IP Law Daily, COPYRIGHT—M.D. Pa.: Copyright owner’s claims for injunctive relief, consequential damages, and attorney fees proceed, (Feb 18, 2016)

By Peter Reap, J.D., LL.M.

Plaintiff Crestwood Membranes, doing business as and referred to as “i2M,” was authorized by the Copyright Act to include demands for injunctive relief, consequential damages, and attorney fees in its complaint brought against defendant Constant Services (“Constant”), the federal district court in Scranton, Pennsylvania, has determined (Crestwood Membranes, Inc. v. Constant Services, Inc., February 17, 2016, Marianai, R.). Thus, Constant’s motion to dismiss those demands was denied. In addition, Constant’s motion to dismiss i2M’s claim of negligence was denied.

Constant and i2M entered into an arrangement under which Constant stored i2M cylinders bearing i2M’s copyrighted "Cobblestone" pool wall design and a single i2M cylinder bearing i2M’s copyrighted "Galaxy Water" pool floor design. Constant was to use the stored cylinders when filling orders placed by i2M to print those designs on i2M vinyl swimming pool liner film, which i2M offered for sale to its customers.

According to the complaint, in 2014, i2M learned that Constant had infringed i2M's copyright in the designs by using the stored i2M cylinders to produce printed swimming pool liner films. i2M alleged that Constant sold this imprinted film to Constant’s own customers. i2M alleged that Constant did not have authorization, permission, or license to use the copyrighted designs for its own customers. Additionally, i2M asserted that, due to failures by Constant to follow agreed upon procedures, i2M was required to compensate its own customers for problems with fading and seam separation in films printed by Constant.

i2M filed its complaint against Constant alleging copyright infringement, breach of contract, breach of warranty, and negligence in performance of contract. Before the court was Constant’s motion to dismiss the above three demands for relief, as well as the claim for negligence.

i2M’s demand for injunctive/equitable relief. Constant argued that i2M did not meet the burden for establishing that a preliminary injunction was warranted and that i2M's "remedies, if any, are strictly monetary damages." However, a fair reading of the complaint made clear that i2M did not pray for preliminary injunctive relief in its complaint, the court observed. Instead, i2M simply requested a permanent injunction as a possible remedy for the harm alleged by its complaint.

Among the remedies available for breach of contract, a cause of action properly pleaded by i2M, is permanent injunctive relief. Such a remedy is also available for infringements of copyrights, another cause of action properly pleaded by i2M, the court explained. The Copyright Act explicitly provides that "[a]ny court having jurisdiction of a civil action arising under this title may ... grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." Thus, dismissal was denied.

i2M’s demand for consequential damages. Constant also requested that the court "strike or dismiss all references and request for consequential damages from the Complaint." However, consequential damages are specifically authorized by the Copyright Act, the court noted. See 17. U.S.C. § 504(b) (copyright owner is entitled to actual damages). Consequential damages are also a recognized remedy for breach of contract.

Federal pleading standards simply did not require i2M to prove, in its complaint, its entitlement to damages for properly stated causes of action. Thus, dismissal was denied.

i2M’s demand for costs and attorney fees. Constant requested that i2M's demand for attorney fees and costs be dismissed with prejudice.

The court refused to strike i2M's demand for attorney fees and costs. First, such an award is explicitly authorized by the Copyright Act should i2M prevail on its copyright infringement cause of action. Second, absent the court's ability to review the contract at issue, it could not determine whether it contained any provision evidencing an agreement that Constant would pay i2M's attorney fees and court costs.

The case is No. 3:15-cv-00537-RDM.

Attorneys: Neil H. Koslowe (Potomac Law Group, PLLC) for Crestwood Membranes, Inc. d/b/a i2M. Mark Joseph Kozlowski (Marshall Dennehey Warner Coleman & Goggin, PC) for Constant Services, Inc.

Companies: Crestwood Membranes, Inc. d/b/a i2M; Constant Services, Inc.

Cases: Copyright PennsylvaniaNews