Beverly Hills Teddy Bear Co. v. Best Brands Consumer Prods., Inc.

• Decision Date: 04 June 2020
• Docket Number: 1:19-cv-3766-GHW
• Parties: BEVERLY HILLS TEDDY BEAR COMPANY, Plaintiff, v. BEST BRANDS CONSUMER PRODUCTS, INC.; and BEST BRANDS SALES COMPANY LLC, Defendants.
• Court: U.S. District Court — Southern District of New York

BEVERLY HILLS TEDDY BEAR COMPANY, Plaintiff, v. BEST BRANDS CONSUMER PRODUCTS, INC.;and BEST BRANDS SALES COMPANY LLC, Defendants.

1:19-cv-3766-GHW

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 4, 2020

MEMORANDUM OPINION AND ORDER

GREGORY H. WOODS, United States District Judge:

In an effort to challenge the validity of Beverly Hills Teddy Bear Company's ("Beverly Hills" or "Plaintiff") copyrights in its "Squeezamals" line of stuffed toys, Best Brands Consumer Products, Inc. and Best Brands Sales Company LLC (collectively "Best Brands" or "Defendants") have invoked 17 U.S.C. § 411(b)(2)—a seldom-used statutory mechanism contained within the Copyright Act that requires district courts to ask the Register of Copyrights whether it would have refused registration if it had known that certain information included in the underlying registration application was inaccurate. See Palmer/Kane LLC v. Rosen Book Works LLC, 188 F. Supp. 3d 347, 348 (S.D.N.Y. 2016). Defendants have squeezed many arguments into their motion, but, from the Court's perspective, it is all just fluff; the factual record of this case does not currently permit the Court to determine that Plaintiff included any inaccuracies in its registration application. Accordingly, Best Brands' request for a referral is, for now, DENIED.

I. BACKGROUND¹

In 2017, Beverly Hills hosted a design contest through the website www.99designs.com. Defs.' Mot. for a Referral to the U.S. Copyright Office, Dkt. No. 54 ("Mot."), at 7; Pl.'s Opp'n, Dkt. No. 60 ("Opp'n"), at 7; Declaration of Kerry Brownlee, Dkt. No. 61-1 ("Brownlee Decl."), Ex. A. The contest challenged participants to "create cute stuffed animal designs for [an] up and coming product[.]" Brownlee Decl., Ex. A. The webpage provided participants with links to the websites of two of Beverly Hills' competitors, BC Mini and Silly Squishies, and an image of a previous Beverly Hills design, "for inspiration." Id.

Two people won the contest: Benson Tjio and Francesca Ibba. Mot. at 7; Opp'n at 7. Beverly Hills excised a portion of Ibba's submission—the eyes—and directed Tjio to incorporate it into his final design. Mot. at 11; Opp'n at 7; Dkt. Nos. 55-7, 55-8. And thus, the Squeezamals—"collectible, scented, super-squeezy slow rise foam stuffed toys" that come in a variety of mostly animal forms—were born. Second Amended Complaint, Dkt. No. 42 ("SAC"), ¶ 9. Many of these Squeezamals were registered as copyrighted sculptural works with the United States Copyright Office. SAC ¶ 18.

In April 2019, Beverly Hills sued Best Brands for copyright infringement, alleging that Best Brands' production and sale of their "Fuzzy Squishy" line of toys infringed on Beverly Hills' exclusive rights to the Squeezamals' design. SAC ¶¶ 33-36. After discovery closed in March 2020, Best Brands asked the Court for a referral to the Register of Copyrights pursuant to 17 U.S.C.§ 411(b)(2), a "peculiar" and "rarely invoked" provision of the Copyright Act—but one examined twice by this Court in recent years.

Rosen Book Works, 188 F. Supp. 3d at 348; see also Palmer/Kane LLC v. Gareth Stevens Publ'g, 1:15-cv-7404-GHW, 2016 WL 6238612 (S.D.N.Y. Oct. 24, 2016). This provision requires courts to seek the advice of the Register in cases where a party alleges that its adversary's certificate of registration contains inaccurate information.

Best Brands allege that the certificates of registration for the Squeezamals are stuffed with inaccuracies. Mot. at 1. Specifically, Best Brands allege that the registrations inaccurately (1) list Tjio as the author of the three-dimensional sculptural works for which Beverly Hills sought registration; (2) list Tjio as the sole author of the works and fail to disclose Ibba's contribution; (3) list an incorrect date and (4) nation of first publication, and; (5) fail to identify preexisting works upon which the Squeezamals were based. Mot. at 1.

Beverly Hills opposed Best Brands' motion on April 9, 2020. Dkt. No. 60. Best Brands replied on April 21, 2020. Dkt. No 64.

