Wales Indus. Inc. v. Hasbro Bradley, Inc.
| Decision Date | 03 July 1985 |
| Docket Number | No. 85 Civ. 2049 (EW).,85 Civ. 2049 (EW). |
| Citation | 612 F. Supp. 510 |
| Parties | WALES INDUSTRIAL INC., Plaintiff, v. HASBRO BRADLEY, INC., Defendant, and Benny P. Lueng, Sheila Lieberman, Lieberman & Rosen Associates, Inc. d/b/a Lieberman & Associates, James Knilans d/b/a Knilans & Associates, and Glacier Enterprises Co. Ltd., Additional Defendants on the Counterclaims. |
| Court | U.S. District Court — Southern District of New York |
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Lilling & Greenspan, White Plains, N.Y., Ballon, Stoll & Itzler, New York City, for plaintiff and third party defendants Benny P. Lueng, Sheila Lieberman, Lieberman & Rosen Associates, Inc., and James Knilans; Burton L. Lilling, Bruce E. Lilling, A. Kate Huffman, White Plains, N.Y., Richard Weinberger, New York City, of counsel.
Parker Auspitz Neesemann & Delehanty, P.C., New York City, for defendants and counterclaim plaintiff Hasbro Bradley, Inc.; Anthony M. Radice, Carroll E. Neesemann, Kim J. Landsman, New York City, of counsel.
This action centers about the validity and alleged infringement of copyrights in a popular new series of convertible robot toys known as "The Transformers," fantasy action figures that can be transformed by manipulation from robots into dinosaurs and other forms. The series, which includes some seventy different figures, is manufactured in Japan by Takara Co., Ltd. ("Takara"), not a party to the action, and is distributed in the United States by defendant Hasbro Bradley, Inc. ("Hasbro") under an exclusive sales license granted by Takara and its American sales subsidiary on November 1, 1983. Thereafter, on November 12, 1984, Takara assigned to Hasbro its rights in the Transformer copyrights for the United States for a period of three years, subject to renewal upon mutual consent. Plaintiff Wales Industrial Inc. ("Wales") plans to import and distribute into the United States its own version of several convertible robot toys, which are manufactured in Taiwan by third party defendant Glacier Enterprises Co., Ltd. ("Glacier"), a Taiwanese company which, though served with process, has not appeared and is in default.
In March 1985, Wales commenced this action against Hasbro seeking a declaratory judgment that Hasbro's claims to copyrights in the Transformers are invalid and that Wales's planned sales of its then yet to be imported products will not infringe any such copyrights. Wales also moved for a preliminary injunction enjoining Hasbro from taking legal action against or from otherwise interfering with Wales's sales effort. In an opinion dated March 30, 1985, familiarity with which is assumed,1 the Court denied Wales's motion. 612 F.Supp. 507.
Thereafter, Hasbro asserted counterclaims against Wales and third party claims against Wales's principal, Benny Leung, and its supplier, Glacier, charging them with violations of federal copyright and trademark law as well as New York law. Specifically, it charges they have advertised, promoted, and solicited sales of convertible robot toys in the United States that are copied from and are substantially similar to the sculptural expressions in five Transformers known as "Slag," "Sludge," "Grimlock," "Topspin," and "Perceptor." Hasbro further charges that James Knilans and Lieberman & Rosen Associates, Inc. ("LRA"), as Wales's sales representatives, and Sheila Lieberman, as LRA's president, have participated in and furthered the illegal sales effort by Wales, and they are also named as third party defendants.
Wales and all third party defendants now move pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(7) to dismiss Hasbro's counterclaims and third party claims for lack of subject matter jurisdiction and failure to join Takara as an indispensable party. In addition, Knilans, LRA, and Lieberman move for dismissal upon the ground that they are not responsible for any infringing activity in which they may have engaged on Wales's behalf. Hasbro opposes the motions and cross-moves for a preliminary injunction enjoining Wales and those acting in concert with it from importing or distributing three convertible robot toys that Glacier allegedly copied from three Transformers — Slag, Sludge, and Grimlock — and has already shipped to Wales for sale in the United States.
On its face, the document purports to transfer to Hasbro rights in the Transformer copyrights that are exclusive but limited in time and place of effect. Under the doctrine of divisibility, embodied in the Copyright Act of 1976 (the "Act"),3 whereby a copyright owner may transfer less than all of his copyrights, such a grant would constitute a "transfer of copyright ownership" and would entitle Hasbro, to the extent of any particular exclusive right it acquired, "to all of the protection and remedies accorded to the copyright owner" by the Act.4 For purposes of invoking the protection of the Act, it is the exclusiveness of the rights transferred, not an absence of temporal or geographic limitations upon them, that is essential.5 Thus, whether the document executed by Takara on November 12, 1984 is denominated an assignment or an exclusive license is of no consequence for purposes of subject matter jurisdiction. The Act expressly authorizes the "legal or beneficial owner of an exclusive right under a copyright," subject to the recordation and registration requirements, discussed hereafter, "to institute an action for any infringement of that particular right committed while he or she is the owner of it."6
The copyright grant executed by Takara on November 12, 1984 was recorded by Hasbro in the United States Copyright Office on April 22, 1985. Thus, the recordation prerequisite to an infringement action by a transferee of an exclusive right under a copyright was satisfied.7 That recordation occurred some five weeks after this action was commenced is irrelevant; it is sufficient that it occurred before the hearing on the instant motion.8 Thus, the jurisdictional requirement of recordation was satisfied.
Wales and the other movants contend that a further jurisdictional requirement, registration of the Transformer copyrights, has not been satisfied. Section 411(a) of Title 17 provides that "no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title." Registration of a copyright claim is a jurisdictional prerequisite to a suit for infringement.9 Under section 409, a registration application must identify the "copyright claimant" and indicate how the claimant, if it is not the author, obtained ownership of the copyright. The term "copyright claimant" is not defined in the statute and one must look to the regulations of the United States Copyright Office. In this case, Hasbro filed registration applications for the Transformers identifying itself as the copyright claimant "by assignment from Takara." The movants contend these registrations are invalid because Hasbro is not a "copyright claimant" as that term is defined in the regulations. The latter define a "copyright claimant" as either the "author of a work" or a "person or organization that has obtained ownership of all rights under the copyright initially belonging to the author."10 According to the movants, since Takara is identified in the registrations as the author of the Transformers, and since, under the document of November 12, 1984, Hasbro did not obtain "ownership of all rights under the copyright initially belonging to the author Takara," but only limited rights in the Transformer copyrights, Hasbro does not qualify as a copyright claimant under either prong of the definition.
If, as is claimed, Hasbro erroneously identified itself on the registrations as the "copyright claimant," in contravention of the statute and regulations, this alleged error would not invalidate the registrations. Even if Hasbro were not a "copyright claimant," it is, under the movants' own reading of the November 12 document, the owner of an exclusive right, limited in time and place of effect, in the Transformers, and as such it would be entitled under the Act and the regulations to submit applications for and obtain registration of the copyright claims in those works.11 Thus, Hasbro's error, if any, would not be jurisdictional but a technical misdescription: it should have identified Takara rather than itself as the "copyright claimant" on the registration applications it submitted. Such error could be readily corrected by Hasbro's filing supplementary registrations with the Copyright Office.12 Since there is no indication that the claimed error was committed knowingly, and since identification of the copyright claimant as Takara rather than Hasbro would not have occasioned rejection of the applications by the Copyright Office, the alleged error would not require dismissal of Hasbro's infringement claims.13
Wales and the other movants...
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