Court Opinion

ID: 4390303
Source: CourtListenerOpinion
Date Created: 2019-04-24 17:00:28.492612+00
Date Added: 2024-06-11T14:51:49.415485
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MALIBU TEXTILES, INC., a New York      No. 17-55983
corporation,
               Plaintiff-Appellant,       D.C. No.
                                       2:14-cv-04054-
                 v.                       R-MAN

LABEL LANE INTERNATIONAL, INC., a
California Corporation; ENTRY, INC.,
DBA ALT B., a California
Corporation,
              Defendants-Appellees.

MALIBU TEXTILES, INC., a New York      No. 17-55984
corporation,
               Plaintiff-Appellant,       D.C. No.
                                       2:14-cv-01018-
                 v.                         R-E

H&M HENNES & MAURITZ, L.P., a
New York limited partnership,
               Defendant-Appellee.
2          MALIBU TEXTILES V. LABEL LANE INT’L

 MALIBU TEXTILES, INC., a New York                 No. 17-56531
 corporation,
                 Plaintiff-Appellee,                 D.C. No.
                                                  2:14-cv-01018-
                      v.                               R-E

 H&M HENNES & MAURITZ, L.P., a
 New York limited partnership,                       OPINION
               Defendant-Appellant.

        Appeals from the United States District Court
           for the Central District of California
         Manuel L. Real, District Judge, Presiding

            Argued and Submitted January 7, 2019
                    Pasadena, California

                       Filed April 24, 2019

 Before: A. Wallace Tashima and Paul J. Watford, Circuit
        Judges, and Jack Zouhary, * District Judge.

                   Opinion by Judge Zouhary

    *
      The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.
           MALIBU TEXTILES V. LABEL LANE INT’L                       3

                          SUMMARY **

                             Copyright

   The panel reversed the district court’s dismissal of two
copyright infringement actions, dismissed a cross-appeal
regarding attorney fees as moot, and remanded.

    Malibu Textiles claimed that defendants infringed its
copyrights for two floral lace designs. The panel held that,
on remand following prior appeal, Malibu sufficiently
alleged ownership of valid, registered copyrights. Malibu
also successfully pled striking similarity between its designs
and defendants’ designs. The panel further held that the
district court abused its discretion in denying Malibu leave
to amend its allegations of access for a theory of substantial
similarity.

    The panel dismissed as moot one defendant’s cross-
appeal from the district court’s denial of its motion for
attorney fees.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4         MALIBU TEXTILES V. LABEL LANE INT’L

                        COUNSEL

Stephen Doniger (argued), Frank Gregory Casella, and Scott
A. Burroughs, Doniger/Burroughs APC, Venice, California,
for Plaintiff-Appellant.

Neal J. Gauger (argued) and Staci Jennifer Riordan, Nixon
Peabody LLP, Los Angeles, California, for Defendants-
Appellees.

                         OPINION

ZOUHARY, District Judge:

                      INTRODUCTION

    Five years ago, Plaintiff-Appellant Malibu Textiles filed
these copyright infringement lawsuits against Defendants-
Appellees Label Lane International, Entry, and H&M
Hennes & Mauritz (collectively, “Defendants”), accusing
them of illegally copying Malibu’s lace designs. And for
five years, these cases have languished at the pleading stage.
The cases are now before this Court for a second time, after
the district court again denied leave to amend and dismissed
with prejudice. We again reverse and remand.

                       BACKGROUND

    In 2014, Malibu sued Defendants for copyright
infringement. Malibu alleges it owns copyrights for two lace
designs, consisting of flowers, vines, leaves, and other
elements arranged in a pattern. Malibu refers to these two
designs collectively as the Subject Work and alleges
Defendants infringed on both.
           MALIBU TEXTILES V. LABEL LANE INT’L                     5

    The first appeal came after the district court dismissed
the cases with prejudice for failure to state a claim. This
Court reversed, stating that “[d]ismissal with prejudice is
appropriate only if the complaint ‘could not be saved by any
amendment.’” Malibu Textiles, Inc. v. Label Lane Int’l, Inc.,
668 F. App’x 803, 803 (9th Cir. 2016) (quoting Leadsinger,
Inc. v. BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir.
2008)); Malibu Textiles, Inc. v. H&M Hennes & Mauritz,
L.P., 668 F. App’x 800, 801 (9th Cir. 2016) (same). This
Court concluded that Malibu could fix its Complaints by
adding more allegations of similarity between the Subject
Work and Defendants’ works and how Defendants had
access to the Subject Work. Label Lane, 668 F. App’x
at 803–04; H&M, 668 F. App’x at 801.

