EDEN TOYS, INC., Plaintiff-Appellant Cross-Appellee, v.
FLORELEE UNDERGARMENT CO., INC., Defendant-Appellee
Cross-Appellant
Dockets Nos. 82-7188, 82-7236, Nos. 25, 68 -- August Term
1982
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
697 F.2d 27; 1982 U.S. App. LEXIS 23627; 217 U.S.P.Q.
(BNA) 201; Copy. L. Rep. (CCH) P25,476
September 13, 1982, Argued
December 2, 1982, Decided
MANSFIELD, Circuit Judge:
Eden Toys, Inc. ("Eden") appeals from an order of the Southern District of
New York, 526 F. Supp. 1187, Robert L. Carter, Judge, granting summary judgment
dismissing its claim against Florelee Undergarment Co., Inc. ("Florelee") for
copyright infringement. Florelee cross-appeals from the district court's grant
[**2] of summary judgment enforcing Eden's claim against it under the Lanham
Act. We affirm in part and reverse and remand in part.
The subject of this case is the alleged copying of a drawing of the
copyrighted fictional character Paddington Bear, the central figure in a series
of children's books written by Michael Bond. n1 Paddington and Company, Limited
("Paddington"), a British corporation, holds all rights to these books, and to
the characters therein. In 1975 Paddington entered into an agreement with Eden,
an American corporation, granting Eden exclusive North American rights to [*30]
produce and sell, and to sublicense the production and sale of, a number of
Paddington products. n2 This agreement was amended in 1980 to grant Eden the
exclusive North American rights to produce and sublicense all Paddington
products except books, tapes and records, stage plays, motion pictures, and
radio and television productions.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 This discussion of the facts is based on the findings made by the district
court on the record for summary judgment, which is wholly documentary, and on
our own examination of that documentary record. [**3]
n2 The relevant portions of the 1975 Eden/Paddington exclusive licensing
agreement are as follows:
"1. Grant of License
(a) Paddington hereby grants to Eden, for the term of this
agreement and all renewals thereof, subject to the terms and
conditions and for the territory hereinafter set forth [North
America], the exclusive right and license to use the Michael Bond
books, characters, names, copyrights and trademarks in the manufacture
and sale of all Licensed Products in both Schedules B and C, and to
license others to use the Michael Bond books, characters, names,
copyrights and trademarks in the manufacture and sale of all Licensed
Products listed in Schedule C alone, and in Eden's name, to copyright
and trademark said Licensed Products and register the resultant
copyrights and trademarks.
. . .
"7. Copyrights and Trademarks
(a) Legal title in and to all copyrights and trademarks derived
from the creation, design and marketing of Licensed Products by Eden
and its licensees, and all copyright and trademark registrations based
thereon, shall be in Eden's name and owned by Eden for the duration of
this agreement and all renewals and extensions thereof; equitable
title shall at all times be in Paddington. Eden shall have the
exclusive right and license, for the duration of this agreement and
all renewals and extensions thereof, to use and license said
copyrights and trademarks and registrations thereof, and Eden shall
have the right in its own name or in Paddington's name or in the names
of both, to sue for infringement of all such copyrights and trademarks
and their respective registrations.
. . .
"9. Infringement
(a) In the event that Eden or its licensees shall be exposed to
competition, direct or indirect, from infringers of the copyright or
trademark rights which are licensed hereunder . . . Paddington shall,
at its option, take all necessary legal action to enjoin such
infringement and protect Eden and its licensees.
(b) In the event of such infringement and Paddington's election to
take no legal action . . . Eden shall have the right, at its option:
(i) to institute appropriate legal action against the infringer. .
. .
. . .
"SCHEDULE B
Stuffed animals, also described as dolls, and puppets, all of various
sizes.
"SCHEDULE C
1. Ready-to-wear sold in the children's division of department and
specialty stores, including, without limitations, infants, babette,
toddler, and 2-4 sizes for boys and girls; 4-7, 8-20, and 27-30 sizes
for boys; and 3-6X, 7-14, pre-teen and junior sizes for girls.
2. All accessories normally sold in the children's divisions of
department and specialty stores.
