Whimsicality, Inc. v. Battat

• Citation: 27 F.Supp.2d 456
• Decision Date: 23 November 1998
• Docket Number: No. 97 Civ. 7871 (DC).,97 Civ. 7871 (DC).
• Parties: WHIMSICALITY, INC., Plaintiff, v. Maison Joseph BATTAT, Ltee, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

27 F.Supp.2d 456

WHIMSICALITY, INC., Plaintiff, v. Maison Joseph BATTAT, Ltee, et al., Defendants.

No. 97 Civ. 7871 (DC).

United States District Court, S.D. New York.

November 23, 1998.

COPYRIGHT MATERIAL OMITTED

Kane, Dalsimer, Sullivan, Kurucz, Levy, Eisele and Richard, L.L.P. by Virginia R. Richard, New York City, for Plaintiff.

Levisohn, Lerner, Berger & Langsam by Andrew S. Langsam, New York City, for Defendants.

MEMORANDUM DECISION

CHIN, District Judge.

In this case, plaintiff Whimsicality, Inc. ("Whimsicality") moves for leave to amend its amended complaint. Defendants Maison Joseph Battat, Ltee, Battat, Inc., and Sensational Beginnings, Inc. (collectively "Battat") move for: (1) summary judgment dismissing Whimsicality's copyright and trade dress infringement claims; and (2) an order vacating the preliminary injunction entered on consent. In an order dated September 2, 1998, I vacated the preliminary injunction, noting that a more detailed decision would follow. For the reasons set forth below, Whimsicality's motion for leave to amend the amended complaint is denied and Battat's motion for summary judgment is granted. In addition, I explain below my reasons for vacating the preliminary injunction.

BACKGROUND

A. The Facts

Construing the record in the light most favorable to Whimsicality, the facts are as follows:

Since approximately 1985, Whimsicality has been in the business of designing, manufacturing, and marketing costumes for children and adults. (Am.Cmplt. ¶ 9). The costumes are sold nationally in "high quality" stores and catalogs, and Whimsicality is "well-known in the industry" and among consumers for its costumes. (Id. ¶¶ 10, 14). Indeed, one of Whimsicality's buyers has described Whimsicality as "`the best' in the costume business." (Id. ¶¶ 20-21). Some of Whimsicality's "most popular" costumes are its BEE, STEGOSAURUS, FROG, TURTLE, LADYBUG, and LION. (Id. ¶ 12). Whimsicality has copyright registrations for these six costumes as well as several others. (Id. ¶¶ 12, 16). In addition, Whimsicality has a trademark registration for the WHIMSICALITY mark that it uses on its costumes. (Id. ¶ 17).

In 1993, Whimsicality entered into a two-year license agreement with Battat (from November 1993 to October 31, 1995) pursuant to which Whimsicality licensed its costumes' copyrights to Battat, and granted Battat the right to market the costumes under the WHIMSICALITY mark. (Id. ¶¶ 18, 22, 23, 26, 27). The license was subsequently renewed for an additional year, until October 31, 1996. (Id. ¶¶ 24, 28). While the license agreement was in effect, Whimsicality's president, Pierre Couture, provided Battat with samples of Whimsicality's costume designs and patterns as well as other proprietary information concerning its business. (Id. ¶ 25).

After the parties' license agreement expired, Battat still had a large number of Whimsicality costumes in inventory, worth approximately $500,000. (Id. ¶¶ 29-30). Whimsicality repeatedly requested that Battat provide it with an accounting statement as to the amount of remaining inventory and as to royalties due. Battat failed to provide Whimsicality with an accounting. (Id. ¶ 30). In the fall of 1997, Whimsicality learned that Battat was manufacturing "virtually identical" copies of the Whimsicality costumes identified in the amended complaint and the Whimsicality BUTTERFLY and SHARK costumes. (Id. ¶ 32-43; Pl.Amend.Mem. at 3-4).

B. Prior Proceedings Before Judge Dearie

In 1989, Whimsicality brought suit in the Eastern District of New York against Rubie's Costume Co. for allegedly infringing six of Whimsicality's 66 "soft sculpture design" costumes. Whimsicality, Inc. v. Rubie's Costumes Co., 721 F.Supp. 1566, 1568-69 (E.D.N.Y.1989) ("Rubie's I"). The costumes at issue were the JACK O'LANTERN, HIPPO BALLERINA, SPIDER, T-REX, BEE, and PENGUIN. Despite the fact that Whimsicality held copyright registrations for these costumes, Judge Dearie held that the costumes — considering them together as a group — were not copyrightable. Rubie's I, 721 F.Supp. at 1569-76. Judge Dearie also held that defendant was not entitled to attorney's fees. Both parties appealed.

The Second Circuit affirmed, but on the ground that Whimsicality obtained its copyright registrations by making misrepresentations to the United States Copyright Office. Whimsicality, Inc. v. Rubie's Costume Co., 891 F.2d 452, 453 (2d Cir.1989) ("Rubie's II"). Because it held that Whimsicality misrepresented its costumes to the Copyright Office, the Second Circuit vacated "that part of the district court's award which declined to award attorney's fees to Rubie's" and remanded the case to the district court to determine the issue of attorney's fees in light of its opinion. Rubie's II, 891 F.2d at 457 (emphasis added). The Second Circuit did not vacate and/or remand that part of Judge Dearie's decision holding Whimsicality's copyrights to be unenforceable.

