Flowserve Corp. v. Hallmark Pump Co. Inc

FLOWSERVE CORPORATION and FLOWSERVE MANAGEMENT COMPANY, Plaintiffs, v. HALLMARK PUMP COMPANY, INC.,

CIVIL ACTION NO. 4:09-cv-0675

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

Dated: April 21, 2011

MEMORANDUM AND ORDER

Pending before the Court is Plaintiffs Flowserve Corporation and Flowserve Management Company's ("Flowserve") Motion for Summary Judgment. After considering Flowserve's arguments, the evidence presented, and the applicable law, the Court finds that the motion should be granted.¹

I. BACKGROUND

Flowserve designs, manufactures and sells industrial pumps, valves, and related products. (Flowserve Am. Compl. ¶ 7, Doc. No. 6.) Defendant Hallmark Pump Company, Inc. ("Hallmark") distributes competing industrial pumps. (Id. ¶ 9.) Hallmark maintains a website in which it advertises and markets the products it offers for sale. (Hallmark Answer ¶ 7, Doc. No. 12.) Flowserve alleges that Hallmark copied and displayed copyrighted images of Flowserve's Durco brand Mark 3 ANSI chemical process pump ("Durco Mark 3 pump") on Hallmark'swebsite in connection with the sale of Hallmark's competing ANSI-FLO Model DIII pump ("DIII pump"). (Flowserve Am. Compl. ¶¶ 2-12.) Specifically, Flowserve's Complaint alleges that Hallmark displayed the following three images in a brochure posted on its website, which are either exact or slightly altered replicas of images for which Flowserve owns a copyright.²

Flowserve IMAGE 1³

Flowserve IMAGE 2

Flowserve IMAGE 3 Flowserve has submitted evidence that Flowserve IMAGES 1 and 3 have been registered and deposited with the Copyright Office. (See Certificate of Registration, U.S. Copyright No. TXu1-200-818 ("Certificate of Registration"), Pls.' Ex. 1; Declaration of B. Joe Schaeff ("Schaeff Decl."), Pls.' Ex. 2.) In its Motion for Summary Judgment, Flowserve asserts that the remaining image (Flowserve IMAGE 2) is substantially similar to images included in the Deposit Materials and that the image is also found in Flowserve's copyrighted Durco Mark 3 brochure ("Flowserve Durco Mark 3 Brochure"). (See Schaeff Decl.; Ex. A to Flowserve Am. Compl. at 15 (image), 36 (indicating copyright).) Flowserve's motion argues that these facts are sufficient to demonstrate Flowserve's ownership of a valid copyright covering Flowserve IMAGE 2. Following a hearing on Flowserve's motion, however, Flowserve withdrew its claim of copyright infringement with respect to Flowserve IMAGE 2. (See Doc. No. 43.) Thus, hereinafter, the Court will analyze Flowserve's copyright infringement claims only with respect to Flowserve IMAGES 1 and 3.

On or about September 7, 2008, Hallmark entered into an agreement with dismissed Third-Party Defendant Network Solutions, LLC ("Network Solutions") to create a new website for Hallmark ("Hallmark website"). (See Hallmark's Third-Party Compl. ¶¶ 12-14, Doc. No. 18.) As part of the process of designing the Hallmark website, Hallmark provided Network Solutions with a brochure for Hallmark's DIII pump in Microsoft Word (.doc) format (the "ANSIFLODIIIBROCHURE2 Word File"), on or about October 15, 2008. (See Log of Hallmark Brochure Upload to Network Solutions Server ("Upload Log"), Pls.' Ex. 3; see also Hallmark's Third-Party Compl. ¶ 21.) The Upload Log indicates that the ANSIFLODIIIBROCHURE2 Word File was "uploaded successfully" and saved with the file name "ANSIFLODIIIBROCHURE2-2.doc." (See Upload Log.)

On December 1, 2008, Sarah C. Hedrick, a product account manager at Network Solutions, advised Charles French, a website designer at Network Solutions, to "convert the word doc to a pdf." (See Sarah C. Hedrick Email to Charles French ("Hedrick Email"), Pls.' Ex. 4.) That French carried out Hedrick's instruction is evidenced by the Hallmark website, which contains a brochure with the same content and the filename "ANSIFLODIIIBROCHURE2-2.pdf" (the "Hallmark DIII Brochure," Ex. B to Flowserve Am. Compl.). The Hallmark DIII Brochure is still available to the public through Hallmark's website.⁴ It contains the three images depicted (and labeled for identification) below, which Flowserve argues are "strikingly similar"—if not identical—to Flowserve's copyrighted images.

