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Defendants in Jewelry Copyright Proceeding Did Not Violate Settlement Agreement Terms

Thursday, March 28, 2013
By Anandashankar Mazumdar

An affidavit including assurance that its statements were made to the best of the affiant's knowledge, memory, and belief did not trigger a provision in a settlement agreement that permitted termination if the affidavit had been false, the U.S. Court of Appeals for the Fifth Circuit ruled March 18 in a decision designated as nonprecedential and not for publication (Silver Dream L.L.C. v. 3MC Inc., 5th Cir., No. 11-30968, 3/18/13, unpub).

Affirming summary judgment on a claim to enforce the settlement agreement, the court rejected arguments by a holder of copyright interest in a jewelry design that the defendant had violated the terms of settlement.

Football-Themes Jewelry Design Copied
Silver Dream L.L.C. of New Orleans is a jewelry designer and producer. It claims copyright interest in a jewelry design based on the fleur-de-lis, created in 2009. The fleur-de-lis shape is augmented with carved representations of a football, a domed football stadium, and the phrases “Who Dat?,” “Nola,” and “Believe Dat.” These images and phrases constitute references to the New Orleans Saints professional football club. The design was registered with the Copyright Office.

Charles and Mei Chen of New Orleans are principals of 3MC Inc. d/b/a Silver Salon, a direct competitor of Silver Dream. Silver Dream sued 3MC and the Chens, alleging that jewelry that the Chens had sold infringed Silver Dream's copyright interest in the football-themed fleur-de-lis design.

The parties reached a settlement under which the Chens would pay $1,850 and they were to disclose details of the source of the infringing jewelry. The Chens filed affidavits saying that they had acquired the jewelry at a trade show, but that they did not have receipts, nor did they disclose the exact number of items they had acquired, or at what price.

The stated source of the infringing items, Malibu International Jewelry Inc. of Diamond Bar, Calif., was added to the lawsuit, and Silver Dream obtained a default judgment against it.

Silver Dream asserted that the Chens' affidavits had been insufficient and false. According to Silver Dream, the Chens continued to sell infringing items and there was documentation that showed that Malibu had denied selling the items to the Chens. Silver Dream thus refused to dismiss the claims. Silver Dream filed a counterclaim to enforce the settlement and moved for summary judgment.

Judge Martin L. C. Feldman of the U.S. District Court for the Eastern District of Louisiana granted summary judgment in the Chens' favor. The court denied Silver Dream's motions for continuances to take the Chens' depositions. Silver Dream appealed.

Termination Upon 'False' Affidavit Only
In a per curiam decision, the appeals court affirmed the award of summary judgment and remanded the proceedings for consideration of an award of attorneys' fees and costs.

The court first rejected Silver Dream's argument that Mei Chen's affidavit constituted a breach of the settlement agreement. The agreement stated that the affidavits must be “true, complete, and exact.” Mei Chen's affidavit stated that it was “[t]o the best of [her] knowledge and memory” or accorded with her belief.

The court said that this provision of the contract permitted termination only upon a finding that the affidavit was “false.” Thus, the affirmation in Mei Chen's affidavit did not violate this provision.

Next, the court rejected as unsupported by evidence Silver Dream's argument that the Chens' affidavits actually were false. Finally, the court found no abuse of discretion in the denial of Silver Dream's continuance for the purpose of taking depositions. The court remanded the case for consideration of whether the Chens' should be awarded attorneys' fees and costs.

The appellate panel comprised Judges W. Eugene Davis, Priscilla Richman Owen, and Leslie H. Southwick.

Silver Dream was represented by Gregory D. Latham of New Orleans. The Chens were represented by Marie J. Breaux of New Orleans.

By Anandashankar Mazumdar


Text is available at http://www.bloomberglaw.com/public/document/Silver_Dream_LLC_v_3MC_Incorporated_et_al_Docket_No_1130968_5th_C/1

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