Gund, Inc. v. Russ Berrie and Co., Inc., 88 Civ. 2929 (VLB).

• Decision Date: 12 December 1988
• Docket Number: No. 88 Civ. 2929 (VLB).,88 Civ. 2929 (VLB).
• Parties: GUND, INC., Plaintiff, v. RUSS BERRIE AND CO., INC., Defendant.
• Court: U.S. District Court — Southern District of New York

701 F. Supp. 1013

GUND, INC., Plaintiff, v. RUSS BERRIE AND CO., INC., Defendant.

No. 88 Civ. 2929 (VLB).

United States District Court, S.D. New York.

December 12, 1988.

George Gottlieb, Jane Shay Wald, Gottlieb, Rackman & Reisman, New York City, for plaintiff Gund, Inc.

Philip H. Gottfried, Eugene Berman, Amster, Rothstein & Ebenstein, New York City, for defendant Russ Berrie and Co., Inc.

ORDER

VINCENT L. BRODERICK, District Judge.

Magistrate Grubin's comprehensive Report and Recommendation is approved, and adopted as the opinion of the court. Plaintiff shall submit, on three days' notice, a proposed preliminary injunction with appropriate provision for a bond. The parties are invited to agree on the amount of the bond: if there is no agreement the parties shall contact my chambers and a prompt conference will be held.

In the interim, Russ Berrie and Co., Inc., its agents, servants, employees, related companies, subsidiaries, and all persons in active concert and privity with them, are enjoined from directly or indirectly manufacturing, displaying, vending, distributing, selling, promoting or advertising, and from causing others to manufacture, display, vend, distribute, sell, promote or advertise, its plush ostrich known as Obee.

SO ORDERED.

REPORT AND RECOMMENDATION TO THE HONORABLE VINCENT L. BRODERICK

SHARON E. GRUBIN, United States Magistrate:

This is an action for copyright infringement brought by plaintiff Gund, Inc. ("Gund") against defendant Russ Berrie and Company, Inc. ("Russ Berrie") with respect to two stuffed animal toys made by Gund, a dog named Muttsy and an ostrich named Popover. This report concerns plaintiff's motion for a preliminary injunction with respect to the second count of its first amended complaint, the alleged infringement of plaintiff's copyright in Popover by defendant's ostrich, Obee.¹ Evidentiary hearings were held on June 22, 27, 29 and July 6, 1988. At defendant's request, the testimony of an additional witness, taken by deposition on August 12, 1988, was also considered. For the reasons set forth herein, I respectfully recommend that your Honor issue the preliminary injunction sought by plaintiff restraining defendant from continuing to sell Obee. The following are my proposed findings of fact and conclusions of law.

BACKGROUND

Gund, a privately-held New Jersey corporation, has been in the business of designing, having manufactured, importing and selling stuffed plush toys since 1898. ("Plush" is the soft material used in making stuffed toys.) Gund designs all of its products through its own design department and attempts to maintain strong quality controls. It sells its products for retail almost exclusively to what are described as "upscale" department stores across the United States and in many foreign countries. Gund apparently enjoys a good reputation with retail establishments and consumers.

The defendant Russ Berrie is a publicly-held corporation also headquartered in New Jersey which designs and markets a large selection of "impulse gifts" to retail stores across the country and abroad. Its product line consists of over 11,000 items, including stuffed animals which fall under the domain of its Plush Division, and it employs design staffs at its headquarters and throughout the world. The defendant says it does not make "toys" and refers to its stuffed animals as "gifts." Russ Berrie's customers are giftware retailers, such as card and gift stores, pharmacies, florists, military post exchanges, chain stores and gift shops located in resorts, hotels, colleges, airports and hospitals.

Popover is a stuffed plush ostrich introduced by Gund to the toy trade in the summer of 1986 as part of Gund's "Spring 1987" product line which was intended for delivery to Gund's retail customers commencing in December of 1986. The United States Copyright Office issued Certificate of Copyright Registration No. VA 236-211 for Popover under effective date of July 15, 1986, showing June 23, 1986 as the date of first publication. The toy is manufactured with a sewn-in label carrying the company name and an appropriate copyright notice. Popover was shown in the Gund Spring 1987 catalog, which was distributed in July and August of 1986, and in all subsequent Gund catalogs to date: Fall 1987, Spring 1988 and Fall 1988. About 20,000 copies of these catalogs are regularly distributed by mail, through Gund sales-people and at trade shows. Popover has been on display at trade shows and in Gund's showrooms in various cities since its introduction, including the New York Gift Show in August of 1986 and the New York International Toy Fair in February of 1987. Popover was also shown as one of twelve Gund stuffed toys in a 30-second television commercial shown nationwide at various times since November of 1986. Gund has sold over 18,000 Popover toys at the wholesale level since its introduction in 1986 for more than $160,000 and, as Gund considers Popover one of its most successful products, the company intends to continue to market and sell it.