Hallmark IMAGE 1

Hallmark IMAGE 2

Hallmark IMAGE 3 After Network Solutions incorporated the Hallmark DIII Brochure containing the three above images into the Hallmark website, Chad Hallmark approved the website design on or around December 3, 2008. (See Chad Hallmark Email to Network Solutions ("Chad Hallmark Email"), Pls.' Ex. 5 ("The complete site looks good except that the address for the Houston office is still incorrect.").) On December 8, 2008, Jim Hallmark also approved the Hallmark website. (See Jim Hallmark Email to Network Solutions ("Jim Hallmark Email"), Pls.' Ex. 6.)

After being approved by both Chad and Jim Hallmark, the Hallmark website, including the Hallmark DIII Brochure, was made available to the public on or about December 15, 2008. (See Network Solutions Customer Log File ("Customer Log") at 17, Pls.' Ex. 7.) On February 9, 2009, Flowserve sent a cease-and-desist letter to Hallmark requesting that the infringing images be removed from the Hallmark website. (See Flowserve's Feb. 9, 2009 Cease-and-Desist Letter to Hallmark ("Cease-and-Desist Letter"), Pls.' Ex. 8.) Hallmark failed to remove the link to the allegedly infringing work within the time specified in the Cease-and-Desist Letter. (See Fedock Decl.} 8.) In fact, Hallmark did not remove the link to the allegedly infringing brochure until after Flowserve filed the instant lawsuit, and Hallmark still has not removed the brochure entirely from the Hallmark website.⁵

Flowserve argues that Hallmark's actions constitute copyright infringement under Title 17 of the United States Code ("the Copyright Act") and false advertising under Section 43(a) of the Lanham Act. Flowserve contends that Hallmark's actions were willful in both instances. To remedy Hallmark's alleged violations, Flowserve's motion seeks (1) statutory damages providedby Section 504 of the Copyright Act in the amount of $30,000;⁶ (2) a permanent injunction pursuant to Section 502 of the Copyright Act and Section 34(a) of the Lanham Act; and, (3) the costs, attorneys' fees, and expenses incurred by Flowserve in protecting its intellectual property rights, as provided by Section 505 of the Copyright Act and Section 35(a) of the Lanham Act, in the amount of $75,000.

II. LEGAL STANDARD FOR SUMMARY JUDGMENT

A motion for summary judgment requires the Court to determine whether the moving party is entitled to judgment as a matter of law based on the evidence thus far presented. Fed. R. Civ. P. 56(c). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir. 2001) (quotations omitted). A genuine issue of material fact exists if a reasonable jury could enter a verdict for the non-moving party. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir. 2000). The Court views all evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Id. Hearsay, conclusory allegations, unsubstantiated assertions, and unsupported speculation are not competent summary judgment evidence. Fed. R. Civ. P. 56(e)(1); see, e.g., Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996); McIntosh v. Partridge, 540 F.3d 315, 322 (5th Cir. 2008); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1975 (5th Cir. 1994) (noting that a non-movant's burden is "not satisfied with 'some metaphysical doubt as to the material facts'") (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).

III. COPYRIGHT INFRINGEMENT

Flowserve urges that Hallmark has infringed Flowserve's copyrights by displaying two of Flowserve's copyrighted images on the Hallmark website without Flowserve's permission. Flowserve contends that, as evidenced by the Certificate of Registration and the Declaration of B. Joseph Schaeff, Flowserve is the owner of a valid copyright covering, inter alia, Flowserve IMAGES 1 and 3. Flowserve argues that Hallmark's impermissible copying and displaying of Flowserve IMAGES 1 and 3 constitutes actionable copying and that Hallmark's conduct was willful.

"A copyright infringement claim requires proof of (1) ownership of a valid copyright and (2) actionable copying, which is the copying of constituent elements of the work that are copyrightable." Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003) (citing Eng'g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1340 (5th Cir. 1994)). A certificate of registration "constitutes prima facie evidence of the validity of the copyright and of the facts stated in the certificate." 17 U.S.C. § 410(c); see also Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir. 1995).

"Two separate inquiries must be made to determine whether actionable copying has occurred. The first question is whether the alleged infringer copied, or 'actually used the copyrighted material in his own work.'" Bridgmon, 325 F.3d at 576. "As direct evidence of copying is rarely available, factual copying may be inferred from (1) proof that the defendant had access to the copyrighted work prior to creation of the infringing work and (2) probative similarity." Peel & Co. v. Rug Market, 238 F.3d 391, 394 (5th Cir. 2001). "Access has been defined to include an opportunity to view the copyrighted work." Ferguson v. Nat'l Broad. Co., Inc., 584 F.2d 111, 113 (5th Cir. 1978). The second element, probative similarity, requires ashowing that the works, "when compared as a whole, are adequately similar to establish appropriation." General Universal Sys. v. Lee, 379 F.3d 131, 142 (5th Cir. 2004) (...