Jr. v. Glass Onion Inc.

• Decision Date: 12 July 2010
• Docket Number: No. 08-6097-CV-SJ-FJG.,08-6097-CV-SJ-FJG.
• Citation: 723 F.Supp.2d 1138
• Parties: Gary Leon TETER, Jr., Plaintiff, v. GLASS ONION, INC., Defendant.
• Court: U.S. District Court — Western District of Missouri

723 F.Supp.2d 1138

Gary Leon TETER, Jr., Plaintiff,

v.GLASS ONION, INC., Defendant.

No. 08-6097-CV-SJ-FJG.

United States District Court,

W.D. Missouri,

St. Joseph Division.

July 12, 2010.

COPYRIGHT MATERIAL OMITTED.

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Arthur K. Shaffer, Kansas City, MO, for Plaintiff.

Roger W. Slead, Amy J. Tillery, Horn Aylward & Bandy, LLC, Kansas City, MO, for Defendant.

ORDER

FERNANDO J. GAITAN, JR., Chief Judge.

Pending before the Court is defendant Glass Onion, Inc.'s (“GOI”) Motion for Summary Judgment (Doc. No. 69) and plaintiff Gary L. Teter, Jr.'s Motion for Partial Summary Judgment (Doc. No. 70).

I. BACKGROUND

Teter is a renowned artist that paints fine art depicting historic scenes of American frontier life, and sells his work at selected art galleries. In January 2007, Brad and Diana Walpole, owners of Glass Onion, Inc. (“GOI”), entered negotiations with Jim Sanders, owner of Treasure Palace Ltd. (“TPL”) doing business as 83 Spring Street Gallery (“Gallery”), to purchase the Gallery and related assets. The real estate and asset purchase agreements were contingent, in part, on the Walpole's obtaining a satisfactory agreement with Teter that he would continue his existing relationship with the Gallery. At the time, Teter sold artwork to TPL for resale at the Gallery, allowed advertisement of his artwork on the Gallery's website and occasionally made personal visits to the Gallery.

A. Jamesport Meeting

On February 27, 2007, Brad and Diana Walpole met with Lee Teter, his wife Barbara Teter, Teter's daughter Shawnee Herbst and her husband Wyatt Herbst, at Teter's home in Jamesport, Missouri. At the meeting, the parties came to an understanding that Teter's relationship with 83 Spring Street Gallery would continue as it had existed under Jim Sanders' ownership. Teter also informed the Walpoles that Shawnee would soon be joining the “family business,” Summer Field Fine Art (“SFFA”), and would handle publication of Teter's work and generally act on his behalf. Any agreement reached between the parties was not reduced to writing. Nonetheless, being satisfied with the outcome of the Jamesport meeting, on March 30, 2007, Jim Sanders and the Walpoles executed the asset purchase agreement and real estate contract, through which GOI purchased the 83 Spring Street Gallery from Jim Sanders, which included the art inventory, the website, domain names and other real and intellectual property associated with TPL's business.

B. GOI and Teter's Business Relationship

Between May 18, 2007, and February 7, 2008, GOI and Teter entered into approximately eight sales transactions, through which GOI purchased original paintings and prints in various quantities at a time. Teter received payment upon GOI's receipt of the artwork. Each time GOI completed a sales transaction with Teter, GOI posted an image of the newly acquired work on the Gallery's website.

During late Spring 2007, GOI began revamping the Gallery's website. On June 30, 2007, Brad Walpole sent an email to SFFA that stated, “we are about to begin our website overhaul in earnest .... [m]ay we use pictures from your website to display Lee's work that we are carrying?” (Doc. No. 71-12). Shawnee responded on July 2, 2007, and stated, “I wanted to answer your question about your website makeover: Yes, use any images from Summer Field's website.” (Doc. No. 71-13).

On January 4, 2008, Barbara Teter sent a letter on behalf of Lee Teter to the “Authorized Lee Teter Galleries,” including 83 Spring Street Gallery, which informed the dealers of Lee and Barbara Teters' official retirement from the publishing business, and announced that Shawnee and Wyatt Herbst would be taking over SFFA. On March 27, 2008, SFFA sent a proposed Dealership Agreement to GOI, which included the terms and conditions for becoming an authorized SFFA dealer, including minimum order requirements, assertion of rights over the advertisement of copyrighted material and terms of sale (Doc. No. 69-9).

