Missouri Federal Court Sends Crayola Trademark Dispute to New Jersey

Back in November 2014, Crayola filed suit against Alex Toys in federal court in Missouri alleging claims for counterfeiting, trademark dilution and infringement, and unfair competition under federal and Missouri state law.  You can read Crayola's complaint here, which has such fun facts as the following:

  • "The CRAYOLA mark has been used since at least as early as June 31, 1905[.]"
  • "The CRAYOLA mark was coined by Alice Binney, the wife of company co-founder Edwin Binney, from 'craie,' the French word for chalk, and 'ola,' from 'oleaginous,' meaning oily."
  • "To this date, Crayola has sold over 200 billion crayons bearing the CRAYOLA mark and Crayola continues to produce nearly 3 billion Crayola crayons each year."
  • "The extraordinary popularity associated with Crayola brand products and the CRAYOLA mark is forever enshrined at the Smithsonian Institution where a permanent display featuring many Crayola brand products has been constructed."

The less fun facts relevant to the district court's decision to be discussed are that the Crayola Plaintiffs are Delaware entities with their principal place of business in Pennsylvania; their parent company (Hallmark Cards, Inc.) is headquartered in Missouri; and Defendant Alex Toys is a New Jersey company with its principal place of business in that state.

Alex Toys filed a motion to dismiss Crayola's complaint for improper venue or, alternatively, to transfer the case to the District of New Jersey.  Notwithstanding the general (often considerable) deference afforded a plaintiff's choice of forum, the district court concluded that overall, the facts favored transferring the case to New Jersey.

The fact that the Crayola Plaintiffs were not Missouri residents decreased the amount of deference afforded their choice of forum.  And the nature of the claims--infringing/diluting use of Crayola's mark--also supported a New Jersey forum, the court concluded, as the allegedly offending packaging was designed and developed in New Jersey, where Alex Toys is headquartered.

The fact that Hallmark, Crayola's parent company, is headquartered in Missouri did not tip the balance back in favor of a Missouri forum.  The court specifically noted that the case turned upon use of the CRAYOLA mark and Crayola, not Hallmark, is the registrant of the mark.

Thus, the court concluded that these and other facts and considerations favored transferring the case to the District of New Jersey.  The court did not address the substance of Alex Toys' alternative motion to dismiss, denying it as moot based on its decision on the motion to transfer.

Apparently, at the time the Missouri court granted Alex Toys' motion to transfer the case, Crayola's motion for a preliminary injunction had been fully briefed and was pending.  That motion will now be decided by the District of New Jersey. 

The case cite is Crayola Properties, Inc. v. Alex Toys LLC, Civil No. 4:14-cv-00992-BCW (W.D. Mo. Jan. 7, 2015).  The case has been assigned case no. 2:15-cv-00278-WHW-CLW by its new home, the United States District Court for the District of New Jersey.

Ninth Circuit: First Sale Doctrine Defeats Copyright Infringement Claim in Omega v. Costco Dispute Over Watches

This long-running dispute involves the sale of watches in the United States that were purchased on the "gray market" overseas.  Omega sold the watches--manufactured in Switzerland--to authorized distributors overseas.  Third parties then purchased the watches and sold them to a New York company, which in turn sold them to Costco who eventually sold them in California.  Omega authorized the initial foreign sales but did not authorize the importation into the U.S. or Costco's sale of the watches.

The watches, which were not themselves copyrighted (or copyrightable), bore a copyrighted globe design engraved on the underside.  In 2004, Omega sued Costco for copyright infringement based on Costco's acquisition and sale of the watches bearing the copyrighted globe design.

Both parties moved for summary judgment.  Costco argued that the first sale doctrine of the Copyright Act, 17 U.S.C. Section 109(a), precluded Omega's infringement claim based on Omega's initial foreign sale of the watches.  The district court granted Costco's motion and also awarded attorneys' fees to Costco.

