GEORGE DANIELS, District Judge
Plaintiff Kam Hing Enterprises, Inc., d/b/a Sunham filed an action against defendants Zheng Zhang USA, Inc. and Yi Ming Li alleging copyright infringement in violation of the Copyright Act, 17 U.S.C. § 106(1) and 501(a), false designation of origin in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and trademark infringement in violation of the common law of the State of New York. Defendants filed counterclaims alleging trademark infringement, false designation of origin in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), false advertising in violation of Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) and deceptive acts and practices, false advertising, injury to business reputation, and dilution in violation of New York State statutory law. Plaintiff then filed counterclaims alleging copyright infringement, trademark infringement and false designation of origin. Both plaintiff and defendants moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, both plaintiff's and defendants' motions for summary judgment are DENIED.
BACKGROUND
Plaintiff's Allegations of Facts
Plaintiff is a New York corporation that designs and distributes bed linens, including puff quilts and pillow shams, with its principal place of business in New York City. (Plaintiff's Local Civil Rule 56.1 Statement of Facts Not In Dispute, hereinafter, "Plaintiff's S.F.," ¶ 1, 12). It creates all of its own fabric and bedding products (Yung Aff. ¶ 4), yet it does not have its own-factories and therefore, it contracts with various factories overseas to manufacture plaintiff's products. (Yung Aff. ¶ 6). It began to use the Shanghai Zheng Zhang Textile Company in China, (hereinafter "the factory"), in approximately September or October 1995 to manufacture plaintiff's fabric and bedding products. The factory manufactured approximately two hundred different designs on behalf of plaintiff. (Yung Aff ¶ 7, 9).
Sarah Lewis, former Design Director at Sunham, directed the design and creation of the small floral and hydrangea fabric patterns, both of which she later used in the creation and design of plaintiff's Green Dahlia and Dahlia Puff bedding products. (Lewis Aff. ¶ 2-3). Sarah Lewis first directed the creation of the hydrangea fabric pattern by engaging the services of Yuan Jen Hsiung. (Lewis Aff. ¶ 4). She expressed to him the design that she wanted, the two met and went through books as research tools, and discussed what the design should look like in terms of scale, flowers, colors, placement and size. Id, Yuan Jen Hsiung memorialized their ideas into writing and these notes containing detailed instructions in Chinese were then forwarded to Cai Hui Yong, an artist and painter. Id. (Yong Aff. ¶ 2). Cai Hui Yong painted an original painting for plaintiff incorporating these instructions and directions. (Yong Aff. ¶ 3). He did not copy `this' painting from any source. (Yong Aff. ¶ 4). Cai Hui Yong sent this painting to Sarah Lewis (Lewis Aff. ¶ 5). She "made certain comments" and then gave it to Howard Yung, the President of Sunham. Id. This fabric pattern was then copyrighted. Id.: (Plaintiff's Exhibit 39).
Defendants argue that Cai Hui Yong's testimony should be precluded due to the fact that plaintiff did not produce him for deposition. This Court finds that even without Cai Hui Yong's testimony, genuine issues of material fact exist as to who created the hydrangea fabric design and that therefore, granting summary judgment on this issue is not appropriate.
Regarding the small flower fabric pattern, plaintiff alleges that Sarah Lewis contacted Michael Popov, an artist in New York that plaintiff often employed as a freelance artist. (Lewis Aff. ¶ 6). She spoke with him on several occasions about her inspiration for the small floral pattern, working with him for two weeks before they finalized the textile design.Id.. Plaintiff later copyrighted this fabric design. (Plaintiff's S.F. ¶ 32).
In 1996, Sarah Lewis, then being employed by plaintiff and working within the scope of her employment, created an original pattern for quilts and pillow shams labeled "Pastel Puff or "Dahlia Puff" that incorporated the hydrangea and small floral fabric designs. (Plaintiff's S.F. ¶ 38). She first prepared a preliminary production drawing for a bedding product that later became known as "Pastel Puff' or "Dahlia Puff." (Lewis Aff. ¶ 7). Sarah Lewis labeled this design concept "Dahlia Pastel," and as was part of her normal course of practice at Sunham to assign each design a number and a short description, she gave the Dahlia Pastel the number "1047." Id. The number 1047 later became known as the Green Dahlia quilt. Id. After Sarah Lewis prepared the preliminary production drawing, she designed and drafted full size templates. (Lewis Aff. ¶ 8). In the summer of 1996, these preliminary production drawings were sent to Steven Ge, an employee at the factory, along with accompanying templates for the purpose of having samples made. (Lewis Aff. ¶ 9); (Yung Aff. ¶ 10). Plaintiff had already sent the artwork for the fabrics to the factory so that samples and strike-offs could be produced of the fabrics. (Lewis Aff. ¶ A sample of the Dahlia Puff was sent from the factory to plaintiff, which plaintiff reviewed and approved for production and offered for sale. (Lewis Aff. ¶ 10); (Davaros Aff. ¶ 3).
