Archives for category: intellectual property

Kids use their parents credit card on Facebook and rack up unauthorized debts. Users’-parents file for a class action, to absolve those debts. In particular, regarding credits purchased for the game “Ninja Saga”

I.B., by and through his Guardian ad Litem BRYAN FIFE, et al., Plaintiffs,
v.
FACEBOOK, INC., Defendant.

No. C 12-1894 CW

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA

Decided, October 25, 2012 by Opinion of Judge Claudia Wilken

Below are the facts from the Opinion (citations to complaint removed):

Facebook operates the largest online social network in the world and provides a payment system, Facebook Credits, for users to make purchases within the Facebook website. Facebook permits minors to register on its website and use its service

In October 2011, Plaintiff I.B., a minor, asked his mother, Plaintiff Glynnis Bohannon, for permission to spend twenty dollars on his Facebook account using Bohannon’s Wells Fargo Master Card, in exchange for twenty dollars in cash I.B. purchased Facebook Credits from Facebook for use in “Ninja Saga.” Subsequently, without any notice that his mother’s credit card information had been stored by Facebook and the Facebook Credits system, or that his mother’s credit card information was being used again after the initial twenty dollar purchase, I.B. made in-game purchases for which he thought he was spending virtual, in-game currency. As a result, Bohannon’s credit card was charged repeatedly and without her consent, and the charges totaled several hundred dollars. Upon discovering the transactions, Bohannon tried to obtain a refund from Facebook by leaving a phone message at a phone number listed for Facebook but received no response.

This opinion is on motions to dismiss,

Facebook moves to dismiss the 2AC for failure to state a claim and to strike the class allegations. Plaintiffs oppose the motions.

As to requests for Judicial notice:

Facebook asks the Court to take judicial notice of screen shots of webpages from Facebook’s website on the grounds that they were specifically referred to in the 2AC or illustrate the allegations in the amended complaint. These include Facebook’s Statement of Rights and Responsibilities, Payment Terms, Help Center pages and payment screens in the game Ninja Saga. Plaintiffs object to these exhibits. Facebook’s manager of Payment Operations, Bill Richardson, provides a supporting declaration concerning the public availability of these webpages. However, Mr. Richardson states that the screen shots were viewed and printed between April 13, 2012 and May 10, 2012, and his declaration does not indicate whether these webpages were in effect or available at the time of the events alleged in the 2AC. Richardson Decl. at 2-4 nn.1-6. In support of Facebook’s reply, Mr. Richardson states that Facebook did not “materially alter” the Ninja Saga payment pages between October 2011 and May 2012. Suppl. Richardson Decl. 3. However, whether the minor Plaintiffs I.B. and J.W. would have viewed these particular payment pages is subject to reasonable dispute. Facebook’s request for judicial notice is therefore denied. See In re Easysaver Rewards Litig., 737 F. Supp. 2d 1159, 1168 (S.D. Cal. 2010) (denying request for judicial notice where “[t]he Court finds that whether these are the webpages Plaintiffs would have viewed during their online transactions is subject to ‘reasonable dispute.'”) (citing Fed. R. Evid. 201).

Then discussing applicable law regarding minors in contracts, subheadings: “2. Contracts Voidable Under Family Code Section 6710” and “a. Minors May Disaffirm Contracts Even After Receiving Benefits”:

Facebook contends that minor Plaintiff I.B. cannot disaffirm his contract because he has already received the full benefit of the Facebook Credits that he purchased by using the Credits to make in-game purchases in “Ninja Saga.

Facebook contends that the ruling in E.K.D. on the enforceability of the forum selection clause is directly applicable here because minor Plaintiff I.B. has already accepted the benefits of the contract to purchase Facebook Credits, as demonstrated by his concession that he used the Credits to make “in-game purchases” in the Ninja Saga game. Mot. at 10-11 (citing 2AC 25). Although Plaintiffs do not allege what Plaintiff J.W. did with the Credits that he purchased, Facebook infers that he also spent the Credits online and argues that allowing the minor Plaintiffs to disaffirm their contracts would result in “an unfair windfall to the minor.”

The court goes on to address claims of violations of Electronic Fund Transfer Act, 15 U.S.C. § 1693 et seq. (EFTA) to which

Facebook contends that it is not a “financial institution”

But

Plaintiffs do not contend that Facebook is a financial institution but rather assert a claim under HN22Go to this Headnote in the case.15 U.S.C. § 1693m, which provides for civil liability against persons other than financial institutions.”

And

Plaintiffs do not sufficiently allege which provision of the EFTA has been violated … motion to dismiss the EFTA claim is granted with leave to amend

Then the Consumer Legal Remedies Act, California’s Unfair Competition Law and the Money Transmission Act.

In conclusion a mixed decision of dismissals, some with leave to amend, and some denied. The claims under the California Family Code remain.

This is an amazing case about fair use in copyright that involves the continually groundbreaking television cartoon “South Park”. The specific “South Park” episode in question “Canada On Strike” (Original Air Date: 04.02.2008) is available for full viewing at South Park Studios. The plot of the episode is satire of the 2007-2008 WGA strike and parody of some notable viral internet YouTube superstars.

Available on YouTube are the other videos referenced by the court: Plaintiff’s “WWITB“, “the Numa Numa Guy“, “the Sneezing Panda” and “the Afro Ninja.”


BROWNMARK FILMS, LLC, Plaintiff-Appellant,
v.
COMEDY PARTNERS, et al., Defendants-Appellees.

No. 11-2620

UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

682 F.3d 687

January 17, 2012, Argued
June 7, 2012, Decided

Counsel:

For BROWNMARK FILMS, LLC, Plaintiff – Appellant: Garet K. Galster, Attorney, RYAN KROMHOLZ & MANION, Milwaukee, WI; Caz McChrystal, Attorney, UNIVERSITY OF WISCONSIN, School of Business & Economics, Stevens Point, WI.

