IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks -- June 14, 2012

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Brownmark Films, LLC v. Comedy Partners, USCA Seventh Circuit, June 7, 2012

 Click here for a copy of the full decision.

  • Seventh Circuit affirms district court’s dismissal of plaintiff’s copyright claims, holding that district court can properly decide affirmative defense of fair use on motion for summary judgment and that defendants’ use of plaintiff’s What What (In The Butt) song in a South Park episode was a parody protected by the fair-use defense.

In a 2008 episode of the animated comedy South Park, the characters Cartman, Stan, Kyle and Butters create a video called What What (In The Butt), a parody of a real-world viral video of the same name. Plaintiff owns the copyright to the original video, and sued the defendant, creators and producers of South Park, for copyright infringement. Defendants moved for dismissal for failure to state a claim, based on the affirmative defense of fair use. The district court found fair use and dismissed the case. (Click here to read our summary of the district court’s decision.) Plaintiff appealed, arguing that courts should refrain from granting motions to dismiss on affirmative defenses. The Seventh Circuit affirmed, finding that, while the court should have treated defendants’ motion as one for summary judgment, that the district court could properly consider an affirmative defense in the context of a motion for summary judgment, and that the use was fair.

The Seventh Circuit elected to treat defendants’ motion as a motion for summary judgment because the procedures for both a motion for summary judgment and a motion to dismiss are “essentially the same” and that the only possible disadvantage to plaintiff would be the lack of notice. In plaintiff’s case, however, this error was harmless because, according to the court, plaintiff could not have offered any evidence in response. Because plaintiff had failed to make any concrete contention that the South Park episode reduced its financial returns from the original video, the district court required only the video of the South Park episode that included its What What (In The Butt) parody and the original What What (In The Butt) video, both of which defendants attached to the motion to dismiss, to properly consider the affirmative defense of fair use.

Treating the motion as a motion for summary judgment, the Seventh Circuit affirmed the district court’s decision, finding that plaintiff had waived its fair-use argument on appeal by failing to address the substantive issue. Even had plaintiff addressed the issue, however, the appeals court concluded that defendants’ use of the original video clearly constituted fair use, finding that the South Park episode clearly meets the four non-exclusive factors for fair use under the Copyright Act – the purpose and character of use, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work. First, the court found that the use of the video was transformative, because defendants used it as a part of an episode that critiqued and lampooned viral videos like the original What What (In The Butt). Second, that the original video is protected by the Copyright Act is of little help to plaintiff, according to the court, because parodies almost invariably copy publicly known, expressive works. Third, the court found that though the defendants used the heart of the original video – the work’s overall design and distinctive visual elements – their use was to create a parody. When a parody achieves its intended aim, the amount of the original work taken is considered reasonable as long as the parody does not serve as a market substitute for the work. Lastly, the court reasoned that because it has found South Park’s use to be a parody, defendants’ use could not have an actionable effect on the potential market for, or value of, the original video.

 

CJ Products LLC v. BTC Enterprises LLC, USDC S.D. New York, June 1, 2012

 Click here for a copy of the full decision.

  • District court grants summary judgment in favor of plaintiff on copyright infringement claim related to 11 Pillow Pet designs, finding that the allegedly infringing toys were virtually identical to the copyrighted works.

Plaintiff CJ Products LLC, the designer and producer of Pillow Pets toys, brought suit against defendants BTC Enterprises LLC and its president claiming, among other things, that defendants’ competing toys infringed on copyrights plaintiffs holds in 11 animal-shaped Pillow Pets. As the court noted, Pillow Pets are part functional pillow, part stuffed animal. Unfolded, the animal lies flat like a pillow; folded, the four corners form "legs" on which it can stand. Defendants sell a competing line of similar products. On plaintiff’s motion, the court granted summary judgment in its favor on the copyright infringement claim and on seven of defendants' counterclaims, and sua sponte dismissed defendants' eighth counterclaim for a declaration of no copyright infringement, finding no triable issue of fact relating to plaintiff’s ownership of the copyrights and that the allegedly infringing toys were virtually identical to the copyrighted works.

At the outset, the court noted that copyrights registered within five years of publication constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate, and that, for this reason, alleged infringers generally concede copyright validity. In this case, however, the defendants argued that there were material issues of fact as to whether CJ Products owned the 11 copyrights. Specifically, defendants argued that CJ Products in its current corporate form (an LLC) did not exist prior to March 2008 and therefore could not own the copyrights in the designs published prior to that time. They also asserted that material issues of fact existed as to whether CJ Products, its CEO or the company that manufactured the toys owned the three works published after March 2008.

