MARGARET M. MORROW, District Judge.
Plaintiff Aurora World, Inc. commenced this action on November 17, 2009, alleging copyright and trademark infringement, as well as state law unfair competition and misappropriation claims.
Aurora is one of the world's leading manufacturers of soft toys in the global gift industry.
Aurora contends that a "side-by-side comparison of the plush animals and the facts of this case clearly reveal" that the Beanie Boos are "remarkably similar" to Aurora's YooHoo & Friends.
Since 2007, Aurora has been using the trademarks YooHoo and YooHoo & Friends in connection with the advertising and sale of plush toys.
On October 2, 2009, Aurora's senior vice president for sales received an email from Bev Silvey, an independent contractor for Aurora who is the sales representative for North Carolina and Myrtle Beach. Silvey forwarded an email from one of her commercial customers, which stated that the customer "didn't know if you guys had seen these from Ty? Total rip off!"
On October 12, 2009, Aurora advised Ty in writing of Aurora's copyrights and trademarks and accused Ty of infringing its intellectual property rights in the United Kingdom.
Aurora alleges that Ty's purported imitation of Yoo-Hoo & Friends products is causing actual confusion in the marketplace and diminishing the value of the YooHoo & Friends products by diluting their unique, distinctive nature and leading consumers erroneously to associate Yoo-Hoo & Friends with Ty rather than Aurora. Aurora asserts that Ty is trading on the goodwill Aurora has built through its development of innovative and unique designs. It contends that in addition to being the most important sales period for plush toy makers, the holiday season is when retailers test how well products fare in the marketplace; as a result, it asserts, orders for 2010 and beyond will be affected by decreased holiday sales.
On November 17, 2009, Aurora commenced suit, alleging claims for copyright infringement, trade dress infringement, unfair competition, and false designation of origin under the Lanham Act, unfair competition under California Business & Professions Code §§ 17200 et seq., common law misappropriation, and common law unfair competition. Aurora seeks of preliminary and permanent injunctions, an award of Ty's profits, actual damages, attorneys' fees and costs, punitive damages, and interest.
A "preliminary injunction is an extraordinary and drastic remedy." Munaf v. Geren, 553 U.S. 674, 128 S.Ct. 2207, 2219, 171 L.Ed.2d 1 (2008). Thus, a district court should enter a preliminary injunction only "upon a clear showing that the plaintiff is entitled to such relief." Winter
"[P]reliminary injunctive relief is available only if plaintiffs `demonstrate that irreparable injury is likely in the absence of an injunction.'" Johnson v. Couturier, 572 F.3d 1067, 1081 (9th Cir.2009) (quoting Winter, 129 S.Ct. at 375).
"A preliminary injunction is an extraordinary remedy never awarded as of right." Winter, 129 S.Ct. at 376. "In each case, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Amoco Production Co. v. Village of Gambell, Alaska, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). "In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction." Weinberger v. Romero-Barcelo, 456 U.S. 305, 312, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982).
"The public interest analysis for the issuance of a preliminary injunction requires [the court] to consider `whether there exists some critical public interest that would be injured by the grant of preliminary relief.'" Independent Living Center of Southern California, Inc. v. Maxwell-Jolly, 572 F.3d 644, 659 (9th Cir. 2009) (quoting Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446, 1458 (Fed. Cir.1988)). "When the reach of an injunction is narrow, limited only to the parties, and has no impact on non-parties, the public interest will be `at most a neutral factor in the analysis rather than one that favor[s] [granting or] denying the preliminary injunction.'" Stormans, 586 F.3d at 1138-39 (quoting Bernhardt v. L.A. County, 339 F.3d 920, 931 (9th Cir.2003)). "If, however, the impact of an injunction reaches beyond the parties, carrying with it a potential for public consequences, the public interest will be relevant to whether the district court grants the preliminary injunction." Id. (citing Sammartano v. First Judicial District Court, 303 F.3d 959, 965 (9th Cir.2002)). See also Sierra Forest Legacy, 577 F.3d at 1022 ("When deciding whether to issue a narrowly tailored injunction, district courts must assess the harms pertaining to injunctive relief in the context of that narrow injunction"). "[When] an injunction is asked which will adversely affect a public interest... the court may in the public interest withhold relief until a final determination of the rights of the parties, though the postponement may be burdensome to the plaintiff." Weinberger, 456 U.S. at 312-13, 102 S.Ct. 1798.
Aurora seeks a preliminary injunction under the Copyright Act prohibiting Ty from infringing its copyrights in various YooHoo & Friends characters by marketing and selling Beanie Boos. To prevail on a copyright infringement claim, a plaintiff must show (1) ownership of a valid copyright and (2) copying of the original elements of the protected work. See Feist Publications v. Rural Telephone Service Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991) ("To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original"). "The word `copying' is shorthand for the infringing of any of the copyright owner's ... exclusive rights, described [in section 106 of the Copyright Act]." S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 n. 3 (9th Cir. 1989).
The first element Aurora must prove to prevail on its copyright infringement claim is ownership of a valid copyright in the YooHoo & Friends plush toys. See Feist, 499 U.S. at 361, 111 S.Ct. 1282. Aurora has proffered Certificates of Copyright Registration for the YooHoo bush baby plush toy in several formats (Nos. VA1-406-420, VA1-628-222, VA1-631-368, VA1-640-398, and VA1-640-401).
A copyright registration certificate is prima facie evidence of copyright ownership. See 17 U.S.C. § 410(c) ("In any judicial proceedings the certificate of a registration made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate"); Syntek Semiconductor Co., Ltd. v. Microchip Technology Inc., 307 F.3d 775, 781 (9th Cir.2002) (stating that a copyright "registration is considered prima facie evidence of the validity of the copyright"). "A certificate of copyright registration, therefore, shifts to the defendant the burden to prove the invalidity of the plaintiff's copyrights." Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1076 (9th Cir.2000). Ty does not challenge the validity of Aurora's registered copyrights. Because there is no contrary evidence in the record, the court finds that Aurora has shown it will likely prove it is the owner of a valid copyright in the bush baby plush toy in several formats, the lemur plush toy with sound, the fennec plush toy with sound, the capuchin plush toy with sound, the squirrel plush toy with sound and the YooHoo Too display box.
Aurora has not proffered a filed application for copyright registration or registration certificate for its koala toy. Consequently, the court lacks jurisdiction to consider a copyright claim concerning the toy. See 17 U.S.C. § 411(a) ("[N]o action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title").
Aurora does not contend that it has obtained a copyright on its penguin, panda, and sugar glider toys; rather, it asserts that it has applied for copyright registration respecting the toys. The Ninth Circuit has not yet addressed the proper interpretation of § 411(a), and there is a split of authority as to whether a copyright must actually have been registered before jurisdiction attaches under § 411(a). Compare La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1204 (10th Cir.2005) ("[W]e reject the proposition that § 411 confers federal court jurisdiction for an infringement action upon mere submission of a copyright application to the Copyright Office. In our view, the statute requires more: actual registration by the Register of Copyrights. Until that happens, an infringement action will not lie in the federal courts"); Strategy Source, Inc. v. Lee, 233 F.Supp.2d 1, 3 (D.D.C.2002) ("[T]his Court concludes that the position adopted by the Eleventh Circuit and several district courts is the approach mandated by section 411(a). The Court is in agreement with those courts that have found that permitting an infringement lawsuit to go forward in the absence of a registration certificate or denial of the same is in tension with the language of section 411(a) of the Copyright Act"); Brush Creek Media, Inc. v. Boujaklian, No. C-02-3491 EDL, 2002 WL 1906620, *3-4 (N.D.Cal. Aug. 19,
Although some courts in this district have followed cases holding that a registration certificate is a prerequisite to suit, see, e.g., Loree Rodkin, 315 F.Supp.2d at 1055, Ty cites this court's recent decision in Breakdown Services, Ltd. v. My Entertainment World, Inc., No. CV 08-5702 MMM (CWx), 2009 WL 3045807 (C.D.Cal. Sept. 18, 2009), wherein the court held that "a plaintiff can satisfy the registration requirement by showing that the Copyright Office received its application, fee, and deposit of the work in question prior to the date suit was filed." Id. at *1. See also Gable-Leigh, Inc. v. North American Miss, No. CV 01-01019 MMM, 2001 WL 521695, *4 (C.D.Cal. Apr. 13, 2001).
Ty notes that the copyright applications Aurora has submitted for the panda, penguin, and sugar glider plush toys omit the second page, are not dated or signed, omit critical information such as the "author" of the work, and do not include a stamp indicating that the applications and accompanying
Although the court has found that it has jurisdiction to consider copyright infringement claims regarding Aurora's
As noted, Ty asserts that it sells the Cleo and Bubblegum plush toys only in Europe and Canada; that they are not currently included on any order form Ty uses in the United States; that they are not currently depicted on Ty's website; and that Ty has no intention of offering Cleo and Bubblegum for sale in the United States pending final resolution of this lawsuit.
"It is a long-standing principle of American law `that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.'" EEOC v. Arabian American Oil Co. (Aramco), 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (quoting Foley Brothers, Inc. v. Filardo, 336 U.S. 281, 285, 69 S.Ct. 575, 93 L.Ed. 680 (1949)). Because courts must "assume that Congress legislates against the backdrop of the presumption against extraterritoriality," unless "there is `the affirmative intention of the Congress clearly expressed,'" congressional enactments must be presumed to be "`primarily concerned with domestic conditions.'" Id. at 248, 111 S.Ct. 1227 (quoting Foley Brothers, 336 U.S. at 285, 69 S.Ct. 575, and Benz v. Compania Naviera Hidalgo, S.A., 353 U.S. 138, 147, 77 S.Ct. 699, 1 L.Ed.2d 709 (1957)).
