Prudent Pub. Co., Inc. v. Myron Mfg. Corp.

• Decision Date: 06 September 1989
• Docket Number: No. 88 Civ. 8469 (RWS).,88 Civ. 8469 (RWS).
• Citation: 722 F. Supp. 17
• Parties: PRUDENT PUBLISHING CO., INC., Plaintiff, v. MYRON MANUFACTURING CORPORATION, Defendant. MYRON MANUFACTURING CORPORATION, Third-Party Plaintiff, v. CENTURY ENGRAVING, EMBOSSING CO., Third-Party Defendant.
• Court: U.S. District Court — Southern District of New York

722 F. Supp. 17

PRUDENT PUBLISHING CO., INC., Plaintiff, v. MYRON MANUFACTURING CORPORATION, Defendant.

MYRON MANUFACTURING CORPORATION, Third-Party Plaintiff, v. CENTURY ENGRAVING, EMBOSSING CO., Third-Party Defendant.

No. 88 Civ. 8469 (RWS).

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

September 6, 1989.

COPYRIGHT MATERIAL OMITTED

Blum Kaplan, New York City, for plaintiff; Steven B. Pokotilow and Laura E. Goldbard, of counsel.

Colucci & Umans, New York City, for defendant; Kenneth R. Umans, of counsel.

OPINION

SWEET, District Judge.

Plaintiff Prudent Publishing Co., Inc. ("Prudent") has moved pursuant to Rule 12(b)(6) of the Fed.R.Civ.P. to dismiss five counterclaims brought by defendant Myron Manufacturing Corporation ("Myron") or in the alternative for summary judgment pursuant to Rule 56(b) of the Fed.R.Civ.P. For the reasons set forth below, Prudent's motion is granted.

The Parties

Plaintiff Prudent, a New Jersey corporation, is a manufacturer of personalized holiday greeting cards and other business products in the United States.

Defendant Myron is a manufacturer of business products, including diaries, calendars and holiday greeting cards, with its principal place of business in New Jersey.

Century Engraving, Embossing Co. ("Century"), an Illinois corporation, is a subsidiary of Williamhouse-Regency, Inc. ("Williamhouse") and a distributor of greeting cards with its principal place of business in New York.

Prior Proceedings

Prudent filed the complaint in this action on November 30, 1988 and by order to show cause, a motion seeking a preliminary injunction and expedited discovery. A preliminary injunction on consent was signed by the court on December 15, 1988 and filed on December 20, 1988. Prudent filed an amended complaint on January 13, 1989. Myron filed its answer, a counterclaim and a cross-claim against Century on February 7, 1989, seeking a declaratory judgment of non-infringement, and damages in the amount of $2 million resulting from unfair competition, trade libel, trade disparagement, interference with prospective economic advantage, interference with contractual relations and antitrust violations.

Prudent filed the instant motion including an affidavit in support in which Prudent undertook a covenant not to sue Myron for copyright infringement on two of the four designs at issue in the original complaint. The motion was fully submitted on May 19, 1989. The facts set forth below are uncontested except as noted.

The Facts

Prudent manufactures holiday greeting cards created by the in-house design staff or purchased from outside artists who assign all rights, title and interest in such designs to Prudent. A copyright notice is affixed to each of these holiday cards from the date of first publication. Each design is registered with the Copyright Office.

Prudent sells these cards through direct mail solicitation, including Prudent's catalog and actual holiday greeting cards, which are sent to potential and regular customers. Prudent also rents its mailing lists and exchanges its lists with other companies to increase its customer base. In the past, Prudent has exchanged its greeting card lists for Myron's diary lists with an express agreement that Myron cannot use Prudent's greeting card list for its own sale of greeting cards.

Myron has offered greeting cards for sale since 1985. Some of Myron's cards were originally created by or for Myron and some were purchased from third parties who claim to have originally created and designed said cards. Myron sells its products by mail order and publishes an annual brochure of the greeting cards available which is mailed to customers in July through October. Thus, the two companies are in direct competition with each other in the greeting card business.

