Eden Toys, Inc. v. Florelee Undergarment Co., Inc.

• Decision Date: 25 November 1981
• Docket Number: No. 80 Civ. 2242 (RLC).,80 Civ. 2242 (RLC).
• Citation: 526 F. Supp. 1187
• Parties: EDEN TOYS, INC., Plaintiff, v. FLORELEE UNDERGARMENT CO., INC., Defendant.
• Court: U.S. District Court — Southern District of New York

526 F. Supp. 1187

EDEN TOYS, INC., Plaintiff, v. FLORELEE UNDERGARMENT CO., INC., Defendant.

No. 80 Civ. 2242 (RLC).

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

November 25, 1981.

COPYRIGHT MATERIAL OMITTED

Stoll & Stoll, P. C., New York City, for plaintiff; Samuel J. Stoll, New York City, of counsel.

Lauritano & Schlacter, New York City, for defendant; Jed R. Schlacter, New York City, of counsel.

OPINION

ROBERT L. CARTER, District Judge.

This is an action for copyright infringement, 17 U.S.C. §§ 501 et seq., and violation of the Lanham Act, 15 U.S.C. § 1125.¹ The plaintiff, Eden Toys, Inc. ("Eden"), and the defendant, Florelee Undergarment Co., Inc. ("Florelee"), each have moved for summary judgment. Although the evidence strongly supports the claim of infringement, the copyright action must be dismissed because Eden is not the proprietor of the rights that the defendant apparently has infringed. The plaintiff is awarded summary judgment on the Lanham Act action, however, because Florelee has marketed merchandise with a false designation of origin.

The litigation concerns the use of a fictional character, Paddington Bear, who was created as the protagonist of a series of children's books by Michael Bond. Paddington Bear is a young Peruvian bear who stows away aboard a ship and eventually takes up residence in England. The principal copyrights covering these books and the characters illustrated and named therein are owned by Paddington and Company (Films) Limited ("Paddington").

In 1975 Paddington granted Eden, in the United States and Canada, an exclusive license to manufacture and sell and to license others to manufacture and sell products based upon the Bond book characters. Under the agreement, Eden retains the copyright and trademark rights derived from those products that Eden or its licensees create, design, or market. The agreement states also that Eden has the right to sue, in its name or in Paddington's name, for infringement of any of the copyright registrations it receives from the commercial development of the Paddington Bear characters. See Defendant's Appendix of Exhibits to Its Cross-Motion for Summary Judgment, Exh. B (License Agreement between Paddington and Eden, Feb. 11, 1975) ("1975 Agreement").

Although the 1975 license was exclusive, it pertained only to a clearly delimited range of products. Among the Paddington Bear items that Eden could develop were stuffed animals, toys, games, and children's clothes, accessories, textiles and furniture. See id. at ¶ 1 and Schedules B, C. In disregard of these restrictions, Eden issued sublicenses for production of a variety of products not covered by its agreement with Paddington, including wrapping paper, draperies, Christmas ornaments, ceramic giftware, and textiles and needlecraft products for adult use. Apparently Paddington did not object to Eden's overstepping the bounds of their contract and renewed the license in 1979. In July, 1980, Paddington and Eden amended their agreement to expand the scope of the licensed products to include all merchandise except books, tapes and records. Eden asserts that the defendant infringed a derivative copyright that Eden obtained under authority of the 1975 agreement.

The copyrighted artwork, a silkscreen print emblazoned on gift wrapping paper, was created by Eden's licensee, the C.R. Gibson Co. ("Gibson") and contained several images of Paddington Bear repeated across the paper with the word "PADDINGTON" interspersed among them. The silkscreen was first published, with copyright notice, in January, 1978, and Eden applied for and received Copyright Registration No. VA 44-638 for the artwork in March, 1980. That registration is for a derivative copyright for artwork based on images of Paddington Bear found in the text and illustrations of the Michael Bond books. The registration leaves ambiguous the precise scope of Gibson's creative contribution to and, hence, of Eden's copyrightable interest in the artwork.

In November, 1979, the plaintiff discovered an adult women's shirt for sale that was manufactured by the defendant and imprinted with a picture of a bear identified by the name "Fred" and with the copyright notice "© Fred original." The picture of the bear is identical in almost all aspects to one of the bear images created by Gibson for the gift paper that is copyrighted under Registration No. VA 44-638. The plaintiff notified the defendant of the apparent infringement and instituted this suit after discovering on the market in February, 1980, a second shirt with the same imprint.

