Whimsicality, Inc. v. Rubie's Costume Co., Inc., Nos. 527

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: Before TIMBERS and WINTER, Circuit Judges, and LEISURE; TIMBERS
• Citation: 13 U.S.P.Q.2d 1296,891 F.2d 452
• Parties: 1990 Copr.L.Dec. P 26,512, 13 U.S.P.Q.2d 1296 WHIMSICALITY, INC., Appellant, Cross-Appellee, v. RUBIE'S COSTUME CO., INC., Appellee, Cross-Appellant. ockets 89-7829, 89-7887.
• Decision Date: 15 December 1989
• Docket Number: D,619,Nos. 527

Page 452

891 F.2d 452 1990 Copr.L.Dec. P 26,512, 13 U.S.P.Q.2d 1296 WHIMSICALITY, INC., Appellant, Cross-Appellee,
v.
RUBIE'S COSTUME CO., INC., Appellee, Cross-Appellant. Nos. 527, 619, Dockets 89-7829, 89-7887. United States Court of Appeals,
Second Circuit. Argued Nov. 6, 1989.
Decided Dec. 15, 1989.

Page 453

Virginia R. Richard, New York City (Pamela G. Bradford, and Kane, Dalsimer, Sullivan, Kurucz, Levy, Eisele and Richard, New York City, on the brief), for appellant, cross-appellee Whimsicality, Inc.

Andrew S. Langsam, New York City (Peter L. Berger, and Levisohn, Lerner & Berger, New York City, on the brief), for appellee, cross-appellant Rubie's Costume Co., Inc.

Arlington R. Robbins, Michael V. Pundeff, and Robbins, Keehn & Jones, San Diego, Cal., filed a brief, for amicus curiae Nat. Theme Productions, Inc.

Before TIMBERS and WINTER, Circuit Judges, and LEISURE, District Judge. ^*

TIMBERS, Circuit Judge:

Appellant Whimsicality, Inc. ("Whimsicality") and appellee Rubie's Costume Co., Inc. ("Rubie's") are competing costume designers and manufacturers. Believing that Rubie's was selling "knock-offs" of its costumes, Whimsicality commenced the instant action and sought initially a preliminary injunction to prevent further manufacture and sale of the alleged knock-offs. The complaint alleged copyright infringement and unfair competition, in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1988). The District Court for the Eastern District of New York, Raymond J. Dearie, District Judge, finding that Whimsicality based its motion for injunctive relief largely on the copyright claim, consolidated that motion with a hearing on the merits of the copyright claim, pursuant to Fed.R.Civ.P. 65(a)(2). On September 11, 1989, 721 F.Supp. 1566, the court granted summary judgment in favor of Rubie's on the copyright claim and denied injunctive relief, reserving decision on the unfair competition claim. 721 F.Supp. 1566 (E.D.N.Y. 1989). The court refused Rubie's request for attorney's fees. Whimsicality filed a timely appeal and Rubie's filed a timely cross-appeal. Our jurisdiction rests on 28 U.S.C. § 1292(a)(1) (1982).

The district court held that Whimsicality had registered a copyright on its costumes, but that the costumes were not copyrightable. 721 F.Supp. at 1575-76. The parties, therefore, devoted most of their arguments on appeal to the latter issue. We agree with the result reached by the district court, and we affirm the dismissal of the copyright claim and the denial of injunctive relief; but we do so on grounds other than those relied on by the district court. We hold that Whimsicality obtained its copyright registrations by misrepresentation of its costumes to the United States Copyright Office. We therefore decline to reach the issue of copyrightability, since proper registration is a prerequisite to an action for infringement. Since we find bad faith on the part of Whimsicality, we vacate that part of the order which declined to award attorney's fees to Rubie's pursuant to 17 U.S.C. § 505 (1982) and we remand the case to the district court for determination of that issue in light of this opinion. ¹

I.

We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

Whimsicality, a Vermont corporation, was founded in 1978 by Pierre Couture. It

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is a small but thriving enterprise that takes great pride in the craftsmanship of its products. Since 1985, it has carried a line of costumes designed by Mr. Couture which now numbers at least 66 varieties. In that short time it has received a great deal of publicity for the quality of its designs, including a cover photograph on New York Magazine and stories in several newspapers including the Chicago Tribune.

Whimsicality achieved sales of more than $1.4 million in 1987 and more than $2.2 million in 1988 for its costumes, which are available in children's and adult sizes. More than 80% of its costume sales occur between the months of March and August, the time when wholesalers and retailers place their Halloween orders with manufacturers. All of Whimsicality's promotional material (catalogs, brochures and the like) make clear that it is selling costumes. The stories in outside publications likewise are unanimous in their conclusion that Whimsicality's products are costumes.

Rubie's, a New York corporation, has been in the costume business for 35 years. It manufactures and markets a wide variety of masquerade and theater-related items, including Halloween costumes. Its 1988 sales totaled more than $30 million.

The dispute leading to the instant appeal apparently began at the 1989 National Halloween Show, held in the Spring, when Whimsicality discovered that Rubie's was displaying the allegedly infringing costumes for sale in the upcoming Halloween season. On April 7, Whimsicality wrote a letter demanding that Rubie's halt marketing the knock-offs. Rubie's refused to do so. It displayed the costumes at another trade show in June, and has included them in its sales material for the 1989 Halloween season.

Whimsicality's demand was based largely on the fact that, in 1988 and 1989, it sought and received copyright registration for six of its creations: the Pumpkin, Bee, Penguin, Spider, Hippo Ballerina and Tyrannosaurus Rex. ² Nowhere in the copyright applications, however, is the word "costume" used. Instead, Whimsicality called its creations "soft sculptures". The costumes were displayed during the oral argument, and our visual examination disclosed that the costumes lack any firm form unless worn by a person or carefully laid out on a flat surface so that the costume's design is revealed. Moreover, it is undisputed that the only practical use for the copyrighted material is as costumes. As the district court observed, "in all promotional literature and catalogs containing photographs of the articles, they are always being modelled by children." 721 F.Supp. at 1570 n.4. There is no evidence of any actual use as sculpture, as one would expect given the lack of firm form.

The explanation for this deception is not a mystery; the Copyright Office considers costumes to be wearing apparel and consistently rejects applications to register them. ³ Whimsicality was aware of this at the time it sought to register its costumes. The district court asked Whimsicality's attorney, "if you took this photograph [of a child wearing the costume] and sent it to the copyright office and said we're filing an application for a children's pumpkin costume, what would happen?" The attorney responded that "[i]t would probably be rejected."

Despite the foregoing, which the district court found "strongly suggests that Whimsicality has not been as forthright with the Copyright Office as it could have been," Id. at 1570. The court held that Whimsicality's conduct did not "reach the level of dissembling that would constitute a fraud." Id. The court then rejected Whimsicality's assertion that, despite the costumes' status as useful articles, certain pictorial, graphic or sculptural elements of the costumes were independently copyrightable.

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The court therefore denied Whimsicality's motion for injunctive relief and granted summary judgment in favor of Rubie's on the copyright claim. This appeal followed.

II.

The elements of a copyright infringement action are (1) ownership of a valid copyright and (2) copying by the alleged infringer. Eckes v. Card Prices Update, 736...