    On remand, Malibu filed new Complaints 1 with
additional similarity allegations, including side-by-side
photos of the Subject Work and Defendants’ works. But the
Malibu attorneys mistakenly omitted new access allegations.
When they realized their error, the parties filed a joint
stipulation seeking leave to file amended versions of the
post-remand Complaints. Malibu included a declaration
explaining the mistake and provided the district court with
redlined copies of the new Complaints with the missing
access allegations. In a one-sentence, handwritten order, the
district court denied leave to amend: “Denied[,] no good
cause is shown.”

    Defendants again moved to dismiss, and the district court
again dismissed with prejudice.        The district court
determined that most of the similarities between Malibu’s
designs and Defendants’ designs consisted of non-

   1
     In the Label Lane case, Malibu filed its Second Amended
Complaint. In the H&M case, Malibu filed its First Amended Complaint.
6         MALIBU TEXTILES V. LABEL LANE INT’L

protectable elements, such as “the natural appearance of a
Bengal Clockvine flower.” The district court identified
differences in the side-by-side images, concluding that the
designs were not strikingly similar. The district court further
held that Malibu failed to plausibly allege access, without
mentioning whether the proposed amendments would have
cured this deficiency. H&M moved for attorney fees, which
the district court denied. These appeals followed.

                         DISCUSSION

     This Court reviews dismissals under Federal Civil
Rule 12(b)(6) de novo, accepting the plaintiff’s allegations
as true and construing them in the light most favorable to the
plaintiff. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d
981, 989 (9th Cir. 2009). At this stage, a complaint’s factual
allegations need not be detailed. Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). They “must be enough to raise a
right to relief above the speculative level” and to “state a
claim to relief that is plausible on its face.” Id. at 555, 570.

   To state a claim for copyright infringement, Malibu
“must plausibly allege two things: (1) that [it] owns a valid
copyright in [the Subject Work], and (2) that [Defendants]
copied protected aspects of [the Subject Work]’s
expression.” Rentmeester v. Nike, Inc., 883 F.3d 1111,
1116–17 (9th Cir. 2018).

    Ownership

   Although the district court based its decision on the
copying element, Defendants argue this Court should affirm
because Malibu failed to allege ownership of a registered
copyright in the Subject Work. See Livid Holdings Ltd. v.
Salomon Smith Barney, Inc., 416 F.3d 940, 950 (9th Cir.
2005) (“This court can affirm the district court’s dismissal
          MALIBU TEXTILES V. LABEL LANE INT’L              7

on any ground supported by the record, even if the district
court did not rely on the ground.”). To plead ownership,
Malibu must plausibly allege it owns a valid copyright
registration for its work. See Unicolors, Inc. v. Urban
Outfitters, Inc., 853 F.3d 980, 988 (9th Cir. 2017)
(“[Plaintiff] was required to show registration as an element
of an infringement claim.”); see also Fourth Estate Pub.
Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 887
(2019) (“[A]lthough an owner’s rights exist apart from
registration, registration is akin to an administrative
exhaustion requirement that the owner must satisfy before
suing to enforce ownership rights.”) (citations omitted).

    Malibu alleges it owns “two original two-dimensional
artworks”—Designs 1967 and 1717—which are registered
with the United States Copyright Office under numbers
VA 1-159-155 and VA9230008. But Defendants argue that
Malibu’s case is not based upon either of these copyrights,
but rather upon some third work called the “Subject Work.”

