Spinmaster, Ltd. v. Overbreak LLC

• Decision Date: 16 December 2005
• Docket Number: No. 05 C 0860.,05 C 0860.
• Citation: 404 F.Supp.2d 1097
• Parties: SPINMASTER, LTD. and Steven Davis Corporation, Plaintiffs, v. OVERBREAK LLC, Defendant.
• Court: U.S. District Court — Northern District of Illinois

404 F.Supp.2d 1097

SPINMASTER, LTD. and Steven Davis Corporation, Plaintiffs, v. OVERBREAK LLC, Defendant.

No. 05 C 0860.

United States District Court, N.D. Illinois, Eastern Division.

December 16, 2005.

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James Joseph Jagoda, Bell Boyd & Lloyd, Chicago, IL, Jeffrey J. Howell, Kimberly N. Reddick, Michael J. Murphy, Bell, Boyd, & Lloyd, Washington, DC, for Plaintiffs.

Douglas N. Masters, Nathan John Hole, Loeb & Loeb LLP, Chicago, IL, Ira M. Siegel, Law Offices of Ira M. Siegel, Beverly Hills, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

ZAGEL, District Judge.

Spinmaster Ltd., maker of the Vectron Ultralite flying saucer toy, has filed for a preliminary injunction against Overbreak LLC to enjoin sales of Overbreak's Hover-Copter flying saucer because it infringes upon their intellectual property. I find that there is a strong likelihood of success for Spinmaster on the merits of both the copyright and patent infringement claims, and irreparable harm to Spinmaster will result if Overbreak is not enjoined from selling their competing product. The balance of harms and the public interest also favor Spinmaster. Spinmaster's motion for a preliminary injunction is granted.

Facts

Plaintiff Steven Davis is a designer of flying toys. In 2002, he began designing a wireless, remote controlled flying saucer. The result of his work was the Vectron Ultralite, the remote control laser gun used to operate the toy, and a base station to charge the device, all of which was completed in 2003. Davis then partnered with Edu-Science, a Hong Kong based company, to coordinate the large-scale production of his toy and assigned Edu-Science some of the corresponding intellectual property rights. The Ultralite went on sale in retail stores in 2003 and received some publicity through television. It was nominated for "Most Innovative Toy of the Year" for 2003 by the Toy Industry Association, and received the "Certificate of Merit Award" from the Federation of Hong Kong Industries in 2003. By January of 2005, the Ultralite had sold more than 900,000 units.

At the 2004 New York Toy Fair, the defendant, Overbreak LLC debuted its new toy, the HoverCopter remote controlled flying saucer. At the Toy Fair, Mr. Davis confronted Tony Hu, Overbreak's Vice-President of Product Development, about the possible infringing aspects of the HoverCopter's design and informed him of the patents pending for the Ultralite. In addition, Davis sent cease and desist letters asking Overbreak to stop selling the allegedly infringing toys. Overbreak continued to market and sell the HoverCopter, insisting that it was not infringing on any of Davis' rights, and also designed the Turbo HoverCopter which it also intends to sell.

In May of 2004, Davis filed copyright applications for the flying saucer, controller and base station. Those applications were initially rejected, but subsequently approved by the Copyright Office, which issued the registrations on January 10, 2005. In addition, copyrights issued for the Ultralite instruction manual and a 2 dimensional design drawing on January 27, 2005 and February 5, 2005, respectively. In September 2004, the United States Patent and Trademark Office (the "PTO") issued Design Patent No. D496,695 to Davis, covering the Ultralite's ornamental design, and on May 31, 2005, Davis obtained Patent No. 6,899,586 (the "'586" patent) covering his description of a "self-stabilizing rotating toy."

In January of 2005, Davis reacquired all of the rights for the Ultralite from Edu-Science and made Spinmaster Ltd. the exclusive licensee for U.S. sales and distribution rights. Spinmaster and Davis then filed suit against Overbreak for copyright infringement and infringement of the '586 patent and have now filed a motion for a preliminary injunction to stop Overbreak from selling the HoverCopter, Turbo HoverCopter, the controller, base station, and any other infringing products.

