Rachel v. Banana Republic, Inc.

• Decision Date: 09 November 1987
• Docket Number: 86-2764,Nos. 86-1901,s. 86-1901
• Parties: 1987 Copr.L.Dec. P 26,188, 9 Fed.R.Serv.3d 612, 4 U.S.P.Q.2d 1877 Edmund A. RACHEL, aka Peter Rachel, d/b/a Wildlife Interiors, Plaintiff- Appellant, v. BANANA REPUBLIC, INC., Fisher Development, Inc., and the Gap, Inc., Defendants/Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1503

831 F.2d 1503

1987 Copr.L.Dec. P 26,188, 9 Fed.R.Serv.3d 612,

4 U.S.P.Q.2d 1877

Edmund A. RACHEL, aka Peter Rachel, d/b/a Wildlife Interiors, Plaintiff- Appellant, v. BANANA REPUBLIC, INC., Fisher Development, Inc., and the Gap, Inc., Defendants/Appellees.

Nos. 86-1901, 86-2764.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 15, 1987.

Decided Nov. 9, 1987.

Limbach, Limbach & Sutton, John P. Sutton and Michael E. Dergosits, San Francisco, Cal., for plaintiff-appellant.

Flehr, Hohbach, Test, Albritton & Herbert, Richard E. Backus and Richard P. Doyle, Jr., San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before CHOY, ALARCON and O'SCANNLAIN, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

Peter Rachel, a producer of realistic reproductions of jungle animals, brought this action against Banana Republic, Fisher Development, and The Gap for alleged trade dress and copyright infringement. The district court granted summary judgment against Rachel on his copyright claim, and, following Rachel's submission of evidence, directed a verdict against him on the trade dress claim. The court also dismissed The

Gap and assessed sanctions against Rachel's counsel for improperly naming The Gap as a party. We affirm the trial court's grant of summary judgment and its directed verdict. We reverse the imposition of sanctions.

FACTS AND PROCEEDINGS BELOW

Rachel, doing business as Wildlife Interiors, produces and sells synthetic animal heads as display pieces for commercial establishments. Banana Republic operates a chain of stores that sells safari clothing and accessories. Fisher Development is a general contractor that designs and constructs the African safari environment of Banana Republic stores. Banana Republic is a wholly-owned subsidiary of The Gap.

Rachel sold his first synthetic animal head at a flea market in 1983. It carried no copyright notice. That same year Rachel sold to Banana Republic a reproduction of a zebra head and offered to make other animal forms. Over the next year, Rachel sold Banana Republic a charging elephant, artificial elephant tusks, and synthetic heads of zebras, buffalos, giraffes, and rhinoceroses for display in its retail stores. In each instance, Rachel applied flocking to a fiberglass form of the animal sold by taxidermy supply stores and added ears, paint, glass eyes, and other necessary details. None of Rachel's works sold to Banana Republic contained a copyright notice.

In early 1984 Banana Republic terminated its business with Rachel and began purchasing its animal displays from Fred Funk, a consultant to Fisher Development hired to improve the quality of the Banana Republic's interior special effects. Funk was critical of Rachel's work and believed that he could produce a more realistic product. Funk's technique was to cast a mold of the animal from an actual taxidermy specimen, thereby adding realism to the skin.

In 1985 Rachel filed this action for copyright infringement, 17 U.S.C. Secs. 101-106 (1982), false designation of origin, 15 U.S.C. Sec. 1125(a) (1982), and pendent state claims for unfair competition, breach of contract and breach of the covenant of good faith and fair dealing. The defendants counterclaimed for a declaration that Rachel's copyright claim was invalid and unenforceable, and that Rachel breached his contract and made fraudulent misrepresentations.

On defendants' motion for partial summary judgment, the district court held that Rachel did not have a valid copyright claim because his work was sold without notice and the omission was not cured. Alternatively, the court held that defendants did not infringe Rachel's copyright. The court denied defendants' summary judgment motion on Rachel's pendent state claims. The court dismissed the action as to The Gap and assessed sanctions. Rachel's motion for preliminary injunctive relief was denied.

The case proceeded to trial on the trade dress infringement claim and the pendent state claims. At the close of Rachel's evidence, the court directed a verdict in favor of Banana Republic and Fisher Development on the remaining federal claim. The jury's verdict on the pendent claims in favor of the defendants was not appealed.

