Sandwiches, Inc. v. Wendy's Intern., Inc.
| Decision Date | 20 February 1987 |
| Docket Number | No. 85-C-1488,18-C-1481.,85-C-1488 |
| Citation | 654 F. Supp. 1066 |
| Parties | SANDWICHES, INC., d/b/a Suburpia Submarine Sandwich Shoppes, Plaintiff, v. WENDY'S INTERNATIONAL, INC., Defendant. WENDY'S INTERNATIONAL, INC., Plaintiff, v. SUBURPIA SUBMARINE SANDWICH SHOPPES OF MILWAUKEE, INC., and William Drilias, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
Michael Jassek, Milwaukee, Wis., for Sandwiches, Inc.
Richard Florsheim, Milwaukee, Wis., for Wendy's Intern. Inc.
James L. Adashek, Milwaukee, Wis., for Suburpia Submarine Sandwich Shoppes.
Allan Strauss, Milwaukee, Wis., for Drilias.
DECISION AND ORDER
The above-captioned litigation commenced on June 25, 1984, when Wendy's International, Inc. filed suit against Suburpia Submarine Sandwich Shoppes of Milwaukee, Inc. and William Drilias in the United States District Court for the Southern District of Ohio. In its complaint Wendy's alleges that it created two original thirty-second television commercials for which it holds the copyrights. Wendy's claims that Suburpia and Drilias disseminated the false accusation that Wendy's had stolen a commercial belonging to them (the "Sub Commercial").1 Consequently, Wendy's seeks compensatory and punitive damages and a judgment declaring that: (1) Suburpia has forfeited any copyright interest in the Sub Commercial; (2) Suburpia's claim of copyright for the Sub Commercial in its purported application for copyright registration is invalid; and (3) the Wendy's commercials do not violate any statutory or common-law right which Suburpia may have in the Sub Commercial. This case is predicated on diversity jurisdiction in that Wendy's is incorporated in Ohio with its principal place of business in Dublin, Ohio and Suburpia is incorporated in Wisconsin with its principal place of business in Milwaukee, Wisconsin. Drilias is a citizen of Wisconsin. See 28 U.S.C. § 1332(a). In an Opinion and Order of April 3, 1985, the Ohio court transferred venue to the Eastern District of Wisconsin where this case is now pending as Civil Action No. 85-C-1481. See 28 U.S.C. § 1404(a).
After the first lawsuit had been transferred to this court, Sandwiches, Inc., d/b/a Suburpia Submarine Sandwich Shoppes, commenced a lawsuit against Wendy's for copyright infringement of a television commercial Suburpia calls the "Cheeseburga" commercial. Suburpia claims that it had registered a copyright on that commercial pursuant to the federal copyright statutes. See 17 U.S.C. §§ 101-810. Therefore, this court has subject matter jurisdiction over this action under 28 U.S.C. § 1338. This copyright has now been purportedly assigned to the plaintiff Sandwiches. On January 31, 1985, Suburpia was ordered into liquidation proceedings under Chapter 7 of the United States Bankruptcy Code by the United States Bankruptcy Court for the Eastern District of Wisconsin. Pursuant to the court-approved sale of Suburpia's business and related assets, the trustee for Suburpia transferred and assigned to Sandwiches all right, title and interest in and to the copyright secured on "Cheeseburga." This assignment expressly includes an assignment of all causes of action which have accrued in favor of Suburpia for infringement of the copyright on "Cheeseburga." This assignment was duly recorded with the Register of Copyrights on October 4, 1985. Sandwiches claims that in late 1983 and early 1984, Wendy's infringed on this copyright by producing two commercials termed "Fluffy Bun I" and "Fluffy Bun II" which it distributed, displayed and attempted to copyright. Sandwiches claims that its actual damages due to this infringement are in excess of forty-eight million dollars. In addition to these damages, Sandwiches seeks an accounting and costs.
On motion of Sandwiches, its own case and Wendy's case were consolidated on April 7, 1986. Near the end of the period scheduled for the discovery of fact witnesses, Wendy's filed a motion for summary judgment which is now fully briefed and ready for decision.
The record reveals that in the early 1970's, Suburpia's then-owner, William Foley, asked James R. Weller, a Milwaukee advertising executive, to do commercial work for Suburpia. See Affidavit of James R. Weller at ¶ 3. Eventually, Weller proceeded to create and produce a series of radio commercials for Suburpia. See Id. Weller claims he received very little compensation for this work. See Id.