II. LEGAL STANDARD

Under the current version of the Copyright Act, registration of a copyright claim is not a condition of copyright protection. 17 U.S.C. § 408(a). With certain exceptions that are not relevant here, however, a certificate of copyright registration is a prerequisite to bringing a civil copyright infringement action. See 17 U.S.C. § 411(a). By statute, a certificate of registration satisfies this prerequisite "regardless of whether the certificate contains any inaccurate information," unless the following two-part test is met: "(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration." 17 U.S.C. § 411(b)(1).

Section 411(b)(2), in turn, requires that courts seek the advice of the Register of Copyrights before finding that a certificate of registration does not support an infringement action. Rosen Book Works, 188 F. Supp. 3d at 348 ("[C]ourts are in agreement that the provision is mandatory in nature[.]") (citing DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 623 (7th Cir. 2013) ("Instead of relying solely on the court's own assessment of the Register's response to an inaccuracy, the statute obligates courts to obtain an opinion from the Register on the matter.")). In other words, a court must first obtain the Register's guidance before finding that the provision of knowingly inaccurate information would have caused the Register to refuse registration.

Although the statute by its terms requires a referral "in any case in which inaccurate information described under [§ 411(b)(1)] is alleged," 17 U.S.C. § 411(b)(2), to protect against the potential for abuse inherent in this process, courts in this circuit generally agree that they may first require the party seeking invalidation to establish as a factual matter that "(1) the registration application included inaccurate information; and (2) the registrant knowingly included the inaccuracy in his submission to the Copyright Office." Rosen Book Works, 188 F. Supp. 3d at 349.²

Thus, before referring the issue to the Register, a court may determine whether the allegedly inaccurate information is, in fact, inaccurate. Where the factual record is insufficient to make such a determination, a court may choose to "await further factual development at the summary-judgment stage or at trial before issuing a referral." King-Devick Test Inc. v. NYU Langone Hosps., 17-CV-9307(JPO), 2019 WL 3071935, at *9 (S.D.N.Y. July 15, 2019); see also Chic Home Design, LLC v. New Journey Grp. Ltd., 15-CV-9468 (JPO), 2017 WL 3738775, at *4 n.2 (S.D.N.Y. Aug. 30, 2017) (concluding that referral was "not appropriate or required" in light of ongoing factual disputes); Gareth Stevens Publ'g, 2016 WL 6238612, at *4 (recognizing the district court's "discretion . . . with respect to the appropriate timing of a [referral] request"). If a court ultimately determines that a registration contains inaccuracies, the Register will then "advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration." 17 U.S.C. § 411(b)(2).

III. ANALYSIS

Defendants moved for a referral to the Register with respect to the materiality of several alleged inaccuracies that, Defendants claim, Beverly Hills knowingly included in its application for copyright registration of the works. Because Best Brands decided to scatter these arguments across their motion in a fairly indigestible way, the Court has summarized the alleged inaccuracies as follows:

A. The registrations incorrectly list Benson Tjio as the author of three-dimensional sculptural works; he allegedly authored only the two-dimensional artwork upon which the three-dimensional sculptural works were based. See Reply, Dkt. No. 64 ("Reply"), at 9.

B. The registrations list Benson Tjio as the sole author of the Squeezamals, but Francesca Ibba designed the eyes. Accordingly, the registration is inaccurate because it omits mention of the inclusion of Ibba's contribution to the works for which copyright is claimed. See Reply at 9-10.

C. The registrations incorrectly list December 21, 2017, the date the Squeezamals shipped to the United States, as the date of first publication for all the Squeezamals other than the Series 1 Unicorn. But the two-dimensional designs and samples of the three-dimensional products were shown to potential buyers as early as October, 2017. And because the Squeezamals shipped on December 21, 2017, Beverly Hills must have offered them for sale at an earlier date. The registration for the Series 1 Unicorn lists February 27, 2018 as the date of first publication. Best Brands allege this date is inaccurate for the same reasons. See Reply at 10.

D. The registrations list the United States as the nation of first publication. This is allegedly inaccurate because the underlying two-dimensional artwork and samples of some of the three-dimensional products were displayed at a Hong Kong trade show in October 2017. See Reply at 10.

E. The registrations do not identify any preexisting works on which the Squeezamals are based or works that the Squeezamals incorporate. See Reply at 10.

Although the parties have engaged in extensive discovery, the parties have not developed a record of undisputed facts on which the Court may rely in determining whether there are any inaccuracies warranting a referral. Still, even the facts that Best Brands marshal in support of their motion do not support a finding that any of these are inaccuracies warranting referral to the Register at this time.

A. Benson Tjio's Authorship of the Three-dimensional Sculptural Works

The parties agree: Benson Tjio created two-dimensional artwork, but the works deposited with the Register are three-dimensional sculptures. Best Brands seem to think...