Court Opinion

ID: 2972229
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:46:03.653229+00
Date Added: 2024-06-11T15:02:18.893666
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 05a0268n.06
                              Filed: April 8, 2005

                                           No. 03-2533

                            UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT

TASTEFULLY SIMPLE, INC.,
      Plaintiff-Appellant                            On Appeal from the
              v.                                     United States District Court for
                                                     the Eastern District of Michigan
TWO SISTERS GOURMET, L.L.C., ET AL.,
      Defendant-Appellee.

______________________________/

       BEFORE: KENNEDY, MOORE, and SUTTON, Circuit Judges.

       KENNEDY, Circuit Judge. Plaintiff, Tastefully Simple, Inc., appeals from the district

court’s order granting summary judgment in favor of the Defendants on its claims for copyright

infringement, unfair competition by false designation of origin in violation of the Lanham act,

breach of contract, and unjust enrichment. For the following reasons, we AFFIRM.

                                        BACKGROUND

       Tastefully Simple, Inc. was established in 1995 as a direct sales gourmet food company.

Tastefully Simple’s business operates through a system of “sales consultants” who are independent

contractors affiliated through an agreement with Tastefully Simple. Each consultant purchases sales

materials from Tastefully Simple, which include product and recipe documentation, business forms

and plan instructions, instructional video tapes, and various sales accessories. The consultants

purchase the gourmet food products at a reduced price, and then sell the products at home based

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parties for a profit. Tastefully Simple’s consultants are also compensated on the basis of the sales

of consultants that they recruit.

       In early 1999, Defendant Lori Caruso met with Tastefully Simple consultant Jennifer

Raybaud and became interested in Tastefully Simple’s business. On April 25, 1999, Caruso signed

a consultant agreement and became a sales consultant with Tastefully Simple. The consultant

agreement between Caruso and Tastefully Simple did not include a non-compete clause. On April

26, 1999, Tastefully Simple invoiced Caruso for $150 for a training kit. Between April 27, 1999 and

August 4, 1999, Caruso purchased $2,815 worth of products, samples, and supplies from Tastefully

Simple.

       On or before August 14, 1999, Caruso and her sister-in-law, Defendant Catherine

Hackenberger, hired a graphic designer to create logos for a company Caruso and Hackenberger

planned to develop called Two Sisters Gourmet. Two Sisters Gourmet, like Tastefully Simple, is

a gourmet food direct sales business utilizing a multi-level marketing channel in which consultants

recruit other consultants and are compensated not only according to their sales, but also according

to the sales of “downline” consultants.

       Caruso prepared a Two Sisters Gourmet consultant’s manual in November 1999. Caruso

explained that she prepared the manual by drawing on her prior business experience, her educational

background, and on her research into other direct sales companies. Caruso did have Tastefully

Simple’s 1999 consulting manual in her possession at this time.

       Caruso and Hackenberger hosted their first party under the Two Sisters Gourmet brand name

on November 5, 1999. In December 1999, Tastefully Simple informed Caruso that she would be

deactivated on December 31, 1999 if she did not meet her $400 minimum quarterly quota. Caruso

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did not meet the quota, and on January 6, 2000, Tastefully Simple informed Caruso that she had

been deactivated. On January 27, 2000, Caruso returned Tastefully Simple’s 1999 consulting

manual to it.

       On January 28, 2002, Tastefully Simple brought this action against the Defendants alleging

1) copyright infringement for copying six pages from its consultant’s manual, 2) unfair competition

by false designation of origin in violation of the Lanham Act, 3) unjust enrichment, and 4) breach

of contract. After the district court granted the Defendants’ motion for summary judgment on the

above claims, Tastefully Simple appealed.

                                           ANALYSIS

       We review a district court’s grant of summary judgment de novo, using the same standard

under Federal Rule of Civil Procedure 56(c) used by the district court. Williams v. Mehra, 186 F.3d
685, 689 (6th Cir. 1999). Summary judgment is appropriate where the “pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the moving party is entitled to a judgment

as a matter of law.” Fed. R. Civ. P. 56(c). In deciding a motion for summary judgment, “we must

view the factual evidence and draw all reasonable inferences in favor of the non-moving party.”

Nat’l Enters. v. Smith, 114 F.3d 561, 563 (6th Cir. 1997). To prevail, the non-movant must show

sufficient evidence to create a genuine issue of material fact. Klepper v. First Am. Bank, 916 F.2d
337, 342 (6th Cir. 1990). “The mere existence of a scintilla of evidence in support of the [non-

movant’s] position will be insufficient; [rather] there must be evidence on which the jury could

reasonably find for the [non-movant].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

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I.      Copyright Act Claim

        Tastefully Simple alleges that the Defendants unlawfully copied six forms from its

consulting manual and training kit.1 In granting summary judgment in favor of the Defendants

on this claim, the district court held that three of the forms (100% Satisfaction, Customer Order,

and Product Return/Claim forms) were not subject to copyright protection because they were

