Peel & Company Inc. v. The Rug Market

• Decision Date: 24 January 2001
• Docket Number: No. 99-31051,99-31051
• Citation: 238 F.3d 391
• Parties: (5th Cir. 2001) PEEL & COMPANY, INC., Plaintiff-Appellant-Cross-Appellee, v. THE RUG MARKET, Defendant-Appellee-Cross-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

Page 391

238 F.3d 391 (5th Cir. 2001)

PEEL & COMPANY, INC., Plaintiff-Appellant-Cross-Appellee, v. THE RUG MARKET, Defendant-Appellee-Cross-Appellant.

No. 99-31051

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

January 24, 2001

[Copyrighted Material Omitted]

Appeals from the United States District Court for the Eastern District of Louisiana

Before HIGGINBOTHAM, WIENER, and DENNIS, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant Peel & Company, Inc. ("Peel") appeals the summary judgment dismissal of its claim of copyright infringement. We reverse and remand for further proceedings by the district court.

I. FACTS AND PROCEEDINGS

In 1991, Peel designed a rug and named it "Directoire" for the early Eighteenth Century French historical period that inspired the rug's pattern. The design, later copyrighted, features two rows of panels, each of which is decorated with a central floral design and trompe l'oeil¹ triangular shading intended to suggest a coffered ceiling. The Directoire also features laurel garlands, punctuated by rosettes, surrounding each panel, and an outer border of repeated squares. Although other Directoire-style rugs exist, Peel claims that it alone incorporates the trompe l'oeil triangular shading and square-patterned border into its design.

Peel, a rug wholesaler, arranged for the manufacture of the Directoire, which is handwoven wool and retails for over $1,000. Some 4,000 copies of the rug have been sold throughout the United States since 1993. It is displayed in at least 100 showrooms, including four in the Los Angeles area, and it has appeared in numerous trade shows as well as in Peel's catalog.

Defendant-Appellee The Rug Market ("Rug Market"), based in Los Angeles, imports rugs and sells them wholesale to retailers. One of its primary suppliers is Ambadi Enterprises ("Ambadi"), of New Delhi, India, which designs, manufactures, and sells home furnishings, including rugs. Ambadi has been supplying rugs to Rug Market since at least 1986, and is the source of thirty to forty percent of its merchandise.

In 1998, Rug Market began selling the "Tessoro" rug, made by Ambadi. The Tessoro is machine-woven of jute and retails for $99. In photographs, it strongly resembles the Directoire, featuring the same general scale and proportionate size among the elements. Key differences between the Tessoro and the Directoire include the Tessoro's elimination of the garlands and rosettes between panels; its use of one instead of two types of flower medallions; its use of four instead of nine colors; and, in general, its coarser make and lower quality. Peel maintains that the Tessoro is a copy of the Directoire and that these differences only make the infringing rug faster and cheaper to manufacture.

Peel issued a written demand that Rug Market cease selling the Tessoro rug, then sued for deliberate copyright infringement. The district court granted Rug Market's pretrial motion for summary judgment. The court found that Peel had failed to submit evidence sufficient to establish that it would be able to carry its burden of proving Ambadi's access to the Directoire design at trial. The court also found that the rugs were not similar enough to imply access, finding that, under the "ordinary observer" test, "no reasonable person would mistake these two rugs as being the same." The district court concluded that Peel's circumstantial evidence of copying was inadequate to support a copyright claim. The court also denied without comment Rug Market's motion for costs and attorneys' fees.

Peel appeals the dismissal of its copyright infringement case on summary judgment. Rug Market cross-appeals the denial of costs and attorneys' fees.

II. ANALYSIS

A. Standard of Review

This case is on appeal from a dismissal on summary judgment. We therefore review the record de novo, applying the same standard as the district court.² A motion for summary judgment is properly granted only if there is no genuine issue as to any material fact.³ A fact issue is material if its resolution could affect the outcome of the action.⁴ In deciding whether a fact issue has been created, the court must view the facts and the inferences to be drawn from them in the light most favorable to the nonmoving party.⁵

The standard for summary judgment mirrors that for judgment as a matter of law.⁶ Thus, the court must review all of the evidence in the record, but make no credibility determinations or weigh any evidence.⁷ In reviewing all the evidence, the court must disregard all evidence favorable to the moving party that the jury is not required to believe, and should give credence to the evidence favoring the nonmoving party as well as to the evidence supporting the moving party that is uncontradicted and unimpeached.⁸

