Opinion
Case No. CV 01-01019 MMM (SHx)
April 9, 2001
ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
Plaintiff Gable-Leigh, Inc. seeks entry of a preliminary injunction against defendants North American Miss (a/k/a BB Productions) and Dorris "Dottie" Bevis. Gable-Leigh asserts that it will likely be able to prove that defendants have infringed its copyrights, misappropriated its trade secrets, and engaged in unfair competition. Gable-Leigh contends that, unless defendants are enjoined, it will suffer irreparable harm before the action is tried on the merits. Defendants counter that Gable-Leigh has not proven a likelihood of success on the merits or irreparable injury, and thus is not entitled to preliminary relief.
I. FACTUAL BACKGROUND
Kimberly Smith, the founder and president of Gable-Leigh, has been involved in the organization and operation of beauty pageants for approximately twenty years, first as a competitor and later as a pageant developer and administrator. Smith's family launched the "Miss Junior America" pageant in 1982. Upon graduation from college, Smith moved to Los Angeles to develop the pageant's west coast program. In 1991, Smith hired defendant Dorris "Dottie" Bevis, whom she had known since 1987, to assist her with this project. Ultimately, Bevis became Gable-Leigh's office manager, responsible, among other things, for contacting prospective contestants, distributing pageant materials to them, answering and returning their phone calls, and managing the sales and clerical staff. After two years in development, the first "Miss Junior America, West Coast" pageant ("Miss Junior America Pageant") was held in August 1992. Thereafter, the pageant was held annually in late July or early August.
Kimberly Smith has also used the names Kimberly Day, Kimberly Cohen, and Kimberly Collins.
See Declaration of Kimberly Smith in Support of Plaintiff's Motion for Preliminary Injunction ("Smith Decl."), ¶¶ 1-2.
See id., ¶¶ 2-3.
See id., ¶ 5; Declaration of Dorris Bevis in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("D. Bevis Decl."), ¶ 2.
Gable-Leigh, Inc. was not incorporated until 1994, and some of the events leading to this lawsuit thus involved a predecessor of the company. (See Smith Decl., ¶ 3:21-22.) For ease of discussion, however, the court uses the name Gable-Leigh to refer to both entities.
See Smith Decl., ¶ 5; D. Bevis Decl., ¶ 3.
See Smith Decl., ¶ 3:19-20.
In advance of the pageant each year, Gable-Leigh distributed a solicitation letter, an application form, and a handbook explaining the pageant process to potential contestants. Smith was the author of these materials, and applied to the United States Copyright Office for a copyright registration in them in December 1995 ("the 1995 Materials"). Smith's application stated that she was the author of the material and the copyright claimant. It also indicated that the material was not a "work made for hire." On January 5, 1996, the Copyright Office issued Copyright Certificate No. TX4-197-325 in Smith's favor.
See id., Ex. 1.
See id., Ex. 1, at 27-28.
See id.
More recently, on January 22, 2001, Smith sent a second application to the Copyright Office, seeking to register new and/or revised materials she had authored in connection with the West Coast Pageant ("the 2001 Materials"). While Gable-Leigh has submitted copies of the materials deposited, the overnight mail receipt, and its check endorsed by the Register of Copyrights, it has not produced a copy of the copyright application, as Smith failed to keep a copy for her records.
See id., Exs. 2, 3.
See id.; Declaration of Kimberly Smith in Further Support of Plaintiff's Motion for Preliminary Injunction ("Supp. Smith Decl."), ¶ 4.
Over the years, Gable-Leigh has expended considerable money and effort attracting potential contestants — i.e., customers — to the West Coast Pageant. As an initial matter, Gable-Leigh purchased the names of 475,000 girls from American Student Listing Company. It then spent approximately $223,000 to distribute pageant materials to those on the list. As a result of this mailing, Gable-Leigh was able to narrow the list to 9,000 names, which for the most part included those who had applied to be contestants in the West Coast Pageant. Smith contends that the 9,000-name list was kept on her home computer, and that the only people who had access to it were Dottie Bevis, Dottie's daughter and Gable-Leigh employee, Lackey Bevis, and a third employee, Lisa Griffiths.
See id., ¶¶ 6.
See id.
See id.
See id.
See id., ¶ 7.
Gable-Leigh's final customer list identified the 900 girls who were contestants in the 2000 Miss Junior America Pageant. This list was kept in what the parties call the "White Book." The White Book, which is a simple three-ring binder, contained a wide variety of information regarding these 900 customers, including their names, phone numbers, addresses, and a schedule of the payments they had made to Gable-Leigh. The parties dispute whether the contents of the White Book were maintained in confidence. Smith alleges that Dottie and Lackey Bevis were the only individuals who had access to the White Book, and that she directed them to keep its contents confidential. Several former Gable-Leigh employees, however, have submitted declarations stating that the White Book was accessible to, and used by, all employees. They assert that they were never told by Smith or anyone else that the White Book was a trade secret, or that its contents should be maintained confidentially.
See id., ¶ 6.
See id., ¶ 7; Declaration of Lackey Bevis in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("L. Bevis Decl."), ¶ 5; Declaration of Lisa Griffiths in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("Griffiths Decl."), ¶ 3; Declaration of Telita Perry in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("Perry Decl."), ¶ 3; Declaration of Christina Woods in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("Woods Decl."), ¶ 4; Declaration of Michele Witman in Support of Defendants' Opposition to Plaintiff's Motion for Preliminary Injunction ("Witman Decl."), ¶ 3.
See Smith Decl., ¶ 7.
See Supp. Smith Decl., ¶ 16.
See D. Bevis Decl., ¶ 6; L. Bevis Decl., ¶ 5; Griffiths Decl., ¶ 4; Perry Decl., ¶ 3; Woods Decl., ¶ 4; Witman Decl., ¶ 3.
See D. Bevis Decl., ¶ 6; L. Bevis Decl., ¶ 5; Griffiths Decl., ¶ 3; Perry Decl., ¶ 4; Woods Decl., ¶ 4; Witman Decl., ¶ 3.
In April or May 2000, Smith informed Dottie Bevis that she intended to close Gable-Leigh's Los Angeles office after the pageant in August and move to Atlanta, Georgia. Smith asserts she "specifically told Ms. Bevis that while the Los Angeles office would be shut down, Gable-Leigh would continue to operate the Miss Junior America pageant from Atlanta." Bevis counters that Smith made no such statement, and that she believed Smith intended to abandon the West Coast Pageant once she moved. After the August 2000 pageant, Gable-Leigh's Los Angeles office was closed, all of the employees were terminated, and Smith left for Atlanta. At this point, Bevis was unsure of her future plans, but purportedly told Smith she would not continue to work in the pageant business.
See Smith Decl., ¶ 8; D. Bevis Decl., ¶ 7.
Smith Decl., ¶ 8.
See D. Bevis Decl., ¶ 10.
See id., ¶ 9.
See Smith Decl., ¶ 8; D. Bevis Decl., ¶ 10.
Whatever she may have said, Bevis decided to launch a new pageant called "North American Miss" shortly after Smith's departure. To attract contestants, Bevis allegedly contacted a marketing company, and gave it demographic information so it could locate girls in the appropriate age groups. Bevis also paid the company to send mailings about her pageant — i.e., a solicitation letter and pageant application — to the families of 50,000 of the girls identified. In addition, she "looked through [her] address book, post-its and other papers," found approximately seventy-two names of customers with whom she had dealt at Gable-Leigh, and sent materials to them as well. Approximately 1,500 girls responded to Bevis' mailing. Each was sent a North American Miss brochure, which describes the format of the pageant and indicates that it will be held from July 26 through July 29, 2001.
See D. Bevis Decl., ¶ 11.
See id., ¶ 12.
See id., Ex. A.
See id.
See id., ¶ 13.
See id., Ex. B.
Smith learned of Bevis' launch of North American Miss and her solicitation of contestants for the 2001 pageant within the past few months. Several Gable-Leigh contestants informed Smith that they had received materials from North American Miss that were similar to those distributed by Miss Junior America. The contestants told Smith they were confused as to whether Miss Junior America had changed its name or was affiliated with North American Miss.
See Smith Decl., ¶ 9.
See id., ¶ 10 and Ex. 5.
