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Blue Nile Inc. v. and Odimo, Inc.

478 F.Supp.2d 1240, No. C06-1002RSL (W.D. Wash., Jan. 18, 2007)

Blue Nile Allowed To Pursue Trade Dress Infringment Claims Arising Out Of Alleged Copying Of Web Site Look And Feel

Court allows plaintiff Blue Nile to proceed with trade dress infringement claims against direct competitors arising out of their alleged creation of a web site that copied the "look and feel" of plaintiff Blue Nile's web site.  The Court denied defendants' motion to dismiss the trade dress claim, which motion was grounded on defendants' assertion that it was preempted by Copyright Act.  The Court held it could not resolve the preemption issue at the outset of the litigation given the limited factual record developed to date.  It also rested its decision on the precept that claims raising novel issues should not be resolved on motions to dismiss, without the benefit of a development of a complete factual record.

The Court did dismiss so much of plaintiff's complaint that alleged that defendants had violated the Washington Consumer Protection Act, and asserted claims for unfair competition, unjust enrichment and restitution.  These claims were all grounded on defendants' alleged copying of copyrighted elements of plaintiff's web site, and were thus preempted by the Copyright Act.  Notably, this copying formed the basis of copyright infringement claims that were also asserted in the complaint, and were not the subject of the instant motion.

Trade Dress Look and Feel Claim Not Preempted By Copyright Act

Plaintiff and defendant Inc. are director competitors, each of which sells diamonds and fine jewelry to the public over the Internet.  Plaintiff sells its jewelry at three web sites, including the web site it operates at the domain also sells its jewelry over the internet at a web site it operates at the domain  Defendant Odimo was a former owner and operator of the web site.

Plaintiff commenced this action, claiming defendants had copied portions of plaintiff's web site during the creation of their own.  Plaintiff asserted copyright infringement claims arising out of the alleged copying by defendants of portions of plaintiff's web site protected by copyright.

Blue Nile also asserted that defendants copied the "look and feel" of plaintiff's web site and were accordingly guilty of trade dress infringement in violation of the Lanham Act.  Plaintiff's complaint also asserted claims for unjust enrichment and unfair competition, as wells as claims that defendants violated the Washington Consumer Protection Act ("CPA").

Defendants moved to dismiss plaintiff's Lanham Act claim, arguing it was preempted by the Copyright Act.  According to the Court, "courts [have] limit[ed the] application of the Lanham Act in areas traditionally occupied by copyright, or where the copyright laws 'provide an adequate remedy.'"  The Court, at this stage of the proceeding, denied defendants' motion.  Based on the factual record before it, the Court held it could not determine if the Copyright Act provided a sufficient remedy for the alleged wrong at issue - namely copying the "look and feel" of plaintiff's website.  In reaching this conclusion, the Court noted that "the Copyright Office … [has] commented that copyright protection may not cover the overall format, or the look and feel, of a web site."  Cited in support of this proposition was Darden v. Peters, 402 F. Supp. 2d 638, 644 (E.D.N.C. 2005) where the Court upheld the Copyright Office's denial of copyright registration for a web site.  In reaching this result, the Darden court quoted the copyright examiner's determination that "protection for the overall format of a web page is inconsistent with copyrightability."  The court held that there was inadequate factual development to permit it to resolve the preemption question at this time, and accordingly denied defendants' motion to dismiss the trade dress claim.

The Court also grounded its decision on the novel nature of the question presented, namely whether the Lanham Act affords protection for the "look and feel" of a web site.  The Court noted that only two unpublished district court decisions were cited by plaintiff in support of its contention that such protection was available under the Lanham Act - Peri Hall & Assoc. Inc. v. Elliot Inst. for Soc. Sci. Research, 2006 U.S. Dist. Lexis 26234 (W.D.Mo., Mar. 20, 2006) and Faegre & Benson LLP v. Purdy, 2004 U.S. Dist. Lexis 896 (D. Minn., Jan. 5, 2004).  Novel claims should not be resolved on motions to dismiss without the benefit of a developed factual record.

State Law Claims For Unjust Enrichment And Unfair Competition Held Preempted By Copyright Act

The Court did grant so much of defendants' motion which sought dismissal of plaintiff's Washington Consumer Protection Act, unjust enrichment and unfair competition claims, on the grounds that they were preempted by the Copyright Act.  Section 301(a) of the Copyright Act preempts certain state law claims.  According to the Court "a claim is preempted if: (1) the work at issue comes within the subject matter of copyright as described in 17 U.S.C. Sections 102 and 103; and (2) the rights granted under the state law are equivalent to the rights contained in 17 U.S.C. section 106."  In determining this later question, state law claims are preempted unless they provide an "extra element" beyond that necessary to establish protection under the Copyright Act.  Importantly, this "extra element must transform the nature of the action."

The Court held that each of the state law claims at issue were preempted by the Copyright Act.  The gravamen of each of these claims was the alleged copying by defendants of portions of plaintiff's web site protected by copyright.  Indeed, each of these claims, as alleged in Blue Nile's complaint, repeated and incorporated by reference the allegations that formed the basis of the copyright infringement claims advanced elsewhere in that pleading.  While certain of these claims required the plaintiff to establish additional elements - such as the deception, misrepresentation and public impact necessary to sustain a Washington Consumer Protection Act claim - they did not change the underlying nature of the claim itself, which still sought redress for the impermissible copying of plaintiff's web site.  As stated by the Court "plaintiff's CPA claim is preempted because it incorporates the copyright claims by reference and is therefore based on rights equivalent to those protected by copyright."

In reaching this result, the Court rejected plaintiff's argument that such claims should survive dismissal because they were premised, in part, on the copying of the "look and feel" of plaintiff's web site, for which the Copyright Act afforded no remedy.  The proper question for preemption purposes, held the Court, is not whether the Copyright Act itself provides protection, but whether the subject of plaintiff's claim - here the "look and feel" of its web site - falls within those subjects addressed by the Copyright Act.  A claim based on a work not protected by the Copyright Act may still be preempted by the Act, held the Court.  As plaintiff's "look and feel" claim fell within the subject matter of the Copyright Act, state law claims that sought to protect copying of the "look and feel" of Blue Nile's site would be subject to preemption where such state law claims sought to protect "equivalent rights" to those governed by the Copyright Act.  Said the court: "for the limited purpose of preemption analysis under Section 301, the Court concludes that the "look and feel" of plaintiff's website is within the subject matter of copyright."

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