On April 24, 2008, GOI sent a letter to Shawnee informing that it would not agree to the terms of the proposed Dealership Agreement, as written. GOI asserted its position that it had an “existing verbal agreement covering our relationship with Summer Field Fine Art,” and referred to the February 27, 2007, meeting amongst the parties where Teter agreed that 83 Spring Street Gallery would continue to be an authorized dealer with an exclusive territory that included the State of Arkansas as well as the Branson, Missouri metro area (Doc. No. 69-10).

C. Events Preceding the Instant Lawsuit

On May 20, 2008, Shawnee sent a letter to Mr. and Mrs. Walpole that “conclude [d] the permissible use of copyrighted images of Lee Teter art,” since any use was a “privilege reserved for Authorized Dealers of Summer Field Fine Art.” (Doc. No. 76-17). The letter requested that GOI remove all images of Teter art from any form of advertising, including websites. SFFA sent GOI a second notice on June 2, 2008, requesting that all copyrighted images be removed from the Gallery's advertising (Doc. No. 76-18).

Following the second notice, GOI temporarily removed the images from the Gallery's website. On July 7, 2008, GOI sent a letter to Shawnee Herbst stating that, pursuant to the standing agreement with Teter, GOI was well within its legal rights to use “thumbnail” images for the purpose of advertising lawfully owned art, and that GOI would re-display such images on its website with digital watermarks reading “83 Spring Street” to protect Teter from unauthorized copies of the digital images from the website (Doc. No. 69-12). Teter commenced this lawsuit on September 24, 2008, at which time GOI maintained the watermarked images displayed on the Gallery's website.

GOI moves for summary judgment on all of Teter's causes of action, which include: (I) copyright infringement, (II) false designation of origin, (III) unfair competition, (IV) trademark infringement (V) trademark dilution, and (VI) violation of the Visual Arts Rights Act (VARA), 17 U.S.C. § 106A.

Teter moves for judgment as a matter of law on his copyright infringement claim, and on defendant's counterclaims for (I) breach of contract, ¹ (II) promissory estoppel, and (III) breach of covenant of good faith and fair dealing.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the movant demonstrates that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The facts and inferences are viewed in the light most favorable to the nonmoving party. Fed.R.Civ.P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-590, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party must carry the burden of establishing both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Matsushita, 475 U.S. at 586-90, 106 S.Ct. 1348.

Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e); Lower Brule Sioux Tribe v. South Dakota, 104 F.3d 1017, 1021 (8th Cir.1997). To determine whether the disputed facts are material, courts analyze the evidence in the context of the legal issues involved. Lower Brule, 104 F.3d at 1021. Thus, the mere existence of factual disputes between the parties is insufficient to avoid summary judgment. Id. Rather, “the disputes must be outcome determinative under prevailing law.” Id. (citations omitted). Furthermore, to establish that a factual dispute is genuine and sufficient to warrant trial, the party opposing summary judgment “must do more than simply show that there is some metaphysical doubt as to the facts.” Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. Demanding more than a metaphysical doubt respects the appropriate role of the summary judgment procedure: “Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action.” Celotex, 477 U.S. at 327, 106 S.Ct. 2548.

III. DISCUSSION

Teter claims copyright infringement in violation of the Copyright Act of 1976, trademark infringement, false designation of origin, unfair competition and trademark dilution under the Lanham Act, and violation of the Visual Artist's Rights Act. GOI seeks judgment as a matter of law on all of Teter's claims. Teter seeks summary judgment on his claim of copyright infringement, and on GOI's counterclaims of breach of contract, promissory estoppel and breach of covenant of good faith and fair dealing.

A. COPYRIGHT INFRINGEMENT

Teter alleges defendant has “unlawfully reproduced, unlawfully distributed, unlawfully prepared a derivative work of LEE TETER Copyrighted Works, and unlawfully displayed LEE TETER Copyrighted Works.” (Doc. No. 1). Plaintiff adds that both the thumbnails and the higher resolution images displayed on the Gallery website are unauthorized works that infringe upon Teter's copyright ownership rights.

To establish copyright infringement, plaintiff must show: “(1) ownership and validity of the copyright, and (2) potential violation of the copyright owner's exclusive rights by, for example, unauthorized reproduction and distribution of the copyrighted work.” Pinkham v. Sara Lee Corp., 983 F.2d 824, 830 (8th Cir.1992). Here, Teter's copyright ownership is undisputed; thus, the only issue is whether GOI infringed Teter's exclusive rights under 17 U.S.C. § 106(1)(2)(3) and (5) to reproduce, prepare derivative works, distribute copies, or display his work publicly. Section 106(1) grants the copyright owner an exclusive right to...