3. Infants, juvenile and youth domestics and textiles.
4. Juvenile and youth furniture and accessories normally sold in the
juvenile furniture department of department and specialty stores.
5. Toys, games, crafts and other articles normally sold in the toy
department of department stores, toy stores and specialty stores.
Excluded from this Schedule are the items of Schedule B and:
a. Books
b. Tapes and Records
c. Stage Plays
d. Motion Pictures
e. Radio and Television Productions."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**4]
At some point between 1975 and 1977 Ivor Wood, the illustrator of the
Paddington Bear books, drew a series of sketches ("the Ivor Wood sketches") for
the use of Eden and its sublicensees. There is evidence in the record that in
July 1980 Eden obtained in its own name U.S. copyright registration certificate
No. TXU 50-185 for these sketches as "derivative" works. Using the Ivor Wood
sketches as a point of departure, the C.R. Gibson Company ("Gibson"), pursuant
to a sublicense from Eden, produced a design for gift wrap that included seven
drawings of Paddington Bear ("the Eden/Gibson drawings"). This gift wrap was
first published in January 1978. In March 1980, Eden registered the gift wrap
design with the Copyright Office as a derivative work.
In November 1979, Eden discovered that Florelee was selling a nightshirt
featuring a print of a bear later found by the district court to be "identical
in almost all respects" [*31] to one of the Eden/Gibson drawings of Paddington
Bear. The nightshirt bore the legend ") Fred Original." After discovering a
second nightshirt with the same apparent "knockoff" of the Eden/Gibson drawing
Eden filed suit against Florelee in April 1980, [**5] alleging both that
Florelee had violated Eden's rights under the Copyright Act and that Florelee
had made a "false designation of origin" or "false description" of its product,
in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1976), by
printing ") Fred Original" on its shirts. Following cross-motions for summary
judgment, Judge Carter granted Florelee's motion for summary judgment dismissing
the copyright claim, and Eden's motion for summary judgment enforcing the Lanham
Act claim.
Reprinted below are (1) a drawing from page 8 of The Great Big Paddington
Book, copyrighted by Paddington; (2) the Ivor Wood sketch used as a model by
Gibson, and apparently copyrighted by Eden; (3) the Eden/Gibson drawing,
copyrighted by Eden and infringed by Florelee, and (4) Florelee's "Fred Bear"
drawing.
No. 1
[SEE ILLUSTRATION IN ORIGINAL]
Drawing of original Paddington Bear, from pre-existing book copyrighted by
Paddington. U.S. Copyright Reg. No. VA 11-588.
No. 2
[SEE ILLUSTRATION IN ORIGINAL]
Ivor Wood sketch, apparently copyrighted by Eden. (See App. 165a-166a.) U.S.
Copyright Reg. No, TXU 50-185.
No. 3
[SEE ILLUSTRATION IN ORIGINAL] [**6]
Eden/Gibson drawing, copyrighted by Eden. U.S. Copyright Reg. No. VA 44-638.
No. 4
[SEE ILLUSTRATION IN ORIGINAL]
Defendant's "Fred Bear" drawing.
[*32] DISCUSSION
The Copyright Act authorizes only two types of claimants to sue for copyright
infringement: (1) owners of copyrights, and (2) persons who have been granted
exclusive licenses by owners of copyrights. n3 17 U.S.C. § 501(b) (Supp. IV
1980); 3 M. Nimmer, Nimmer on Copyright § 12.02, at 12-25 (1982). Within the
first category are both those who hold copyrights on wholly new material, and
those who hold copyrights on derivative works, based substantially on
pre-existing materials. 17 U.S.C. § 103(a) (Supp. IV 1980).
