Walt Disney Productions v. Air Pirates

• Decision Date: 05 September 1978
• Docket Number: Nos. 75-3116,75-3243,s. 75-3116
• Parties: , 1978-81 Copr.L.Dec. 25,033 WALT DISNEY PRODUCTIONS, Plaintiff-Appellee, v. The AIR PIRATES et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 751

581 F.2d 751

199 U.S.P.Q. 769, 1978-81 Copr.L.Dec. 25,033

WALT DISNEY PRODUCTIONS, Plaintiff-Appellee, v. The AIR PIRATES et al., Defendants-Appellants.

Nos. 75-3116, 75-3243.

United States Court of Appeals, Ninth Circuit.

Sept. 5, 1978.

Michael Stepanian (argued), San Francisco, Cal., for defendants-appellants.

Frank D. Tatum, Jr. (argued) of Cooley, Godward, Castro, Huddleson & Tatum, San Francisco, Cal., for plaintiff-appellee.

Appeal from the Northern District of California.

Before CHAMBERS, CUMMINGS ^* and ANDERSON, Circuit Judges.

CUMMINGS, Circuit Judge.

This case involves the admitted copying of plaintiff Walt Disney Productions' ("Disney") cartoon characters in defendants' adult "counter-culture" comic books. The present defendants are three individuals and two business entities operated by them. ¹ The complaint alleges that they infringed Disney copyrights, a Disney trademark and engaged in unfair competition, trade disparagement and interference with Disney's business. ² Disney sought injunctive relief, destruction of infringing materials, damages, costs and attorney's fees.

The district court awarded Disney a temporary restraining order and subsequently granted its motion for a preliminary injunction, simultaneously issuing an opinion reported in 345 F.Supp. 108 (N.D.Cal.1972). ³ As Judge Wollenberg noted in his opinion, the basic facts are undisputed. He found as follows (at 109-110):

Plaintiff holds valid copyrights on the various works noted in the first seven causes of action. ⁴ The works protected by the copyrights comprise a series of cartoon drawings ranging from a single page to "book length." The cartoons depict the antics of characters created by plaintiff, with "balloons" over each of the characters' heads containing dialog. Cartoons are drawn to form a narrative.

According to plaintiff, defendants infringed Disney copyrights by copying the graphic depiction of over 17 characters. ⁵ Two of the characters are represented as insects, and the others as animals endowed with human qualities. Each character has a recognizable image.

The individual defendants have participated in preparing and publishing two magazines of cartoons entitled "Air Pirates Funnies." ⁶ The characters in defendants' magazines bear a marked similarity to those of plaintiff. The names given to defendants' characters are the same names used in plaintiff's copyrighted work. However, the themes of defendants' publications differ markedly from those of Disney. While Disney sought only to foster "an image of innocent delightfulness," defendants supposedly sought to convey an allegorical message of significance. Put politely by one commentator, the "Air Pirates" was "an 'underground' comic book which had placed several well-known Disney cartoon characters in incongruous settings where they engaged in activities clearly antithetical to the accepted Mickey Mouse world of scrubbed faces, bright smiles and happy endings." It centered around "a rather bawdy depiction of the Disney characters as active members of a free thinking, promiscuous, drug ingesting counterculture." Note, Parody, Copyrights and the First Amendment, 10 U.S.F.L.Rev. 564, 571, 582 (1976).

In awarding Disney a preliminary injunction, the district court held that Disney's graphic depictions were protectable under Section 3 of the then Copyright Act ⁷ as component parts of Disney's copyrighted work. Next, the defense of fair use was rejected because defendants had copied the substance of the Disney products. Finally, after balancing the competing interests of free speech and press versus "encouraging creation by protecting expression" of ideas as reflected in the Copyright Clause of the Constitution, ⁸ the district court held that the First Amendment did not bar the issuance of a preliminary injunction (at 115-116).

Three years after granting the preliminary injunction, the district court granted summary judgment for plaintiff because the issues were "purely legal and ripe for decision" (R. 512). In its unreported summary judgment order, the court followed the rationale of its preliminary injunction opinion, adding that defendants' parody of Disney's copyrighted work without the consent of Disney "may not be achieved through outright copying of the original work" (R. 514). The court considered it immaterial that in some instances defendants used the challenged cartoon figures in different plots than Disney's or portrayed them with altered personalities, stating that "The test is whether the figures drawn by Defendants are substantial copies of the work of Plaintiff" (R. 515). The court concluded that defendants' challenged publications constituted trade(mark) infringements (concerning the Disney "Silly Symphony" trademark) and violated Disney's valid copyrights and that defendants were guilty of "unfair competition in the form of trade disparagement" (R. 515). In addition to granting Disney a permanent injunction, the court ordered defendants to deliver all infringing materials to Disney's counsel. Costs were awarded to Disney, and the amount of damages and reasonable attorney's fees to be paid to Disney was submitted to a magistrate for preliminary assessment. Only the question of defendants' liability is before us. We affirm as to copyright violation and reverse and remand as to the remainder.

