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Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 1 of 12
`
`WO
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF ARIZONA
`
`No. CV 05-3699-PHX-JAT
`FINDINGS OF FACT AND
`CONCLUSIONS OF LAW
`
`))))))))))))
`
`Designer Skin, LLC, et al.,
`Plaintiffs,
`
`vs.
`
`S & L Vitamins, Inc., et al.,
`Defendants.
`
`The Court presided over a single trial on all legal and equitable claims remaining in
`this case on July 15, 16, and 17, 2008.1 At the close of evidence, the Court granted
`Defendants’ motion for judgment as a matter of law on all claims except Plaintiff Designer
`Skin, LLC’s2 equitable claim for injunctive relief against Defendant S & L Vitamins, Inc.
`The Court now addresses this remaining claim, which raises the following two issues: (1)
`whether S & L Vitamins has infringed any of Designer Skin’s copyrights; and if so, (2)
`whether Designer Skin is entitled to permanent injunctive relief. The Court hereby finds and
`concludes as follows:
`
`1 The Court resolved a number of claims at the summary-judgment stage of this
`litigation. See Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Ariz.
`2008).
`
`2 There are actually three plaintiffs in this suit: Designer Skin, LLC; Splash Tanning
`Products, LLC; and Boutique Tanning Products, LLC. But for purposes of this litigation, the
`parties have treated them as the single entity “Designer Skin.”
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 2 of 12
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`I.
`1.
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`2.
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`3.
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`4.
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`5.
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`FINDINGS OF FACTS
`Designer Skin is the exclusive creator and manufacturer of the following 42 indoor
`tanning products: Ultimate Love Junkie; Secret Rapture; Revival; Sheer Wisdom; Ray
`of Light; Vanishing Act; Designer Skin Intrigue; Tao; Designer Skin Mood; Designer
`Skin Worship; Worship Me; Designer Skin Goddess; Halo; Designer Skin
`Spellbound; Designer Skin Speed of Light; Designer Skin Shine; Designer Skin
`Saving Face; Amazing Face; Addicted to Love; Designer Skin Drama Queen;
`Enamor; Flare; Undercover Angel; Designer Skin Bombshell; Designer Skin Believe;
`Splash Get Down Brown; Ritual; Shrine; Dolce; Whisper; Veritas; Boutique Bronze
`Camouflage; Bohemia; Bronze Bondage; Smolder; Siren; Angel; Gold Digger; Ego
`Maniac; Triple Play; Splash Hustle; and Bipolar (the “Products”).
`Designer Skin is the exclusive creator of certain artwork associated with the Products,
`including the labels that appear on the physical Products themselves and the electronic
`renderings of the Products that appear on its website, www.designerskin.com.
`Designer Skin has conceded that taking and displaying photographs of the physical
`Products does not infringe its copyrights in the labels on those Products. Thus, the
`only copyrights allegedly infringed by S & L Vitamins are the copyrights in the
`electronic renderings of the Products.3
`The electronic renderings of the Products are displayed on Designer Skin’s website
`for advertising and marketing purposes only.
`Designer Skin owns registered copyrights in both (1) the labels that appear on its
`Products and (2) its website.
`
`3 Designer Skin also claimed that S & L Vitamins has infringed Designer Skin’s
`copyrights in the electronic renderings of 12 other products that appear on its website: The
`Big O; Pure Intentions; Freedom; Choc-o-holic; Daddy-O; Floozy; Fortune; Boutique
`Bloom; Secret Stash; Try Me; Faker; and Shameless (“Other Products”). The advisory jury,
`however, found that S & L Vitamins has not infringed these copyrights. On the basis of this
`finding, the Court likewise finds as a fact that S & L Vitamins has not infringed Designer
`Skin’s copyrights in the electronic renderings of these Other Products.
`
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 3 of 12
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`These copyright registrations provide overlapping protection for Designer Skin’s
`copyrights in the electronic renderings of the Products that appear on its website.
`Although slight, there are some noticeable differences between the look of the
`physical Products themselves and the electronic renderings of the Products that appear
`on Designer Skin’s website.
`Designer Skin’s website is publicly accessible.
`An internet user can copy an image from Designer Skin’s website by right-clicking
`on the image, selecting copy, and then pasting the image in the user’s desired location.
`The copied image can then be altered in various ways, including reducing the image’s
`size.
`S & L Vitamins is an internet reseller: it buys various products in bulk, including
`Designer Skin’s Products, and resells those products at discount prices through its
`website located at www.thesupplenet.com.
`S & L Vitamins’ website contains images that, except for being smaller, are identical
`to the electronic renderings of the Products that appear on Designer Skin’s website.