On February 2, 2001, Gable-Leigh filed this suit against North American Miss and Doris "Dottie" Bevis, asserting claims for copyright infringement, misappropriation of trade secrets, and unfair competition. Gable-Leigh contends that the solicitation letter, application, and brochure distributed by North American Miss infringe plaintiffs copyright, and also that defendants misappropriated its trade secrets and/or engaged in unfair competition by utilizing its customer list.
On March 5, 2001, Gable-Leigh filed a motion for preliminary injunction, asserting it will suffer irreparable harm if the court does not enjoin defendants from using the copyrighted materials and customer lists. While Bevis states that she does not intend to distribute the 2001 North American Miss brochure in the future, she will have to restructure her pageant and find new contestants if the court prohibits all use of the brochure. This, she asserts, will cause her to lose approximately $200,000. Bevis also claims that Gable-Leigh's customer list is not proprietary or confidential, and thus not protectable as a trade secret. Additionally, she asserts it was appropriate for her to contact customers with whom she had a personal relationship.
See D. Bevis Decl., ¶ 16.
II. DISCUSSION
A. Standard Governing Preliminary Injunctive Relief
In deciding whether to issue a preliminary injunction, the court must consider (1) the likelihood that the moving party will succeed on the merits; (2) the possibility it will suffer irreparable injury if relief is not granted; (3) the extent to which the balance of hardships tips in favor of one party or the other; and in certain cases (4) whether the public interest will be advanced by granting preliminary relief. See Miller v. California Pacific Med. Ctr., 19 F.3d 449, 456 (9th Cir. 1994). The court may issue an injunction if the moving party establishes either (1) a combination of probable success on the merits and the possibility of irreparable harm or (2) the existence of serious questions going to the merits, a demonstration that there is at least a fair chance the movant will prevail, and a balance of hardships that tips sharply in the movant's favor. See id. "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Id.
B. Copyright Infringement
"Copyright law protects an author's expression; facts and ideas within a work are not protected." Shaw v. Lindheim, 919 F.2d 1353, 1356 (9th Cir. 1990). See also Sid Marty Krofft Television Productions v. McDonald's Corp., 562 F.2d 1157, 1163 (9th Cir. 1977) ("It is an axiom of copyright law that the protection granted to a copyrighted work extends only to the particular expression of the idea and never to the idea itself").
To prevail on a copyright infringement claim, a plaintiff must show (1) ownership of a valid copyright and (2) copying of the original elements of the protected work. See Feist Publications v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991); Kouf v. Walt Disney Pictures Television, 16 F.3d 1042, 1043, n. 2 (9th Cir. 1994). To prove copying, plaintiff must show that defendants had access to the copyrighted work and that there is a substantial similarity between it and defendants' work. See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1472 (9th Cir. 1992); Chase-Riboud v. Dreamworks, Inc., 987 F. Supp. 1222, 1224 (C.D. Cal. 1997).
1. Jurisdiction Under 17 U.S.C. § 411
Before considering the likelihood that Gable-Leigh will succeed in proving the merits of its copyright infringement claim, the court must determine whether it has subject matter jurisdiction over the claim. Section 411 of the Copyright Act of 1976 provides that "no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title." 17 U.S.C. § 411 (a). See Globe Int'l, Inc. v. National Enquirer, Inc., No. 98-10613 CAS (MANx), 1999 WL 727232, * 2 (C.D. Cal. Jan. 25, 1999) ("copyright registration is a jurisdictional prerequisite to instituting an action alleging infringement"); Dielsi v. Falk, 916 F. Supp. 985, 994 (C.D. Cal. 1996) ("Plaintiff's failure to plead that he has applied for a copyright registration deprives this court of subject matter jurisdiction over his copyright claim"); Conan Properties v. Mattel, 601 F. Supp. 1179, 1182 (S.D.N.Y. 1984) ("In order to proceed in its copyright infringement action, plaintiff is required to comply with the statutory requirement that all copyrights be registered").
Gable-Leigh alleges it is the owner of a copyright in the 1995 and 2001 Materials. Defendants contend that Gable-Leigh has failed to satisfy § 411's jurisdictional requirements as respects the 2001 Materials because it has not submitted a copyright registration certificate with its motion for preliminary injunction. As noted earlier, Smith neglected to keep a copy of the application she mailed to the Copyright Office on January 22, 2001, and thus is unable to proffer the document for review by the court. The "registration requirement" set forth in § 411, however, may be satisfied by adducing evidence that plaintiff has deposited the work in question and paid the registration fee, and that the Copyright Office has received plaintiff's application. See Apple Barrel Productions v. R.D. Beard. 730 F.2d 384, 386 (5th Cir. 1984) ("In order to bring suit for copyright infringement, it is not necessary to prove possession of a registration certificate. One need only prove payment of the required fee, deposit of the work in question, and receipt by the Copyright Office of a registration application"); Dielsi, supra, 916 F. Supp. at 994, n. 6. Evidence that the Copyright Office received the materials satisfies the "jurisdictional requirement," whether or not the application is accepted or rejected, and whether or not its submission precedes or follows the alleged infringement. See Dielsi, supra, 916 F. Supp. at 994, n. 6. Gable-Leigh has provided copies of the materials deposited, the overnight mail receipt, and the check for the registration fee endorsed by the Register of Copyrights. In addition, Smith was advised that the Copyright Office received her copyright registration on January 23, 2001. Based on this evidence, the court finds that Gable-Leigh has satisfied the requirement set forth in § 411 that registration be effected prior to initiation of an infringement action.
See Defendants' Opposition to Motion for Preliminary Injunction ("Defs.' Opp.") at 14-15.
See Supp. Smith Decl., ¶ 4.
See Smith Decl, Exs. 2, 3; Supp. Smith Decl., Ex. 2.
See Smith Decl., ¶ 4.
2. Gable-Leigh's Ownership of A Valid Copyright
The first element of Gable-Leigh's proof is demonstration that it owns a valid copyright in the 1995 and 2001 Materials. See Feist, supra, 499 U.S. at 361. A copyright registration certificate is prima facie evidence of copyright ownership. See 17 U.S.C. § 410 (c) ("In any judicial proceedings the certificate of a registration made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate"). See also Micro Star v. Formagen, Inc., 1998 WL 598544, * 2 (9th Cir. Sept. 11, 1998) (stating that proof of copyright registration creates a presumption of ownership). Gable-Leigh has presented a copy of a certificate of registration covering the 1995 Materials, and, as discussed above, has shown that it filed an application for such a certificate on the 2001 Materials.
Defendants maintain that this proof does not suffice, as Gable-Leigh is not identified as the author or copyright owner on the applications. Rather, Smith is listed as the author, and defendants contend there is no evidence that she transferred or assigned her rights in the works to Gable-Leigh. Additionally, defendants note, in her application for registration of the 1995 Materials, Smith specifically stated that they were not a "work made for hire." Finally, defendants assert, Gable-Leigh cannot prove it owns a copyright in the 2001 Materials without submitting a copy of an actual registration certificate.
See Defs.' Opp. at 15:7-12.
See id. at 16:7-8. See also Smith Decl., Ex. 1, at 27-28.
See Defs.' Opp. at 16:9-10.
As respects the 2001 Materials, Gable-Leigh is not entitled to the presumption set forth in § 410(c), as neither it nor Smith has yet obtained a registration certification. See Marshall Swift v. BS A Software, 871 F. Supp. 952, 957 (W.D. Mich. 1994) (application for copyright registration does not entitle work to the presumption of validity afforded works accepted for registration). See also Itar-Tass Russian News Agency v. Russian Kurier, Inc., 886 F. Supp. 1120, 1125 (S.D.N.Y. 1995) (noting, but not deciding, defendants' argument that "the registration forms offered by the plaintiffs do not entitle the plaintiffs to the same presumption of validity as is afforded by an actual certificate of copyright registration"). Cf. Apple Barrel, supra, 730 F.2d at 386-88 (in case where plaintiff proved payment of the required fee, deposit of the work in question, and receipt by the Copyright Office of a registration application, court considered whether plaintiff had proffered sufficient evidence of originality, copyrightability, and compliance with applicable statutory formalities).
