Craft Smith, LLC v. Ec Design, LLC
| Decision Date | 17 May 2019 |
| Docket Number | Case No. 2:16-cv-01235 |
| Citation | 388 F.Supp.3d 1385 |
| Parties | CRAFT SMITH, LLC, a California limited liability company, Plaintiff, v. EC DESIGN, LLC, a California limited liability company, Defendant. EC Design, LLC, a California limited liability company, Counterclaimant, v. Craft Smith, LLC, a California limited liability company, and Michaels Stores, Inc., a Delaware corporation, Counterclaim Defendants. |
| Court | U.S. District Court — District of Utah |
Kirk R. Harris, Charles J. Veverka, Daniel R. Barber, R. Parrish Freeman, Maschoff Brennan, Park City, UT, for Plaintiff/Counter Defendant.
Kristine E. Johnson, J. Adam Wright, Juliette P. White, Parsons Behle & Latimer, Salt Lake City, UT, for Counter Claimant/Defendant.
On April 5, 2019 the court heard oral argument on EC Design's Motion for Partial Summary Judgment on First Claim for Copyright Infringement, Craft Smith and Michaels' Motion for Summary Judgment, as well as Craft Smith and Michaels' Motion to Exclude Richard S. Hoffman and EC Design's Motion to Exclude Expert Opinion of Clarke Nelson. (Dkt. Nos. 96, 99, 107, 110.) At the conclusion of the hearing, the court took the matter under advisement with a written order to follow.
EC Design claims that when Craft Smith and its distributor Michaels Stores began selling the Recollections Planner in October 2016, they infringed on 1) EC's LifePlanner trade dress under 15 U.S.C. § 1125(a) and 2) EC's copyright in the LifePlanner under 17 U.S.C. § 101 et seq. (See Dkt. No. 54 at 6; Dkt. No. 112 at 6-8, 19.) EC also brings several state law unfair competition claims against Craft Smith and Michaels. (Dkt. No. 54 at 41-47.)
Erin Condren is the founder of EC Design, a California designer and retailer of personal planners, organizers, notebooks, stationery, school and holiday goods, which it sells on its website www.erincondren.com, Amazon, and other retail locations. (Dkt. No. 54 at 7.) Craft Smith, one of EC's competitors, is a California company that began operating in January 2014; it makes and sells products in the personal organizer and crafts markets, including planners under the "Recollections" brand. (Dkt. No. 2 at 2; Dkt. No. 112 at 12.) Michaels is a Delaware corporation that sells craft, art, scrapbook, and stationery products at its numerous retail stores, as well as its website www.michaels.com. (Dkt. No. 2 at 7-8.) Craft Smith and Michaels have worked together to develop and sell planners since 2014; Michaels is by far Craft Smith's largest customer. (Dkt. No. 112 at 12.)
In 2007, Erin Condren created EC's flagship product, the LifePlanner. (Dkt. No. 112 at 8.) The LifePlanner has evolved significantly over time since 2007. According to EC, "[e]ach year since 2007, EC's product development team [has created] a new version of the LifePlanner that builds on Ms. Condren's original design." (Id. ) From 2007 to 2015 EC only offered LifePlanners with a vertical layout, but since its 2015-16 LifePlanner version it has offered both horizontal and vertical layouts. (Id. ) The vertical layout uses different artwork and graphics than does the horizontal layout. (Dkt. No. 138 at 7.)
As of October 2016, the LifePlanner products purchased through the erincondren.com website were customizable. Purchasers could select (i) cover artwork; (ii) removable or "luxe" cover style; (iii) a custom message or photograph for the cover; (iv) layout style; (v) coil color; (vi) colorful or neutral color scheme; and (vii) gold foil accents. (Dkt. No. 98 at 10-12.)
Since 2009, EC claims to have sold 1,549,770 LifePlanner products, with revenue from these sales totaling approximately $65 million. (Dkt. No. 54 at 23.) In 2016 alone, EC received $18.5 million in U.S. sales of the LifePlanner. (Id. )
On January 15, 2015, EC reached out to Craft Smith to discuss a "possible ... private label creation between [the] two companies." (Dkt. No. 112 at 10.) Craft Smith's owner and designer were both enthusiastic about the potential to work with EC; Craft Smith's internal correspondence reveals a high level of interest in and admiration for EC's brand, planner quality, and popularity in the market. (See Dkt. No. 112 at 10, 15.) Craft Smith proposed working with EC to develop a planner together to sell in Michaels stores; ultimately, however, they were unable to arrive at an agreement. (Id. at 11.)
