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GMA ACCESSORIES, INC. v. OLIVIA MILLER

United States District Court, S.D. New York


June 4, 2004.

GMA ACCESSORIES, INC., Plaintiff, -against- OLIVIA MILLER, INC., Defendant

The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge, District

OPINION AND ORDER

This case concerns defendant's infringement of plaintiff's copyrighted pattern, "Hawaiian Punch," imprinted on light-weight slippers worn in these climes principally during the summer, called "flip-flops." Plaintiff GMA Accessories, Inc., which sells these items, sued defendant, Olivia Miller, Inc., which distributes clothing and accessories and contracted for the manufacture of the offending flip-flops in China for resale to one of its customers. Infringement was conceded, and the one remaining issue in the case concerns the award of costs and attorney fees after a trial on damages. At that trial, held on December 10, 2003, plaintiff elected statutory damages rather than compensatory damages, even though compensatory damages were provable with precision. The court granted "a modest statutory award" of $2,000, which was approximately three times defendant's gross profit on the infringing product. (12/11/03 a.m. Tr. 8)

  For the reasons set forth below, the court awards, as costs, $1,065.70, and as attorney fees $5,000, with the result that the total award to plaintiff will be $8,065.70.

  I.

  The relevant facts of this case, including its procedural history, are as follows: In late May or early June 2003, about a month before the onset of litigation in this case, plaintiff learned that defendant was distributing flip-flops bearing one of plaintiff's copyrighted patterns, "Hawaiian Punch." (12/11/03 a.m. Tr. 8) Plaintiff's flip-flops did not include a copyright notice imprinted on the slippers themselves, but only on the hang tag and the plastic strip that bound each pair of flip-flops together. (Id. at 7; Hearing Tr. 12, 28) Plaintiff waited until the eve of the July 4 weekend and then filed an action in this court and secured a temporary restraining order barring further distribution of the offending goods.

  When the parties could not negotiate a settlement of the damages issue, a trial on damages was held on December 10, 2004, at which it appeared that the total number of offending flip-flops ordered by defendant was 1,200 pairs, of which 600 were shipped to the customer that had placed the order, of which 132 were returned; the remaining 600 were disposed of through a discount retailer. (12/11/03 a.m. Tr. 5)

  At the damages trial, I found that defendant's infringement was innocent because when defendant arranged to have the flip-flops manufactured and shipped it had seen only a sample of the flip-flops without the hang tag or the plastic strip that bore the copyright notice. There was no other circumstance suggesting that the pattern in question was copyrighted, and thus defendant was unaware that it had arranged to reproduce a copyrighted pattern. (Id. at 4-5) Despite plaintiff's claim to the contrary, there was no evidence adduced at trial that defendant had ever before infringed a copyright, and no evidence of willful infringement here. The one shortcoming in defendant's response to the lawsuit and the restraining order was its failure to notify one of its customers and its supplier of the existence of that order (id. at 7-8), a pecadillo defendant explained at trial by pointing out that it had discussed the matter with its principal customer, which was a codefendant here, and by suggesting that it believed the matter involved small sums and could be worked out with plaintiff. (Hearing Tr. 34) Defendant's gross profit on the flip-flops it sold, without considering costs of shipping, warehousing or overhead, was $712.20. (Id. at 61; 12/11/03 a.m. Tr. at 5)

  At the hearing, it appeared that defendant initially had produced documents reflecting that even fewer than 1,200 pairs of flip-flops had been imported, but then supplemented its document production and turned over the correct invoices to plaintiff's counsel. (Hearing Tr. 52) In addition, it appeared that plaintiff's counsel had had the opportunity during discovery to learn just how defendant arranged to produce goods for its customers, and how infrequently such production involved copying of patterns under any circumstances, but declined to examine a witness who had that knowledge (Hearing Tr. 47-48; 12/11/03 p.m. Tr. 10-11), although he argued at the hearing that defendant was a serial infringer. (Hearing Tr. 4)

  Unbeknownst to the court at the time of the hearing, defendant had sent plaintiff before the hearing date an offer of judgment in the amount of $30,000. When plaintiff's counsel learned that the court was awarding statutory damages of only $2,000, he sought to accept the offer of judgment, which he claimed was still in effect. (Id. at 10-11) The court, having, been put to the task of trying and deciding the case, declined this gambit (id. at 4-6), and told plaintiff's counsel to submit a properly substantiated application for costs and fees. (Id. at 11)

  II.