Omega appealed and in September 2008, the Ninth Circuit reversed, essentially concluding that the first sale defense was unavailable because the watches were neither manufactured nor previously sold in the U.S. with the copyright owner's permission, a necessary prerequisite to application of the defense according to Ninth Circuit precedent.  You can read the Ninth Circuit's 2008 opinion, addressing the first sale issue, here.

On remand, the parties again moved for summary judgment and the district court again granted Costco's motion but this time based its decision only on the copyright misuse defense.  The district court found that the defense applied because "Omega used the defensive shield of copyright law as an offensive sword":

Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted.  Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.

You can read the district court's order and judgment here.  The district court also again granted Costco's motion for attorneys' fees.

Back to the Ninth Circuit the case went and this time, the court affirmed the district court's decision, though on a basis different from the district court's reasoning.  Rather than addressing the copyright misuse question, the Ninth Circuit returned to the first sale defense, finding that it disposed of Omega's copyright infringement claim.

After the district court's second grant of summary judgment to Costco and while briefing was pending in the second appeal to the Ninth Circuit, the Supreme Court issued its decision in Kirtsaeng v. John Wiley & Sons, Inc. in March 2013.  In that decision, the Supreme Court essentially held that the first sale doctrine does apply to copies of copyrighted works lawfully made outside the U.S.  That decision established the validity of Costco's first sale defense, the Ninth Circuit held, and therefore disposed of Omega's copyright infringement claim:

Kirtsaeng explained that copyright distribution and importation rights expire after the first sale, regardless of where the item was manufactured or first sold. . . .

Omega concedes that it authorized a first sale of the watches in a foreign jurisdiction.  Omega's right to control importation and distribution of its copyrighted Omega Globe expired after that authorized first sale, and Costco's subsequent sale of the watches did not constitute copyright infringement.

Judge Wardlaw wrote a separate opinion concurring in the judgment affirming the district court but arguing that the Ninth Circuit should affirm based on the copyright misuse defense, not the first sale doctrine, an issue which was not briefed or argued in the second appeal.  Judge Wardlaw went on to discuss why the relatively rare defense of copyright misuse applied to Omega's copyright infringement claim.  Essentially, Judge Wardlaw concluded that Omega used its copyrighted globe design--variously described as "nearly invisible" and "roughly the size of the hole in a Cheerio" (picture appended to the Ninth Circuit's opinion)--for the purpose of using its limited monopoly in the design to control the importation and sale of its watches, which were not copyrightable:

If the copyright law allowed Omega to use its copyright to combat the importation and sale of all gray market watches that are stamped with the Globe Design, it would effectively grant Omega a copyright-like monopoly over the distribution and sale of Omega watches in the United States.  Because such an outcome directly controverts the aims of copyright law, it is impermissible.

The case cite is Omega S.A. v. Costco Wholesale Corp., Appeal Nos. 11-57137, 12-56342 (9th Cir. Jan. 20, 2015).

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Unanimous Supreme Court Finds That Ninth Circuit Got it Right on Trademark "Tacking"

This case involved the doctrine of "tacking" which allows trademark users to make some modifications to their marks without losing priority over junior users by, as the Supreme Court described it, "cloth[ing] a new mark with the priority position of an older mark."

In determining whether tacking is appropriate, courts have adopted the "legal equivalents" rule, which asks whether the original and modified marks "'create the same, continuing commercial impression' so that consumers 'consider both as the same mark.'"

The circuit split that the Supreme Court addressed was whether the tacking question should be decided by judges or juries.  The Ninth Circuit concluded that it was "a highly fact-sensitive inquiry . . . reserved for the jury," while the Federal and Sixth Circuits resolved it as a question of law.

In a short, unanimous decision, the Supreme Court agreed with the Ninth Circuit, stating that a test like the tacking rule, "that relies upon an ordinary consumer's understanding of the impression that a mark conveys falls comfortably within the ken of a jury."  The Court did not hold that a judge may never decide the tacking question but only that "when a jury trial has been requested and when the facts do not warrant entry of summary judgment or judgment as a matter of law, the question whether tacking is warranted must be decided by a jury."