"The `undisputed axiom[]' ... that the United States' copyright laws have no application to extraterritorial infringement predates the 1909 Act." Subafilms, Ltd. v. MGM—Pathe Communications Co., 24 F.3d 1088, 1095 (9th Cir.1994) (en banc) (quoting 3 Melville B. Nimmer and David Nimmer, NIMMER ON COPYRIGHT, § 12.04[A][3][b], at p. 12-86 (1991)). Sitting en banc, the Ninth Circuit found no "no clear expression of congressional intent in either the 1976 Act or other relevant enactments to alter the preexisting extraterritoriality doctrine." Id. at 1096. Noting "the continuing application of the principle that `infringing actions that take place entirely outside the United States are not actionable in United States federal courts,'" it observed that "[h]ad Congress been inclined to overturn the preexisting doctrine that infringing acts that take place wholly outside the United States are not actionable under the Copyright Act, it knew how to do so," id. (quoting Peter Starr Production Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442 (9th Cir. 1986)). Animated by this consideration and concerned with international comity, the en banc court concluded that the Copyright Act does not extend "to acts of infringement that occur entirely overseas." Id. at 1097.
To succeed on its copyright claim, Aurora must demonstrate that Ty "copied" its copyrighted designs. Because direct evidence of copying is generally not available, a plaintiff can establish copying by showing that defendant had access to the copyrighted work and that the parties' works are substantially similar. See Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir.1996) ("To establish a successful copyright infringement claim, a plaintiff must show that (1) she owns the copyright, and (2) defendant copied protected elements of the copyrighted work"); Kouf v. Walt Disney Pictures & Television, 16 F.3d 1042, 1044 n. 2 (9th Cir.1994); Berkla v. Corel Corp., 66 F.Supp.2d 1129, 1140 (E.D.Cal. 1999). Aurora's reply clarifies that its copyright claim is based on Ty's Cleo, Bubblegum, Bamboo, and Waddles plush toys.
Access is established if "plaintiff shows that the defendant had an opportunity to view or to copy the plaintiffs work." Meta-Film Associates v. MCA, 586 F.Supp. 1346, 1355 (C.D.Cal.1984) (citation omitted). "Circumstantial evidence of reasonable access is proven in one of two ways: (1) a particular chain of events is established between the plaintiff's work
Having shown that it will likely be able to prove access, Aurora must next show that it will likely demonstrate that the penguin and panda Beanie Boos Ty distributes in the United States are substantially similar to Aurora's copyrighted YooHoo & Friends plush toys. To determine whether works are substantially similar, the Ninth Circuit uses both an extrinsic and an intrinsic test. The extrinsic test objectively considers whether there are substantial similarity in both ideas and expression, while the intrinsic test measures expression subjectively from the standpoint of the ordinary reasonable observer. See Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994) ("The intrinsic prong was a test for similarity of expression from the standpoint of the ordinary reasonable observer, with no expert assistance"); see also Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 637 (9th Cir.2008) (noting that the extrinsic test has evolved, and stating: "[T]he extrinsic prong was a test for similarity of ideas based on external criteria; analytic dissection and expert testimony could be used, if helpful. The intrinsic prong was a test for similarity of expression from the standpoint of the ordinary reasonable observer, with no expert assistance. . . . As it has evolved, however, the extrinsic test now objectively considers whether there are substantial similarities in both ideas and expression, whereas the intrinsic test continues to measure expression subjectively," quoting Apple Computer, 35 F.3d at 1442); Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th Cir.2002) ("The `extrinsic test' is an objective comparison of specific expressive elements. . . . The `intrinsic test' is a subjective comparison. . .").
Analytical dissection of a work and expert testimony can be useful in conducting the extrinsic test. Swirsky v. Carey, 376 F.3d 841 (9th Cir.2004) ("The extrinsic test requires `analytical dissection of a work and expert testimony,'" quoting Three Boys Music Corp., 212 F.3d at 485); Apple Computer, 35 F.3d at 1442 ("As originally adopted in Sid & Marty Krofft Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1164 (9th Cir.1977), the extrinsic prong was a test for similarity of ideas based on external criteria; analytic dissection and expert testimony could be used, if helpful"); Smith, 84 F.3d at 1218. This is because "[e]xtrinsic analysis is objective in nature. `[I]t depends not on the responses of the trier of fact, but on specific criteria which can be listed and analyzed.'" Funky Films, Inc. v. Time Warner Entertainment Co., L.P., 462 F.3d 1072, 1077 (9th Cir.2006) (quoting Krofft, 562 F.2d at 1164). "`Analytical dissection' requires breaking the works `down into their constituent elements, and comparing those elements for proof of copying as measured by "substantial similarity."'" Swirsky, 376 F.3d at 845 (quoting Rice v. Fox Broadcasting Co., 148 F.Supp.2d 1029, 1051 (C.D.Cal.2001)). "Because the requirement is one of substantial similarity to protected elements of the copyrighted work, it is essential to distinguish between
"The `intrinsic test' is a subjective comparison that focuses on `whether the ordinary, reasonable audience' would find the works substantially similar in the `total concept and feel of the works.'" Cavalier, 297 F.3d at 822 (quoting Kouf, 16 F.3d at 1045). See also Swirsky, 376 F.3d at 847 (noting that the intrinsic test measures "whether subjectively the `ordinary, reasonable person would find the total concept and feel of the [two works] to be substantially similar,'" quoting Three Boys Music Corp., 212 F.3d at 485); Aliotti v. R. Dakin & Co., 831 F.2d 898, 901 (9th Cir.1987) (applying the "total concept and feel" test to a comparison of stuffed dinosaur toys).
In Apple Computer, the Ninth Circuit set forth the steps a court must take to evaluate substantial similarity:
Because Aurora's copyright claim is limited to Ty's panda and penguin,
Before turning to the sources of similarity Aurora has identified, it is useful to note that no copyright protection can be afforded the idea of producing plush toys that resemble particular animals. See, e.g., Satava v. Lowry, 323 F.3d 805, 810 (9th Cir.2003) (holding that plaintiff could "not prevent others from copying aspects of his [jellyfish] sculptures resulting from. . . jellyfish physiology"); Aliotti, 831 F.2d at 901 ("No copyright protection may be afforded to the idea of producing stuffed dinosaur toys or to elements of expression that necessarily follow from the idea of such dolls. . . . Appellants therefore may place no reliance upon any similarity in expression resulting from either the physiognomy of dinosaurs or from the nature of stuffed animals"). Thus, Aurora cannot claim infringement based on the fact that Ty manufactures and sells a plush toy that resembles an animal in the Yoo-Hoo & Friends line.
The first source of similarity that Aurora has identified is the coloration of its and Ty's toys. Aurora's bush baby plush toys are off-white, with gray faces, and have multi-colored (pink, orange, purple, or blue) striped tails. Aurora's squirrel toy is bright red and white. Aurora's fennec toy is light pink and white. Only Aurora's capuchin and lemur plush toys have natural coloration—the lemur is gray and white while the capuchin is dark and light brown.
The second source of similarity Aurora identified is the stitching design on its toys. It is difficult to conduct an extrinsic analysis of the element of the toys, as neither Aurora's motion nor the declarations it submitted defined the term. For the first time in its reply, Aurora argued that it intended to reference the stitching design of the mouth of its panda.
Finally, Aurora identifies the large eyes on its toys as a source of similarity.
In like fashion, there are only a limited number of sizes for the eyes of a stuffed animal—they can be big, small, or medium-sized. It is questionable, therefore, that the large eyes of the YooHoo toys are protectable.
Additionally, as Ty correctly notes, "protection extends only to those components of a work that are original to the author." Apple Computer, 35 F.3d at 1445. Thus, to the extent aspects of Aurora's animals were not original, but found in prior stuffed animals, they cannot be considered protectable elements. Ty has proffered a number of plush toys that predate Aurora's YooHoo & Friends that also have large eyes. Russ Berrie's "Lil Peepers" line of big-eyed plush toys, which was marketed as early as 1994, appears to incorporate a style of large eyes that is similar to Aurora's YooHoo line.
At best, therefore, Aurora's evidence suggests that it will be able to establish that it is entitled to only thin copyright protection for its YooHoo & Friends toys. As a result, "the appropriate standard [on which to evaluate whether there has been] illicit copying is virtual identity." Apple Computer, 35 F.3d at 1439, 1442. Employing this standard, Aurora has not shown that it will likely succeed on the merits of its copyright infringement claim. Viewed as a whole, neither Ty's panda nor its penguin is virtually identical to any of Aurora's bush baby, squirrel, fennec, capuchin, or lemur toys. See id. at 1446 ("This does not mean that at the end of the day, when the works are considered under the intrinsic test, they should not be compared as a whole"). This is particularly when one filters out the unprotectable elements of expression.
By way of example, Ty's panda is black and white, with green inside the ears and green eyes.
In sum, based on the record presently before the court, it appears that Aurora's YooHoo & Friends bush baby, squirrel, fennec, capuchin, or lemur toys are entitled, at best, to thin copyright protection. Ty's panda and penguin Beanie Boos are not virtually identical. Indeed, they are not even substantially similar. Aurora has not demonstrated, therefore, that it is likely to prevail on the merits of its copyright claim.
At oral argument, Aurora argued that Ty had infringed its right to display the bush baby and lemur plush toys
"Display" means "to show a copy of [the copyrighted work], either directly or by means of a film, slide, television image, or any other device or process. . . ." 17 U.S.C. § 101. Section 101 defines "copies" as "material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." Id. "A work is `fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Id.
