Filewrapper-old

Seventh Circuit issues a stinker of an opinion in copyright case
March 20, 2007
The Seventh Circuit succinctly sums up the field of commerce of its decision today in JCW Investments, Inc. v. Novelty, Inc.:
Somewhat to our surprise, it turns out that there is a niche market for farting dolls, and it is quite lucrative.
The case presents some interesting issues, such as whether the copyright in such a doll is valid and infringed, whether greater attorney fees may be awarded under the copyright act than those the attorney would otherwise be entitled to based on the contingent fee arrangement with the client, and whether state remedies for unfair competition that are greater than those allowed under the Lanham Act are permissible. The court answers "yes" to each of these questions, affirming a lower court's award of $116,000 for copyright infringement, $125,000 for trademark infringement, $50,000 in punitive damages under the Illinois unfair competition law, as well as $575,099.82 in attorneys' fees. More details of the case after the jump.JCW Investments (d/b/a Tekky Toys) sells a plush novelty doll called Pull My Finger® Fred. As described by the court, Fred "is a white, middle-aged, overweight man with black hair and a receding hairline, sitting in an armchair wearing a white tank top and blue pants." As one can imagine, Fred makes a distinctive noise when his finger is squeezed, and follows the sound with a statement such as "Did somebody step on a duck?" Below is an image of Fred: Between 1999 and 2004, Tekky sold over 400,000 Fred dolls. Fred's design was registered with the copyright office on February 5, 2001. Novelty, Inc. sells a doll called "Fartman." According to the Seventh Circuit, "Fartman could be Fred's twin." As it turns out, this was not by chance. Todd Green, Novelty's president, testified that he viewed Fred in a Hong Kong showroom, and told an artist at his company to make a drawing in Fred's image. The result was Fartman. Novelty began selling Fartman in late 2001. Once Tekky learned of Fartman, it sued Novelty for copyright infringement. The court had little difficulty finding Novelty liable for copyright infringement. To establish infringement, the plaintiff must show (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. Here, Novelty argued that many of Fred's features were actually unprotectable elements under the doctrine of scènes à faire, which prevents copyright claims in "incidents, characters or settings which are as a practical matter indispensable or at least standard, in the treatment of a given topic." Essentially, Novelty argued that Fred's appearance was just "a typical man wearing jeans and a T-shirt in a chair doing the 'pull my finger' joke." The court was unpersuaded, stating that "the problem with this argument is that the very combination of these elements as well as the expression that is Fred himself are creative," and thus copyrightable. In short, it "is not the idea of a farting, crude man that is protected, but this particular embodiment of that concept." Thus, the finding of copyright infringement was affirmed. There were also trademark issues before the court, because Novelty used Tekky's registered "Pull My Finger" trademark to sell its Santa dolls. These sales infringed Tekky's trademark rights, and the jury found the infringement to be willful and, under Illinois law, awarded Tekky $50,000 in punitive damages. Novelty argued that the Lanham Act preempted the states' ability to provide remedies greater than those permitted in the Act, and thus the punitive damage award must be vacated. The court rejected this argument as well. There are three instances where a federal statute preempts state law:
  1. When the federal statute explicitly provides for preemption;
  2. When Congress intended to occupy the field completely; and
  3. Where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.
Only the third possibility applied to this case. One section of the Lanham Act, 15 U.S.C. § 1117(a) provides in part that damages awarded under the Act "shall constitute compensation and not a penalty." Thus, Novelty argued, because the punitive damages are, by their nature, a penalty, they are not permitted under the Lanham Act, and thus should not be permitted under the analogous state law. On this point, the court relied upon a 2006 First Circuit decision, where a similar issue arose in the context of attorneys' fees. In that case, Attrezzi, LLC v. Maytag Corp., the court found there was no preemption of New Hampshire's law that permitted greater recovery than the Lanham Act allowed. The Seventh Circuit found the logic of Attrezzi persuasive, and likewise found no preemption. Finally, the court turned to the attorney fee award. Novelty argued that because Tekky had a contingent fee arrangement with its counsel, the attorney fee award could not be greater than what the lawyers would have earned from the contingent fee contract, or about $145,000. Once again, the court disagreed with Novelty. In a prior case on attorneys' fees, the Seventh Circuit observed that:
were it not for the expectation of an additional, court-ordered award if the suite was successful but yielded little in the way of damages, the plaintiff might not have been able to interest a lawyer in taking the case in the first place. So the percentage specified in the contract should not cap such awards.
While the fees were high (about double the damages awarded), there was no abuse of discretion in using the lodestar method as opposed to the contingent fee arrangement to determine the amount of attorneys' fees. To read the full decision in JCW Investments, Inc. v. Novelty, Inc., click here. The appendix to the court's decision, depicting the Fred, Fartman, and Fartboy dolls, is below:
Post has no comments.
Post a Comment




Captcha Image
Return to the Filewrapper Blog
  Newer Posts Older Posts  

Purpose

The attorneys of McKee, Voorhees & Sease, P.L.C. designed this blog as an informational and educational resource about intellectual property law for our clients, other attorneys, and the public as a whole. Our goal is to provide cutting-edge information about recent developments in intellectual property law, including relevant case law updates, proposed legislation, and intellectual property law in the news.

Disclaimer

McKee, Voorhees & Sease, P.L.C. provides this blog for general informational purposes only. By using this blog, you agree that the information on this blog does not constitute legal or other professional advice and no attorney-client or other relationship is created between you and McKee, Voorhees & Sease, P.L.C. Do not consider this blog to be a substitute for obtaining legal advice from a qualified, licensed attorney. While we try to revise this blog on a regular basis, it may not reflect the most current legal developments. We consciously refrain from expressing opinions on this blog and instead, offer it as a form of information and education, however if there appears an expression of opinion, realize that those views are indicative of the individual and not of the firm as a whole

Connect with MVS

Enter your name and email address to recieve the latest news and updates from us and our attorneys.

Subscribe to: MVS Newsletter

Subscribe to: Filewrapper® Blog Updates

  I have read and agree to the terms and conditions of McKee, Voorhees & Sease, P.L.C.