The opinion of the court was delivered by: SIDNEY H. STEIN
SIDNEY H. STEIN, DISTRICT JUDGE:
The question for determination is whether the plaintiff has demonstrated possible irreparable injury and probable success on the merits with regard to defendants' alleged infringement of plaintiff's copyright in its "Kitchen Basics" box design, and is therefore entitled to a preliminary injunction. For the reasons that follow, this Court answers that question in the affirmative.
Plaintiff Tienshan, Inc. ("Tienshan") is in the business of designing, importing, and distributing home furnishings, including casual dinnerware. Defendants C.C.A. International (N.J.), Inc. and C.C.A. International, Inc. (collectively "C.C.A.") are also engaged in the business of distributing casual dinnerware.
Tienshan's "Kitchen Basics" Product and Box
In late 1991 and early 1992, Tienshan designed a style of "banded" dinnerware -- dinnerware that has a band of color encircling the rim -- and named it "Kitchen Basics." Tr. at 15-16. Each set of Kitchen Basics dinnerware comprises four dinner plates, four salad/dessert plates, four bowls, and four mugs. In February 1992, Tienshan contracted with Ruth Tulino Designs ("Tulino") in Los Angeles to design a box for packaging of the Kitchen Basics product. Tr. at 17-18. Tienshan paid somewhat in excess of $ 6,000 for the design, which was created by using photographs of the dinnerware taken by Peter Hogg, an employee of Tulino. Tr. at 20.
Sales of Kitchen Basics dinnerware in the first quarter of 1995 were down from previous years, due to C.C.A.'s alleged infringement, according to John P. Braunschweig, president of Tienshan. Tr. at 31. Braunschweig conceded, however, that he had no way of knowing for certain the cause of the decline in sales. Tr. at 38.
C.C.A.'s "Casuals by China Pearl" Product and Box
At an export trade show held in China in October 1993, Hung Lam, the President and owner of C.C.A., received from an export company a set of dinnerware items that were almost identical in appearance to Tienshan's Kitchen Basics banded dinnerware. Tr. at 66, 77-78. C.C.A. decided that it would sell this dinnerware under the name "Casuals by China Pearl" ("Casuals").
The set of dinnerware items given to C.C.A. by the export company -- like the Kitchen Basics product, a set of Casuals comprises four dinner plates, four salad/dessert plates, four bowls, and four mugs -- were packaged in Tienshan's box. Tr. at 66, 77-78. Because this was C.C.A.'s first experience in selling a sixteen-piece set, it needed to use Tienshan's box as a guide to determine the dimensions that it would need its own box to have, according to Lam, who had seen the box once before, in a Bradlees store in the Spring of 1993. Tr. at 77-79.
On December 9, 1993, not having heard from Chiu, Lam faxed a sketch of a proposed box design, which, he testified, he drew without using Tienshan's box as a guide. Tr. at 71-72, 82-83. Lam's sketch displayed a representative of each piece in the set. Tr. at 83. After Chiu informed Lam that such a design would greatly increase costs, Lam sent Chiu another sketch the following day. Tr. at 84. Both sketches included the words "Casuals" on the upper-left hand corner of the front panel of the box, but without a rectangle around the word. Several days later, Lam received from Chiu an initial sketch of the box design that Chiu had devised. Tr. at 69, 85. Lam found two flaws with this sketch: like the Tienshan box, it failed to show the small plate; and, also like the Tienshan box, it had a space for the Uniform Products Code ("U.P.C.") symbol on the bottom of the box, rather than on the side, as Lam desired. Tr. at 70, 72, 85-86. Lam informed Chiu of these "errors," whereupon Chiu completed a second sketch, which Lam approved later that month. Tr. at 70, 86. Besides correcting these two "errors," Chiu also included a rectangle around the word "Casuals" in the final sketch.
Tienshan's Awareness of C.C.A.'s Alleged Infringement and the Filing of this Action
Lam testified that he believed that the Casuals box had been seen at least twice by Jan Lin Chen, the Executive Vice President of Tienshan, prior to 1995. It was allegedly first seen during a housewares show in Chicago in January 1994, when Chen apparently visited Lam at the C.C.A. booth. Tr. 103-04. Because the Casuals box was placed somewhere behind Lam, he assumed that Chen noticed it. Tr. at 106, 107-08, 113. Chen, however, could not recall whether or not she visited the C.C.A. booth at that particular show, and could not recall seeing any C.C.A. boxes at that show. Tr. at 167, 169.
Chen also visited C.C.A.'s showroom in New York City during the "tabletop show" in November 1994. Tr. at 109, 110, 159-60. Lam believed that Chen saw the Casuals box at that time, given the prominent placement of C.C.A.'s display area. Tr. at 111. Chen, however, testified that she did not see the boxes, but only some bowls from C.C.A.'s Casuals set. Tr. at 161, 167-68. After seeing the bowls, she told Braunschweig about them. Tr. at 167. Chen's duties include being the Chief Financial Officer of Tienshan and its liaison to its Chinese suppliers. Tr. at 156. Her job does not involve the design of either the product or its packaging. Tr. at 157, 168.
Braunschweig first became aware of the Casuals box on April 10, 1995, when he saw it in a Bradlees store. Tr. at 28-29, 54. Ten days later, Tulino and Hogg executed a copyright assignment transferring all of their rights in the Kitchen Basics box design to Tienshan, and five days after that a Certificate of Registration of the Kitchen Basics box design was issued to Tienshan by the United States Copyright Office.
On May 3, 1995, Tienshan petitioned this Court for an Order to Show Cause why C.C.A. should not be temporarily restrained from using its Casuals box. The request for a Temporary Restraining Order was denied on May 5, 1995. Expedited discovery took place and an evidentiary hearing on Tienshan's motion for a preliminary injunction was held on June 2, 1995.
As a threshold matter, C.C.A. argues that Tienshan should be prevented from obtaining equitable relief because Tienshan "slept on its rights." An inordinate and unexplained delay between the time Tienshan learned of C.C.A.'s alleged infringement and the time Tienshan filed the instant suit could indeed prevent it from obtaining the relief it now seeks. See, e.g., New Era Publications International v. Henry Holt and Co., Inc., 873 F.2d 576, 584 (2d Cir. 1989), cert. denied, 493 U.S. 1094, 110 S. Ct. 1168, 107 L. Ed. 2d 1071 (1990).
C.C.A. adduced evidence that an officer of Tienshan may have known about the C.C.A. box design as early as January 1994, approximately sixteen months before this action was brought. However, that evidence was inconclusive. Lam stated that Chen visited him on two occasions, once in January 1994 and once in November 1994, and that he thought that she saw the Casuals box on both occasions. However, Lam did not actually see Chen notice the Casuals box and could only assume that she saw it. For her part, Chen recalled visiting Lam in November 1994 but could not recall whether she visited him in January 1994. On neither occasion did she recall seeing the Casuals box. The inference that she did not in fact see it is strengthened by her testimony that she ...