Kid Stuff Mktg., Inc. v. Creative Consumer Concepts, Inc.

• Decision Date: 19 December 2016
• Docket Number: Case No. 15–2620–JWL
• Citation: 223 F.Supp.3d 1168
• Parties: KID STUFF MARKETING, INC., Plaintiff, v. CREATIVE CONSUMER CONCEPTS, INC. and Steak N Shake Operations, Inc., Defendants.
• Court: U.S. District Court — District of Kansas

223 F.Supp.3d 1168

KID STUFF MARKETING, INC., Plaintiff,

v.CREATIVE CONSUMER CONCEPTS, INC. and Steak N Shake Operations, Inc., Defendants.

Case No. 15–2620–JWL

United States District Court, D. Kansas.

Signed December 19, 2016

David L. Marcus, Bartle & Marcus, LLC, Kansas City, MO, for Plaintiff.

Caroline Ann Bader, Eric A. Buresh, Megan J. Redmond, Erise IP, PA, Overland Park, KS, for Defendants.

MEMORANDUM & ORDER

John W. Lungstrum, United States District Judge

In this lawsuit, plaintiff asserts that defendants infringed on its copyrights in certain illustrated characters, assembly instructions and a die line associated with paperboard cars that defendant Steak N Shake Operations, Inc. ("SNS") distributed to consumers in connection with its kids' meal program. This matter is presently before the court on the parties' motions for summary judgment. The parties have filed cross-motions on the issues of whether SNS enjoys an irrevocable implied license to use the character copyrights and whether the assembly instructions and die line copyrights are valid. Plaintiff also moves for summary judgment on the issue of ownership of the asserted copyrights. As will be explained, both motions are granted in part and denied in part.¹

I. Standard

Summary judgment is appropriate if the moving party demonstrates that there is "no genuine dispute as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). In applying this standard, the court views the evidence and make inferences in the light most favorable to the non-movant. Kerber v. Qwest Group Life Ins. Plan , 647 F.3d 950, 959 (10th Cir. 2011). A dispute is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party" on the issue. Id. (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). Although the court views the evidence and draws reasonable inferences therefrom in the light most favorable to the nonmoving party, "the nonmoving party must present more than a scintilla of evidence in favor of his position." Id. (quoting Ford v. Pryor , 552 F.3d 1174, 1177–78 (10th Cir. 2008) ).

The legal standard does not change if the parties file cross-motions for summary judgment. Each party has the burden of establishing the lack of a genuine issue of material fact and entitlement to judgment as a matter of law. Atlantic Richfield Co. v. Farm Cr. Bank , 226 F.3d 1138, 1148 (10th Cir. 2000).

II. Statement of Facts

In August 2008, defendant Steak N Shake Operations, Inc. (hereinafter "SNS") began exploring ways to revamp its kids' meal program. Toward that end, Karen Cunningham, SNS's senior marketing manager, issued a Request for Proposals to various marketing entities, including plaintiff Kid Stuff Marketing, Inc. (hereinafter "KSM"). In preparing a presentation for SNS, KSM's then-CEO Joseph Tindall inquired as to whether SNS wanted KSM to explore the use of characters in connection with the kids' meal program. Ms. Cunningham indicated that SNS would like to see characters as part of the presentation. Mr. Tindall instructed KSM's senior creative director Michael Oden to create and develop characters for inclusion in the presentation to SNS. Ultimately, Mr. Oden reached out to Mike Dammer, a freelance artist, to illustrate two animated characters patterned after popular food items sold at SNS. These characters came to be known as "Sizzle" and "Shaker." The versions of those characters that were ultimately copyrighted by KSM are shown in Exhibit A, attached hereto. Mr. Dammer executed a work-for-hire agreement in April 2016, an agreement that KSM contends memorialized the terms of the parties' agreement at the time Mr. Dammer illustrated Sizzle and Shaker.

In September 2008, Mr. Tindall and other KSM representatives presented their proposal to SNS's management team. The presentation included the Sizzle and Shaker characters, as well as the introduction of paperboard cars. These "Classic Cruiser" cars, intended for distribution to children purchasing kids' meals and for easy assembly in the restaurant, were patterned after real cars manufactured by Ford and General Motors and were produced under license from those companies. After viewing KSM's presentation and proposal, SNS selected KSM as the vendor for its kids' meal program.