For COMEDY PARTNERS, MTV NETWORKS, PARAMOUNT PICTURES CORPORATION, SOUTH PARK DIGITAL STUDIOS LLC, VIACOM INTERNATIONAL, INCORPORATED, Defendants – Appellees: Alonzo B. Wickers, IV, Attorney, DAVIS WRIGHT TREMAINE LLP, Los Angeles, CA.

ELECTRONIC FRONTIER FOUNDATION, Amicus Curiae: Julie P. Samuels, Attorney, ELECTRONIC FRONTIER FOUNDATION, San Francisco, CA.

Before: Chief Judge Easterbrook, and Circuit Judges Cudahy and Hamilton

Opinion by: Judge Cudahy:

This is a case about how a court may dispose of a copyright infringement action based on the fair use affirmative defense while avoiding the burdens of discovery and trial. This case also poses the interesting question of whether the incorporation-by-reference doctrine applies to audio-visual works.

South Park is a popular animated television show intended for mature audiences. The show centers on the adventures of foul-mouthed fourth graders in the small town of South Park, Colorado. It is notorious for its distinct animation style and scatological humor. The show frequently provides commentary on current events and pop-culture through parody and satire. Previous episodes have dealt with the Florida Recount, the aftermath of hurricane Katrina and the phenomenon of celebrity sex tapes.

This case involves one episode entitled “Canada On Strike,” which satirized the 2007-2008 Writers’ Guild of America strike, inexplicably popular viral videos and the difficulty of monetizing Internet fame. In the episode, the nation of Canada goes on strike, demanding a share of the “Internet money” they believe is being generated by viral videos and other online content. The South Park Elementary school boys—Cartman, Stan, Kyle and Butters—decide to create a viral video in order to accrue enough “Internet money” to buy off the striking Canadians. The boys create a video, “What What (In The Butt),” (WWITB) in which Butters sings a paean to anal sex. Within the show, the video is a huge hit, but the boys are only able to earn “theoretical dollars.”

This video is a parody of a real world viral video of the same name, featuring an adult male singing and dancing in tight pants. The two versions of WWITB are very similar. The South Park version recreates a large portion of the original version, using the same angles, framing, dance moves and visual elements. However, the South Park version stars Butters, a naïve nine-year old, in a variety of costumes drawing attention to his innocence: at various points he is dressed as a teddy bear, an astronaut and a daisy.

Brownmark Films, LLC (Brownmark), the copyright holder for the original WWITB video, filed suit against South Park Digital Studios (SPDS) and others for copyright infringement under the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq. Brownmark’s complaint referenced both versions of WWITB, but it did not attach either work to the complaint. SPDS responded claiming the South Park version was clearly fair use under § 107, attached the two works and moved for dismissal for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Brownmark did not address the substance of SPDS’s fair use defense, but instead argued that the court could not consider fair use on a 12(b)(6) motion to dismiss. The district court concluded that “[o]ne only needs to take a fleeting glance at the South Park episode” to determine that its use of the WWITB video is meant “to lampoon the recent craze in our society of watching video clips on the internet . . . of rather low artistic sophistication and quality”—in other words, fair use. The court granted SPDS’s motion to dismiss based on the fair use affirmative defense.

Brownmark appeals, arguing that an unpleaded affirmative defense of fair use is an improper basis for granting a motion to dismiss under Rule 12(b)(6), and that in any event, SPDS’s WWITB video is not a fair use of the original WWITB video. We hold that the district court could properly decide fair use on SPDS’s motion, and we affirm the district court’s finding of fair use.

and:

we agree with the district court that this is an obvious case of fair use. When a defendant raises a fair use defense claiming his or her work is a parody, a court can often decide the merits of the claim without discovery or a trial. When the two works in this case are viewed side-by-side, the South Park episode is clearly a parody of the original WWITB video, providing commentary on the ridiculousness of the original video and the viral nature of certain YouTube videos.

because:

Central to determining the purpose and character of a work is whether the new work merely supersedes the original work, or instead adds something new with a further purpose or of a different character. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S. Ct. 1164, 127 L. Ed. 2d 500 (1994). The underlying purpose and character SPDS’s work was to comment on and critique the social phenomenon that is the “viral video.” Brownmark’s video exemplifies the “viral video.” Through one of the South Park characters—the innocent and naïve Butters—SPDS imitates viral video creation while lampooning one particularly well-known example of such a video. Moreover, the episode places Butters’ WWITB video alongside other YouTube hits including, among others, the Numa Numa Guy, the Sneezing Panda and the Afro Ninja. This kind of parodic use has obvious transformative value, which under § 107 is fair use. See § 107 (preamble); Campbell, 510 U.S. at 579 (“[P]arody, like other comment or criticism, may claim fair use under § 107.”).

concluding:

SPDS’s use of the original WWITB was not insubstantial. Certainly, SPDS used the “heart” of the work; the work’s overall design and distinctive visual elements. Harper & Row, Publrs. v. Nation Enters., 471 U.S. 539, 565, 105 S. Ct. 2218, 85 L. Ed. 2d 588 (1985). But in the context of parody, “[c]opying does not become excessive in relation to parodic purpose merely because the portion taken was the original’s heart.” Campbell, 510 U.S. at 588. Parody therefore “presents a difficult case.” Id. Indeed, it may even seem as an anomaly under fair use that parody, a favored use, must use a substantial amount of qualitative and quantitative elements to create the intended allusion; there are few alternatives. But when parody achieves its intended aim, the amount taken becomes reasonable when the parody does not serve as a market substitute for the work. See id. (“[H]ow much more is reasonable will depend . . . on the extent to which the [work’s] overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original.”). The South Park WWITB is clearly a parody and has not supplanted the original WWITB.

