IP Law Daily, COPYRIGHT—D. Del.: Motion to dismiss granted in software tool copying dispute, (Sep 26, 2022)

By Randall Holbrook, J.D.

A motion to dismiss was granted in part because a party seeking to establish that a competitor illegally copied its product failed to show that the law protects its product from copying.

A retail company was entitled to dismissal of claims that it committed trade-dress infringement and breach of contract by copying the software tool developed by one of its competitors, the U.S. District Court in Delaware held. The party that asserted the infringement failed to produce evidence showing the tool was a protectable trade-dress or that the opposing party breached a contract. The only claim that survived involved the claim that Target copied the copyrighted computer code (Design with Friends Inc. v. Target Corp., September 23, 2022, Bibas, S.).

Design with Friends, Inc./Design with Friends LTD (Design with Friends) developed a user-friendly, commercially successful online room-planning tool. The tool allowed users to add furniture and decorations, arrange them, and then buy the items they added to the room. Target Corporation (Target) also developed an online room-planning tool, which Design with Friends claimed was the product of reverse-engineering its tool. Design with Friends sent a cease and desist demanding that Target stop copying the software tool, but Target continued to use it. Design with Friends sued Target for trade-dress infringement, copyright infringement, and breach of contract. Target moved to dismiss the claims.

Nonfunctional design and consumer confusion. Design with Friends listed 15 design elements which it said formed its software tool. The court found that, while Design with Friends demonstrated a clear list of design features and demonstrated that the design acquired secondary meaning, it failed to show the design was nonfunctional and that consumers would likely confuse the source of its tool with that of Target’s. To show that its design was nonfunctional, Design with Friends had to prove the design features it listed did not affect its tool’s quality and only served to identify its source. The court found that most of the design elements listed made the Design with Friends tool more sensible and were, therefore, functional; the remaining design elements were not distinctive and did not identify the Design with Friends brand. The court also found that Design with Friends could not establish why consumers would confuse its room-planning tool with Target’s room-planning tool, since the tools are accessed on different websites, sell different merchandise, and contain different graphics. Motion to dismiss was granted for Target on the trade-dress claim.

Lack of assent. Design with Friends alleged that Target knew or should have known about the terms it had that prohibited the copying or reverse engineering its tool, and that this knowledge resulted in Target forming a contract not to copy the tool. The court found that Design with Friends did not offer any specific facts to support the theory that Target’s employees viewed Design with Friends’ terms of use, which fails to meet the plausibility threshold. The court also found that, although the fact that a website has terms of use is common knowledge, this does not mean that a user automatically manifests assent to those terms. Target did not contractually agree to not use the Design with Friends software tool. Motion to dismiss was granted for the breach of contract claim.

Protectable elements. To win on the infringement of copyright claim, Design with Friends had to show that the protectable elements of its tool were original and nonfunctional, which the court already determined it failed to do. The court also found that Design with Friends failed to demonstrate that Target copied its graphics. However, the court held that Design with Friends plausibly alleged that Target copied its computer code, since it showed that Target repeatedly used its software-development applications to access and test the Design with Friends software tool. The court also found that Design with Friends alleged significant similarities in the mechanics of the two tools, and although these are non-protectable elements, they can still be compared to demonstrate copying. Motion to dismiss was denied on the copyright infringement claim.

The case is No. 1:21-cv-01376-SB.

Attorneys: Douglas Daniel Herrmann (Troutman Pepper Hamilton Sanders LLP) for Design with Friends, Inc. Annamartina Tyreus Hufnal (Fish & Richardson P.C.) for Target Corp.

Companies: Design with Friends, Inc.; Target Corp.

Cases: Copyright TechnologyInternet DelawareNews