    Defendants mischaracterize Malibu’s allegations.
According to Malibu, Design 1967 derives from Design
1717. The designs are “essentially the same artwork” with
only “slight variations” due to differences in the machinery
used in production. The post-remand Complaints allege that
Malibu owns valid, registered copyrights in both Design
1967 and Design 1717, and that the infringement action is
based on the original artistic expression owned by Malibu
and reflected in both designs. Malibu is entitled to protect
all components of that artistic expression—both derivative
and original. See DC Comics v. Towle, 802 F.3d 1012,
1023–25 (9th Cir. 2015). Malibu plausibly alleges it owns
registered copyrights for the artwork in Designs 1967 and
1717; its use of a shorthand label for that artwork does not
change that fact.
8         MALIBU TEXTILES V. LABEL LANE INT’L

    And contrary to Defendants’ assertions, Malibu was not
required to include images of Design 1717, a complete
deposit of Design 1967, or registration materials for either
Design in the Complaints to plausibly allege ownership. See
Rentmeester, 883 F.3d at 1117–18. As for Defendants’
arguments about their foreign copyright registrations, those
defenses are better suited for summary judgment. At the
pleading stage, Malibu successfully alleged ownership of
valid, registered copyrights.

    Copying

     To allege actionable copying, Malibu was required to
plead facts plausibly showing either (1) “that the two works
in question are strikingly similar,” or (2) “that [the works]
are substantially similar and that [Defendants] had access to
the [Subject Work].” Label Lane, 668 F. App’x at 803
(citing Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481,
485 (9th Cir. 2000)); H&M, 668 F. App’x at 801 (same).
Where two works are strikingly similar, access may be
inferred.    Unicolors, 853 F.3d at 987–88; see also
Rentmeester, 883 F.3d at 1124 (“[I]f the similarities are
‘striking’ enough . . . such similarities can be sufficient on
their own to establish that the defendant must have had
access to the plaintiff’s work.”). Thus, a plaintiff must
separately plead access only when alleging substantial
similarity, not when alleging striking similarity. See, e.g.,
Three Boys Music, 212 F.3d at 485; Baxter v. MCA, Inc.,
812 F.2d 421, 423–24 & n.2 (9th Cir. 1987); see also Astor-
White v. Strong, 733 F. App’x 407, 407 (9th Cir. 2018).

   “In assessing whether particular works are substantially
similar, or strikingly similar, this Circuit applies a two-part
analysis: the extrinsic test and the intrinsic test.” Unicolors,
853 F.3d at 985. At the pleading stage, this Court considers
only the extrinsic test. See Williams v. Gaye, 895 F.3d 1106,
          MALIBU TEXTILES V. LABEL LANE INT’L               9

1119 (9th Cir. 2018). The extrinsic test “is an objective
comparison of specific expressive elements; it focuses on the
articulable similarities between the two works.” L.A. Printex
Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 848 (9th Cir.
2012) (internal quotation marks and citation omitted). The
extrinsic test consists of two steps.

   Step 1: Protectable Elements

    First, the reviewing court “must ‘filter out’ the
unprotectable elements of the plaintiff’s work,”
Rentmeester, 883 F.3d at 1118 (citation omitted), and
determine the breadth of copyright protection for the
protectable elements, id. at 1120.          Although certain
elements—like elements found in nature—may not be
protectable individually, “[o]riginal selection, coordination,
and arrangement” of unprotectable elements may be
protectable expression. L.A. Printex, 676 F.3d at 849. A
combination of unprotectable elements is eligible for
copyright protection “if those elements are numerous
enough and their selection and arrangement original enough
that their combination constitutes an original work of
authorship.” Satava v. Lowry, 323 F.3d 805, 811 (9th Cir.
2003).

