Universal City Studios, Inc. v. Nintendo Co., Ltd.

Citation746 F.2d 112,223 U.S.P.Q. 1000
Decision Date04 October 1984
Docket NumberD,No. 1208,1208
PartiesUNIVERSAL CITY STUDIOS, INC., Plaintiff-Appellant, v. NINTENDO CO., LTD., Nintendo of America, Inc., Defendants-Appellees. ocket 84-7095.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Douglas C. Fairhurst, New York City (Mary D. Faucher, Sandra Edelman, Townley & Updike, New York City, of counsel), for plaintiff-appellant.

John J. Kirby, Jr., New York City (Thomas G. Gallatin, Jr., Shelley B. O'Neill, Catherine E. Palmer, Mudge, Rose, Guthrie, Alexander & Ferdon, New York City, and James L. Magee, Sax & Maciver, Seattle, Wash., of counsel), for defendants-appellees.

Before FRIENDLY, MESKILL and KEARSE, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from an order of the United States District Court for the Southern District of New York, Sweet, J., granting the motion for summary judgment by the defendants, Nintendo Co., Ltd. and Nintendo of America, Inc. (Nintendo), in the action brought by plaintiff Universal City Studios, Inc. (Universal) under section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1982), the New York anti-dilution statute, N.Y.Gen.Bus.Law Sec. 368-d (McKinney 1984), and common law unfair competition, trademark and trade name principles. Universal City Studios, Inc. v. Nintendo Co., 578 F.Supp. 911 (S.D.N.Y.1983). We affirm.

BACKGROUND

Nintendo Co., and its wholly owned subsidiary Nintendo of America, has engaged in the design, manufacture, importation and sale of the extraordinarily successful video game known as "Donkey Kong." Nintendo has realized over $180 million Universal, a giant in the entertainment industry, maintains that it owns the trademark in the name, character and story of "King Kong." The King Kong character and story, of course, need no introduction. Universal traces its ownership of the trademark from RKO General's (RKO) efforts to exploit the goodwill created by its 1933 film classic of the same name. It asserts that RKO's commercial use of the name and character of King Kong created the trademark; that the rights to the trademark were passed from RKO to Richard Cooper, son and heir of King Kong creator Merian Cooper, pursuant to a judgment resulting from a claim brought by Richard Cooper against RKO alleging that RKO had exceeded the license originally granted by Merian Cooper to make the original King Kong motion picture; and that Richard Cooper subsequently transferred to Universal for consideration the rights he obtained from RKO. 1

from the sale of approximately 60,000 video arcade machines in the United States and Canada. Donkey Kong requires the player to maneuver a computerized man named Mario up a set of girders, ladders and elevators to save a blond pigtailed woman from the clutches of a malevolent, yet humorous gorilla, while simultaneously avoiding a series of objects such as barrels and fireballs hurled at him by the impish ape.

Universal filed its complaint against Nintendo in 1982, approximately nine months after Nintendo began marketing Donkey Kong. Universal alleged that the Donkey Kong name, character and story constituted false designation of origin in violation of 15 U.S.C. Sec. 1125(a) because Nintendo's "actions falsely suggest to the public that [its] product originates with or is authorized, sponsored or approved by the owner of the King Kong name, character and story." Universal also asserted claims based upon the New York anti-dilution statute, N.Y.Gen.Bus.Law Sec. 368-d, and common law unfair competition, trademark and trade name principles. 2 Neither side requested a jury trial.

