Original Appalachian Artworks v. Toy Loft

• Decision Date: 02 May 1980
• Docket Number: Civ. A. No. C79-2325A.
• Citation: 489 F. Supp. 174
• Parties: ORIGINAL APPALACHIAN ARTWORKS, INC., a Georgia Corporation, Plaintiff, v. The TOY LOFT, INC., a Georgia Corporation; Lawson Enterprises Unlimited, Inc., a Georgia Corporation; and A. David Lawson, an individual, Defendants.
• Court: U.S. District Court — Northern District of Georgia

489 F. Supp. 174

ORIGINAL APPALACHIAN ARTWORKS, INC., a Georgia Corporation, Plaintiff, v. The TOY LOFT, INC., a Georgia Corporation; Lawson Enterprises Unlimited, Inc., a Georgia Corporation; and A. David Lawson, an individual, Defendants.

Civ. A. No. C79-2325A.

United States District Court, N. D. Georgia, Atlanta Division.

May 2, 1980.

COPYRIGHT MATERIAL OMITTED

Stanley F. Birch, Jr., Deal, Birch, Orr & Jarrard, Gainesville, Ga., William H. Needle, Newton, Hopkins & Ormsby, Atlanta, Ga., for plaintiff.

James C. Kesterson, Pitts & Kesterson, Knoxville, Tenn., W. Fred Orr, II, Orr & Edwards, Decatur, Ga., for defendants.

ORDER

TIDWELL, District Judge.

The above-styled action is one for copyright infringement, unfair competition, injury to business reputation, deceptive trade practices, and a suit on an open account arising under the copyright laws of the United States, 17 U.S.C. § 101 et seq., the Federal Trademark Act of 1946, 15 U.S.C. § 1051 et seq., the statutes of the State of Georgia, and common law. This court's jurisdiction was invoked by the plaintiff under 28 U.S.C. §§ 1331 and 1338, 17 U.S.C. § 502, 15 U.S.C. § 1121, and Ga.Code Ann. § 24-113.1. The complaint requests injunctive relief, damages, court costs, and attorney's fees. The defendants have interposed counterclaims under 15 U.S.C. § 1125(a) and Ga.Code Ann. §§ 37-712, 106-115, and 106-701. An anti-trust counterclaim (designated Count VI) was voluntarily dismissed by the defendants.

A temporary restraining order which was issued by the court on December 21, 1979 was later dissolved in accordance with the terms of that order when the defendants posted a $10,000 bond pending final disposition of the action. Pursuant to Rule 65(a)(2), Federal Rules of Civil Procedure, the trial of the case on the merits was consolidated with the hearing of plaintiff's application for a preliminary injunction on March 31 — April 2, 1980. After considering the evidence and arguments of counsel, the court makes the following findings of fact and conclusions of law. Rule 52(a), Fed.R. Civ.P.

FINDINGS OF FACT

Xavier Roberts, who is presently the president of the plaintiff corporation, has an extensive background in art, including soft sculpture. In 1976 and 1977, he was employed by the State of Georgia at Unicoi State Park, where he was a buyer for the park's craft shop. In connection with his duties there, he became acquainted with Martha Nelson, a practicing artist whose work primarily involved soft sculpture dolls. Mr. Roberts decided to carry Ms. Nelson's dolls at the Unicoi craft shop, and at his suggestion, she exhibited her work at a craft show held at Unicoi State Park in February, 1977. Because of a dispute which occurred at the craft show, Ms. Nelson thereafter refused to sell any additional dolls through the Unicoi craft shop. In May of 1977, Mr. Roberts, with the assistance of Deborah Morehead, began producing and selling his own soft sculpture dolls through the Unicoi craft shop.

Between May, 1977 and the end of that year, Mr. Roberts and Ms. Morehead made and sold approximately 80 of their soft sculpture dolls. Although there is some dispute as to the exact numbers involved, it appears that up to one-half of the dolls sold had no copyright notice, while the remainder had a copyright notice affixed to paper tags pinned to the dolls' clothing. These early dolls, as exemplified by Plaintiff's Exhibits 18 and 19 (which two dolls were made in December, 1977) were experimental models differing substantially from the dolls that the plaintiff is presently manufacturing.

The type of doll that the plaintiff corporation presently manufactures and sells was first published, as that word is used in the Copyright Act, in February of 1978. All of plaintiff's dolls that have been produced subsequent to that date have had copyright notices attached to them, although notices on sewn-in tags were not used until late 1978. The plaintiff was incorporated in the fall of 1978, and on June 1, 1979 copyright registration number VA 35-804 was issued for plaintiff's dolls. The registration certificate lists Xavier Roberts as the "author" and Xavier Roberts and Original Appalachian Artworks, Inc. as the copyright claimants. Xavier Roberts has since assigned all of his interests in the copyright to the plaintiff corporation. Although it appears that Ms. Morehead "co-authored" plaintiff's dolls, this does not affect the posture of the present action vis-a-vis this plaintiff and these defendants.