B. Copyright Infringement

To prevail on a copyright infringement claim, a plaintiff must show (1) ownership of a valid copyright and (2) unauthorized copying.⁹ Peel's copyright is no longer in dispute,¹⁰ leaving copying as the central issue of this appeal. As direct evidence of copying is rarely available, factual copying may be inferred from (1) proof that the defendant had access to the copyrighted work prior to creation of the infringing work and (2) probative similarity.¹¹

To determine access, the court considers whether the person who created the allegedly infringing work had a reasonable opportunity to view the copyrighted work. A bare possibility will not suffice; neither will a finding of access based on speculation or conjecture.¹² In this court, "[i]f the two works are so strikingly similar as to preclude the possibility of independent creation, 'copying' may be proved without a showing of access."¹³

Not all copying is legally actionable, however. To prevail on a copyright infringement claim, a plaintiff also must show substantial similarity between the two works:¹⁴ "To determine whether an instance of copying is legally actionable, a side-by-side comparison must be made between the original and the copy to determine whether a layman would view the two works as 'substantially similar.'"¹⁵ Although this question typically should be left to the factfinder,¹⁶ summary judgment may be appropriate if the court can conclude, after viewing the evidence and drawing inferences in a manner most favorable to the nonmoving party, that no reasonable juror could find substantial similarity of ideas and expression.¹⁷ If, after the plaintiff has established its prima facie case, the defendant offers evidence of independent creation, the plaintiff has the burden of proving that the defendant in fact copied the protected material.¹⁸

In this case, the district court found that the Directoire design could be copyrighted, and that Peel possesses a valid copyright.¹⁹ Therefore, the issues on appeal are whether Peel has failed to establish the existence of a genuine issue of material fact as to whether Rug Market copied its Directoire design, and whether any such copying was legally actionable, that is, whether the rugs are substantially similar.

1. Factual Copying

a. Access

As this court stated in Ferguson v. National Broadcasting Co., a copyright infringement plaintiff must establish "a reasonable possibility of access" by the defendant.²⁰ Peel adduced circumstantial evidence of the broad sale and display ---- in showrooms, trade shows and catalogs ---- of the Directoire rug in the United States, including Los Angeles. We find this evidence adequate under Ferguson to raise a genuine issue of material fact as to whether Rug Market had access to the design. In particular, Rug Market employees and the company's principal, Michael Shabtai, attended rug trade shows where the Directoire was exhibited, and Shabtai admitted that he may have visited Peel's showroom, where the Directoire was displayed.

Whether designers for Ambadi, located in New Delhi, India, had a reasonable possibility of access presents a more difficult question. The district court found that Peel produced no evidence of Ambadi's direct access to the Directoire, concluding that "[i]nstead, Peel argues that Rug Market had access and confers this knowledge to Ambadi."

The parties sharply contest whether Ambadi had access to the Directoire design. Peel argues access by Ambadi under two alternative theories: wide dissemination²¹ and chain of events.²² Even though we have not expressly adopted either theory, we are satisfied that the facts of this case can be adequately addressed under Ferguson's "reasonable possibility of access" test. The question here is whether Peel has produced more than speculation and conjecture regarding access by Ambadi.

Peel emphasizes that Rug Market "supplied designs and samples on a regular basis for Ambadi to use in manufacturing carpets for Rug Market," and that Shabtai admitted that the Tessoro design probably was created in response to his request for "a masculine, geometric type rug." In addition, Ambadi's manager, Ishwinder Singh, visits the United States ---- including Los Angeles ---- at least once a year. Peel argues that Singh and his design representatives review magazines and travel around this country to observe designs and obtain ideas, in addition to visiting exhibitions and fairs and researching in design institute libraries. These contacts, Peel argues, establish at least the existence of a genuine issue of material fact regarding access, thereby making the grant of summary judgment inappropriate.

Rug Market counters that Peel has not established that Ambadi had access to the Directoire design. In particular, Rug Market states that it "did not provide any pictures, rugs, information or input to Ambadi in connection with the design and manufacture of the Tessoro Jute. Rug Market simply purchased the Tessoro Jute from Ambadi." Furthermore, "Ambadi's designers are not familiar with the work entitled Directoire and did not see it, review it or copy it when making the Tessoro Jute rug. . . . [T]he...