By Tamar Duvdevani and Matthew Ganas
A relatively common problem affecting the fashion industry is claims of copyright infringement over designs that appear on clothing and other merchandise. In particular, retailers create product overseas, unaware that a print stated to be open source by an Asian manufacturing partner is actually a protected design. And, because ignorance is no excuse in copyright infringement, retailers are often penalized for infringement that they may view as innocent – even for use of “simple” designs that may not be perceived as protectable at all. But does this fact pattern create a finding of willful infringement, which confers additional penalties under the Act? According to a recent decision out of the Eleventh Circuit, the answer is no.
The Eleventh Circuit’s decision in Olem Shoe Corp. v. Washington Shoe Corp, 2015 BL 5729 (11th Cir. Jan 12, 2015) affirmed a Florida district court’s summary judgment ruling that Olem Shoe Corporation (“Olem”) infringed Washington Shoe Company’s (“Washington Shoe”) copyrights in polka dot and zebra stripe women’s rain boot designs, although not willfully.
In its infringement analysis, the appeals court first determined that Washington Shoe’s copyrights for its polka dot and zebra stripe designs are valid, thus satisfying the first prong of the copyright infringement test. Id. at *7. In doing so, it relied on the presumption of validity created by a certificate of registration and determined that Olem failed to rebut that presumption by showing Washington Shoe’s designs are non-protectable. See id.
In analyzing the second copyright infringement prong – copying of the original elements of the protected work – the Eleventh Circuit affirmed the district court’s findings on two alternative bases: (1) “striking similarity” between Olem’s accused boots and the copyrighted designs, and (2) Olem’s access to the copyrighted designs combined with “substantial similarity.” Id. at **10-11. As to similarity, the Court viewed Olem’s boots as “‘virtually identical’ and thus strikingly similar” to the copyrighted designs. Id. As to access, it accepted the lower court’s reliance on Washington Shoe’s “wide dissemination” of the copyrighted designs through established boot sales at national Target retail stores. Id. at *8.
Importantly, the Eleventh Circuit also affirmed the lower court’s ruling that Olem’s infringement was not willful, and thus not subject to enhanced statutory damages. The Court determined that Washington Shoe could not establish willfulness on a theory of Olem’s actual knowledge, because “there is no evidence that Olem knew of Washington Shoe’s copyrights and chose to violate them.” Id. at *4. It also determined that the evidence could not support a willful infringement finding based on Olem’s “reckless disregard.” Id. Specifically, the Court rejected Washington Shoe’s argument, among others, that Olem’s sourcing of its boots from China evidenced reckless disregard and increased the probability of infringement, especially considering Olem did not design the infringing artwork itself. See id. at *6. The Court reasoned that “[t]his argument, if effective, would impute reckless disregard to any company purchasing and selling products from China that it did not design itself that turned out to be copyrighted by another. Thus, it is unpersuasive.” Id.
The Olem decision reinforces that the threshold for originality is quite low under U.S. copyright law, and thus even arguably simple designs – like polka dots and zebra stripes – may be protectable. It also demonstrates that a retailer’s lack of knowledge and dissociation from the design and off-shore manufacturing process will not insulate it from copyright infringement liability, although such facts may assist in defending against willful infringement and, consequently, enhanced damage claims.