    For protectable elements, this Court “distinguishe[s]
between ‘broad’ and ‘thin’ copyright protection based on the
‘range of expression’ involved.” Williams, 895 F.3d at 1120
(quoting Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904,
913–14 (9th Cir. 2010)). “[T]he greater the range of creative
choices that may be made, the broader the level of protection
that will be afforded to the resulting [work].” Rentmeester,
883 F.3d at 1120. “We review de novo the district court’s
determination as to the scope of copyright protection.”
Mattel, 616 F.3d at 914 (citation omitted).
10        MALIBU TEXTILES V. LABEL LANE INT’L

     Here, although copyright law does not protect the natural
appearance of a Bengal Clockvine flower, see Satava,
323 F.3d at 813, it does protect the original “selection,
coordination, and arrangement” of floral elements in a lace
pattern, Label Lane, 668 F. App’x at 803 (citing L.A. Printex,
676 F.3d at 850); H&M, 668 F. App’x at 801 (same). The
Subject Work’s copyright protection is broad—not thin—
because there is “‘a wide range of expression’ for selecting,
coordinating, and arranging floral elements in stylized fabric
designs.” L.A. Printex, 676 F.3d at 850 (citation omitted).
After all, “there are gazillions of ways to combine petals,
buds, stems, leaves, and colors in floral designs on fabric.”
Id. at 850–51 (internal quotation marks and citation omitted).

     Step 2: Similarity Comparison

    Second, the “protectable elements that remain are then
compared to corresponding elements of the defendant’s
work to assess similarities in the objective details of the
works.” Rentmeester, 883 F.3d at 1118. “We do not have a
well-defined standard for assessing when similarity in
selection and arrangement becomes ‘substantial’” or
striking, “and in truth no hard-and-fast rule could be devised
to guide determinations that will necessarily turn on the
unique facts of each case.” Id. at 1121. “In comparing fabric
designs, we examine the similarities in their objective details
in appearance, including, but not limited to, the subject
matter, shapes, colors, materials, and arrangement of the
representations.” L.A. Printex, 676 F.3d at 849 (internal
quotation marks and citation omitted).

    Striking Similarity. The first question is whether Malibu
pled striking similarity, which would obviate the need to
plead access. Two works are strikingly similar when the
similarities between them are so great that they are “highly
          MALIBU TEXTILES V. LABEL LANE INT’L                11

unlikely to have been the product of independent creation.”
Rentmeester, 883 F.3d at 1124.

    Here, the similarities between the lace patterns go well
beyond their mutual inclusion of the Bengal Clockvine
flower. The works contain nearly identical floral, leaf,
boteh, and dot elements, and those elements are arranged in
virtually the same way. The post-remand Complaints state
that the patterns are “identically arranged” and that the
elements “are arranged exactly the same in relation to each
other.” They describe, in detail, some of the similarities
between the patterns. And most importantly, they provide
side-by-side pictures that make the similarities apparent. See
Appendix, infra.

     To be sure, the pictures do show some minor differences
between the Subject Work and Defendants’ works, such as
in color, netting, and shape curvature. “But a rational jury
could find that these differences result from the fabric-
printing process generally and are ‘inconsequential,’ or
could credit [Malibu]’s assertion that these differences result
in part from ‘print[ing] using cruder, lower-quality
techniques and machinery.’” L.A. Printex, 676 F.3d at 851
(second alteration in original) (citations omitted).
Alternatively, a jury could find these to be knowing
modifications, which could be evidence of willful copying.
See Concord Fabrics, Inc. v. Marcus Bros. Textile Corp.,
409 F.2d 1315, 1316 (2d Cir. 1969) (per curiam) (“While the
trial court placed great emphasis on the minor differences
between the two patterns, we feel that the very nature of
these differences only tends to emphasize the extent to which
the defendant has deliberately copied from the plaintiff.”).

     As for the differences pointed out by the district court in
its dismissal order, those appear to result from the cropping
and angle of the images rather than any real differences in
12        MALIBU TEXTILES V. LABEL LANE INT’L

the designs. And to the extent Defendants contend the
similarities are “required by the medium of lace” and are
merely “functional choices . . . dictated by the lace medium,”
those arguments are better suited for summary judgment,
after discovery and perhaps with the aid of expert testimony.
For this stage, Malibu successfully pled striking similarity in
the post-remand Complaints, and the district court erred in
dismissal on this ground.

