Ideal Toy Corp. v. KENNER PRODUCTS, ETC.

• Decision Date: 27 December 1977
• Docket Number: No. 77 Civ. 4375 (CHT).,77 Civ. 4375 (CHT).
• Parties: IDEAL TOY CORPORATION, Plaintiff, v. KENNER PRODUCTS DIVISION OF GENERAL MILLS FUN GROUP, INC. and Twentieth Century-Fox Film Corporation, Defendants, and Twentieth Century-Fox Licensing Corporation, Counterclaim-Plaintiff.
• Court: U.S. District Court — Southern District of New York

443 F. Supp. 291

IDEAL TOY CORPORATION, Plaintiff, v. KENNER PRODUCTS DIVISION OF GENERAL MILLS FUN GROUP, INC. and Twentieth Century-Fox Film Corporation, Defendants and Twentieth Century-Fox Licensing Corporation, Counterclaim-Plaintiff.

No. 77 Civ. 4375 (CHT).

United States District Court, S. D. New York.

December 27, 1977.

COPYRIGHT MATERIAL OMITTED

Curtis, Morris & Safford, P. C., New York City, for plaintiff; Lewis H. Eslinger, John A. Mitchell, Stuart A. White, Leonard J. Santisi, William F. Lawrence, New York City, of counsel.

Rogers & Wells, New York City, for defendants and counterclaim-plaintiff; Herbert C. Earnshaw, John B. Koegel, New York City, Cooper, Epstein & Hurewitz, Beverly Hills, Cal., of counsel.

OPINION

TENNEY, District Judge.

Plaintiff Ideal Toy Corporation ("Ideal") commenced this action in August of this year seeking a declaration that its production and distribution of certain toys — sold under the trademark "Star Team" — did not infringe any rights possessed by the defendants Twentieth Century-Fox Film Corporation ("TCF"), producer of the film "Star Wars," and Kenner Products Division of General Mills Fun Group, Inc. ("Kenner"), holder of a license from TCF to produce toys based on characters from the film. Plaintiff sought and obtained an order enjoining defendants from instituting parallel state court actions during the pendency of this action. Ideal Toy Corp. v. Kenner Products Div'n of General Mills Fun Group, Inc., 77 Civ. 4375 (CHT) (Oct. 26, 1977). Before the order was entered, the defendants filed an answer and counterclaims, seeking injunctive and monetary relief from Ideal. They then moved for a preliminary injunction, contending that Ideal's toys infringed TCF's copyright in "Star Wars" and constituted unfair competition with "Star Wars" and with Kenner's toys. For the reasons set forth below, the preliminary injunction is denied.

Facts

The movie "Star Wars," released by TCF on May 25, 1977, is now, after less than seven months, the most financially successful movie of all time, having surpassed the movie "Jaws" in late-November. To date the gross box office rentals in the United States and Canada are in excess of $120 million. (Tr. at 78). Seeking to capitalize on the movie, TCF has granted, since the end of 1976, more than 20 licenses for "Star Wars" products, from school supplies and bubble gum to bedspreads and model flying robots. (Id. at 100-101). This merchandising campaign included an attempt to interest toy manufacturers in producing "Star Wars" toys. Marc Pevers, Director of Business Affairs for TCF, wrote to an officer of Ideal on February 14, 1977, announcing the upcoming release of "Star Wars" and soliciting Ideal's attendance at a presentation at the annual Toy Fair in New York in late-February. (Exh. F). A similar letter was written to Zeke Rose of Ideal's public relations firm. (Exh. E). A large, glossy black brochure containing pictures and descriptions of "Star Wars" (Exh. G) was enclosed with each letter.

Ideal did not attend the presentation at the Toy Fair, but Rose spoke to Pevers by phone at that time, informing him that

Ideal had no interest in the product, that science fiction films were chancy, films themselves were risky as merchandising properties because of their frequently short release life.

Furthermore, there was no television series and also that Star Wars itself was a rather ordinary property and all the elements of Star Wars had been done before, that there was a complete lack of interest on Ideal's part.

(Tr. at 90). Pevers received the same response from Herb Sand, an Ideal executive, and from another member of Ideal's public relations firm. (Id.). Unlike Ideal, however, Kenner expressed interest in the license and entered into an agreement with TCF in April 1977.

In May 1977, "Star Wars" was released to critical acclaim and virtually instant popularity. According to Ideal, this acclaim, together with the continued popularity of the television show "Star Trek", the publicity surrounding the American space shuttle, the expected release of other space movies, and the fact that other toy companies were bringing out space toys, led Ideal to reexamine its opinion of such toys.¹ (Id. at 11, 211, 246). Julius Cooper, Ideal's Senior Vice President for Research and Development, testified that the market for toys is very much affected by fads and trends, which often originate in a motion picture, a television show or a "happening." Mr. Cooper stated that "the toy industry tries to capitalize on these events because children are very well aware of what is current and we therefore always try to bring out toys, games, dolls that take advantage of these fads." (Id. at 204-05).