Thus, the court must examine whether Gable-Leigh has adduced sufficient evidence of originality, copyrightability and compliance with the statutory formalities to demonstrate that it is likely to succeed in proving ownership of a copyright in the 2001 Materials. Montgomery v. Noga, 168 F.3d 1282, 1289 (11th Cir. 1999) (plaintiff must show that the work is original and that the applicable statutory formalities have been followed); Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1541 (11th Cir. 1996) (same); Gemel Precision Tool, Co., Inc. v. Pharma Tool Corp., 1995 WL 71243, * 2 (E.D. Pa. February 13, 1995). To demonstrate originality, a plaintiff must show that the work is "the product of independent creation" and that the author "contribute[d] more than a trivial variation of a previous work." L. Batlin Son, Inc. v. Snyder, 536 F.2d 486, 489-90 (2d Cir.), cert. denied, 429 U.S. 857 (1976).
The court concludes that Gable-Leigh will likely be able to prove ownership of a valid copyright in the 2001 Materials. First, the pageant materials — the application letter and handbook — are copyrightable under 17 U.S.C. § 102. See, e.g., CMM Cable Rep., Inc. v. Ocean Coast Properties, Inc., 888 F. Supp. 192, 197 (D. Me. 1995) (brochure for radio station's promotional contest was copyrightable), aff'd., 97 F.3d 1504 (1st Cir. 1996). See also Edmark Industries SDN. BHD. v. South Asia International (H.K.) Ltd., 89 F. Supp.2d 840, 844 (E.D. Tex. 2000) (noting that the Copyright Office had issued registration certificates for food slicer brochures). Second, it appears that Smith and/or Gable-Leigh have satisfied the statutory formalities by placing a notice of copyright on each of the works and submitting an application for registration to the Copyright Office. See Norma Ribbon Trimming, Inc. v. Little, 51 F.3d 45, 48 (5th Cir. 1995) (equating statutory formalities with the copyright notice requirement); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir. 1983) (noting that the statutory formalities include registration, notice and deposit). Finally, Smith declares that she prepared the materials. There is no evidence that she copied any portion of the application letter or handbook from another source or that they were not her independent creation. See Feist, supra, 499 U.S. at 345 ("Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. . . . To be sure, the requisite level of creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade quite easily, as they possess some creative spark, `no matter how crude, humble or obvious' it might be"). Consequently, and in the absence of contrary evidence, the court concludes that Gable-Leigh will likely be able to show it is the owner of a valid copyright in the 2001 Materials.
See Smith Decl., ¶ 4, Ex. 2. In fact, because the 2001 Materials are subject to the standards established by the Berne Convention of 1989, notice and registration are no longer required as a condition to copyright protection. See Transwestern Publishing Co. v. Multimedia Marketing Assoc., Inc., 133 F.3d 773, 782 (10th Cir. 1998); NIMMER ON COPYRIGHT, §§ 7.01, 7.16 (2000).
See Supp. Smith Decl., ¶ 5.
As respects defendants' argument that any copyrights belong to Smith rather than Gable-Leigh, those parties have, since the date defendants filed their opposition, executed an agreement pursuant to which Smith has assigned all rights she may have in the 1995 and 2001 Materials to Gable-Leigh. Even without this agreement, however, Gable-Leigh would be able to establish that it owns any copyrights in works authored by Smith. Despite Smith's representation on the 1995 application, it is undisputed that she created the works while acting within the scope of her employment at Gable-Leigh. For this reason, the copyright in both the 1995 and 2001 Materials belongs to Gable-Leigh. See Real Estate Data, Inc. v. Sidwell Co., 907 F.2d 770, 771 (7th Cir. 1990) ("[U]nder the work for hire doctrine . . . the County, as the employer of Sidwell, was presumed to be the owner of the copyright with the burden on Sidwell to demonstrate a contrary intention"); Community for Creative Non-Violence v. Reid, 846 F.2d 1485, 1492 (D.C. Cir. 1988) ("If the work was in the scope of employment . . . the employer is the `author'").
See Supp. Smith Decl., Ex. 3.
The Ninth Circuit has held that "inadvertent mistakes on registration certificates do not invalidate a copyright and thus do not bar infringement actions, unless the alleged infringer has relied to its detriment on the mistake, or the claimant intended to defraud the Copyright Office by making the misstatement." Urantia Foundation v. Maaherra, 114 F.3d 955, 963 (9th Cir. 1997). See also Banctraining Video Sys. v. First Am. Corp., No. 91-5340, 1992 WL 42345, * 5, n. 3 (6th Cir. Mar. 3, 1992) (stating agreement with the holding in Frost Belt Intern. v. Cold Chillin' Records, 758 F. Supp. 131, 137 (S.D.N.Y. 1990), that "checking `no' on the registration certificate indicating that work was not made for hire did not dictate that the work was not made for hire").
See Supp. Smith Decl., ¶ 5:20-22 ("I was the President and sole shareholder of Gable-Leigh, and was acting in the course and scope of my employment in preparing the materials and in obtaining the registration").
2. Defendants' Copying of Plaintiff's Works
The second element of a copyright infringement claim is proof that defendant "copied plaintiff's copyrighted work." Because direct evidence of copying is generally not available, a plaintiff can establish copying by showing that defendant had access to the work and that the parties' works are substantially similar. See Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir. 1996); Kouf v. Walt Disney Pictures Television, 16 F.3d 1042, 1044, n. 2 (9th Cir. 1994); Berkla v. Corel Corp., 66 F. Supp.2d 1129, 1140 (E.D. Cal. 1999).
Access is established when "plaintiff shows that the defendant had an opportunity to view or to copy the plaintiffs work." Meta-Film Associates v. MCA, 586 F. Supp. 1346, 1355 (C.D. Cal. 1984) (citation omitted). A plaintiff must demonstrate that there is more than a "bare possibility" that defendant had access to the work. Rather, a "reasonable possibility" must be established. See id. In this case, it is clear that defendant Bevis had access to plaintiff's copyrighted materials. She worked for Gable-Leigh for almost ten years, and, by her own admission, "was in charge of re-printing the Miss Junior America materials to be distributed to the contestants." Thus, the only question is whether Gable-Leigh is likely to establish that the pageant materials distributed by North American Miss are substantially similar to the 1995 and/or 2001 Materials.
D. Bevis Decl., ¶ 3:2-4.
Substantial similarity "refers to similarity of expression, not merely similarity of ideas or concepts." Chase-Riboud, supra, 987 F. Supp. at 1225. To determine whether works are substantially similar, the Ninth Circuit uses both an extrinsic and an intrinsic test.
a. Extrinsic Test
"The extrinsic test considers whether two works share a similarity of ideas and expression based on external, objective criteria. Analytical dissection of a work and expert testimony are appropriate to the extrinsic test." Smith, supra, 84 F.3d at 1218 (internal quotations omitted). In conducting the extrinsic test, a court must compare the individual features of the works to find specific similarities between them. See Shaw, supra, 919 F.2d at 1362. Courts require less proof of similarity when, as here, a high degree of access is shown. Smith, supra, 84 F.3d at 1218.
Gable-Leigh contends that a comparison of its pageant materials and those distributed by North American Miss demonstrates that the two works are substantially similar, and that defendants copied its copyrighted materials. The court has compared the individual features of the works, and finds numerous similarities between the two. Focusing particularly on Gable-Leigh's 2000 handbook and North American Miss's 2001 handbook, the court notes that, among others, defendants' handbook mimics plaintiff's in the following ways:
See Plaintiff's Memorandum of Points and Authorities in Support of Motion for Preliminary Injunction ("Pl.'s Mem.") at 10-12.
(1) Congratulations Page
The first page of both handbooks is titled "Congratulations." The first sentence in Gable-Leigh's handbook states: "We are pleased to announce that you have been selected as a state finalist in the 2000-2001 MISS JUNIOR AMERICA NATIONAL FINALS." The corresponding sentence in defendants' handbook states: "We are pleased to announce that you have been selected as a state finalist for the North American Miss National Finals scheduled for July 26-29th in Southern California." Both parties' "Congratulations" page emphasizes that the pageant is not a beauty pageant. In addition, both pages are signed by the respective directors of the pageant (i.e., Smith and Bevis) and include a picture of the pageant staff.
See Plaintiff's Notice of Lodging of Original Exhibits in Further Support of Motion for Preliminary Injunction ("Notice of Lodging") at 3, 15.
Id. at 3.
Id. at 15.
See id. at 3, 15.
See id.
