IP Law Daily, COPYRIGHT—D.N.M.: Counterclaim for copyright invalidity is not a ‘mirror image’ of an infringement claim, (Apr 2, 2025)

By Matthew Hersh, J.D.

If the underlying claim were voluntarily withdrawn, litigating the copyright’s validity would still have value.

A jewelry store accused of purloining the work of jewelry designer and retailer was entitled to counterclaim for a declaratory judgment that the designer’s work was unoriginal and that the accused store did not infringe the work, the federal court for Santa Fe, New Mexico, has held. But the court, in refusing to strike the declaratory judgment counterclaims, found that the store could not proceed with its counterclaim for a declaratory judgment that it was an innocent infringer (Santa Fe Goldworks, Inc. v. Bella Jewelry, LLC, No. 1:23-cv-00602-KK-JMR (D.N.M. Mar. 31, 2025)).

The lawsuit was brought by Santa Fe Goldworks, a jewelry designer and retailer. The designer’s lawsuit takes aim at Bella Jewelry and its principals, all of whom the designer claims have been responsible for selling infringing copies of a collection of jewelry entitled River of Love. The complaint, filed in 2023, brings claims of direct and secondary infringement. The jewelry store and its co-defendants, in turn, filed counterclaims seeking declarations that the designer’s copyright was invalid, that they had not infringement, and that, in the alternative, any infringement was innocent.

The designer moved to dismiss the counterclaims, leading to this opinion.

Declaration of invalidity. The court refused to dismiss the counterclaim as to invalidity of the copyright. The designer argued that the counterclaim was a “mirror image” claim that was duplicative and redundant of the complaint itself. But the court disagreed. A counterclaim seeking a declaratory judgment is not duplicative or redundant, the court noted, “if it asserts an independent case or controversy which would remain viable after a dismissal of the plaintiff’s claim.” That was the case here, the court noted. “Notably,” the court observed, resolution of the infringement claims “will not necessarily reach, much less resolve, the question presented in [the counterclaim] or provide the relief Defendants seek in bringing that claim.” Indeed, the court noted, if the designer voluntarily dismissed its infringement claims, the question of whether it holds valid copyrights “will remain unadjudicated unless Defendants are allowed to maintain [the counterclaim].” The counterclaim was not a mirror image of the complaint, the court concluded.

With the procedural issues out of the way, the court then turned to the merits of the counterclaims. The jewelry store and its co-defendants argued that the designer’s copyright was invalid because of a lack of originality. The claim was sufficiently pleaded to remain in the case, the court found—at least at the present stage. The defendants alleged that the works “are comprised of common representations of a simple ‘zig zag’ pattern on a piece of jewelry that are not original,” the court noted, and that the “‘zig zag’ pattern and design has been used repeatedly for centuries in connection with jewelry design.” Taken as true and construed in the light most favorable to the defendants, as required at this stage of the proceedings, the court noted, “these factual allegations allow the Court to draw the reasonable inference” that the copyrights were invalid.

However, the court noted, the same could not be said for the counterclaim’s alternative theory of invalidation, namely that the designer knowingly included inaccurate information in its applications for copyright registration. The Copyright Act, the court noted, provides a “safe harbor” for authors who inadvertently include inaccurate information on a registration application. Indeed, as interpreted by the Supreme Court in 2021 in Unicolors, Inc. v. H&M Hennes & Mauritz, a registrant does not violate this provision unless they knew that the registration was both factually and legally inaccurate. Here, the court noted, the counterclaim was “wholly devoid of any factual allegations” to support the inference that the designer was aware of the legal requirements that made its applications inaccurate. The counterclaim would therefore be dismissed.

Declaration of non-infringement. The court also refused to dismiss the defendants’ counterclaim for a declaration on non-infringement. To be sure, the court noted, there was some redundancy in the claim, in that it brought into question “issues that have already been presented in the plaintiff’s complaint and defendant’s answer to the original claim.” But that was not necessarily grounds for dismissal, the court noted, “but rather presents a question of whether the court should exercise its discretion to hear the claim.” Once again, the court noted, there was always the possibility that the designer might choose to voluntarily dismiss its claims. “In such cases, a counterclaim seeking a declaration of non-infringement serves the useful and peculiarly important purpose of allowing the defendant to fully litigate its defenses and secure a final judgment on the merits.” This counterclaim, too, would remain in the case.

Declaration of innocent infringement. But while the court let several of the counterclaims remain in the case, the request for a declaration of innocent infringement would be stricken. The defense of innocent infringement, the court noted, “requires, as a threshold matter, an admission or finding of infringement.” Moreover, the court noted, the considerations that applied to the other counterclaims did not apply. Importantly, the court noted, should the copyright infringement claims be dismissed, the remaining counterclaim of innocent infringement—"essentially, a defense to an increased statutory damages award for a claim that was never proven”—would be superfluous. This counterclaim would not remain in the case.

Judge: Khalsa, K.

Attorneys: Benjamin W. Allison (Bardacke Allison Miller LLP) for Santa Fe Goldworks, Inc. Megan Day Hill (Civerolo, Gralow & Hill, PA) for Bella Jewelry, LLC.

Companies: Santa Fe Goldworks, Inc.; Manic Enterprises, LLC; Jewelry, LLC; Amini Enterprise, Inc.; Amini Brothers, LLC; Manic Enterprises, LLC

Cases: Copyright NewMexicoNews