After extensive discovery, Nintendo moved for summary judgment. The motion was granted by the district court. Specifically, the court held that (a) Universal failed to derive trademark rights from RKO because the transfer from RKO to Cooper was an invalid assignment in gross; (b) any trademark that Universal purported to own could not be the basis of a successful action under the Lanham Act because it lacked "secondary meaning" as a matter of law; (c) even if Universal's trademark had secondary meaning, there was no question of fact as to whether consumers were likely to confuse Donkey Kong and King Kong; (d) Universal did not state a claim under the New York anti-dilution statute because it lacked a distinctive trademark and there were no triable issues as to whether Donkey Kong blurred the King Kong mark; and (e) the common law trademark,

                trade name and unfair competition claims should be dismissed. 3   The district court subsequently certified its decision as final under Fed.R.Civ.P. 54(b) even though Nintendo's counterclaim remained unadjudicated. 4   This appeal followed
                
DISCUSSION

We turn first to what Universal labels the "main" issue, whether the district court's decision that Universal failed to raise a question of fact as to the likelihood of consumer confusion concerning the origin of Donkey Kong was erroneous. Because we affirm the holding of the district court on this issue, we need not and do not decide if the district court was correct in finding that the King Kong mark was not validly developed and conveyed to Universal and that the King Kong mark has not acquired secondary meaning. Rather, we assume only arguendo that the King Kong trademark was validly developed and conveyed to Universal and that the King Kong mark has secondary meaning. See Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 918 (2d Cir.1980) ("even if we assume for purposes of this appeal that [counterclaim plaintiff] could demonstrate secondary meaning at trial, since likelihood of consumer confusion could not be established [counterclaim defendant] was entitled to summary judgment").

To be entitled to summary judgment, Nintendo must demonstrate "the absence of any material factual issue genuinely in dispute," Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975) (citation omitted), and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The record must be construed in the light most favorable to Universal and all reasonable inferences must be drawn to its advantage. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Sterling National Bank & Trust Co. v. Fidelity Mortgage Investors, 510 F.2d 870, 875 (2d Cir.1975). We hold that Universal failed to raise a question of fact on the issue of the likelihood of consumer confusion and thus Nintendo was entitled to summary judgment on the Lanham Act claim.

"It is well settled that the crucial issue in an action for trademark infringement or unfair competition is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question." Mushroom Makers, Inc. v. R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir.1978) (per curiam) (citation omitted), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979). See also Lever Brothers Co. v. American Bakeries Co., 693 F.2d 251, 253 (2d Cir.1982); Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 205 (2d Cir.1979) ("The public's belief that the mark's owner sponsored or otherwise approved the use of the trademark satisfies the confusion requirement."). "The solution of this problem ... depends upon a consideration of the facts and circumstances in each case." Plus Products v. Plus Discount Foods, Inc., 722 F.2d 999, 1003 (2d Cir.1983). The factors enumerated in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961), are utilized and balanced to determine the likelihood of confusion:

Where the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers. Even this extensive catalogue does not exhaust the possibilities--the court may have to take still other variables into account.

Id. at 495. Questions regarding the likelihood of confusion are normally factual in nature. American International Group, Inc. v. London American International Corp., 664 F.2d 348, 351 (2d Cir.1981). Nonetheless, "courts retain an important authority to monitor the outer limits of substantial similarity within which a jury is permitted to make the factual determination whether there is a likelihood of confusion as to source," Warner Bros. Inc. v. American Broadcasting Cos., 720 F.2d 231, 246 (2d Cir.1983), and summary judgment is appropriate if the court is satisfied that the products or marks are so dissimilar that no question of fact is presented. See Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 918 (2d Cir.1980) (summary judgment granted to counterclaim defendant on issue of likelihood of consumer confusion); B & L Sales Associates v. H. Daroff & Sons, Inc., 421 F.2d 352, 354 (2d Cir.) (summary judgment to defendant), cert. denied, 398 U.S. 952, 90 S.Ct. 1873, 26 L.Ed.2d 292 (1970); Bowmar Instrument Corp. v. Continental Microsystems, Inc., 497 F.Supp. 947, 954-55 (S.D.N.Y.1980).

In Warner Bros. Inc. v. American Broadcasting Cos., 720 F.2d 231 (2d Cir.1983), Warner, owner of the trademark and copyright in the fictional character Superman, brought an action against ABC for its production of a television series entitled "The Greatest American Hero." Warner claimed, as does Universal in this case, that the character infringed its trademark. We held that it was proper to compare the "extent to which the allegedly infringing character captures the 'total concept and feel' " of the protected character in order to determine whether...

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