Dean Davaros, plaintiff's Sales Manager, then met with a buyer who indicated that she liked the sample. However, the buyer wanted the layout changed, and stated that she would rather sell it as a quilt instead of as a puff. (Davaros Aff. ¶ 1, 5). Dean Davaros asked Howard-Yung, who was then in China visiting the factories that manufactured plaintiff's products, if plaintiff could transform the Dahlia Puff design into a quilt design. (Davaros Aff. ¶ 6); (Yung Aff. ¶ 11). He intended to use the same hydrangea and small floral fabrics that were already being used in the Dahlia Puff design and make it into a quilt. Id. Howard Yung used plaintiff's Pastel Puff design that was already being manufactured and rearranged plaintiff's fabrics. (Lewis Aff. ¶ 11). Howard Yung then showed Sarah Lewis his quilt design that incorporated the hydrangea and small floral fabrics and which was based on the Dahlia Puff that Sarah Lewis had already created. Id. Sarah Lewis then made several changes to Howard Yung's design, which for the most part consisted of moving the fabric placement in the quilt. (Lewis Aff. ¶ 12); (Yung Aff. ¶ 11). She took photographs of the quilt as designed by Howard Yung on which she had also made handwritten notes setting forth her changes. (Plaintiff's Exhibit 32); (Lewis Aff. ¶ 12); (Plaintiff's Exhibit 10); (Yung Aff. ¶ 11); (Davaros Aff. ¶ 7). Sarah Lewis then made a new set of production drawings, along with a fabric card in order to show fabric placement, which were sent to the factory via fascimile. (Lewis Aff. ¶ 13). Samples were then forwarded from the factory to plaintiff for approval, which Sarah Lewis reviewed. Id. The resulting design was referred to as the "Green Dahlia" quilt. Id. Plaintiff then began importing the Green Dahlia quilt in December 1996-January 1997. (Davaros Aff. ¶ 9). Plaintiff filed for the copyright to the "`Green Dahlia quilt on August 11, 1999, and the copyright was issued on August 19, 1999. (Plaintiff's S.F. ¶ 59).
In or around Market Week 1997, Yuan, plaintiff's freelance artist, spoke with both Sarah Lewis and Dean Davaros, informing him that many of plaintiff's fabrics which he helped design were being offered for sale by defendants. (Davaros Aff. ¶ 16). Plaintiff states that Howard Yung and Dean Davaros then visited defendants' New York office and that Howard Yung approached defendant Li and told him "that these . . . designs . . . were owned by Sunham and that he had no right showing Sunham's patterns in his showroom." (Yung Aff. ¶ 21). Howard Yung "demanded that Mr. Li remove Sunham's design from his showroom," to which defendant Li allegedly responded that he would. Id. Howard Yung told defendant Li that if he did not do so, that Howard Yung would proceed with a lawsuit. Id. However, defendants continued to offer most of plaintiff's designs for sale. (Reiss Aff. ¶ 6, 11); (Davaros Aff. ¶ 17-18).