The case cite is Hana Fin., Inc. v. Hana Bank, Case No. 13-1211 (U.S. Jan. 21, 2015).

Ninth Circuit: EA's First Amendment Defenses Don't Defeat Former Players' Claims Over Use of Likenesses in "Madden NFL"

For at least the second time in as many years, the Ninth Circuit addressed the interplay between the right of publicity and the First Amendment in the context of sports-themed video games. 

This most-recent case involved claims by former professional football players against Electronic Arts that challenged EA's use of their likenesses in its Madden NFL game.  Specifically, the former players asserted claims for right of publicity under California statutory and common law, conversion, trespass to chattels, and unjust enrichment.

EA moved to strike the complaint under California's anti-SLAPP statute, arguing that plaintiffs' claims would fail based on five First Amendment defenses:  the transformative use defense, the public interest defense, the public affairs exemption in Section 3344(d) of California's Civil Code, the Rogers test, and the incidental use defense.

The Ninth Circuit essentially relied on its earlier decision in Keller v. Electronic Arts, 724 F.3d 1268 (9th Cir. 2013), to conclude that EA's first four defenses were precluded.  (You can find a discussion of Keller and the Ninth Circuit's decision in another former player's challenge to the use of his likeness in Madden NFL issued the same day as Keller here.)

That left only EA's incidental use defense, which the Ninth Circuit assessed using four factors (all internal quotation marks omitted):

(1) whether the use has a unique quality or value that would result in commercial profit to the defendant; (2) whether the use contributes something of significance; (3) the relationship between the reference to the plaintiff and the purpose and subject of the work; and (4) the duration, prominence or repetition of the name or likeness relative to the rest of the publication.

The Ninth Circuit concluded that none of these factors favored EA's incidental use defense, concluding that "EA goes to substantial lengths to incorporate accurate likenesses of current and former players" and that the likenesses "are featured prominently in a manner that is substantially related to the main purpose and subject of Madden NFL -- to create an accurate virtual simulation of an NFL game."

The Ninth Circuit thus affirmed the denial of EA's motion to strike the plaintiffs' complaint.

The case cite is Davis v. Elec. Arts Inc., Appeal No. 12-15737 (9th Cir. Jan. 6, 2015).

UPDATE: No Go for Supreme Court Review in "The Dark Knight Rises" Trademark Dispute

On Monday, the Supreme Court denied review of the dispute between Fortres Grand, the seller of software under the mark "Clean Slate," and Warner Bros. over references to a fictional software program known as "the clean slate" in the 2012 Batman film, The Dark Knight Rises.

Fortres Grand's trademark claims were dismissed in the district court, a decision affirmed by the Seventh Circuit.  You can find a discussion of the district court's decision here and the Seventh Circuit's decision here.

E-Book Seller's Knowledge That Customers Were Stripping DRM Protection From E-Books Found Insufficient for Publishers' Copyright Infringement Claim

Publishers Simon & Schuster and Penguin Group had agreements with Abbey House Media under which Abbey House agreed to act as their agent in the sale of e-books.

As part of its agreement to sell the Publishers' e-books, Abbey House was to engage a "digital fulfillment provider" who would be responsible for providing DRM (digital rights management) protection for the e-books.  Abbey House was also responsible for ensuring that purchasers agreed to use the e-books only for personal, noncommercial purposes.

Abbey House's e-book store ceased operations in April 2013.  As part of that cessation, Abbey House told customers that they could download their e-books onto their new devices by stripping the DRM protection using tools available on the Internet, as long as they were doing so for personal use.

The Publishers alleged that some customers stripped the DRM protection from the e-books and then copied and distributed them in violation of the copyrights in the e-books.  The Publishers' copyright infringement claims against Abbey House were based on the theory that Abbey House's announcement to customers "led users to remove the DRM protection from e-books, and some users who removed the DRM protection then copied and distributed these e-books."  As a result, according to the Publishers, Abbey House was liable for contributing to or inducing this copyright infringement.

But the district court found the Publishers' allegations insufficient to support either theory of copyright infringement.

