Tuesday, January 10, 2012, 11:25 AM

Don't Forget The Unfair and Deceptive Trade Practices Claim

In a straight forward copyright infringement case the plaintiff cannot usually also assert a claim under North Carolina Gen. Stat. 75-1.1 because the claim is preempted by federal copyright law.  See, e.g., Iconbazaar, L.L.C. v. Am. Online, Inc., 308 F. Supp. 2d 630, 636-37 (M.D.N.C. 2004); Vogel v. Wolters Kluwer Health, Inc., 630 F. Supp. 2d 585, 593 (M.D.N.C. 2008).  For a state unfair competition claim to survive, it must usually be based on conduct not related to the allegations of copyright infringement, for example, fraud.  However, when the tables are turned and the lawsuit is a declaratory judgment ("DJ") action, then the claim is likely appropriate.

Take for example the recently filed case of Culp, Inc. v. Design Legacy by Kelly O'Neal, Case No. 1:12-cv-22 (M.D.N.C. Jan. 5, 2012).  It its complaint, Culp accuses Design Legacy of threatening copyright litigation over Culp's alleged infringement of a Design Legacy copyright protected design.  The complaint alleges Design Legacy accused Culp's "Birdsong" fabric pattern of infringing the copyright in Design Legacy's "Blue Heron" design, which is the subject of a pending copyright application.  Culp filed a DJ action seeking a declaratory judgment its Birdsong fabric did not infringe any of Design Legacy's copyrights.  Culp also lodged a claim for unfair and deceptive trade pratices under North Carolina Gen. Stat. 75-1.1, et seq.  Because Culp is not bringing an infringement claim, and the conduct Culp complains of consists of Design Legacy's threats to Culp's business, there is a good chance the unfair competition claim would survive a motion to dismiss based on federal preemption.

What's the benefit of such a claim?  The statutory cause of action provides for possible treble damages and attorneys' fees should Culp be successful.  It is a powerful weapon to wield in the face of copyright infringement claims.


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