`Designer Skin has never authorized S & L Vitamins to use any of its intellectual
`property rights for any purpose. Nor has S & L Vitamins ever requested that Designer
`Skin authorize it to use its intellectual property rights for any purpose.
`After the close of evidence at trial, an advisory jury found that S & L Vitamins has
`infringed Designer Skin’s copyrights in the electronic renderings of the Products. On
`the basis of this finding, the Court likewise finds as a fact that S & L Vitamins has
`infringed Designer Skin’s copyrights in the electronic renderings of the Products.
`The Court further finds that there is a significant likelihood that S & L Vitamins will
`continue to infringe Designer Skin’s copyrights in the electronic renderings of the
`Products in the future.
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`6.
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`7.
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`8.
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`II.
`
`1.
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`2.
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`3.
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`4.
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`5.
`
`CONCLUSIONS OF LAW
`A. Subject Matter Jurisdiction
`As a preliminary matter, S & L Vitamins argues that the Court lacks subject matter
`jurisdiction over Designer Skin’s copyright claims because Designer Skin did not
`register the copyrights at issue in this case, i.e., the electronic renderings of the
`Products, before commencing this action.
`“Registration is generally a jurisdictional prerequisite to a suit for copyright
`infringement.” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1154 n.1 (9th
`Cir. 2007) (citing 17 U.S.C. § 411). But the failure to register a copyright before
`filing suit for infringement is a defect that can be cured by a later registration. See,
`e.g., Positive Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357, 365-67 (5th
`Cir. 2004) (citing cases); Proven Methods Seminars, LLC v. Am. Grants & Affordable
`Hous. Inst., LLC, 519 F. Supp. 2d 1057, 1063-64 (E.D. Cal. 2007) (citing Zito v.
`Steeplechase Films, Inc., 267 F. Supp. 2d 1022, 1025 (N.D. Cal. 2003)).
`The record in this case reflects that, after filing this infringement action, Designer
`Skin registered its copyrights in the labels that appear on the Products, as well as the
`copyrights in its website. These registrations provide overlapping protection for the
`electronic renderings of the Products. The Court therefore deems Designer Skin’s
`noncompliance with § 411 to be cured.4
`Accordingly, the Court has jurisdiction pursuant to 28 U.S.C. § 1331.
`B. Copyright Infringement
`To establish copyright infringement, Designer Skin must prove by a preponderance
`of the evidence that (1) the plaintiff is the owner of a valid copyright and (2) the
`defendant copied original elements from the copyrighted work. Feist Publ’ns, Inc.
`v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991); Swirsky v. Carey, 376 F.3d 841,
`
`4 S & L Vitamins argues that the copyright registration for the labels does not protect
`the electronic renderings of the Products.
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 5 of 12
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`7.
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`8.
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`844 (9th Cir. 2004). The plaintiff may establish that the defendant copied from the
`plaintiff’s work by proving that the defendant had access to the work and that the
`defendant’s work is substantially similar to the plaintiff’s work. Transgo, Inc. v. Ajac
`Transmission Parts Corp., 768 F.2d 1001, 1018 (9th Cir. 1985).
`Because the parties stipulate that Designer Skin owns valid copyrights in the
`electronic renderings of the Products, the only issue this Court must decide is whether
`S & L Vitamins copied these copyrighted renderings.
`The uncontroverted evidence at trial demonstrated (1) that S & L Vitamins, along
`with the rest of the public, has access to Designer Skin’s website; (2) that the
`electronic renderings of the Products appearing therein can be easily copied by simply
`right-clicking a mouse; and (3) that the images of the Products appearing in S & L
`Vitamins’ website are, except for their size, identical to the electronic renderings
`appearing in Designer Skin’s website. The Court therefore finds that S & L Vitamins
`has infringed Designer Skin’s copyrights in the electronic renderings of the Products.
`C. Entitlement to Permanent Injunction
`The parties dispute the law governing the issuance of a permanent injunction in a
`copyright-infringement case. Relying on MAI Sys. Corp. v. Peak Computer, Inc., 991
`F.2d 511, 520 (9th Cir. 1993), Designer Skin argues that “a permanent injunction
`[should] be granted in a copyright infringement case when liability has been
`established and there is a threat of continuing violations.” [Doc. # 115 at 3.]
`Conversely, S & L Vitamins argues that the MAI rule has been overruled by the recent
`Supreme Court opinion in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006),
`and that the traditional four-factor test reaffirmed by eBay applies.
