Harolds Stores, Inc. v. Dillard Dept. Stores, Inc.

• Citation: 38 USPQ2d 1609,82 F.3d 1533
• Decision Date: 03 May 1996
• Docket Number: Nos. 95-6133,95-6160,s. 95-6133
• Parties: 1996-1 Trade Cases P 71,390, 1995 Copr.L.Dec. P 27,514, 34 Fed.R.Serv.3d 1608, 38 U.S.P.Q.2d 1609 HAROLDS STORES, INC.; CMT Enterprises, Inc., Plaintiffs-Appellees, v. DILLARD DEPARTMENT STORES, INC., Defendant-Appellant. HAROLDS STORES, INC., Plaintiff-Cross-Appellant, v. DILLARD DEPARTMENT STORES, INC., Defendant-Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1533

82 F.3d 1533

1996-1 Trade Cases P 71,390, 1995 Copr.L.Dec.

P 27,514,

34 Fed.R.Serv.3d 1608, 38 U.S.P.Q.2d 1609

HAROLDS STORES, INC.; CMT Enterprises, Inc., Plaintiffs-Appellees, v. DILLARD DEPARTMENT STORES, INC., Defendant-Appellant.

HAROLDS STORES, INC., Plaintiff-Cross-Appellant, v. DILLARD DEPARTMENT STORES, INC., Defendant-Cross-Appellee.

Nos. 95-6133, 95-6160.

United States Court of Appeals Tenth Circuit.

May 3, 1996.

Appeal from the United States District Court for the Western District of Oklahoma; David L. Russell, District Judge. (D.C. No. CV-93-1212-R).

D. Kent Meyers, (Mack J. Morgan, III and Joseph J. Ferretti with him, on the brief), Crowe & Dunlevy, Oklahoma City, Oklahoma, for Plaintiffs-Appellees/Cross-Appellant.

Terry W. Tippens, (Thomas J. Enis, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma, Simor L. Moskowitz, Jacobson, Price, Holman & Stern, Washington, D.C., with him, on the brief), Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma, for Defendant-Appellant/Cross-Appellee.

Before ANDERSON, TACHA, and BALDOCK, Circuit Judges.

BALDOCK, Circuit Judge.

This appeal arises from a jury verdict entered in a copyright infringement action. Plaintiffs Harold's Stores, Inc. ("Harold's") and CMT Enterprises, Inc. ("CMT") filed suit against Defendant Dillard Department Stores, Inc. ("Dillard") ¹ alleging that Dillard infringed Harold's copyrighted fabric designs contained on women's garments, predominately skirts. Harold's also asserted that Dillard violated the Oklahoma Antitrust Act and the Oklahoma Unfair Sales Act. A jury returned a verdict for Harold's on all three claims. Dillard appeals, arguing that federal copyright law preempted Harold's state antitrust claim, the district court erroneously admitted consumer survey evidence, and that it was entitled to judgment as a matter of law after trial. Harold's cross-appeals the district court's rulings on its motions for attorneys' fees and denial of its motion for a permanent injunction.

I.

A.

Dillard is a retail department store, operating 218 stores in 17 states. Harold's is a retail clothing store with 22 stores in 7 states, including 6 in Oklahoma and 7 in Texas. Women's clothing forms the majority of Harold's business. With the assistance of CMT, a garment manufacturer, Harold's designs and manufactures private label women's clothing, including skirts, that feature original print fabric designs. Harold's annually develops 70 to 80 print fabrics from original art that it purchases from art studios in Italy and New York. Garments made from the original print fabrics comprise 56% of Harold's skirt sales, and 40% of Harold's overall sportswear sales. Harold's represents to its customers that the original print fabric garments are available solely from Harold's. In sum, Harold's offers unique custom-printed fabric designs in skirts and other sportswear that are not available from Harold's competitors, including Dillard.

B.

On May 10, 1993, Rebecca Casey, C.E.O. of Harold's, received information that Dillard stores in Norman and Tulsa, Oklahoma were offering for sale skirts with print fabric patterns identical to print skirts that Harold's had sold during the previous 1991 to 1992 sales season. Ms. Casey dispatched two employees to a Dillard store to investigate. The employees returned with "sacks of garments" purchased at Dillard that upon first examination appeared identical to print skirts that Harold's had developed from original art and offered for sale at $78.00 to $80.00 apiece the year before. The Dillard skirts were priced at $28.00 to $30.00. Over the next few days, Harold's personnel discovered skirts substantially similar to Harold's own offered for sale in 26 different Dillard stores.

On May 12, 1993, Harold's sent a demand letter to Dillard claiming that Dillard had infringed Harold's copyrighted print fabrics and requesting Dillard to remove the merchandise from its stores. Dillard did not remove the garments at issue from its stores.

C.