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 Eden apparently believed that a third basis for standing under the
Copyright Act existed, namely authorization by the copyright holder of suit by a
person other than an exclusive licensee. Clause 9 of the 1975 Eden/Paddington
agreement, quoted supra note 2, contemplates such an arrangement. We do not
believe that the Copyright Act permits holders of rights under copyrights to
choose third parties to bring suits on their behalf. While F.R.Civ.P. 17(a)
ordinarily permits the real party in interest to ratify a suit brought by
another party, see Urrutia Aviation Enterprises v. B.B. Burson & Associates,
Inc., 406 F.2d 769, 770 (5th Cir. 1969); Clarkson Co. Ltd. v. Rockwell Int'l
Corp., 441 F. Supp. 792 (N.D. Calif. 1977), the Copyright Law is quite specific
in stating that only the "owner of an exclusive right under a copyright" may
bring suit. 17 U.S.C. § 501(b) (Supp. IV 1980).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**7]
In the present case, Eden claims to be the owner of the copyrights in certain
derivative works -- the Eden/Gibson drawing [*33] (No. 3 above) and the Ivor
Wood sketch (No. 2 above), upon which No. 3 is based -- and the exclusive
licensee of certain rights under Paddington's original copyrights. We discuss
each of these in turn. Eden's complaint is limited to claims based on its
ownership of the Eden/Gibson copyrighted drawing (No. 3 above); by express or
implied consent of the parties, see F.R.Civ.P. 15(b), Eden's claims as exclusive
licensee of certain rights under the original copyrighted Paddington drawings
(No. 1 above) were also considered by the court. Eden's later motion to add a
claim based on its ownership of the Ivor Wood copyrighted drawings was denied
but will be granted on remand. n4
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 The complaint did not mention Eden's claim of copyright in the Ivor Wood
sketches, although Eden's registration certificate for these drawings was
produced during discovery. In a motion to re-argue, Eden requested leave to
amend its complaint to add a cause of action for infringement of the Ivor Wood
drawings. The district court denied this request.
Although the registration of the Ivor Wood drawings does not appear to be
disputed, we cannot at this stage treat it as proved since Florelee did not have
an adequate opportunity below to challenge that registration. Cf. 6 J. Moore,
Moore's Federal Practice § 56.27[1], at 56-1557 to 56-1558 (1976). However,
since Eden did seek to allege and prove this copyright, albeit belatedly, and
since we reverse on grounds which recognize its materiality, substantial justice
requires that Eden be permitted to amend its complaint to add a cause of action
based on the copyrighted Ivor Wood drawings. Rule 15, F.R.Civ.P.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**8]
Eden's Claims as Copyright Owner
Assuming that, upon remand and amendment of the complaint to add its claim
based upon the Ivor Wood copyrighted sketch (No. 2 above) derived from
pre-existing Paddington Bear drawings (such as No. 1), Eden were found to be the
owner of U.S. Copyright No. TXU 50-185, registered July 22, 1980, which covers
the Ivor Wood sketch, Eden would be entitled to copyright protection for any
novel additions made by this work to the existing copyrighted drawings of
Paddington. G. Ricordi & Co. v. Paramount Pictures, 189 F.2d 469, 471 (2d Cir.
1951). The fact that Eden apparently did not register this copyright (or the
Eden/Gibson copyright) until after Florelee's alleged infringement does not
preclude Eden from recovering for infringement of these copyrights occurring
before the date of registration. See 17 U.S.C. § 411 (Supp. IV 1980); H. Rep.
No. 94-1476, 94th Cong., 2d Sess. 157 (1976); 3 M. Nimmer, supra, § 12.08, at
12-59 (1982). However, Eden's delay in registering the copyrights would
preclude it from claiming either attorney's fees or statutory damages. 17
U.S.C. § 412 [**9] (Supp. IV 1980). n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 Title 17 U.S.C. § 412 (Supp. IV 1980) provides:
"In any action under this title, other than an action instituted under
section 411(b), no award of statutory damages or of attorney's fees,
as provided by sections 504 and 505, shall be made for --
(1) any infringement of copyright in an unpublished work commenced
before the effective date of its registration; or
(2) any infringement of copyright commenced after first publication
of the work and before the effective date of its registration, unless
such registration is made within three months after the first
publication of the work."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Similarly, Eden's copyrighted Eden/Gibson drawing (No. 3 above) registered on
March 7, 1980, as No. VA 44-638 and the balance of its gift wrap design
represent derivative works based on the copyrighted Ivor Wood sketches
(including No. 2 above).
