Madigan, Melissa

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DePaul Journal of Art, Technology & Intellectual Property Law Volume 3 Issue 2 Spring 1993 Article 9 Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 150641 (S.D.N.Y. June 15, 1992) Melissa Madigan Follow this and additional works at: https://via.library.depaul.edu/jatip Recommended Citation Melissa Madigan, Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 150641 (S.D.N.Y. June 15, 1992), 3 DePaul J. Art, Tech. & Intell. Prop. L. 83 (1993) Available at: https://via.library.depaul.edu/jatip/vol3/iss2/9 This Case Summaries is brought to you for free and open access by the College of Law at Via Sapientiae. It has been accepted for inclusion in DePaul Journal of Art, Technology & Intellectual Property Law by an authorized editor of Via Sapientiae. For more information, please contact digitalservices@depaul.edu. tual compilations. However, the court continued itsanalysis because the Copyright Act categorizes mapsnot as factual compilations but as "pictorial, graphic,and sculptural works" and the Fifth Circuit agreed thatmaps do, in fact, have an inherent pictorial or photo-graphic nature. Again, only minimal creativity wasrequired to achieve protection.' The court ruledMason's pictorial portrayals of the area were productsof his own skill and judgement and were entitled tocopyright protection as pictorial works as well. 9The final issue for the court was whether Masoncould receive statutory damages for acts of infringe-ment of the same work committed after copyright reg-istration but which were part of a series of infringe-ments that commenced prior to registration.According to section 412 of the Copyright Act, statuto-ry damages cannot be awarded for any infringementwhich begins after the first publication but before thecopyright is registered.,' However, the court foundsection 412 unclear as it applied to a series ofinfringements against the same work; either each actof infringement was to be treated separately or theseries was to be treated as a single infringing act3 1The District Court chose the latter interpretation anddenied statutory damages for all infringements of awork if one of those infringements commenced priorto registration.' The Fifth Circuit agreed, citing thelegislative history2 and the purpose2 of section 412 assupport.In arriving at this conclusion, the court alsolooked to section 50425 which provides for statutorydamages as a form of relief. According to the court,under section 504(c)(1) the number of "awards" ofstatutory damages a plaintiff can recover depends onthe number of works infringed and the number ofinfringers, not on the number of infringements ofthose works."5 Thus, when the same defendantinfringes the same work many times the series istreated as a whole. Mason registered one map in 1968and the other 232 maps in 1987. Since, the defen-dant's alleged acts of infringement began before 1987,the court ruled Mason could recover statutory dam-ages only for infringements of the original map heregistered in 1968.27CONCLUSIONThe Court of Appeals for the Fifth Circuit makesclear that the Copyright Act protects a map as an orig-inal work when preparation involves a certainamount of discretion and judgement. Thus, a suffi-ciently original map is protectable either as a factualcompilation or as a "pictorial work." However, thecourt emphasized that registration of a copyright isessential, as it preserves the copyright owner's rightsto seek statutory damages for infringement.Ann E. Dustman1. 17 U.S.C.A. § 106 (West Supp. 1992).2. 17 U.S.C. § 504-505 (1988).3. Mason v. Montgomery Data, Inc., 967 F.2d 135, 136 (5thCir. 1992).4. See Id. at 143.5. 17 U.S.C. § 102(a) (1988).6. Mason v. Montgomery Data, Inc,. 967 F.2d at 138(emphasis in original).7. Id.8. Id. at 138-39.9. Id. at 138 (citing Toro Co. v. R. & R. Products Co., 787F.2d 1208, 1212 (8th Cir. 1986)).10. Mason v. Montgomery Data, Inc., 967 F.2d at 138.11. Id.12. Id.; See also Id. at 140 n.7 (noting that implicit in thisdetermination is a consideration of originality of the expressionbecause, if "original", then it is clear the idea can, in fact, beexpressed in a variety of ways).13. Id. at 140.14. Id. at 141 (citing Feist Publications Inc. v. Rural Tel.Serv. Co., 111 S.Ct. 1282, 1287 (1991)).15. Id. (citing H.R. REP. NO. 1476, 94th Cong., 2d Sess. 51(1976)).16. Id. at 142 (citing Feist Publications Inc., v. Rural Tel.Serv. Co.,, 111 S. Ct. at 1287).17. Id. at 141; See also 17 U.S.C. § 101 (1988) (defining"compilation").18. Id. at 142.19. Id.20. 