Wildlife Express Corporation v. Carol Wright Sales, Incorporated

Citations: 18 F.3d 502; 30 U.S.P.Q. 2d (BNA) 1140; 1994 U.S. App. LEXIS 4480; 1994 WL 74344Docket: 92-3274

Court: Court of Appeals for the Seventh Circuit; March 11, 1994; Federal Appellate Court

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Wildlife Express Corporation filed a lawsuit against Carol Wright Sales, Inc. for copyright infringement related to various children's duffle bags designed with animal heads and tails. The district court, with a magistrate judge presiding, found that Carol Wright had willfully or recklessly infringed Wildlife's copyrights on the sculptured bags and awarded $50,000 in statutory damages for each infringement. Carol Wright appealed the decision.

Wildlife, an Indiana corporation, creates children's duffle bags named "Critters in a Carrier," which feature soft sculptures resembling animals. Carol Wright, a Delaware corporation, marketed similar bags called "Precious Pet Duffle Bags." The infringement claim arose after Wildlife exhibited its products at a toy fair, where a representative from Taiwan showed interest in manufacturing them. Subsequent to this, Carol Wright began selling their bags after sourcing them from a manufacturer associated with the Taiwanese representative.

Wildlife was notified in 1988 by the U.S. Customs Service that Carol Wright's panda duffle bags infringed its copyright. Although the notice was later canceled due to Wildlife's failure to post a bond, Wildlife formally claimed copyright infringement in February 1989. Carol Wright denied the infringement but offered to cease sales once its inventory ran out. Wildlife subsequently filed suit in September 1989. The appellate court upheld the district court's judgment.

The district court established that to prove copyright infringement, a plaintiff must demonstrate ownership of a valid copyright and that the defendant copied the work. Wildlife was found to own valid copyright registrations for certain sculptural works, namely the bear, duck, and elephant, distinct from the utilitarian aspects of the duffle bag. The court determined that Carol Wright had access to the copyrighted work, and substantial similarity was established through a detailed comparison of the products, noting the near identical nature of the disassembled pattern pieces. The court concluded that an ordinary observer would find the aesthetic appeal of the two duffle bags identical, leading to the finding of unlawful appropriation.

Regarding damages, the district court found the plaintiff's actual damages too speculative but awarded enhanced statutory damages due to Carol Wright's willful infringement, determined by their failure to investigate the proprietary status of imported merchandise and their actions after receiving a Customs notice. Damages were set at $50,000 for each of the three copyright infringements.

Carol Wright contested the court's findings of substantial similarity and willful infringement. The review process involves examining the district court's findings for clear error and its legal conclusions de novo. The initial requirement for a copyright infringement claim specifies that the plaintiff must show ownership of a valid copyright and copying of original elements, with the validity of Wildlife's copyrights not being challenged in this case. A certificate of registration serves as prima facie evidence of a copyright's validity.

Protection is sought for the specific expression of animal heads and tails on duffle bags, rather than the broader concept of animal heads on such bags. This aligns with the Copyright Act's aim to promote arts by ensuring authors control their original expressions while allowing others to build upon ideas. The Act protects the expression of ideas but does not extend protection to the ideas themselves, as noted in cases such as Erickson v. Trinity Theatre and Harper & Row v. Nation Enterprises. Original expressions in creative works, including video games and sculptures, must be demonstrated to prove copyright infringement, requiring a showing of substantial similarity in the expression rather than the underlying idea. For example, in the context of a jeweled bee pin, if the design does not contribute new expression, copying it may not constitute infringement. The degree of protection varies with the complexity of the expression, with more intricate artistic works receiving greater protection. A copyright owner is safeguarded against unauthorized copying, and infringement may be inferred if the defendant had access to the original work and the accused work shows substantial similarity. However, a plaintiff must demonstrate sufficient similarities to prove copying or establish that the work was independently created, as established in Alfred Bell & Co. v. Catalda Fine Arts.

The determination of substantial similarity in this circuit follows the "ordinary observer" test, which assesses whether a reasonable person would believe the defendant unlawfully appropriated the plaintiff's protectible expression. This standard, rooted in precedent from over thirty years ago, holds that works are substantially similar if an ordinary observer would overlook disparities and perceive their aesthetic appeal as the same.

