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Bachner + Co., Inc. v. White Rose Food, Inc.

2010 WL 3210689 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

CONTRACTS; COPYRIGHTS — A claim for damages based on a party’s improper use of copyrighted material is pre-empted by copyright law and is not available for damages based upon breach of contract.

A graphic designer approached a printing company, intending to get a contract to redesign a particular food wholesaler’s logo and packaging. The designer and the printing company met with the wholesaler’s management in the first of a series of meetings. A comprehensive proposal was submitted by the designer to the wholesaler. It outlined possible services and pricing, including the redesign of 15 items per month over a period of five years. The proposal identified the printing company as the principal contact who would be responsible for billing for services. The wholesaler appeared receptive and, at a third meeting, its management asked the graphic designer to adapt its proprietary logo and labeling designs to additional products across the wholesaler’s entire line. The designer was reluctant to proceed without first entering into a contract for the full implementation of the proposal. It received assurances that the designs would only be used for evaluation purposes, and the designer entered into a confidentiality agreement with the wholesaler. The agreement require the use of reasonable efforts to protect proprietary information. Release of the information would be limited to a “need to know” basis for reasons of business planning, and could only be disclosed to a third party with the other party’s consent.

Negotiations to reach a final agreement failed. The wholesaler chose another supplier for its rebranding project, and took several months to return the graphic designer’s proprietary information. Six months after losing the contract, the designer learned, through the printing company, that the wholesaler gave another supplier copies of the designer’s proprietary work, and asked the other company to duplicate those designs. The designer sued the wholesaler and the other design company, alleging breach of contract, unjust enrichment, fraud, and copyright infringement.

The wholesaler moved to dismiss the breach of contract claim. The lower court denied that motion, finding that the confidentiality agreement could still be enforceable even though there never was a final agreement between the wholesaler and the designer. It also found that, given that certain relevant terms were not defined in the document, the scope of the confidentiality agreement was sufficiently ambiguous and would require further discovery for explanation.

The Court dismissed the designer’s unjust enrichment claim, finding that such a claim is preempted by copyright law. The designer’s alleged proprietary work, in the form of logos and labeling designs, fell within the type of work protected by copyright law. Additionally, the Court dismissed the unjust enrichment claim because there was no evidence that the designer expected remuneration from either the wholesaler or other design company. Rather, the designer was only a subcontractor to the printing company, the party who would have expected to be paid under the submitted proposal.

Finally, the Court dismissed the fraud counts because the designer failed to plead particular facts regarding misrepresentations allegedly made by the wholesaler’s management. It ruled that the complaint merely stated that the wholesaler never had any intention of awarding the contract to the designer and printing company.

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