17 U.S.C. 5 412 (1988).21. See Mason v. Montgomery Data, Inc., 967 F.2d at 143.22. Id. at 143.23. The House Report explained that section 412 of theCopyright Act denies statutory damages where infringement takesplace before registration, indicating the series should be treated asa whole. Mason v. Montgomery Data, Inc., 967 F.2d at 143 (citingH.R. REP. No. 1476 at 158 (emphasis added)).24. Section 412 of the Copyright Act was intended toencourage copyright registration since this was the way an authorcould preserve his right to recover statutory damages. Mason v.Montgomery Data, Inc., 967 F.2d at 143.25. Section 504 of the Copyright Act provides in pertinentpart: "The copyright owner may elect... to recover an award ofstatutory damages for all infringements involved in the action withrespect to any one work, for which any one infringer is liable indi-vidually." 17 U.S.C. § 504(c)(1) (1988).26. Mason v. Montgomery Data, Inc., 967 F.2d at 143.27. Id. at 144.Monarch Licensing, Ltd. v.Ritam International, Ltd.1992 WL 150641 (S.D.N. Y June 15,1992).INTRODUCTIONThe plaintiff, Monarch Licensing Ltd. ("Monarch"),sought a preliminary injunction against its formerlicensee, Ritam International Ltd. ("Ritam"), in connec-tion with a toy, to which Monarch had been grantedexclusive rights by its French inventor. The actionwas brought under, inter alia, Section 43(a) of theLanham Act for false designation of origin, under theNew York common law of trademark infringementand unfair competition, and breach of contract'. TheSpring, 1993 83 1Madigan: Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 1506Published by Via Sapientiae, 2016U.S. District Court for the Southern District of NewYork denied Monarch's motion, stating that Monarchfailed to show likelihood of success on the merits.FACTSMonarch is a New York corporation in the busi-ness of licensing toys. Ritam is an Iowa corporationwhich develops and markets toys. Monarch had beengranted exclusive rights to license a new toy com-pound by its French inventor. The compound was asoft, stretchable, shapable, putty-like substance whichcould be rolled into a ball and bounced. In February1991, Ritam entered into an exclusive licensing agree-ment with Monarch to market the compound, knownas "Ooz Ball". The agreement provided that copyrightand/or trademark rights in the name "Ooz Ball" maybe either owned or controlled by the licensor,Monarch; that the licensee, Ritam, owned the copy-right and/or trademark rights in the name "Ooz Ball"during the term of the agreement; and that Ritamwould assign these rights to Monarch upon termina-tion of the license. Additionally, all copyrights in theOoz Ball, its packaging and advertising were tobelong to Ritam and upon termination of the license,all rights, title and interest were to be assigned toMonarch.In February 1991, Ritam introduced the Ooz Ballto the U.S. toy market. The name "Ooz Ball" was con-spicuously displayed at the top of the blister card.The slogan "The Pod of Intergalactic Ooze", alongwith the tag lines "String It", "Stretch It", "Web It", and"Bounce It" also appeared on the packaging. A copy-right notice in Ritam's name and the statement "OozTM Ball and The Pod of Intergalactic Ooze TM aretrademarks of Ritam International, Ltd.," were locatedon the bottom of the blister card.Monarch terminated its agreement with Ritam onDecember 6, 1991 asserting that Ritam failed toaccount for royalties to Monarch. After the termina-tion, Ritam did not assign the trademarks and copy-rights back to Monarch as called for in the agreement.Ritam contends that Monarch breached the exclu-sivity provision of their agreement by authorizing acompetitor to market the compound under anothername. Additionally, Ritam states that much of thecompound shipped to it by Monarch's manufacturerwas defective, thus pursuant to Paragraph 19(e)2 ofthe agreement, Ritam sought and contracted withanother manufacturer to provide it with an ooze-typecompound, which Ritam subsequently in 1992 mar-keted under the name "Ooze". For these reasonsRitam took the position that it was not obliged toassign the trademarks and copyrights back toMonarch because the termination of the agreementwas not a "normal termination". In marketing its"Ooze" product, Ritam utilized the same tag lineswhich had appeared on the "Ooz Ball" blister card.Monarch sought a preliminary injunction for falsedesignation of origin under the Lanham Act, NewYork common law for trademark infringement andunfair competition, and for breach of