Tattoo Art Inc. v. Tat Int'l Llc

Decision Date29 June 2011
Docket NumberCivil Action No. 2:10cv323.
Citation794 F.Supp.2d 634
CourtU.S. District Court — Eastern District of Virginia
PartiesTATTOO ART, INC., A Virginia Stock Corporation, Plaintiff,v.TAT INTERNATIONAL, LLC, A Michigan Limited Liability Company,andKirk A. Knapp, Individually, Defendants.

OPINION TEXT STARTS HERE

Kristen R. Jurjevich, Esq., Mark R. Baumgartner, Esq., for Plaintiff.Charles S. Rominger, Esq., David N. Ventker, Esq., James R. Bruinsma, Esq., Marissa M. Henderson, Esq., Michael P. Farrell, Esq., for Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

MARK S. DAVIS, District Judge.

Pursuant to this Court's Opinion and Order dated February 28, 2011, 2011 WL 1304910, this matter was tried before the Court, as to the issue of damages only, on March 1 and 2, 2011. At the conclusion of trial, the Court instructed the parties to file proposed findings of fact and conclusions of law within two weeks from the date that the trial transcripts were made available to them. On March 24, 2011, defendants TAT International, LLC (TAT) and Kirk A. Knapp (“Knapp” and, collectively with TAT, the defendants) filed an unopposed motion for an extension of time to make such filing. The Court granted such motion on that same date, and the parties timely made their respective filings on March 28, 2011.

Pursuant to an Order of this Court dated June 3, 2011, an on-the-record telephonic status conference was held on June 17, 2011 to address certain legal issues that were not adequately addressed in the parties' proposed findings of fact and conclusions of law. Plaintiff filed a memorandum regarding those issues on the eve of the status conference; the Court allowed defendants until close of business on June 21, 2011 to file a response to plaintiff's memorandum, but defendants filed no response.

After consideration of the evidence offered by the parties at trial, their respective proposed findings of fact and conclusions of law, their arguments during the telephonic status conference, as well as the record of this matter as a whole, the Court now makes the following findings of fact and conclusions of law. The Court also details herein the manner in which judgment in favor of plaintiff is to be entered after the Court has issued a Final Order on plaintiff's request for attorney's fees.

I. PROCEDURAL HISTORY

This Court previously recounted the procedural history of the instant matter in detail in its February 28, 2011 Opinion and Order, see Docket No. 48 at 6–8, and will therefore only partially reiterate that history herein. The instant matter is the second lawsuit plaintiff Tattoo Art, Inc. (Tattoo Art) has filed against defendants TAT and Knapp. Plaintiff filed the first lawsuit in this Court, Civil Action No. 2:09cv314, on July 7, 2009. Defendants thereafter filed a motion to dismiss on the basis of a mandatory mediation provision in the license agreement between the parties, and after briefing and a hearing on December 21, 2009, this Court granted that motion by Opinion and Order dated May 14, 2010, dismissing the case without prejudice. The parties thereafter submitted the matter to mediation, but were unable to resolve their dispute.

Plaintiff filed its complaint in the instant matter on July 2, 2010, alleging (as it had in its prior lawsuit) causes of action for breach of the parties' license agreement and copyright infringement, and requesting damages, attorney's fees, costs, and a permanent injunction. Defendants answered the complaint on August 11, 2010.

Plaintiff filed a motion for partial summary judgment as to liability on December 10, 2010, which was fully briefed, and on which this Court held a hearing on February 11, 2011. By Opinion and Order dated February 28, 2011, this Court granted plaintiff's motion. As previously noted, this matter was consequently tried before the Court, as to the issue of damages only, on March 1 and 2, 2011, and the parties thereafter submitted proposed findings of fact and conclusions of law on March 28, 2011. On May 5, 2011, plaintiff filed a renewed motion for a permanent injunction and the impoundment of defendants' infringing materials. Defendants filed no response. As detailed above, an on-the-record telephonic status conference was held on June 17, 2011, in connection with which plaintiff filed a memorandum on June 16, 2011.