Legal Standard

A court may issue a preliminary injunction enjoining copyright or patent infringement if four conditions are met. First, the party seeking a preliminary injunction must pass the threshold tests of demonstrating a likelihood that they will ultimately succeed on the merits of the case and showing that irreparable harm will result if the injunction is denied. See Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 461 (7th Cir.2000). If the movant passes those two tests, the court must then consider any irreparable harm that will result to the defendant and whether the injunction is in the public interest. See Jack Guttman, Inc. v. Kopykake Enters., Inc., 302 F.3d 1352, 1356 (Fed.Cir.2002); Eli Lilly, 233 F.3d at 461. Finally, the court should use a sliding scale approach to weigh all four of the factors against each other, so that the more likely that a plaintiff will succeed on the merits, the less the balance of harms needs to weigh in the plaintiff's favor. Eli Lilly, 233 F.3d at 461; see also Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.Cir.2001).

Likelihood Of Success On Copyright Infringement Claim

I will start with Spinmaster's claim of copyright infringement against Overbreak under the Copyright Act of 1976, 17 U.S.C. § 101 et seq. In order for a plaintiff to win a claim of copyright infringement, the plaintiff must show (1) ownership of a valid copyright, and (2) copying of original elements of the copyrighted work. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); Incredible Techs., Inc. v. Virtual Techs., Inc., 400 F.3d 1007, 1011 (7th Cir.2005). Copying can be shown through direct evidence or by inference, if the copier had access to the copyrighted work and the accused work is substantially similar. Incredible Techs., 400 F.3d at 1011. Substantial similarity consists of two questions: (1) whether the defendant copied the plaintiff's work, and (2) whether the copying constitutes an improper appropriation. Id.

Ownership of a valid copyright

The certificate of registration for a copyright issued within five years of the first publication of a copyrighted work is prima facie evidence of the validity of the copyright and any facts stated in the certificate. 17 U.S.C. § 410(c); see also Wildlife Express Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 507 (7th Cir.1994). This shifts the burden of rebutting the presumption to the defendant in order to disprove validity. See Wildlife, 18 F.3d at 507. To prove their ownership of a valid copyright, Spinmaster has included their certificates of registration for the Ultralite, the infrared controller, and the base station, as well as a letter from the Examining Division of the Copyright Office. Overbreak has not challenged these documents or the existence of a valid copyright covering any protectible elements of the Ultralite. Instead, Overbreak focuses its efforts on showing that copyright protection does not cover the relevant aspects of the Ultralite's design at issue in this case. Therefore the copyrights are presumptively valid. Next I must determine what parts of the work the copyrights actually protect.

The Basic Law of Copyright Infringement

The Copyright Act limits the extent to which certain items may be protected from infringement. With respect to toys, only those toys which qualify as pictorial, graphic or sculptural works are subject to copyright protection. See 1-2 Nimmer on Copyright § 2.18(H)(1). Pictorial, graphic or sculptural works include "two-dimensional and three-dimensional works of fine, graphic and applied art, photographs, prints, and art reproductions, maps, globes, charts, diagrams, models and technical drawings, including architectural plans." 17 U.S.C. § 101. Although the form of these articles may be copyrightable, if the item is useful, then the mechanical and utilitarian aspects must be separated from the artistic aspects. Id. A useful article is "an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information." Id. Once an item is considered useful, it may only be copyrighted as a pictorial, graphic or sculptural work to the extent that those features can be separated from the functional features. Id.; Pivot Point Int'l, Inc. v. Charlene Prods., Inc., 372 F.3d 913, 920-21 (7th Cir.2004). So, even if a defendant's product seems to infringe upon a valid copyright, the court cannot find infringement with respect to any of the functional elements of the copyrighted work. Incredible Techs., 400 F.3d at 1012. "If an article is not `useful' as the term is defined in § 101, then it is a pictorial, graphic or sculptural work entitled to copyright protection (assuming the other requirements of the statute are met)." Pivot Point, 372 F.3d at 919.

The Application

It is clear that the Ultralite was registered as a pictorial, graphic and sculptural work, so Overbreak makes several arguments purporting to show the Ultralite's usefulness. First, it claims that the Ultralite's purpose "is more than to portray the appearance of an article, its purpose is to fly, and to do so with increased stability." This claim incorrectly tries to equate the Ultralite's purpose with an aspect of its design. Its method of flight is certainly part of the draw of the toy, and one of the qualities that makes playing with it unique, but it is quite clear that the Ultralite is designed to portray a flying saucer. The flight is only one part of that portrayal. Overbreak's second argument is that the value of the coordination skills children learn while playing with these devices makes them useful. This argument lacks merit. While it may be true that the Ultralite teaches some coordination skills, that same quality could be (and probably has been) said of almost any toy. A rule that considers any toy which helps to develop hand-eye...