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Music City Metals Co., Inc. v. Cai

United States District Court, M.D. Tennessee, Nashville Division

April 30, 2018

MUSIC CITY METALS CO., INC., Plaintiff,
v.
JINGCHANG CAI et al. Defendants.

          MEMORANDUM

          ALETA A. TRAUGER United States District Judge

         Before the court is a request by Music City M s Co., Inc. (“MCM”) to convert the following temporary restraining orders (“TROs”) into preliminary injunctions: the Modified Temporary Restraining Order against Shenzhen Hai Pai International Warehousing Services Ltd., HiPacking Inc., Hyco International Trading Company L.P., Jolyn Liu, Chugang Guan, Jia Ning Lui, Bloom International, Inc., Feng Bai, and Guangzhou Hongshuo Trading Co., Ltd. (“Hyco Defendants”) (Docket No. 81); the Modified Temporary Restraining Order against Oceanside BBQ Parts Factory Inc., Baldev Sandhu, and Sukhwinder Bedi (“Oceanside Defendants”) (Docket No. 93); and the Temporary Restraining Order against Jui Terng Pai A/K/A Lucas Pai (“Lucas Pai”), Debbie Pai, Hsu Hsin Yang, Hui Feng Yang, Broilchef Enterprise, Inc., Dragon Right Ltd., D&A Gourmet Co., Ltd., Lucas Innovation, Inc. (British Virgin Islands), Lucas Innovation, Inc. (Taiwan), Lucas BBQ Co., Ltd., Grill Town Enterprises, Inc., Bbqtek Enterprise, Inc., Suntech Parts & Services, Inc. (Canada), Suntech Parts & Services, Inc. (U.S.) and Kuo-Min Yeh, A/K/A Denny Yeh (“Lucas Pai Defendants”) (Docket Nos. 9 & 137). For the reasons set forth herein, MCM's request will be granted in part and denied in part. The above-referenced TROs will be lifted and the court will enter a Consolidated Preliminary Injunction governing the actions of certain defendants at issue in this Memorandum (“Covered Defendants”).

         I. BACKGROUND AND PROCEDURAL HISTORY [1]

         MCM is a Nashville-based seller of replacement parts for gas grills. Because MCM is not the manufacturer of the grills with which its parts are used, it conducts its own research to identify parts that are likely to need replacing in popular grill models and designs replacement parts that will meet those needs. MCM's business is not limited solely to replicating grill manufacturers' original parts. For example, some MCM replacement parts are designed to fulfill that part's designated purpose in multiple different grill models and, therefore, may include a combination of features appropriate to each relevant model-e.g., screw holes in multiple different places depending on where the part will be affixed for each grill model. MCM has presented testimonial evidence establishing that the research and development process through which MCM designs its replacement parts is time- and resource-intensive, requiring MCM to continuously investigate manufacturers' grills to determine the specifications of the needed replacement parts and develop parts that will meet those needs.

         Once MCM has developed a grill part that it wishes to make available for sale, it assigns that part a unique model number. MCM maintains that its system of model numbers is well known throughout the industry and identified, in the minds of the relevant buying public, with MCM itself. MCM compiles and publishes a product catalog that includes original photographs and/or illustrations of the parts alongside MCM product numbers and “fitment data” identifying the models of grill with which the particular parts can be used. MCM's catalog is available both in print form and as an electronic database made available to licensed MCM distributors. MCM has obtained three federal copyright registrations for versions of its catalogs. (See Docket Nos. 1-4, -6, -8.) MCM has also obtained federal trademark registrations for the marks MCM and MUSIC CITY M S (“MCM Marks”), each for use with “distributorship services in the field of gas grill parts; namely, valves, control knobs, heat indicators, ignitor components, lid handles, accessories, rotisserie housings, regulators, hoses, grill plumbing, natural gas grill posts, warming racks, gaslight parts and supplies, hot plates, burners and venturis, cooking grids, and rock grates/heat plates.” (Docket Nos. 1-2, -3.)

         MCM does not claim any rights to patent protection for its designs and, therefore, has no legal right to prevent its competitors from producing and selling similar, or even identical, parts. Accordingly, MCM is forced to turn to other potential advantages to maintain its market position, namely: (1) the accumulated goodwill and reputation from its many years in the industry; and (2) its ability to effectively match consumers with the parts they need, using tools like its part numbering system and the associated compiled fitment data. MCM claims to have dealt, at least in recent years, with persistent efforts by competitors to trade improperly on MCM's work and goodwill in order to further their own sales in the gas grill replacement parts market, in particular through e-commerce platforms. In order to combat this allegedly unlawful marketing by its competitors, MCM has initiated and received injunctive relief in a number of actions in this court.