To "display a work `publicly' means":
Aurora has adduced no evidence that the sale sheet sent to retailers was displayed at a place "open to the public" or at any place where a "substantial number of persons. . . gathered." Consequently, it appears unlikely that Aurora would be able to prevail a claim that Ty infringed its right to display by including Cleo and Bubblegum on the document. Ty's display racks, by contrast, are meant to be used in retail stores open to the public.
As respects the cartoon caricatures of Cleo and Bubblegum on the display rack, however, Aurora has not demonstrated, or even attempted to argue, that it will be able to prove virtual identity or substantial similarity between the copyrighted work and the caricatures on the display racks.
Aurora has not shown that it will likely succeed on the merits of its copyright infringement claim with respect to the two cartoon caricatures depicted on the display rack. Viewed as a whole, neither is virtually identical, nor even substantially similar, to any of Aurora's bush baby, squirrel, fennec, capuchin, or lemur toys. See id. at 1446 ("This does not mean that at the end of the day, when the works are considered under the intrinsic test, they should not be compared as a whole"). This is particularly true when one filters out the unprotectable elements of expression. By way of example, the cartoon caricature on the right is magenta and white, with light pink hands, inner ears, and eyes.
In sum, the caricatures on Ty's display racks are neither virtually identical nor substantially similar to Aurora's plush toys. Aurora has not demonstrated, therefore, that it is likely to prevail on the merits of its claim that Ty infringed its right to display by sending display racks and/or the sales sheets to retailers.
Trademarks represent "a limited property right in a particular word,
Trade dress, including the design of a product, can be protectable under the Lanham Act. Wal—Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 216, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000) ("We hold that, in an action for infringement of unregistered trade dress under § 43(a) of the Lanham Act, a product's design is distinctive, and therefore protectible, only upon a showing of secondary meaning"). "Trade dress refers to the overall appearance of the product design, rather than its mechanics or a specific logo." Global Manufacturing Group, LLC v. Gadget Universe.Com, 417 F.Supp.2d 1161, 1164 (S.D.Cal.2006) (citing Wal— Mart, 529 U.S. at 209-10, 120 S.Ct. 1339). See also Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769-70, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) ("The "trade dress" of a product is essentially its total image and overall appearance,'" quoting Blue Bell Bio—Medical v. Cin—Bad, Inc., 864 F.2d 1253, 1256 (5th Cir.1989)). "It `involves the total image of a product and may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques.'" Id. (quoting John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.1983)). See also Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252 1257 (9th Cir.2001) ("Trade dress refers generally to the total image, design, and appearance of a product and `may include features such as size, shape, color, color combinations, texture or graphics,'" quoting International Jensen, 4 F.3d at 822). Global Manufacturing, 417 F.Supp.2d at 1166 ("Trade dress refers to the visual aspects of a product relating to its design or style," citing Leatherman Tool Group, Inc. v. Cooper Industries, Inc., 199 F.3d 1009, 1011 n. 3 (9th Cir. 1999)). "Trade dress protection is broader in scope than trademark protection, both because it protects aspects of packaging and product design that cannot be registered for trademark protection and because evaluation of trade dress infringement claims requires the court to focus on the plaintiff's entire selling image, rather than the narrower single facet of trademark." Vision Sports, 888 F.2d at 613.
"[T]rade dress may be protected if it is nonfunctional and has acquired secondary meaning and if its imitation creates a likelihood of consumer confusion." Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 842 (9th Cir.1987). "To prove trade dress infringement, a plaintiff must demonstrate that (1) the trade dress is nonfunctional, (2) the trade dress has acquired secondary meaning, and (3) there is a substantial likelihood of confusion between the plaintiff's and defendant's products." Art Attacks Ink, LLC v. MGA Entertainment Inc., 581 F.3d 1138, 1145 (9th Cir.2009). Where, as here, the trade dress for which protection is sought is the design of the product itself, plaintiff "bears the burden of establishing first, that the features sought to be protected are not functional, but were selected arbitrarily or for purely aesthetic reasons; second, that the design has acquired a distinctive meaning such that consumers identify the trade dress with the source of the product rather than the product itself; and third, that the
In its reply, Aurora argues for the first time that a Lanham Act injunction should be entered that applies internationally.
To establish that it is appropriate to apply the Lanham Act extraterritorially, Aurora must first show that there is "some effect on American foreign commerce." Reebok, 970 F.2d at 554 ("The sales of infringing goods in a foreign country may have a sufficient effect on commerce to invoke Lanham Act jurisdiction," quoting Ocean Garden, Inc. v. Marktrade Co., Inc., 953 F.2d 500, 503 (9th Cir.1991)). In addition, Aurora must demonstrate that the effect is "sufficiently great to present a cognizable injury." Id. The facts of Reebok are relevant in understanding the extent of the injury necessary to extend the reach of the statute extraterritorially. There, defendant organized and directed the manufacture of counterfeit shoes in Mexico, knowing that the shoes would enter U.S. commerce with regular frequency. The evidence showed that sales of the counterfeit shoes in the United States decreased sales of genuine Reebok shoes and decreased the value of Reebok's consolidated holdings. The court concluded that defendant's activities "thus affect[ed] American foreign commerce in a manner which cause[d] injury to [plaintiff] cognizable under the Lanham Act." Reebok, 970 F.2d at 554-55.
Aurora has adduced no evidence that it has lost sales in the United States, however. Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 899 (9th Cir.2002) (holding that sales of an album worldwide had a sufficient effect on American foreign commerce to apply the Lanham Act extraterritorially where plaintiff "suffered monetary injury in the United States from those sales");
The present record does not support a finding that Aurora is likely to prove Ty's sales of Beanie Boos in countries other than the United States has a significant effect on American foreign commerce. A single retailer's Internet sale of Cleo and Bubblegum plush toys does not show a significant effect on American foreign commerce, particularly when there is no evidence that the retailer is located in the United States, received the toys in the United States,
To properly evaluate the third Timberlane factor, the court would have to examine whether the trademark laws of the United States, the United Kingdom, Canada, and any other country in which Aurora claims infringement are in conflict or are congruent. It would also have to evaluate the extent to which enforcement actions in the United Kingdom, Canada, or other countries could be expected to achieve compliance. Love, 473 F.Supp.2d at 1057 (finding that at least one aspect of U.K. trademark law "differ[ed] significantly" from U.S. trademark law and that "[g]iven the narrower scope of the English cause of action, the Court should not apply U.S. trademark law because the conduct might have been lawful in the country in which it occurred"). Aurora has presented no evidence or argument regarding any of these subjects.
Another factor bearing on whether enforcement in another country would be more likely to achieve compliance than issuance of an injunction in this action is where "the majority of the allegedly infringing conduct occurred." Love, 473 F.Supp.2d at 1057 ("The third sub-factor also counsels against application of the Lanham Act; since the majority of the allegedly infringing conduct occurred in the United Kingdom, a court there is better-positioned than this Court to provide effective relief"). It appears that sales of the Cleo and Bubblegum plush toys have overwhelmingly been consummated abroad; Aurora cites only incidental or indirect contact between those plush toys and the United States. With respect to
The court similarly cannot analyze the relative significance of effects on the United States and elsewhere because Aurora has adduced no evidence regarding the proportion of its sales that is domestic and the proportion that is foreign.
The Lanham Act expressly provides that a plaintiff who asserts infringement of a nonregistered trade dress "has the burden of proving that the matter sought to be protected is not functional." TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 29, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001) (quoting 15 U.S.C. § 1125(a)(3)). "The requirement of nonfunctionality is based `on the judicial theory that there exists a fundamental right to compete through imitation of a competitor's product, which right can only be temporarily denied by the patent or copyright laws.'" Clamp Manufacturing Co. v. Enco Manufacturing Co., Inc., 870 F.2d 512, 515 (9th Cir.1989) (quoting In re Morton-Norwich Products, Inc., 671 F.2d 1332, 1336 (C.C.P.A.1982)).
When a product is useful, trademark protection cannot be used to extend the life of the useful invention by protecting the design from competition. "If the utilitarian aspects of the product are its essence, only patent law protects its configuration from use by competitors." Id. See also TrafFix Devices, 532 U.S. at 34, 121 S.Ct. 1255 ("The Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity").
"For an overall product configuration to be recognized as a trademark, the entire design must be nonfunctional." Clamp, 870 F.2d at 516. "Several factors guide the decision whether a product feature is functional, including: (1) whether the design yields a utilitarian advantage; (2) whether alternative designs are available thereby showing that the plaintiffs choices were arbitrary or aesthetic; (3) whether the advertising touts the utilitarian advantages of the product; and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture." Global Manufacturing, 417 F.Supp.2d at 1168 (citing International Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 823 (9th Cir. 1993)). "No one factor is dispositive; all should be weighed collectively." Disc Golf Ass'n, Inc. v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir.1998). The judicial "inquiry is not directed at whether the individual elements are functional but
A single product feature, by contrast, will be deemed "functional if it is essential to the use or purpose of the article or affects the cost or quality of the article. . . . [A] functional feature is one the `exclusive use of [which] would put competitors at a significant non-reputation-related disadvantage.'" TrafFix Devices, 532 U.S. at 32, 121 S.Ct. 1255 (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982) and Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995) (alteration original)). Courts also consider whether the feature at issue "constitute[s] the actual benefit that the consumer wishes to purchase, as distinguished from an assurance that a particular entity made, sponsored, or endorsed a product." Vuitton et Fils S.A. v. J. Young Enterprises, Inc., 644 F.2d 769, 774 (9th Cir.1981). "[T]he existence of alternative designs that would not hinder competition" also bears on whether a feature is functional. Catalyst, 2001 WL 34118030 at *9 (citing International Jensen, 4 F.3d at 822-23). Although Aurora has claimed protection in the "overall look and feel" of the YooHoo & Friends plush toys, it has also emphasized that it is "unique eye styling" that gives "Aurora World's products their unusual look."
