Wolf Designs LLC v. Five 18 Designs LLC

635 F.Supp.3d 787

WOLF DESIGNS LLC, Plaintiff, v. FIVE 18 DESIGNS LLC, et al., Defendants.

No. CV-21-01789-PHX-ROS

United States District Court, D. Arizona

Signed October 18, 2022

Alexandra Mijares Nash, Gregory W. Seibt, Rutila Seibt & Nash PLLC, Scottsdale, AZ, Kiri Tamar Semerdjian, Koeller Nebeker Carlson & Haluck LLP, Phoenix, AZ, Heather Sapp, Phoenix, AZ, for Plaintiff.

Bert Daniel Millett, Ralph Anthony Caliendo, Orangewood Law Group PLC, Mesa, AZ, for Defendants.

ORDER

Roslyn O. Silver, Senior United States District Judge

Plaintiff Wolf Designs LLC ("Wolf" or "Plaintiff") designs and installs "vehicle wraps," i.e. large vinyl graphics or decals applied to car bodies. Defendant Garrett Maxwell owns Defendant Five 18 Designs LLC ("Five 18") (collectively "Defendants"). Five 18 is a direct competitor of Wolf. This suit involves Five 18 and Maxwell allegedly copying Wolf's copyrighted designs and stealing Wolf's customers. Five 18 and Maxwell seek Partial Judgment on the Pleadings (Doc. 45) under various theories, including that the statute of limitations bars some claims and that other claims are not supported by adequate factual allegations or recognized legal theories. For the reasons below, the motion will be granted in part and denied in part.

BACKGROUND

I. Factual Background

Both Plaintiff and Defendants design and install vehicle wraps. (Verified Complaint, Doc. 1 at ¶¶ 9, 11) ("VC"). The complaint asserts five claims related to alleged copyright infringement, where three of Plaintiff's customers allegedly opted to hire Defendants to install vehicle wraps featuring designs Plaintiff had created and copyrighted.

A. Nash Copyrights

i. Facts

In March 2020, Plaintiff's customer, Nash Powersports ("Nash") commissioned Plaintiff to design and install a custom wrap for a 5th wheel toy-hauler trailer used to haul off-road vehicles. (Id. at ¶ 19). Plaintiff created a custom graphic design and installed it. (Id. at ¶ 21).

After that, Nash "indicat[ed] its desire to commission [Plaintiff] to create and install wrap designs on a Nash truck and a box trailer, utilizing the same theme as the wrap previously created, designed and installed on the 5th wheel trailer." (Id.) Plaintiff sent Nash estimates for both the truck wrap and the box trailer wrap on April 5, 2021. (Id. at ¶ 22). Nash did not pursue the truck wrap. With respect to the box trailer, Nash signed and executed the estimate, and paid the deposit on April 9, 2021. (Id. at ¶ 23-24). Plaintiff sent Nash a mockup of the box trailer design, which included Plaintiff's logo and copyright notice. (Id. at ¶ 25; Doc. 1-3 at 17 (VC Ex. L)). Plaintiff installed the wrap onto a Nash box trailer. (VC at ¶ 26; Doc. 1-3 at 14-15 (VC Ex. L)). Plaintiff published photographs of the design and completed installation work it did for Nash on its website. (VC at ¶ 28).

At some point after this project, Plaintiff alleges Nash commissioned Defendants to copy Plaintiff's design and install a vehicle wrap on Nash's truck using Plaintiff's protected work. (Id. at ¶ 30). Defendants installed the wrap and Plaintiff first became aware of this infringement in or around May 2021. (Id. at ¶ 31). Defendant Maxwell posted photographs of the completed truck project on his personal Instagram account. (Id.; Doc. 1-3 at 20-21 (VC Ex. M)). In May of 2021, Plaintiff asked Defendants to stop its misappropriation of Plaintiff's copyright protected designs, but Defendants did not respond. (VC at ¶ 42).

ii. Copyright Information

Shortly after Plaintiff's interactions with Defendants regarding the Nash truck wrap, Plaintiff received a copyright registration for a group of unpublished works it created for Nash. That registration, issued on June 15, 2021 ("Nash Group Copyright") (Doc. 1-2 at 4 (VC Ex. B)), includes seven designs:

1. Toy Hauler LD1933

2. 2020 Teryx KRX 1000 LD-1470

3. McLaughlin Sam X3 Max LD-0177

4. Hancock, Eric XP4

5. 2021 Can Am Max LD-3080

6. 2021 Door kit LD-3079

7. 24 x 7 Box trailer LD-3227

Additionally, Plaintiff alleges that following the publication or installation of these designs, Plaintiff registered additional individual copyright registrations for all seven designs. As relevant, Plaintiff registered the Toy Hauler LD1933 (Registration No. VA 2-262-207), which was first published April 2, 2020¹ and registered on August 4, 2021. (Doc. 1-3 at 7 (VC Ex. J)). Plaintiff additionally registered the 24 x 7 Box trailer LD-3227 (Registration No. VA 2-272-042), first published on April 9, 2021 and registered October 15, 2021. (Doc. 1-3 at 3 (VC Ex. I)).²