As to the contributory infringement theory, the court first noted that the only allegation was that Abbey House knew customers were removing DRM protection from their e-books, which did not equate with knowledge that some customers were then also illegally distributing the e-books.

Second, the court found that the Publishers had not "plausibly alleged" that Abbey House materially contributed to the unlawful distribution of the e-books by customers:

While it is alleged that Abbey House informed its customers of a third-party's product that would enable them to strip DRM from their e-books, such stripping is not itself an act of copyright infringement.  Nor is the stripping of DRM to transfer an e-book to a consumer's newly purchased e-reader the act of infringement at issue here.  With the demise of Abbey House, the stripping was as essential for their personal, noncommercial use as it was for a commercial misappropriation of the publishers' works.

Similarly, the court found that Abbey House's announcement regarding stripping the DRM protection was insufficient to support an inducement of copyright infringement theory:

Abbey House discussed only a noninfringing use in the Announcement: the removal of DRM protection by consumers so that they could continue to read their purchased e-books on new devices after Abbey House went out of business.  This does not promote the infringement at issue here [i.e., copying and distributing the e-books after the DRM protection was removed].

The court thus dismissed the Publishers' claims for copyright infringement.  The court also dismissed Penguin's breach of contract claim against Abbey House while Simon & Schuster's claim survived.

The case cite is Abbey House Media, Inc. v. Apple Inc., Case No. 14cv2000 (DLC) (S.D.N.Y. Nov. 21, 2014).

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Court Dismisses Copyright Claims Alleging Infringing Use of the Word "Oh"

This copyright infringement case involved plaintiff's allegation that defendants' use of the word "oh" in an audio recording and music video infringed plaintiff's copyrights in a composition and recording in which "oh" appears once.

The allegedly infringed works were a composition called Hook & Sling Part I and a performance of that composition by Eddie Bo and the Soul Finders.  The allegedly infringing works were an audio recording entitled Run This Town and a music video with the same title featuring Jay-Z, Rihanna, and Kanye West.

On defendants' motion to dismiss, the court accepted the parties' assumptions on two points--that plaintiff had valid copyrights in the works at issue and that defendants had sampled the word "oh" and used it in the accused works.  Resolution of the motion therefore came down to whether there was a substantial similarity between the works.

Although the court expressed skepticism as to whether the word "oh" was, standing alone, deserving of copyright protection, it ultimately declined to reach the issue because it decided the motion on the question of substantial similarity or, more specifically, the quantitative and qualitative significance of the allegedly copied element to plaintiff's works.

Turning to the latter question, the court found that the word "oh" was neither quantitatively nor qualitatively significant to the allegedly infringed works.

As to quantitative significance, the court noted that the allegedly sampled portion--the word "oh"--constituted only a fraction of a second.  The court thus had no difficulty concluding that the "word 'oh' has essentially no quantitative significance" to plaintiff's works.

The court also concluded that "oh" was not qualitatively significant to plaintiff's works:

The word in question -- "oh" -- is quite common.  It appears only once, if it appears at all, in the introductory lyrics to [the composition].  There is nothing inherently or especially important about "oh" to the message conveyed by, or the theme presented in, the [c]omposition.

Similarly, Eddie Bo vocalizes "oh" only once, in the introduction to his rendition of [the composition].  His vocalization of the word is not accompanied by music and lasts no more than a fraction of a second. . . .  [T]he Court holds that the Master would not have suffered if "oh" had been replaced by any of a host of monosyllabic or duosyllabic utterances.  Indeed, "oh" could have been omitted entirely without altering the essence of [the allegedly infringed works].

The court therefore granted defendants' motion to dismiss plaintiff's copyright infringement claims.

The case cite is Tufamerica, Inc. v. WB Music Corp., Case No. 13-cv-7874 (LAK) (S.D.N.Y. Dec. 8, 2014).

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Amicus Curiae Filings in Ninth Circuit En Banc Rehearing of "Innocence of Muslims" Case

The amicus curiae briefs are piling up in connection with the Ninth Circuit's decision to rehear en banc Garcia v. Google, the case involving an actress's claim of a copyright interest in her performance in the film "Innocence of Muslims."