These timely appeals followed. ¹

DISCUSSION

1. Directed Verdict on Trade Dress Infringement

Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), provides a remedy for a broad range of deceptive practices in commerce. Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 841 (9th Cir.1987). The statute creates a federal law of unfair competition by providing a remedy for injury caused by a competitor's " 'false destination or origin' of its product, whether or not the aggrieved party has a federally registered trademark." LeSportsac, Inc. v. K Mart Corp., 754 F.2d 71, 75 (2d Cir.1985). This protection entitles the first manufacturer of a product to an unregistered trademark in the "trade dress" of its product. Stormy Clime Ltd. v. Pro-Group, Inc., 809 F.2d 971, 974 (2d Cir.1987). "Trade dress" is the appearance of the product and may include features such as size, shape, color, color combinations, texture, or graphics. Id. "A plaintiff seeking to recover for trade dress infringement under section 43(a) must show that its trade dress is protectable and that defendant's use of the same or similar trade dress is likely to confuse consumers." Fuddruckers, 826 F.2d at 841. "Under this analysis, trade dress may be protected if it is nonfunctional and has acquired secondary meaning and if its imitation creates a likelihood of consumer confusion." Id. at 842.

The district court directed a verdict on the ground that Rachel's trade dress was functional and therefore not entitled to protection under the Lanham Act. Our review is de novo. West Am. Corp. v. Vaughan-Bassett Furniture Co., 765 F.2d 932, 934 (9th Cir.1985). We must review the evidence in a light most favorable to Rachel and draw all possible inference in his favor. See Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1219 (9th Cir.1983), cert. denied, 471 U.S. 1007, 105 S.Ct. 1874, 85 L.Ed.2d 166 (1985). "A directed verdict is proper when the evidence permits only one reasonable conclusion as to the verdict." Peterson v. Kennedy, 771 F.2d 1244, 1256 (9th Cir.1985), cert. denied, 475 U.S. 1122, 106 S.Ct. 1642, 90 L.Ed.2d 187 (1986).

A product feature is functional if it is essential to the product's use or if it affects the cost and quality of the product. Fuddruckers, 826 F.2d at 842. "In determining functionality, a product's trade dress must be analyzed as a whole." First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1381 (9th Cir.1987). "The issue of functionality has been consistently treated as a question of fact." Vuitton et Fils S.A. v. J. Young Enters, Inc., 644 F.2d 769, 775 (9th Cir.1981). Nevertheless, "unique arrangements of purely functional features constitute a functional design" not entitled as a matter of law to protection under the Lanham Act. Stormy Clime, 809 F.2d at 977.

Rachel argues that defendants bear the burden of proving functionality. Thus he contends the district court erred by directing a verdict before defendants submitted any evidence. In this circuit, however, we have placed the burden of proof on the plaintiff. ² First Brands, 809 F.2d at 1381 (plaintiff must prove that its trade dress is, inter alia, nonfunctional).

Rachel contends that even if he has the burden of proof, that burden was met by evidence of thirteen unique elements of his work product that make his creations nonfunctional. He argues that the various features of his creations such as eyes, nostrils, ears, and noses are not real, do not work and therefore are not functional. Rachel's concept of functionality is mistaken. "Functional features of a product are features 'which constitute the actual benefit that the consumer wishes to purchase, as distinguished from an assurance that a particular entity made, sponsored, or endorsed a product.' " Vuitton, 644 F.2d at 774 (quoting International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 917 (9th Cir.1980), cert. denied, 452 U.S. 941, 101 S.Ct. 3086, 69 L.Ed.2d 956 (1981)). Rachel sought to create realistic reproductions of animals. The features that he points to are all absolutely essential to that goal. None of these features is nonfunctional. See Vaughan, 814 F.2d at 349 (" 'functional' means not that a feature serves a function"). The district court did not err in directing a verdict against Rachel on his trade dress infringement claim. ³

2. Summary Judgment on Copyright Claims

There is no dispute that Rachel's works may be copyrighted. See Kamar Int'l, Inc. v. Russ Berrie and Co., 657 F.2d 1059, 1061 (9th Cir.1981) (realistic depictions of live animals are copyrightable). Rachel failed, however, to place a copyright notice on his works when they were created. The district court held that Rachel's belated copyright claim was not valid and alternately, if it was valid, defendants did not infringe the copyright. The court granted defendants' motions for summary judgment. Our review is de novo. Frybarger v. Int'l Bus. Machs. Corp., 812 F.2d 525, 528 (9th Cir.1987).

We need not decide whether Rachel's copyright is valid. Even assuming its validity, we agree with the district court that no infringement of the copyright occurred. For his copyright infringement claim, Rachel was required to prove that (1) he owned the works in question; (2) the defendants had access to his works; and (3) the defendants' works are substantially similar to his. Worth v. Selchow & Richter Co., 827 F.2d 569, 571 (9th Cir.1987). The district court found no disputes of material fact and that as a matter of law Rachel's work and defendants' work are not substantially similar.

"To show that two works are similar, a plaintiff must demonstrate that the works are substantially...