to enforce an indemnification agreement and the warranty against infringement codified in N.Y. U.C.C. § 2-312.

The court holds that Brylane and Kenly infringed upon Dolori's copyright and therefore grants judgment in favor of Dolori against Kenly for $3,718.84 in damages plus an additional $15,000.00 in attorney's fees; against Brylane for $36,647.76; and against both Kenly and Brylane, in joint and several liability, for $7,052.76. Because The Limited and Lane Bryant played no part in infringement, the court dismisses Dolori's claims against them. Finally, judgment under N.Y. U.C.C. § 2-312 is granted to Brylane against Kenly in the amount of $36,647.76. Brylane may also recover from Kenly whatever portion of the joint and several liability of the two companies that Brylane pays to Dolori.

I. Facts

Dolori is a textile converter. A textile converter buys unpatterned and uncolored fabrics, known as greige goods, arranges to have them patterned and finished, and then sells the finished products to garment manufacturers and other fabric users. Kenly manufactures and sells women's dresses and sportswear to retailers. Brylane vends women's fashions through six catalogue lines, which include the "Lane Bryant" and "Tall Collection" catalogues. Lane Bryant operates outlets for women's apparel in various malls and shopping centers throughout the country. Both Brylane and Lane Bryant are wholly-owned subsidiaries of The Limited.

Prior to 1982, Lane Bryant consisted of both a retail division and a mail order division. In 1982, The Limited acquired Lane Bryant and split the two divisions into separate corporations, the retail division becoming Lane Bryant, Inc., and the mail order division, Brylane, Inc. The two companies now have distinct officers, buyers, staffs, places of business, vendors, and merchandise. Neither Lane Bryant nor The Limited purchased or sold any of the infringing garments.

In the summer of 1985, Donald Fixelle, president of Dolori, and Louis Klahr, his partner, collaborated on a new design. They started with a fabric swatch of Dolori's successful pattern No. W-200, a twin print which exhibited a positive/negative look on two separate pieces of fabric—the first piece employing one color as background and the other as pattern, and the second piece of fabric reversing the two colors. Fixelle and Klahr set out to incorporate W-200's positive/negative look into one pattern on one piece of fabric. They also located a black and white floral swatch from their fabric library with a positive/negative pattern, and a photograph from an Italian magazine. This photograph depicts a model wearing a green and white dress with a floral, positive/negative design. Combining inspiration from these three sources, they attempted to create a flat, clean look with equal distribution of positive and negative sources.

Fixelle and Klahr next met with artist Pat Sperandeo, whom they often used for design work, and showed her the two fabric swatches and the magazine photograph. They explained to her the desired look and feel. Sperandeo then drew the pattern that Fixelle and Klahr had described into a design "repeat"—the actual two-dimensional pattern which a converter prints repeatedly onto the fabric. An artist draws a design repeat to permit the engraver to engrave the pattern; to insure that the pattern can be printed repeatedly onto the cloth without gaps; and to see how the pattern will actually appear on the cloth. When Sperandeo drew the repeat, she did not have the two floral swatches with her, but did have the magazine photograph. The repeat which Sperandeo drew was engraved and reproduced as pattern W-232. Dolori then registered the design with the Copyright Office and, on November 14, 1985 was granted a certificate of copyright registration, No. VAU 85-083.

In November and December, 1985, and January, 1986, Dolori sold samples of W-232 on a matte georgette—an expensive, high-quality fabric—to a number of garment manufacturers, including Kenly. The samples employed a royal blue and black color scheme, a particularly popular combination in the fashion industry that year. Fixelle testified that the samples carried Dolori's copyright notice on the selvage, or nonusable border, of the material. A swatch of fabric finished by Dolori which clearly bears a copyright notice on its selvage supports this claim. Nevertheless, Kenly disputes this, pointing to a dress made from fabric sampled to it by Dolori which retains part of the selvage but bears no copyright notice. Visual inspection of this dress discloses that a substantial portion of the selvage has been cut off. The fact that no notice appears on the portion of the selvage that remains does not prove that the original fabric pattern lacked notice of Dolori's copyright. Consequently, the court credits Fixelle's testimony, buttressed by the swatch of fabric introduced by Dolori, and finds that the samples of pattern No. W-232 sold to Kenly provided notice of Dolori's copyright on the selvage.

Kenly never purchased any of Dolori's fabric after receiving the sample. Instead, Kenly passed some of the fabric to Schneider Fabrics, Inc., a rival textile converter, who then printed the allegedly infringing design on lesser-quality material—crepe— and sold the finished fabric to Kenly on February 28 and June 16, 1986. Kenly used the material to manufacture two different style dresses, which it sold to Brylane. These dresses appeared in Brylane's "Lane Bryant" and "Tall Collection" catalogues —one style in each catalogue—beginning in May, 1986. Brylane subsequently sold both dress styles through its mail order system.

When Fixelle received copies of the "Lane Bryant" and "Tall Collection" catalogues in late June or early July, 1986, he spotted the garments made from the fabric manufactured by Schneider. Fixelle immediately visited his attorney, who, on July 9, 1986, sent a letter to Lane Bryant, Inc. demanding that it stop selling the infringing garments and requesting information about the manufacturer. This letter did not state where Fixelle had seen the dresses. Upon receipt of the letter, Lane Bryant searched through its inventory, but, as it did not sell any dresses made from Schneider's fabric, found nothing which "remotely resembled" Dolori's pattern.

On July 15, 1986, Lane Bryant reported the results of its search to Fixelle's attorney. Dolori responded, in a letter dated July 25, 1986, and for the first time mentioned that the dresses had appeared in a "Lane Bryant" catalogue. Aware that Lane Bryant's sister company Brylane published the "Lane Bryant" catalogue, controller Joel Silverman wrote back to Dolori on July 28, 1986, and suggested that Dolori direct its correspondence to Stan Silver, Silverman's counterpart at Brylane. Neither Lane Bryant nor Dolori made any subsequent attempt to contact Brylane until this suit commenced. In the meantime, Fixelle ordered two dresses, one from each catalogue, which he received in August, 1986.

Dolori filed this action on August 28, 1986, and on the same day served on the defendants an order to show cause why a preliminary injunction should not issue. The order to show cause contained a temporary restraining order, signed by Judge John M. Walker, Jr. When Judge Walker denied Brylane's application to stay issuance of the TRO, made pursuant to Fed. R.Civ.P. 65(b), Brylane's president Peter Canzone ordered the items "frozen in stock." Accordingly, Brylane pulled the dresses from future printings of the catalogues and cancelled any outstanding orders from customers. However, Brylane's records show that it received 732 dresses of style No. 103-3506 from Kenly on August 29, 1986, one day after the issuance of the TRO, and that only 628 dresses of that style now remain in stock. Thus, Brylane must have shipped at least 104 garments after it had been served with the TRO. Defendants thereafter stipulated to the continuance of the TRO without admission of liability. The case proceeded to trial on February 19 and February 25, 1987.

II. Liability of Lane Bryant and The Limited

At trial, Dolori agreed to dismiss its action against The Limited, admitting that the company had no responsibility for any infringement by its wholly-owned subsidiary. For the same reason, the court also dismisses Dolori's claim against Lane Bryant, Inc. Although Dolori does not claim that Lane Bryant either purchased or sold the infringing garments, it suggests that this court may impute Bylane's liability to its sister company. However, "a corporation, absent findings of fraud or bad faith, is entitled to a presumption of separateness from a sister corporation even though both are owned and controlled by the same persons." Crown Central Petroleum Corp. v....

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