The district court's finding that Paddington rather than Eden holds the
copyrights in the Ivor Wood sketch appears to be incorrect. [**10] The record
contains a copy of an apparently valid U.S. Copyright Certificate, Reg. No. TXU
50-185, dated July 22, 1980, issued to Eden for "adaptation of designs and
additional artistic work" based on "the copyrighted Paddington Bear series of
books by Michael Bond, including 'The Great Big Paddington Book.'" We therefore
remand the issue to the district court for redetermination of ownership
following amendment of the complaint to add the claim based on the copyrighted
Ivor Wood sketch. In addition, the district court found or at least strongly
implied that Eden's copyright in the Eden/Gibson drawing was invalid because the
changes made by Gibson [*34] to the pre-existing Ivor Wood sketch were too
insignificant to qualify the drawing as an "original work" under the Copyright
Act, 17 U.S.C. § 102 (Supp. IV 1980). n6 In so finding, however, the district
court applied a test that erroneously mingled the standard for sufficient
originality and the test for infringement. The standard for sufficient
originality is whether a work contains "some substantial, [**11] not merely
trivial, originality." L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486, 490 (2d
Cir.) (en banc), cert. denied, 429 U.S. 857, 50 L. Ed. 2d 135, 97 S. Ct. 156
(1976); Chamberlin v. Uris Sales Corp., 150 F.2d 512, 513 (2d Cir. 1945). The
standard for copyright infringement, by contrast, is whether the defendant's
work is "substantially similar" to the plaintiff's work. Warner Bros., Inc. v.
American Broadcasting Co., 654 F.2d 204, 208 (2d Cir. 1981); see also Peter Pan
Fabrics, Inc. v. Martin Weiner Corp., 274 F.2d 487, 489 (2d Cir. 1960) ("same
aesthetic appeal").
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 The district court also suggested that Eden's grant of a sublicense to
Gibson to produce gift wrap was in violation of the 1975 Eden/Paddington
agreement, quoted supra at note 2, thus "tarnish[ing]" Eden's copyright in the
derivative work and placing Eden "in the position of an infringer." It is true
that if Eden did not have Paddington's consent to produce a derivative work
based on Paddington's copyrighted illustrations, its derivative copyrights would
be invalid, since the pre-existing illustrations used without permission would
"tend[] to pervade the entire derivative work." 1 M. Nimmer, supra, § 3.06, at
3-21 (1978), citing H. Rep. No. 94-1476, supra, at 57-58. However, the district
court's conclusion that Eden's use of the pre-existing material copyrighted by
Paddington was without permission appears mistaken. First, Paddington, the
supposedly aggrieved party, has made no complaint about this alleged
transgression. Indeed, Eden claims that Paddington supplied the Ivor Wood
sketches to Eden for the very purpose of allowing Eden to prepare derivative
works based on those sketches. Second, it appears that Paddington may have
retroactively ratified Eden's licensing of gift wrap by its conduct and by the
1980 amendment to the Eden/Paddington agreement. Such a ratification is
sufficient to insulate a holder of copyright in a derivative work from charges
by an infringer of that copyright that the derivative work was created without
the permission of the holder of the original copyright. See Ilyin v. Avon
Publications, 144 F. Supp. 368, 373 (S.D.N.Y. 1956); see also Gilliam v.
American Broadcasting Co., 538 F.2d 14, 21-22 & n.5 (2d Cir. 1976) (noting
possibility of ratification).
Finally, the 1975 agreement on its face authorized Eden to produce Paddington
Bear gift wrap. That agreement gave Eden the exclusive right to produce, inter
alia, "all accessories normally sold in the children's divisions of department
and specialty stores." Although some Paddington gift wrap may be sold to
customers in adult stores and departments, there can be little doubt that
Paddington Bear gift wrap paper, clearly aimed at a juvenile audience, would
"normally [be] sold in the children's divisions of department and specialty
stores."
