Paying damages under both copyright and trademark laws
Two furniture makers landed in court after one copied the other’s designs. To the chagrin of the infringer, the copying provided the basis, not only for copyright infringement damages, but also for trade dress infringement damages that were six times as much.
In 1998, designer Jason Scott started creating hand-carved furniture from reclaimed teak. In 2003, he designed the three pieces at issue in the case — a table, a desk and a buffet. The pieces were sold by Jason Scott Collection Inc. (JSC).
Trendily Furniture LLC (Trendily) and JSC compete in Texas. In September 2016, a furniture retailer gave Trendily’s owner photos of Scott’s three pieces and asked him to manufacture similar pieces. Trendily’s factory, on the owner’s instruction, built a set of nearly identical imitations.
JSC sold its furniture exclusively to authorized retailers, agreeing to restrict sales to a single store in a certain radius. When one of its retailers saw the imitations at a competitor, she called Scott, worried that JSC was violating the exclusivity agreements.
Another retail customer of both JSC and Trendily alerted Scott’s brother about the knockoffs. Fearing being labeled a “snitch,” though, he told the brother that he’d stop buying JSC items if his name was revealed. After Scott was forced to disclose the retailer’s identity as part of the lawsuit, their business relationship ended.
In 2017, Scott obtained copyrights on his three pieces, and his attorney sent Trendily two cease-and-desist letters. Yet Trendily continued selling its pieces until JSC filed a lawsuit for copyright and trade dress infringement.
The trial court ruled in favor of JSC on the copyright claim and awarded about $20,000, the amount of Trendily’s profits on the infringing sales. On the trade dress claim, the court awarded JSC three years of estimated lost sales to the retailer as “reasonably foreseeable” damages.
Trendily appealed to the U.S. Court of Appeals for the Ninth Circuit. One of its challenges was directed at the lower court’s decision to award reasonably foreseeable damages to JSC based on its changed relationship with the retailer. But, the Ninth Circuit said, damaged business relationships are a reasonably foreseeable consequence of infringement.
Trendily also argued that, because copying is sometimes a necessary aspect of competition, it should be held liable under only the Copyright Act. The court rejected the notion that copyright and trademark claims are mutually exclusive. The fact that copying is an essential element of copyright infringement and also can be relevant to proving trade dress infringement doesn’t mean the laws remedy the same wrongs.
Once it established that trade dress damages were warranted, the appeals court turned to Trendily’s argument that the trial court abused its discretion in awarding $132,747 in lost annual profits over three years. Trendily protested that the trade dress award was six times the lost profits the lower court awarded for the copyright claim.
The Ninth Circuit found this argument “inapposite.” The copyright damages, after all, were based on Trendily’s retrospective gross profits from infringement — the amount it made off the infringing pieces. The trade dress damages, however, were assessed based on JSC’s prospective lost profits, or the amount it would have made if it had retained the lost business.
Dollars for deception
As the defendant found out in this case, assessed damages are often quite costly. The case is a valuable reminder that copyright and trademark damages can overlap.