IP Law Daily, COPYRIGHT—N.D. Ind.: Court dismisses graphics designer’s infringement, DMCA claims against boat manufacturers, (Aug 23, 2017)

By Robert Margolis, J.D.

The federal court in South Bend, Indiana has dismissed copyright infringement and Digital Millennium Copyright Act ("DMCA") claims brought by The Art of Design, Inc., against two boat manufacturers who allegedly used Art of Design’s copyrighted graphics on their boats without permission. Defendants Pontoon Boat, LLC d/b/a Bennington and Bennington Marine ("Bennington") and Hawkeye Boat Sales, Inc. moved to dismiss those claims and several state law claims asserted against them. The court dismissed without prejudice the infringement claim, along with some state law claims, but the DMCA claim and other state law claims were dismissed with prejudice (The Art of Design, Inc. v. Pontoon Boat, LLC, August 22, 2017, DeGuilio, J.).

Art of Design designs custom artwork that is applied to a variety of "canvases," including boats, motor coaches, airplanes, helicopters, and recreational vehicles. It alleges that it created two designs it calls "Shatter Graphics," registered with the U.S. Copyright Office, though one of them is registered to a third party, Dean Loucks, who is not a party to the lawsuit.

Bennington and Hawkeye sell boating products, including pontoon boats, and in 2011 Bennington asked Art of Design to propose a design for application on its pontoon boats. Art of Design presented several designs to Bennington, affixing a written notice on the designs stating that they "are the property of TAOD" and cannot be "reproduced, copied or forwarded to anyone without written permission." Bennington then selected the Shatter Graphics designs, and entered into an agreement providing that the Art of Design would apply those designs to the exterior of a limited number of Bennington’s pontoon boats for a fee. The Art of Design did so and Bennington paid the fee.

Art of Design subsequently sued Bennington and Hawkeye, alleging that Bennington has, without permission, continued to market, sell, and distribute products with the Shatter Graphics design (or substantially similar designs), including on Bennington’s website. Art of Design also alleges that Bennington passed along the Shatter Graphics design to Hawkeye, who also, without permission, has marketed, sold, and distributed products bearing the Shatter Graphics design, including on its website. Art of Design brought claims for Copyright infringement, violation of the Digital Millennium Copyright Act ("DMCA"), and violations of Indiana state law. Bennington and Hawkeye moved to dismiss.

Infringement and inducement claims. Bennington and Hawkeye argued that Art of Design’s copyright infringement and inducement of infringement claims should be dismissed for failure to properly identify in the complaint the allegedly infringed work. The court agreed. While Art of Design identified the registration numbers of the two Shatter Graphics designs, "[g]laringly absent from the complaint are any descriptions or explanations as to what the designs are or look like," the court noted. The court also pointed out that Art of Design did not identify any allegedly infringing works by Bennington or Hawkeye, nor include in the complaint any description of how those works infringe the Shatter Graphics. The court dismissed these claims without prejudice.

DMCA. Art of Design alleged that Bennington and Hawkeye violated the DMCA by removing from the designs the notice that they are "property of TAOD," which could not be reproduced without permission. Art of Design alleged that the notice is "copyright management information" and the DMCA forbids the removal or alteration of CMI or distributing works knowing that CMI has been removed or altered. CMI may include, among other things, the name of the copyright owner. The court compared the alleged CMI, which identified "TAOD" as the copyright owner, and the registrations identifying Art of Design and Loucks as the owners of the Shatter Graphics copyrights. Anyone who saw the actual CMI on the design and attempted to verify the designs’ copyright status as owed by "TAOD" "would come up empty" because the actual owners are Art of Design and Loucks, the court held. Therefore, the notice did not qualify as CMI, the court held, requiring dismissal of the claim with prejudice.

Preemption. Art of Design also brought a state law claim for unjust enrichment, which the court held is preempted by the Copyright Act. The Act preempts state law claims that "are equivalent to any of the exclusive rights within the general scope of copyright," 17 U.S.C. § 301(a), and the court found Art of Design’s unjust enrichment claim to meet that standard. An Indiana unjust enrichment claim requires that a "measurable benefit" be conferred on a defendant under circumstances that make retention of that benefit unjust. Art of Design alleged that Bennington and Hawkeye received the benefits of Art of Design’s "labor, services, and designs" without paying for them. But because the only "labor and services" alleged were the application of the Shatter Graphics to pontoon boats that Bennington paid for under the parties’ agreement, the only unpaid-for benefit was use of the designs, the court noted. That left only the theory that Bennington and Hawkeye copied or prepared derivative works from the Shatter Graphics without permission or payment, "which overlaps with the rights in the Copyright Act, hence preempting this state law claim," the court held.

The case is No. 3:16-cv-00595-JD-JEM.

Attorneys: John D. LaDue (LaDue Curran & Kuehn LLC) for The Art of Design, Inc. Ryan G. Milligan (Faegre Baker Daniels LLP) for Pontoon Boat, LLC d/b/a Bennington and Bennington Marine and Hawkeye Boat Sales, Inc.

Companies: The Art of Design, Inc.; Pontoon Boat, LLC d/b/a Bennington and Bennington Marine; Hawkeye Boat Sales, Inc.

Cases: Copyright TechnologyInternet IndianaNews