question is now presented whether BellePointe has a valid defense to infringement.
III. BellePointe's Affirmative Defenses
BellePointe initially asserted two affirmative defenses: 1) joint authorship of the designs at issue; and 2) acquisition of rights in the copyrights in the sweater styles based on the prior purchase of the sweaters from plaintiff.
In opposition to Design Options' motion for summary judgment, BellePointe asserts neither of these affirmative defenses. Instead, BellePointe claims that it acquired an implied license to sell the disputed sweater styles. As set forth below, BellePointe has failed to adequately demonstrate the existence of a material issue of fact as to any of its three asserted affirmative defenses.
A. BellePointe is Not a Joint Author Of the Sweater Designs
In the Second Circuit, a work is considered to be jointly authored under Section 101 the Copyright Act if two requirements are met: First, both parties must have intended, at the time of creation, that the work be jointly owned. Childress v. Taylor, 945 F.2d 500, 508-09 (2d Cir. 1991). Second, even if such mutual intent existed at the time of creation, each party's individual contribution must be independently copyrightable. Id. at 505-08.
There is no evidence that both Design Options and BellePointe intended to create a work of joint authorship at the time of creation, or at any other time, and Design Options has submitted evidence that it never had any intent to create a work of joint authorship with BellePointe. The deposition testimony of BellePointe's own officers and employees confirms that there is no evidence of a shared intention to author or own the designs jointly in the sweater styles sold to BellePointe. Accordingly, there exists no genuine issue of material fact as to the question of a shared intent to author the designs jointly.
In any event, BellePointe has not shown that it meets the second requirement of a joint authorship defense -- that it contributed independently copyrightable matter to the sweater designs. As a matter of law, it did not. BellePointe made suggestions of idea for themes, trims or colors. As BellePointe has conceded, such input does not rise to the requisite level to qualify as a joint author. Neither are such ideas independently copyrightable. An author is one "who translates an idea into a fixed, tangible expression entitled to copyright protection." Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989). The suggestion of a color or a trim does not render a design a joint creation. As the court in Childress observed, the creator of a copyrightable work does not "so easily acquire a joint author" based on suggestions of ideas and "minor bits of expression." 945 F.2d at 509. See also Balkin v. Wilson, 863 F. Supp. 523 (W.D. Mich 1994) (finding no joint authorship and granting summary judgment because defendant's contribution to plaintiff's songs consisted only of ideas and certain technical specifications); Fred Riley Home Building Corp. v. Cosgrove, 864 F. Supp. 1034 (D. Kan. 1994) (designer of house is author and owner of copyright in house even though "builder presents ideas and concepts" and retains approval authority).
BellePointe's affirmative defense of joint authorship is factually and legally insufficient to avoid liability for copyright infringement.
B. BellePointe Did Not Acquire Rights In The Sweater Designs From Design Options
BellePointe also asserted in its responsive pleadings, as an affirmative defense, that it acquired rights in the sixteen sweater designs at issue when it purchased the sweaters bearing those designs during the period of its customer relationship with Design Options.
A purchaser does not acquire copyright rights in designs by the mere purchase of goods. The Copyright Act provides, in pertinent part:
Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied .... Transfer of ownership of any material object ... does not of itself convey any rights in the copyrighted work embodied in the object.
17 U.S.C. § 202; see Forward v. Thorogood, 758 F. Supp. 782, 784 (D. Mass, 1991) (plaintiff did not obtain copyright rights in defendant's taped studio sound recordings even though plaintiff had arranged for recording session and had physical possession of only tapes of sessions), aff'd, 985 F.2d 604 (1st Cir. 1993).
Thus, when BellePointe purchased various sweater styles from Design Options and resold those goods to its own customers, it acquired no rights in the copyrighted designs embodied in the sweater styles. Rather, when BellePointe purchased sweaters from Design Options between 1989 and 1994, it had the right to resell those goods pursuant to the "first sale" doctrine, which permits the sale of the material object in which the copyright is embodied without transferring ownership of the copyright. See 17 U.S.C. § 109(a); Bourne v. Walt Disney Co., 68 F.3d 621, 631-33 (2d Cir. 1995) (describing "first sale" doctrine), cert. denied, 116 S. Ct. 1890, 135 L. Ed. 2d 184 (1996). The "first sale" doctrine did not permit BellePointe to reproduce the designs and to manufacture and sell new versions of Design Options' copyrighted sweater styles, since that right rests exclusively in Design Options as the owner of the copyrighted works. 17 U.S.C. § 106(1)-(3).