Harold's filed its original complaint on July 8, 1993, claiming violations of the Copyright Act, the Oklahoma Antitrust Act, and the Oklahoma Unfair Sales Act. Harold's sought preliminary and permanent injunctive relief and damages. On July 21, 1993 Dillard reduced the price of the skirts from $28.00 or $30.00 to $12.00 or $12.25, a 59% mark down that set the price below cost. During discovery, Harold's learned that Dillard buyers had arranged for the manufacture of the print skirts at issue from two separate sources: Cannontex and Wadesboro Manufacturing Company. Two different Dillard merchandise managers instructed Cannontex to manufacture skirts using Harold's skirts as "inspiration." ² One of the merchandise managers purchased skirts from Harold's so that Cannontex could copy the print fabric designs and styles. The skirts obtained from Wadesboro were made from fabric similar or identical to fabric used by CMT to manufacture skirts for Harold's. On August 17, 1993, prior to a hearing on Harold's motion for a preliminary induction, Dillard agreed that it would not sell the print skirts in markets where Harold's and Dillard competed, but that Dillard could sell the garments in markets where Harold's did not have stores.

Dillard and Harold's hotly contested the pretrial litigation, and Dillard filed at least six motions for partial summary judgment, a motion to dismiss, and several motions to reconsider. As relevant to this appeal, Dillard moved for partial summary judgment on the grounds that § 301 of the Copyright Act preempted Harold's claim under the Oklahoma Antitrust Act, Okla. Stat. tit. 79, § 1. The district court denied Dillard's motion for partial summary judgment, ruling that the Copyright Act did not preempt Harold's claim under the Oklahoma Antitrust Act because the state law claim was qualitatively different from, and not subsumed by a federal claim for copyright infringement.

Prior to trial, Dillard stipulated that it had infringed 19 of Harold's copyrighted print fabrics. Dillard offered for sale a total of 22,000 garments manufactured using Harold's copyrighted print fabric designs, and placed advance orders for 15,000 more. Thus, Dillard offered for sale or had ordered a total of 37,000 garments which infringed Harold's copyrights.

The district court conducted a six-day jury trial on Harold's damages claims. To establish its damages, Harold's submitted opinion testimony from Dr. Donald Murry and Dr. Daniel Howard. Dr. Murry, an economics professor from the University of Oklahoma, testified that Dillard's infringement of Harold's copyrights and offering skirts for sale below cost in violation of the Oklahoma Unfair Sales Act amounted to unreasonable acts in restraint of trade under the Oklahoma Antitrust Act.

Dr. Howard, a marketing professor from Southern Methodist University ("SMU"), estimated Harold's damages. Based on the results of a survey of college-aged women who had visited a Harold's store or examined a Harold's catalog and visited a Dillard store during the relevant time, Dr. Howard calculated the damages Harold's suffered nationwide due to Dillard's infringement of Harold's copyrights, and the damages Harold's suffered in Oklahoma on the Oklahoma Antitrust Act and Oklahoma Unfair Sales Act claims. Over Dillard's motion in limine and objections, the district court admitted Dr. Howard's survey, report, and testimony.

At the close of evidence, the district court denied Dillard's motion for judgment as a matter of law. The jury returned a verdict in favor of Harold's on all three claims on May 16, 1994. The jury awarded Harold's and CMT $312,000.00 jointly as actual damages on the copyright infringement claim, and awarded Harold's individually $21,780.00 on the Oklahoma Unfair Sales Act claim and $30,000.00 on the Oklahoma Antitrust Act claim. The district court entered the judgment on the docket on May 17, 1994, but did not address Harold's remaining claim for a permanent injunction. Later, the district court amended the judgment and reduced the copyright damages to $260,220.00 to eliminate double recovery, and trebled the antitrust damage award to $90,000.00, for a total judgment of $372,000.00.

Dillard filed a renewal motion for judgment as a matter of law after trial which the district court denied on September 2, 1994. On August 31, 1994 the district court denied Harold's motion under Fed.R.Civ.P. 37 for attorneys' fees and expenses incurred in proving that William Dillard made certain statements reported in the Dallas Morning News that Dillard had denied Mr. Dillard made during discovery. On September 30, 1994, Harold's filed an untimely motion to amend the judgment under Fed.R.Civ.P. 59(e) and requested a permanent injunction. The district court denied Harold's request for a permanent injunction on February 14, 1995 and awarded Harold's $30,000.00 in attorneys' fees on its Oklahoma Antitrust Act claim.

D.

Both parties appealed. Dillard contends the district court erred by: (1) concluding that § 301 of the Copyright Act did not preempt Harold's Oklahoma Antitrust Act claim; (2) admitting Dr. Howard's survey; and (3) denying its renewal motion for judgment as a matter of law after trial. ³ Harold's argues the district court erred by: (1) failing to award Harold's reasonable attorneys' fees on its Oklahoma Antitrust Act claim; (2) failing to award Harold's attorneys' fees and expenses incurred under Fed.R.Civ.P. 37 in proving that William Dillard made certain statements reported in a newspaper that Dillard denied in discovery; and (3) denying Harold's motion for a permanent injunction.

II.

As an initial matter, we must examine our jurisdiction over this appeal. Dillard filed its notice of appeal on March 16, 1995, 30 days after the February 14, 1995 order denying Harold's request for a permanent injunction, but 190 days after the district court denied Dillard's renewal motion for judgment...