         On April 27, 2017, MCM filed its Verified Complaint in this case, naming over sixty defendants. (Docket No. 1.) Although the Complaint frequently discusses the defendants in the aggregate, MCM has not adduced any evidence to suggest that the numerous defendants are part of any unitary enterprise or conspiracy. To the contrary, the evidence currently presented suggests that this case involves numerous distinct clusters of affiliated defendants who may be in competition with each other just as surely as they are in competition with MCM.

         Counts I, II, and III of the Complaint plead, respectively, trademark infringement, unfair competition, and counterfeiting under the Lanham Act against all defendants. (Id. ¶¶ 283-300.) Count IV pleads a claim under Tennessee law of unfair competition against all defendants. (Id. ¶¶ 301-03.) Count V is a breach of contract claim against four of the Lucas Pai Defendants arising out of a December 2, 2014 settlement agreement. (Id. ¶¶ 304-08.) Count VI pleads a claim for copyright infringement against all defendants. (Id. ¶¶ 309-17.) Counts VII and VIII are claims under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) against all defendants. (Id. ¶¶ 318-32.) Count IX pleads a claim for false advertising under the Lanham Act against select defendants, related to those defendants' allegedly improper use of the phrase “FDA Approved.” (Id. ¶¶ 333-41.) Count X is a claim under the Tennessee Consumer Protection Act against the same defendants arising out of the “FDA Approved” allegations. (Id. ¶¶ 342-46.) On May 5, 2017, the court issued an Order granting a TRO as to all defendants, ordering the defendants to show cause as to why MCM is not entitled to a preliminary injunction, and setting a hearing on the preliminary injunction. (Docket No. 9.)

         The original hearing date was eventually superseded by a number of separate dates reflecting the different statuses and concerns of the various groups of defendants. The court held a hearing regarding a potential preliminary injunction with regard to the Hyco Defendants on June 2, 2017. The court reserved ruling on that matter and left the TRO in effect, with modifications. (Docket Nos. 58, 81.) On June 22, 2017 the court held a hearing regarding a potential preliminary injunction against the Oceanside Defendants. Following that hearing, MCM and the Oceanside Defendants submitted, and the court approved, a modified TRO reserving judgment on the possibility of a preliminary injunction. (Docket Nos. 91-93.) On October 18, 2017, the court held a hearing regarding a potential preliminary injunction against the Lucas Pai Defendants, after which the court extended the TRO. (Docket No. 128 & 137.) The court ordered supplemental briefing regarding the preliminary injunction request from the Hyco and Lucas Pai Defendants, which the parties provided. (Docket Nos. 142, 158, 159, 176.)

         II. LEGAL STANDARD

         The Sixth Circuit has held that the district court must balance four factors when considering a motion for preliminary injunction under Federal Rule of Civil Procedure 65: (1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether the issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by the issuance of the injunction. City of Pontiac Retired Emps. Ass'n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014) (citing PACCAR Inc. v. TeleScan Techs., LLC, 319 F.3d 243, 249 (6th Cir. 2003)).

         III. CONCLUSIONS OF LAW REGARDING THE BASIS OF MCM'S CLAIMS

         MCM has asserted an array of intellectual property rights related to its sale and marketing of grill replacement parts. Because MCM's likelihood of success against individual defendants will depend on the scope of the rights asserted, the court will first consider MCM's general theories of liability and then turn to its consideration of the various named defendants.

         A. Likelihood of Success Regarding MCM's Rights Under Copyright Law

         MCM first asserts that the defendants have violated its copyrights, in particular with regard to its compiled fitment data.[2] Copyright owners have the exclusive rights to reproduce and distribute copyrighted works. 17 U.S.C. § 106. “The United States Constitution requires that, ” for a work to qualify for copyright protection, “the work [must] be ‘original.'” Tomaydo-Tomahhdo, LLC v. Vozary, 629 Fed.Appx. 658, 660 (6th Cir. 2015) (citing U.S. Const. art. I, § 8, cl. 8; Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 346 (1991)). Pursuant to that originality requirement, a simple fact about the world cannot, in and of itself, be protected from dissemination merely because that fact was included in a material subject to copyright. Id. Nevertheless, “[w]hile facts cannot be copyrighted, compilations of facts generally can be.” Id. (citing Feist Publ'ns, 499 U.S. at 344) (emphasis added). “However, the copyright protection extends only to the original aspect of the compilation; it does not protect the underlying unoriginal elements.” Id. (citing Feist Publ'ns, 499 U.S. at 348).