It follows from the third factor that SPDS’s parody cannot have an actionable effect on the potential market for or value of the original WWITB video under the fourth factor. As the South Park episode aptly points out, there is no “Internet money” for the video itself on YouTube, only advertising dollars that correlate with the number of views the video has had. It seems to this court that SPDS’s likely effect, ironically, would only increase ad revenue. Any effect on the derivative market for criticism is not protectable. Id. at 592. And the plaintiff has failed to give the district court or this court any concrete suggestion about potential evidence indicating that the South Park parody has cut into any real market (with real, non-Internet dollars) for derivative uses of the original WWITB video.

We agree with the district court’s well-reasoned and delightful opinion. For these reasons, the judgment of the district court is Affirmed.

That district court opinion by Judge Stadtmueller begins:

Federal lawsuits seldom touch on such riveting subjects and regard so many colorful parties as the present matter. The plaintiff, Brownmark Films, LLC (“Brown mark”), is the purported co-owner of a copyright in a music video entitled “What What (In the Butt)” (“WWITB”), a nearly four minute ditty regarding the derrière of the singer of the underlying work. (Am. Compl. ¶¶ 11-13). The music video begins with an array of bizarre imagery—from a burning cross to a floating pink zeppelin— and only gets stranger from there. The heart of the video features an adult African American male ensconced in a bright red, half-buttoned, silk shirt, dancing, grinning creepily at the camera, and repeatedly singing the same cryptic phrases: “I said, what what, in the butt” and “you want to do it in my butt, in my butt.” Meanwhile, the defendants are the entities involved in the production of “South Park,” an animated sitcom that centers on the happenings of four foul-mouthed fourth 994*994 graders in a small mountain town in Colorado. Id. ¶¶ 6-10. In the nearly fifteen years South Park has aired on Comedy Central, the four central characters have, amongst other adventures, battled space aliens,[1] hunted Osama Bin Ladin in the wake of 9/11 ala Elmer Fudd and Bugs Bunny,[2] and have, more recently, resolved the nation’s economic woes by charging the nation’s consumer debts on one of the character’s credit card.[3]

Brownmark and the makers of South Park find themselves litigating against each other in federal court as a result of an April 2, 2008 episode of the television program. (Am. Compl. ¶ 14). Specifically, Brownmark’s amended complaint seeks damages and injunctive relief for copyright infringement under the Copyright Act, 17 U.S.C. § 101 et seq., against the defendants because of a South Park episode entitled “Canada on Strike.” (Docket # 6). In that episode, one of the characters—the naive “Butters Stotch”—is coaxed by his fellow classmates to record an internet video in the hopes of “making money on the Internet.” The video— which lasts for fifty eight seconds of the approximately twenty-five minute episode—replicates parts of the WWITB video, with the nine-year old Butters singing the central lines of the original video, while dressed as a teddy bear, an astronaut, and even as a daisy. In the episode, Butters’ video, much like the original WWITB video, goes “viral,” with millions watching the clip. However, after their attempts to collect “internet money” prove fruitless, the South Park fourth graders learn that their video, much like other inane viral YouTube clips, have very little value to those who create the work.

Affiliate web sales subjects defendant to personal jurisdiction and venue in retailers’ state.

MuscleDriver USA, LLC, Plaintiff,
vs.
Robert Chandler Smith and Web Ninjas, LLC, Defendants.

C/A No. 0:11-1777-MBS-PJG

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA, ROCK HILL DIVISION

2012 U.S. Dist. LEXIS 69446

May 17, 2012, Decided

Opinion by Chief United States District Judge Margaret B. Seymour:

On July 22, 2011, Plaintiff MuscleDriver USA, LLC, filed an action against Defendants Robert Chandler Smith (“Smith”) and Web Ninjas, LLC (“Web Ninjas”). On September 19, 2011, default was entered against Web Ninjas. Because Smith is represented pro se, this action was referred to United States Magistrate Judge Paige J. Gossett for pretrial handling pursuant to 28 U.S.C. § 636(b) and Local Rule 73.02(B)(2), D.S.C.

On October 11, 2011, Smith filed a motion to dismiss for lack of personal jurisdiction and for improper venue, or, in the alternative, to transfer the action to the Western District of Texas. On April 17, 2012, the Magistrate Judge issued a Report and Recommendation recommending that Smith’s motion be denied. … The court adopts the Report and Recommendation and incorporates it herein by reference.

According to that April 17 report by Magistrate Judge Paige J. Gossett, this case is about:

The Plaintiff, MuscleDriver USA, LLC (“MuscleDriver”) filed this action against Defendant Robert Chandler Smith (“Smith”), who is self-represented, and Defendant Web Ninjas, LLC (“Web Ninjas”), alleging false designation of origin and unfair competition in violation of the Lanham Act, § 43(a), 15 U.S.C. § 1125(a), as well as state law claims for unfair trade practices under S.C. Code Ann. §§ 39-5-10, et seq., common law unfair competition, and injunction.