(2) Breakdown of Competition Page
Page 2 of defendants' handbook, titled "Breakdown of State National Competition," is quite similar to page 10 of plaintiff's handbook, which is captioned "Breakdown of Competition." Plaintiff's Breakdown of Competition Page states:STATE COMPETITION (See schedule on back of handbook for event dates and times)
I. PERSONAL INTERVIEW COMPETITION (backstage with the judges)
A. Style of dress: Any appropriate outfit of your choice (dress or skirt and blouse)
B. Judging Criteria: Personality, Poise and Communication Skills
II. CASUALWEAR COMPETITION
A. Style of dress: outfit of your choice. Any form of clothing you desire. Style should be appropriate to your personality . . . Anything goes! Bright colors and accessories are always a hit!
B. Judging Criteria: Sense of unique style, stage presence, personality.
III. GOWN COMPETITION
A. Style of dress: Any style party dress . . . any length!
B. Judging Criteria: Communication Skills, content of speech, poise.
In comparison, defendants' Breakdown of Competition Page is set forth in the following manner:
— STATE COMPETITION — (Schedule on Front Cover)
1) PERSONAL INTERVIEW (Backstage with judges — Friday)
A. Wardrobe: Dress, suit or skirt and blouse.
B. Judging Criteria: Poise, Personality and Communication Skills
2) CASUALWEAR (On Stage Saturday)
A. Wardrobe: Outfit of your choice to suit your lifestyle and activities.
B. Judging Criteria: Personality, Stage Presence and Sense of Style
3) GOWN
A. Wardrobe: Evening or party dress, any length.
B. Judging Criteria: Poise, Communication Skills and Content of Speech
In addition, both Breakdown of Competition pages state that, after these events have been completed, scores will be tabulated to determine which contestants will continue to the next phase of the pageant.
See id.
(3) Competition Requirements/Categories Page
While page 8 of Gable-Leigh's handbook is captioned "Competition Requirements," and page 3 of North American's handbook is called "State Competition Categories," the content of the pages is strikingly similar. For instance, the opening paragraphs state respectively:Miss Junior America:
"This event will be one of the best memories of your life. Each of you should feel relaxed and prepared in each phase of the competition. The three categories listed below will each count towards 1/3 of your final State competition score."
North American Miss:
"The North American Miss Finals will be an unforgettable and exciting experience. Contestants can be more confident and relaxed by preparing for the three categories listed below which each count for 1/3 of the State Final Competition score."
Defendants utilize the same three categories as plaintiff — interview, casualwear, and gown — and the descriptions of the categories set forth in their handbook is almost identical to that found in Gable-Leigh's. This is exemplified by comparing the parties' descriptions of the "Interview" category:
Miss Junior Miss:
"INTERVIEW: You will be seated in front of a panel of judges and asked to give a 15 second speech about yourself. At the conclusion, these same judges will begin their questions. The judges will assess your general ability to express yourself and your personality. Speak clearly and effectively. The one minute interview will begin when the contestant sits down. Immediately start your 15 second speech about yourself. After your speech, the judges will begin asking questions on a rotation basis. The questions will derive from topics introduced by you in your speech."
Id. at 10.
North American Miss
"INTERVIEW: Contestants will be escorted into a conference room (10 at a time) and seated individually in front of a panel of judges. Each will be asked to give a second speech about herself and the judges will then ask questions based on the topics in her speech. Girls will be judged on their general ability to express themselves and their personalities. Speak clearly, look them in the eye and SMILE! Each contestant will be limited to one minute total."
Id. at 17.
(4) Wardrobe Requirements
Finally, defendants' wardrobe requirements as explained in its pageant handout are remarkably similar to Gable-Leigh's:Miss Junior America:
"All of these outfits are probably already in your closet. Your outfits can be creative, not expensive. You are not being judged on the outfit you are wearing, rather you are being judged on what you say, how you say it and how you present yourself.
INTERVIEW: Our only request is no slacks. First impressions are very important and your interview will be the first time the judges see you. Your speech is only 15 seconds and your interview lasts for a total of one minute.
CASUALWEAR: The outfit can be anything that expresses your personality from high fashion to sporty. Anything goes! Coordinated accessories are always a hit (hats, jewelry, purses). You will need a 15 second speech describing your outfit, why you chose it, and/or how it represents your personality.
GOWN: The gown you choose should accentuate your best features. It may be any length. Keep in mind your competing age group. You want to look your age. Your dress need not be expensive. Rather, you are being judged on your speech and how you present yourself on stage. You will speak for 15 seconds on a topic of your choice."
Id. at 10.
North American Miss
"Most of you have these outfits already in your closet. They should be flattering to you, age-appropriate and make you feel confident. You are not being judged on teh outfits you war but what you say, how you say it and how you present yourself.
INTERVIEW: A dress, suit or skirt and blouse. No slacks please. This is your very important first impression with the judges.
CASUALWEAR: Any outfit that expresses your personality or illustrates the activities you enjoy. Be creative, accessorize and have fun!
GOWN: Your gown should accentuate your best features, be age appropriate and any length.
Keep in mind you'll need to be able to walk across the stage, up and down steps and sit in it. You will not be judged on your dress so it need not be elaborate or expensive. Judges will focus on your speech and how you present yourself on stage."
Id. at 17.
Although these examples are not exhaustive, they are illustrative of the similarities between the two handbooks.
Defendants argue that dissecting the handbooks demonstrates "that those portions of the Miss Junior America materials which Gable-Leigh claims have been infringed are . . . uncopyrightable elements not subject to protection." Specifically, defendants assert that the only similarities between plaintiff's and defendants' works are the use of words and short phrases, ideas or methods, and blank forms. Defendants are correct that such elements cannot be copyrighted. See 37 C.F.R. § 202.1. See also CMM Cable Rep, Inc. v. Ocean Coast Properties, Inc., 97 F.3d 1504, 1519 (1st Cir. 1996) ("It is axiomatic that copyright law denies protection to `fragmentary words and phrases' and to `forms of expression dictated solely at functional considerations' on the grounds that these materials do not exhibit the minimal level of creativity necessary to warrant copyright protection"). Defendants did not simply copy a few words or phrases, ideas or methods and forms, however. Rather, substantial portions of the North American Miss 2001 handbook are verbatim or essentially verbatim copies of Gable-Leigh's copyrighted materials. In this regard, the First Circuit's opinion in Kepner-Tregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527 (1st Cir. 1994), is instructive. There, Kepner-Tregoe ("KT"), the holder of an exclusive license to copyrighted management training materials, brought a copyright infringement action against Leadership Software, Inc. ("LSI"), a computer program developer. Affirming the district court's grant of a preliminary injunction, the court stated:
Defs' Opp. at 17:2-6.
See id. at 18.
"Seizing upon the court's statement that the questions and processes of the Vroom-Yetton model are its `heart and soul,' LSI argues that these elements are `inherent in the leadership management theory . . . of the Vroom models,' implying that questions and processes that comprise the V-Y Model are unprotectable ideas. LSI contends that there is no protectable expression remaining in K-T's licensed materials, once all unprotectable elements are filtered out. But this is absurd. Each question and process in the V-Y Model is presented in a paragraph of text. There are countless ways of expressing the content of each paragraph, so there was no need for the MPO screen text to copy exactly the language of K-T's materials. Even if each of the eight questions and five processes conveys unprotectable ideas, the specific words, phrases, and sentences selected to convey those ideas are protectable expression under any reasonable abstraction analysis. As LSI's
[Managing Participation in Organization ("MPO")] program copied those words, phrases, and sentences verbatim, we conclude that — far from being clearly erroneous — the district court's finding that the MPO program infringed K-T's Licensed Materials was correct and must be affirmed." Id. at 534 (emphasis added).
As was the case in Kepner-Tregoe, there were countless ways for defendants to express the content of the paragraphs found in its 2001 pageant handout. Defendants' handbook could have conveyed most, if not all, of the ideas found in the Miss Junior America handbook without infringing Gable-Leigh's copyright. Because defendants chose to copy virtually verbatim significant portions of Gable-Leigh's copyrighted materials, however, Gable-Leigh is likely to succeed on the merits of its copyright infringement claim.