“blank forms,” which do not convey information, but rather “merely provide a convenient

method for consultants to record ordered or returned items for administrative purposes and

record keeping.” The district court held that the remaining documents (Taxes, Party Checklist,

and Reactivation forms) were not entitled to copyright protection because the forms were not

original.2

        Tastefully Simple argues that the district court erred in concluding that its 100%

Satisfaction, Customer Order, and Product Return/Claim forms were blank forms not subject to

copyright because “whether or not a form document conveys information is a genuine issue of

        1
         Tastefully Simple also alleges that Two Sisters’ copying of its sales materials into its own
sales materials would likely cause confusion in the marketplace as to the source of Two Sisters’
products, in violation of the Lanham Act. However, as noted below, since such forms are widely
used in the direct sales gourmet food industry, a consumer would not identify the source of a direct
sales gourmet food company’s products on the basis of such forms.
        2
          Tastefully Simple argues that the district court erroneously considered twenty-two exhibits
because they were not supported by affidavits as required by Fed. R. Civ. P. 56(e), and because, the
Plaintiff asserts, they constituted inadmissible hearsay. The exhibits consisted of forms, some
similar to those alleged to have been copied in this case, from other competing direct sales gourmet
food companies’ consulting manuals. Although the exhibits were not supported by affidavits, it is
undisputed that Two Sisters could easily submit affidavits to establish their authenticity. Thus, any
error in admitting the documents unsupported by affidavits is harmless. Additionally, the documents
were not inadmissible hearsay for they were not offered to prove the truth of what the forms
asserted; rather, they were offered to show that Plaintiff’s forms were not original because
essentially every direct sales gourmet food company in the industry uses similar forms.

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material fact that must not be decided on a motion for summary judgment.” “Blank forms, such

as time cards, graph paper, account books, diaries, bank checks, scorecards, address books,

report forms, order forms, and the like, which are designed for recording information and do not

in themselves convey information,” are not subject to copyright protection. 37 C.F.R 202.1(c);

See Baker v. Selden, 101 U.S. 99 (1879). The first step in considering copyright infringement

claims is for the court to identify “which aspects of the artist’s work, if any, are protectible by

copyright.” Kohus v. Mariol, 328 F.3d 848, 855 (6th Cir. 2003). Thus, whether a form is a

“blank form,” and therefore not entitled to copyright protection, is a question of law for the court

to decide. The district court correctly concluded that the 100% Satisfaction, Customer Order,

and Product Return/Claim forms were not entitled to copyright protection because they were

“blank forms” that merely recorded information. For instance, the Satisfaction Form merely

records such information as the consultant’s and client’s name and phone number, the food

item’s number and description, and the client’s concern. The Customer Order form simply lists

the description of the food product for sale and its price and then has a column for “quantity” and

“total price” that the consultant or purchaser fills out. The Product Return/Claim form merely

provides the consultant with a convenient matrix to record the information that Tastefully Simple

requires when a consultant returns a product. As these forms were designed to record

information and do not in themselves convey information, we agree they are not subject to

copyright protection.

       The district court also correctly held that the three remaining documents, entitled

“Taxes,” “Reactivation,” and “Party Checklist,” were not entitled to copyright protection

because they did not satisfy the originality requirement. For a valid copyright to exist, the

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copyrighted material must be an original work of authorship. 17 U.S.C. § 102. “Originality . . .

means only that the work was independently created by the author (as opposed to copied from

other works), and that it possess at least some minimal degree of creativity.” Feist Publ’ns, Inc.

v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991).

        The Taxes document that Tastefully Simple claims is subject to copyright protection

consists of a spreadsheet that lists alphabetically all the states in the union, the states’ respective

tax department names, addresses, and telephone numbers, and the states’ sales tax rate. Direct

sales companies provide their sales consultants with this information since the consultants are

responsible for remitting to the appropriate state taxing authority the sales taxes they collect

upon selling their products. This form is not subject to copyright protection not only because it

has no minimal level of creativity, but also because it is barred by the merger doctrine, for the

only way to inform someone of the respective states’ sales tax rates and their taxing department

names and addresses is to actually list the information. Kohus, 328 F.3d at 856 (noting that

“[w]hen there is essentially only one way to express an idea, the idea and its expression are

inseparable [i.e., they merge,] and copyright is no bar to copying that expression.”) (alteration in

original, internal citation omitted).

        The “Reactivation” document simply explains that deactivated consultants who choose to

reactivate are required to pay a reactivation fee and place a minimum order. Tastefully Simple’s

president testified that she was aware of other companies having a similar policy and got the idea

for a reactivation policy from another direct sale gourmet food company, Creative Memories.

Because Plaintiff’s and Creative Memories’ “reactivation policies” are strikingly similar, and

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because reactivation policies are standard in the industry, Plaintiff’s “reactivation” document

was not original and could therefore not be afforded copyright protection.

        Likewise, the “Party Checklist” document is not original. The “Party Checklist”

document lists the things that the consultant should do before a tasting party is held. For

instance, three weeks prior to the holding of a tasting party, the checklist reminds the consultant

to call the hostess to confirm the party and date and to deliver the hostess kit. Two weeks prior

to the party, the consultant is to review the status of supplies, such as tortilla chips, pretzels,

crackers, and souffle cups. One week prior, the consultant is to call the hostess to confirm that

the invitations were sent, pre-pour all the samples, and stuff the catalog with inserts. Finally, on

the day of the party, the consultant is to confirm that she has her calculator, cash box, recipes,

brochures, and recruiting packets, among other things.