`10. MAI’s general rule may accurately describe the result of applying the four-factor test
`to a copyright-infringement case in which liability has been established and there is
`a threat of continuing violations. Nevertheless, as Judge Wilson persuasively
`demonstrated in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp.
`2d 1197, 1209-10 (C.D. Cal. 2007), this general rule, as a rule, is clearly inconsistent
`
`9.
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 6 of 12
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`11.
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`12.
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`13.
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`with the Supreme Court’s decision in eBay. Thus, for the reasons given by Judge
`White in Grokster, Designer Skin’s reliance on this pre-eBay rule is unavailing, and
`the Court will apply the traditional four-factor test.
`Before turning to this test, however, the Court must address a preliminary matter
`raised by Designer Skin. Designer Skin argues, in essence, that it need not meet its
`burden of proving the four-factor test because, according to Designer Skin, S & L
`Vitamins conceded that the evidence at trial was legally sufficient to satisfy this test
`by offering to stipulate to a permanent injunction in open court. This argument is
`meritless. S & L Vitamins’ offer was no more than a settlement offer, which Designer
`Skin rejected. It was not an admission that the evidence at trial proved that Designer
`Skin is entitled to injunctive relief.5
`The Court now turns to the four-factor test. Before a court can grant permanent-
`injunctive relief, a plaintiff has the burden of proving:
`(1) that it has suffered an irreparable injury; (2) that remedies
`available at law, such as monetary damages, are inadequate to
`compensate for that injury; (3) that, considering the balance of
`hardships between the plaintiff and defendant, a remedy in equity is
`warranted; and (4) that the public interest would not be disserved by
`a permanent injunction.
`eBay, 547 U.S. at 391. The Court will address each factor in turn.
`1. Irreparable Harm
`Although courts have articulated the meaning of “irreparable harm” in various ways,
`the core essence of these varying formulations seems to be that harm is irreparable
`when it cannot otherwise be remedied except through injunctive relief. See Grokster,
`518 F. Supp. 2d at 1210 (noting differences between cases).
`
`5 Curiously, Designer Skin also argues that S & L Vitamins waived the sufficiency-
`of-the-evidence argument by failing to make it in a Rule 50(a) motion for judgment as a
`matter of law at trial. This argument, of course, is nonsense. Rule 50 only applies to jury
`trials, not to actions tried to the court with an advisory jury. Moreover, regardless of any
`motions S & L Vitamins did or did not make, Designer Skin (as the plaintiff) carries the
`burden of proof before the fact-finder.
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 7 of 12
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`Before eBay, many courts indulged in a presumption of irreparable harm upon a
`finding of copyright infringement. Grokster, 518 F. Supp. 2d at 1210 (citing cases).
`But after eBay, most courts addressing the issue have found the presumption to be
`irreconcilable with eBay’s holding that it is the plaintiff who “must demonstrate . . .
`irreparable injury,” 547 U.S. at 391, because the application of the presumption would
`effectively shift the burden of proof to the defendant. See, e.g., Grokster, 518 F.
`Supp. 2d at 1211 (holding “that the presumption of irreparable harm no longer inures
`to the benefit of Plaintiffs” because “[s]uch a rule would contravene the Supreme
`Court’s intent that Plaintiffs establish not merely that infringement causes ‘harm,’ but
`how it amounts to irreparable harm”); MercExchange, L.L.C. v. eBay, Inc., 500 F.
`Supp. 2d 556, 568 (E.D. Va. 2007) (holding that “a presumption of irreparable harm
`is inconsistent with the Supreme Court’s instruction that traditional equitable
`principles require the plaintiff to demonstrate that it has suffered an irreparable
`injury”). There is no reason to doubt the soundness of this reasoning, and this Court
`embraces it. As a result, it is now clear that past infringement alone cannot equal
`irreparable harm. Grokster, 518 F. Supp. 2d at 1214.
`But query whether a finding of past infringement coupled with a threat of future
`violations is sufficient to constitute irreparable harm. The district judge in Grokster
`did not think so, reasoning that “future copyright infringement can always be
`redressed via damages.” Id. at 1215. But Chief Justice Roberts, with whom Justices
`Scalia and Ginsburg joined, suggested otherwise in an eBay concurrence. 547 U.S.
`at 395 (noting “the difficulty of protecting a right to exclude through monetary
`remedies that allow an infringer to use”). And the Eighth Circuit has stated, albeit in
`a pre-eBay decision, that “irreparable harm inescapably flows from the denial of [the
`right to control the use of one’s copyrighted materials].” Taylor Corp. v. Four
`Seasons Greetings, LLC, 403 F.3d 958, 968 (8th Cir. 2005); see also MercExchange,
`500 F. Supp. 2d at 568 (stating that “the right to exclude . . . will frequently result in
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 8 of 12
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`a plaintiff successfully establishing irreparable harm in the wake of establishing
`validity and infringement”).