Indeed, under BellePointe's theory of copyright ownership, every time a retailer purchases merchandise from a designer, the retailer would thereby become the copyright proprietor of the apparel designs embodied in the merchandise, merely because it paid for the goods.
Moreover, the Copyright Act is clear that any transfer of copyright ownership must be in writing. 17 U.S.C. § 204(a). Mellencamp v. Riva Music Ltd., 698 F. Supp. 1154, 1161-62 (S.D.N.Y. 1988). Because there is no such writing in this case, defendant's second affirmative defense must fail as well.
C. BellePointe's Implied License Defense Fails
1. The Defense Has Been Waived
Finally, BellePointe asserts -- for the first time in its memorandum of law submitted in opposition to this motion -- an affirmative defense of "implied license." As set forth above, BellePointe plead two affirmative defenses, and implied license was not one of them. Design Options correctly notes that, under the circumstances, this defense has been waived pursuant to Fed. R. Civ. P. 8(c), which requires a party to "set forth affirmatively" any matter constituting an avoidance or affirmative defense," including, specifically, the existence of a "license." Fed. R. Civ. P. 8(c). As an affirmative defense to copyright infringement, implied license must be pleaded pursuant to Fed. R. Civ. P. 8. See Oddo v. Ries, 743 F.2d 630, 634 & n.6 (9th Cir. 1984).
The Second Circuit has held that Rule 8(c) "is intended to notify a party of the existence of certain issues, and its mandatory language has impelled us to conclude that a party's failure to plead an affirmative defense bars its invocation at later stages of the litigation." Doubleday & Company, Inc. v. Curtis, 763 F.2d 495, 503 (2d Cir.), cert. dismissed, 474 U.S. 912, 88 L. Ed. 2d 247, 106 S. Ct. 282 (1985) (citing Satchell v. Dilworth, 745 F.2d 781, 784 (2d Cir. 1984). Accordingly, if a party fails to plead an affirmative defense, that defense is deemed to have been waived. George A. Fuller Co. v. Alexander & Reed, Esqs., 760 F. Supp. 381, 385 (S.D.N.Y. 1991).
Under these circumstances, the implied license defense belatedly raised by BellePointe has been waived and cannot be considered. The Court's consideration of a previously unpleaded defense at this late stage in the proceedings would run afoul of the procedural safeguards ensured by Rule 8(c). See Doubleday, supra, 763 F.2d at 502. See also Travellers Int'l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1580-81 (2d Cir. 1994).
An unpleaded affirmative defense raised for the first time in a motion for summary judgment has been held to have been waived under Rule 8(c). See MCI Telecommunications Corp. v. Ameri-Tel, Inc., 852 F. Supp. 659 (N.D. Ill. 1994). In MCI, the defendant, in response to plaintiff's motion for summary judgment, attempted to raise affirmative defenses of estoppel and illegality that had not been pleaded. The court held: "we will not consider claims and defenses raised for the first time in a brief in response to a summary judgment motion." Id. at 666 (citing Computer Network Corp. v. Compmail Systems, Inc., 1985 WL 2218 (N.D. Ill. July 10, 1985)).
Here, the Court is likewise unable to consider BellePointe's belated defense of implied license, in the face of Rule 8(c)'s plain language requiring such a defense to be affirmatively pleaded in the earlier stages of litigation. As this belated defense constitutes BellePointe's only stated opposition to Design Option's motion for summary judgment, that motion will be granted.
2. There is no Genuine Issue of Material Fact as to Whether BellePointe Had an Implied License in the Sweaters
Even if this Court were to address BellePointe's affirmative defense of implied license, the Court would nonetheless grant summary judgment in favor of Design Options.
BellePointe cites no binding Second Circuit authority for the proposition that it was granted an implied license to sell the sweater styles at issues. The three cases Bellepointe does rely on -- I.A.E., Inc. v. Shaver, 74 F.3d 768 (7th Cir. 1996), Effects Associates, Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1980), cert. denied, 498 U.S. 1103, 112 L. Ed. 2d 1086, 111 S. Ct. 1003 (1991) and Ladas v. Potpourri Press, Inc., 846 F. Supp. 221 (E.D.N.Y. 1994) -- are readily distinguishable from the facts here.