Weller left Milwaukee in 1974, but in 1978, when he was a vice president of a New York advertising agency, Foley again asked him to create a Suburpia commercial, this time for television. Weller recalls that:
I reminded Mr. Foley that I had received very little compensation for my prior work for Suburpia, but stated that, because we were friends, I would agree to create a television commercial for Suburpia's use provided that I, not Suburpia, would retain all rights, including any copyright, to this commercial after its production. I wanted those rights because I knew that commercials could generate licensing revenues for the owners of such rights and I knew that other artists who had created advertisements and retained the rights were sometimes able to earn income by licensing those rights to others.
Weller alleges that he and Foley then entered into an oral contract whereby Weller would work on a new Suburpia television commercial which Suburpia would be allowed to broadcast. In return, Weller was to retain all rights to the commercial. Weller asserts that he and Foley did not sign any agreement that this commercial would be a "work made for hire." Id. at ¶ 5.
What Suburpia calls the "Cheeseburga" commercial and Wendy's now calls the "Clown" commercial was created, filmed and televised in 1979. See Id. at ¶ 6. Several other persons, including Josef Sedelmaier, a Chicago film producer, collaborated in making the changes on Weller's original script. Sedelmaier also directed, produced, and filmed the commercial. See Id. Weller maintains that: "Mr. Sedelmaier and I created the `Clown' commercial without any creative input, direction or control from Suburpia." Id. at ¶ 7. Weller's account of the production of the "Cheeseburga/Clown" commercial is corroborated by Sedelmaier. See Affidavit of J. Josef Sedelmaier at ¶¶ 5 & 6.
In late 1983 and early 1984, Wendy's and the advertising firm of Dancer, Fitzgerald, Sample, Inc. prepared a series of proposed television commercials. The advertising strategy was "designed to communicate that Wendy's Single hamburger had more beef than McDonald's Big Mac or Burger King's Whopper." See Affidavit of Robert Lawrence Reed at ¶ 2. Sedelmaier was commissioned to produce the commercials which are termed the "Fluffy Bun I" and "Fluffy Bun II" commercials. On March 19, 1984, after production was completed, Wendy's applied for registration of its copyright in these commercials. Id. at ¶ 3; Sandwiches' Complaint at ¶ 21. Suburpia did not apply for copyright registration of the "Cheeseburga/Clown" commercial until April 16, 1984. See Affidavit of Robert E. Shumaker at Exhibit 1, p. 7.
Meanwhile, in August of 1982, Foley, who had filed a personal bankruptcy action, sold his Suburpia stock to Festivals, Inc. which was principally owned and managed by defendant William Drilias and his brother Thomas. A written Stock Purchase Agreement was executed by all the parties with respect to this stock transfer. See Affidavit of William J. Drilias at Exhibit A. Section 2.11 of this Agreement provides that:
Shareholders shall convey, transfer, assign and quit claim to Buyer all of Shareholders' right, title and interest, if any, in the name "Suburpia," "Suburpia Submarine Sandwiches," "Suburpia Submarine Sandwich Shoppes of Milwaukee," and any combination and/or abbreviation of said trade names and in any and all promotional materials promoting the name and business of said Corporation, and Shareholders hereby disclaim any right, title and interest in said trade names. Likewise Shareholders shall convey, transfer, assign and quit claim to Buyer all of Shareholders' right, title and interest, if any, in any trademark and/or copyright of designs or materials bearing any of the aforementioned trade names, and Shareholders hereby disclaim any right, title and interest in said trademarks or copyrights.
Affidavit of William J. Drilias at Exhibit A, § 2.11. In addition, the Agreement states that all items of real and personal property owned by Suburpia were to be transferred to Festivals, Inc. See Id. at § 2.08. A further provision of the Agreement requires that Suburpia make full disclosure of any and all other agreements, commitments, contracts or leases to which Suburpia was a party at the time of the sale. See Id. at § 2.17. The list provided pursuant to this clause does not contain any mention of the "Cheeseburga/Clown" commercial. See Affidavit of Thomas Drilias at Exhibit B. William Drilias claims that prior to the stock transfer he was aware of Suburpia's television and radio commercials and "was under the impression that full and complete title to said promotional materials was to be transferred to Festivals, Inc." Affidavit of William J. Drilias at ¶ 4. He also says that at no time did Weller come forward to claim that he was the owner of the commercial. Id. at ¶ 9. Thomas Drilias states that he too was aware of the commercials in question. See Affidavit of Thomas Drilias at ¶ 4. He says that Foley told him that Festivals had acquired the commercial in the stock purchase, Id. at ¶ 7, and that:
At no time during the negotiations prior to the stock transfer or the actual closing of the stock sale was any mention made by William J. Foley or anyone else on his behalf of a pre-existing agreement with James Weller regarding the ownership of the "Cheeseburga" commercial.
Id. at ¶ 6. David A. McGuire, an attorney who represented William and ...
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