Waldman Pub. Corp. v. Landoll, Inc.

• Decision Date: 22 December 1994
• Docket Number: No. 477,D,477
• Citation: 43 F.3d 775
• Court: U.S. Court of Appeals — Second Circuit
• Parties: , 33 U.S.P.Q.2d 1266, 23 Media L. Rep. 1065 WALDMAN PUBLISHING CORP. and Playmore Inc., Publishers, Plaintiffs-Appellees, v. LANDOLL, INC., Defendant-Appellant, Martin Myers & James Landoll, Defendants. ocket 94-7428.

Page 775

43 F.3d 775

63 USLW 2475, 33 U.S.P.Q.2d 1266, 23

Media L. Rep. 1065

WALDMAN PUBLISHING CORP. and Playmore Inc., Publishers, Plaintiffs-Appellees, v. LANDOLL, INC., Defendant-Appellant, Martin Myers & James Landoll, Defendants.

No. 477, Docket 94-7428.

United States Court of Appeals, Second Circuit.

Argued Oct. 13, 1994.

Decided Dec. 22, 1994.

Robert L. Epstein, New York City (Harold James, James and Franklin, of counsel), for defendant-appellant.

Charles Guttman, Mineola (Loretta Gastwirth, Danielle Laibowitz, Meltzer, Lippe, Goldstein, Wolf, Schlissel & Sazer, P.C., of counsel), for plaintiffs-appellees.

Before: OAKES, KEARSE and PRATT, Circuit Judges.

OAKES, Senior Circuit Judge:

This appeal presents the issue whether the prohibition of "false designation of origin" in section 43(a) of the Lanham Act of 1946, 15 U.S.C. Sec. 1125(a) (Supp. IV 1992) ("section 43(a)"), applies to a misattribution of authorship of a written work. The issue arises on the appeal of defendant Landoll, Inc. ("Landoll") from two orders of the United States District Court for the Southern District of New York, Charles S. Haight, Jr., Judge. The first, that of April 8, 1994, holds that plaintiffs Waldman Publishing Corp. ("Waldman") and Playmore Inc., Publishers ("Playmore") showed a likelihood of success on their claim that Landoll violated section 43(a) by publishing books substantially similar to those published by Waldman without designating Waldman as the source of the books. Waldman Publishing Corp. v. Landoll, Inc., 848 F.Supp. 498 (S.D.N.Y.1994). The second, that of April 21, 1994, grants a preliminary injunction which, inter alia, prohibits Landoll from publishing or selling any books which copy to a substantial degree books published by Waldman and distributed by Playmore. We agree that Waldman has shown a likelihood of success on its claim that Landoll falsely designated the source of its books and that this false designation will cause consumer confusion. However, we remand for a determination of whether Waldman and Playmore can show irreparable economic harm from the false designation. The injunction is vacated, and the case is remanded.

Background

I. Facts

The facts as found by the district court are as follows, and they are not challenged in this appeal:

Waldman publishes a line of children's books. Playmore sells and distributes the books for Waldman. The books are adaptations of literary works that are in the public domain, including Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. The Waldman books are abbreviated versions of the classics. They are written in simplified language and have illustrations on every other page in order to make them more appealing to young children.

In creating this series, Waldman contracted with writers to adapt the text of the classics and with artists to create the illustrations. The writers and artists are credited in the front of each book. Each book also contains a copyright notice on behalf of Playmore and Waldman for the cover, and on behalf of Waldman for the text. ¹

Waldman and Playmore began selling the softcover line of books called Illustrated Classics in 1979, and introduced hardcover versions of the same books called Great Illustrated Classics in 1990. There are thirty-six titles currently in print in the softcover series and thirty-five in hardcover. Waldman and Playmore sell the books to retail outlets such as discount department stores, toy stores, drug stores and book stores.

Defendant Landoll also publishes children's books. In December 1993, Landoll began publishing and selling a line of books called First Illustrated Classics. The series consists of six softcover books that are illustrated adaptations of Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. Landoll began publishing and selling hardcover versions of the books in January 1994.

The Landoll books are not exact copies of the Waldman books. It is undisputed by the parties that the cover designs are not confusingly similar. However, the arrangement of the chapters in the Landoll books mirrors that in the Waldman books, and the Landoll texts closely follow the Waldman texts. Many of the illustrations in the Landoll books depict the same events as are illustrated in the Waldman books.