In the analysis of the current case, the district court made specific findings regarding the copying of the plaintiff's designs by the defendant. The findings include:

1. The defendant's "Precious Pet Duffle Teddy Bear" closely imitates the plaintiff's "Hershel the Bear" in features such as ear size and placement, eye type and positioning, and tail design.
2. The defendant's "Precious Pet Duffle Panda Bear" has similar copying elements as the teddy bear.
3. The "Precious Pet Duffle Duck" replicates the plaintiff's "Just Ducky" in eye and bill placement, bill shape, and tail configuration.
4. The "Precious Pet Duffle Elephant" mirrors the plaintiff's "Elephant Trunk" in ear size and placement, eye positioning, trunk shape, and tail design.

Upon disassembly of both parties' products, the court noted that the components of the bags were virtually identical, with only minor differences attributed to cost-saving measures by the defendant. The court concluded that an ordinary observer would recognize the substantial similarity between the products, supported by the fact that the defendant's supplier had access to the plaintiff's copyrighted works. The court's comprehensive comparison confirmed that the defendant's designs were derived from the plaintiff's, leading to a finding of copying.

Evidence of copying between the Plaintiff's and Defendant's children's duffle bags is substantial, particularly evident in the nearly identical stylized tails featured on both products. The Plaintiff's designs for the bear, duck, and elephant showcase unique features: the bears have a plush loop tail, the duck has a gathered plush tail, and the elephant has a braided string tail. The Defendant's designs replicate these characteristics closely. Additionally, the Defendant's supplier manufactured the same four popular styles as the Plaintiff's, further indicating copying.

The district court applied the "ordinary observer" test, determining that the aesthetic appeal of both the Plaintiff's and Defendant's bags is similar enough that an ordinary observer would overlook minor differences, such as the zippers on the Defendant's bags. Consequently, the court found that the Defendant's bags are substantially similar to the Plaintiff's work, and since the Defendant had access to the Plaintiff's designs, copyright infringement was established.

In contrast, Carol Wright argues that the designs of generic animal heads and tails lack originality and therefore have limited copyright protection. Citing case law, including Herbert Rosenthal Jewelry Corp. v. Kalpakian, Wright contends that similarities between the designs arise from common characteristics of the animals depicted, which are not protectable. Other cases referenced support the notion that shared features among similar items do not qualify for copyright protection. Thus, Wright's position is that the Plaintiff's and Defendant's designs share only generic traits, which fall outside copyright coverage.

The court evaluated Carol Wright's appeal regarding the district court's findings on copyright infringement related to the design of animal portions of duffle bags. It determined that the designs were not generic or merely lifelike but included imaginative artistic expression. A side-by-side comparison revealed significant similarities in the size, shape, pose, and overall character of the bags, despite minor differences in color and material. These differences were deemed trivial and insufficient to negate a finding of substantial similarity under the ordinary observer test, which does not require identical copying for infringement. The court upheld the district court's conclusion that Carol Wright's designs were copied to a significant extent, constituting unlawful appropriation.

Additionally, the court addressed the issue of willfulness in the infringement. It noted that the Copyright Act allows for increased statutory damages for willful infringement, but does not define "willful." The determination of willfulness is a factual matter left to the trial court, and the appellate court found no clear error in the district court's finding that the infringement was willful. The appellate court emphasized the trial judge's discretion in evaluating evidence, especially when based on oral testimony, making it challenging for the appellant to overturn such findings.

A finding of willfulness in copyright infringement is justified if the infringer knows their conduct is infringing or acts with reckless disregard for the copyright owner's rights. Relevant factors for determining willfulness include whether the infringer ignored notices of copyright protection, sought legal advice, or dismissed the infringement as a nuisance. Prior notice of infringement is particularly compelling evidence of willfulness. The trier of fact must assess the quality of the notice and the credibility of the defendant's testimony, with deference given to their findings absent clear error.

In the case at hand, the district court found several key facts regarding willful infringement: Mr. Ginsberg, CEO of Carol Wright, indicated the Defendant does not typically investigate proprietary interests unless they are obvious. In October 1988, the Defendant was notified by the U.S. Customs Service about potential infringement regarding their Panda duffle bags. Although the Customs notice was later canceled due to the Plaintiff's failure to post a required bond, the Defendant was aware of Wildlife Express's claim to copyright for a similar product and had contacted the Plaintiff's attorney. Following this notice, the Defendant's lack of inquiry into other copyrights related to similar products (duck, bear, and elephant) demonstrated reckless indifference.