In addition to copying actual language, defendants also utilized an organization and format that is strikingly similar to plaintiffs. See Kepner-Tregoe, supra, 12 F.3d at 536. n. 20 (embracing the "general, noncontroversial proposition that nonliteral aspects of copyrighted works — like structure, sequence and organization — may be protected under copyright law . . ."); Calcar Advertising, Inc. v. American Isuzu Motors, Inc., No. 99-55398, 2000 WL 1465916, * 1 (9th Cir. Sept. 29, 2000) (Unpub. Disp.) ("The non-functional aspects of the QuickTips guides, including the selection and arrangement of topics and material within the guides . . . are entitled to copyright protection"). For these reasons, the court concludes that the exceptions delineated in 37 C.F.R. § 202.1 do not apply.
Defendants also invoke the scenes a faire doctrine to defend against any suggestion that their work is substantially similar. This doctrine provides that "courts will not protect a copyrighted work from infringement if the expression embodied in the work necessarily flows from a commonplace idea . . . the rationale [being] that there should be no monopoly on the underlying unprotectable idea." Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1082 (9th Cir. 2000). Defendants appear to assert that the procedures and "rules" for operating a beauty pageant are commonplace ideas that do not warrant copyright protection. They contend, for example, that Gable-Leigh's three "Competition Requirements" — personal interview, casual wear competition, and gown competition — are employed in all beauty pageants. "[W]here an expression is, as a practical matter, indispensable, or at least standard, in the treatment of a given idea," the expression is treated as the equivalent of the idea, and cannot be protected by copyright. Johnson Controls, Inc. v. Phoenix Control Sys., Inc., 886 F.2d 1173, 1175 (9th Cir. 1989). See also Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1444 (9th Cir. 1994) ("when similar features in a videogame are as a practical matter indispensable, or at least standard, in the treatment of a given [idea], they are treated like ideas and are therefore not protected by copyright" (internal quotations omitted)); Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1507 (9th Cir. 1987) ("even similarity in expression is noninfringing when the nature of the creation makes similarity necessary"); Torah Soft Ltd. v. Drosnin, No. 00 Civ. 5650, 2001 WL 314642, * 7 (S.D.N.Y. March 30, 2001) ("Nor can copyright protection be afforded to `scenes a faire' — expressions that are `as a practical matter, indispensable or at least standard in the treatment of a given [idea],'" quoting Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 208 (9th Cir. 1988)).
See id. at 20-21.
Arguably, certain features of Gable Leigh's Miss Junior America Pageant, such as the competition requirements, are, as a practical matter, "standard" in the pageant industry. In fact, a review of other pageants' guidebooks submitted by the parties reveals that each employs competition requirements or categories that are similar to Gable-Leigh's. Even if it is assumed that much of the expression in Gable-Leigh's handbook is indispensable or standard, it is nevertheless protected from verbatim or virtually verbatim copying. See Johnson Controls, supra, 886 F.2d at 1175 ("[W]here an expression is, as a practical matter, indispensable, or at least standard, in the treatment of a given idea, the expression is protected only against verbatim, or virtually identical copying"); Rachel, supra, 831 F.2d at 1507 ("Such `indispensable expression' of ideas may be protected only against virtually identical copying"); Krofft, supra, 562 F.2d at 1162 ("[w]hen idea and expression coincide, there will be protection against nothing other than identical copying of the work"); Integral Sys. Inc. v. Peoplesoft, Inc., No. C-90-2598, 1991 WL 498874, * 10 (N.D. Cal. July 19, 1991). As discussed above, the evidence before the court reveals that substantial portions of the North American Miss 2001 handbook are verbatim or essentially verbatim copies of Gable-Leigh's copyrighted materials. The scenes a faire doctrine is therefore inapplicable. Cf. Krofft, supra, 562 F.2d at 1171, n. 17 ("[T]he Random House biography copied verbatim almost 27% of one of the Look articles and 14% of all of the articles. We believe this represents an unjustifiable appropriation of the expression of the idea . . ." (internal citations omitted)); Wainwright Sec., Inc. v. Wall Street Transcript Corp., 558 F.2d 91 (2d Cir. 1977) (holding that a newspaper that published abstracts of plaintiffs research reports almost verbatim did not merely use its news information, but appropriated the expression of that information).
The American Coed Pageant's requirements are formal dress, interview outfit, and official t-shirt and shorts outfit. See D. Bevis Decl., Ex. C. All American Pageants' categories are personal interview, sportswear, and evening gown. See id., Ex. D. Ms. Petite U.S.'s requirements include personal interview, achievement portfolio, aerobic/tennis wear, and evening gown. See id., Ex. E. The requirements for the "Tiny Miss" of America Pageant are personality, swimsuit, schoolwear/sportswear, and dress. See id., Ex. F. The Her Heighness Pageant's requirements include swimsuit, aerobic wear, and evening gown. See id., Ex. G. The categories for America's Miss Teen of the Year Pageant are personal interview, personal platform, evening wear, and swim wear. See Supp. Smith Decl., Ex. 12. Finally, the competition breakdown for the Miss United State's Pageant is evening gown, swimsuit, interview, and fashion ensemble. See id., Ex. 13.
After comparing the individual features of plaintiffs copyrighted materials and defendants' 2001 pageant handbook, the court finds that the two works share a similarity of ideas and expression. This is especially true in light of evidence that defendants had a high degree of access. See Smith, supra, 84 F.3d at 1218 ("In applying the extrinsic test, we require a lower standard of proof on substantial similarity when a high degree of access is shown"). Thus, the extrinsic test has been satisfied.
b. Intrinsic Test
Because Gable-Leigh has satisfied the extrinsic test, the court must consider the subjective "intrinsic test," which asks whether an "ordinary, reasonable observer would find a substantial similarity of expression of the shared idea." Id. The focus here is on the "total concept and feel" of the two works. See Krofft, supra, 562 F.2d at 1167.
To prove similarity under the intrinsic test, Gable-Leigh has submitted correspondence received from Miss Junior America contestants and their parents, who state that the materials they have received from North American Miss are quite similar to those distributed by plaintiff. Given the similarities, many contestants profess confusion as to whether the name of the Miss Junior America Pageant has been changed, or whether the North American Miss Pageant is affiliated with Gable-Leigh. These contestants — "ordinary reasonable observers" — have clearly found a substantial similarity between plaintiff's and defendants' works. Accordingly, Gable-Leigh has adduced sufficient evidence to satisfy the intrinsic test. See Olson v. National Broad. Co., 855 F.2d 1446, 1449 (9th Cir. 1988) ("The `intrinsic' test, which is used to compare forms of expression, `depend[s] on the response of the ordinary reasonable person,'" quoting Krofft, supra, 562 F.2d at 1164)). See also Roth Greeting Cards v. United Card Co., 429 F.2d 1106, 1110 (9th Cir. 1970) ("It appears to us that in total concept and feel the cards of United are the same as the copyrighted cards of Roth. . . . [T]he characters depicted in the art work, the mood they portrayed, the combination of art work conveying a particular mood with a particular message, and the arrangement of the words on the greeting card are substantially the same as in Roth's cards. . . . The remarkable similarity between the Roth and United cards in issue . . . is apparent to even a casual observer").
See Smith Decl., Ex. 5. Defendants filed a motion to strike this correspondence (Exhibit 5 to Kimberly Smith's declaration) on the basis that it constitutes inadmissible hearsay. (See Defendants' Motion to Strike at 2:1-4.) In response, plaintiff submitted declarations from the contestants or their parents setting forth, for the most part, the information that had previously been included in their e-mails. (See Declarations of Miss Junior America Contestants or Their Parents in Further Support of Plaintiff's Motion for Preliminary Injunction ("Contestant Decls.")). Defendants' motion to strike, therefore, appears moot. Even had plaintiff not proffered the supplemental declarations, however, defendants' motion would likely have been denied, because district courts have discretion to consider otherwise inadmissible evidence in ruling on the merits of an application for temporary restraining order or preliminary injunction. See Sierra Club v. F.D.I.C., 992 F.2d 545, 551 (5th Cir. 1993) ("at the preliminary injunction stage, the procedures in the district court are less formal, and the district court may rely on otherwise inadmissible evidence, including hearsay evidence. Thus, the district court can accept evidence in the form of deposition transcripts and affidavits" (citations omitted)); Republic of the Philippines v. Marcos, 862 F.2d 1355, 1363 (9th Cir. 1988) ("It was within the discretion of the district court to accept this hearsay for purposes of deciding whether to issue the preliminary injunction"); Flynt Distrib. Co., Inc. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984) ("The Harveys argue that Flynt's evidence is hearsay. The urgency of obtaining a preliminary injunction necessitates a prompt determination and makes it difficult to obtain affidavits from persons who would be competent to testify at trial. The trial court may give even inadmissible evidence some weight, when to do so serves the purpose of preventing irreparable harm before trial").