Aurora contends that the trade dress of YooHoo & Friends is the "design of the product, including the large round eyes, coloration, poses of the animals, size and shape of the animals, and stitching designs."
Although Aurora's goal in designing YooHoo & Friends does not appear to have been the "realistic" depiction of animals, a factfinder will likely conclude that the eyes of the toys are functional because they are essential to the goal of making the plush toys look like animals; this is because plush toys without eyes would not resemble their counterparts in nature. To the extent that other attributes, such as the shape and coloration of the toys, are designed to make them resemble an animal, it is similarly unlikely that Aurora will be able to prove nonfunctionality.
As the Fabrica court noted, the Pagliero functionality test has been limited "to product features"; the Ninth Circuit "has refused to apply the test to cases involving trade dress and packaging." Id. at 895. Because Aurora has asserted a trade dress claim, the test is inapposite. To the extent that Aurora's citation of Fabrica suggests it is attempting to assert a trade dress claim based on product features, it fails to demonstrate that the design aspects of YooHoo & Friends on which it bases the trade dress claim—in particular the large eyes—are not "important ingredient[s] in the commercial success of the product." Id. Aurora states that the "large round eyes, coloration, poses of the animals, size and shape of the animals, and stitching design all contribute to the products' consumer appeal."
In Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062 (9th Cir.2006), the Ninth Circuit synthesized "forty years of ... scattered references to [the] aesthetic functionality [doctrine articulated in Pagliero]." Id. at 1072. Given the Supreme Court's decisions in Qualitex and TrafFix, the court noted that a twostep test must be used to determine functionality. "In the first step, courts inquire whether the alleged `significant non-trademark function' satisfies the Inwood Laboratories definition of functionality—`essential to the use or purpose of the article [or] affects [its] cost or quality.'" Id. (quoting TrafFix Devices, 532 U.S. at 32-33, 121 S.Ct. 1255). If the feature is essential to the use or purpose of the article or affects its cost or quality, "the inquiry is over— the feature is functional and not protected." Id. If, by contrast, there is a claim of "aesthetic functionality," the court "inquires whether protection of the feature as a trademark would impose a significant non-reputation-related competitive disadvantage." Id.
This formulation limits "aesthetic functionality" to "product features that serve an aesthetic purpose wholly independent of any source-identifying function." Id. The court cited with approval four examples of aesthetic functionality. First, it noted that in Qualitex, the Supreme Court held that the use of a particular color on dry cleaning pads might avoid noticeable stains. Qualitex, 514 U.S. at 166, 115 S.Ct. 1300. Second, it noted Publications International, Ltd. v. Landoll, Inc., 164 F.3d 337 (7th Cir.1998), in which the Seventh Circuit held that coloring the edges of cookbook
Based on these examples, the Ninth Circuit in Au-Tomotive Gold held that the logos of Volkswagen and Audi were not functional because they, like other logos and company names, "generally have no function apart from their association with the trademark holder." Id. Unlike logos, the aesthetic features of plush toys such as those manufactured by Aurora and Ty are essential selling features of the toys. Comparing logos and company names, on the one hand, and plush toys and china patterns, on the other, aids in discerning what constitutes an "aesthetic purpose wholly independent of any source-identifying function." Id. at 1072. A manufacturer or designer has an incentive to make a china pattern or plush toy aesthetically pleasing because that drives the consumer's decision to buy the plate or toy. Such designs are, therefore, functional. By contrast, aesthetically pleasing as a logo may be, it merely identifies the source of the product.
As noted, some of the design features, to the extent they make the toys resemble animals are functional for that reason. Other design features, such as the fanciful coloring of the toys, are aesthetically functional as that term is used in Au-Tomotive Gold. The same is true of the YooHoo's overall design. It is the toys' aesthetics that drive the consumer to purchase them; this functionality exists independent of its source-identifying function.
As respects the eyes of the YooHoo & Friends toys, Ty notes that the inventor of Aurora's recessed eyes obtained a patent on the invention.
Because the recessed eyes have been patented, Aurora must "overcom[e] the strong evidentiary inference of functionality based on the disclosure." Id. at 30, 121 S.Ct. 1255. "While a utility patent is strong evidence that the features therein claimed are functional,' [however,] . . . it is not dispositive." Alphaville Design, Inc. v.
As respects the coloration of the toys, the Supreme Court in Qualitex discussed how lower courts had applied the functionality doctrine to product colors. It noted that it had been held that the color green on farm machinery was functional because customers wanted their farm equipment to match; that the color black for outboard boat motors had been held to be functional because black has the special functional attributes of decreasing the apparent size of the motor and ensuring compatibility with many different boat colors; and that courts had found the color blue in fertilizer to be functional because blue indicated the presence of nitrogen. Qualitex, 514 U.S. at 170, 115 S.Ct. 1300 (citing Deere & Co. v. Farmhand, Inc., 560 F.Supp. 85, 98 (S.D.Iowa 1982), aff'd, 721 F.2d 253 (8th Cir.1983); Brunswick Corp. v. British Seagull Ltd., 35 F.3d 1527, 1532 (Fed.Cir. 1994); Nor-Am Chemical v. O.M. Scott & Sons Co., 4 U.S.P.Q.2d (BNA) 1316, 1320 (E.D.Pa.1987)). "Also critical to the functionality inquiry is whether exclusive use of the color would be anti-competitive by depleting alternatives or otherwise putting competitors at `a significant non-reputation-related disadvantage.'" Sportvision, Inc. v. Sportsmedia Technology Corp., No. C 04-03115 JW, 2005 WL 1869350, *5 (N.D.Cal. Aug. 4, 2005) (quoting Qualitex, 514 U.S. at 165, 115 S.Ct. 1300). Given that Aurora's entire argument regarding coloration is that the coloration of its toys is inherently non-utilitarian, and given that it is the party that bears the burden of proving nonfunctionality, the court must conclude that Aurora has not shown that it is likely to succeed in proving the nonfunctionality of the toys' coloration. Indeed, Aurora itself insists that the "coloration. . . contribute[s] to the products' consumer appeal."
As respects the products' stitching, Aurora once again fails to explain how the stitching on its toys is unusual or unique. Stitching is common in plush toys and serves the highly functional purpose of preventing the plush toy from coming apart.
In sum, Aurora is the party that bears the burden of proving that the aspects of its trade dress for which it seeks protection are nonfunctional, and the party that bears the burden of showing that it is likely to succeed on the merits. Aurora has merely listed attributes of its products that are common to many plush toys and asserted that they are not utilitarian. This does not suffice to carry its burden on nonfunctionality at the preliminary injunction stage.
"When trade dress is asserted for a product design, the plaintiff is required to show `acquired meaning' for [the] product design to be eligible for protection by the Lanham Act." Global Manufacturing, 417 F.Supp.2d at 1170 (quoting Wal-Mart, 529 U.S. at 216, 120 S.Ct. 1339). See also Computer Access Technology Corp. v. Catalyst Enterprises, Inc., No. C-00-4852-DLJ, 2001 WL 34118030, *9 (N.D.Cal. June 13, 2001) ("With respect to the second element, if a trade dress claim involves
"Secondary meaning is another way of expressing the distinctiveness of a trademark"; the "basic element" is "the mental association by a substantial segment of consumers and potential consumers" with the single source of a product. Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1354 (9th Cir.1985) (en banc). See also Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 614 (9th Cir.1989) ("A plaintiff's trade dress acquires secondary meaning when the purchasing public associates the dress with a particular source"). Thus, secondary meaning attaches "when the purchasing public associates the . . . dress with a single producer or source rather than with the product itself." International Jensen, 4 F.3d at 824. See also Art Attacks, 581 F.3d at 1145 ("To show secondary meaning, a plaintiff must demonstrate `a mental recognition in buyers' and potential buyers' minds that products connected with the [mark] are associated with the same source,'" quoting Japan Telecom v. Japan Telecom America, 287 F.3d 866, 873 (9th Cir. 2002)).
"The courts examine various factors to assess if a `learned association' exists between the source and the appearance of the product. . . ." Normally, the association "is . . . shown by direct consumer testimony that purchasers associate the design with the source." Global Manufacturing, 417 F.Supp.2d at 1170 (citing Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d 1143, 1151 (9th Cir. 1999)). See also Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 802 (9th Cir.1970) ("The test of secondary meaning is the effectiveness of the effort to create it, and the chief inquiry is directed towards the consumer's attitude about the mark in question: does it denote to him a single thing coming from a single source?" (internal quotation omitted)).
Courts also consider whether plaintiff's use of the particular design or configuration has been exclusive, Vision Sports, 888 F.2d at 615; Clamp, 870 F.2d at 517, and the length and manner of advertising and sales figures, Filipino Yellow Pages, 198 F.3d at 1151; Clamp, 870 F.2d at 517.
