On August 20, 2010, the Fourth Circuit Court of Appeals affirmed the Middle District of North Carolina's rulings on liability and damages against Collezione Europa. The decision brings to a close litigation originally filed in 2004.

The case is primarily a copyright case with an interesting twist that brings trademark and unfair and deceptive trade practices law into play. Universal sold two collections, the Grand Inheritance Collection and the English Manor Collection. Although Universal's designer admitted to consulting public domain sources, and combining elements from the public domain, Universal filed copyright applications claiming the "decorative sculptural designs on furniture; adaptation of preexisting decorative designs on furniture; compilation of decorative designs on suites of furniture." The Copyright Office issued registrations to Universal on the same day it received the applications.

At the request of a customer, Collezione agreed to design furniture collections that mimicked Universals' collections. Collezione believed that the Universal designs were not entitled to copyright protection. At the High Point Market, Collezione displayed Universal furniture with its labels removed in its showroom when it introduced its collections.

The district court awarded Universal a permanent injunction prohibit Collezione from producing or displaying derivative works of Universal's copyrighted collections and from selling the infringing products. The district court awarded Universal $11 million, representing Collezione's gross revenues on the infringing items. Collezione failed to produce an accurate accounting of its expenses. Collezione appealed the liability and damages decisions.

On appeal, the Fourth Circuit affirmed. The appellate court found that Universal owned valid copyrights that protected sufficiently original and conceptually separable elements in Universal's collections. The court noted the copyright applications only claim decorative sculptural designs and compilations of decorative designs and that such designs meet the threshold for originality even if they consist of a compilation of public domain design elements. The designer still selected and arranged them in an original manner. The court also found that the sculptural elements on Universal's collection were conceptually separable from the utilitarian features.

As in interesting side note, the district court originally denied Universal's motion for a preliminary injunction and the Fourth Circuit affirmed that denial. The district court originally found the claimed designs were not conceptually separable from the furniture's utilitarian function, rendering them unprotectable. In its opinion, the Fourth Circuit noted this tension in the record and commented that the earlier decision was based on a "sparse record" and that it was not the court's intention to "categorically exclude Universal's and other comparable design compilations from copyright protection."

A copy of the decision may be found here.