See Smith Decl., Ex. 5 and Contestant Decls.
3. Likelihood of Success On The Merits
Because Gable-Leigh is entitled to a rebuttable presumption that Smith owns the copyright to the 1995 Materials, and because it has adduced evidence that she has assigned that copyright to it, the court finds that Gable-Leigh is likely to prove ownership of a valid copyright in the 1995 Materials. Similarly, Gable-Leigh has adduced evidence suggesting that it will likely prove Smith's ownership of a valid copyright in the 2001 Materials, and the assignment of that copyright to it. Coupled with proof of the substantial similarities between its handbook and the North American Miss 2001 pageant handout, and of defendants' access to the copyrighted materials, the court concludes that Gable-Leigh is likely to succeed on the merits of its copyright infringement claim.
4. Irreparable Harm
In a copyright infringement case, "[a] showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm." Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330, 1335 (9th Cir. 1995). See also Franklin Computer, supra, 714 F.2d at 1254 ("A copyright plaintiff who makes out a prima facie case of infringement is entitled to a preliminary injunction without a detailed showing of irreparable harm"). This presumption may be rebutted by a showing that (1) the plaintiff's copyrighted item is no longer on the market; (2) the plaintiff unreasonably delayed in seeking injunctive relief; (3) the plaintiff has not been harmed or any harm is de minimis; or (4) defendant acted with innocent intent, relying on lack of copyright notice. See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 828-29 (9th Cir. 1997).
Defendants have proffered no evidence that any factors rebutting the presumption of irreparable harm are present in this case. Rather, they argue that a preliminary injunction is unnecessary because Bevis does not intend to distribute the infringing 2001 handbook further, but only plans to use the 2001 handbook during this year's North American Miss Pageant in July "as a document [with] which to describe the format and operations of the pageant to contestants, families, judges and pageant workers." This does not demonstrate that plaintiff has not suffered irreparable harm as a result of defendants' infringement, and, in fact, suggests that defendants will cause plaintiff further harm by continuing to use the infringing handbook during their 2001 pageant.
See D. Bevis Decl., ¶¶ 13; 16:19-24.
5. Balance of Hardships
Courts must also consider the balance of hardships in deciding whether to grant a request for preliminary injunctive relief. If defendants are allowed to continue infringing Gable-Leigh's copyrighted materials, the company will likely lose customers not only for this year's pageant, but possibly for future pageants as well, as many pageant contestants appear to be "repeat" participants. While she does not attempt a quantification, Smith states that such a loss of business would cause Gable-Leigh severe financial hardship.
See Smith Decl., Ex. 5.
See Supp. Smith Decl., ¶ 24.
Bevis counters that if North American Miss is enjoined from using the infringing handout during this year's pageant — i.e., as a reference guide for contestants, their families, judges, and pageant volunteers — she will be severely impacted, as she will have to restructure her pageant, attract new customers, and revamp her business. Because she has already invested $75,000 in preparing for the 2001 event, and expects that it will generate approximately $100,000 in income, Bevis estimates that a preliminary injunction prohibiting use of handbook will cause her to lose approximately $200,000.
See D. Bevis Decl., ¶ 16:19-24.
See id., ¶ 16:24-26.
These concerns appear to overstate the impact any injunction will have on Bevis' business. If the court enjoins defendants from using the infringing handbook during this year's pageant, they need not revamp their entire business. Rather, they will simply be required to rewrite the handbook in their own words. The handbook may contain the ideas that are in the current North American Miss handbook, as plaintiffs copyright protects only the expression of those ideas. It simply may not use verbatim or essentially verbatim words to communicate them. See Kepner-Tregoe, supra, 12 F.3d at 534 ("There are countless ways of expressing the content of each paragraph, so there was no need for the MPO screen text to copy exactly the language of K-T's materials. Even if each of the eight questions and five processes conveys unprotectable ideas, the specific words, phrases, and sentences selected to convey those ideas are protectable expression under any reasonable abstraction analysis"). See also CMM Cable Rep, 97 F.3d at 1518-19 (concluding that plaintiff's brochure describing a radio contest was protected by copyright, but noting that even if plaintiff's "expansive contributions [to the competition] were original, they simply cannot enjoy copyright protection: to do so would be to erroneously extend copyright protection to a method of conducting a radio promotional contest"); Anti- Monopoly, Inc. v. General Mills Fun Group, 611 F.2d 296, 300, n. 1 (9th Cir. 1979) (noting that game concepts are not protected by the copyright laws).
In any event, whatever hardship defendants may suffer is irrelevant where, as here, plaintiff has demonstrated a likelihood of success on the merits of a copyright infringement claim. "`[T]he balance of hardships issue cannot be accorded significant' — if any — `weight in determining whether a court should enter a preliminary injunction to prevent the use of infringing material in cases where . . . the plaintiff has made a strong showing of likely success on the merits.'" Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1119 (9th Cir. 1999) (quoting Cadence, supra, 125 F.3d at 830).
6. Public Interest
It is in the public interest to enter a preliminary injunction here because copyrighted works must be protected as an incentive for people to create new works. See Harper Roe, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985) ("[I]t should not be forgotten that the Framers intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of one's expression, copyright supplies the economic incentive to create and disseminate ideas"); Zacchini v. Scripps-Howard Broad. Co., 433 U.S. 562, 576 (1977) ("The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in `Science and useful Arts,'" quoting Mazer v. Stein, 347 U.S. 201, 219 (1954)).
7. Conclusion
Gable-Leigh has demonstrated a likelihood that it will succeed on the merits of its copyright infringement claim and is thus entitled to a presumption of irreparable harm. The balance of hardships and public interest factors also favor issuance of an injunction. Accordingly, plaintiff's motion to enjoin defendants from using the North American Miss 2001 handbook is granted.
C. Trade Secret Claim
Gable-Leigh next contends that defendants have violated the California Uniform Trade Secrets Act ("UTSA") by misappropriating its customer lists. To prevail on this claim, Gable-Leigh must show that it has a legally protectable trade secret and that defendants have misappropriated it. See CAL. Civ. CODE § 3426.1(b); Morlife, Inc. v. Perry, 56 Cal.App.4th 1514, 1520-21 (1997); Vacco Indus., Inc. v. Van Den Berg, 5 Cal.App.4th 34, 50 (1992). A legally protectable trade secret is any "information, including a formula, pattern, compilation, program, device, method, technique, or process" that derives economic value from not being generally known to the public, and that is the subject of reasonable efforts to maintain its secrecy. See CAL. Civ. CODE § 3426.1(d). Misappropriation is defined, inter alia, as the
See Pl.'s Mem. at 15-20.
"(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(2) Disclosure or use of a trade secret of another without express or implied consent by a person who:
allow a competitor to direct its sales efforts to those customers who have already shown a willingness to use a unique type of service or product as opposed to a list of people who only might be interested. Its use enables the former employee to solicit both more selectively and more effectively." Morlife, supra, 56 Cal.App.4th at 1522 (internal citations and quotations omitted).
In the present case, Gable-Leigh has presented evidence that the identities of the girls on the 9,000- and 900-name lists were not readily ascertainable, that they were discoverable only with great effort, and that their patronage was secured through the expenditure of considerable time and money. See id. Specifically, Smith states in her declaration that Gable-Leigh purchased a list of the names of 475,000 girls from the American Student Listing Company, and spent approximately $223,000 to distribute pageant materials to those girls and their parents. Through this process, Gable-Leigh was able to narrow the list to 9,000 names, i.e., those who applied to be contestants in the West Coast Pageant. This 9,000-name list was further refined to the 900 actual participants in the 2000 Miss Junior America Pageant. Given the multiple-step process that was required to distill publicly available information into a list of 900 names, Gable-Leigh's customer lists are likely the sort of information that derives independent economic value, actual or potential, from not being generally known to the public or to persons who can obtain economic value from this disclosure or use. See Kirgan, supra, 183 Cal.App.3d at 1324.
