Shepard v. Wo Hop City, Inc.

Background

Shirley and Andrea Shepard created a dragon design in 1993 and supplied approximately 1,000 custom T-shirts bearing it to the prior iteration of the Wo Hop restaurant. Wo Hop 17, Inc. bought that restaurant in 2008 and admitted selling T-shirts with an exact copy of the design from 2008 through November 2017. The Shepards discovered the shirts after seeing a 2017 GQ magazine article and later sued Wo Hop 17, Wo Hop 1938, Inc., and Wo Hop City, Inc.

The Shepards asserted copyright infringement and a claim under 17 U.S.C. § 1202(b) concerning removal or alteration of copyright management information. The parties filed cross-motions for summary judgment, which is a ruling issued when the evidence shows no genuine dispute about a material fact and a party is entitled to judgment under the law.

Timeliness

The court rejected the defendants’ statute-of-limitations defense. The Shepards provided evidence that they did not know, and had no reason shown in the record to know, about the alleged infringement until 2017. The defendants did not identify facts that would have prompted a reasonably diligent investigation earlier. The court therefore granted the Shepards summary judgment as to timeliness and dismissed the defendants’ second affirmative defense.

Copyright infringement

The court held that the dragon design was original because the Shepards independently created it and exercised creative choices, including researching Chinese dragon mythology, using five claws, and making the dragon appear friendly. The court found the design entitled to copyright protection even though other dragon designs might have existed, because copyright law requires originality rather than novelty.

The Shepards were entitled to summary judgment on liability against Wo Hop 17. Wo Hop 17 admitted selling exact copies without authorization, and the court explained that knowledge or intent is not required to establish copyright infringement. The court did not decide the amount of damages. Factual disputes remained about the number of shirts sold, whether some shirts were given away, the profit per shirt, and when sales stopped. The court also stated that damages could not cover conduct before October 19, 2015, subject to the issues discussed in the opinion.

The court granted Wo Hop City summary judgment on all claims and dismissed it from the case. The Shepards did not claim that Wo Hop City sold shirts or directly participated in the infringement. Their theory depended on disregarding the separate corporate status of Wo Hop 17 and imposing liability on Wo Hop City. The court found insufficient evidence of the required corporate domination and use of that domination to commit an injury-producing wrong.

The court denied both sides’ summary-judgment motions concerning Wo Hop 1938. A factual dispute remained about whether that entity participated in Wo Hop 17’s infringement. The dispute included statements in Wo Hop 1938’s 2018 trademark application, which attached a photograph of the Shepards’ design and referred to use by the applicant or a related company, licensee, or predecessor.

Copyright-management-information claim

The Shepards showed that the 1993 shirt contained “© Alla Prima” and that Wo Hop 17 distributed copies without that marking. But the court found no evidence that any defendant knew the marking had been removed or knew, or had reasonable grounds to know, that distribution would assist or conceal infringement. The court therefore granted all defendants summary judgment on count three.

Disposition

The court granted the Shepards summary judgment on timeliness and on Wo Hop 17’s liability for copyright infringement. Damages against Wo Hop 17 and Wo Hop 1938’s potential liability remained for trial. The court granted Wo Hop City summary judgment on all claims and dismissed it from the case, denied both summary-judgment motions concerning Wo Hop 1938, and granted all defendants summary judgment on count three. Judge J. Paul Oetken directed the parties to submit a joint letter about the remaining proceedings within 21 days.