DC Comics, Inc. v. Reel Fantasy, Inc.

• Decision Date: 14 December 1982
• Docket Number: No. 98,D,98
• Citation: 696 F.2d 24
• Parties: , 1983 Copr.L.Dec. P 25,479 DC COMICS INC., Plaintiff-Appellant, v. REEL FANTASY, INC., trading as Batcave and Frank C. Verzyl, Defendants- Appellees. ocket 82-7310.
• Court: U.S. Court of Appeals — Second Circuit

Page 24

696 F.2d 24

217 U.S.P.Q. 307, 1983 Copr.L.Dec. P 25,479

DC COMICS INC., Plaintiff-Appellant, v. REEL FANTASY, INC., trading as Batcave and Frank C. Verzyl,

Defendants- Appellees.

No. 98, Docket 82-7310.

United States Court of Appeals, Second Circuit.

Argued Oct. 18, 1982.

Decided Dec. 14, 1982.

Richard Lehv, New York City (Weiss, Dawid, Fross, Zelnick & Lehrman, P.C., New York City, of counsel), for plaintiff-appellant.

Frank C. Verzyl, pro se.

Before OAKES and WINTER, Circuit Judges, and MacMAHON, ^* District Judge.

WINTER, Circuit Judge:

DC Comics Inc. ("DC") appeals from a judgment of the United States District Court, 539 F.Supp. 141, for the Southern District of New York, entered by Judge Duffy, granting summary judgment in favor of defendants Reel Fantasy Inc., trading as Batcave, and its president, Frank C. Verzyl (collectively "RFI") ¹, and dismissing DC's complaint alleging unfair competition and trademark and copyright infringement. Because summary judgment was clearly inappropriate, we reverse.

I

For purposes of this appeal, we may assume the following facts. DC is the sole owner of all trademarks and copyrights relating to numerous comic strip characters who appear in cartoon adventure stories in which the principal heroes are Batman and Green Arrow. In those adventures, Batman's secret hideout and headquarters is called the Batcave, and has been a prominent feature since 1944. "The Batcave" is also the title of a column which appeared in DC's Batman comic magazines since 1959. For over twenty-one years, DC has derived substantial revenues from licensing the use of the Batman character and related Bat-paraphernalia, including licensing of the "Batcave" mark to a toy manufacturer which markets a plastic replica of Batman's hideout.

Defendant RFI is a New York corporation which owns a chain of retail bookstores in the New York metropolitan area and a related mail order business, all of which operate under the name of "The Batcave." The Batcave bookstores sell books, comic magazines, including Batman and Green Arrow comic books, and movie memorabilia. Inside RFI's Manhattan store is at least one depiction of the stylized bat symbol worn by DC's Batman character. On at least two occasions, RFI has also used drawings of DC's Batman and Green Arrow characters in its advertising flyers.

DC commenced this action in April, 1982, seeking damages and injunctive relief against RFI and its president Frank Verzyl. DC alleged that RFI's use of the Batman and Green Arrow figures in its advertising flyers, its display of the Batman insignia in its store and its use of the name "The Batcave" for its bookstore and mail order business constituted: (i) copyright infringement under the Copyright Act of 1976, 17 U.S.C. Secs. 101-810 (1976); (ii) trademark infringement under Section 32(1) of the Lanham Trademark Act of 1946, 15 U.S.C. Sec. 1114(1) (1976) and the common law; (iii) unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1976) and the common law; and (iv) trademark dilution and injury to business reputation under New York law, N.Y.Gen.Bus.Law Sec. 368-d (McKinney 1968).

Defendant Frank Verzyl, appearing pro se, filed a motion to dismiss. Although RFI submitted only an unsworn statement, no pre-trial discovery was conducted, and DC offered substantial evidentiary submission in opposition, Judge Duffy, without oral argument or evidentiary hearing, granted summary judgment for RFI and dismissed the complaint. In so doing, he found that DC had "failed to establish" a likelihood of confusion resulting from RFI's use of the "Batcave" mark and that RFI's use of the Batman and Green Arrow characters on its advertising came within the "fair use" defense to copyright infringement liability.

We reverse.

II

It is apparent from the face of his opinion that Judge Duffy believed DC bore a burden of proving its case on RFI's motion and resolved a host of material factual disputes against DC in granting summary judgment. He stated, for example, that DC "failed to show that defendants' use of 'Batcave' has in fact infringed upon that mark," DC Comics Inc. v. Reel Fantasy, Inc., 539 F.Supp. 141, 144 (S.D.N.Y. Mar. 22, 1982); that DC had "failed to establish a secondary meaning in 'Batcave'," id. at 145; that DC had "not established that defendants have confused the public as to the source of the D.C. comics or the store's services," id. at 145; that RFI's unsworn assertion was sufficient to "establish a good faith basis for their use of the mark 'Batcave'," id. at 145; and that RFI's "incidental use of illustrations of Batman and Green Arrow constitutes 'fair use'," id. at 146. His decision is troubling not only because it disregards well-known principles of summary judgment, but also because it conspicuously ignores our recent decision in American International Group, Inc. v. London American International Corp. Ltd., 664 F.2d 348, 351 (2d Cir.1981), a case strikingly similar to the present one in several respects.

DC alleged that RFI's use of the name "The Batcave" for its stores infringed on its registered trademark for "Batman" and a common law trademark in "Batcave." The district court granted summary judgment because it found that no confusion was likely to result from RFI's use of the name the "Batcave" for its stores. As we noted in American International Group, however, "[w]hether or not there is a likelihood of confusion is a question of fact as to the probable or actual actions and reactions of prospective purchasers of the goods or services of the parties." 664 F.2d at 351. This determination in turn depends upon a number of factual variables such as "(1) the strength of the plaintiff's mark, (2) the degree of similarity between the two marks, (3) the proximity of the products or services, ... (4) the defendant['s] good faith in adopting its mark," id., as well as the existence of actual confusion and the sophistication of the consumers of the products or services. Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961).

As to the strength of DC's mark, the district court concluded that "Batman" did not extend to "Batcave" because the only similarity between the two words was the "Bat" prefix common to both words, and "Bat" had not "acquired a secondary meaning which would automatically link any word it modified with the Batman character." DC Comics, Inc. at 144. In so concluding, the court simply ignored DC's allegations and evidentiary submission which more than adequately raised the possibility that the Batcave is an integral part of the Batman stories and thus strongly associated with the mark "Batman."

The district court's conclusion that the "Batman" and "Batcave" marks were dissimilar also ignored the evidentiary materials submitted by DC which suggested an almost unmistakable association between "Batman" and the "Batcave." In considering the proximity of the products or services, the district court overlooked the obvious link between the Batman character, predominantly a comic book personality, and RFI's Batcave sale of comic books. Because an issue of material fact exists concerning the connection between "Batman" and the "Batcave," there are live factual questions as to the proximity of the comic book figure and the comic book store, particularly since customers might well believe that the Batcave bookstores are operated by those who create or publish Batman comic books. E.g., Spring Mills Inc. v. Ultracashmere House, Ltd., 689 F.2d 1127, 1133-34 (2d Cir.1982).

The district court simply adopted the unsworn statements of RFI in concluding that it used the "Batcave" mark in good faith:

[T]he defendants claim that they picked 'Batcav...