The Ninth Circuit set today as the deadline for filing amicus curiae briefs and so far briefs have been filed by:  Netflix, Inc.; The Computer & Communications Industry Association; Public Citizen; Internet Law Professors; a collection of entities including the Electronic Frontier Foundation and the ACLU; a group of professors including David Nimmer; a collection of entities including Adobe Systems, Facebook, and Twitter; Floor64 and the Organization for Transformative Works; a group of Professors of Intellectual Property Law; a collection of entities and individuals including the International Documentary Association; and a collection of groups including the Screen Actors Guild-American Federation of Television and Radio Artists supporting Appellant Garcia.

The Ninth Circuit has scheduled en banc oral argument for December 15, 2014, at 3:30 p.m.

You can read about related proceedings in the Ninth Circuit here, here, and here.

The case cite is Garcia v. Google, Inc., Appeal No. 12-57302 (9th Cir.).

(Note: This post has been updated after its original publication date to include later-filed briefs.)

Ninth Circuit Orders Rehearing En Banc in Garcia v. Google "Innocence of Muslims" Case

It took awhile but today the Ninth Circuit ordered rehearing en banc of Garcia v. Google, the case involving an actress's claim of a copyright interest in her performance in the film "Innocence of Muslims" and her request for a preliminary injunction requiring Google to take down the film.

Currently, en banc argument in the appeal is scheduled for the week of December 15, 2014.

You can read about earlier proceedings in the Ninth Circuit here and here.

The case cite is Garcia v. Google, Inc., Appeal No. 12-57302 (9th Cir.).

Dispute Over Rights to "Zorro" Dismissed on Jurisdictional Grounds

A dispute over the rights to the nearly 100-year-old fictional character Zorro has been quietly dismissed on jurisdictional grounds by the Western District of Washington.

According to the complaint, the Zorro character first appeared in 1919 in a story titled "The Curse of Capistrano" by Johnston McCulley.  That story was adapted into "The Mask of Zorro" silent movie by Douglas Fairbanks, Sr. in 1920.

There doesn't appear to be any dispute that the copyrights in these two works--the 1919 story and the 1920 film--have expired and therefore those works have entered the public domain.  (In 2002, in another dispute between the parties before the Trademark Trial and Appeal Board, Zorro Productions, Inc. ("ZPI") admitted that the copyright terms for the 1919 story and the 1920 film had expired.)

In 1996, the plaintiff, Robert Cabell, authored the script for a musical-- "Z-The Musical of Zorro"--allegedly incorporating material from the 1919 story and the 1920 film as well as original material.  Cabell later licensed his musical to be produced at a festival in Germany in June 2013 and by a production company also based in Germany.  Plaintiff alleged that ZPI contacted representatives of the festival and the production company, claiming the rights to the Zorro character.

ZPI "claims to be the worldwide proprietor of the trademark 'Zorro' and to own numerous copyrights pertaining to 'Zorro'," according to the court.  The complaint alleges a number of trademark registrations that ZPI obtained for the "Zorro" mark.  It also alleges that ZPI holds a copyright interest in a 2005 book titled "Zorro" and that ZPI produced a musical based on the book that plaintiff alleges incorporates original material from his 1996 script.

Cabell filed suit against ZPI (and others) in March 2013, alleging, in part, copyright infringement with respect to ZPI's "Zorro" musical and the book on which it was based.  He also sought a declaration that his musical does not infringe on any copyright or trademark interest of ZPI and requested cancellation of certain trademark registrations for "Zorro" obtained by ZPI.

Defendants moved to dismiss plaintiff's complaint alleging, among other things, a lack of personal jurisdiction.  The court granted the motion on October 21, 2014, leaving the interesting copyright/trademark issues unresolved.

The case cite is Cabell v. Zorro Prods., Inc., Case No. 2:13-cv-00449 (W.D. Wash. Oct. 21, 2014).