On this last ground alone, we reject as erroneous the district court's
suggestion that Eden infringed Paddington's copyrights by producing the
Eden/Gibson drawing. Since the district court made this finding entirely on the
basis of documentary materials that we are equally competent to evaluate, we may
reject it. Taylor v. Lombard, 606 F.2d 371, 372 (2d Cir. 1979).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**12]
The difference between these two tests is not merely academic. A work which
makes non-trivial contributions to an existing one may be copyrighted as a
derivative work and yet, because it retains the "same aesthetic appeal" as the
original work, render the holder liable for infringement of the original
copyright if the derivative work were to be published without permission from
the owner of the original copyright. An example is the second edition of a
textbook, which is copyrightable even though it makes only minor revisions of or
additions to the first edition. By its very nature a "derivative" work, which
is copyrightable as such, borrows substantially from existing works, and is so
defined. 17 U.S.C. § 101 (Supp. IV 1980). Yet it is entitled to registration as
a copyrighted work even though it would infringe the original copyrighted work
if it were created without the permission of the owner of copyright in the
underlying work. United States v. Taxe, 540 F.2d 961, 965 n.2 (9th Cir. 1976),
cert. denied, 429 U.S. 1040, 50 L. Ed. 2d 751, 97 S. Ct. 737 (1977). [**13]
In this case, the Eden/Gibson variations of the Ivor Wood sketch, although
too minor to entitle the Eden/Gibson work to claim a different aesthetic appeal,
are still original and substantial enough to [*35] deserve independent
copyright protection. The numerous changes made by Gibson -- the changed
proportions of the hat, the elimination of individualized fingers and toes, the
overall smoothing of lines -- combine to give the Eden/Gibson drawing a
different, cleaner "look" than the Ivor Wood sketch on which it is based. Such
a contribution satisfies the minimal requirements of originality for
registration under the Copyright Act. Durham Industries v. Tomy Corp., 630 F.2d
905, 910 (2d Cir. 1980). Since the factual question here depends entirely on
visual comparison of exhibits, we are in as good a position as the district
court to judge the originality of the work in question. Taylor v. Lombard, 606
F.2d 371, 372 (2d Cir. 1979); Jack Kahn Music Co. v. Baldwin Piano and Organ Co.
, 604 F.2d 755, 758 (2d Cir. 1979). To the extent that [**14] the district
court applied the proper test for originality, its finding of insufficient
originality was erroneous. To the extent that the district court applied the
Peter Pan Fabrics test for copyright infringement as the test for determining
originality, the district court erred as a matter of law. The Ivor Wood
variations (No. 2 above) from the original Paddington sketch (No. 1 above),
while retaining the same aesthetic appeal as the original, are even more
pronounced and substantial than Gibson's contributions to the Ivor Wood sketch
and hence clearly meet the requirements of the Copyright Act for originality
entitling the owner to registration. Durham Industries v. Tomy Corp., supra, 630
F.2d at 910.
Thus, assuming that the district court upon remand finds that Eden holds a
valid copyright in the Ivor Wood sketch, this case involves three successive
tiers of valid copyrights in designs of the Paddington Bear. The first
copyrighted tier (No. 1 above), belonging to Paddington, n7 consists of a body
of illustrations of Paddington Bear in the books or other publications
copyrighted by Paddington. The second tier (No. 2 above) consists of the new
contributions [**15] made by the Ivor Wood sketch to the existing body of
Paddington Bear illustrations. Rights to these contributions are apparently
owned by Eden, which claims to hold the copyright to that sketch. n8 Finally,
the third tier (No. 3 above) consists of the new contributions made by Gibson in
transforming the Ivor Wood sketch into the Eden/Gibson drawing. Rights to these
contributions are held by Eden, which copyrighted the Eden/Gibson drawing.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n7 Of course, if Eden had an exclusive license at the relevant time to
exploit Paddington's copyrights in the market in which Florelee was selling,
Eden would be entitled by its exclusive license to sue Florelee for infringement
of those copyrights. See the discussion infra of Eden's exclusive license
claim.
n8 Should the district court find, contrary to our impression from the
record, that Paddington and not Eden holds the copyright to the Ivor Wood
sketches, Eden's claims as copyright owner would be restricted to the novel
additions made by Gibson to the Ivor Wood sketches.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**16]
Thus, whatever the outcome of the exclusive license issue discussed below,
Eden appears to be entitled to recover for the cumulative contributions made by
the Ivor Wood sketch and the Eden/Gibson drawing to the existing body of
Paddington Bear illustrations. The remaining issue, whether Florelee infringed
Eden's copyrights, requires little discussion. As the district court noted, the
Florelee print is "identical in almost all respects" to one of the validly
copyrighted Eden/Gibson drawings and in view of the close resemblance of the
Florelee print to the copyrighted Ivor Wood sketch the same observation applies
with respect to Eden's contention that Florelee infringed the Ivor Wood
copyright.
