Knickerbocker Toy Co., Inc. v. Winterbrook Corp.

• Decision Date: 30 September 1982
• Docket Number: Civ. No. 81-521-D.
• Parties: KNICKERBOCKER TOY CO., INC. v. WINTERBROOK CORPORATION and St. James Doll Creations v. ST. JAMES DOLL CREATIONS.
• Court: U.S. District Court — District of New Hampshire

554 F. Supp. 1309

KNICKERBOCKER TOY CO., INC. v. WINTERBROOK CORPORATION and St. James Doll Creations v. ST. JAMES DOLL CREATIONS.

Civ. No. 81-521-D.

United States District Court, D. New Hampshire.

September 30, 1982.

Raymond V. Denault, Claremont, N.H., Robert Stoll, New York City, for plaintiff.

Steven M. Latici, Laconia, N.H., Milton Oliver, Boston, Mass., for Winterbrook.

Nancy Richards-Stower, Concord, N.H., John L. Peytavin, Lutcher, La., for St. James.

ORDER AND OPINION

DEVINE, Chief Judge.

The manufacture and sale of a line of stuffed rag dolls gives rise to the instant copyright infringement action involving one of the world's largest toy companies and a non-profit community action agency. At stake is the copyright status of two of America's most beloved and well-known dolls, Raggedy Ann and Raggedy Andy. Subject matter jurisdiction is founded upon 28 U.S.C. §§ 1332, 1338, and 15 U.S.C. § 15.

Plaintiff Knickerbocker Toy Company, Inc. ("Knickerbocker"), a subsidiary of Warner Communications, is a Delaware corporation having its principal place of business in New Jersey. Knickerbocker Amended Complaint ¶ 3; St. James Exhibit X-1. Knickerbocker claims that its predecessor corporation, Knickerbocker Toy Company, Inc., a New York corporation, acquired in 1964 the exclusive license from the copyright owners to make and sell Raggedy Ann and Raggedy Andy stuffed rag dolls. Affidavit of Rod L. White, President of Knickerbocker, ¶¶ 1, 2 ("R. White Affidavit"); Affidavit of Richard Gruelle ¶ 5 ("Gruelle Affidavit"). Knickerbocker has since acquired its own copyright in the famous dolls, Copyright # Gp 55343. Amended Complaint, Exhibit 1. It is this copyright upon which Knickerbocker relied in filing this action.

Defendant St. James Doll Creations ("St. James") is the "trading style" of an employment project of St. James Parish Community Action, Inc., a non-profit Louisiana corporation. St. James' Answer and Counterclaim, filed February 1, 1982, ¶ 32 ("St. James' Answer"). At its height, St. James' doll manufacturing operation consisted of several former welfare recipients who worked on a regular basis and over 100 low-income and elderly families working in their homes. Affidavit of Larry LeBeouf, Acting Director, St. James Parish Community Action, Inc., attached to St. James' Motion to Respond Out of Time, filed January 5, 1982. St. James' stuffed rag dolls were sold to retailers through its sales representative. LeBoeuf Deposition, St. James' Exhibit Z-39, 42, 47, 62-63. Defendant Winterbrook Company ("Winterbrook"), a New Hampshire corporation, was one such retailer, allegedly shipping and selling St. James' stuffed rag dolls from its principal place of business in New Hampshire. Amended Complaint ¶ 4.

This action commenced on October 20, 1981, when Knickerbocker filed a complaint against Winterbrook alleging infringement of Copyright # Gp 55343. Winterbrook in turn filed a third-party complaint against St. James. Knickerbocker subsequently amended its complaint on December 22, 1981, to allege a first-party action against both Winterbrook and St. James. St. James answered the amended complaint on February 3, 1982, denying that Knickerbocker possessed a valid copyright and denying any copyright infringement. St. James further asserts that Knickerbocker engaged in fraudulent conduct before the Copyright Office, and counterclaims for violations of the federal antitrust laws. St. James also counterclaims under state common law causes of action. Based on the acts alleged in its counterclaims, St. James also seeks a declaratory judgment that the Knickerbocker copyright is null, void, and unenforceable.

Knickerbocker filed a motion for preliminary injunction against St. James on December 28, 1981, and a hearing was set for February 11, 1982. The motion was withdrawn on February 9, 1982, after a stipulated agreement was reached between Knickerbocker and Winterbrook. This controversy is now before the Court for the first time on the following motions:

—Knickerbocker's Motion to Amend Complaint;

—St. James' Motion to Strike Knickerbocker's Amended Reply to St. James' Counterclaims;

—St. James' Motion to Strike Knickerbocker's Letter to the Court dated June 17, 1982 —St. James' Motion for Summary Judgment or Declaratory Judgment on the issues of copyright validity, copyright infringement, unclean hands, antitrust, tortious interference with contractual relations, and unfair competition;

—Knickerbocker's Motion to Dismiss Antitrust Claims; and

—Knickerbocker's Motion to Strike Affirmative Defense.

The Court has carefully reviewed over 100 pages of pre- and post-hearing briefs of counsel, the compendium of affidavits, depositions, documents under seal, and exhibits submitted, and the additional evidence and oral argument at the hearing on motion for summary judgment, and thus proceeds to its resolution of the pending motions.

