Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 202

• Decision Date: 17 December 1985
• Docket Number: D,No. 202,202
• Citation: 780 F.2d 189,228 U.S. P.Q. 423
• Parties: , 228 U.S.P.Q. 423, 1986 Copr.L.Dec. P 25,879 HASBRO BRADLEY, INC., Plaintiff-Appellee, v. SPARKLE TOYS, INC., Defendant-Appellant. ocket 85-7302.
• Court: U.S. Court of Appeals — Second Circuit

Page 189

780 F.2d 189

54 USLW 2378, 228 U.S.P.Q. 423, 1986

Copr.L.Dec. P 25,879

HASBRO BRADLEY, INC., Plaintiff-Appellee, v. SPARKLE TOYS, INC., Defendant-Appellant.

No. 202, Docket 85-7302.

United States Court of Appeals, Second Circuit.

Argued Sept. 30, 1985.

Decided Dec. 17, 1985.

Marvin N. Gordon, New York City (Hopgood, Calimafde, Kalil, Blaustein & Judlowe, New York City, of counsel), for defendant-appellant.

Anthony M. Radice, New York City (Kim J. Landsman, Parker Auspitz Neesemann & Delehanty, New York City, of counsel), for plaintiff-appellee.

Before FRIENDLY, MANSFIELD and WINTER, Circuit Judges.

FRIENDLY, Circuit Judge:

The companies involved in this copyright case in the District Court for the Southern District of New York are Takara Co., Ltd. ("Takara"), a Japanese company that designed the toys here in question; plaintiff Hasbro Bradley, Inc. ("Hasbro"), a large American toy manufacturer and seller that acquired Takara's rights to United States copyrights for the toys; and defendant Sparkle Toys, Inc. ("Sparkle"), a smaller American toy manufacturer and seller that copied the toys in Asia from models manufactured by Takara which did not carry the copyright notice required by Sec. 401 of the Copyright Act of 1976 (the "Act"), 17 U.S.C. Sec. 101 et seq., ¹ and by Article III(1) of the Revised Universal Copyright Convention (U.C.C.), 25 U.S.T. 1341 (1971), to which the United States and Japan are parties. The appeal, by Sparkle, is from an order of Judge Broderick entered April 29, 1985, granting Hasbro a preliminary injunction prohibiting Sparkle from "distributing, selling, marketing, promoting, advertising, imitating or exploiting, in this country, its toys, formerly denoted 'Trans Robot,' which are in violation of plaintiff's registered copyrights in the sculptural embodiments of its 'Topspin' and 'Twin Twist' toys."

"Topspin" and "Twin Twist" (the "toys") are part of Hasbro's "The Transformers" series of changeable robotic action figures. The sculptural expressions of the toys are original designs of Takara, which manufactures "The Transformers" for Hasbro. Takara authored the designs in the summer of 1983 and by the end of November had completed molds for manufacturing the toys. These molds did not contain a copyright notice. Takara avers that the omission was due to the facts that Japanese law does not recognize copyright in toy products and that Takara was unaware that American law does recognize copyright in such works but requires notice, even on copies of the work distributed outside the United States, for copyright protection to be claimed inside the United States. Production of the unmarked toys began in December 1983 and ended in February 1984. Between January and March, approximately 213,000 of the unmarked toys were sold; thereafter, sales were minor and were made only to remove inventory. Whether the unmarked toys were sold only in Asia or some of them were sold as well in the United States is in dispute.

Hasbro was shown the toys by Takara in June 1984 and decided to adopt them into "The Transformers" series. In the course of modifying the toys to meet Hasbro's specifications, Takara designed new molds that contained a copyright notice; at the same time, it added a copyright notice to its old molds. Takara avers that after August 1984 no toys using molds that did not contain a copyright notice were manufactured for sale anywhere in the world. Hasbro has widely distributed the toys in the United States, beginning in January 1985. Sparkle does not dispute that all of the toys sold in this country by Hasbro have born copyright notice.

Sometime in June 1984, Takara orally granted Hasbro the exclusive right to import and sell the toys in the United States and assigned to Hasbro the United States copyrights in the designs of the toys, including the right to apply for copyright registration. A written confirmation of assignment was executed as of November 12, 1984. Hasbro applied to register copyrights in the United States in both sculptural expressions of each toy on November 29, 1984, listing Takara as the "author" and itself as the "copyright claimant" by virtue of the assignment from Takara. Certificates of registration were granted effective December 3, 1984.