The district court found that enhanced statutory damages up to $100,000 per infringement may be awarded for willful infringement. It determined that the Defendant initially acted innocently but failed to inquire about the proprietary status of merchandise, thus accepting the risk of copyright infringement. Following Customs' detention of panda shipments due to Plaintiff's copyright and the subsequent awareness of Plaintiff’s existence, it became unreasonable for the Defendant to continue believing it was not infringing. The Defendant's failure to check Plaintiff's registered copyrights in October 1988 constituted reckless disregard, leading to a conclusion of willful infringement, particularly after Plaintiff's demand letter in February 1989 and the initiation of the lawsuit in September 1989. Although the Defendant presented a letter from its attorney disputing Plaintiff's claims, the court found that the lack of proof of good faith reliance on counsel's advice undermined this defense. Consequently, the court concluded that the Defendant willfully infringed three copyrights, awarding enhanced damages of $50,000 per copyright, considering the majority of sales were arguably innocent.

Carol Wright contested the magistrate judge's finding regarding the cancellation of the Notice of Redelivery, arguing it was based on the notice stating the panda was "dissimilar" to the copyrighted work. Carol Wright claimed it had reason to believe it was not infringing and had acted promptly to investigate the claim through its supplier and legal counsel, asserting that it cooperated with Customs and planned to deplete its inventory. The district court found that the cancellation was due to Wildlife's inability to post the required bond, supported by testimony from Wildlife's president, which Carol Wright did not challenge at trial. Thus, the court deemed the testimony credible and did not find grounds to reconsider its determination.

The district court determined that Carol Wright had a duty to further investigate potential copyright infringement after receiving a Customs notice in October 1988. The court criticized Carol Wright for not contacting the copyright owner to address the potential infringement. The evidence indicated that Carol Wright was aware of the infringement yet continued selling the Precious Pets product throughout 1989, even after a lawsuit was filed against it in August 1989. Testimony from Carol Wright's CEO revealed that the company did not conduct necessary patent and copyright searches, opting instead to accept the risk of infringement as part of their business model. This behavior supported the finding of willfulness, which could justify increased statutory damages to reinforce compliance with copyright laws. The overall record provided sufficient evidence for the district court's conclusions regarding substantial similarity and willful infringement, leading to the affirmation of its judgment. Additionally, the appellate court noted that it conducts a de novo review for substantial similarity when it can visually compare the works, but follows a clearly erroneous standard for factual findings.

The 11th Circuit Court upheld the clear error standard for reviewing findings of similarity in trade dress infringement, rejecting de novo review (812 F.2d 1531, 1541 n. 46). In a related case, the district court corrected a scrivener's error regarding the copyright registration number for Wildlife's elephant trunk after a limited remand (Transamerica Ins. Co. v. South, 975 F.2d 321, 325). The parties differentiated the duffle bag, deemed a useful article, from the artistic designs of the animal head and tail, which are copyrightable under 17 U.S.C. § 102(a)(5). The Act permits copyright for original artistic works, but distinguishes them from useful articles, which typically do not qualify for copyright protection (Whimsicality, Inc. v. Rubie's Costume Co., 891 F.2d 452, 455). Access to a protected work can be established if the defendant had the opportunity to view it (Nimmer on Copyright, Sec. 13.02[A]). Carol Wright accepted the district court's findings regarding its supplier's access to Wildlife's items and did not contest the proof of access, despite raising new arguments in its reply brief that were not previously presented, thus waiving them (Circuit Rule 28f).

The cited cases illustrate that the factual contexts differ significantly from the current case. Notably, in Kalpakian, the court ruled against copyright protection for a life-like bee representation due to the lack of expressive variation. Similarly, Gund denied protection for realistic stuffed puppies, deeming their features as common traits of all puppies. In Russ Berrie, the court found that the similarities among Santas and bears were typical features recognizable by the average observer, thus not warranting copyright protection. In contrast, when artistic expression diverges from common characteristics, as seen in Recycled Paper Products and Act Young Imports, protection is granted. Additionally, the Video Views case highlighted a procedural issue where the plaintiff's notification of infringement lacked specificity, resulting in no evidence of willful infringement.