contract.LEGAL ANALYSISFirst, Monarch contended that it, and not Ritam,was the owner of the copyrights and trademarks asso-ciated with the Ooz Ball. Second, Monarch assertedthat trademark rights attach to the mark "Ooz Ball",and thus, Ritam infringed those rights with its newmark "Ooze". Third, Monarch claimed infringement asto trade dress asserting that Ritam's use of the sametag lines on its "Ooze" product packaging as werefound on the Ooz Ball packaging constituted infringe-ment. Because Monarch sought an injunction, thecourt analyzed the merits of the caseAIn its analysis of Monarch's likelihood of successon the merits, the court first addressed the issue ofownership of the trade name "Ooz Ball". Ownershipof the name in this case stemmed from the contractu-al agreement between Monarch and Ritam. SinceRitam had not assigned the name "Ooz Ball" back toMonarch as called for in the contract, the court decid-ed that Ritam was still the legal owner of the name. Itdid not, however, use Ritam's refusal to assign themark to Monarch to deny the preliminary injunction,thus it did not place form over substance. The courtsimply found it unnecessary to resolve the ownershipissue since Monarch's position contained so manyother defects.Next, the court addressed the strength of "OozBall" as a trademark. In its analysis, it looked first atthe mark's protectibility. Distinctiveness is ordinarilyrequired to establish protectible trademark rights.' Ageneric mark is not protected under such rights whilea descriptive mark, as opposed to a distinctive mark,is only protectible if a secondary meaning is shown.'The court found that a strong argument could bemade that the "Ooz Ball" mark, when used in connec-tion with the compound was generic and therefore,unprotectible. The "Ooz Ball" mark was used to des-ignate a product which was described by thosewords. The product was shaped like a ball and wasmeant to be used as a ball. The material from which itwas made was ooze, "a thick viscous liquid whichflows slowly".6 The package described the product asa pod of "Intergalactic Ooze". The instructiondescribed how to restore the toy's "ooz-ability" incase it dried up. Additionally, other manufacturers ofsimilar toys used the word "ooze" as part of the markof their products. The court found that, at best, thetrademark sat "at the low end of the descriptive cate-"1 7gory".A weak descriptive mark will be given less pro-tection against use of similar marks by others in thesame areas of trade." Where the similarity lies in theuse of a descriptive term and is only part of the mark,there may be no infringement.9 The less distinctive84 Journal of Art & Entertainment Law 2DePaul Journal of Art, Technology & Intellectual Property Law, Vol. 3, Iss. 2 [2016], Art. 9https://via.library.depaul.edu/jatip/vol3/iss2/9and more descriptive a mark, the less likely it is thatconsumer confusion will result from the use of amark that is similar with small differences."0 The courtexplained that the only similarity between Monarch's"Ooz Ball" and Ritam's "Ooze" occurs as to the wordwhich describes the product. The similarity was notenough to be considered infringement upon "OozBall" because it was such a weak descriptive markand consumer confusion was unlikely to result.Weak descriptive marks are often given a narrowscope of trademark protection for reasons of publicpolicy. "The trademark law accords monopoly rightsin distinctive designations to permit traders in com-merce to establish valuable reputations (goodwill) fortheir products or services through reliable perfor-mance, and to permit the public to rely on past expe-rience with satisfactory and unsatisfactory marks toguide their future custom."" It is difficult to justify thegranting of monopoly rights to descriptive marks, andthus exclude others from access to those descriptivemarks, especially when there is an unlimited numberof distinctive marks available for a commercial entityto use to identify itself.'2 The court next addressedMonarch's claim of trade dress infringement. Accord-ing to the recent Second Circuit decision inLaureyssens v. Idea Group, Inc., to justify enforce-ment of trademark rights in trade dress under theLanham Act, a secondary meaning must be shown intrade dress.'0 Trade dress obtains secondary meaning"when the purchasing public associates its designwith a single producer rather than simply with theproduct"." The acquisition of a secondary meaningcan be determined by looking to such factors aslength and exclusivity of trade dress, advertisingexpenditures, sales success, studies establishing con-sumer recognition, and unsolicited media coverage."On this issue, the court stated only that Monarch hadmade no showing of secondary meaning in its tradedress.Secondary meaning can also be inferred from thefact of copying. 