Assuming that Florelee infringed either or both of Eden's copyrights in the
derivative works, the fact that the Eden/Gibson drawing was printed on gift wrap
while the Florelee design was printed on clothing is irrelevant. No one may
copy another's novel additions in a derivative work, even if the copier employs
a medium different from that used by the holder of the derivative copyright.
Davis v. E.I. DuPont deNemours & Co., 240 F. Supp. 612 (S.D.N.Y. 1965). [**17]
[*36] Eden's Claim as Exclusive Licensee
Eden also sues for infringement as exclusive North American licensee for
certain Paddington Bear products. An exclusive licensee of a right under a
copyright is entitled to bring suits for infringement "of that particular right,
" 17 U.S.C. § 501(b) (Supp. IV 1980), without being required to join his
licensor. 3 M. Nimmer, supra, § 12.02, at 12-24 (1981). The question, then, is
whether Eden was the exclusive licensee of the right allegedly infringed by
Florelee, i.e., the right to produce images of Paddington Bear on adult
clothing. Florelee argues correctly that adult clothing was clearly not among
the "licensed products" listed in the 1975 agreement between Eden and
Paddington, see note 2, supra, and concludes from this fact that Eden was not
the exclusive licensee of this right at the time the allegedly infringing
garments were sold in 1979. Eden responds that at that time Eden was operating
under an informal understanding with Paddington, later formalized in the 1980
amendment to the 1975 agreement, that gave Eden the exclusive North American
rights to produce any Paddington Bear product [**18] except books, records, and
a few other items not relevant here.
Under the pre-1978 copyright law, exclusive licenses could be granted orally
or by conduct. Id., § 10.03[B][1], at 10-37 (1980). Under the new Copyright
Act, however, Eden's claim of an informal grant of an exclusive license
seemingly must fail in light of the statute of frauds provision of the new Act,
which states that an exclusive license "is not valid unless an instrument of
conveyance, or a note or memorandum of the transfer, is in writing and signed by
the owner of the rights conveyed. . . ." 17 U.S.C. § 204(a) (Supp. IV 1980).
However, since the purpose of the provision is to protect copyright holders from
persons mistakenly or fraudulently claiming oral licenses, the "note or
memorandum of the transfer" need not be made at the time when the license is
initiated; the requirement is satisfied by the copyright owner's later execution
of a writing which confirms the agreement. See Dan-Dee Imports, Inc. v.
Well-Made Toy Mfg. Corp., 524 F. Supp. 615, 618-19 (E.D.N.Y. 1981); [**19] 3 M.
Nimmer, supra, § 10.03[A], at 10-34 (1982); cf. Khan v. Leo Feist, Inc., 165
F.2d 188, 191-92 (2d Cir. 1947) (A. Hand, J.) (applying British law). In this
case, in which the copyright holder appears to have no dispute with its licensee
on this matter, it would be anomalous to permit a third party infringer to
invoke this provision against the licensee.
Since the district court rejected as a matter of law the notion that
Paddington could orally or through conduct grant an exclusive license to Eden,
it made no findings on the issue of whether Paddington had in fact granted Eden
such an informal license at any time during Florelee's apparent infringement,
and whether that understanding was ever committed to writing. We therefore
remand for findings on this issue. n9
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n9 On the present record, the evidence is mixed. Eden's president stated in
a deposition that the 1980 agreement, which clearly opened up the adult clothing
market to Eden, "formalized an understanding that [Eden] had been operating
[under], for several years past, with regard to the breadth of the licensed
product[s] covered by our agreement." App. 302a. Indeed, a telex from
Paddington, submitted to the court after the summary judgment hearing and not
yet made the subject of cross-examination by Florelee, constitutes the very sort
of memorialization required here. However, in an affidavit Eden's president
states that "nowhere in the complaint does plaintiff claim a license from
Paddington and Company Limited to manufacture or to sublicense Paddington Bear
garments for adults." App. 86a. If this statement raises a question of
pleading, and the problem is only a formal one, it may be corrected by an
amended pleading.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**20]
If Paddington granted Eden an informal exclusive license to sell Paddington
Bear products in the market in which Florelee sold -- adult clothing -- and that
informal license was later confirmed in a writing signed by Paddington, Eden may
sue in its own name, without joining Paddington, for infringement of any
Paddington-owned copyrights in that market. Combined with Eden's rights in the
derivative work(s) discussed earlier, Eden would be entitled to [*37] sue for
all damages caused by Florelee's infringement of the Eden/Gibson version of
Paddington Bear.