Plaintiff contends that defendants have willfully copied, and/or have caused another to copy plaintiff's Green Dahlia pattern and hydrangea and small floral fabric designs, and that defendants are distributing unauthorized copies of such designs. (Plaintiff's S.F. ¶ 85). Plaintiff alleges that defendants are offering for sale, selling and distributing in retail stores, under the names "Green Dahlia Puff" and "Garden Dahlia Puff," a line of quilts and pillow shams that have a pattern that is identical to plaintiff's Green Dahlia pattern and which incorporates designs that are identical to plaintiff's hydrangea and small floral fabric designs. Id. Defendants' Allegations of Facts
Defendant Zheng Zhang USA is a New York corporation with a showroom in New York City. (Defendant's Statement of Material Facts as to Which There Is No Genuine Issue to Be Tried Under Local Civil Rule 56.1 In Support of Defendant's Motion for Summary Judgment, hereinafter "Defendants' S.F.," ¶ 1). Defendant Zheng Zhang USA purchases quilts from a manufacturer known as Shanghai Zheng Zhang Textiles Factory (hereinafter "Shanghai Zheng-Zhang") for resale in the United States. (Defendants' S.F. ¶ 2). Zheng Zhang USA sells quilts which incorporate a design called the "Green Lily" and that the Green Lily design is manufactured by Shanghai Zheng Zhang. Id Shanghai Zheng Zhang manufactured quilts for plaintiff during the period of 1995 to 1997. (Defendants' S.F. ¶ 10).
Defendants allege that the hydrangea and small floral design were created by Shanghai Print Dye Company for defendants. (Li Dep.) Defendants further allege that the hydrangea fabric design was created by Shanghai Print Dye Company based on a preexisting American fabric design, but not on plaintiff's fabric design. (Li Dep.).
In March 1992, Sheng Tang Cao, a designer employed by Shanghai Zheng Zhang, designed a quilt identified as N3A0291/2 (hereinafter the "N3A" quilt) which had a dahlia as its center motif and repeating rows of diamonds at its border. (Cao Dep.); (Defendants' S.F. ¶ 4). This quilt was sold by Shanghai Zheng Zhang to its customers at least as early as 1995 and was displayed in the company's factory in China. (Defendants' S.F. ¶ 5). In September 1996, Sheng Tang Cao designed a quilt labeled "1047" which used the design of the N3A quilt, but in a different colorway. (Cao Dep.); (Defendants' S.F. ¶ 6). In October 1997, Sheng Tang Cao designed a quilt referred to as "LI-033," the layout of this quilt being similar to the 1047 quilt design, however using some different fabric designs. (Cao Dep.); (Defendants' S.F. ¶ 7-8) He then converted the LI-033 quilt design into a puff quilt design which was labeled "YM-001." (Cao Dep.); (Defendants' S.F. ¶ 9).
In August 1997, plaintiff's officers visited defendants' showroom and asked whether defendants were displaying quilts that were previously sold by plaintiff, including the Green Dahlia quilt. (Defendants' S.F. ¶ 12). Howard Yung was therefore personally aware that the Green Dahlia quilt was on display at defendants' showroom at that time. Subsequently, plaintiff became aware that defendants continued to display the quilt in its showroom. (Yung Dep.); (Reiss Dep.); (Davaros Dep.). In September 1997, plaintiff's attorney forwarded a letter to defendant Zheng Zhang USA claiming that defendant had infringed several of plaintiff's copyrighted designs (Yung Dep.), to which defendants requesting that plaintiff identify which copyrights plaintiff believed defendant was infringing. (Defendants' S.F. ¶ 16). No particular quilt designs were identified, "despite the fact that Sunham knew the Green Dahlia quilt was on display at Zheng Zhang USA's showroom." (Defendants' S.F. ¶ 17). Concerning the copyrights that defendants allege plaintiff did identify, defendant Zheng Zhang USA sent a letter to plaintiff on October 7, 1997, stating that "the rightful copyright owner . . . is clearly Shanghai Zheng Zhang." (Defendants' S.F. ¶ 18). Defendants allege that there was no further communication between plaintiff and defendants regarding this issue until defendant Zheng Zhang USA contacted plaintiff in August 1999. (Defendants' S.F. ¶ 19).