  Section 505 of Title 17 provides that in a copyright infringement action such as this, the court "in its discretion may allow the recovery of full costs by or against any party" and "may also award a reasonable attorney's fee to the prevailing party as part of the costs." Id.

  Plaintiff has sought costs of $1,233.70, consisting of fees for filing, service of process, a deposition transcript, photocopying, and a transcript of the damages hearing on December 10, 2003, which are unexceptionable. (Letter of John Bostany, Esq., to the Court, Dec. 22, 2003, enc. p. 3) However, plaintiff has included also the cost of transcripts for December 11, 2003, which would have included not only the court's bench opinion but also colloquy resulting from the cynical attempt to exploit a pretrial offer of settlement after the trial had been held and the issue determined. Because plaintiff has not broken down the cost of this transcript request, the entire request, in the amount of $168, is disallowed. Accordingly, costs in the amount of $1,065.70 will be awarded.

  Plaintiff seeks legal fees in the amount of approximately an additional $37,000, and argues that if such fees are not awarded, the court will fail in its duty to encourage copyright holders to vindicate their rights, and will reward an infringer. (Letter of John Bostany, Esq. to the Court, Dec. 30, 2003, p. 2)

  "Generally, the prevailing party [to whom a fee may be awarded under Section 505] is one who succeeds on a significant issue in the litigation that achieves some of the benefits the party sought in bringing suit." Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir. 1989). To be sure, an award of costs and fees "assures equal access to courts, provides an economic incentive to challenge infringements, and penalizes the losing party." Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir. 1983) (per curiam). However, "[a] party's success on a claim that is purely technical or de minimis does not qualify him as a prevailing party." Warner Bros., 877 F.2d at 1126 (internal quotation marks and citation omitted). Finally, the statute makes it explicit that the award of costs and fees is committed to the court's discretion, and the enabling language is correspondingly permissive — "may also award a reasonable attorney's fee." 17 U.S.C. § 505.

  In this case, if plaintiff was the prevailing party, it was not so by much. First, it should be recalled that plaintiff tolerated the infringement for about a month at the beginning of the summer season before bringing suit. If getting the offending product off the market was a benefit plaintiff wished to achieve in bringing suit, it apparently chose to enjoy the benefit more in the anticipation than in the realization. Second, counsel waited until just before the July 4 weekend before seeking a temporary restraining order, so as to make the timing as difficult for defendant as possible. In any event, there was no dispute as to infringement. Indeed, one wonders whether the filing of an action was necessary at all. Third, actual damages were small, and plaintiff's recovery only slightly larger. Fourth, although plaintiff's counsel professed great uncertainty as to the scope of the infringement, and continued to insist at the hearing that defendant was a serial infringer, he was provided during discovery with the correct documentation that showed just how limited the infringement had been, and resolutely avoided learning from a witness with knowledge facts that would have refuted his claim that defendant was a serial infringer. In any event, the scope of the infringement obviously never loomed large, as plaintiff's own casual approach at the beginning reflects. Finally, of course, plaintiff's counsel chose to wait until the damages issue had been tried and decided before figuratively popping out from behind a potted palm and electing to accept an offer of judgment, seeking thereby to convert the exertions of the court and his adversary into a fools' errand. Although there is every reason to provide copyright holders with the incentive to protect their works, there is no reason whatever to provide their lawyers with the incentive to turn molehills into mountains. This problem could have been solved with the application of no more than $5,000 worth of a lawyer's time; it should have been. It is ample punishment to defendant to have to pay that sum in addition to the statutory damages and costs assessed herein, not to mention defendant's own legal costs.

  Settle judgment on 10 days' notice.

  SO ORDERED.

20040604

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