Popover (P.Ex. 50)² is a soft, cuddly item with an egg-shaped body, two legs, two wings and a tail. It has a long neck protruding up from the front of the body and a round bulbous head with two eyes and a beak. Its normal position is a sitting one with the two legs protruding frontward. It is what I would describe as a medium-sized toy: the body measures about eight inches in length, and its height from the top of the head to the bottom of the body is about nine inches. Popover is meant to be a baby ostrich, described in plaintiff's promotional literature as "just hatched," and attempts to achieve a "wet-look" as newly-born from the egg by the use of a curly, tumbled plush material for the torso. This material is brownish in color with white at the tips of the strands of "fur." The wings are covered in the same material as they come out from the body, but the outer half of each wing is all white. The tail is also white, as are the neck and head. The beak and legs and feet are brown (a different brown from that in the body). The beak is short and rounded and made of plush, and the legs culminate in large feet of three toes made of the same plush as the beak. It is fair to say that Popover is a very cute item, and its appeal (in my opinion) lies largely in the nature of its soft, inviting facial appearance.

Popover was the brainchild of Gund's design director, Rita Raiffe, and designer, Susan Procino. In about April 1986 they discussed new characters to include in Gund's Spring 1987 product line and decided to try to develop a soft baby bird of some sort just hatched from an egg. The concept of a big egg led them to think about an ostrich. They thought, however, that real ostriches were quite unattractive in appearance, so they set about to develop a cute, whimsical ostrich instead of a lifelike one. Procino, who has been a designer at Gund since 1977 and has developed near one thousand stuffed plush toys, is the person who then designed Popover from start to finish. Two "reference" books at Gund contained photographs of adult and baby ostriches, Baby Animals by Maurice Burton (P.Ex. 5) and Elephants & Other Land Giants by Time-Life Films (P.Ex. 6), but Popover was not designed to look like the ones in the books because Procino and Raiffe found them so unappealing. Procino eventually came up with a two-dimensional paper pattern and a sewn sample with which she and Raiffe were satisfied. In May 1986 the two of them took the pattern and sample to Korea, where most of these types of items are apparently manufactured, selected the factory they thought could best produce Popover, and Popover was hatched.

The defendant's ostrich, Obee (P.Ex. 51), came into being in October 1987. Jennifer R. Monson, the defendant's Vice President of Product Development, who has been responsible for the development of 4,000 to 7,000 items for Russ Berrie's plush line, 1,000 to 2,000 of which have actually gone into production, testified as to the creation of Obee. In September or October of 1987 she was in Korea with Mr. Russell Berrie, defendant's President. During a meeting with the President of the defendant's Korean division, Mr. Y.B. Lee, Mr. Berrie reviewed sales reports on each item produced by the division. In reviewing a plush item known as Laverne Flamingo, Mr. Berrie mentioned that Laverne was doing very well and asked if Lee could "develop something like Laverne or the next generation of Laverne, because that item was doing very well in the line at the time." (Tr. 115.) The defendant's Korean operations employ designers, pattern-makers and artists. Monson and Berrie left Korea and went to Taiwan or Hong Kong for further business meetings, but returned to Korea ten to fourteen days later. There they reviewed all new items on which Y.B. Lee had been working, and Lee presented a sample of Obee. Berrie liked it and told Lee to obtain a manufacturer, and a few days later the three of them met with a Korean manufacturer and Berrie placed an order for the production of Obee and its shipment to various of defendant's distribution centers in the United States and other countries. Monson's contemporaneous notes of the meeting indicate that it was a Ms. Lee, who is the head pattern-maker and designer in the Korean office, who designed Obee. (D. Ex. F.) Obee became part of the defendant's "Caress" line of plush items, which uses higher quality fabrics and stuffings than are used in some other stuffed items.

After this litigation commenced, Monson called Y.B. Lee in Korea and asked him to send to her the paper pattern for Obee, and she told him that she wanted to know "anything that he used in developing Obee, all materials that he used to develop Obee." (Tr. 155.) Lee responded by sending the pattern of Obee and the patterns of two other plush ostriches that had been previously made by the defendant's Korean division, Olivia (D. Exs. E, J) and Henrietta (D. Exs....