    Substantial Similarity. But striking similarity was not
the only theory Malibu sought to plead. The next question
is whether the district court erred in denying Malibu leave to
amend its access allegations for a theory of substantial
similarity. This Court reviews denial of leave to amend for
abuse of discretion. Gompper v. VISX, Inc., 298 F.3d 893,
898 (9th Cir. 2002). “Dismissal without leave to amend is
improper unless it is clear, upon de novo review, that the
complaint could not be saved by any amendment.” Id.
(citation omitted). “An outright refusal to grant leave to
amend without a justifying reason is . . . an abuse of
discretion.” Manzarek v. St. Paul Fire & Marine Ins. Co.,
519 F.3d 1025, 1034 (9th Cir. 2008) (citation omitted).

    When pleading substantial similarity, a copyright
infringement plaintiff “must allege facts ‘from which a
reasonable finder of fact could infer that the defendant had a
reasonable opportunity to copy his or her work.’” Shame on
You Prods., Inc. v. Banks, 120 F. Supp. 3d 1123, 1149 (C.D.
Cal. 2015) (citation omitted), aff’d, 690 F. App’x 519 (9th
Cir. 2017); see also L.A. Printex, 676 F.3d at 846 (“Proof of
access requires ‘an opportunity to view or to copy plaintiff’s
work.’”) (citation omitted). As the prior Panel instructed,
Malibu could meet this pleading requirement by alleging “a
chain of events that linked the protected pattern with the
allegedly infringing patterns, or provid[ing] sales figures
          MALIBU TEXTILES V. LABEL LANE INT’L             13

accompanied by dates and geographic distribution
information plausibly showing access via widespread
dissemination.” Label Lane, 668 F. App’x at 804; see also
H&M, 668 F. App’x at 801.

     Here, the proposed amended Complaints allege several
ways Defendants had access to the Subject Work. Malibu
first alleges that Defendants do business in California and
that they had access to the Subject Work through Malibu’s
California showrooms. Malibu next states that, since 1998,
it has produced “approximately 1 million yards of lace
bearing the Subject Work,” which have been manufactured
in “over twenty mills, including numerous mills in China.”
Those mills’ libraries of patterns, containing the Subject
Work, have since been acquired by other mills, who in turn
“have offered those patterns to customers without regard to
whether those patterns were protected by copyright law.”
Malibu further alleges that its customers have “sold
garments and other products featuring the Subject Work . . .
in the same markets (domestically and internationally) as
Defendants.” Finally, Malibu specifies several clothing
retailers “operating in the same market as Defendants” that
collectively “have sold hundreds of thousands of garments
featuring reproductions of the Subject Work.”

    These allegations, taken as true, plausibly allege
Defendants had reasonable opportunities to view the Subject
Work. See L.A. Printex, 676 F.3d at 848. The proposed
amendments would have sufficiently alleged access. The
district court thus abused its discretion by denying leave to
amend.

   Attorney Fees

    In its cross-appeal, H&M argues the district court erred
in denying its motion for attorney fees. Because of the
14        MALIBU TEXTILES V. LABEL LANE INT’L

district court errors, H&M is no longer a prevailing party
eligible for attorney fees under 17 U.S.C. § 505, making its
cross-appeal moot. See Electro Source, LLC v. Brandess-
Kalt-Aetna Group, Inc., 458 F.3d 931, 941 (9th Cir. 2006).

                       CONCLUSION

    It is the responsibility of “the court and the parties to
secure the just, speedy, and inexpensive determination of
every action and proceeding.” Federal Civil Rule 1. This
aspirational goal was not achieved in these cases. This latest
round of appeals added nearly two years to cases that were
already three years old. And these cases have not advanced
beyond the initial pleading stage. Direction from the earlier
appeals was disregarded, as were the parties’ stipulations to
allow amendments to the Complaints. This Court reverses
the dismissal of the Complaints and remands to allow the
cases to proceed consistent with this Opinion.

   The district court judgments in Case Nos. 17-55983 and
17-55984 are REVERSED and REMANDED. The cross-
appeal in Case No. 17-56531 is DISMISSED as moot.
  MALIBU TEXTILES V. LABEL LANE INT’L   15

              APPENDIX

SUBJECT WORK             LABEL LANE
                          PATTERN
16     MALIBU TEXTILES V. LABEL LANE INT’L

     SUBJECT WORK            H&M PATTERN