The court rejected defendants’ arguments, finding that the only change that occurred in 2008 was one of corporate form (from a sole proprietorship owned by the Pillow Pets designer and her husband to an LLC), that the designs were “works made for hire” by the designer/owner and owned by the proprietorship, and that defendants had put forth only conjecture and conclusory allegations in support of their argument that the copyrights owned by the proprietorship were not properly transferred to the LLC. Noting “well-settled” law that minor, technical inaccuracies will not invalidate a copyright registration if they would not have affected the Copyright Office's approval of the application, the court also concluded that the fact that each of plaintiff's pre-2008 copyrights listed the LLC, not the proprietorship, as the owners did not create a triable issue as to the proprietorship's original ownership of the copyrights or the validity of the registrations. The court likewise rejected as meritless defendants’ argument that the written agreement between CJ Products and its manufacturer was evidence that the manufacturer may have contributed to the design of the works, finding that the agreement actually memorialized the understanding of the parties, dating back to 2004, that CJ Products owned the Pillow Pet designs. The court also noted that, contrary to defendants' highly speculative and unsupported assertions, the designer’s deposition testimony established that the manufacturer did not contribute at all to the creative design of the Pillow Pets.

Defendants also argued that plaintiff was not entitled to a presumption of validity with respect to two of the copyrights that were not registered within five years of publication of the works. Acknowledging that the defendants were correct as a matter of fact and law, the court used its discretion under the Copyright Act to give the same presumption of validity to those two works as the statute provided to the other nine. The court adopted the rationale from another infringement case involving Pillow Pets, in which the District Court for the Eastern District of New York also used its discretion to afford the same evidentiary weight to registrations made outside the five-year period. In that case, the district court noted that the overwhelming majority of the designs within the Pillow Pets product line were clearly entitled to the statutory presumption of validity, that plaintiffs made and sold 33 versions of the product line that were all functionally the same – combination of a stuffed animal and a pillow, and that the fact that, for example, the "Buzzy Bumble Bee" design was registered within the five-year period and the "Puffy Duck" design was not, was substantively insignificant. Applying the reasoning to the two products for which defendants disputed the copyright registration, the court noted that they were made and marketed as parts of the identical product line as the other nine, and afforded the copyright registrations related to those two products the presumption of validity.

Using similar reasoning, the court rejected defendants’ argument that plaintiff had failed to show that the eleven designs at issue are "in fact" the same as those registered with the Copyright Office, based on plaintiff’s difficulty in obtaining and producing for the court the Pillow Pet "deposit materials" submitted to the Copyright Office. Calling the argument pure speculation and conjecture, the court concluded that defendants failed to raise a triable issue of fact as to whether the 11 Pillow Pets in question corresponded with the registered designs. According to the court: “The Lady Bug is a lady bug, the Bumble Bee a bumble bee, and the Penguin a penguin. As the old adage goes, and it applies here with particular resonance, if it looks like a duck and quacks like a duck, it is a duck.”

After concluding that no triable issue of fact existed with the regard to plaintiff’s ownership of the copyrights, the court turned to the issue of whether defendants copied plaintiff’s 11 Pillow Pet works without permission. Noting that the bundle of exclusive rights protected by the Copyright Act includes the right to make reproductions and to distribute copies by sale, and that copyright infringement may be inferred "if two works are so strikingly similar as to preclude the possibility of independent creation,” the court concluded that the defendants' toys and plaintiff’s 11 copyrighted works were virtually identical. Based on side-by-side comparisons of the parties' products put forth by plaintiff in their motion, “no reasonable juror could find that defendants did not copy plaintiff’s protected works. The court also found that the “minute differences in the eyes and facial features” to which defendants pointed, and their “conclusory assertion” that the quality of their fabric and the finish of their products was notably better were insufficient to raise a triable issue of fact as to copying.

The court also granted plaintiff’s motion for summary judgment on defendants’ first seven counterclaims, each of which was based on the premise that defendants did not commit infringement and therefore plaintiff’s actions to protect its rights were somehow unlawful, and sua sponte dismissed the eighth counterclaim, which sought a declaration that defendants did not infringe on plaintiff’s copyrights.



For more information, please contact Jonathan Zavin at jzavin@loeb.com or at 212.407.4161.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.

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