Laureyssens v. Idea Group, Inc.

• Decision Date: 24 June 1992
• Docket Number: 846,D,Nos. 686,s. 686
• Citation: 964 F.2d 131
• Parties: , 1992 Copr.L.Dec. P 26,917, 22 U.S.P.Q.2d 1811 Dirk LAUREYSSENS, an individual; I Love Love Company, N.V., Creative City Limited, and Extar Corporation, Plaintiffs-Appellees, Cross-Appellants, v. IDEA GROUP, INC., Defendant-Appellant-Cross-Appellee, Days Off Designs, Inc., Defendant. ockets 91-7869, 91-7917.
• Court: U.S. Court of Appeals — Second Circuit

Page 131

964 F.2d 131

60 USLW 2745, 1992 Copr.L.Dec. P 26,917,

22 U.S.P.Q.2d 1811

Dirk LAUREYSSENS, an individual; I Love Love Company, N.V Creative City Limited, and Extar Corporation Plaintiffs-Appellees, Cross-Appellants, v. IDEA GROUP, INC., Defendant-Appellant-Cross-Appellee Days Off Designs, Inc., Defendant.

Nos. 686, 846, Dockets 91-7869, 91-7917.

United States Court of Appeals Second Circuit.

Argued Jan. 8, 1992.

Decided May 15, 1992.

As Amended June 24, 1992.

Marya Lenn Yee, New York City (Morton Amster, Steven M. Levy, James Tramontana, Amster, Rothstein & Ebenstein, of counsel), for defendant-appellant-cross-appellee.

Paul Fields, New York City (Alexandra D. Malatestinic, Robert S. Weisbein, Darby & Darby, P.C., of counsel), for plaintiffs-appellees-cross-appellants.

Before: OAKES, Chief Judge, MESKILL and PRATT, Circuit Judges.

OAKES, Chief Judge:

At issue in this trade dress and copyright infringement case are the similarities between two sets of foam rubber puzzles. The puzzles produced by the parties contain six pieces with a variety of notches cut into each of their four edges. By interlocking the notched edges, the puzzles can be assembled either in a flat form in a rectangular frame or into a three-dimensional hollow cube. The more intrepid puzzler can piece together more challenging multi-puzzle combinations such as a larger cube or other three-dimensional figures including a beam of two or three cubes joined in a line, a cross of five cubes, and a star comprised of pieces from six cube puzzles.

One set of puzzles is marketed under the name HAPPY CUBE. The HAPPY CUBE puzzles were designed by Dirk Laureyssens and are produced, distributed, exported from Europe, and marketed in the United States through a number of entities including I Love Love Company, N.V., Creative City Limited, and Extar Corporation (collectively "Laureyssens"). The competing set is marketed under the name SNAFOOZ by Idea Group, Inc., a California corporation ("Idea Group").

Idea Group appeals from an order entered pursuant to a July 31, 1991 opinion of the United States District Court for the Southern District of New York, Robert M. Sweet, Judge, granting a preliminary injunction for trade dress infringement under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1988), and under the New York common law of unfair competition. 768 F.Supp. 1036 (S.D.N.Y.1991). Pursuant to that order, Idea Group is enjoined from marketing SNAFOOZ puzzles "in flat form and in transparent packaging, unless the puzzle package contains an assembled SNAFOOZ puzzle." In addition, Laureyssens cross-appeals from the district court's denial of a preliminary injunction against Idea Group for copyright infringement, 17 U.S.C. §§ 101-914 (1988), which, if granted, would have forced Idea Group to cease all activities relating to the SNAFOOZ puzzles.

For the reasons set forth below, we reverse the district court's decision to grant a preliminary injunction based on trade dress infringement under section 43(a) of the Lanham Act and under the New York common law of unfair competition, and affirm the district court's decision to deny a preliminary injunction based on copyright infringement.

I.

Dirk Laureyssens, a designer of various toys and puzzles, first began creating cube puzzles in 1985. Over the next few years, he refined his cube puzzle designs by selecting puzzle pieces which would not only permit assembly in flat and cube form, but which also were aesthetically pleasing. Six puzzle designs emerged, each of which contains pieces with edges that are five notch-widths to a side. ¹

By 1991, Laureyssens had filed certificates of copyright registration with the Copyright Office in Washington for each of his six designs. The certificates indicate that the nature of authorship claimed consists of the shape of the pieces; the certificates also refer to earlier filings with the Copyright Office in 1987 and 1988 which also covered his puzzle designs.

Laureyssens introduced his puzzles for sale in the United States at the 1988 International Toy Fair held in New York City. Subsequently, he decided to market them on his own under the name CUBE-IT. After his counsel discovered a trademark conflict, prior to the 1990 International Toy Fair in New York, Laureyssens changed the name of the puzzles to HAPPY CUBE.