DISCUSSION
Plaintiff moves for summary judgment on the issue of independent creation of the small floral fabric and hydrangea fabric designs and the Green Dahlia quilt design, arguing that' defendants copied plaintiff's copyrighted designs. Defendants move for summary judgment of non-infringement with respect to the Green Dahlia quilt design. Defendants argue that plaintiff cannot succeed on a claim of copyright infringement of the Green Dahlia design because this design (what defendants term the "Green Lily" quilt) was independently created by an employee of Shanghai Zheng Zhang Textile Factory and because plaintiff's copyright claim is barred by the doctrine of laches.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Nebraska v, Wyoming, 507 U.S. 584, 590, 113 S.Ct. 1689, 1694 (1993). A dispute regarding a material fact is genuine if a verdict at trial could reasonably be returned for the non-moving party. See Weinstock v. Columbia University, 224 F.3d 33, 41 (2d Cir. 2000). The burden of demonstrating that no factual dispute exists is on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317,323 (1986). Once the moving party has met this burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). 4The non-moving party may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Alemas, 143 F.3d 105, 114 (2d Cir. 1998). In deciding a motion for summary judgment, a court must resolve all ambiguities and draw all reasonable inferences in favor of the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.3d.2d 202 (1986). Summary judgment should be granted only when no reasonable trier of fact could find in favor of the nonmoving party. Gallo v. Prudential Residential Services. Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994). The burden in demonstrating that summary judgment should be granted is significant in that summary judgment is a "drastic devise, since its prophylactic function, when exercised, cuts off a party's right to present his case to the jury."Nationwide Life Ins. Co. v. Bankers Leasing Ass'n. Inc.. 182 F.3d 157, 160 (2d Cir. 1999), quoting Eastway Construction Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985).
The Hydrangea and Small Floral Fabric Designs
Plaintiff's motion for summary judgment on the issue of independent creation of the hydrangea and small floral fabric design is denied because genuine issues of material fact exist as to who created such designs. As stated above, plaintiff alleges that the hydrangea fabric design was created at the direction of Sarah Lewis, plaintiff's former Design Director, by employing the services of Yuan Jen Hsiung, a freelance textile designer, to whom she expressed the "look" that she was hoping to achieve, and with whom she discussed what would be appropriate in terms of scale, flowers, colors, placement and size. (Lewis Aff. ¶ 4). Plaintiff alleges that the designer then made notes on Sarah Lewis' direction and instruction in Chinese. (Yong Aff. ¶ 2). These were forwarded to Cai Hui Yong, a painter and artist employed by plaintiff, who used these notes to create an original painting of the proposed fabric design. (Lewis Aff. ¶ 4); (Yong Aff. ¶ 2-3). Plaintiff alleges that this painting was sent to Sarah Lewis, who made comments on it, the final result being the hydrangea fabric design. (Lewis Aff. ¶ 5). Plaintiff alleges that the small floral design was created at the direction of Sarah Lewis, through Michael Popov, a freelance artist that plaintiff often employed. (Lewis Aff. ¶ 6); (Popov Aff. ¶ 7-8).
However, in deposition, defendant Li testified that the small floral and hydrangea fabric designs were "created by Shanghai Print Dye Company for Zheng Zhang," and that the hydrangea fabric design was created by Shanghai Print Dye Company based on a preexisting fabric design, but not on plaintiff's fabric design. (Li Dep.). Defendant Li also testified regarding several documents, which defendants have submitted as Exhibits 2, 3 and 4 in their Opposition to Plaintiff's Motion for Summary Judgment (Li Dep.). He stated that these are invoices from China Printing Dye Company for fabrics, which include the hydrangea and small fabric design, as well as original design drafts of these two fabric designs, that were made for Shanghai Zheng Zhang. Id. Specifically, defendant Li testified that a document that bears the Bates number 290, which defendants submitted as Exhibit 2 along with what appears to be photocopies of the hydrangea and small floral fabric designs, is a document "from . . . China Printing Dye, it certifies that Z9668-1 and Z9668-2, and Z9669-1 and Z9669-2, these two fabrics was [sic] based on Shanghai Zheng Zhang factory's pattern and that it was produced in December 1996." Id.
Defendants also argue in their Opposition to Plaintiff's Motion for Summary Judgment, that what plaintiff originally submitted as Exhibit 24 in support of Plaintiff's Motion for Summary Judgment as the hydrangea fabric design is in fact a fabric design that was created by Creative Fabrics Inc. in 1992. (Loeffler Dec. ¶ 3). On October 10, 2000, after defendants submitted their Opposition to Plaintiff's Motion for Summary Judgment, plaintiff resubmitted Exhibits 23 and 24, indicating that as a result of a printing error, what was originally submitted was mistaken and should be replaced. The replacement exhibits depict a different design than that originally submitted by plaintiff.