and

This case arises out of an internet business relationship gone bad. At some point prior to 2009, Smith, who attests that he has never been to South Carolina, created and began operating a website at the domain www.buyweightliftingshoes.com. (Smith Decl. ¶¶ 3, 20, ECF No. 14-2 at 1, 2.) Smith states that on the website, “I drafted and posted reviews of various weightlifting shoes. The site also contained ‘affiliate’ links to the sellers of the reviewed shoes through the sellers’ affiliate programs.” (Id. at ¶ 21, ECF No. 14-2 at 2.) Under affiliate programs, a party seeking to become an affiliate generally signs up with a retailer online, is given a tracking code, and collects a commission from the retailer on “click-through” sales that flow from the affiliate site. (Id. at ¶ 22, ECF No. 14-2 at 2.) In November 2009, Smith contacted MuscleDriver by e-mail, and the parties exchanged information about the MuscleDriver affiliate program. (ECF No. 18-1 at 8, 9.) Thereafter, Smith states that “I entered into an affiliate agreement with plaintiff . . . by signing up online then by agreeing to [MuscleDriver]’s Affiliate Terms and Conditions by clicking a check-box at the bottom of the page.” (Smith Decl. ¶ 23, ECF No. 14-2 at 3.) Although MuscleDriver’s location and address is identified on its website that Smith visited to establish the affiliate agreement, Smith states that he “only learned that [MuscleDriver] was in South Carolina after receiving his first commission check,” which was mailed from the MuscleDriver headquarters. (Id. at ¶ 25, ECF No. 14-2 at 3.) He had periodic communications with MuscleDriver and received monthly commission checks. (Id. at ¶ 11, ECF No. 14-2 at 2.) In 2010, Smith initiated a second, separate wholesale agreement with MuscleDriver in which he received commissions for advertising and selling MuscleDriver products from a different website, www.musclesandcurves.com. In March 2011, a dispute arose between the parties over a product review posted on http://www.buyweightliftingshoes.com, and MuscleDriver terminated its relationship with Smith. (Id. at ¶¶ 28-30, ECF No. 14-2 at 3.) In response to the termination and communications about the dispute, Smith removed some content from http://www.buyweightliftingshoes.com, but continued to post other content related to MuscleDriver and its products on the site, as well as the disputed review. (Id. at ¶ 32, ECF No. 14-2 at 4.) He also then formed Web Ninjas, LLC on March 16, 2011. (Id. at ¶ 33, ECF No. 14-2 at 4.) Five months later, on August 15, 2011, Smith took http://www.buyweightliftingshoes.com offline. (Id. at ¶ 34, ECF No. 14-2 at 4.) During the eighteen-month relationship between the parties, Smith’s websites generated more than $100,000 in sales of MuscleDriver’s products, all for products that shipped from MuscleDriver’s facility in South Carolina. Some of the sales through Smith’s websites were to customers in South Carolina. (Hess Decl. ¶¶ 5, 7-8, ECF No. 18-1 at 4; Invoices, ECF No. 18-1 at 15-26.) MuscleDriver majority owner and president Brad Hess further attests that all of its witnesses and documents related to this case are in South Carolina. (Hess Decl. ¶¶ 14-16, ECF No. 18-1 at 5-6.)

The following 2009 case is about the microwave ceramics industry but cites to the “ninja” of Hasbro v Child’s Play – see NinjaLaw #7.


John Chabria, et al., Plaintiffs,
-v-
EDO Western Corporation, Defendant.

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Case No. 2:06-CV-00543

Filed – March 30, 2009

Opinion by Magistrate Judge Abel and signed by District Court Judge George C. Smith

OPINION AND ORDER

Plaintiffs John Chabria (“Chabria”), Zenix, Inc. (“Zenix”), and Zenix Ltd. (collectively “Plaintiffs”), have brought this action seeking payment of approximately $ 1,164,000 in unpaid royalties. On February 20, 2007, this Court granted in part and denied in part EDO Western Corporation’s (“EDO”) Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 25). EDO now moves for summary judgment dismissing all remaining claims (Doc. 47). For the reasons that follow the Court GRANTS Defendant EDO’s Motion for Summary Judgment.

I. FACTUAL BACKGROUND

This litigation was commenced by Plaintiffs in 2006 to recover $ 1,164,000 of unpaid royalties Plaintiffs claim they are owed under the Asset Purchase Agreement (“APA”). On February 20, 2007, this Court granted in part and denied in part Defendant EDO’s Motion to Dismiss Plaintiffs’ Amended Complaint, holding, inter alia, that Plaintiffs had sufficiently alleged EDO’s failure to use its best efforts when performing under the APA, EDO’s breach of the implied covenant of good faith and fair dealing and EDO’s fraudulent inducement of Plaintiffs to enter into the APA (Doc. 25). EDO has now moved for summary judgment, contending that Plaintiffs’ claim for breach of an implied contractual obligation to reasonable efforts must fail because no such obligation should be implied in this case, and even if such an obligation is implied, EDO fulfilled the obligation by making extensive efforts to sell the Zenix line and by acting in good faith at all times in operation of the business. EDO further contends that it is entitled to summary judgment on Plaintiffs’ fraudulent inducement claim for the following reasons: (1) it is barred by the statute of limitations; (2) the alleged misrepresentations all relate to the performance of the APA and cannot give rise to a separate cause of action for fraud; (3) Plaintiffs’ reliance on the alleged misrepresentations were not reasonable; and (4) the alleged misrepresentations were all statements of future intent, which Plaintiffs cannot establish were false when made.

A. Plaintiff Chabria’s Background in the Microwave Ceramics Industry

In or around 1964, Plaintiff Chabria started Xtalonix, a microwave ceramics business, in Columbus, Ohio. He sold the business to Harshaw Chemical in 1966, but stayed on as manager. The business changed hands a number of times, and Chabria eventually repurchased it in the early 1980s. In April 1996, Xtalonix attempted to expand and moved its operations to Maryland, transferring most of the equipment previously located in Columbus. The attempted expansion failed because Xtalonix “racked up debt by spending money faster than it could bring it in . . . .” (Chabria Depo. at 200:3-19). To avoid bankruptcy, Xtalonix was forced to enter into receivership. Trak Ceramics purchased the assets of Xtalonix’s business in 1997 for $ 1,760,000.

and

The facts of Hasbro v. Child’s Play, supra, are analogous in that the defendant in Hasbro also failed to take all of the steps it had originally anticipated when it entered into the agreement at issue. Hasbro obtained an exclusive license to manufacture and sell Child’s Play’s line of ninja action figures. During negotiations, Hasbro represented that it anticipated spending $ 2-5 million on television advertising. 1991 U.S. Dist. LEXIS 10794, 1991 WL 156282 at *2. Notwithstanding Hasbro’s significant efforts, it was unable to sell the action figures at levels it had anticipated and ultimately determined that the number of action figures ordered by its customers did not warrant television advertising. Hasbro therefore abandoned its plan to launch a television advertising campaign. 1991 U.S. Dist. LEXIS 10794, [WL] at *3-4. Child’s Play sued and Hasbro moved for summary judgment. The Hasbro court, in its opinion granting summary judgment, took note of Hasbro’s description of its efforts to exploit the line, and observed that Child’s Play had failed to come forward in response with any evidence that such efforts were insufficient. 1991 U.S. Dist. LEXIS 10794, [WL] at *5. The Hasbro court also noted that if a best efforts duty were to be implied, “it, of course, would not have required Hasbro slavishly to devote its efforts to marketing the Line.” 1991 U.S. Dist. LEXIS 10794, [WL] at *6.