        Party checklists have been in the public domain for years as they are commonly used for

wedding, birthday, and anniversary parties as well as for “tasting parties.” It is true that all

copyrighted materials are in the “public domain” in the sense that, when made available, anyone

may view them. However, when used as a phrase of art in the context of copyright law, a

document or publication that is in the public domain is one that is owned by the public and thus

not subject to copyright protection. Although it is undisputed that party checklists were in

existence long before Tastefully Simple created its party checklist, “a work may be protected by

copyright even though it is based on something already in the public domain if the author . . . has

contributed a distinguishable variation [to it].” Norma Ribbon & Trimming, Inc., v. Little, et al.,

51 F.3d 45, 47 (5th Cir. 1995) (citation and internal quotations omitted). Tastefully Simple’s

party checklist is specifically tailored to “tasting parties.” However, the idea of including a party

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checklist for a “tasting party” is not original or creative, and party checklists, similar to the one

used by Tastefully Simple, are used by other direct sales gourmet food companies. Even the

items in Tastefully Simple’s party checklist that one might consider creative, such as the listing

of pretzels and souffle cups as supplies, are not only used by other direct sales gourmet food

companies but are essential to conducting the direct sales gourmet food business. For instance,

just as at a Tupperware party where the host will have Tupperware containers to display, at any

gourmet food “tasting party” the host will have pretzels for the guests to use to sample, for

example, the mustards for sale, and little souffle cups to place food samples in, such as nuts or

salsa. We conclude that Tastefully Simple’s party checklist is not subject to copyright

protection.3

2.     Breach of Contract

       Tastefully Simple argues that Defendant Caruso breached paragraph 10 of the Consultant

Agreement, which requires that the consultant “maintain high standards of integrity, honesty,

and responsibility in dealings with Tastefully Simple,” when she started a competing business

while she was still a consultant for Tastefully Simple. Paragraph 10, however, is not a non-

       3
         Tastefully simple also argues that the Defendants were unjustly enriched as a result of their
copying of its consultant manual materials. The Copyright Act preempts this claim to the extent it
relies upon the Defendants alleged copying of the “Taxes,” “Reactivation,” and “Party Checklist”
forms because 1) these documents fall within the scope of the “subject matter of copyright,”as
specified in 17 U.S.C. §§ 102, 103, and 2) Tastefully Simple’s claim depends on nothing more than
the unauthorized use of these forms. Murray Hill Publ’ns, Inc. v. ABC Communications, Inc., 264
F.3d 622, 636-38 (6th Cir. 2001). The Copyright Act does not preempt Tastefully Simple’s unjust
enrichment claim to the extent it relies upon the “blank forms” since those forms are not within the
scope of the subject matter of copyright. Nonetheless, Tastefully Simple’s claim fails with respect
to these documents also because Michigan law will not imply a contract where there is a contract
covering the same subject matter. Barber v. SMH, 509 N.W.2d 791, 796 (Mich. Ct. App. 1993).
As noted below, since the contract covered Caruso’s “behavior” as a consultant, a contract will not
be implied in law.

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compete clause, and Tastefully Simple cannot convert it into one. Tastefully Simple presents no

evidence that Caruso ever lied to the company, failed to pay for her purchases, or mistreated

customers, which are the types of activities this provision is certainly meant to curtail.

       Tastefully Simple also asserts that Defendant Caruso breached paragraph 2 of the

consultant agreement. Paragraph 2 provides, “I shall not market or otherwise promote the sale of

any products or supplies other than Tastefully Simple products at a Tastefully Simple function . .

. .” As admitted by Tastefully Simple’s president, a party at which no Tastefully Simple

products are sold is not a Tastefully Simple function. There is no evidence that Defendant

Caruso ever sold Two Sisters’ products at a Tastefully Simple function. Recognizing the

problem with this claim, Tastefully Simple asserts that what paragraph 2 actually means is that a

consultant is not only prohibited from marketing Tastefully Simple’s products at a function other

than a Tastefully Simple function, but that a consultant is also “prohibited from marketing or

otherwise promoting the sale of any products or supplies other than Tastefully Simple’s

products.” As with paragraph 10, Tastefully Simple attempts to convert this paragraph into a

non-compete clause. This paragraph is not capable of any such interpretation.4

       For the foregoing reasons, we AFFIRM.

       4
          In support of this interpretation of paragraph 2, Plaintiff points out that the sentence
immediately prior to the language of paragraph 2 quoted above provides that the consultant agrees
“not to sell or display those products or conduct parties of Tastefully Simple business in retail stores
or service establishments.” Tastefully Simple contends that this language, taken together with the
language quoted above, leads to the conclusion that a consultant is prohibited from selling any other
product besides those of Tastefully Simple’s. This is an unreasonable interpretation.

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