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Scentsy, Inc., An Idaho Corporation v. B.R. Chase

April 30, 2013

SCENTSY, INC., AN IDAHO CORPORATION,
PLAINTIFF,
v.
B.R. CHASE, LLC., A UTAH LIMITED LIABILITY COMPANY; AND HARMONY BRANDS, LLC., A UTAH LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendant Harmony Brands, LLC's Motion for Summary Judgment (Dkt. 89), and Plaintiff's Motion to Strike Unauthorized Summary Judgment Reply Materials, and Alternative Motion for Leave to Respond (Dkt. 120). The Court heard oral argument on the motions on March 13, 2013, and now issues the following decision.

BACKGROUND

Both Scentsy, Inc. ("Scentsy") and Harmony Brands, LLC. ("Harmony") manufacture scented wax and wax warmer products. Scentsy sells its products through a party-plan distribution model. Harmony sells its products through a retail distribution network. In the remaining claims in this case, Scentsy contends that Harmony has infringed Scentsy's copyright and trade dress rights in a number of its warmers.

LEGAL STANDARD

Summary judgment is appropriate where a party can show that, as to any claim or defense, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). One of the principal purposes of the summary judgment "is to isolate and dispose of factually unsupported claims . . .." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut," but is instead the "principal tool[ ] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). There must be a genuine dispute as to any material fact -- a fact "that may affect the outcome of the case." Id. at 248.

The evidence must be viewed in the light most favorable to the non-moving party, and the Court must not make credibility findings. Id. at 255. Direct testimony of the non-movant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d 1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).

The moving party bears the initial burden of demonstrating the absence of a genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001)(en banc). To carry this burden, the moving party need not introduce any affirmative evidence (such as affidavits or deposition excerpts) but may simply point out the absence of evidence to support the nonmoving party's case. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir.2000).

This shifts the burden to the non-moving party to produce evidence sufficient to support a jury verdict in her favor. Deveraux,263 F.3d at 1076. The non-moving party must go beyond the pleadings and show "by her [ ] affidavits, or by the depositions, answers to interrogatories, or admissions on file" that a genuine dispute of material fact exists. Celotex, 477 U.S. at 324.

Only admissible evidence may be considered in ruling on a motion for summary judgment. Orr v. Bank of America, 285 F.3d 764, 773 (9th Cir. 2002); see also Fed.R.Civ.P. 56(e). In determining admissibility for summary judgment purposes, it is the contents of the evidence rather than its form that must be considered. Fraser v. Goodale, 342 F.3d 1032, 1036-37 (9th Cir. 2003). If the contents of the evidence could be presented in an admissible form at trial, those contents may be considered on summary judgment even if the evidence itself is hearsay. Id. (affirming consideration of hearsay contents of plaintiff's diary on summary judgment because at trial, plaintiff's testimony of contents would not be hearsay).

ANALYSIS

1. Copyright Claims

To prevail on a copyright infringement claim, a plaintiff "must demonstrate (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Benay v. Warner Bros. Entertainment, Inc., 607 F.3d 620, 624 (9th Cir. 2010) (Internal citations and quotations omitted). Harmony does not necessarily challenge the validity of Scentsy's copyrights in the registered warmers, but it does argue that Scentsy's claimed copyright protection is limited by the deposit copies submitted at registration. The Court will address that initial question before turning to the copying issue.

A. The Registration Certificate's Effect on the Scope of Scentsy's Copyright Protection.

Section 408 of the Copyright Act requires authors who wish to register their copyrights to deposit a copy of the work, along with certain other application materials and a fee, with the Register of Copyright. 17 U.S.C. § 408(a). Where depositing an actual copy of the work is impractical, such as with three-dimensional sculptural works like Scentsy's warmers, the Register allows authors to submit "[a]s many pieces of identifying material as are necessary to show the entire copyrightable content in the ordinary case, but in no case less than an adequate representation of such content" in lieu of depositing a copy of the work. 37 C.F.R. §§ 202.20(c)(2)(xi), 202.21(b).

Harmony suggests that because Scentsy's identification materials did not disclose every element of its warmers in which it now claims a copyright, Scentsy cannot claim protection in those elements. Some history of the Copyright Act is helpful in understanding why that is not the case.

Under the Copyright Act of 1909, "federal copyright protection attached only upon publication, and even then, only if proper notice, registration, and deposit occurred." Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606 F.3d 612, 618 (9th Cir. 2010). However, the Copyright Act of 1976 changed the copyright landscape to "vastly increase[] the scope of works subject to copyright protection." Id. at 619. Now, by the very terms of the Act, "registration is not a requirement of protection." 17 U.S.C. § 408(a). Rather, to the extent that Scentsy's warmers contain copyrightable elements, those elements gained copyright protection from the moment of their creation. See 17 U.S.C. § 302(a).

Likewise, the registration requirement does not limit the Court's authority to protect Scentsy's copyrights to their full extent. As Judge Kaplan of the Southern District of New York explained in a thoughtful opinion on the matter, courts engage in an independent evaluation of the "full panoply of copyright infringement issues" in such a suit. Ward v. Nat'l Geographic Soc'y, 208 F. Supp. 2d 429, 446 (S.D.N.Y. 2002). This is so because Congress enacted the permissive registration requirement to fulfill its interest in having a robust federal register of copyrights, not to give the Register the opportunity to pass final judgment on the question of a work's copyrightability. Id. at 444-48; see also Nat'l Conference of Bar Examiners v. Multistate Legal Studies, Inc., 692 F.2d 478, ...


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