`16. Whatever else might be said against the propriety of a rule that holds that past
`infringement plus the threat of future infringement equals irreparable harm, it seems
`clear to this Court that such a rule would not run afoul of eBay’s directives. First of
`all, the eBay Court did not address the showing necessary to establish “irreparable
`harm.” It merely held that the plaintiff has the burden of proving it. 547 U.S. at 391.
`Second, this two-part test does not resurrect the “presumption of irreparable harm”
`impliedly laid to rest by the eBay court. It simply recognizes that a plaintiff meets the
`burden of proving irreparable harm by making this two-part showing. And finally,
`the two-part test does not represent “a rule that an injunction automatically follows
`a determination that a copyright has been infringed.” Id. at 392-93. In exercising
`their equitable discretion, courts would still have the freedom to deny injunctive relief
`when the public interest or the balance of hardships weighs against such relief.6
`In the end, however, this Court need not stake out its position on this issue to
`determine whether irreparable harm is present in the case before it. S & L Vitamins
`is an internet reseller of Designer Skin products. In conducting its internet business,
`S & L Vitamins has impermissibly used 42 of Designer Skin’s copyrighted images to
`market the products, without ever paying Designer Skin one cent in licensing fees.
`Designer Skin does not want S & L Vitamins to use its copyrighted images.
`Throughout this litigation and even before, S & L Vitamins has repeatedly shunned
`Designer Skin’s efforts to protect its copyright interests by claiming that the images
`appearing on its websites are lawful photographs of Designer Skin’s products. Yet
`
`17.
`
`6 The opportunity to deny injunctive relief for other reasons also explains why the
`two-part test does not conflict with the eBay Court’s statement that “the creation of a right
`is distinct from the provision of remedies for violations of that right.” Id. at 392. Although
`violations of the right to exclude would establish irreparable harm, they would not in and of
`themselves guarantee injunctive relief.
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 9 of 12
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`at trial, S & L Vitamins offered no proof to support this contention. Certainly S & L
`Vitamins had every right to decline to put on a defense case and to put Designer Skin
`to its burden of proof at trial. But the complete lack of evidence to support S & L
`Vitamins’ factual contention “do[es] not inspire confidence that [S & L Vitamins]
`poses no threat of future infringements.”7 Broad. Music, Inc. v. Blueberry Hill Family
`Rests., 899 F. Supp. 474, 483 (D. Nev. 1995) (inferring a threat of future infringement
`from the “thin excuses” the defendant made when confronted with infringement
`allegations). Finally, the nature of the infringing activity in this case makes actual
`damages difficult to prove—after all, how do you quantify the value of a product
`license that has no market?—and the availability of statutory damages in the wake of
`Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 701 (9th Cir. 2008),8 is
`uncertain at best. Failing to issue an injunction under the circumstances of this case
`would be tantamount to forcing Designer Skin to license its copyrighted images to S
`& L Vitamins for some unknown price yet to be determined in future litigation (if
`possible), thus rendering its right to exclude others from using its images illusory.
`Designer Skin has established irreparable harm.
`2. Inadequate Remedy at Law
`“‘[T]he requisite analysis of the second factor of the four-factor test inevitably
`overlaps with that of the first . . . .’” Grokster, 518 F. Supp. 2d at 1219 (quoting
`MercExchange, 500 F. Supp. 2d at 582). Thus, pursuant to the discussion above,
`Designer Skin has established that it lacks an adequate remedy at law.
`
`18.
`
`7 This is especially true in light of the Court’s summary-judgment ruling that the only
`triable issue of fact was whether the images on S & L Vitamins’ websites were lawful
`photographs or infringing copies of Designer Skin’s electronic renderings. [Doc. # 76 at 12.]
`
`8 Statutory damages are unavailable “for any infringement of copyright commenced
`. . . before the effective date of its registration.” 17 U.S.C. § 412(c). Poof holds that “the
`first act of infringement in a series of ongoing infringements of the same kind marks the
`commencement of one continuing infringement under § 412.” 528 F.3d at 701 (emphasis
`omitted).
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`19.
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`20.
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`21.
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`22.