In the instant case, Defendant EDO purchased and operated the Zenix product line for 3.5 years, investing in excess of $ 3 million after purchasing. The evidence shows that the Zenix product line continued to lose money and sales were not as expected. As the Hasbro court noted, implication of a best efforts duty does not require slavish devotion to the marketing of the line, especially in light of the continued and unanticipated monetary losses and low sales. Reasonable efforts does not require every possible effort, to the detriment of one’s own interests or finances. See e.g., Scott-Macon Securities, Inc. v. Zoltek Companies, 2005 U.S. Dist. LEXIS 9034, 2005 WL 1138476, *14 (S.D.N.Y. 2005) (under a reasonable efforts clause “a party is entitled to give ‘reasonable consideration to its own interests’ in determining an appropriate course of action to reach the desired result”), aff’d in relevant part, vacated in part, and reversed in part, 2007 U.S. App. LEXIS 23356, 2007 WL 2914873 (2d Cir. 2007). See also Johns v. Rexam , 2005 WL 1308319, at *10 (M.D. Ga. 2005) (“[T]he implied covenant of good faith does not require a party to a contract to exert the maximum possible effort. Indeed, a party can in good faith exert no effort at all, if it can show that a business decision to exert no effort was reasonable under the circumstances.”). Accordingly, this Court, like the Hasbro court, holds that Defendant EDO’s failure to implement Phase III of its pre-acquisition plan does not constitute evidence creating a material question of fact with respect to the issue of whether Defendant EDO took reasonable efforts to market the Zenix product line.

Therefore

In conclusion, the Court finds that Defendant EDO has presented evidence that they used reasonable efforts to market the Zenix Product. Plaintiffs unsupported allegations and hindsight complaints about EDO’s operation of the Zenix business fail to raise triable issues of fact in response to EDO’s showing. Thus, the undisputed facts establish that the question of whether Defendant EDO used reasonable efforts is appropriately resolved in Defendant EDO’s favor on summary judgment.

And also, as regards “Fraud in the Inducement Claim (Count Four)”:

Accordingly, this Court finds that Plaintiffs’ fraud in the inducement claim is time-barred, and Plaintiffs have failed to meet their burden of proving that the alleged fraud was not discovered and could not have been discovered until within two years of the commencement of the lawsuit. Therefore, the Court grants Defendant EDO’s motion for summary judgment with respect to Plaintiffs’ Count Four Fraud in the Inducement claim.

As an alternative basis for summary judgment on Plaintiffs’ fraud in the inducement claim, Defendant EDO argues that the claim should be dismissed because it is duplicative of Plaintiffs’ breach of contract claim and because Plaintiffs have adduced no evidence from which a jury could reasonably find that EDO fraudulently induced Plaintiffs to enter into the APA. Having determined that Plaintiffs’ claims are barred by the applicable statute of limitations, however, the Court finds it unnecessary to address Defendant’s alternative arguments.

V. CONCLUSION

For all of the foregoing reasons, the Court GRANTS Defendant EDO’s Motion for Summary Judgment (Doc. 47).

The Clerk shall remove Document 47 from the Court’s pending motions list.

The Clerk shall remove this case from the Court’s pending cases list.

IT IS SO ORDERED.

/s/ George C. Smith
GEORGE C. SMITH, JUDGE

This opinion is about discovery in an infringement case involving POWERWHEELS, Dora the Explorer, Spider-Man, Strawberry Shortcake and Ninja – under the ‘Lil Quad and PowerQuad marks.

dora explorer powerquad spider man powerquad

MATTEL, INC.,
and FISHER-PRICE, INC., Plaintiffs,
v.
RAND INTERNATIONAL LEISURE PRODUCTS, LTD., Defendant.

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NEW YORK
06CV807A
2008 U.S. Dist. LEXIS 89439

Decided November 4, 2008, Opinion by: Honorable Hugh B. Scott, United States Magistrate Judge:

This is a trademark and copyright infringement and common law unfair competition action regarding toy ride-on quad vehicles. The plaintiffs claim trade dress infringement and copyright infringement of their “‘LIL QUAD” battery powered ride-on quad vehicles under their POWERWHEELS(R) brand, bearing the Nickelodeon channel characters Dora the Explorer and Diego. Plaintiffs allege that defendant’s “POWER QUAD” bearing the indicia of Marvel Comics’ Spider-Man infringes on their ‘LIL QUAD design and claims that defendant has been selling these infringing ‘LIL QUAD toys since 2006. (See Docket No. 29, Pls. Memo. at 2; see generally Docket No. 1, Compl.)

On October 30, 2007, plaintiffs served their Interrogatories and requests for production (id. at 3; Docket No. 29, Kane Decl. P 2, Exs. A (Interrogatories), B (requests for production)). After over three months (including repeated requests for a response), defendant served plaintiff with its discovery responses (Docket No. 29, Pls. Memo. at 3; Docket No. 29, Kane Decl. PP 3-4, 5, Exs. C, D, E (Interrogatory responses), F (document production responses)). On February 15, 2008, plaintiffs wrote to defendant about the deficiencies in defendant’s production, outlining several non-responsive Interrogatory responses and categories of documents not produced (id.; Docket No. 29, Kane Decl. P 6, Ex. G).