See Smith Decl.,¶ 6.
See id.
See Supp. Smith Decl., ¶ 2.
The question remains, however, whether the customer lists were the subject of efforts that were reasonable under the circumstances to maintain their secrecy. See id. Gable-Leigh asserts that it took reasonable precautions to protect the secrecy of the lists. Smith contends that she maintained both the 9,000- and 900-name lists on her computer at home in order to keep control over them and protect their secrecy. She also asserts that the only people who had access to the 9,000-name list were Dottie Bevis, Lackey Bevis, and Griffiths, and that only Dottie and Lackey were able to access the White Book (i.e., the 900-name list). Finally, Smith states that she informed Dottie and Lackey, as well as other Gable-Leigh employees, that the customer lists belonged to the company and should be kept confidential.
See Pl.'s Mem. at 17; Plaintiff's Reply Memorandum of Points and Authorities in Support 28 of Motion for Preliminary Injunction ("Pl.'s Rep.") at 15-16.
See Smith Decl., ¶ 7.
See id.
See id., ¶ 5; Supp. Smith Decl., ¶ 11.
Defendants dispute these claims. Several former Gable-Leigh employees — including Dottie Bevis, Lackey Bevis, Lisa Griffiths, Telita Perry, Christina Woods, and Michele Witman — have submitted declarations stating that neither Smith nor any other Gable-Leigh representative told them that the customer lists were trade secrets and/or confidential. They further assert that the White Book was accessible to, and used by, all employees, not just Dottie and Lackey Bevis. There is no dispute that Gable-Leigh did not require any of its employees to sign confidentiality agreements.
See Defs.' Opp. at 11-13.
See D. Bevis Decl., ¶ 6; L. Bevis Decl., ¶ 5; Griffiths Decl., ¶ 3; Perry Decl., ¶ 4; Woods Decl., ¶ 4; Witman Decl., ¶ 3.
See D. Bevis Decl., ¶ 6; L. Bevis Decl., ¶ 5; Griffiths Decl., ¶ 4; Perry Decl., ¶ 3; Woods Decl., ¶ 4; Witman Decl., ¶ 3.
See D. Bevis Decl., ¶ 6; L. Bevis Decl., ¶ 5; Griffiths Decl., ¶ 5; Perry Decl., ¶ 5; Woods Decl., ¶ 4; Witman Decl., ¶ 3.
In assessing this disputed evidence, the court notes that five of defendants' declarants — Dottie Bevis, her daughter Lackey, and three of the former Gable-Leigh employees — are presently working for North American Miss. As respects the remaining individual — Griffiths — plaintiff admits that she had access to the customer lists. The close relationship between defendants and the declarants impacts the court's assessment of their credibility. See Q-Co Indus., Inc. v. Hoffman, 625 F. Supp. 608, 617 (S.D.N.Y. 1985) ("It is well recognized with respect to trade secrets . . . [that] misappropriation and misuse can rarely be proved by convincing direct evidence. In most cases plaintiffs must construct a web of perhaps ambiguous circumstantial evidence from which the trier of fact may draw inferences which convince him that it is more probable than not that what plaintiffs allege happened did in fact take place. Against this often delicate construction of circumstantial evidence there frequently must be balanced defendants and defendants' witnesses who directly deny everything").
See Supp. Smith Decl., ¶¶ 28, 32, 35, 37.
See Smith Decl., ¶ 7; Declaration of Richard Cohen in Further Support of Motion for Preliminary Injunction ("Cohen Decl."), ¶ 8.
Even assuming the truth of the declarants' representations, i.e., that all six of them had access to the White Book, it would not be unreasonable for Gable-Leigh to disclose its trade secrets to such a limited number of employees. Cf. Consolidated Brands, Inc. v. Mondi, 638 F. Supp. 152, 157 (E.D.N.Y. 1986) (finding that plaintiff's customer list was not a trade secret in part because many employees had access to it). Additionally, given the small number of employees and the longstanding relationship between Smith and the Bevises, it was not unreasonable for Gable-Leigh to forego confidentiality agreements.
Smith and the Bevises have been friends since Lackey Bevis won the Miss Junior Tennessee title in the Miss Junior America pageant in the mid 1980s. (See Smith Decl., ¶ 5.) When Smith moved to California to launch the west coast pageant, she contacted Dottie Bevis, and asked her to come to work. (See D. Bevis Decl., ¶ 2.) As a favor to Dottie, Smith also hired Lackey as a Gable-Leigh employee. (See Smith Decl., ¶ 5.) Smith and Dottie worked together for almost ten years and had a close personal relationship. (See Supp. Smith Decl., ¶ 17.) Because Smith's family lived on the east cost, she spent many holidays with the Bevises, and considered Dottie a "surrogate mother." (See id.) Dottie is also godmother to Smith's daughter. (See id.)
In short, notwithstanding defendants' evidence to the contrary, the court finds that Gable-Leigh's efforts to maintain the secrecy of the customer lists — i.e., keeping the lists on Smith's home computer, limiting access to the lists, and communicating their confidential nature to the employees — were reasonable under the circumstances. See CAL. Civ. CODE § 3426.1(d). See also Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 664 (4th Cir. 1993) ("[A]bsolute secrecy is not essential. It is enough that [the software owner] made it difficult for others to acquire copies of the . . . software through proper means" (internal quotations omitted)). Based on the evidence currently in the record, therefore, it appears Gable-Leigh will likely be able to establish that its customer lists are trade secrets.
2. Gable-Leigh Will Likely Be Able To Prove That Defendants Misappropriated The Customer Lists
Assuming it proves that the customer lists are protectable trade secrets, Gable-Leigh must also establish that defendants misappropriated them. Misappropriation, inter alia, is the disclosure or use of a trade secret without its owner's express or implied consent by a person who, at the time of the disclosure or use, knew or had reason to know that he or she had a duty to maintain the secrecy of the information. See CAL. Civ. CODE § 3426.1(b)(2). There is no evidence in the record that Gable-Leigh authorized defendants to use its customer lists. Moreover, Bevis admits that she solicited seventy-two of Gable-Leigh's customers.
See Defs.' Opp. at 9:19-23.
Citing Moss, Adams Co. v. Shilling, 179 Cal.App.3d 124, 129 (1986), defendants contend that Bevis' use of the customer lists does not constitute misappropriation because the seventy-two girls she contacted were personal acquaintances, and "[o]ne may do business with a former employer's customers with whom one became personally acquainted and developed a business relationship while formerly employed." Id.
Defendants argue that Bevis did not "use" the customer lists because neither Dottie nor Lackey Bevis have copies of the lists in their possession. (See id. at 13:16-21.) The court in Morlife held, however, that information need not be embodied in a written list to be protectable as a trade secret. It is equally protectable if it exists in an employee's memory. See Morelife, supra, 56 Cal.App.4th at 1522.
As the court noted in Morlife, Moss, Adams did not involve a UTSA claim. Morlife, supra, 56 Cal.App.4th at 1527 ("Moss, Adam was decided before the UTSA became effective. That court was unencumbered by the legislatively mandated definition of misappropriation now contained in the UTSA. Under the UTSA, simple disclosure or use may suffice to create liability. It is no longer necessary, if it ever was, to prove that the purpose to which the acquired information is put is outweighed by the interests of the trade secret holder or that use of a trade secret cannot be prohibited if it is infeasible to do so").93 Because it arises under the UTSA, this case is controlled by Morlife. That court held, contrary to Moss, Adams, that "[i]n the case of a former employee who attempts to use personal customer contacts for personal benefit upon going into competition with the former employer, `[i]t is this personal acquaintance and additional influence of the friendship developed during his employment . . . which makes solicitation of former customers by appellant so unfair to his former employer.'" Id. at 1526 (quoting Peerless Oakland Laundry Co. v. Hickman, 205 Cal.App.2d 556, 560 (1962)).
Based on the evidence presently before the court, therefore, it appears likely that Gable-Leigh will be able to prove that Bevis' use of its customer lists to solicit contestants for the North American Miss Pageant constitutes misappropriation. This is particularly true since Smith and Richard Cohen told Bevis they planned to continue the Miss Junior America pageant after relocating to Atlanta. Bevis thus knew or had reason to know that her duty to maintain the secrecy of Gable-Leigh's customer lists continued.