With regards to the small floral fabric design, defendants submitted as Exhibit 6 in their Opposition to Plaintiff's Motion for Summary Judgment, a declaration by Michael Popov, the freelance artist that plaintiff allegedly employed to design the small floral fabric design at the direction of Sarah Lewis. In this declaration, Michael Popov states that "Sunham has never hired me to create any original designs. I have never signed any agreement to create and/or design any fabric patterns for Sunham." (Popov Dec. ¶ 3). He further stated that in reference to what appears to be a photocopy of the small floral fabric design, which is attached to his declaration, that he "did not create and/or design or participate in the creation and/or design" of such fabric pattern. (Popov Dec. ¶ 4). He also states, in reference to what appears to be photocopies of both the small floral and hydrangea fabric designs attached to his declaration, that "Based on my years of experience in the textile industry, it is my opinion that the fabric patterns shown in Exhibits 1 and 2 were copied from fabric patterns that have been in existence for many years." (Popov Dec. ¶ 5).
In an affidavit plaintiff submitted, Michael Popov states that after signing the declaration submitted by defendants he reviewed invoices concerning work that he did for plaintiff's in 1996, and that his recollection was therefore refreshed. (Popov Aff. ¶ 6). He states that he did "participate in the coloring and painting of the small floral fabric" that was attached to his declaration defendants submitted as an exhibit. (Popov Aff. ¶ 7). He states that while he did not design the fabric design himself, he took direction from Sarah Lewis as to the coloration, scale, type of flowers, placement and size with respect to the fabric design and that he then prepared a floral painting. (Popov Aff. ¶ 7-8). He further states that he has no opinion as to the source of the direction that Sarah Lewis gave him. (Popov Aff. ¶ 11).
This Court finds that, as a matter of law, genuine issues of material fact exist as to who created both the hydrangea and small floral fabric designs. Therefore, plaintiff's motion for summary judgment on the issue of independent creation of these designs is denied.
Plaintiff also claims that it owns the copyrights to the hydrangea and small floral fabric designs and that defendants are infringing its copyrights. Plaintiff offers as Exhibits 27 and 28 in support of its Motion for Summary Judgment copies of what plaintiff alleges are its certificates of registration of copyright for the small floral fabric design. It also submits as Exhibits 39 and 40 what plaintiff alleges are its certificates of registration of copyright for the hydrangea fabric design. Defendants argue that it is unclear whether plaintiff does in fact own the copyrights to these designs because with plaintiff's submission of the above exhibits, plaintiff did not also submit certified copies of the deposit materials that were filed with the Copyright Office when plaintiff applied for the copyright registrations. Therefore, defendants argue that a genuine issue of material fact exists as to what is protected by plaintiff's copyright registrations. Since a genuine issue of material fact exists as to who created the designs, this Court declines to reach the question of whether plaintiff holds the copyrights to the hydrangea and small floral fabric designs.
The Green Dahlia Quilt Design
Both plaintiff's and defendants' motions for summary judgment on the issue of independent creation of the Green Dahlia quilt design are denied because genuine issues of material fact exist as to who created that design. Plaintiff alleges that Howard Yung created the Green Dahlia quilt design using plaintiff's Pastel Puff or Dahlia Puff design that Sarah Lewis had previously created, and rearranged, incorporating plaintiff's hydrangea and small floral fabrics. (Lewis Aff. ¶ 11). Plaintiff alleges that Howard Yung then showed Sarah Lewis his quilt design. (Lewis Aff. ¶ 11). She then made several changes which for the most part consisted of moving the fabric placement in the quilt. (Lewis Aff. ¶ 11-12); (Yung Aff. ¶ 11); (Davaros Aff. ¶ 7). Sarah Lewis thereafter made a new set of production drawings along with a fabric card in order to show fabric placement, which were then sent to the factory via fascimile. (Lewis Aff. ¶ 13). Samples were made by the factory.Id. They were forwarded to plaintiff for approval. Id. Sarah Lewis reviewed them, and the resulting design was referred to as the "Green Dahlia" quilt (Lewis Aff. ¶ 14).