HAPPY CUBE puzzles come in six colors and each is named after a well-known city. The yellow puzzle is named Tokio [sic], the green New York, the purple Brussels, the orange Amsterdam, the blue Milano, and the red Paris. By design, some of the puzzles are harder to assmeble than others.

HAPPY CUBE puzzles are packaged for sale in the flat assembled form in clear plastic shrink-wrap with a cardboard insert. The HAPPY CUBE name is printed on the upper right hand portion of the cardboard insert against a black background. Each letter of the word HAPPY is colored in one of the puzzle colors. The word "CUBE" is colored blue, the color of the sixth puzzle variation. Underneath the logo is a color and model chart identifying all six puzzles by color and city name. Beneath the chart is a color photograph of two hands assembling a double-sized cube involving pieces from all six puzzles. The reverse side of the insert, which can only be read after removing the insert from the packaging, depicts the different "missions" for the puzzler. These range from assembling a one-color cube to assembling the HAPPY CUBE star, involving thirty of the thirty-six pieces from the six different puzzles.

Since their introduction in the United States market, Laureyssens claims to have sold 103,000 puzzles, 90,000 of which were marketed in the HAPPY CUBE packaging. Raphael Berkien, the chief executive officer of Laureyssens' exclusive United States distributor Extar Corporation, declared in an affidavit that sales since 1988 were worth $50,000, but one week later was unable to substantiate the figure during his deposition. Berkien also claims to have orders for an additional 250,000 puzzles, and to have entered into an agreement with an organization possessing a nationwide sales force of 40 sales representatives, each of whom apparently committed to selling 100,000 puzzles per month.

Following the original appearance at the 1988 American International Toy Fair in New York, Laureyssens exhibited the puzzles at toy and novelty shows across the country where leaflets in the style of the packaging were distributed. Laureyssens also advertised the puzzles in various trade publications, such as the New York Toy Fair Directory.

Television advertising has been limited. The Laureyssens puzzles were featured during an episode of "Family Feud" in which two wrestling teams that were competing on the show played with the cubes. In addition, Maui Productions produced an installment of its half-hour promotional show "Incredible Breakthroughs" about the puzzles, featuring representatives from the National Football League and professional football players, which was scheduled to air for four months beginning on July 4, 1991.

Dirk Laureyssens testified that he has spent approximately $80,000 in connection with these advertising and promotional efforts, a figure which includes his salary. Berkien stated that, by his estimation, approximately $180,000 had been expended to advertise and promote the puzzles over the last three years, but later conceded during his deposition that these expenditures covered the entire line of HAPPY toy products.

The Laureyssens puzzles received some unsolicited media coverage when NBC News broadcast a segment on the puzzles which was filmed at the Dallas Toy Fair in 1990. ²

Laureyssens is also attempting to sell his puzzles in the novelty and premium item market. For example, in March 1991, Extar obtained a license from the National Football League allowing Laureyssens to place various NFL trademarks on the puzzles. Also, Extar entered into an agreement with Strottman International, Inc., a supplier of premium and novelty products to packagers such as fast food chains and breakfast cereal companies, which granted Strottman exclusive promotional rights to the Laureyssens puzzles in the premium industry.

The first conflict between Laureyssens and Idea Group arose at the 1990 American International Toy Fair in New York City. During the fair, Dirk Laureyssens discovered that Idea Group was manufacturing and marketing identical puzzles called SNAFOOZ. After receiving cease and desist letters from Laureyssens' counsel, Idea Group acknowledged on March 19, 1990 that "our puzzle apparently was copied from a sample obtained through your French distributor or licensee and, in its present form, cannot be marketed in the U.S. without your permission."

The president of Idea Group was approached by Mr. Berkien of Extar Corporation approximately one month after the Toy Fair about the possibility of Idea Group marketing the Laureyssens puzzles in the United States. Apparently, Berkien was unaware of the recent dispute between Dirk Laureyssens and Idea Group until a few hours before he was supposed to meet with Idea Group. After a few weeks of negotiations, however, the parties failed to reach an agreement.

Following the breakdown of negotiations with Laureyssens, Idea Group decided to develop its own version of the flat-to-cube puzzle series, utilizing pieces whose edges were six notch-widths in length rather than five. Late in July 1990, an executive vice president of Idea Group contacted a graduate student in computer science at the Massachusetts Institute of Technology, Eric Brewer, and described the new series of puzzle designs that Idea Group was hoping to market. Brewer then met with the executive vice president who provided him with two of the old SNAFOOZ Puzzles and discussed the nature of the computer program Idea Group desired. An agreement was reached in August 1990, and the graduate student completed the work for Idea Group a few weeks...