If the district court finds that no such informal understanding existed, or
that such an understanding was never memorialized, Paddington, which has
expressed a willingness to be made a co-plaintiff in this lawsuit, App. 233a,
should be joined as a plaintiff. The district court has the power to order the
joinder of "any person having or claiming an interest in the copyright [at
issue]." 17 U.S.C. § 501(b) (Supp. IV 1980). In this case, the exercise of that
power would clearly be appropriate if Paddington [**21] in fact owns some of
the rights apparently infringed by Florelee. The equities in this case lie
heavily in favor of Eden, and it would be unjust to deny redress to Eden because
of an easily remediable procedural defect.
Lanham Act Claim
Judge Carter granted summary judgment in favor of Eden's claim under § 43(a)
of the Lanham Act, 15 U.S.C. § 1125(a) (1976). n10 That section grants a cause
of action to "any person who believes that he is or is likely to be damaged by
the use of" any "false designation of origin" or "false description or
representation." Here, Florelee's shirts bore the legend, ") Fred Original." As
Judge Carter aptly noted, "there is no doubt about the falsity of Florelee's
copyright notice."
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n10 Eden's complaint also sought relief under 17 U.S.C. § 506, subsection (c)
of which concerns fraudulent notices of copyright. Eden did not press this
claim below; in any event, § 506 is a criminal provision that does not appear to
provide a private right of action.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**22]
The "Fred Bear" image appears to be at best a thinly disguised copy of the
Eden/Gibson drawing, possessing no originality. Moreover, there is a likelihood
that Eden will be damaged by this falsehood, since, as Judge Carter observed,
"this deception can mislead consumers into believing that the clothing they
purchased is a unique novelty instead of a common copy" and therefore to be
purchased in lieu of or in addition to other Paddington Bear possessions.
Section 43(a) reaches false and misleading claims with respect to the
defendant's own product, as distinguished from false claims about the plaintiff
's product or other matters. See Fur Information & Fashion Council, Inc. v.
E.F. Timme & Son, Inc., 501 F.2d 1048, 1051-52 (2d Cir.), cert. denied, 419 U.S.
1022, 42 L. Ed. 2d 296, 95 S. Ct. 498 (1974); Bernard Food Industries v. Dietene
Co., 415 F.2d 1279, 1283-84 (7th Cir. 1969), cert. denied, 397 U.S. 912, 25 L.
Ed. 2d 92, 90 S. Ct. 911 (1970). Since Florelee's claim of originality clearly
concerned its own product, [**23] the district court's finding of liability is
affirmed.
Florelee has made a "false designation of origin" or "false description"
within the meaning of the Lanham Act, and that falsehood will more probably than
not damage Eden. Eden is therefore entitled to an injunction, see American
Home Products v. Johnson & Johnson, 577 F.2d 160, 171 (2d Cir. 1978), and to
damages, if any, see Truck Equipment Service Co. v. Fruehauf Corp., 536 F.2d
1210, 1222-23 (8th Cir.), cert. denied, 429 U.S. 861, 50 L. Ed. 2d 139, 97 S.
Ct. 164 (1976).
The judgment of the district court dismissing Eden's claim of copyright
infringement is reversed and the copyright infringement aspects of the case are
remanded for further proceedings consistent with this opinion. The judgment in
favor of Eden on the Lanham Act claims is affirmed. Costs are assessed against
defendant-appellee.