6 When copying a trade dress, it isinferred that the second user perceives a commercialvalue in doing so.' 7 This perceived advantage flowsfrom consumer recognition.'8 On this issue, the courtpointed out that there was no copying on the part ofRitam, because Ritam simply continued to use certainaspects of trade dress that it had previously usedwhen it had been marketing the "Ooz Ball".Accordingly, without secondary meaning, Monarchcould not prevail on its claim of trade dress infringe-ment.Even if secondary meaning had been shown, thecourt questioned the protectibility of the trade dress:the use of descriptive tag lines placed on the packag-ing which describes the features of the product. Itquestioned whether tag lines which were descriptiveof the product were protectible, since ordinarily, tradedress can be protectible only if it is distinctive.' 9Further, under the Lanham Act, descriptive tag linesused adjectivally and not used as a trademark, mostlikely fall within the category of "fair use".- The taglines "String It", "Stretch It", "Web It", and "Bounce It"described the features of the product, lacked distinc-tiveness, and likely would be considered "fair use"under the Lanham Act, thus, the court found theywere not protectible and could not be infringed.Additionally, the court questioned Monarch'sclaim of ownership rights in the trade dress. Theagreement between Monarch and Ritam asserted noclaim by Monarch in any trade dress which might bedeveloped by Ritam. Neither did it oblige Ritam toassign trade dress to Monarch upon termination of theagreement.CONCLUSIONIn denying Monarch's motion for a preliminaryinjunction, the court suggested that not only hadMonarch failed to show likelihood of success on themerits, but that Monarch's position was so substan-tively weak, that it was unlikely to succeed on themerits.Melissa Madigan1. Monarch also brought the action under New YorkGeneral Business Law sections 349 and 350 for deceptive acts andpractices and false advertising; and for wrongful disclosure and useof confidential information. Ritam counterclaimed for breach ofcontract, breach of the duty of good faith and fair dealing, commonlaw unfair competition, and unjust enrichment. In its disposition ofthe case, the court did not address any of these issues. MonarchLicensing, Ltd. v. Ritam International Ltd., Inc., et. al., 1992 WL150641, at *1 (S.D.N.Y. June 15, 1992).2. Paragraph 19(c) states that "if Licensor is for any reasonunable to make available to Licensee such supplies of the licensedProperty as may be ordered by Licensee from time to time, theLicensor shall permit Licensee to enter into such arrangements asLicensee shall think fit for Licensees own direct manufacture of theLicensed Property accordingly." Id. at "9.3. In the Second Circuit, a party seeking a preliminaryinjunction must show "irreparable harm, and either 1) a likelihoodof success on the merits, or 2) sufficiently serious questions goingto the merits to make them a fair ground for litigation and a bal-ance of hardships tipping decidedly in the moving party's favor. Id.at "3. The court found that, even assuming irreparable harm,Monarch was not entitled to a preliminary injunction because 1)Monarch failed to show likelihood of success on the merits, 2) itfound Monarch's showing of questions going to the merits not suf-ficiently serious to make them fair ground for litigation, and 3)Monarch failed to show that the balance of hardships tipped in itsfavor, Id. at *8-9.4. Id. at *5.5. Id.6. Although Monarch dropped the silent "e" from ooze,such a spelling change which does not affect pronunciation willnot normally save a generic mark. Id.7. Id.8. id. at *6.9. Id.10. Id.11. Id. at "7.12. Id.13. Id. at *7 (citing Laureyssens v. Idea Group, Inc., Nos.91-7869, -7917, (2d Cir. May 15, 1992)). However, the SupremeSpring, 1993 85 3Madigan: Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 1506Published by Via Sapientiae, 2016

Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 150641 (S.D.N.Y. June 15, 1992)

https://via.library.depaul.edu/cgi/viewcontent.cgi?article=1487&context=jatip

Monarch Licensing, Ltd. v. Ritam International, Ltd. 1992 WL 150641 (S.D.N.Y. June 15, 1992)

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