B. Pyrtle Copyright

Plaintiff contracted with Kevin Pyrtle to design and install a vehicle wrap on Pyrtle's recreational vehicle known as a "utility terrain vehicle" or "UTV." (VC at ¶ 34). The mockup for this project includes Plaintiff's logo. (Doc. 1-3 at 23 (VC Ex. N)). Plaintiff installed the wrap on Pyrtle's UTV in 2017. (VC at ¶ 34). Plaintiff's design was first published on September 15, 2016 and received copyright registration on July 30, 2021 (Registration No. VA 2-261-469). (Doc. 1-2 at 8 (VC Ex. C)). Plaintiff alleges it published a photograph of Pyrtle's design on its website, which contained a copyright notice and the statement "All Rights Reserved." (VC at ¶ 36; Doc. 1-2 at 2 (VC Ex. A)).

On February 6, 2018, Plaintiff alleges it became aware Defendants misappropriated Plaintiff's copyright protected design that had been applied to Pyrtle's UTV. (VC at ¶ 38). On that date, Defendant Five 18 posted a photograph on its Instagram account of a "UTV wrap that is in all material respects visually identical to that of [Plaintiff's] copyright protected Pyrtle design." (VC at ¶ 39; Doc. 1-3 at 25 (VC Ex. O)). Plaintiff alleges the photograph of the Pyrtle design on its website was published at the time Defendants posted its photograph on Instagram, and that Defendants knew the design was not of its own creation despite representing it as such on its Instagram post. (VC at ¶ 41).

C. Simon Med Prius

Lastly, Plaintiff alleges Defendants used one of Plaintiff's copyright protected designs on a Toyota Prius. Plaintiff's mockups for this wrap include its logo. (Doc. 1-3 at 27 (VC Ex. P)). Plaintiff's design was first published on February 1, 2015, and it was registered with the USPTO on September 10, 2021 (Registration No. VA 2-266-798). (Doc. 1-3 at 11 (VC Ex. K)). Defendants allegedly used Plaintiff's design and Defendant Maxwell posted photographs of the completed vehicle wrap on his personal Instagram page. (Doc. 1-3 at 29-33 (VC Ex. Q)).

II. Procedural Background

Plaintiff filed the present suit on October 22, 2021. Plaintiff asserts five claims. In Count I, Plaintiff asserts Defendant's actions constituted copyright infringement. In Count II, Plaintiff asserts a violation of the Lanham Act, 15 U.S.C. § 1125(a), because Defendant's actions have caused and will continue to cause confusion to the public as to the true source of the designs. In Count III, Plaintiff asserts tortious interference with business relations with respect to all three clients (Nash, Pyrtle, and Simon Med). In Count IV, Plaintiff asserts unfair competition. In Count V, Plaintiff asserts a claim for piercing the corporate veil ("alter ego"). Defendants answered the complaint, denying many of the allegations and asserting a number of affirmative defenses. (Doc. 16).

The Court granted a stipulated preliminary injunction in March 2022 (Doc. 38) barring Defendants from reproducing, preparing, distributing, or displaying the vehicle wraps included in Exhibits A-I of the stipulation for preliminary injunction (Doc. 36) (the same copyright registrations included in the Verified Complaint). Defendants filed this Motion for Judgment on the Pleadings thereafter. (Doc. 45).

ANALYSIS

I. Standard for Judgment on the Pleadings

A motion for judgment on the pleadings is "functionally identical" to a motion to dismiss for failure to state a claim. Gregg v. Hawaii, Dep't of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 2017). Therefore, the inquiry is "whether the complaint at issue contains sufficient factual matter, accepted as true, to state a claim [to] relief that is plausible on its face." Harris v. Cty. of Orange, 682 F.3d 1126, 1131 (9th Cir. 2012). A claim qualifies as "plausible" only when it does more than establish "a sheer possibility that a defendant acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). It is not enough for a complaint to "plead facts that are merely consistent with a defendant's liability." Id. The facts must be such that a court, "draw[ing] on its judicial experience and common sense," can conclude "the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937. "A judgment on the pleadings is properly granted when, taking all the allegations in the non-moving party's pleadings as true, the moving party is entitled to judgment as a matter of law." Ventress v. Japan Airlines, 603 F.3d 676, 681 (9th Cir. 2010) (citations omitted).³

"Courts have discretion in appropriate cases to grant a Rule 12(c) motion with leave to amend, or to simply grant dismissal of the action instead of entry of judgment." Special District Risk Management Auth. v. Munich Reins. Am., Inc., 562 F. Supp. 3d 989, 994 (E.D. Cal. 2021). And the Ninth Circuit has long held "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lacey v. Maricopa Cnty., 693 F.3d 896, 926 (9th Cir. 2012) (en banc) (quotation marks and citation omitted).

II. Count 1 (Copyright)

Plaintiff's first claim alleges copyright infringement based on the three set of facts described above. Plaintiff included a copyright symbol and the statement "All Rights Reserved" on its website, and registered copyrights for each of its designs. Plaintiff argues "Defendants therefore knew that the designs were not ones of [their] 'own...