To bring an infringement action, a plaintiff must be the owner of a copyright, its assignee, or an exclusive licensee. See, e. g., Bertolino v. Italian Line, 414 F.Supp. 279, 284 (S.D.N.Y.1976) (Cooper, J.); 3 Nimmer on Copyright § 12.02 (1981). A non-exclusive licensee, however, does not have standing to commence an infringement action. See, e. g., 3 Nimmer on Copyright § 12.02.

Eden's right to initiate this litigation depends, therefore, upon its showing that it is the owner or exclusive licensee of a valid copyright that allegedly the defendant has infringed. The certificate of registration ordinarily provides prima facie proof of validity and ownership of the copyright. Novelty Textile Mills v. Joan Fabrics Inc., 558 F.2d 1090, 1092 (2d Cir. 1977); 17 U.S.C. § 410(c). This presumption of validity, however, may be rebutted by evidence demonstrating lack of originality or other defects in the copyright. See Russ Berrie & Co., Inc. v. Jerry Elsner Co., 482 F.Supp. 980, 987-88 (S.D.N.Y.1980) (Haight, J.).

Eden contends that the image on the defendant's shirts is a direct copy of the artwork protected by Copyright Registration No. VA 44-638 and that as owner of that copyright, Eden has authority to sue for infringement. Even though Eden has obtained a copyright registration for the Gibson paper, that registration does not establish plaintiff's standing. The validity of the copyright is tarnished by Eden's forays into markets for which it had not received a license from Paddington. Moreover, the copyright cannot protect the Paddington Bear image expropriated by the defendant because that image was copied by Gibson from a design created and copyrighted by I.S. Wood/Paddington. Finally, Eden lacks standing to enforce Paddington's copyright against the defendant because Eden was not an exclusive licensee for Paddington Bear products sold in the markets in which the defendant sold its products.

Eden concedes that "there is no question but that the underlying rights are owned by Paddington." Memorandum in Support of Plaintiff's Motion for Summary Judgment at 7. Eden has not sued, however, for infringement of the copyrights on the Bond book characters. Rather, its case rests on its alleged rights to the specific piece of art created by its licensee, Gibson, pursuant to a contract specifying that Eden would have title to all original artwork by Gibson.

The initial lacuna in Eden's argument occurs at the point of Eden's claim that it had authority to make this contract with Gibson. Eden's license from Paddington, the agreement underlying the Eden-Gibson contract, grants to Eden "legal title in and to all copyrights and trademarks derived from the creation, design and marketing of Licensed Products by Eden and its licensees." 1975 Agreement ¶ 7. The gift wrapping paper that Eden licensed Gibson to develop is not a "Licensed Product" as that term is used in the 1975 Agreement. The paper is produced in "packaged individual sheets only for sale to retail consumers" in the adult market. Memorandum in Support of Plaintiff's Motion for Summary Judgment at 16. Eden's authority under the 1975 license, by contrast, is expressly limited to the creation of toys, clothes, accessories and other similar items for the juvenile market.

Eden acknowledges that it overreached its express licensing authority in several transactions concerning its sublicensing of Paddington Bear novelties. Richard Miller, Eden's president, admitted that "licenses had been granted by Eden that were not precisely within the schedule of items to be granted." Deposition of Richard Miller 69. The plaintiff contends, however, that Paddington ratified these extra-contractual actions informally during the life of the 1975 agreement and formally in the 1980 amendment.

Eden's argument that it had de facto authority to disregard the plain terms of its contract with Paddington is unpersuasive. As the 1980 amendment makes clear, Eden could have sought to revise the license any time that it desired to expand the scope of its Paddington Bear marketing activities. That no such expansion was memorialized until 1980 undercuts rather than supports Eden's contention that it had the right to operate in the adult gift and novelty market despite the narrow scope of the 1975 agreement. Eden's contract with Gibson apparently violated the 1975 authorization and placed Eden in the position of an infringer. Even if Paddington has chosen to ignore this transgression, serious doubt remains concerning the validity of a copyright based upon such infringement.

The court need not determine the status of Copyright No. VA 44-638, however, because even if Eden had authority to produce and copyright the gift paper, the copyright could not encompass the Paddington Bear image that the defendant applied to its shirts. For a copyright on a piece of work to be valid, the work must contain "some substantial, not merely trivial originality...." Chamberlin v. Uris Sales Corp., 150 F.2d 512, 513 (2d Cir. 1945). When the work derives from a previously copyrighted design, the new copyright is limited to the original contribution to the existing design. See, e. g., L. Batlin & Sons, Inc. v. Snyder, 536 F.2d 486, 489-91 (2d Cir. 1976); Russell v. Price, 448 F.Supp. 303, 305 (C.D.Cal.1977); 1 Nimmer on Copyright, § 3.03 (1981). The silkscreen artwork that Eden registered under Copyright No. VA...