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Enchant Christmas Light Maze & Market Ltd. v. Glowco, LLC

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

November 13, 2019

ENCHANT CHRISTMAS LIGHT MAZE & MARKET LTD. Plaintiff,
v.
GLOWCO, LLC, EXHIBAU LLC, PATRICK WALLAIN, and CHRIS STACEY, Defendants.

          MEMORANDUM

          ALETAA.TRAUGER UNITED STATES DISTRICT JUDGE

         Enchant Christmas Light Maze & Market Ltd. (“Enchant”) filed a Motion for Temporary Restraining Order (“TRO”) (Docket No. 3), which the court granted on October 30, 2019, setting a hearing on whether the TRO should be converted to a preliminary injunction for November 7, 2019 (Docket No. 14). Following the presentation of evidence and argument at the hearing, the court ruled, for the reasons now set out in this Memorandum, that the TRO was lifted and the application for preliminary injunction was denied. (See Docket No. 34 (Order).)

         I. FINDINGS OF FACT

         A. The Disputed Sculptures

         Enchant is a Canadian company that produces Christmas-themed light exhibitions at locations such as baseball stadiums. The “Enchant Christmas” show features a “Christmas light maze” and includes various Christmas- or winter-themed “light sculptures.” The light sculptures, generally speaking, are three-dimensional frames on which Christmas lights or similar small sequential lights can be placed. Some look like animals, such as deer, and others look like objects, such as sleighs and ice crystals. Enchant has not yet produced Enchant Christmas or any similar show in the Nashville market. Enchant concedes that it is not the only company staging Christmas light exhibitions involving light sculptures, and it claims no general right to prevent competitors from staging such exhibitions.

         Enchant seeks to prevent the defendants from using ten sculptures (“Disputed Sculptures”)[1]in its upcoming Nashville Christmas light exhibition, Glow Nashville, scheduled to open on November 22. Enchant alleges that the Disputed Sculptures are based on its own copyright- and trade secret-protected designs. Enchant has obtained copyright registrations for nine of the ten Disputed Sculptures and argues that the tenth sculpture's design is protected by trade secret law. The defendants deny that the Disputed Sculptures were manufactured from Enchant's designs.

         Defendant Patrick Wallain operates Exhibau LLC. In 2016-17, Wallain and Exhibau worked with Enchant to produce Enchant Christmas.[2] While working with Enchant, Wallain had access to Enchant files through a Google shared folder that he had established prior to his relationship with Enchant. He also retained files from projects he worked on, including Enchant projects, as a general practice. Included in the files to which he had access and which he retained after ceasing his work with Enchant were three-dimensional design files that could be used to construct Enchant light sculptures.

         Chris Stacey lives in Nashville and operates Glowco, LLC. He testified at the hearing that, in the 2017-18 timeframe, Wallain and he engaged in conversations with Enchant about the possibility of putting on some type of Christmas light show in Nashville in affiliation with Enchant. The evidence at the hearing was conflicting with regard to whether the show was always intended to be roughly comparable to Enchant Christmas or whether it could have had a “music festival” component. The evidence established that, regardless of any other details, all parties understood that the proposed Nashville event would include light sculptures. The parties ultimately failed to reach an agreement to present a Nashville exhibition together, and Wallain and Stacey elected to do so independently. In support of that effort, they purchased from Enchant in late 2018 some light sculptures offered for sale by Enchant. The defendants' rights to use those purchased sculptures are not at issue here.

         Liang Qingdi is the owner of Shenzhen Enviroshine Technology Ltd., a Chinese company that has worked with Enchant to fabricate its sculptures. Enchant has provided a sworn Declaration by Liang. Liang has worked in the past with a company known as Lejin to make the Enchant sculptures. According to Liang, she heard from “[t]he boss at Lejin” that Patrick Wallain was soliciting companies in China to produce light sculptures. Wallain does not dispute that this solicitation occurred. According to her Declaration, Liang obtained digital files that Patrick Wallain allegedly sent to Lejin in connection with his solicitation. Much of Liang's Declaration is based on hearsay and she did not testify at the preliminary injunction hearing.

         Enchant has provided a Declaration and a Report from a forensic expert, Christopher Vanadia. Vanadia, like Liang, did not testify at the hearing. Vanadia performed an analysis comparing the files allegedly obtained from Liang with Enchant's own files. Vanadia found that 37 files that had allegedly been received in China from Wallain were exact copies of Enchant files.

         Wallain testified at the hearing and conceded that he or someone else at Exhibau may have sent Enchant files to Chinese manufacturers as part of a bid solicitation process. He admitted that, at the very least, two-dimensional images of Enchant sculptures had been used by Exhibau in its manufacturing solicitations. However, he credibly testified that only original designs were actually used to manufacture the final light sculptures for Glow Nashville. He provided documentation and testimony regarding Exhibau's design and production process, including the use and payment of artists to independently design its own three-dimensional models. He provided examples but did not independently document the design of every Disputed Sculpture.

         The court also compared the designs of the Disputed Sculptures with the defendants' allegedly infringing sculptures. Numerous differences between the parties' designs are clear to an ordinary observer. Heads, legs, and bodies are angled differently in many examples. The defendants' snowflake is significantly more ornate. One allegedly infringing bear sculpture is not only posed differently in the Glow version but has an entirely different head shape, suggestive of a different species of bear. The crystals look fairly similar, in a sense, but that can be explained by the fact that they are just crystals-simple geometric planes joined together into ice-like forms.

         Based on the foregoing, the court finds that, in light of all of the evidence presented and the court's assessment of the credibility of the live witnesses, Enchant has failed to establish that the Disputed Sculptures were manufactured from design files taken from Enchant.

         B. Potential Effects of an Injunction

         Stacey testified that Glow Nashville could proceed without the Disputed Sculptures, but that their unavailability would substantially hamper the show. In particular, if the defendants cannot use the disputed ice crystal sculptures, it will substantially harm the design of a central attraction of Glow Nashville, a multi-story ice crystal fortress that is built of ice crystal sculptures.

         Enchant President and CEO Kevin Johnston testified that he was concerned that allowing Glow Nashville to go forward with the Disputed Sculptures could harm Enchant's goodwill and reputation, although he did not testify that this would result from the presentation of a product inferior to Enchant's.

         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. ...


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