A plaintiff may establish secondary meaning through direct and circumstantial evidence. Continental Laboratory Products, Inc. v. Medax International, Inc., 114 F.Supp.2d 992, 999 (S.D.Cal.2000). "Direct evidence, such as consumer surveys and direct consumer testimony, often provides the strongest evidence of secondary meaning. . . . A plaintiff may also establish secondary meaning through circumstantial evidence, such as: exclusivity, manner, and length of use, amount and manner of advertising, amount of sales and the number of customers, and plaintiff's established place in the market." Id. at 1000
"While evidence of a manufacturer's sales, advertising and promotional activities may be relevant in determining secondary meaning, the true test of secondary meaning is the effectiveness of this effort to create it." International Jensen, 4 F.3d at 824. For this reason, courts generally credit customer surveys as the strongest evidence of secondary meaning. Levi Strauss, 778 F.2d at 1358 ("An expert survey of purchasers can provide the most persuasive evidence of secondary meaning"); Global Manufacturing, 417 F.Supp.2d at 1170 ("Evidence such as customer surveys are important because the purpose of the trade dress protection is to protect consumers from confusion or deception; therefore, the purchasing public's perspective is central to the determination of acquired meaning"). Nonetheless, "at the preliminary injunction stage, `fullblown
The Ninth Circuit affords little or no weight to the opinions of those connected with the business that owns the trademark or trade dress, however, including wholesalers, dealers, or other business associates. Japan Telecom, 287 F.3d at 870 (because acquired secondary meaning requires a showing of mental recognition by buyers, two incorrectly addressed letters (one from a supplier) and six declarations from business owners were not sufficient evidence to defeat summary judgment); Filipino Yellow Pages, 198 F.3d at 1152 (affirming, at the summary judgment stage, a district court's evidentiary ruling that struck portions of the declaration of the founder and president of plaintiffs company as inadmissible and/or lacking in substantial probative value on secondary meaning); Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902, 910 (9th Cir.1995) (noting that declarations of employees and wholesalers had "little probative value regarding the assessment of consumer perception," and therefore failed to raise question of material fact sufficient to defeat summary judgment motion); Outfitters, Inc. v. GM Corp., 448 F.2d 1293, 1297 (9th Cir.1971) (testimony from persons closely associated with the trademark owner does not adequately reflect the views of the buying public).
In Wal-Mart, the Supreme Court held that to prove secondary meaning in a trade dress actions, plaintiff had to show that "in the minds of the public, the primary significance of a [mark] is to identify the source of the product." Wal-Mart, 529 U.S. at 211, 120 S.Ct. 1339. The standard appears to be higher in the case of a product design:
See also TrafFix Devices, 532 U.S. at 26, 121 S.Ct. 1255 (approving Wal-Mart's statement that product design almost invariably serves purposes other than source identification); Continental Laboratory Products, Inc. v. Medax International, Inc., 114 F.Supp.2d 992, 997 (S.D.Cal.2000) ("Because affording trade dress protection to product designs may hinder legitimate competition, the Ninth Circuit has advised district courts to evaluate such claims with greater scrutiny than claims involving other forms of trade dress," citing Leatherman, 199 F.3d at 1012-13).
As evidence that its product design has acquired secondary meaning, Aurora proffers its worldwide sales figures, worldwide and national advertising budget, and three emails that purportedly evidence consumer confusion.
Aurora's sales figures, which reflect worldwide rather than national sales, are likewise minimally probative. Aurora's sales of YooHoo & Friends generated $3.0 million in revenue worldwide in 2008, and $4.0 million worldwide through November 2009.
In short, Aurora has failed to establish either that $225,000 over almost three years constitutes significant advertising expenditures in the relevant market or that the manner in which the $225,000 was spent had an impact on consumers sufficient to establish secondary meaning. Nor has it established that the 26,627 people
Similarly, Aurora has failed to place its sales figures in a coherent evidentiary context in that it has not proffered evidence of its U.S. sales figures or "evidence [regarding] the size of the relevant market or the market share" it has achieved. Continental
The Ninth Circuit's recent decision in Art Attacks is instructive. A company that marketed and sold dolls with large eyes, oversized feet and other features contended that its trade dress had acquired secondary meaning because large numbers of people had passed by its booth at county fairs, where the doll was displayed, and visited its website. Art Attacks, 581 F.3d at 1145-46. The court held that the evidence adduced did not demonstrate that purchasers linked a product with large eyes and oversized feet, and the other characteristics typical of the dolls with a single source. Id. The court observed that it was not the number of people who were exposed to plaintiff's advertising, but the effectiveness of the advertising that was decisive. Id. at 1146. As the court noted previously, Aurora has proffered no such evidence here.
For all these reasons, Aurora's evidence that its YooHoo & Friends toys have acquired secondary meaning is not sufficient to permit the court to conclude that it will likely prove this element of its trade dress claim.
Once a plaintiff has shown that its trade dress is entitled to protection, "liability under § 43(a) requires proof of the likelihood of confusion." Two Pesos, 505 U.S. at 769-70, 112 S.Ct. 2753 (citing First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1381 (9th Cir.1987)). "This is `the core element of trademark infringement.'" International Jensen, 4 F.3d at 825. "The test for likelihood of confusion is whether a `reasonably prudent consumer' in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks." Dreamwerks Prod. Group, Inc. v. SKG Studio, d/b/a Dreamworks SKG, 142 F.3d 1127, 1129 (9th Cir.1998) (footnote omitted). See also Clicks Billiards, 251 F.3d at 1265 ("Likelihood of confusion exists when customers viewing the mark would probably assume that the product or service it represents is associated with the source of a different product or service identified by a similar mark," quoting Fuddrucker's, 826 F.2d at 845).
The Ninth Circuit has identified eight factors that should be considered in assessing likelihood of confusion: (1) the strength of the mark; (2) the proximity or relatedness of the goods; (3) the marks' similarity in appearance, sound, and meaning; (4) evidence of actual confusion; (5) the degree to which the parties' marketing channels converge; (6) the type of goods and the degree of care customers are likely to exercise in purchasing them; (7) evidence of defendants' intention in selecting and using the allegedly infringing mark; and (8) the likelihood that the parties will expand their product lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir.1979); see also GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000) (reciting the eight Sleekcraft factors); Global Manufacturing, 417 F.Supp.2d at 1173 ("In addition to evidence of actual consumer confusion, courts evaluate several factors to determine whether confusion is likely, including the strength of plaintiff's trade dress; the similarity between the competing products and whether the copying was deliberate; the degree of care consumers devote to selecting the type of product; and the products' market and advertising channels," citing Clamp, 870 F.2d at 517).
"The[se] factors should not be rigidly weighed." Dreamwerks, 142 F.3d at 1129. Rather, they "are intended to guide the
"[A]t the preliminary injunction stage, `the trial court is not required to consider all of th[e] factors' since the record will not likely be sufficient to permit thorough consideration." Sony Computer Entertainment America, Inc. v. Gamemasters, 87 F.Supp.2d 976, 984 (N.D.Cal. 1999) (quoting Apple Computer, 725 F.2d at 526). At the preliminary injunction stage, plaintiff need only "establish that it is likely to be able to show such a likelihood of confusion." Brookfield Communications, 174 F.3d at 1052 n. 15.
Aurora's trade dress "claim is, in essence, a repeat of [its] copyright infringement claim." Alchemy II, 844 F.Supp. at 570 (using a substantial similarity analysis where plaintiff asserted both copyright and trade dress infringement claims based on its product design). For purposes of its Lanham Act claim, however, Aurora can rely on plush toys for which it does not have a copyright. As respects these toys, the court must determine whether one or more of the Beanie Boos is confusingly similar. The only comparison Aurora offers, however, is a comparison of Ty's Cleo and Bubblegum plush toys and its lemur and bush baby toys.
The similarity of the trade dress factor weighs in favor of a finding of infringement when "`the similarity of the [trade dress] is likely to confuse customers about the source of the products.'" GoTo.com, 202 F.3d at 1205 (quoting Official Airline Guides v. Goss, 6 F.3d 1385, 1391 (9th Cir.1993)). It is always an important factor in the likelihood of confusion analysis. See Perfumebay.com, Inc. v. eBay Inc., 506 F.3d 1165, 1174 (9th Cir.2007) ("`The similarity of the marks will always be an important factor. Where the two marks are entirely dissimilar, there is no likelihood of confusion,'" quoting Brookfield Communications, 174 F.3d at 1054).
Aurora does not compare the trade dress of the YooHoo & Friends toys and the Beanie Boos that Ty sells in the United States in any detail. Ty, however, has made a side-by-side comparison of each toy that both parties market and sell in the United States. As respects Aurora's koala plush toy and Ty's Kooky the Koala, the animals have strikingly different coloring,
As noted, Sleekcraft commands that the court consider "sight, sound, and meaning." Sleekcraft, 599 F.2d at 351 (emphasis supplied). Each of Aurora's YooHoo & Friends plush toys makes a sound. Ty's Beanie Boo toys do not.
The individual Beanie Boos sold in the United States bear little resemblance to the comparable YooHoo & Friends toys. The primary similarities are those that are inherent in being a depiction of the same animal, this factor weighs against a finding of confusion. Aliotti, 831 F.2d at 901 ("Appellants therefore may place no reliance upon any similarity in expression resulting from either the physiognomy of dinosaurs or from the nature of stuffed animals").
"The strength of a given mark rests on its distinctiveness." Miss World (UK) Ltd. v. Mrs. America Pageants, Inc., 856 F.2d 1445, 1448 (9th Cir.1988), abrogated on other grounds in Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355 (9th Cir.1985) (en banc).
The distinctiveness of trade dress is related to the question of secondary meaning. See TrafFix Devices, 532 U.S. at 28, 121 S.Ct. 1255 ("The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a trade dress which may not be used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods"). The Supreme Court in Wal-Mart offered these observations regarding the distinctiveness of trade dress:
The Court thus concluded that a product design cannot be inherently distinctive unless it has acquired secondary meaning. Id.
Because the court has found that Aurora is not, based on the present record, likely to succeed in showing that the design of its YooHoo & Friends toys has acquired secondary meaning, it concludes that Aurora is not likely to prove that its trade dress is inherently distinctive. This factor, therefore, weighs against a finding that Aurora will be able to prove a likelihood of consumer confusion.