I. Copyright Infringement

The issue that has attracted the most attention from the parties in this case is whether defendants' copies of the images of Disney's characters are infringements of Disney's copyright. In order to answer the subsidiary questions of whether Disney's characters are copyrightable and if so whether they were infringed, and whether defendants' infringement can be excused by the fair use defense or can be protected by the First Amendment, it is important to begin by noting what statute is controlling. In a post-argument letter, defendants claim that the Copyright Act of 1976, which took effect on January 1, 1978, must provide the controlling standards even though it became law after the entry of judgment below. See Bradley v. School Board of the City of Richmond, 416 U.S. 696, 711-721, 94 S.Ct. 2006, 40 L.Ed.2d 476. While this claim is based on a generally valid rule of law, that rule does not apply where there is a "statutory direction * * * to the contrary." Id. at 711, 94 S.Ct. 2006. The new Copyright Act expressly provides that all causes of action that arose under the Copyright Act before January 1, 1978, "shall be governed by title 17 as it existed when the cause of action arose." Public Law # 94-553, 90 Stat. 2600 (Transitional and Supplementary Provisions § 112), reproduced in 17 U.S.C. § 501 note. Therefore to the extent the legal issues in this case are controlled by statute, the old Copyright Act governs.

A. Copyrightability

In some instances Disney's copyrights cover a book and others an entire strip of several cartoon panels. The fact that its characters are not the separate subject of a copyright does not preclude their protection, however, because Section 3 of the then Copyright Act provided that Disney's copyrights included protection for "all the copyrightable component parts of the work copyrighted" (note 7 Supra ).

The essence of defendants' argument is that characters are never copyrightable and therefore cannot in any way constitute a copyrightable component part. That argument flies in the face of a series of cases dating back to 1914 that have held comic strip characters protectable under the old Copyright Act. See Detective Comics, Inc. v. Bruns Publications Inc., 111 F.2d 432 (2d Cir. 1940); Fleischer Studios v. Freundlich, 73 F.2d 276 (2d Cir. 1934), certiorari denied, 294 U.S. 717, 55 S.Ct. 516, 79 L.Ed. 1250; King Features Syndicate v. Fleischer, 299 F. 533 (2d Cir. 1924); Detective Comics, Inc. v. Fox Publications Inc., 46 F.Supp. 872 (S.D.N.Y.1942); Hill v. Whalen & Martell Inc., 220 F. 359 (S.D.N.Y.1914); 1 Nimmer on Copyright § 30. ⁹

It is true that this Court's opinion in Warner Brothers Pictures v. Columbia Broadcasting System, 216 F.2d 945 (9th Cir. 1954), certiorari denied, 348 U.S. 971, 75 S.Ct. 532, 99 L.Ed. 756, lends some support to the position that characters ordinarily are not copyrightable. There the mystery writer Dashiell Hammett and his publisher entered into a 1930 contract with Warner Brothers giving the movie production company copyright and various other rights to a "certain story * * * entitled Maltese Falcon" involving the fictional detective Sam Spade. In 1946, Hammett and other defendants used the Maltese Falcon characters in other writings, causing Warner Brothers to sue for copyright infringement and "unfair use and competition." After pointing out the sophisticated nature of the plaintiff, we construed the contracts between the parties and held:

"We are of the opinion that since the use of characters and character names are nowhere specifically mentioned in the agreements (including the assignment of copyright instrument), but that other items, including the title, 'The Maltese Falcon', and their use are specifically mentioned as being granted (to Warner Brothers), that the character rights with the names cannot be held to be within the grants, and that under the doctrine of Ejusdem generis, general language cannot be held to include them." (Footnote omitted.)

After so holding, Judge Stephens' opinion considered "whether it was ever intended by the copyright statute that characters with their names should be under its protection." ¹⁰ In that context he concluded that such a restriction on Hammett's future use of a character was unreasonable, at least when the characters were merely vehicles for the story and did not "really constitute" the story being told. Judge Stephens' reasons for that conclusion provide an important indication of the applicability of that conclusion to comic book characters as opposed to literary characters. In reasoning that characters ...