Defendant basically responded with information about the Spider-Man POWER QUAD. Plaintiffs allege that defendant infringes on their LIL QUAD mark with other toys (for example POWER QUAD toys with Strawberry Shortcake, Ninja, and Marvel Heroes trade dress) and defendant thus needs to supplement its production as to these other toys (see Docket No. 29, Kane Decl., Ex. G, at 1-3). Interrogatory Number 8 sought defendant to identify which part of the LIL QUAD design was functional or otherwise not protectable by copyrights, but defendant objected that it was premature since it had not examined plaintiffs’ products (Docket No. 29, Kane Decl., Ex. A, Interrog. No. 8; Docket No. 29, Kane Decl., Ex. G at 3-4). Plaintiffs sought documents regarding defendant’s distribution of the POWER QUAD toys, the costs to produce, documents regarding adverting and marketing of these toys, and communications with retailers about advertising and about this action (Docket No. 29, Kane Decl., Ex. G, at 4-5).

Plaintiff’s motions are granted in part and denied in part. The granted motions are about packaging materials and access to employees responsible for packaging materials.

This case is about the patent of a collapsible structure, specifically pop-up goals available for sale at Target. The producer of the goods is a United Arab Emerites based corporation called Ninja Corp.


Patent Category Corp.
v.
Target Corp. and Franklin Sports, Inc.

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
CV 06-7311 CAS (CWx); 567 F. Supp. 2d 1171

Honorable Christina Snyder, July 16, 2008, decided:

Plaintiff Patent Category Corp. (“plaintiff” or “PCC”) owns the rights to U.S. Patent No. 6,266,904 (“the ‘904 patent”) issued on July 31, 2001, and U.S. Patent No. 6,604,537 (“the ‘537 patent”), issued on August 12, 2003. On November 15, 2006, plaintiff filed the instant suit against defendants Target Corp. (“Target”) and Franklin Sports, Inc. (“Franklin”) alleging that defendants are infringing plaintiff’s patents. Defendant Franklin is a distributor of at least fifteen models of collapsible, spring-form soccer goals (“Pop-Up Goals”), which plaintiff alleges infringe its patents. [FN1] Franklin purchased these accused products from The Ninja Corp. UAE (“Ninja“). 2 Id. Defendant Target Corp. (“Target”) sells Pop-Up Goals to consumers pursuant to an agreement with Franklin.

=== Footnotes ===
FN1 At the hearing held herein, the parties provided the Court with two examples of the accused products. Exhibit 1, the Dora the Explorer Pop-Up Goal, is accused of infringing the ‘537 patent only. Exhibit 2 is accused of infringing both the ‘537 patent and the ‘904 patent. The Court will refer to these exhibits in deciding the issue of infringement, or non-infringement as the case may be.2 On March 9, 2007, Ninja, a corporation organized under the laws of the United Arab Emirates, filed suit against plaintiff in the United States District Court for the Southern District of Texas, seeking a declaration that its products do not infringe the ‘904 and ‘537 patents, and that these patents are invalid. The action was then transferred to the United States District Court for the Central District of California in September 2007, and assigned to this Court as a case related to the present action.


dora the explorer pop up goal target

Recall the connection of multicultural cartoons associated to this Ninja word. Here it is a UAE corporation, sending children’s toy products for consumer distribution at Target. It is perhaps merely a coincidental connection but in the context of this rhetorical study of words, it is a notable that there is this seemingly unnecessary connection of the Dora character. Recall Teenage Mutant Ninja Turtles role in Federal Court ruling the general idea of multicultural cartoons was not protected by copyright.

This actual patent case about the Pop Up Goals remained unresolved at the end of the Courts opinion. The Court denied all the summary judgment motions because of factual issues about obviousness; whether there is a “continuous frame member” and the effect of a prior art on “flexible frame”.

Patent ‘537 is for “Collapsible structures” (US Patent 6,604,537)
Patent ‘904 is for “Collapsible structures supported on a pole ” (US Patent 6,266,904)

I dunno. They look obvious. Ha just kidding. I have no idea.

This 2005 tax case involved three movies with Ninja in the title. It is also the only federal case with both “ninja” and “zombies” in the opinion – See ZombieLaw: “Astro Zombies in Tax Law” for a prior writeup of this case: Santa Monica Films v. IRS.

SANTA MONICA PICTURES, LLC, PERRY LERNER, TAX MATTERS PARTNER, * Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent CORONA FILM FINANCE FUND, LLC, PERRY LERNER, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Nos. 6163-03, 6164-03
UNITED STATES TAX COURT
T.C. Memo 2005-104; 2005 Tax Ct. Memo LEXIS 104; 89 T.C.M. (CCH) 1157

Opinion by Judge Michael Thornton, filed May 11, 2005

The following film titles and development projects were listed in Schedule 1.6(b) of the exchange and contribution agreement as assets of SMHC:

57. Ninja Hunt

58. Ninja Showdown

59. Ninja Squad



All three are listed by the Court as 1987 movies (though IMDB suggests 1986). The Opinion also reveals that they were originally in the “EBD film library”. They were then sold. The Court notes difficulties in determining the market price of movies because of issues finding comparable films. For comparison noting the movie “Teenage Mutant Ninja Turtles”.

in 1993, New Line sold 200 features to Turner Broadcasting for $ 500 million ($ 2.5 million per title); … in 1997, Orion/Samuel Goldwyn sold 2,000 features to MGM for $ 573 million ($ 286,500 per title).

[footnote #135]:
The film library that New Line sold to Turner Broadcasting included the film titles: “Teenage Mutant Ninja Turtles“, “Misery”, and “City Slickers”. The film library that Orion/Samuel Goldwyn sold to MGM included the Academy Award-winning film titles: “Amadeus”, “Platoon”, “Dances With Wolves”, and “The Silence of the Lambs”.