SNS placed its first order with KSM in October 2008. This initial order included Classic Cruisers as well as placemats and cups that included animated girl and boy characters developed by KSM. The order did not include any items with Sizzle and Shaker. In the meantime, a senior designer at KSM, Jay Thompson, created another illustrated character for potential use with the SNS work—a "female" character patterned after French fries. This character came to be called "Goldie." The version of Goldie that was ultimately copyrighted by KSM is shown in Exhibit B, attached hereto.

In February 2009, KSM put together another presentation for SNS, featuring Sizzle, Shaker and Goldie and SNS placed its first order for products incorporating these characters in August 2009. That order called for KSM to develop a double-sided placemat featuring the SNS kids' meal menu, various activities, and the Sizzle, Shaker and Goldie characters. SNS then used another company to manufacture the placemats that were designed by KSM. In October 2009, SNS placed its second order for products incorporating the Sizzle, Shaker and Goldie characters. That order called for KSM to develop the artwork for a new paper kids' cup that would feature the characters. As with the placemat design, SNS used another company to manufacture the cups that were designed by KSM.

In the spring of 2010, SNS approached KSM about ways to reduce the cost of the kids' meal program. In response to that inquiry, KSM proposed reducing the size of the Classic Cruisers to make them less expensive and creating original car designs that did not require the payment of license fees to Ford and GM. Toward that end, William Billen, KSM's director of product development, together with KSM's creative team, began creating original, non-licensed cars used in connection with SNS's kids' meal program. In May 2010, SNS placed its first order for KSM's original, non-licensed car designs. These cars were known as the Custom Non–Licensed Steak 'n Shake Cruisers.

SNS continued to order original, non-licensed cars from KSM through early 2014. In 2012, KSM developed a new five-panel design for its original, non-licensed cars that permitted KSM to incorporate additional design features and graphics. These cars featured one or more of the Sizzle, Shaker and Goldie characters and typically focused on a specific theme. For example, the first five-panel cars that KSM produced for SNS were known as the Super Hero Cars, which were produced in April 2012. Later, KSM produced additional five-panel cars for SNS, including cars known as the Futuristic Cars. Mr. Billen created the "die line" for the Futuristic Cars and that die line is known as the 9015 Concept Car die line.² That die line is shown in Exhibit C, attached hereto. Mr. Billen also created assembly instructions for the Futuristic Cars. Those written instructions, which were designed for a child's understanding, are known as the 9015 Concept Car Instructions. The 9015 Concept Car Instructions also include one illustration for each of the eight separate assembly steps. The assembly instructions as they appeared on the paperboard cars are shown in Exhibit D. The eight illustrations were created by James Kresge, a freelance artist. Mr. Kresge, like Mr. Dammer, executed a work-for-hire agreement in April 2016, an agreement that KSM contends memorialized the terms of the parties' agreement at the time Mr. Kresge created the assembly illustrations.

In April 2014, SNS notified KSM that it had received a proposal from a competing vendor to supply paperboard cars at a lower cost. Despite negotiations between SNS and KSM, SNS moved its kids' meal marketing business to that competing vendor, defendant Creative Consumer Concepts, Inc. (hereinafter "C3"). C3 began supplying paperboard cars to SNS in early 2015. According to KSM, these cars (known as the Spy Series cars) incorporate the characters designed by KSM as well as the assembly instructions/illustrations created by KSM. KSM further asserts that the Spy Series cars were created from the die line created by KSM for its Futuristic Cars. In the pretrial order, KSM contends that C3 has produced additional infringing cars for SNS.

Additional facts will be provided as they relate to the specific arguments raised by the parties in their submissions.

III. Discussion

In the pretrial order, KSM alleges that SNS and C3 infringed KSM's copyrights in the Sizzle, Shaker and Goldie characters; in the paperboard car assembly instructions (the 9015 Concept Car Instructions); and in the paperboard car die line (the 9015 Concept Car die line) by preparing, selling and distributing paperboard cars that were manufactured using KSM's Concept Car die line and featured the Sizzle, Shaker and Goldie characters as well as the Concept Car assembly instructions. KSM further alleges a contributory copyright infringement claim against SNS on the grounds that SNS made the artwork for the characters available to C3 and distributed works featuring the assembly instructions and die line to its franchise locations.

To establish copyright infringement, KSM must establish "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original."

Savant Homes, Inc. v. Collins , 809 F.3d 1133, 1138 (10th Cir. 2016). Contributory copyright infringement is derivative of direct copyright infringement. Id. at 1146. It occurs "when the defendant causes or materially contributes to another's infringing activities and knows of the infringement." Id. (quoting Diversey v. Schmidly , 738 F.3d 1196, 1204 (10th Cir. 2013) ). Thus, there can...