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Fortress Iron L.P. v. Fairway Building Products, LLC

United States District Court, D. Nebraska

July 18, 2018

FORTRESS IRON L.P., Plaintiff,
v.
FAIRWAY BUILDING PRODUCTS, LLC, Defendant.

          MEMORANDUM AND ORDER

          Joseph F. Bataillon, Senior United States District Judge

         This matter is before the court on plaintiff Fortress Iron, L.P.'s (“Fortress”) motion for preliminary injunction, Filing No. 19. The court heard oral argument on the motion on June 28, 2018.

         I. BACKGROUND

         Fortress is a designer and manufacturer of metal railings. Fortress alleges it authored original installation instructions for installing its railings, posted the information on its website, and included the instruction on the outside of the packaging for the railings. In October 2017, defendant Fairway Building Products, LLC (“Fairway”) brought its metal railings to market and posted instructions on its website and on its packages. Fortress contends Fairway's instructions copy its instructions and infringe its copyright on the instructions. Fortress moves for a preliminary injunction enjoining Fairway from using Fortress's instructions and infringing Fortress's copyright.

         In support of the motion, Fortress has shown the instructions were created in-house by Fortress employees at a significant cost of money and time. Filing No. 21-1, Index of Evid., Ex. A, Declaration of Matt Sherstad (“Sherstad Decl.”) at 1. Fortress learned in late 2017 that Fairway was marketing an allegedly identical railing product with identical packaging and installation instructions. Id., Ex. A, Sherstad Decl. at 2. Fortress lowered its prices in order to compete with Fairway's products. Filing No. 37-5, Index of Evid., Ex. H, Declaration of Jim Ganninger at 1. Fortress applied for and received United States Copyright Registration No. TX0008468254 on January 26, 2018 for its instructions. Filing No. 21-3, Index of Evid., Ex. C, Copyright Registration Certificate. At oral argument, Fortress's counsel stated that its price reductions resulted in lost profits to the company of approximately $45, 000 dollars per month for the two months that Fairway sold products with infringing instructions after Fortress registered its copyright.[1]

         Fortress's instructions and Fairway's allegedly infringing instructions appear identical in many respects. CompareFiling No. 1, Complaint, Ex. A, FE26 Installation Instructions with id., Ex. B, Fairway Steel-Level Stair-Instructions. On February 20, 2018, Fortress filed this copyright infringement action against Fairway under the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq.

         In opposition to Fortress's motion, Fairway has shown that it became aware of the filing of the plaintiff's complaint several days after it was filed. Filing No. 28-1, Index of Evid., Ex. A, Declaration of Greg Burkholder (“Burkholder Decl.”) at 1. Without admitting liability, Fairway removed the challenged instructions from its website on or about March 1, 2018, and halted production and shipment of its metal railings from its manufacturing operation in China pending a rewrite of the new instructions. Id. at 1-2. On or about March 7, 2018, Fairway drafted new instructions and computer-aided design (CAD) drawings (“new instructions”) in about four hours. Id. at 2; seeFiling No. 28- 2 Ex. B, new instructions.

         Fairway was officially served with the Complaint on March 19, 2018. Filing No. 28-1, Ex. A, Burkholder Decl. at 2. On or about March 22, 2018, Fairway uploaded the New Instructions to its website. Id. at 2. On or about April 19, 2018, Fairway began including the new instructions in all of its metal railing packaging. Id. at 2. For purposes of this motion, Fortress does not contend the new instructions infringe its copyright.

         Fairway has shown that fewer than 5000 products with the old instructions remain in inventory. Id. at 3. Fairway inserted copies of the new instructions in the packages of its unsold inventory of railings that contain the allegedly infringing instructions and posted a yellow “ATTENTION” notice on the outside of the packaging, instructing the customer to disregard the old instructions and follow the new instructions when installing the product. Id. at 2; seeFiling No. 28-3, Ex. C, Photos of Notice & New Instructions; Filing No. 28-4, Ex. D, Notice to Use New Instructions. Fairway has only shipped products with its new instructions since May 8, 2018. Filing No. 28-1, Ex. A, Burkholder Decl. at 2. Fairway has also shown that it would be costly to repackage the products entirely because the equipment it requires to do so remains in China, where it manufactures and packages its products. Id. at 2-4.

         Fortress seeks an order enjoining Fairway from distributing the remaining inventory unless it is fully re-packaged. Fairway opposes the motion and challenges the validity of Fortress's copyright, contending that parts of Fortress's copyrighted instructions are functional or otherwise uncopyrightable and asserting affirmative defenses of merger and functionality. Fairway argues that Fortress cannot show irreparable harm or probability of success on the merits. Further, it argues that Fortress's delay in seeking injunctive relief undermines its claim of irreparable harm.

         II. LAW

         The extraordinary remedy of an injunction should not be granted unless the movant has demonstrated: (1) the threat of irreparable harm to the movant; (2) the state of the balance between this harm and the injury that granting the injunction will inflict on other parties; (3) the probability that the movant will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc); Roudachevski v. All-American Care Ctrs., Inc., 648 F.3d 701, 705 (8th Cir. 2011). The burden of establishing the propriety of an injunction is on the movant. Roudachevski, 648 F.3d at 705.

         The Copyright Act provides that courts may grant injunctive relief “on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). Injunctions under the Copyright Act are governed by traditional equitable considerations. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93 (2006) (rejecting categorical rules for injunctions in patent cases).[2] The Supreme Court “has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.” Id. at 392-93.[3]

         In deciding whether to grant a preliminary injunction, likelihood of success on the merits is the most significant factor. Laclede Gas Co. v. St. Charles Cnty., 713 F.3d 413, 419-20 (8th Cir. 2013). “To that end, the absence of a likelihood of success on the merits strongly suggests that preliminary injunctive relief should be denied.'” Barrett v. Claycomb, 705 F.3d 315, 320 (8th Cir. 2013) (quoting CDI Energy Servs., Inc. v. W. River Pumps, Inc., 567 F.3d 398, 402 (8th Cir. 2009)). A party seeking injunctive relief must show a fair chance of prevailing where a preliminary injunction is sought to enjoin something other than ...


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