3. Likelihood of Success On The Merits
Because it will likely be able to prove that its customer lists constitute protectable trade secrets, and also that they were misappropriated by defendants, Gable-Leigh will likely succeed on the merits of its trade secret claim under the UTSA.
4. Irreparable Harm
Unlike a copyright infringement plaintiff, a trade secrets plaintiff who shows likely success on the merits of its claim is not entitled to a presumption of irreparable harm. See Symantec Corp. v. McAfee Assoc., Inc., No. C-97-20367, 1998 WL 740798, * 2, n. 6 (N.D. Cal. June 9, 11 1998). See also Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 92 (3d Cir. 1992) (rejecting the argument that irreparable harm must be presumed when the elements of a trade secret claim have been established). Plaintiff argues it will suffer irreparable injury if defendants are allowed to continue use of the customer lists, as it will be deprived of the value of a trade secret in which it has invested significant time and money. See Beckman Instruments, Inc. v. Cincom Sys., Inc., No. 98-55252, 1998 WL 783774, at *2 (9th Cir. Oct. 9, 1998) (Unpub. Disp.) ("Once a trade secret is enabled to fly from its oubliette, it cannot be recaptured. Once lost, it is lost forever. The harm is irreparble"); AT T Communications of Cal. v. Pacific Bell, No. C 96-1691, 1996 WL 940836, * 11 (N.D. Cal. July 3, 1986) ("[D]efendants are breaching the Billing Agreements and misappropriating plaintiffs' trade secrets. These misdeeds allow defendants to compile a list of plaintiffs' best customers, and to save money by exploiting plaintiffs' databases rather than create their own. The Court finds that a continuation of this activity during the pendency of this action poses some risk of harm to plaintiffs"); Imi-Tech Corp. v. Gagliani, 691 F. Supp. 214, 231 (S.D. Cal. 1987) ("Irreparable injury is also shown by the evidence of Imi-Tech's investment of time and money in the development of the secret processes misappropriated by defendants . . "). Here, Gable-Leigh has submitted evidence that its customers have been solicited by defendants, and also that it is typical in the beauty pageant industry for contestants to form an association with a single pageant that they enter multiple times. The combination of this evidence leadsd the court to conclude Gable-Leigh is likely to suffer irreparable harm if defendants' solicitation continues.
5. Balance of Hardships
Gable-Leigh maintains that absent an injunction against use of the customer list, it will likely lose a significant portion of its customer base to North American Miss — a direct competitor — and suffer severe financial hardship as a result. Defendants, by contrast, will not be precluded from identifying contestants for their pageant if restrained. Gable-Leigh's customer list contains the names of fewer than 10,000 girls who reside in the western part of the United States. There are thus hundreds of thousands of potential customers defendants may solicit. See Merrill Lynch, Pierce, Fenner Smith, Inc. v. Chung, No. CV 01-00659 CBM RCX, 2001 WL 283083, * 6 (C.D. Cal. Feb. 2, 2001) ("[T]he balance of hardships tips heavily in favor of granting injunctive relief because an injunction merely prohibits Defendants from misappropriating the trade secrets of Merrill Lynch, and requires them to comply with the reasonable terms of their Agreements. An injunction will not prevent the Defendants from continuing their employment in the securities industry, will not interfere with their ability to acquire even a fairly limited number of . . . the thousands of potential clients in the area, or from working for Smith Barney in the community in which Defendants have chosen to work"); Liberty Mut. Ins. Co. v. J. Gallagher Co., No. C94-3384 MHP, 1994 WL 715613, at * 5 (N.D. Cal. Dec. 19, 1994) ("The balance of hardships also tips sufficiently in Liberty's favor. This group of customers is sufficiently small in relation to the whole of Wickstrom's potential customers that he will not be significantly harmed by being denied the opportunity to compete for their business. Liberty, on the other hand, faces the potential erosion of a significant portion of its local business").
Any injunction that issues, however, cannot be as broad as that Gable-Leigh seeks. Specifically, it is not appropriate to enjoin defendants from having contact with or in any way conducting business with individuals whose names are on its customer lists. As the Morlife court makes clear, it is only the solicitation of customers that is forbidden by the UTSA. See Morlife, supra, 56 Cal.App.4th at 1524 ("While California courts have shown a reluctance to impose an unconditional prohibition on doing business with customers of the former employer, they have prohibited the unlawful use of trade secrets to solicit those customers. . . . In cases decided both before and after the adoption of the UTSA, the decisions have equated acts of solicitation with `use' or `misappropriation' of protected information"). Thus, in that case, the injunction entered by the court prohibited the defendants from doing business with any of the entities that switched their business after being unlawfully solicited, and also from "soliciting any business from any entity that did business with Morlife before [defendants] stopped working there, provided they obtained knowledge about the customer during the course of their employment at Morlife." Id. at 1527-28. The court observed that this measure of relief did "not appear to be broader than authorized by the governing statute and appear[ed] to be in complete conformance with similar restrictions courts have enforced in the past." Id. at 1528. Thus, while it is appropriate to enjoin defendants from doing business with those girls who have been wrongfully solicited, and from soliciting individuals whose names appear on Gable-Leigh's customer lists, if individuals other than the seventy-two young women already solicited seek out defendants' pageant, defendants should be free to enroll them as contestants.
6. Public Interest
The issuance of an injunction on Gable-Leigh's trade secrets claim will promote the public interest because it is in the public interest that trade secret customer lists be protected. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) ("It is hard to see how the public would be benefitted by disclosure of customer lists"); Chung, supra, 2001 WL 283083 at * 6; Merrill Lynch, Pierce, Fenner Smith, Inc. v. Zimmerman, No. 96-2412-JWL, 1996 WL 707107, * 2 (D. Kan. Oct. 1, 1996) ("[T]here is a strong public interest in favor of protecting trade secrets").
7. Conclusion
Gable-Leigh has established a likelihood of success on the merits of its trade secret claim, threat of immediate and irreparable harm, and a balance of hardships that tips in favor of enjoining defendants' activities. Plaintiff's motion to enjoin defendants' use of its customer lists is therefore granted.
III. CONCLUSION
For the foregoing reasons, Gable-Leigh's motion for preliminary injunction is granted. Because it has shown a likelihood of success on the merits, irreparable harm, and a balance of hardships that tips in its favor as respects both the copyright infringement and trade secret claims, defendants will be enjoined from (1) using the 2001 North American Miss Pageant handbook or any other materials that infringe Gable-Leigh's copyrights in the 1995 and/or 2001 Materials, including, without limitation, providing such materials to contestants, their family members, judges, volunteers, or any other persons during the 2001 pageant; (2) soliciting any of the individuals listed on Gable-Leigh's 9,000-name and/or 900-name customer lists whose identity defendants learned while in Gable-Leigh's employment; and (3) conducting business with any individuals whose names are on the customer lists and who have already been wrongfully solicited. The injunction will not extend to potential customers with whom defendants had no contact and as to whom they acquired no information while working at Gable-Leigh. See Morlife, supra, 56 Cal.App.4th at 1528. See also Merrill Lynch, Pierce, Fenner Smith, Inc. v. Garcia, No. 00-09292 CM, 127 F. Supp.2d 1305, 1306 (C.D. Cal. 2000) ("In fashioning a remedy for wrongful solicitation, California courts have enjoined defendants from accepting business from customers who were wrongfully solicited. In Morlife, for example, the defendant was enjoined from `doing business' with any customer who was wrongfully solicited. Accordingly, the Court finds that Defendants may be enjoined from accepting business from any Merrill Lynch customers who were wrongfully solicited." (internal citations omitted)). The parties are directed to meet and confer as to whether the injunction should extend to individuals whose names are on Gable-Leigh's 9,000- or 900-name customer lists and who were solicited independently and without specific knowledge of the fact that they appeared on those lists by defendants and/or third parties with whom they contracted. On or before April 19, 2001, the parties are directed to submit joint or separate filings, not to exceed ten (10) pages in length, addressing this issue and proposing injunctive language for the court's consideration.
Pursuant to Rule 65(c) of the Federal Rules of Civil Procedure, the court will require that Gable-Leigh post a bond as security for issuance of a preliminary injunction. The parties are directed to meet and confer regarding this issue, and to recommend an appropriate bond amount to the court in joint or separate filings of no more than five pages in length on or before April 19, 2001.