"`Placement on the spectrum of distinctiveness does not end the enquiry as to the strength of a mark: it is only the first step. The second step is to determine the strength of th[e] mark in the marketplace[,] [t]hat is, its degree of recognition in the minds of the relevant customer class.'" Miss World, 856 F.2d at 1449 (quoting 1 J. Thomas McCarthy, TRADEMARKS AND UNFAIR COMPETITION § 11:1 (2d ed. 1984)); see also Petro Stopping Centers v. James River Petroleum, Inc., 130 F.3d 88, 93 (4th Cir.1997) (". . . the placement of a mark in either the suggestive or descriptive category is merely the first step in assessing the strength of a mark for purposes of likelihood of confusion test. . . . [C]ourts must examine, in addition to the mark's characterization as suggestive or descriptive, the extent of secondary meaning a mark has acquired in the eyes of consumers"); Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 479 (3d Cir.1994) ("Distinctiveness on the scale of trademarks is one measure of a mark's strength. . . . Commercial strength, or marketplace recognition of the mark, is another"); John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 975 (11th Cir.1983) (the distinctiveness of the mark and the extent of third party use "both . . . should be considered when analyzing the strength of a particular trademark"); Sun Banks of Florida, Inc. v. Sun Fed. Savings & Loan Ass'n, 651 F.2d 311, 315 (5th Cir.1981) (after holding that plaintiff's mark was arbitrary, the court stated: "The ultimate strength of a mark, [however,] the key inquiry before us, is determined by a number of factors which establish its standing in the marketplace"); 2 J. Thomas McCarthy, TRADEMARKS AND UNFAIR COMPETITION § 11.83 (4th ed. 2006) ("While some courts have made the strong-weak evaluation solely upon the place of a term on the spectrum of marks, such an approach is incomplete. One must in addition look at the marketplace strength of the mark at the time of the litigation or at the time registration is sought").
As noted in connection with the court's analysis of secondary meaning, Aurora has not adduced evidence that its mark is commercially strong in the United States market. Most specifically, it has not proffered evidence regarding its U.S. sales, the size of the relevant market or its market share. Similarly, it has not established that its advertising expenditures of $225,000 over almost three years are significant in terms of the market norm, nor that the manner in which the $225,000 was spent caused consumers to identify the product design of YooHoo & Friends with Aurora as the single source of supply. Absent such evidence, the court cannot conclude that Aurora is likely to prove that its trade dress is commercially strong.
Because Aurora's proof does not demonstrate that it is likely to show either that its trade dress is inherently distinctive or that it is commercially strong, the court concludes that this factor weighs against a finding that plaintiff will likely succeed in proving a likelihood of confusion.
Goods are proximate or related if they "are similar in use and function," and "would be reasonably thought by the buying public to come from the same source if sold under the same mark.'" Sleekcraft, 599 F.2d at 348 n. 10, 350 (quoting Standard Brands, Inc. v. Smidler, 151 F.2d 34, 37 (2d Cir.1945)); Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 159 (9th Cir.1963) ("The use need not be the same as, nor one in competition with the original use. The question is, are the uses related so that they are likely to be connected in the mind of a prospective purchaser"); see also Brookfield Communications, 174 F.3d at 1056 (holding that because "both companies offer products and services relating to the entertainment industry generally, and their principal lines of business both relate to movies specifically," there was sufficient relatedness of goods to support a finding of likelihood of confusion); 4 J. Thomas McCarthy, TRADEMARKS AND UNFAIR COMPETITION § 24.24 (4th ed. 2006) ("Goods are `related' if consumers are likely to mistakenly think that the infringer's goods come from the same source as the senior user's goods or are sponsored or approved by the senior user").
Both Ty and Aurora market small plush toys. Ty does not dispute that the goods sold by it and Aurora are proximate and related. It is likely, therefore, that this factor will weigh in favor of a finding of likelihood of confusion.
Aurora has not adduced any evidence of actual confusion. While such evidence is not necessary to prevail on an infringement claim or to secure injunctive relief, it can be persuasive proof that future confusion is likely. See Academy of Motion Picture Arts & Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir.1991) ("[A]ctual confusion is not necessary to a finding of likelihood of confusion under the Lanham Act"); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1218 (9th Cir.1987) ("Evidence of actual confusion is strong evidence of likelihood of confusion, but it is not determinative"); Levi Strauss, 778 F.2d at 1360 ("The absence of evidence of actual confusion need not give rise to an inference of no likelihood of confusion"); Golden Door, Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir.1980) (affirming the grant of an injunction for plaintiff despite the absence of evidence of actual consumer confusion); Sleekcraft, 599 F.2d at 352 (proof of actual confusion "is persuasive proof that future confusion is likely").
Aurora presents the three emails discussed earlier as evidence of actual confusion. Ty correctly counters, however, that the very "nature of the question" asked by all three authors indicates that they understand there are at least two different plush toy manufacturers and "that potential customers do not automatically" confuse Beanie Boos with YooHoo & Friends. See Duluth News-Tribune v. Mesabi Publishing Company, 84 F.3d 1093, 1098 (8th Cir.1996) ("The question to the reporter who was asked to specify which News-Tribune he worked for indicates a distinction in the mind of the questioner, rather than confusion. See Fisher Stoves, Inc. v. All Nighter Stove Works, 626 F.2d 193, 195 (1st Cir.1980) (questions about affiliations of two companies indicate that customers
This factor requires the court to consider whether the predominant purchasers of the parties' goods are similar or different, and whether the marketing approaches used resemble each other. See Gray v. Meijer, Inc., 295 F.3d 641, 649 (6th Cir. 2002); see also Frehling Enterprises, Inc. v. International Select Group, Inc., 192 F.3d 1330, 1338 (11th Cir.1999) ("`Dissimilarities between the retail outlets for and the predominant customers of plaintiffs and defendant's goods lessen the possibility of confusion, mistake, or deception.'... This factor takes into consideration where, how, and to whom the parties' products are sold," quoting Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 262 (5th Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 268, 66 L.Ed.2d 129 (1980)).
The parties need not be in direct competition with one another for this factor to weigh in favor of a finding of likelihood of confusion. Similarly, the parties' outlets and customer bases need not be identical; rather, some degree of overlap suffices. Frehling Enterprises, 192 F.3d at 1339; see also Century 21 Real Estate Corp. v. Century Life of America, 970 F.2d 874, 877 (Fed.Cir.1992) ("An opposer need not establish the sale of both parties' services by the same vendor to show employment of the same trade channels.... Rather, this factor covers `similarity and dissimilarity of established, likely-to-continue trade channels.' ... This court does not limit channels of trade to identical stores or agents. Rather a channel of trade includes the same type of distribution channel. For example, this court has held channels of trade identical when products were sold under opposing marks in supermarkets and grocery stores across the country.... An opposer does not have the burden to show sales of an infringing product by a specific chain of supermarkets or agents").
Plaintiffs motion states that both Aurora's and Ty's toys "are marketed and sold to retailers, including specialty gift shops and zoos, and both are marketed worldwide and through the Internet."
"It is generally assumed that consumers with expertise or who are buying expensive products or services exercise a greater degree of care when doing so and are thus less easily confused." Edge Wireless, LLC v. U.S. Cellular Corp., 312 F.Supp.2d 1325, 1333 (D.Or.2003) (citing Brookfield Communications, 174 F.3d at 1060 ("What is expected of this reasonably prudent consumer depends on the circumstances. We expect him to be more discerning—and less easily confused—when he is purchasing expensive items")). By contrast, "[w]hen dealing with inexpensive
Aurora's only argument regarding this Sleekcraft factor is that consumers do not exercise care when purchasing "small, relatively inexpensive toys for children."
In addition, Ty notes that each Beanie Boo is sold with and clearly identified by the trademarked Ty heart logo that is attached.
Knowing adoption of a mark closely similar to one used by another is a basis for inferring intent to deceive. See Official Airline Guides, 6 F.3d at 1394 ("When an alleged infringer knowingly adopts a mark similar to another's, courts will presume an intent to deceive the public"); Nutri/System, Inc., 809 F.2d at 606 ("When an alleged infringer knowingly adopts a mark similar to another's, the court examines his good faith and intent in developing and marketing it," citing Sleekcraft, 599 F.2d at 354, and Carson Mfg. Co. v. Carsonite Int'l Corp., Inc., 686 F.2d 665, 671 (9th Cir.1981), cert. denied, 460 U.S. 1052, 103 S.Ct. 1499, 75 L.Ed.2d 930 (1983)); see also Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 286 (6th Cir.1997) ("[T]he use of a contested mark with knowledge of the protected mark at issue can support a finding of intentional copying").
Without citation of authority, Aurora asks the court to find that Ty intentionally copied its YooHoo & Friends toys because Beanie Boos are "strikingly similar" to the YooHoo toys. In at least one case, a circuit court has held that "in the product configuration context, a defendant's intent weighs in favor of a finding of likelihood of confusion only if intent to confuse or deceive is demonstrated by clear and convincing evidence, and only where the product's labeling and marketing are also affirmatively misleading." Versa, 50 F.3d at 207. The court need not decide whether the Ninth Circuit would adopt the Third Circuit's standard for intent in product design cases because, for reasons already stated, the court does not credit Aurora's assertion that the parties' toys are "strikingly similar." The court does credit the Third Circuit's argument that clear labeling weighs heavily against a finding of intent. See also Continental Laboratory Products, 114 F.Supp.2d at 1010 n. 14 ("As a related principle, federal courts have refused to infer secondary meaning from deliberate copying of a product design where the defendant uses a different packaging design or conspicuously displays its own trademarks.... The principle behind these cases is that a court should not infer that the defendant intended to deceive consumers where it made deliberate efforts to prevent source confusion"). The court consequently concludes that Aurora is not likely to prove that this factor weighs in favor of a finding of likelihood of confusion.