Whimsicality moved to vacate Judge Dearie's earlier ruling pursuant to Fed.R.Civ.P. 60(b) and requested that the court consider new evidence that would prove that Whimsicality did not perpetrate a fraud upon the Copyright Office, evidence that the Second Circuit declined to hear. Whimsicality, Inc. v. Rubie's Costume Co., 836 F.Supp. 112 (E.D.N.Y.1993) ("Rubie's III"). Although Judge Dearie technically granted the request to vacate, it is evident that the decision concerned only the issue of whether Whimsicality defrauded the Copyright Office, and indeed the "new" evidence concerned only that issue. See Rubie's III, 836 F.Supp. at 115-16. In reading the entire decision, I find that there is no indication that Judge Dearie decided anything other than whether Whimsicality committed a fraud as the Second Circuit had held. Indeed, in his conclusion, Judge Dearie clearly stated that "[a]s to the inequitable conduct issue relied upon by the Court of Appeals ... this Court finds the registrations are enforceable." Rubie's III, 836 F.Supp. at 120-21.

Whimsicality knew that Judge Dearie had already concluded that its copyright registrations were valid. Even accepting the validity of the registrations, however, Judge Dearie held that the copyrights were unenforceable. Rubie's III, therefore, did nothing more than put Whimsicality back to the place where it was prior to the Second Circuit's decision. Grasping at straws, however, Whimsicality seized upon a sentence in Rubie's III, which stated that Judge Dearie "vacated" the original decision, to claim that Judge Dearie had vacated his prior, unequivocal holding as to the ultimate enforceability of Whimsicality's copyrights.

To avoid any confusion, Judge Dearie issued an order in December 1993 clarifying that his original holding, in which he dismissed Whimsicality's copyright infringement claim despite the validity of its copyright registrations, was not affected by the decision in Rubie's III. Whimsicality, Inc. v. Rubie's Costume Co., No. 89 Civ. 1720, 1993 WL 661161, at *1 (E.D.N.Y. Dec.6, 1993) ("Rubie's IV").

Whimsicality did not appeal. Persisting in its unreasonable and tortured reading of Rubie's III, Whimsicality instead moved for reconsideration of Rubie's IV, the December 6, 1993 clarifying order. That motion was denied "in all respects" in a memorandum decision dated February 24, 1998. Whimsicality, Inc. v. Rubie's Costume Co., No. 89 Civ. 1720, 1998 WL 178856, at *1-2 (E.D.N.Y. Feb.24, 1998) ("Rubie's V"). In this decision, Judge Dearie explained that Rubie's III returned the case to its posture at the time immediately prior to the Second Circuit's ruling and that, to the extent this was not explicit, Rubie's IV made this absolutely clear. Judge Dearie commented that "no reasonable reading of the Court's rulings would accommodate [Whimsicality's] farfetched interpretation of the action taken," and that "[e]veryone including the plaintiff, knew that [the court never wavered on its decision that Whimsicality's copyrights were unenforceable]." Rubie's V, 1998 WL 178856, at *1 (emphasis added).

Again, Whimsicality did not appeal. Accordingly, Judge Dearie's decision holding the copyrights unenforceable is final.

C. Prior Proceedings in this Court

Whimsicality commenced this action against Battat on October 23, 1997 asserting claims of copyright infringement, trade dress infringement, false advertising, trade dress dilution, unfair competition, and breach of contract. The original complaint alleged infringement with respect to Whimsicality's BUMBLE BEE, JACK O'LANTERN, STEGOSAURUS, FROG, TURTLE, LADYBUG, and LION costumes.

When Whimsicality filed suit, it also moved, by order to show cause, for a preliminary injunction. I held a conference in the case on October 27, 1997, and scheduled a preliminary injunction hearing for November 13, 1997. In the meantime, on November 3, 1997, Whimsicality filed an amended complaint. The amended complaint was identical to the original complaint except for the deletion of all claims relating to its JACK O'LANTERN costume. A preliminary injunction was entered on consent on November 19, 1997 enjoining Battat from filling orders or shipping orders for the LION, BUMBLE BEE, STEGOSAURUS, FROG, LADYBUG, TURTLE, T-REX, SHARK, and BUTTERFLY costumes.

Prior to the issuance of the preliminary injunction, Whimsicality's counsel wrote a letter on November 6, 1997 to Battat's counsel advising him that Whimsicality intended to serve a second amended complaint the next day, November 7, 1997, that would add Whimsicality's T-REX, SHARK and BUTTERFLY costumes and a number of retailers (Battat's customers) who had been selling Battat's costumes. Whimsicality did not, however, serve a second amended complaint on November 7, 1997. (Langsam Aff.Ex. A). Rather, in a letter dated November 11, 1997, Whimsicality's counsel advised Battat's counsel that the time to answer the first amended complaint "has been extended until such time as Whimsicality, Inc. serves and files its Second Amended...