The Facts

The facts underlying the instant litigation are complex. Because a factual summary is pertinent to (and only to) the pending motions for summary judgment, the Court summarizes the record in the light most favorable to the nonmoving party (Knickerbocker). Rule 56, Fed.R.Civ.P.; O'Neil v. Dell Publishing Company, 630 F.2d 685, 686 (1st Cir.1980); Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976).

The first Raggedy Ann doll was reportedly made in the early part of this century by the grandmother of John B. Gruelle ("Gruelle"), who later acquired fame and fortune as the author of "Raggedy Ann Stories" and "Raggedy Andy Stories". Gruelle v. Molly-'Es Doll Outfitters, Inc., 94 F.2d 172 (3d Cir.1937), cert. denied, 304 U.S. 561, 58 S.Ct. 943, 82 L.Ed. 1528 (1938). Published in 1918 and 1920, respectively, the books were copyrighted by the Gruelles' publisher, P.F. Volland & Company ("Volland"). Gruelle Affidavit ¶¶ 3, 4. Both copyrights were renewed by Gruelle's widow, Myrtle Gruelle, in 1945 and 1947, respectively. Id. Certified copies of the Gruelle copyrights and renewal copyrights have been submitted into evidence by Knickerbocker. Knickerbocker claims that these copyrights are still valid and subsisting and that they afford copyright protection to the Raggedy Ann and Raggedy Andy dolls in addition to Knickerbocker's own copyright.¹

Raggedy Ann and Raggedy Andy dolls have been manufactured by several different companies since the early part of this century. Gruelle obtained a design patent on a Raggedy Ann doll in 1915, Design Patent No. 47,789. St. James Exhibit Q. A copy of the design patent is hereto attached as Appendix A. Volland itself manufactured a version of the Raggedy Ann and Raggedy Andy dolls in the early part of this century. Affidavit of Leo White, (former) President of Knickerbocker Toy Company, attached to Knickerbocker's Application for Registration of a Claim to Copyright dated June 22, 1967, Item 19 of the Certified Copies of the Files of the Copyright Office ("L. White Affidavit"). The parties have as yet been unable to locate one of the Volland dolls; they have introduced a photocopy of a 1935 advertisement bearing a picture of these dolls, a copy of which is hereto attached as Appendix B. Id.; St. James' Exhibit N-3.²

For a period of approximately 25 years dating from 1938 to 1963 the exclusive rights to the Raggedy Ann and Raggedy Andy dolls were held by Georgene Novelties, Inc. ("Georgene"). L. White Affidavit. The present record discloses that Georgene manufactured three versions of the dolls, hereinafter referred to as "Georgene 1" and "Georgene 2", see attachments to Affidavit of Pamela Ross ("Ross Affidavit"),³ and "Georgene 3", see attachment to L. White Affidavit and St. James Exhibit S-1, photocopies of which are attached as Appendices C-1, C-2, and C-3, respectively. In some of the photographs and photocopies submitted, a copyright notice bearing the names of P.F. Volland Company, John B. Gruelle, and Myrtle Gruelle is visible. St. James Exhibit S-1; attachments to Ross Affidavit.

By agreement dated June 20, 1960, Myrtle Gruelle transferred to Bobbs-Merrill Company, Inc., rights to certain copyrights in Raggedy Ann and Raggedy Andy, reserving to herself "the right to make, copy, reproduce, use and sell the specific characters `RAGGEDY ANN' and `RAGGEDY ANDY' in the form of stuffed rag dolls". Gruelle Affidavit ¶ 2; certified records of the Copyright Office Vol. 1079, p. 78, ¶ 3. Effective January 1, 1964, Knickerbocker's predecessor was granted the exclusive United States rights to manufacture and sell Raggedy Ann and Raggedy Andy dolls.⁴ Gruelle Affidavit ¶ 5; R. White Affidavit ¶ 2.

Thereafter Knickerbocker manufactured and sold its own version of the Raggedy Ann and Raggedy Andy dolls, first shown at the New York Trade Show on March 9, 1964, and first shipped to customers on May 11, 1964. L. White Affidavit. Knickerbocker then sought copyright protection for what it claimed to be a new version of the famous dolls. The following summary of the proceedings before the Copyright Office is drawn from the certified records thereof submitted by Knickerbocker, also found in uncertified form as St. James Exhibits C-P. For ease of reference the St. James identifications are herein utilized.

Knickerbocker submitted copyright applications for Raggedy Ann and Raggedy Andy dolls in April of 1964, giving as a first publication date the date of November 23, 1938. The Copyright Office rejected the application because the copies deposited bore copyright notices with the 1945-1963 copyright dates attached (in the name of Myrtle Gruelle), as well as Knickerbocker's copyright notice. The Copyright Office concluded that "dolls published in 1938 would not show a 1945 and 1963 copyright notice". St. James Exhibit E.

In February 1967 Knickerbocker filed a second set of copyright applications giving the date of first publication of the Raggedy Ann and Raggedy Andy dolls as May 11, 1964. The ...