799 F.3d 468 (6th Cir. 2015), 14-5237, Varsity Brands, Inc. v. Star Athletica, LLC

Docket Nº:14-5237
Citation:799 F.3d 468
Opinion Judge:KAREN NELSON MOORE, Circuit Judge.
Party Name:VARSITY BRANDS, INC.; VARSITY SPIRIT CORPORATION; VARSITY SPIRIT FASHIONS & SUPPLIES, INC., Plaintiffs-Appellants, v. STAR ATHLETICA, LLC, Defendant-Appellee
Attorney:Grady M. Garrison, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C., Memphis, Tennessee, for Appellant. Michael F. Rafferty, HARRIS SHELTON HANOVER WALSH, P.L.L.C., Memphis, Tennessee, for Appellee. Grady M. Garrison, Bradley E. Trammell, Adam S. Baldridge, Nicholas L. Vescovo, BAKER, DONELSO...
Judge Panel:Before: GUY, MOORE, and McKEAGUE, Circuit Judges. MOORE, J., delivered the opinion of the court in which GUY, J., joined. McKEAGUE, J. (pp. 33-36), delivered a separate dissenting opinion. McKEAGUE, Circuit Judge, dissenting.
Case Date:August 19, 2015
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
SUMMARY

Varsity manufactures cheerleading and athletic apparel. Its designers sketch concepts: “original combinations, positionings, and arrangements of elements which include V’s (chevrons), lines, curves, stripes, angles, diagonals, inverted V’s, coloring, and shapes,” but do not consider functionality or the ease of actually producing a uniform. Varsity decides whether to implement the completed... (see full summary)

 
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799 F.3d 468 (6th Cir. 2015)

VARSITY BRANDS, INC.; VARSITY SPIRIT CORPORATION; VARSITY SPIRIT FASHIONS & SUPPLIES, INC., Plaintiffs-Appellants,

v.

STAR ATHLETICA, LLC, Defendant-Appellee

No. 14-5237

United States Court of Appeals, Sixth Circuit

August 19, 2015

Argued April 24, 2015

Page 469

Appeal from the United States District Court for the Western District of Tennessee at Memphis. No. 2:10-cv-02508--Robert H. Cleland, District Judge.

ARGUED:

Grady M. Garrison, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C., Memphis, Tennessee, for Appellant.

Michael F. Rafferty, HARRIS SHELTON HANOVER WALSH, P.L.L.C., Memphis, Tennessee, for Appellee.

ON BRIEF:

Grady M. Garrison, Bradley E. Trammell, Adam S. Baldridge, Nicholas L. Vescovo, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C., Memphis, Tennessee, for Appellant.

Michael F. Rafferty, Steven M. Crosby, Theodore C. Anderson, HARRIS SHELTON HANOVER WALSH, P.L.L.C., Memphis, Tennessee, for Appellee.

Before: GUY, MOORE, and McKEAGUE, Circuit Judges. MOORE, J., delivered the opinion of the court in which GUY, J., joined. McKEAGUE, J. (pp. 33-36), delivered a separate dissenting opinion.

OPINION

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KAREN NELSON MOORE, Circuit Judge.

Are cheerleading uniforms truly cheerleading uniforms without the stripes, chevrons, zigzags, and color blocks? That is the question that strikes at the heart of this appeal. Plaintiffs-Appellants Varsity Brands, Inc., Varsity Spirit Corporation, and Varsity Spirit Fashions & Supplies, Inc. (collectively " Varsity" ) have registered copyrights for multiple graphic designs that appear on the cheerleading uniforms and warm-ups they sell. Defendant-Appellee Star Athletica, LLC, also sells cheerleading gear bearing graphic designs that, according to Varsity, are substantially similar to the designs for which Varsity has valid copyrights. Star asserts that Varsity's copyrights are invalid because the designs at issue are unprotectable " design[s] of . . . useful article[s]." 17 U.S.C. § 101 (2012). The district court concluded that a cheerleading uniform is not a cheerleading uniform without stripes, chevrons,

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zigzags, and colorblocks, and therefore Varsity's copyrights are invalid. Varsity now appeals, and we take up the question that has confounded courts and scholars: When can the " pictorial, graphic, or sculptural features" that are incorporated into " the design of a useful article" " be identified separately from, and [be] capable of existing independently of the utilitarian aspects of the article[?]" Id.

For the reasons we now explain, we REVERSE the district court's judgment and enter partial summary judgment for Varsity with respect to whether Varsity's designs are copyrightable pictorial, graphic, or sculptural works, and REMAND the case for further proceedings consistent with this opinion.

I. BACKGROUND

Varsity designs and manufactures apparel and accessories for use in cheerleading and other athletic activities. R. 170 at 1 (Joint Statement of Undisputed Facts (" JSUF" ) ¶ 1) (Page ID #2228). It employs designers who sketch design concepts consisting of " original combinations, positionings, and arrangements of elements which include V's (chevrons), lines, curves, stripes, angles, diagonals, inverted V's, coloring, and shapes . . . ." R. 173 at 2-3, 6 (Pls.' Statement of Undisputed Facts (" PSUF" ) ¶ ¶ 1, 4, 21 (Page ID #2385-86, 2389); R. 173-2 at 4-5 (Williams Decl. ¶ 8) (Page ID #2439-40). When creating these designs, the designers do not consider functionality of the uniform or the ease of producing a full-sized uniform that looks like the sketch. R. 173 at 2-3, 6 (PSUF ¶ ¶ 4-5, 21) (Page ID #2385-86, 2389); R. 173-2 at 4-5 (Williams Decl. ¶ 8) (Page ID #2439-40). After a designer completes a sketch, Varsity decides whether to implement that design concept for cheerleading or other uniforms, or whether to abandon the design concept altogether. R. 173 at 4 (PSUF ¶ ¶ 11-12) (Page ID #2387). Once Varsity selects a design for production, the production crew re-creates the design using one of four methods to create a cheerleading uniform: " cutting and sewing panels of fabric and braid together" ; sublimation; 1 embroidery; or screen printing. Id. at 8-9 (PSUF ¶ 28) (Page ID #2391-92). Varsity sells its merchandise by advertising in catalogs and online by inviting customers to choose a design concept among the many designs that Varsity offers, before selecting the shape, colors, and braiding for the uniform. R. 173-3 at 3-4 (Williams Dep. at 22-23) (Page ID #2449-50).