         MCM's copyright-registered catalogs convey a number of facts that are not subject to copyright protection-for example, that the parts exist; that they look a certain way and consist of certain materials; and that they are available for sale from MCM. Similarly, each individual piece of fitment data is too inherently factual to be entitled to copyright protection in its own right. That a particular part, if placed in a certain grill, will perform a certain function is simply a physical fact that no party has a right to prevent another from repeating under copyright law. This court, moreover, has already held that, under the law of the Sixth Circuit, the product numbering system that MCM uses in the catalogs is not, in and of itself, entitled to copyright protection. (Docket No. 124 at 18.) As the Sixth Circuit held in ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., a system that methodically assigns numbers to new products as they become available is not, in isolation, sufficiently creative or expressive for the numbers to warrant protection under federal copyright law. 402 F.3d 700, 709 (6th Cir. 2005)

         MCM's copyright claims, however, are not based solely on the defendants' use of product numbers alone or their repeating of individual pieces of fitment data. Rather, MCM claims copyright protection in the compilation and coordination of fitment data, product descriptions, and product numbers, as embodied by the MCM catalogs. “To copyright a compilation, the statute imposes three requirements: ‘(1) collection and assembly of pre-existing material, facts or data; (2) the selection, coordination or arrangement of those materials; and (3) the creation, by virtue of the particular selection, coordination or arrangement, of an ‘original' work of authorship.'” Sem-Torq, Inc. v. K Mart Corp., 936 F.2d 851, 854 (6th Cir. 1991) (quoting Feist, 499 U.S. at 357). “Not every selection, coordination, or arrangement will pass muster” and entitle its creator to copyright protection. Feist, 499 U.S. at 358. Nevertheless, the originality requirement for obtaining at least some level of protection is “not particularly stringent”; the Supreme Court has explained that “the vast majority of compilations will pass this test” as long as they “display some minimal level of creativity.” Id. at 358-59. With that in mind, the court has little trouble concluding that MCM is likely to succeed in establishing that it is entitled to some level of protection with regard to its compilation and coordination of product details, product descriptions, product numbering, and fitment data, as represented in its catalogs.[3]

         While the bar for establishing some protection in a compilation is low, however, establishing actual infringement by a party that has not copied one's compilation in its entirety is more difficult. “[C]opyright is not a tool by which a compilation author may keep others from using the facts or data he or she has collected.” Id. at 359. Accordingly, “the copyright in a factual compilation is thin.” Id. at 349. The rights holder has no authority to prevent any third party from relaying-or even from outright copying-the underlying facts, as long as the third party refrains from “copying of constituent elements of the work that are original.” Id. at 361 (citing Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 548 (1985)). Elements of a compilation that are original may include the author's “choos[ing] which facts to include, in what order to place them, and how to arrange the collected data so that they may be used effectively by readers.” Id. at 338.

         The examples of the defendants' allegedly infringing conduct identified by MCM involve discrete listings of particular grill replacement parts, not large-scale replication of MCM's lengthy compilations as found in its catalogs. The court, accordingly, cannot conclude that MCM is likely to prevail on any copyright infringement claims based on the arrangement of information in the catalogs as a whole. MCM has suggested that particular defendants' multiple listings, taken in the aggregate, could be viewed as the cumulative equivalent of copying considerable portions of the catalog. It has not, however, identified any examples of cases where a court has accepted such a claim, and, insofar as such a theory is even viable, it would require a substantial factual record of listings that, taken together, would not merely convey information from the catalogs but mirror its arrangement. MCM has, therefore, not demonstrated a likelihood of success on a theory that would equate defendants' cumulative listings with large-scale copying of its catalogs.

         Nor has MCM identified any particular aspect of the arrangement of the fitment data itself, as conveyed by the defendants, that would qualify as creative. To the contrary, the listings that MCM has offered as examples of infringement mostly present simple, matter-of-fact lists of grill models with which each relevant part would work. There is nothing creative about how the information is presented, nor has MCM identified anything relevantly creative about the way that the same information was presented when MCM first compiled it. MCM has instead repeatedly retreated to reminding the court of all the labor it has put into its product development and marketing processes. That ...


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