Six months after discussions ended with EC, Craft Smith began preparing to propose a new spiral-bound planner to Michaels that would be similar to EC's LifePlanner. (Dkt. No. 112 at 12.) This would be the first spiral planner Craft Smith had produced. (Id. ) In February 2016, Craft Smith sent its manufacturer in China an EC LifePlanner sample to get a baseline for what its pricing would be on the proposed product for Michaels. (Id. at 13.) Craft Smith told the manufacturer, (Id. )
On February 29, 2016, Michaels and Craft Smith met to discuss developing a new 2017 planner series to launch in the fourth quarter of 2016. (Id. ) According to meeting notes, Michaels' and Craft Smith's "[c]oncept [was] to manufacture a like item to the current Erin Condren Life Planner." (Dkt. No. 112 at 14.) The projected cost for the new spiral planner was "based on everything you see in the EC planner," with a projection that the new planner could be offered at a discounted price of $24.99-$29.99 in comparison with the LifePlanner's retail price of $40. (Id. )
On March 24, 2016, Craft Smith completed its horizontal and vertical Recollections Planner calendar arrangements in black and white, as well as the "initial cover ... themed ... [and] calendar artwork." (Id. ) By April 5, 2016, the final artwork and arrangement of the new planner series was approved by Michaels to move forward. (Id. at 16.) The planner files were sent to the manufacturer in China on April 5th, along with instructions to "match [the new planner] exactly to sample" referring to the LifePlanner Craft Smith had previously provided. (Id. )1 The sticker pages were purposefully sized to match the LifePlanner's weekly layouts. (Id. at 17.) Craft Smith emphasized that the new Recollections Planner needed to "feel like overall weight of current sample." (Id. ) On April 6, Craft Smith further instructed the manufacturer to "match [the spiral size] of the sample." (Id. )
In early April 2016, Michaels asked Craft Smith to compare the new Recollections Planner with the LifePlanner, including a request to make sure that no quotes were copied from the LifePlanner "to make sure our planners are not too similar to hers." (Id. at 18.) Craft Smith provided the "specs" of both planners, revealing that both planners are sized at 7.25? × 9.25?, and that the twelve-month versions both have a total of 178 pages, and both have removable covers. (Id. ) EC alleges that the design and arrangement of Recollections didn't change after that comparison was finished. (Id. ) On April 26, Craft Smith submitted its first purchase orders to the manufacturer. (Id. at 17.) One day later while reviewing the planner's packaging images, a Craft Smith employee (Id. )
In May 2016, Michaels approached EC to discuss the possibility of Michaels carrying EC's planners at its stores. (Id. at 11.) Prior to that meeting, Craft Smith had shared consumer survey results showing that "Erin Condren was the most popular" planner brand. (Id. ) However, this relationship also never materialized as the parties failed to agree on a licensing fee or royalty rate. (Id. )
Michaels released Craft Smith's Recollections Planner in October 2016, which was viewed as "a hit" with customers. (Id. at 19.)
On November 29, 2016, Craft Smith received a letter from EC Design's counsel which included an express allegation that Craft Smith had infringed on EC's alleged copyrights and trade dress rights in the LifePlanner. (Dkt. No. 2 at 3.) EC demanded that Craft Smith immediately cease selling or advertising any planners, including the Recollections Planner, that incorporate any design, text, graphic, color combination, or other material allegedly found in the LifePlanner, and to notify all distributors to return unsold planners to Craft Smith. (Id. )
On December 8, 2016, Craft Smith filed a complaint in this court against EC seeking a declaratory judgment of no copyright infringement and no trade dress infringement, as well as an award of Craft Smith's costs and attorney fees. (Id. )
On the same day Craft Smith initiated this action (December 8, 2016), EC applied for the following copyright registrations from the U.S. Copyright Office for its 2016-17 LifePlanners, which were granted on December 12, 2016:
(Dkt. Nos. 110-12, 110-13, 110-15, and 110-16.)
Approximately eight months later, on August 11, 2017, EC applied for a compilation copyright in "2-D artwork, layout and graphics" as well as "Selection, coordination, and arrangement of text and 2D artwork." (See Dkt. No. 110-17.) Before the copyright was granted by the U.S. Copyright Office, the Copyright Office specifically refused registration of EC's LifePlanner "layout" claim, and provided the following rationale:
... "layout" does not describe a copyrightable type of authorship. Please note that the general layout or format of a book, a page, a slide presentation, a website, or the like, is not copyrightable because it is a template of expression. Compendium of U.S. Copyright Office...
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