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DESIGN OPTIONS, INC. v. BELLEPOINTE

October 8, 1996

DESIGN OPTIONS, INC., Plaintiff, against BELLEPOINTE, INC., Defendant.


The opinion of the court was delivered by: SWEET

 Sweet, D. J.,

 Plaintiff Design Options, Inc. ("Design Options") moves for summary judgment on the issue of the liability of defendant BellePointe, Inc. ("BellePointe") for copyright infringement. For the reasons set forth below, the motion will be granted.

 Parties

 Design Options is a wholesale knitwear business which designs, manufactures, imports and delivers finished knitwear products to customers who resell the products at wholesale or retail in department stores, smaller boutiques and specialty stores, and through mail order catalogs.

 BellePointe is an Ohio-based wholesaler of sweaters, turtlenecks and related apparel and accessories, whose products are sold under its own label to department stores, specialty stores, boutiques and catalog companies.

 Prior Proceedings

 Plaintiff filed the complaint in this action on October 3, 1994, alleging copyright infringement by BellePointe of fifteen sweater styles that had been designed and created by Design Options and previously sold to BellePointe. In BellePointe's responsive pleading, filed in November 1994, no affirmative defense was raised. On October 4, 1995, plaintiff filed an Amended Complaint alleging infringement of an additional style, for a total of sixteen sweater styles. In response, BellePointe served an amended answer, which included two affirmative defenses: (i) that BellePointe was a joint author of the sweater designs at issue; and (ii) that BellePointe had acquired all right, title and interest in the designs of the sweaters sold to BellePointe.

 Discovery in this action was ongoing from November 1994 until May 1996, when discovery officially closed, pursuant to Order of this Court. Plaintiff filed the instant motion for summary judgment on June 14, 1996. Oral argument was heard on September 11, 1996, at which time the motion was considered fully submitted.

 Facts

 In deciding a motion for summary judgment, "as a general rule, all ambiguities and inferences to be drawn from the underlying facts should be resolved in favor of the party opposing the motion, and all doubts as to the existence of a genuine issue for trial should be resolved against the moving party." Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 330 n.2, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (Brennan, J., dissenting); Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970)). See United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962); Cartier v. Lussier, 955 F.2d 841, 845 (2d Cir. 1992); Burtnieks v. City of New York, 716 F.2d 982, 983-84 (2d Cir. 1983). The facts as presented here are construed accordingly, and they are limited to this motion.

 In 1988, BellePointe was formed for the purpose of producing a line of sweaters to be sold at wholesale to retailers. BellePointe enlisted Design Options to help create the new BellePointe product line.

 Between 1988 and 1994, the parties operated under an arrangement whereby Design Options created Sweater Designs for BellePointe. Between 1989 and 1994, Design Options sold approximately two hundred different sweater styles to BellePointe, with the annual volume of finished merchandise per year exceeding ten thousand sweaters. Most of the sweater styles that Design Options designed and manufactured for BellePointe were "theme" or "novelty" sweaters, such as Christmas, holiday, "nurse" and "teacher" sweaters, all of which had elaborate ornamental designs expressing the particular theme of the sweater.

 Mary Bandeen ("Bandeen"), the President of BellePointe from 1989 to 1992, suggested ideas and concepts to Design Options. According to her deposition, Bandeen's input included "general ideas, general concepts of what we felt we could sell in very general categories," such as "crew necks versus cardigans versus theme sweaters versus solid sweaters. . . ." Design Options then converted these ideas and concepts into a "first draft" of a design. Bandeen then worked in conjunction with Design Options to create a final version of the design. Once the designs were completed, Bandeen would select certain of the designs to be adopted into BellePointe's product line.

 As part of the agreement between the parties, Design Options also found a Hong Kong factory to produce the sweaters. Design Options turned the sweater designs over to the factory, which then delivered the finished product to BellePointe, and BellePointe sold the merchandise to retailers and catalog companies under its own label.

 BellePointe paid Design Options a certain price per sweater that was, in effect, a "package price" which covered all the services Design Options provided to BellePointe, as well as the actual cost of the sweater. As compensation for its designing and sourcing services, Design Options added a 20-30% mark-up to the factory price. The subject of copyright or ownership rights in the styles was never discussed between Design Options and BellePointe. Design Options never registered for copyrights in any of the sweater designs at issue here until after it initiated this action.

 Design Options and BellePointe appeared to have shared an understanding that the sweaters designed by Design Options for BellePointe were "exclusives" -- that is, Design Options did not show sweaters that had been purchased by BellePointe to other customers. Throughout the parties' association, Design Options encouraged BellePointe to find alternative sources for the production of sweaters.

 In the spring of 1994, Design Options delivered its last line of sweaters to BellePointe. Shortly thereafter, Design Options discovered that BellePointe had copied many of the sweater styles previously purchased from Design Options and had arranged for the sweaters to be manufactured in factories of BellePointe's own choosing, without Design Options' authorization. Design Options then registered for copyrights in the sweater designs, and filed this action.

 Discussion

 I. The Standard for Summary ...


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