The point is that these movies are not particularly comparable. The transactions involved shifted the losses from failed movies and were deemed to be a tax shelter. The Court here upholds the IRS ruling over the studio’s arguments.

This is, of course, not the first NinjaLaw Federal case to mention the Teenage Mutant Ninja Turtles, nor to mention them even though they are not necessarily relevant to the particularities of the case. Here in 2005, the Turtles movie is listed among a number of modern classics and blockbuster successes.

This 2004 case is about copyright of the design elements of miniature motorcycles.

KIKKER 5150 and KELLY KIKKERT, Plaintiffs, v. KIKKER 5150 USA, LLC, et al., Defendants.
No. C 03-05515 SI

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
2004 U.S. Dist. LEXIS 16859; Copy. L. Rep. (CCH) P28,895

Decided – August 13, 2004
Opinion by district Judge Susan Illston:

This case concerns copyrights in miniature working motorcycles. Plaintiffs Kikker 5150 and Kelly Kikkert filed their complaint on December 8, 2003 against Kikker 5150 USA, Mark Gholson, and others (defendants or counterclaimants).

At issue is the design element of miniature motorcycles. Not toys, miniature-sized, functional motor vehicles.

defendants argue that “a Formula One race car is no more copyrightable than a Ford Escort and plaintiffs’ miniature motorcycles are no more copyrightable than a Harley-Davidson Heritage Softail or a Kawasaki Ninja.” As useful articles, defendants argue, plaintiffs’ miniature motorcycles are precluded from copyright protection.

The Court mostly agrees:

The Court finds that the miniature motorcycles are useful articles and therefore not eligible for copyright protection as such.

But,

The Court also finds, however, for the reasons discussed below, that there are genuine issues of fact concerning whether various “design elements” of the motorcycles “can be identified separately and are capable of existing independently as a work of art.”

The Court cites Fabrica Inc. v. El Dorado Corp., 697 F2d 890, 893 (9th Cir. 1983) which is a case about competing carpet companies and the potentially unfair use of a similar sales system, though the functional elements of are not copyrightable some aesthetic aspects may still be protected.

Therefore,

For this reason, defendant’s motion for summary judgment must be denied.

Summarizing:

Defendants argue that the motorcycles at issue are not copyrightable and ask the Court to issue a preliminary injunction or an order to show cause why a preliminary injunction should not issue. The Court finds that the motorcycles themselves are not copyrightable, since the motorcycles are useful articles and are not subject to copyright protection. However, since the Certificates of Copyright described the nature of the works as “three-dimensional, sculptural features and design elements of miniature motorcycles,” and since the Court cannot say as a matter of law that the design elements of the motorcycles are not severable and original, the Court declines to grant the motion to summarily adjudicate the copyrights’ invalidity.

No restraining orders where issued and so the case continued, presumably to be settled because I see no subsequent published case history.

Here the Court is quoting the defendant’s reply brief to mention the Ford Escort, the Harley-Davidson Heritage Softail and the Kawasaki Ninja. And we’ve seen mentions of the Kawasaki Ninja already in the NinjaLaw Court record . The Heritage Softail appears is four Federal Opinions and the Kikker 5150 case is its second appearance, the prior also being an intellectual property case. In contrast this is the first use of the Kawasaki Ninja in an IP case and the prior cases were all mentions of the actual bike. And the Ford Escort appears in over 300 cases beginning in the early 80s.

Note: here’s a warning about the dangers of Kikker bikes

Ultimately, this Kikker 5150 case stands for principles of copyright in toys – that is, that toys are copyrightable as to the aspects that are not part of the usable functions specifically. So it is fitting that “ninja” is mentioned here, because as we know from ninja law, “ninja” is strongly related to toys.

This 1997 Federal Court opinion involved multiple major Hollywood movie companies suing a video rental company for copyright infringement. The movie “3 Ninjas Knuckle Up”, copyright held by Columbia Tristar, is listed as involved in the litigation.

video city

COLUMBIA PICTURES INDUSTRIES, INC.; BUENA VISTA PICTURES DISTRIBUTION, INC.; DISNEY ENTERPRISES, INC.; METRO-GOLDWYN-MAYER PICTURES, INC.; PARAMOUNT PICTURES CORPORATION; TRISTAR PICTURES, INC.; TWENTIETH CENTURY FOX FILM CORPORATION; UNITED ARTISTS PICTURES, INC.; UNIVERSAL CITY STUDIOS, INC.; WARNER BROS., A Division of TIME WARNER ENTERTAINMENT COMPANY, L.P.; COLUMBIA TRISTAR HOME VIDEO; LIVE HOME VIDEO, INC. (LIVE AMERICA INC.); TWENTIETH CENTURY FOX HOME ENTERTAINMENT, INC., Plaintiffs,
v.
DOMINGO LANDA, individually and d/b/a VIDEO CITY and MOVIE TRAK; JASON FRANK, individually and d/b/a TAKE TWO VIDEO; and SYED AHMED, individually and d/b/a VIDEO CITY, Defendants.


Columbia v. Landa
Case No. 96-1340
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS
974 F. Supp. 1

Decided – June 26, 1997

Judge Joe Billy McDade writing for the Court explains:

Plaintiffs, numerous motion picture producers and distributors, filed this action against Defendants, three movie rental store owners, on July 11, 1996. The named Defendants include Domingo Landa, d/b/a VIDEO CITY and MOVIE TRAK, Jason Frank, d/b/a TAKE TWO VIDEO, and Syed Ahmed, d/b/a VIDEO CITY. 1 Plaintiffs Amended Complaint [Doc. # 33] alleges that Defendants illegally duplicated and distributed motion picture videocassettes in violation of 17 U.S.C. § 106 (Copyright Infringement) and 5 U.S.C. § 1125(a) (Trademark Infringement).