On the other hand, defendants argue that plaintiff did not independently create the Green Dahlia design. Instead, the Green Dahlia quilt design is based on designs created by Sheng Tang Cao, a designer employed by Shanghai Zheng Zhang. Defendants allege that in March 1992, Sheng Tang Cao, designed a quilt identified as N3A0291/2 (hereinafter the "N3A" quilt) which had a dahlia as its center motif and repeating rows of diamonds at its border. (Cao Dep.); (Defendants' S.F. ¶ 4). Defendants submitted copies of design and production drawings of the N3A quilt as Exhibit 1 in support of their Motion for Summary Judgment. Defendants allege that this quilt was sold by Shanghai Zheng Zhang to its customers at least as early as 1995 and was displayed in the company's factory in China. (Defendants' S.F. ¶ 5). As Exhibit 2, defendants submitted a copy of a packing list from Shanghai Zheng Zhang Textile Factory that lists the N3A quilt. Defendants allege that in September 1996, Sheng Tang Cao designed a quilt labeled "1047" which used the design of the N3A quilt, but in a different colorway. (Cao Dep.); (Defendants' S.F. ¶ 6). Defendants submitted copies of design and production drawings of the 1047 quilt as Exhibit 3 in support of their Motion for Summary Judgment. Defendants allege that in October 1997, Sheng Tang Cao designed a quilt referred to as "LI-033," the layout of this quilt being similar to the 1047 quilt design, however using some different fabric designs. (Cao Dep.); (Defendants' S.F. ¶ 7-8). Defendants submitted copies of design and production drawings of the LI-033 quilt as Exhibit 4 in support of their Motion for Summary Judgment. They also allege that Sheng Tang Cao then converted the LI-033 quilt design into a puff quilt design which was labeled "YM-001." (Cao Dep.); (Defendants' S.F. ¶ 9). Defendants submitted copies of production drawings of the YM-001 quilt as Exhibit 5 in support of their Motion for Summary Judgment. Defendants further submitted as Exhibits 6 through 9 copies of fabric and color cards for each of the above-listed quilt designs, and what they allege are dated photographs of the quilts.
This Court finds that, as a matter of law, genuine issues of material fact exist as to who created the Green Dahlia quilt design. Therefore, both plaintiff's and defendants' motion for summary judgment on the issue of independent creation of this design are denied.
Plaintiff also claims that it owns the copyright to the Green Dahlia quilt design and that defendants are infringing its copyright. Plaintiff offers as Exhibit 34 in support of its Motion for Summary Judgment a copy of what plaintiff alleges is its certificate of registration of copyright for the Green Dahlia quilt design. Defendants again argue that it is unclear whether plaintiff does in fact own the copyright to this design because with plaintiff's submission of the above exhibit, plaintiff did not also submit a certified copy of the deposit materials that were filed with the Copyright Office when plaintiff applied for the copyright registration. Therefore, defendants argue that a genuine issue of material fact exists as to what is protected by plaintiff's copyright registration. Since a genuine issue of material fact exists as to who created the Green Dahlia quilt design, this Court declines to reach the question of whether plaintiff holds the copyright to said design.
Defendant's Claim of Laches
Defendants also move for summary judgment of non-infringement with respect to the Green Dahlia quilt design on the grounds that plaintiff's copyright infringement claim is barred by the doctrine of laches. Defendants argue that plaintiff had knowledge as of September 1997 that defendants were manufacturing and selling the Green Dahlia quilt, plaintiff was not diligent in its investigation or prosecution of the alleged infringement, and defendants will be prejudiced if this Court permits plaintiff to assert its alleged rights. Defendants' motion for summary judgment based on their claim of laches is also denied.
Laches "is an equitable defense that bars a plaintiff's . . . claim where he is guilty of unreasonable and inexcusable delay that has resulted in prejudice to the defendant." Eppendorf-Netheler-Hinz GMBH v. National Scientific Supply Co., Inc., et al., 2001 WL 798844, 2 (2d Cir. 2001), citing Ikelionwu v. United States, 150 F.3d 233, 237 (2d Cir. 1998). To prevail on this defense, a defendant must show that "(1) the plaintiff knew of the defendant's misconduct; (2) the plaintiff inexcusably delayed in taking action; and (3) the defendant was prejudiced by the delay." Ikelionwu, 150 F.3d at 237. Further, a party that is asserting a laches defense must show that it is coming before the court with clean hands. See Frankel v. Central Moving Storage Co., 1997 WL 672003 (S.D.N.Y. 1997) ("To prove the equitable defense of laches, defendant must show . . . good faith conduct on the part of the defendant.").
Here, genuine issues of material fact exist as to whether plaintiff knew of defendants' conduct, whether plaintiff inexcusably delayed in taking action, whether defendants were prejudiced by the delay, as well as whether defendants acted in good faith.