The plaintiff's dolls, sold under the trade name "The Little People," have achieved considerable commercial success, in part due to a unique combination of marketing techniques, which include: treating the dolls as "babies" who are "adopted" rather than sold; providing the customer with a "birth certificate" and "Official Adoption Papers" which include an "oath of adoption" to be subscribed to by the buyer; individually naming each doll that is produced, and communicating this fact by means of a name tag affixed to each doll's clothing; sending the buyer a birthday card for his "little person" on the first anniversary of the date of sale; and signing each doll's derriere "Xavier" while advertising that the dolls are a "limited signed edition" (although this latter claim is somewhat suspect inasmuch as over 40,000 have been sold to date). The plaintiff corporation presently employs approximately 90 individuals, has had gross sales of around $800,000 since its inception, and has placed its products in over 800 retail outlets in 39 states and several foreign countries.

Defendant A. David Lawson first became aware of plaintiff's products when he saw them displayed for sale at Hartsfield International Airport in Atlanta in late 1978 or early 1979. Mr. Lawson operates a retail toy business located in Gatlinburg, Tennessee, and is the president of defendants The Toy Loft and Lawson Enterprises Unlimited, Inc. The defendants began selling the plaintiff's dolls at their retail outlet in May, 1979, and received written information from the plaintiff corporation suggesting the manner in which "The Little People" should be displayed and sold in order to maximize sales. The defendants also received copies of the birth certificates, adoption papers, and name tags heretofore mentioned, and defendant Lawson personally toured the plaintiff's manufacturing facilities in Cleveland, Georgia, where at his request he received detailed instructions on the plaintiff's stitching techniques. During the months of July and August, 1979, the plaintiff sold the defendants 120 dolls invoiced in the total amount of $5,447.00, which amount has not been paid by the defendants to date.

Defendant Lawson first became acquainted with Martha Nelson's dolls in the summer of 1979, subsequent to his having purchased dolls from the plaintiff. Shortly thereafter, he and his wife began to make their own soft sculpture dolls, which were similar to those of the plaintiff. In November of 1979, the defendants began selling their dolls using marketing techniques similar to plaintiff's, including offering the dolls for "adoption," providing a "birth certificate," and signing the dolls' derrieres "Mama Stork" with a registration number. The defendants' dolls, which are called "The Love Me Babies," have copyright notices affixed by means of a sewn-in tag. The defendants have sold their dolls at The Toy Loft in Gatlinburg as well as in two department stores, Miller's in Knoxville, Tennessee and Davison's in Atlanta. (Davison's stopped carrying defendants' products before Christmas after being notified of the threat of the present suit; Miller's has apparently refused to place any further orders until the instant litigation has been terminated.) Defendants' gross profits on the sale of their dolls have been in the neighborhood of $17,500.00 since November, 1979.

Defendant Lawson testified that he specifically instructed his employees to distinguish "The Love Me Babies" from plaintiff's dolls in responding to any customer inquiries. Although this may be true, it constitutes an admission that he anticipated the possibility of confusion on the part of the public. There was also countervailing evidence presented by the plaintiff that defendant Lawson had intimated to a customer in Miller's Department Store that his dolls were the same as plaintiff's. In any event, the court finds that at least one instance of actual customer confusion occurred at Miller's Department Store due to the similarity of the parties' dolls and marketing techniques. Based upon this fact as well as the other evidence presented and the court's own examination of the dolls in question, the court concludes that there exists a substantial likelihood of confusion, mistake, or deception of purchasers as to source resulting from this similarity.

With regard to the plaintiff's dolls, the defendants' dolls, and the dolls created by Martha Nelson prior to February, 1978, the court makes the following observations and findings. Although the Martha Nelson dolls and the plaintiff's pre-1978 experimental models are somewhat similar, the Martha Nelson dolls and the plaintiff's dolls as they exist today (and as they have existed since February, 1978) are generally dissimilar in the following respects: facial expression (plaintiff's dolls look like babies while the Nelson dolls more resemble old people due to puckered chin caused by secondary stitching below mouth); shape of nose (plaintiff's dolls' noses go straight across while the Nelson dolls' noses have an inverted-Y shape); hands (fingers on the Nelson dolls are generally elongated while the fingers on plaintiff's dolls are shorter and more anatomically correct); buttocks (plaintiff's dolls are more anatomically correct due to presence of center seam); eyes (plaintiff's dolls' eyes are painted in high gloss paint with eyebrows as opposed to Nelson dolls having no eyebrows and eyes painted with flat-finish paint); ...