First, in each of these cases, the copyright owner created and sold to the defendant a design -- not finished merchandise -- or a component of a larger work for the defendant's use in the larger work. Thus, in these cases, if a license was not implied to permit the defendant's use of the copyright owner's work, the work would otherwise have been rendered worthless. Here, Design Options sold BellePointe finished merchandise -- not simply sweater designs -- for BellePointe to resell to its customers. Accordingly, an implied license is in no way necessary to effectuate the purpose for which BellePointe purchased the goods, i.e., the resale of those goods. BellePointe received the benefit of the bargain it made with Design Options when it resold the sweaters to its own customers, presumably at a profit.
BellePointe claims that the package price it paid for each sweater represented an investment in the underlying sweater designs, which investment could not be realized unless it had the right to copy the designs. But there is no evidence that there was anything more to the transaction between BellePointe and Design Options than the purchase of goods for an agreed-upon price.
Furthermore, in each of the cases cited by BellePointe, there was evidence on which the court could rely demonstrating that both parties to the transaction, not just the defendant, intended that the defendant could use or copy the plaintiff's work without liability for copyright infringement. As the court pointed out in Allen-Myland v. International Business Machines Corp., 746 F. Supp. 520 (E.D. Pa. 1990), an implied license to use a copyrighted work "cannot arise out of the unilateral expectations of one party." There must be objective conduct that would permit a reasonable person to conclude that "an agreement had been reached." Id. at 549. See also N.A.D.A. Services Corp. v. Business Data of Virginia, Inc., 651 F. Supp. 44, 49 (E.D. Va. 1986) ("The creation of an implied license, as in the creation of any implied contract, requires a meeting of the minds").
Here, BellePointe has failed to offer any evidence from which a "meeting of the minds" could reasonably be inferred. The record on this motion for summary judgment shows only that Design Options sold finished merchandise to BellePointe for a price, and never conveyed any rights to BellePointe, either directly or impliedly, to use the sweater designs Design Options had created.
In opposing Design Options' motion for summary judgment, there must be more than a "scintilla of evidence" in support of BellePointe's position; BellePointe bears the burden of showing that there is sufficient evidence to permit the factfinder to reasonably find that there was a "meeting of the minds" between BellePointe and Design Options on the issue of an implied license. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); see also Pinkham v. Sara Lee Corp., 983 F.2d 824, 830-33 (8th Cir. 1992) (appellate court upheld grant of summary judgment to plaintiff on a claim of copyright infringement against a book distributor where there was insufficient evidence presented by defendant on the motion that it had an implied license to reproduce and distribute the plaintiff's book). BellePointe has not met its burden here.
As evidence of the existence of an implied license, BellePointe points to a facsimile, dated November 5, 1991, from Design Options to BellePointe, urging BellePointe to find other sources for sweaters. BellePointe claims that implicit in this communication is the understanding that BellePointe had the right to manufacture the same sweater styles previously purchased from Design Options. Design Options claims that no such understanding is implicit, and that the facsimile simply expressed that BellePointe should develop other sources for sweaters generally. In any event, a single ambiguous fax, sent over two years before BellePointe began copying the sweater styles at issues, is insufficient to defeat Design Options' motion for summary judgment. BellePointe also points to the fact that Design Options did not show the sweater styles at issue here to other buyers. Such an exclusivity agreement, however, is not evidence of a mutual understanding that BellePointe was granted an implied license to resell the sweaters. Rather, it was simply Design Options' business practice to sell different sweater styles to different customers, in order to maintain the unique image of the theme sweaters.
In sum, BellePointe's evidentiary arguments do not amount to a showing that Design Options understood that it was conveying a license to BellePointe to use its sweater designs. See Pinkham, 983 F.2d at 833 (affirming grant of summary judgment to plaintiff on claim of copyright infringement where defendant cited twelve different evidentiary factors that created an issue of fact as to whether there was an implied license to use plaintiff's work, but none of the factors, individually or together, supported the inference of implied authorization asserted by defendant).
For the reasons set forth above, Design Options' motion for summary judgment is hereby granted.
It is so ordered.
New York, N.Y.
October 8, 1996
ROBERT W. SWEET