Varsity sought and received copyright registration for " two-dimensional artwork" for many of its designs, including the following designs, which are the subject of this lawsuit:

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R. 1-15 at 2 (Compl. Ex. 15) (Page ID #48); R. 1-16 at 2-3 (Compl. Ex. 16) (Page ID #51-52); R. 1-17 at 2 (Compl. Ex. 17) (Page ID #54); R. 1-18 at 2 (Compl. Ex. 18) (Page ID #57); R. 51-1 at 2 (1st Am. Compl. Ex. 9) (Page ID #536).2

Star markets and sells uniforms and accessories for football, baseball, basketball, lacrosse, and cheerleading. R. 170 at 2 (JSUF ¶ 5) (Page ID #2229). Varsity filed this lawsuit after seeing Star's marketing materials and noticing that Star was advertising cheerleading uniforms that looked a lot like Varsity's five registered designs. See R. 1 at 3-4, 6-10 (Compl. ¶ ¶ 13-15, 27-53) (Page ID #3-4, 6-10). Varsity alleges five claims of copyright

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infringement for " selling[,] distributing, [and] advertising . . . goods bearing . . . design[s] that [are] copied from and substantially similar to" five of Varsity's designs in violation of the Copyright Act, 17 U.S.C. § 101 et seq. Id. at 7-10 (Compl. ¶ ¶ 29, 36, 42, 49, 56) (Page ID #7-10). In addition, Varsity has asserted that Star violated Tennessee's laws against unfair competition, inducement of breach of contract, inducement of breach of fiduciary duty, and civil conspiracy.3 Id. at 11-13 (Page ID #11-13). Star denied liability for all of Varsity's claims and asserted counterclaims, including a claim that Varsity made fraudulent representations to the Copyright Office. R. 58 at 1-18 (Answer) (Page ID #585-602).

At the close of the discovery period, both parties filed motions for summary judgment. Star argued that it was entitled to summary judgment on all of Varsity's claims. With respect to Varsity's copyright-infringement claims, Star argued that Varsity does not have a valid copyright in the five designs for two reasons: (1) Varsity's designs are for useful articles, which are not copyrightable; and (2) the pictorial, graphic, or sculptural elements of Varsity's designs were not physically or conceptually separable from the uniforms, making the designs ineligible for copyright protection. R. 168 at 2 (Def.'s Mot. for Summ. J.) (Page ID #2121). Varsity asserted a right to summary judgment, as well, arguing that its copyrights were valid because the designs were separable and non-functional, and that Star infringed those valid copyrights. R. 172 at 1-2 (Pls.' Mot. for Summ. J.) (Page ID #2300-01). Varsity also sought dismissal of Star's counterclaims. Id. In response to Varsity's motion for summary judgment, Star primarily focused on whether Varsity's designs were unprotectable useful articles, see R. 176-2 at 8-13 (Def.'s Combined Mem. of Law in Opp'n to Pl's Mot. for Summ. J. and Reply in Supp. of Def.'s Mot. for Summ. J.) (Page ID #3282-87), but also argued that Varsity had not met its obligation " to prove which 'key elements' of its designs are original," id. at 14 (Page ID #3288). Varsity responded in its sur-reply to Star's claim that Varsity's designs were unoriginal. See R. 177 at 10-11 (Pl.'s Sur-Reply in Supp. of Mot. for Summ. J.) (Page ID #3371-72).

The district court entered summary judgment in Star's favor on the copyright claims, concluding that Varsity's designs were not copyrightable because the graphic elements of Varsity's designs are not physically or conceptually separable from the utilitarian function of a cheerleading uniform because the " colors, stripes, chevrons, and similar designs typically associated with sports in general, and cheerleading in particular" make the garment they appear on " recognizable as a cheerleading uniform." R. 199 at 15 (D. Ct. Op. & Order Re Mot. for Summ. J.) (Page ID #4309). In other words, the district court held that the aesthetic features of a cheerleading uniform merge with the functional purpose of the uniform. The district court did not address whether Varsity's designs were unoriginal, and therefore unprotectable. Without addressing the merits of the state-law claims, the district court dismissed them without prejudice on the basis that it had resolved all of Varsity's federal claims and declined to exercise supplemental jurisdiction. Id. at 17-18

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(Page ID #4311-12) (citing 28 U.S.C. § 1367(c)(3) (2012) (" The district court[] may decline to exercise supplemental jurisdiction over a claim . . . if . . . the district court has dismissed all claims over which it has original jurisdiction." )).

This appeal followed. Varsity challenges the district court's entry of summary judgment on the issue of copyright infringement and dismissal of the state-law claims. Appellant Br. at 16-18. Because Varsity seeks a remand to the district court for further proceedings, it asks that we address the district court's ruling permitting Star's experts to testify about whether Varsity's designs are copyrightable, non-useful designs. Id. at 18.

II. COPYRIGHT INFRINGEMENT

We review the district court's grant of summary judgment de novo. Jones v. Blige, 558 F.3d 485, 490 (6th Cir. 2009)...

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