"A `"strong possibility" that either party may expand [its] business to compete with the other will weigh in favor of finding that the present use is infringing.' " Tillamook Country Smoker, Inc. v. Tillamook County Creamery Ass'n, 311 F.Supp.2d 1023, 1044 (D.Or.2004) (quoting Sleekcraft, 599 F.2d at 354). Neither party contends that this factor is relevant here.
"To prevail on the ultimate question toward which the Sleekcraft analysis is
Applying the factors as Dreamwerks directs, the court concludes that Aurora has not made a clear showing that it will be able to prove likelihood of consumer confusion. With respect to the factors that are most significant—i.e., the strength of Aurora's trade dress and the similarity of the parties' trade dress, see GoTo.com, 202 F.3d at 1205 (similarity of the marks "has always been considered a critical question in the likelihood-of-confusion analysis")— Aurora has failed to adduce evidence that supports its likely confusion claim. Aurora has not demonstrated that it will likely prove its mark is conceptually or commercially strong. Aurora has adduced no evidence that Ty intended to infringe its trade dress or consumers have actually been confused. Nor does Aurora contend that it has plans to expand the market for YooHoo & Friends in a way that will generate future confusion. Aurora's claim regarding the degree of care consumers exercise when purchasing small plush toys is successfully countered by Ty's evidence that it clearly labels its products and that consumers exercise only a small degree of care in buying such items.
As respects the remaining factors—relatedness of the products and convergence of the market channels—While it is probable that Aurora will show they weigh in favor of a finding of likely, this is insufficient to support a finding of likely success on the merits of its Lanham Act claim, given that its evidence concerning the remaining factors falls short.
In addition to its federal copyright and trade dress claims, Aurora alleges claims for state law unfair competition under Business & Professions Code § 17200 and California common law.
Aurora concedes that the "test for [its] statutory and common law unfair competition claims [under California law] is materially the same as the test for the Lanham Act."
"`Common law misappropriation is one of a number of doctrines subsumed under the umbrella of unfair competition. It is normally invoked in an effort to protect something of value not otherwise covered by patent or copyright law, trade secret law, breach of confidential relationship, or some other form of unfair competition.'" City Solutions, Inc. v. Clear Channel Communications, 365 F.3d 835, 842 (9th Cir.2004) (quoting United States Golf Association v. Arroyo Software Corp., 69 Cal.App.4th 607, 618, 81 Cal.Rptr.2d 708 (1999)).
Aurora's theory with respect to its misappropriation claim is that "[i]n manufacturing and selling the strikingly similar Beanie Boos, Ty has appropriated and used Aurora World's intellectual property."
In its attempt to show irreparable harm, Aurora relies principally on the presumption employed in the Ninth Circuit that a plaintiff who demonstrates a likelihood of success on the merits of a copyright or trademark infringement claim is entitled to a presumption of irreparable harm. Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1119 (9th Cir.1999) (citing Cadence Design Systems v. Avant! Corp., 125 F.3d 824, 826-27 (9th Cir.1997)). See also LGS Architects, Inc. v. Concordia Homes of Nevada, 434 F.3d 1150, 1155-56 (9th Cir.2006) ("A copyright holder seeking a
Ty questions the continuing validity of the presumption given the Supreme Court's decision in Winter. The Winter Court held that the Ninth Circuit's standard that a possibility of irreparable injury suffices if plaintiff makes a strong showing of likely success on the merits was too lenient and concluded that the plaintiff must demonstrate that irreparable injury is "likely in the absence of an injunction." Winter, 129 S.Ct. at 375 (emphasis original). Following Winter, several district courts in the Ninth Circuit have found that the presumption is no longer valid. Jacobsen v. Katzer, 609 F.Supp.2d 925, 936 (N.D.Cal.2009) (copyright plaintiff). See also Mortgage Electronic Registration Systems, Inc. v. Brosnan, No. C 09-3600 SBA, 2009 WL 3647125, *8 (N.D.Cal. Sept. 4, 2009) (stating in a trademark infringement case that "the Supreme Court's decision in Winter has effectively eliminated that presumption"); Gowan Co., LLC v. Aceto Agricultural Chemicals, No. CV-09-1124-PHX-JAT, 2009 WL 2028387, *4 (D.Ariz. July 10, 2009) ("The Supreme Court's more recent decision in Winter and the Ninth Circuit's ruling in American Trucking further confirmed that irreparable harm should no longer be presumed," citing Jacobsen, 609 F.Supp.2d at 925); Nampa Classical Academy v. Goesling, No. 09-cv-427-EJL, 2009 WL 2923069, *2 (D.Idaho Sept. 10, 2009) ("No longer are plaintiffs granted the presumption of irreparable harm upon a showing of a likelihood of success on the merits"); Maxim Integrated Products, Inc. v. Quintana, 654 F.Supp.2d 1024, 1030 (N.D.Cal.2009) ("Thus, a plaintiff is no longer entitled to a presumption of irreparable harm on the ground that it has shown a likelihood of success on the merits").
Although Ty relies on Winter, the court finds the Supreme Court's holding in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), more pertinent. In eBay, the Supreme Court held that the Federal Circuit erred in adopting a categorical rule that permanent injunctive relief was available once a patentee established the validity of its patent and infringement by defendant. Id. at 392-94, 126 S.Ct. 1837. eBay involved a permanent injunction; nonetheless, "it has been applied to preliminary, as well as permanent, injunctions, and has been read to limit the presumption of irreparable harm [based] solely upon the finding of infringement." Hologic, Inc. v. Senorx, Inc., C 08-133 RMW, 2008 WL 1860035, *15 (N.D.Cal. Apr. 25, 2008) ("[I]t does not appear that presumption of irreparable harm should be extended to preliminary injunction applications involving patents"); Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F.Supp.2d 1197, 1214 (C.D.Cal.2007) (finding that there was no presumption of irreparable harm in a copyright case); Chamberlain Group, Inc. v. Lear Corp., C 05-3449, 2007 WL 1017751, *5 (N.D.Ill. Mar. 30, 2007) (citations omitted); see also Seitz v. Envirotech Sys. Worldwide Inc., CV H 02-4782, 2007 WL 1795683, *2 (S.D.Tex. June 19, 2007) (recognizing that eBay "clarified the standard for issuing a[ ] [preliminary] injunction in a patent case," and that now "[a] court cannot automatically issue an injunction based on infringement allegations," but must instead independently consider, inter alia, whether the movant "has suffered an irreparable injury"); Torspo Hockey Intern., Inc. v. Kor Hockey Ltd., 491 F.Supp.2d 871, 881 (D.Minn.2007) ("[Counter-claimant] argues that if it has
The eBay holding is not limited to patent cases; indeed, the Ninth Circuit has applied it in a trademark case. See Reno Air Racing Ass'n, Inc. v. McCord, 452 F.3d 1126, 1137 (9th Cir.2006) (discussing eBay in the context of a motion for permanent injunction).
Having concluded that Aurora is not entitled to invoke a presumption of irreparable harm, the court must examine whether it has demonstrated a probability that it will suffer irreparable harm if an injunction does not issue. Aurora argues that it is entitled to injunctive relief because Ty's alleged infringement will lead to lost sales and because Aurora has a "moral right" to preserve the integrity of its work, reputation and good will. This argument is unavailing for two reasons. First, by failing to proffer evidence regarding YooHoo & Friends' penetration into the U.S. market, Aurora has failed to demonstrated that it has significant reputation or goodwill to protect in that market. The mere fact that Aurora has spent $225,000 on advertising over almost three years, taken alone, does not prove that it has such an interest. Reebok Intern. Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1557 (Fed. Cir.1994) (holding that plaintiff had failed to prove the loss of a reputation interest because it "provided no evidence on the extent of such sales"); Apple Inc. v. Psystar Corp., 673 F.Supp.2d 926, 929-30 (N.D.Cal.2009) (quoting DFW Metro Line Servs. v. Southwestern Bell Telephone Co., 901 F.2d 1267, 1269 (5th Cir.1990) (denying a preliminary injunction where plaintiff was only in business for one and a half years and any injury could be calculated and recompensed in the form of damages)).
To the extent Aurora relies on lost sales, moreover, its reliance is misplaced. Loss of sales alone will not support a finding of irreparable injury "because acceptance of that position would require a finding of irreparable harm to every" plaintiff regardless of circumstances. Reebok, 32 F.3d at 1558. Similarly, potential loss of market share does not constitute irreparable injury. See Oakland Tribune, Inc. v. Chronicle Publishing Co., Inc., 762 F.2d 1374, 1376 (9th Cir.1985) ("Plaintiff [newspaper] initially claims injury because it will lose circulation and revenue, but as plaintiff seems to admit, this involves purely monetary harm measurable in damages"). As respects Aurora's argument that lost sales will be difficult to calculate, the court cannot evaluate the validity of the argument as Aurora has presented no evidence regarding its U.S. sales figures, potential lost sales in the United States, or any evidence suggesting that sales are being lost to Ty. Indeed, because the two Ty toys upon which Aurora principally relies—the Cleo and Bubblegum toys—are not sold in the United States, it is not clear that there is any potential for lost U.S. sales, calculable or otherwise.
"In each case, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Amoco Production Co., 480 U.S. at 542, 107 S.Ct. 1396. See also International Jensen, 4 F.3d at 827 ("In evaluating the balance of hardships a court must consider the impact granting or denying a motion for a preliminary injunction will have on the respective enterprises"). In addition, the court "must consider the public interest as a factor in balancing the hardships when the public interest may be affected," Caribbean Marine Services Co.