Cooper testified that prior to May 1977 Ideal had been doing development work on two types of space toys: a giant, almost-full-size robot and an updated version of its earlier line of toys marketed under the trademark "Zeroid."² (Id. at 211-12). At the end of May, however, Ideal determined that it was necessary to capitalize on the space toy fad as quickly as possible. Accordingly, Cooper testified, Ideal "decided to go back into its old archives of tools and molds and see what toys it perhaps could make with the least amount of investment." (Id. at 214). The first toy it reexamined was the "Alien Invader," a "Zeroid-type toy," i. e., a nonhumanoid, robot-like character with a thick body, tractor treads set in a square base for locomotion and two arms emerging from its "shoulders." (Exh. 11 at 26; Exh. 12). Ideal decided, however, that Alien Invader was too complicated, involving cams and gears. (Tr. at 215). (Indeed, the toy had been described in the 1970 catalogue as "a mass of mirth provoking mechanics." Exh. 11 at 27).

Ideal then went on to look at the Zeroids themselves. All but one of these toys had arms capable of throwing small missiles and were therefore rejected because Ideal has operated since 1970 under a safety regulation that its toys not launch projectiles. (Tr. at 216, 278). Attention then focused on the remaining Zeroid, "Zogg," and the decision was made to adapt that toy. The 1970 Zogg had an elaborate head of squarish shapes with six tube-like protrusions in the "face" and an antenna grid on top. (Exh. 12). This head constituted about one-third of the cost of the toy and was eliminated in favor of a simple hemispherical dome of clear plastic. (Exhs. 6A & 14). Cooper testified that this change was made for ease of manufacture and because Cooper wanted the light contained in the original Zogg to shine through the entire head. (Tr. at 270).

In order to make the toy less expensive, Ideal also took out the motor drive (id. at 216) and eliminated the laser weapon which was held in Zogg's hands and which lit up and blinked. (Id. at 267; Exh. 11 at 24). The latter change was apparently occasioned by the elimination of the electrical parts which activated the light in the laser. (Tr. at 267). Finally, the color of the original Zogg (at least of the example produced in evidence and the photograph in the original catalogue) was green with purple stripes. (Exhs. 11 at 24 and 12). The new toy became grey with either blue or red stripes.

The result was the toy called "Zeroid", one of the three challenged in this action. (Exh. 6A). With bubble head it stands approximately five inches high. Zeroid rides on a base slightly-less-than-three inches square and one-and-a-quarter inches high in which are set two rubber tractor treads three-eighths-of-an-inch wide. On the front of the base is a pattern which appears to represent electronic circuitry. Set on top of the base is a round body two inches high and slightly-less-than-two inches in diameter. The round body is grey in color, as is the base, and has slats through which may be glimpsed a solid plastic cylinder which surrounds the internal battery case: the color of this cylinder is either blue or red, and its projection through the slats in the body gives the appearance of blue or red striping in the body. The remainder of the figure consists of a clear plastic cylinder topped by grey "shoulders" and the clear dome described above; this entire top part swivels 360°. From the "shoulders" are appended two rotating "arms" approximately two inches in length which extend, when pointing down, to about mid-way in the round body, i. e., about two and one-half inches from the ground. A light placed in the middle of the top part of the toy shines through the clear plastic.

Having concluded that it wished to bring out a "complete line of toys," Ideal went on to consider other possibilities. (Tr. at 219). Cooper testified that "we wanted two good guys and that's why we chose the second robot to go along with the Zeroid." (Id.). Once again Ideal went back into its archives to look for a mold and chose a human figure patterned after a detective named "J. J. Armes." (Id. at 218; Exh. 16). Cooper stated that this figure was chosen because it was "the easiest mold to get into." (Tr. at 220). He also testified that the selection was made from among three existing figures, J. J. Armes prevailing over "Captain Action" (the toy which provided the mold for the "Knight of Darkness," the third of the figures challenged in this action) because J. J. Armes was a smaller figure and could be sold more cheaply, and over "Action Boy," Captain Action's partner, because Action Boy was not a fully-jointed figure like J. J. Armes. (Id. at 285). He added that Action Boy was substantially smaller than J. J. Armes (id.), although the evidence would seem to show that both were approximately nine inches tall. (Compare Exh. 11 at 26 with Exh. 16).

As with the Zeroid toy, alterations were made in the earlier product. Wanting to make the figure look like a robot, Ideal "went into the mold," engraving various lines and metallic-appearing features which then appeared as raised surfaces on the molded toy. (Exh. 7A). No changes were made in the...