Plaintiff alleges that Howard Yung and Dean Davaros visited defendants' New York office and that Howard Yung approached defendant Li and told him "that these . . . designs . . . were owned by Sunham and that he had no right showing Sunham's patterns in his showroom." (Yung Aff. ¶ 21). Plaintiff alleges that Howard Yung "demanded that Mr. Li remove Sunham's design from his showroom," to which defendant Li allegedly responded that he would. Id. Defendants dispute this. (Defendants' Opposition Under Local Rule 56.1(b) to Plaintiff's Statement of Material Facts to Which It Is Contended That There Exists A Genuine Issue to Be Tried and Motion to Exclude Evidence, hereinafter "Defendant's O.P.S.F.," ¶ 69). It is alleged by plaintiff that Howard Yung told defendant Li that if he did not do so, that Howard Yung would proceed with a lawsuit. Id Defendants dispute this. (Defendant's O.P.S.F.," ¶ 69). Plaintiff alleges that after Howard Yung confronted defendant Li, defendant Li told one of his employees, Richard Reiss, to move some of plaintiff's designs into the back of the showroom, but that defendants did not stop offering most of plaintiff's designs for sale. (Reiss Aff. ¶ 6). Defendants again dispute this. (Defendant's O.P.S.F.," ¶ 70). Plaintiff alleges that defendant Zheng Zhang USA had its receptionist remove the copyright insignia from designer products to show as samples to buyers, and that defendant Li was aware of this practice. (Reiss Aff. ¶ 18). Defendants also dispute this. (Defendant's O.P.S.F.," ¶ 83). In September 1997, plaintiff sent defendants a "cease and desist" letter, which plaintiff attached as Exhibit 38 in support of plaintiff's Motion for Summary Judgment. (Yung Aff. ¶ 22).
Defendants allege that in August 1997, when plaintiff's officers visited defendants' showroom and asked whether defendants were displaying quilts that were previously sold by plaintiff, including the Green Dahlia quilt, Howard Yung became personally aware that the Green Dahlia quilt was on display at defendants' showroom at that time. Subsequently, plaintiff became aware that defendants continued to display the quilt in its showroom. (Yung Dep.); (Reiss Dep.); (Davaros Dep.) Plaintiff disputes this. (Plaintiff's Counter Local Civil Rule 56.1 Statement of Facts, hereinafter "Plaintiff's C.S.F., ¶ 14). Defendants allege that in September 1997, plaintiff's attorney forwarded a letter to defendant Zheng Zhang USA claiming that defendant had infringed several of plaintiff's copyrighted designs. (Yung Dep.). In response, defendants requested that plaintiff identify which copyrights plaintiff believed defendant was infringing. (Defendants' S.F. ¶ 16). Plaintiff also disputes this. (Plaintiff's C.S.F., ¶ 16). Defendants allege that no particular quilt designs were identified, "despite the fact that Sunham knew the Green Dahlia quilt was on display at Zheng Zhang USA's showroom." (Defendants' S.F. ¶ 17). Plaintiff disputes this. (Plaintiff's C.S.F., ¶ 17). Concerning the copyrights that defendants allege plaintiff did identify, defendant Zheng Zhang USA sent a letter to plaintiff on October 7, 1997, stating that "the rightful copyright owner . . . is clearly Shanghai Zheng Zhang." (Defendants' S.F. ¶ 18). Plaintiff disputes this. (Plaintiff's C.S.F., ¶ 18). Defendants allege that there was no further communication between plaintiff and defendants regarding this issue until defendant Zheng Zhang USA contacted plaintiff in August 1999. (Defendants' S.F. ¶ 19). Plaintiff disputes this. (Plaintiff's C.S.F., ¶ 19).
Furthermore, as it has yet to be determined whether defendants are indeed infringing plaintiff's designs, it is still at issue whether defendants' have been acting in good faith and with "clean hands."
This Court finds that, as a matter of law, genuine issues of material fact exist as to whether plaintiff knew of defendants' conduct, whether plaintiff inexcusably delayed in taking action, whether defendants were prejudiced by the delay, as well as whether defendants acted in good faith. Therefore, defendants' motion for summary judgment on the basis that plaintiff's claim of copyright infringement is barred by the doctrine of laches is denied.
CONCLUSION
For the foregoing reasons, both plaintiff's and defendants' motions for summary judgment are DENIED.
SO ORDERED