An extensive array of movies videocassettes were seized from the defendants, and “3 Ninjas Knuckle Up” appears first in the list because the number three is first alphabetically.

The Court, granting Plaintiff’s motion for Summary Judgment, finds that there was copying and orders damages and permanent injunction relief. Interesting, despite finding that Defendant’s “illegal activity” was “pervasive” and with “total disregard for copyright law”, there is no finding as to willful infringement. Such a finding could have increased the liability tremendously but:

In the instant action, Plaintiffs do not seek a finding that the infringing acts of Defendants were willful. (See Doc. # 61 at p. 8). Rather, Plaintiffs insist that an award against Landa and Frank in the amount of $ 1,000 per infringement is just and proper.

The Court agrees, and so with 207 infringing video cassettes, the defendants owe $207.000. And in 1997, I am sure that sounded like a huge award for a copyright case.

But contrast with the future (err. the present), the more recent cases, where similar Plaintiffs have taken a more aggressive position on digital content. For example see Sony BMG v. Tenenbaum and of course, the prosecution of NinjaVideo.

In this 1996 case Topps sued to protect its product, the Ring Pop, from competition. One of the reasons it won was because of the substantial advertising to non-sophisticated purchasers (kids), by means of cartoons. And so of course again, appearing somewhat unnecessarily in a Federal Court opinion, the Teenage Mutant Ninja Turtles.

ring pops

THE TOPPS COMPANY, INC., Plaintiff, – against – GERRIT J. VERBURG CO. and B.I.P. HOLLAND B.V., Defendants.
96 Civ. 7302 (RWS)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
1996 U.S. Dist. LEXIS 18556; 41 U.S.P.Q.2D (BNA) 1412

December 12, 1996, Decided

The Court explains:

During the mid-1970’s, Topps developed the product for which it now seeks protection, the Ring Pop lollipop. It is comprised of a candy portion in the shape of a solitaire jewel, supported by a plastic base portion in the form of a stylized, or “play,” ring. The Ring Pop is held by inserting a finger through the ring, and the candy is then licked.

In 1975, Topps filed patent applications in the U.S. Patent Office on the “inventive” ornamental design for a diamond gemstone ring candy and was awarded two patents, Nos. Des. 242,646 and Des. 242,645 on December 7, 1976. These patents expired on December 7, 1990, but reference to them continues to appear on the Topps’ packaging.

On June 1, 1976 a trademark was registered for Ring Pop by Topps and on July 26, 1994 a trademark was issued consisting of “a candy portion in the configuration of a jewel mounted on a stylized ring.”

The Court continues explaining the high volume of sales and about

Topps’ advertisements on broadcast television during the past ten years of the Ring Pop emphasized the configuration of the product during children’s programming on well-known, popular programs, such as Tom & Jerry Cartoons, Teenage Mutant Ninja Turtles, and Power Rangers, shows specifically aimed at the children for whom the Ring Pop candies were conceived. The buyers of these products are not sophisticated purchasers.

Because the Court will rely on a likelihood of confusion analysis for the trademark infringement claims, the fact that the competing candy products “are expressly intended to be consumed by children” is important. The Court also notes other deceptive aspects of defendant’s packaging and that it “fails to meet the requirements set by regulations” of the US FDA as to nutritional labeling.

Though the competing product has been available in Hong Kong for as long or longer than the Topps Ring Pop product, and despite the expiration of Topps patent, trademark still protects the Ring Pop.

There is no inherent conflict between trademark rights under the Lanham Act and patent rights. Because the Lanham Act and the patent statute are both federal statutes, there is no preemption. A product can be both patentable and protected by trademark rights as long as the particular design protected does not have a utilitarian function.

Therefore, deciding the Ring Pop is not a functional design, the Court ordered a preliminary injunction. And in a subsequent motion decision, (April 28, 1997, 961 F.Supp. 88) the claims against defendant-manufacturer from Hong Kong were dismissed for lack of personal jurisdiction, leaving only the claim against the US distributor (which I assume was probably settled out of court..?).

Meanwhile, it seems a new relative of this case is coming back to the Courts. A false marketing claim was filed in May 2011, alleging Topps is violating marketing laws by continuing to list the patent numbers on Ring Pop packaging after the patents expired. See “Ring Pops: A Fun Way to Teach Your Kids about False Patent Marking” posted by Travis Burchart, Jun 2011 The complaint alleges that each Ring Pop sold violates marketing laws and if the Court agrees, Topps will be liable for a LOT of damages.

Finally, recall, this is not the first time we at NinjaLaw have seen the turtles mentioned unnecessarily and also not the first time mentioned with the Power Rangers. Last time we saw the Turtles team up with the Power Rangers in Federal Court, they served to exemplify the business model of cartoon merchandising. Here they help protect their sponsor Topps (baseball cards and candy and what else?), again implicating the susceptibility of kids to product marketing.


tmnt power rangers animation handshake
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Previous NinjaLaw cases about the Ninja Turtles:

First mention of TMNT in Federal Courts
Sun Dun v Coca Cola – August 15, 1991

Teenage Mutant Ninja Turtles again – Retromutagen Ooze
Monarch v. Ritam – June 12, 1992

Ninja Turtles and Hollywood’s Horizontal Conspiracy
El Cajon v. AMC – October 23, 1992

First mention of Ninja Turtles in F.Ct. where it’s actually about them
Mirage Studios v. Weng et.al. – April 29, 1994

Burger King Kids Club with Mutant Ninja Turtles – multi-ethnic path to Glee and Celebrity Apprentice
CK Company v. Burger King – September 29, 1994

Ninja Turtles again, this time with FASA’s BattleTech, ExoSquad, RoboTech and Playmates
Fasa v. Playmates – June 19, 1995
(WITH POWER RANGERS)

Spam vs Spa’am with Splinter from TMNT and Pumbaa from Lion King
Hormel Foods v. Jim Henson Productions – September 22, 1995