Best of 2008: “Designer Skin v. S&L Continued: ‘S&L had a perfect right to sell this product’” (July)

This was first posted on July 18th:

Unfortunately for future defendants in the position of our client, Internet retailer S&L, U.S. District Judge James Teilborg’s decision from the bench in the District of Arizona dismissing the damages claims of suntan lotion manufacturer Designer Skin will not be officially published, being an oral opinion. Well, it will not be published unless and until it is quoted and affirmed by the Ninth Circuit, which a Designer Skin lawyer has promised will happen soon — though not exactly in those words. (Earlier post here.)

Bronze AnarchyFortunately we can mitigate some of the sting of the lack of officially published precedent, for now, and on our electronic mimeograph machine “publish” that opinion. The ruling is below; an example of the subject “electronic renderings” is at left; the transcript of the entire colloquy, including the striking of the would-be “damages” testimony of the company’s president, Beth Romero, and the argument of counsel can be downloaded here.

Disclosure: Neither counsel nor court had prepared particularly thoroughly for these oral motions or the ruling from the bench, which came up earlier in the proceedings than had been anticipated for reasons we will discuss next week. Therefore, in contrast to a situation where one can read each side’s thoroughly researched and argued written briefs and then a meticulously sourced judicial opinion, the oratorical edges in the transcript linked to above as well as the opinion also set forth below may appear somewhat rough all around. Be kind to all of us as you consider them.

The Court has, obviously, heard the evidence and heard the arguments of counsel and I have previously granted the motion to strike certain of the damage evidence from Miss Romero and set forth my reasons why. The Court has now granted the unopposed motion to dismiss the claim for statutory damages. I now grant the Rule 50 motion with respect to actual damages on the bases that there has been no showing of actual damages suffered as a result of the alleged copyright infringement.

As I pointed out earlier, there has been a witting or unwitting conflation between the alleged lifting of the electronic image from Designer’s website and pasting it on the S & L website, and yet we’ve heard virtually all the evidence, in fact, I think it’s fair to say all the so-called damage evidence, directed at product. In other words, the difference here is between the alleged copyright infringement in connection with the image and the product distribution issues.

It is clear that the beef, if you may, on the part of the plaintiffs is the selling of product by S & L, and we’ve heard evidence in terms of how much money Designer has spent in their product development, how much they’ve spent in their product image, the money they’ve spent in their diversion program, and it would appear that is all directed at seeking out product distributors such as S & L.

But even if one could assume that somehow it is to seek out and take action against a copyright infringement of its images, there is no basis for this jury or any reasonable jury to attempt to connect how much of those expenditures are connected to the images themselves as opposed to the product distribution issues.

Likewise, the references to S & L’s profits are simply, again, gross references to revenues and ultimately to profits without any reasonable basis to differentiate how much of that is attributable to the copyright infringement as opposed to the product sales.

It has been argued, but I believe without basis, that the mere fact that the image that has been lifted is now associated with a product, that somehow that, if you may, attaches to the product, infects that product such that all sales of that product can now be made the subject of a damage calculation.

This is not a case where an image was lifted and then was actually placed on somebody else’s product and there’s an attempt to force a disgorgement of profits made by that product. Indeed, as we’ve said several times, if S & L had simply photographed the product and used the photograph of the product in connection with its advertisement, that would not be actionable.

There is the argument that there have been lost licensing fees and/or royalties. There is obviously no evidence of the quantification of either of those, nor how they could either. Alternatively, and now having heard the evidence and seen the evidence and seen the website presentations, it is clear to me that the portraying of Designer Skin’s product images on the website next to the S & L logo cannot cause any confusion that somehow S & L is associated with Designer Skin or is a so-called authorized distributor.

And again, we must remind ourselves that S & L — though much to the chagrin of Designer — S & L had a perfect right to sell this product, and the mere fact the S & L logo is next to the product does not and I believe could not result in any bases for confusion. In my judgment, this is no different than if this product had been sold on the Macy’s or Nordstrom’s website with Nordstrom’s and Macy’s logos sprinkled throughout. That would not be the basis for a claim of confusion. And obviously, retailers and Internet purveyors of products are doing this regularly and it cannot and should not be actionable.

I would just also let the record reflect the, perhaps, applicability of the first sales doctrine that basically says once a sale is made the holder of the copyright cannot hold downstream consumers liable for infringement, and that doctrine may or may not be applicable here, but again, clearly, clearly S & L had a right to sell this product with its — in its Designer bottle with its Designer label on it.

So again, the only issue in front of this jury and before this Court is that narrow issue of the electronic image being lifted and pasted on the website, and there’s been simply no connection between that and any ascertainable damages.

Every case’s facts, procedural posture, and trial has its unique aspects, and both Designer Skin’s lawyers and LIKELIHOOD OF CONFUSION® can think of things that we would have very much thought could and should have gone differently before and during trial. Nonetheless, as with every judicial ruling, one can take the words and principles expressed for what they are worth. For victims of the abuse of the intellectual property laws by “brand equity” companies using trademark and copyright as cudgels to retain exclusive, inefficient and anti-competitive business practices — and, unfortunately, those jurists who may unwittingly act as their handmaidens but whose minds are yet open — these words from Judge Teilborg, which appear largely based, as to the damages issue, on Lexmark International v. Static Control Components, 387 F.3d 522 (6th Cir. 2000)*, may be worth quite a bit. (UPDATE: As may be these very interesting words from the Seventh Circuit last week!)

NB: You can, and always will be able to, buy genuine Designer Skin® products, and the genuine merchandise of other fine providers of quality skincare and other products (such as Australian Gold®!), at S&L Vitamins’ website, Body Source Online, and at prices far below the manufacturers’ “suggested” retail price, of course. Please do!

*Hat tip again to virtual-second-chair David Marc Nieporent, Esq.!

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Author:Ron Coleman

I write this blog.

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