II. FINDINGS OF FACT 1
A. The Court's Credibility Determinations

To the extent that there existed unresolved factual disputes between the parties in this matter, the Court's resolution of such disputes in the findings of fact below were reached on the basis of the following general credibility-determinations. The Court found the trial testimony of plaintiff's owner, Joseph M. DuFresne, to have been straightforward, consistent, and credible, and accordingly the Court affords it great weight herein. By contrast, the Court found the deposition and trial testimony of Knapp (TAT's sole member) to have been at times evasive, self-serving, implausibly-vague as to both material factual issues and matters of his own personal and professional history, irreconcilably contradictory as to several material factual issues, and ultimately less credible than that of DuFresne. Consequently, based on the substance of Knapp's testimony and the Court's close observation of Knapp's demeanor while testifying at trial, the Court affords his testimony less weight than it does to the testimony of DuFresne. In particular, the Court found Mr. Knapp's testimony about his disciplinary history, with the National Association of Securities Dealers (the predecessor to the Financial Industry Regulatory Authority, Inc.) and the United States Securities and Exchange Commission in connection with his prior career as a stock broker, to have been less than forthcoming. Compare Pl.'s Exs. 4 & 5, with Trial Tr. vol. 1, 134:8–141:13 (Knapp Test.) & 176:9–13, Mar. 1, 2011. Although that testimony obviously did not bear directly on the disputed issues in the instant matter, it certainly figured in the Court's assessment of the credibility of Mr. Knapp's testimony.

The Court found no reason to doubt the credibility of the deposition testimony admitted at trial from former TAT employees Mark Vanderwel and Kelly Christine Knapp. The Court likewise found no reason to doubt the credibility of the deposition testimony admitted at trial from TAT employee Benjamin Lee Wolfe, and further found Mr. Wolfe's live testimony at trial to have been generally consistent with his deposition testimony, and ultimately very credible. Thus, the Court affords Mr. Wolfe's testimony substantial weight herein.

B. The Parties

1. Plaintiff is a Virginia corporation in the business of creating, copyrighting, licensing, and selling “tattoo flash” artwork designs.

2. DuFresne is plaintiff's owner and the creator of its artwork, and operates under the professional name J.D. Crowe.” Trial Tr. vol. 1, 56:1–25 (DuFresne Test.).

3. Defendants are in the business of creating and selling stencils and other products for use in applying airbrush body art.

4. TAT is a Michigan limited liability company with its principal place of business in Grand Rapids, Michigan.

5. Knapp, a citizen of Michigan, is the sole member of TAT, and controls TAT's activities.

C. Plaintiff's Method of Copyrighting His Tattoo Designs

6. DuFresne organized his tattoo designs, both for copyright registration and sale, into books (hereinafter, the “Books”), each consisting of fifty “tattoo flash sheets,” each of which sheets, in turn, contain a number of individual tattoo images. Trial Tr. vol. 18:23–21:9 (DuFresne Test.) & 51:5–12.

7. DuFresne did not register the Books, or any portions thereof, as compilations or derivative works. Id. 20:16–21:22 (DuFresne Test.) & 52:18–53:25.

8. Instead, DuFresne explained that it was his intent to register the Books as individual copyright images under a single registration, [m]ostly because it was cheaper” than separately registering each flash sheet or the individual tattoo designs on each flash sheet. Id. 20:24–21:6 (DuFresne Test.). He later elaborated that the Books “were put together for sale and done in 50 sheets to just help with the cost of a copyright compared to 50 copyrights,” that [t]hey were created in the order of those flash sheets [he] created,” and that “it was just a random decision to stop at 50 and call it a book.” Id. 51:5–52:7 (DuFresne Test.).

9. DuFresne explicitly denied that the Books were organized thematically, or that he “exercised [any] artistic discretion as an artist in putting together [his] books for purposes of copyright registration.” Id. 50:11–52:9 (DuFresne Test.). He also denied that the individual flash sheets consistently reflected a single theme, indicating that [s]ome did, some didn't.” Id. 52:10–17 (DuFresne Test.).

10. DuFresne sells his copyrighted tattoo designs in a variety of ways, including on an individual image basis. Id. 19:8–12 (DuFresne Test.).

D. The Terms of the Parties' License Agreement

11. On December 29, 2005, plaintiff, through its owner DuFresne, and TAT, through its sole member Knapp, entered into a written license agreement (the “Agreement”). See Compl. Ex. A.2

12. The Agreement granted TAT the exclusive right to use the sixteen pages of plaintiff's copyrighted tattoo designs (the “Property”) attached to the Agreement “for the manufacture, offer for sale, sale, advertisement, promotion, shipment, and distribution of” airbrush stencils derived from the Property (the “Licensed Articles). See Compl. Ex. A ¶¶ 1.01, 1.02 & 2.01.

13. The Property consisted of 711 individual tattoo designs, of which 212 designs were drawn from 24 of plaintiff's registered Books. See Docket No. 42 at 1; Pl.'s Ex. 1; Tr. Exs. 1–24. The remaining designs contained in the Property were unregistered. However, defendants do not dispute that all 711 designs contained in the Property “were subject to a claim of copyright” by plaintiff. See Docket No. 42 at 1.

14. The Agreement's initial...

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