The standard process for creating the card designs, is to create a mechanical/art work for each design and then forward that work to an engraver to create a die which is then forwarded to the die cutter to be embossed. In 1975 Prudent created the Embossed Dove of Peace design (the "Dove"). That work is registered under Copyright Registration No. VA 6-709. In 1984 Walter Brooks created the Embossed Gold Pines design (the "Pines") and thereafter assigned all rights, title and interest in the copyright to Prudent. It was registered under Copyright Registration No. VA 166-480. Both designs have been considerably successful and are widely distributed. Prudent has sold over one million cards in each design.

In November of 1988, an employee of Prudent while at the plant of its die maker Freedman Die Cutters, Inc. ("Freedman") was given manufacturing dies, substantially identical to Prudent's Pines and Dove designs. After reviewing a squeeze proof and photocopy of the respective dies it was determined that Prudent had not ordered the dies and that they belonged to Myron. Prudent thereafter reviewed Myron's 1988 holiday greeting card catalog and discovered two other holiday greeting cards that were similar to copies of Prudent's Bringing Home the Tree (the "Tree"), and White Birches (the "White Birches").

As a result Prudent filed the complaint in this action alleging four counts of copyright infringement one for each of the alleged infringements of the Dove, Pines, Tree and White Birches cards. At a subsequent scheduling conference the parties agreed upon a preliminary injunction on consent enjoining Myron from manufacturing, offering for sale or selling any cards, materials or articles resembling the four designs as well as the designs of two other cards not mentioned in the complaint (Prudent's Cardinals and Silhouettes in Snow).

Two of the Myron cards, the Old Fashioned Christmas and Winter Landscape designs which Prudent alleges infringed the Tree and White Birches copyrights respectively, have been in the Myron catalog for approximately five months prior to the events at issue. Winter Landscape carries a theme which is standard in the greeting card industry, and was manufactured and designed by Century who then sold it to Myron. Finally, the two cards alleged to infringe the Pines and Dove cards were never completed by Myron.

Because of Prudent's acts Myron abandoned plans for the relevant portions of their 1989 Christmas catalog, and returned and segregated cards instead of filling orders. Its relationship with Century was damaged.

On December 16, 1988, after the consent order had been signed, Prudent published a press release which set forth the facts alleged in the complaint and included statements from the relief set forth in the consent order. Myron alleges this publication irreparably damaged its reputation with the trade and consuming public.

Myron subsequently informed Prudent that it planned to join Williamhouse as a third party defendant in connection with the Tree claim. According to Prudent, Williamhouse, also a client of Blum Kaplan, Prudent's counsel, expressed concern over a potential conflict of interest. Thereafter Williamhouse made full disclosure of the facts to Prudent and Prudent amended its complaint omitting the Tree and Birches claims.

Prudent then prepared a stipulation stating that Prudent would delete those two claims with prejudice. Myron served its answer shortly thereafter containing seven counterclaims set forth in five counts and a cross claim against Williamhouse shortly thereafter. At a subsequent scheduling conference Myron suggested adding to the proposed stipulation a clause preserving defendant's rights to any actions it might have. The parties did not reach an agreement, and the stipulation was not executed. Thereafter, Prudent, in an affidavit attached to its motion to dismiss Myron's counterclaims, provided the court with a covenant not to sue Myron for the copyright infringement of the two claims omitted from the amended complaint. The affidavit reads:

Prudent "covenants and agrees, in perpetuity not to bring any litigation or make any claim against Myron for copyright infringement in regard to the two designs known as `Old Fashioned Christmas' and `Winter Landscape' based on the copyrights of Prudent subsisting in its Bringing Home the Tree greeting card design, ...and Prudent's White Birches design."

In its opposition to Prudent's motion to dismiss, Myron in effect has withdrawn its trade libel, and trade disparagement tortious interference with contractual relationship, and Sherman Antitrust Act violation counterclaims in light of Prudent's covenant not to sue.

Standards Applicable to Summary Judgment Motions

Summary judgment is authorized if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact exists. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Corselli v. Coughlin, 842 F.2d 23 (2d Cir. 1988). All ambiguities are resolved against the moving party, and all favorable inferences are drawn in favor of the party against whom summary judgment is sought. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir.1989); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir.1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987).

The Supreme Court recently has made clear that "at the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); see also Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir. 1987). Summary judgment is permissible only in circumstances where "the evidence is such that a reasonable jury could not return a verdict...