Landoll purchased the six adaptations from an English publisher named Peter Haddock on a "camera ready" basis, meaning that Haddock sent the text and illustrations to Landoll, and Landoll published the books at its facility. Each book displays the Landoll logo and includes a copyright notice on behalf of Landoll. A writer by whom the story is "retold" and an illustrator are credited in each book.

II. Procedural History

Waldman and Playmore filed a complaint in the Supreme Court of the State of New York, New York County, on March 21, 1994, alleging that Landoll had violated section 43(a) of the Lanham Act, New York common law, and section 368-d of New York General Business Law. Waldman and Playmore alleged, inter alia, that the books published by Landoll entered into the stream of commerce with a false designation of origin because a recipient of the books would likely think that the books originated with Landoll, when they in fact originated with Waldman. ² On March 23, 1994, Landoll removed the action to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. Sec. 1441(a) on the basis of federal question jurisdiction.

On March 25, 1994, Waldman and Playmore applied for, and the court issued (1) an order for Landoll to show cause why a preliminary injunction should not issue, and (2) a temporary restraining order which, inter alia, prohibited Landoll from publishing or selling its Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. Between March 30 and April 5, 1994, the court held a four-day hearing during which it heard evidence on the order to show cause.

On April 8, 1994, the court ordered that a preliminary injunction issue against Landoll. The court held that Waldman and Playmore had shown a likelihood of success on their claim of false designation of origin in violation of section 43(a), and that in the absence of a preliminary injunction they would suffer irreparable harm. ³ On April 21, 1994, the court issued a preliminary injunction which, inter alia, prohibits Landoll from publishing or selling any books which copy to a substantial degree books published by Waldman and distributed by Playmore. This appeal ensued.

Discussion

Standard of Review

A preliminary injunction may be granted only upon a demonstration of "irreparable harm, and 'either (1) a likelihood of success on the merits of [the] case or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in [ ] favor [of the moving party].' " Polymer Technology Corp. v. Mimran, 37 F.3d 74, 77-78 (2d Cir.1994) (quoting Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 314-15 (2d Cir.1982)); Jackson Dairy, Inc. v. H.P. Hood & Sons, 596 F.2d 70, 72 (2d Cir.1979) (per curiam). The decision whether to grant a preliminary injunction is within the discretion of the trial judge, Polymer Technology, 37 F.3d at 78, and if the moving party has established the requirements for such an injunction, the injunction may be reversed only if the district court has abused its discretion. Arrow United Indus. v. Hugh Richards, Inc., 678 F.2d 410, 414 (2d Cir.1982). A district court may abuse its discretion by applying an incorrect legal standard or by basing the preliminary injunction on a clearly erroneous finding of fact. King v. Innovation Books, 976 F.2d 824, 828 (2d Cir.1992). See also Henry J. Friendly, Indiscretion About Discretion, 31 Emory L.J. 747 (1982).

I. Likelihood of Success on the Lanham Act Claim

A false reference to the origin of a work, or a reference which is misleading or likely to confuse, may form the basis of a claim under section 43(a) of the Lanham Act. King, 976 F.2d at 828. Section 43(a) provides, in relevant part:

(1) Any person who, on or in connection with any goods or services ... uses in commerce ... any false designation of origin ... which--

(A) is likely to cause confusion ... as to the origin ... of his or her goods ...

. . . . .

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. 1125(a) (Supp. IV 1992).

In order to show likelihood of success on their claim, Waldman and Playmore must show that Landoll affixed a false designation of origin to its books, that Landoll used the false designation in commerce, that the false designation is likely to cause consumer confusion, and that Waldman and Playmore are likely to be damaged by the false designation. The parties do not contest that the designation was used in commerce.

A. False Designation of Origin

The first question is whether Landoll's acts constitute a false designation of origin under section 43(a). The section has been interpreted as prohibiting misrepresentations as to the source of a product in primarily two types of activities: (1) false advertising and (2) "passing off" (also called "palming off") in which "A" sells its product under "B's" name. See Roho, Inc. v. Marquis, 902 F.2d 356, 359 (5th Cir.1990). However, section 43(a) also prohibits a practice termed "reverse passing off," in which "A" sells "B's" product under "A's" name. Id. See generally Restatement (Third) of Unfair Competition ("Restatement") Sec. 5 (Tent. Draft No. 1 1988).

The typical reverse passing off case involves a manufactured product rather than a written work. For example, the defendant,...