Discussion

The settled law of this circuit is that a preliminary injunction may be granted only upon a showing of "(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Jackson Dairy, Inc. v. H.P. Hood & Sons, 596 F.2d 70, 72 (2 Cir.1979); see, e.g., Mattel, Inc. v. Azrak-Hamway International, Inc., 724 F.2d 357, 359 (2 Cir.1983). Irreparable harm may ordinarily be presumed from copyright infringement. Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 94 (2 Cir.1977), cert. denied 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978); accord Apple Computer, Inc. v. Formula International, Inc., 725 F.2d 521, 525 (9 Cir.1984); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1254 (3 Cir.1983), cert. dismissed, 464 U.S. 1033, 104 S.Ct. 690, 79 L.Ed.2d 158 (1984); Atari, Inc. v. North American Philips Consumer Electronics Corp., 672 F.2d 607, 620 (7 Cir.), cert. denied, 459 U.S. 880, 103 S.Ct. 176, 74 L.Ed.2d 145 (1982). A prima facie case of copyright infringement consists of proof that the plaintiff owns a valid copyright and the defendant has engaged in unauthorized copying. Novelty Textile Mills, Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1092 (2 Cir.1977); 3 Nimmer on Copyright Sec. 13.01 (1985) [hereafter Nimmer ]. Since Sparkle admits to unauthorized copying, the only issue before us in reviewing the grant of the preliminary injunction is whether Hasbro's copyrights for the toys are valid. Under Sec. 410(c) of the Act, Hasbro's certificates of copyright registration are prima facie evidence that the copyrights are valid, ² shifting to Sparkle the burden of proving the contrary. See Oboler v. Goldin, 714 F.2d 211, 212 (2 Cir.1983). Sparkle attempts to meet this burden with various lines of argument, all stemming from the fact that the toys were initially sold by Takara without copyright notice. We hold that the efforts fail on the facts of this case, although we reject some of the arguments made by Hasbro in seeking to counter them.

Sparkle's most basic position is that sale of the unmarked toys by Takara in Japan injected the designs into the public domain. If the designs were truly in the public domain, Hasbro could have enjoyed no copyrights in the toys, and Sparkle's copying would have been permissible. See Sears Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964); Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964). Sparkle's argument, however, ignores the scheme for the protection of copyrightable works set up by the Act and the U.C.C. If the toys, though not initially qualifying for copyright protection, subsequently did, Sparkle's position loses its glow.

There is no dispute that the toys here at issue were originally designed by Takara in June 1983. Although the toys enjoyed no copyright protection under Japanese law, ³ they fell within the class of "pictorial, graphic, and sculptural works" covered by Sec. 102(a)(5) of the Act. See Sec. 101. Since the toys were authored by a Japanese national and first "published" (i.e. sold) in Japan, they enjoyed copyright protection under United States law from the moment they were created, see Sec. 302(a), by virtue of both Sec. 104(b) of the Act and Article II(1) of the U.C.C. ⁴

As previously stated, there is also no dispute that before the assignment of Takara's copyrights to Hasbro approximately 213,000 of the toys were sold, mostly in Japan, without copyright notice. This omission of notice from toys sold by Takara or with its authority outside the United States violated Sec. 401(a) of the Act, which requires:

Whenever a work protected under this title is published in the United States or elsewhere by authority of the copyright owner, a notice of copyright as provided by this section shall be placed on all publicly distributed copies from which the work can be visually perceived, either directly or with the aid of a machine or device.

(Emphasis added.) See 2 Nimmer, supra, Sec. 7.12[D].

This does not mean, however, that the Takara designs were immediately thrust into the public domain. The Act explicitly provides in Sec. 405(a) that the omission of notice from copies of a protected work may be excused or cured under certain circumstances, in which case the copyright is valid from the moment the work was created, just as if no omission had occurred. ⁵ The House Report accompanying the Act stated with respect to Sec. 405(a) that "[u]nder the general scheme of the bill, statutory copyright protection is secured automatically when a work is created, and is not lost when the work is published, even if the copyright notice is omitted entirely." H.Rep. No. 1476, 94th Cong., 2d Sess. 147 [hereafter House Report ], reprinted in 1976 U.S.Code Cong. & Ad.News 5659, 5763. In the opinion of the committee that authored the report, the excuse and cure provisions of Sec. 405(a) represented "a major change in the theoretical framework of American copyright law." Id. at 146, reprinted in 1976 U.S.Code Cong. & Ad.News at 5762. ⁶

It is not contended that the omission of notice from the toys could have been excused under either subsections (1) or (3) of Sec. 405(a); rather, reliance is placed on subsection (2). In effect, Sec. 405(a)(2) allows a person who publishes a copyrightable work without notice to hold a kind of incipient copyright in the work for five years thereafter: if the omission is cured in that time through registration and the exercise...