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`3. Balance of Hardships
`On the one hand, S & L Vitamins argues that its business will suffer dramatically if
`it cannot display images of Designer Skin’s products. On the other hand, without an
`injunction, Designer Skin is at risk of future, needless litigation to enforce its
`copyrights. (The Court has previously explained why S & L Vitamins poses a threat
`of future infringements.) Because the injunction crafted by the Court will not enjoin
`S & L Vitamins from displaying original photographs of the products, S & L
`Vitamins’ claimed hardship is alleviated, and this factor weighs in favor of issuing an
`injunction.
`4. Public Interest
`Finally, the public interest in protecting the exclusive rights conferred upon a
`copyright holder will be served by issuing an injunction, Apple Computer, Inc. v.
`Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir. 1983), and S & L Vitamins
`has not identified any public interest that will be disserved by the issuance of an
`injunction.
`Designer Skin, therefore, has satisfied the four-factor test, and this Court, in the
`exercise of its discretion, shall issue a permanent injunction in favor of Designer Skin
`and against S & L Vitamins as set forth in the Final Judgment and Permanent
`Injunction issued concurrently with this Order.
`D. Costs
`Both Designer Skin and S & L Vitamins claim to be the “prevailing party” in this
`action for purposes of costs under Federal Rule of Civil Procedure 54(d).9 S & L
`Vitamins argues that it is the “prevailing party” because, although the Court is issuing
`an injunction against it, the injunction is of limited scope and it has prevailed on
`nearly all the other claims in this case. Designer Skin argues that it is the “prevailing
`
`9 The Court declines to view Defendant Larry Sagarin as distinct from S & L
`Vitamins for purposes of determining the “prevailing party” in this case because the issues
`involving these parties overlapped for all cost-incurring purposes.
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`24.
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`23.
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`party” because it has obtained a judgment on 42 claims of copyright infringement and
`a permanent injunction with regard to those 42 infringed copyrights.
`The district court has “wide discretion in awarding costs.” K-S-H Plastics, Inc. v.
`Carolite, Inc., 408 F.2d 54, 60 (9th Cir. 1969). Where neither party has been entirely
`successful, the court has the discretion to apportion costs between the parties. See,
`e.g., id.; Johnson v. Nordstrom-Larpenteur Agency, Inc., 623 F.2d 1279, 1282 (8th
`Cir. 1980) (holding that the district court did not abuse its discretion in ordering each
`party to bear its own costs); Three-Seventy Leasing Corp. v. Ampex Corp., 528 F.2d
`993, 999 (5th Cir. 1976) (recognizing the district court’s authority to order that each
`party bear its own costs under).
`Here, S & L Vitamins prevailed on the bulk of the claims and issues in this case, see
`Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Ariz. 2008), and
`the injunction ultimately entered against it is of limited scope. Designer Skin,
`however, proved that S & L Vitamins has infringed 42 of Designer Skin’s copyrights,
`and that there is a likelihood of future infringement. Under these circumstances, the
`Court orders that each party shall bear its own costs in this matter.
`E. Conclusion
`Based on the foregoing findings of fact and conclusions of law,
`IT IS ORDERED that S & L Vitamins has infringed Designer Skin’s copyrights in
`the electronic renderings of the 42 products styled Ultimate Love Junkie, Secret Rapture,
`Revival, Sheer Wisdom, Ray of Light, Vanishing Act, Designer Skin Intrigue, Tao, Designer
`Skin Mood, Designer Skin Worship, Worship Me, Designer Skin Goddess, Halo, Designer
`Skin Spellbound, Designer Skin Speed of Light, Designer Skin Shine, Designer Skin Saving
`Face, Amazing Face, Addicted to Love, Designer Skin Drama Queen, Enamor, Flare,
`Undercover Angel, Designer Skin Bombshell, Designer Skin Believe, Splash Get Down
`Brown, Ritual, Shrine, Dolce, Whisper, Veritas, Boutique Bronze Camouflage, Bohemia,
`Bronze Bondage, Smolder, Siren, Angel, Gold Digger, Ego Maniac, Triple Play, Splash
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`Case 2:05-cv-03699-JAT Document 123 Filed 09/05/08 Page 12 of 12
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`Hustle, and Bipolar, and that Designer Skin is entitled to a permanent injunction enjoining
`S & L Vitamins from any such future infringement of these copyrights;
`IT IS FURTHER ORDERED that S & L Vitamins has not infringed Designer Skin’s
`copyrights in the electronic renderings of the 12 products styled The Big O, Pure Intentions,
`Freedom, Choc-o-holic, Daddy-O, Floozy, Fortune, Boutique Bloom, Secret Stash, Try Me,
`Faker, and Shameless;
`IT IS FURTHER ORDERED that each party shall bear its own costs in this matter.
`DATED this 5th day of September, 2008.
`
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`
`- 12 -

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