To demonstrate that the balance of hardships tips in its favor, Ty proffers the declaration of its chief financial officer, who states that an injunction would prevent Ty from selling Beanie Boos in the United States, interfere with its relationship with its customers, and tarnish its reputation.
"The likelihood of confusion to consumers is [a] critical factor in our consideration" of the harm to the public. Milon-DiGiorgio Enterprises, 559 F.3d at 995 n. 5. "The public has an interest in avoiding confusion between two companies' products." Id. Where there is no finding of likelihood of confusion, however, "an injunction [] depriv[es] consumers of a choice of products." International Jensen, 4 F.3d at 827. In the absence of a finding of likelihood of confusion, therefore, the interest of the public weighs against entry of an injunction.
For the foregoing reasons, Aurora's motion for preliminary injunction is denied.
At the hearing, Aurora stated that on the Friday before the Monday hearing on this motion it sought and received information verifying that the copyright applications had been received in the Copyright Office and were being processed. Aurora made no attempt to show good cause for the late retrieval of this evidence and Ty objected to its introduction. The court declines to consider evidence first proffered at the hearing. See United States v. Halling, 232 Fed.Appx. 692, 693 (9th Cir.2007) (Unpub.Disp.) ("We do not consider the additional arguments raised for the first time at oral argument," citing Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 515 (9th Cir.1992)); White v. FedEx Corp., C04-00099 SI, 2006 WL 618591, *2 (N.D.Cal. Mar. 13, 2006) ("The Court will not consider any arguments or evidence raised for the first time at the hearing"). This is particularly true where, as here, the opposing party would be prejudiced by being denied the right to investigate or respond to the authenticity of the evidence.
The Ninth Circuit subsequently limited the Reuters III holding in Los Angeles News Service v. Reuters Television International (USA) Ltd. (Reuters V), 340 F.3d 926 (9th Cir.2003), clarifying that "no rational deterrent function is served by making an infringer whose domestic act of infringement—from which he earns no profit—leads to widespread extraterritorial infringement, liable for the copyright owner's entire loss of value or profit from that overseas infringement, particularly if the overseas infringement is legal where it takes place." Id. at 931.
Aurora cites a statement in Wuescher's declaration as evidence of a predicate act of domestic infringement. Wuescher states: "I was one of several designers primarily responsible for the development and design of Ty's BEANIE BOOS ™ line of plush toys." (Wuescher Decl., ¶ 3.) Aurora makes several assumptions based on this statement. First, it assumes that Wuescher referenced the Cleo and Bubblegum toys as well as other Beanie Boos. The context of the statement, however, undercuts this suggestion, as the preceding and succeeding paragraphs in the declaration discuss only Beanie Boos marketed in the United States. (Id., ¶¶ 2, 4.) Second, Aurora assumes without foundation that Wuescher was in the United States when he participated in the design process. Third, based on Wuescher's assertion that he was "primarily responsible" for development and design of the Beanie Boos, it assumes that even if Wuescher supervised a process that occurred abroad from the United States, his supervision constitutes an actionable act of copyright infringement. This misapprehends Ninth Circuit law.
Aurora cites Professor Nimmer's treatise, which states that "if, and to the extent, a part of an `act' of [copyright] infringement occurs within the United States, then, although such act is completed in a foreign jurisdiction, those parties who contributed to the act within the United States may be rendered liable under American copyright law." 4 NIMMER ON COPYRIGHT, § 17.02 at 17-19 (2008). Although potentially authoritative in other jurisdictions, Nimmer does not appear to state the law of this circuit. Rather, Reuters V, which Aurora does not cite, limited the holding of Reuters III, and concluded that "an exception may apply where an act of infringement is completed entirely within the United States and that such infringing act enabled further exploitation abroad." Reuters V, 340 F.3d at 927 (emphasis supplied). To the extent Wuescher was directly involved in an allegedly infringing act, he makes clear that he was only "one of several designers primarily responsible for the development and design." (Wuescher Decl., ¶ 3.) If other participants in the design process were not in the United States, Wuescher's domestic acts of infringement do not justify extraterritorial application of the copyright laws under Reuters V, even if they would under Nimmer's formulation. This interpretation is consistent with the Ninth Circuit's desire to create a "narrow application" to avoid "over-deterrence [that] might chill the fair use of copyrighted works in close cases." Reuters V, 340 F.3d at 931.
In sum, the court cannot conclude that, standing alone, the single, general sentence in Wuescher's declaration on which Aurora relies demonstrates that it will likely succeed in proving the predicate facts necessary for extraterritorial application of the Copyright Act.
Aurora also relies on evidence that a sales sheet displaying the Cleo and Bubblegum toys was sent to a retailer in New Mexico. (Fitzhugh Supp. Decl., Exh. A.) Because it has not adduced evidence of an actual sale by Ty, however, this is insufficient to prove infringement. See, e.g., Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701, 718 (9th Cir. 2007) ("[T]he district court's conclusion [that distribution requires an `actual dissemination'] is consistent with the language of the Copyright Act"); In re Napster, Inc. Copyright Litigation, 377 F.Supp.2d 796, 802-03 (N.D.Cal.2005) (citing a scholar's observation that "if the distribution right is to be infringed, 'an actual transfer must take place; a mere offer for sale will not violate the right,'" quoting 2 Paul Goldstein, COPYRIGHT § 5.5.1, at 5:102 to 5:102-1 (2d ed. 2000 & Supp. 2005), and citing National Car Rental Sys., Inc. v. Computer Assoc. Int'l, Inc., 991 F.2d 426, 434 (8th Cir.), cert. denied, 510 U.S. 861, 114 S.Ct. 176, 126 L.Ed.2d 136 (1993); Arista Records, Inc. v. Mp3Board, Inc., No. 00 Civ. 4660(SHS), 2002 WL 1997918, *4 (S.D.N.Y. Aug. 29, 2002); and Obolensky v. G.P. Putnam's Sons, 628 F.Supp. 1552, 1555-56 (S.D.N.Y.), aff'd, 795 F.2d 1005 (2d Cir. 1986)); New Name, Inc. v. Walt Disney Co., No. CV 07-5034 PA (RZx), 2007 WL 5061697, *4 (C.D.Cal. Dec. 3, 2007) ("Offering for sale is not enough; a defendant must have actually completed a sale"); 2 David Nimmer & Melville B. Nimmer, NIMMER ON COPYRIGHT § 8.11[A], at 8-149 (2007) ("Infringement of [the distribution right] requires an actual dissemination of either copies or phonorecords").
To the extent Aurora infringement of its right to display under 17 U.S.C. § 106(3), this is addressed infra.
As respects the second caricature on the display rack, it appears most like Aurora's sugar glider. The coloration of the caricature and the sugar glider is not substantially similar, however, as the sugar glider has gray stripes across its face, gray ears and paws, green eyes, and a pink nose and mouth. The sugar glider also has webbing, similar to that found on a flying squirrel, running from its arms to its legs. The cartoon Beanie Boo has no gray coloring except two stripes on its tail. Rather, it is largely magenta and white, with pink hands and ears, has a black nose, pink eyes, and no mouth.
Under Reebok, a pending proceeding abroad is not a sine qua non of the conflicting law analysis. Because Aurora has presented no evidence regarding the existence of a conflict of any kind, and has not addressed whether there are pending proceedings between the parties in another jurisdiction, the court cannot evaluate the weight of this factor.
While each of these cases is distinguishable, the court does not mean to suggest that evidence of international advertising is always irrelevant in assessing whether a mark had acquired secondary meaning. Given that the court has determined that exterritorial application of the Lanham Act is not warranted in this case, however, it is clear that the figures that are relevant are advertising and sales figures for the United States, not worldwide advertising and sales figures.
The Icon Enterprises court reasoned that
Employing this approach, the court declined to admit testimony regarding confusion on the part of a retailer because "the circumstances giving rise to his confusion ... [were] not the circumstances under which an ordinary consumer is likely to encounter Defendants' product." Id. On the other hand, it admitted evidence of confusion by a different retailer who was "confused after seeing an ad for [the product] in a[] catalogue" because "a consumer is likely to encounter Defendants' product in the same context." Id.
In the present case, Aurora has provided no detail regarding the circumstances under which the retailers came into contact with Ty's toys. To the extent they saw the toys outside the United States, their view would not be probative of confusion in the United States, because the retailers may well have seen Beanie Boos not sold in the United States. To the extent they saw the toys on a sales sheet, this does not appear probative, as consumers likely encounter Ty's products in person at a store, not via a visual depiction on a sales sheet. In any event, because the emails indicate that the speakers were not confused, and correctly identified the fact the toys manufactured by Ty and those manufactured by Aurora, the court need not reach address the issue.
The court credits to some extent Aurora's assertion that, because many consumers remove the hang tag after purchase, its confusion-obviating effect is limited. Aurora relies on an exhibit that bears a U.K. hang-tag, which informs the purchaser to remove the tag before giving the toy to a child. (Kessler Decl., Exh. G.) Aurora makes several assumptions based on this evidence. The first is that the same warning is present on U.S. hang tags. If this is the case, Aurora could have presented direct evidence of the fact since it presumably has access to Beanie Boos available in the U.S. market. Second, Aurora presumes that removing the hang tag will eliminate all post-sale confusion because all consumers of the toys are children. The only consumers about whom Aurora has presented evidence thus far, however, appear to be adult collectors running the Leon and Sondra website. Given the existence of this website, it is not implausible to infer that many of one or both companies' consumers are collectors, who would likely not remove the hang tag following purchase. Aurora's evidence, moreover, is offered for the limited purpose of rebutting Ty's arguments regarding the consumer's degree of care at the moment of purchase. It is noteworthy that at that point, the hang tag is attached.
