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Email to Disney November 18, 2002

Subject: suspended auctions
Date: Mon, 18 Nov 2002 09:43:29 -0700

Dear Ms Perry,

I’m sorry about the delay in getting back to you concerning your email dated September 4, 2002, in which you present the reasons Disney terminated several of my auctions in which I was selling fabric items made from lawfully acquired licensed Disney fabric.

There are a number of problems in reference to your statements as to why my auctions were terminated.

1. Disney cannot control the use of the copyrighted fabric once it’s been released into the stream of general commerce. Placing a disclaimer on the fabric does not obligate the purchaser to comply with the intended restrictions. For example, stating that flannel fabric is not suitable for use as clothing for infants does not prevent the user from making infant clothing, it only adds a layer of deniability to protect the manufacturer from some sort of product liability. A user would be compelled to comply with use restrictions in order to insure a warranty remained in effect but fabric has no warranty. Restrictions such you have indicated violate the First Sale Doctrine which appears in section 109 of the Copyright Act of 1976.

2. Derivative works - One standard for a modified work to qualify as a derivative work is that it be copyrightable in it’s own right. No one would suggest that an apron or a pillow made from the copyrighted Disney fabric would qualify as copyrightable. Laying a piece of fabric on a pattern, cutting it out, and then sewing it together, lacks any “originality” which is a requirement of the statute for a work to qualify as a derivative. The law requires more than a modicum of originality. This has been interpreted to require a distinguishable variation that is more than merely trivial.

In Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), the Supreme Court stated:

Copyright protection "subsists . . . in original works of authorship fixed in any tangible medium of expression." 17 U. S. C. § 102(a) (1982 ed.). This protection has never accorded the copyright owner complete control over all possible uses of his work. (White-Smith Music Publishing Co. v. Apollo Co., 209 U.S., at 19)

In Precious Moments vs La Infantil, 1997, (D.P.R.) 971 F.Supp. 66, the First Circuit Court specifically rejected the copyright claim where La Infantil was being accused with unauthorized use of copyrighted fabric, saying that “bedding items manufactured with lawfully acquired, authentic fabric with copyrighted design were not infringing derivative works.”

The First Circuit Court also said “The copyright owner’s right to distribute the work is limited by the “First Sale” doctrine, which permits the owner of a legally acquired lawfully made copy of a work to sell that particular copy without the consent of the copyright holder”. The Court argued that previous decisions had omitted the qualification that a derivative work must show originality. It held that merely using a pattern to sew fabric into a design was not “original” and it does not make the item a derivative work.

Since the fabric was intended to be cut, and shaped, and sewn, no “material difference” exists from the original product. Indeed, the fabric images would have to be altered before the First Sale Doctrine could be refuted under 15 U.S.C. Section 1114. One does not buy a yard of fabric, toss over their shoulder, and walk down the street showing it off. It must be cut and shaped to complete the use for which it was intended.

Justice Stevens, delivering an opinion for a unanimous Supreme Court in the case QUALITY KING DISTRIBUTORS, INC. v. L'ANZA RESEARCH INT'L, INC (96-1470), 98 F.3d 1109, reversed, stated,

"The whole point of the first sale doctrine is that once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution."

The Ninth Circuit Court of Appeals stated in ENTERTAINMENT RESEARCH GROUP, INC., v. GENESIS CREATIVE GROUP, INC., case 95-17123, relying on Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905 (2d Cir. 1980): (1) the original aspects of the derivative work must be more than trivial, and (2) they must reflect the degree to which the work relies on preexisting material and not affect the scope of any copyright protection in that material. Citing S 101 of the Copyright Act, the court ruled that in seeking artistic differences for the purpose of the originality determination, differences in appearance between the derived and original material that are driven primarily by functional, utilitarian, or mechanical purposes could not be considered.

What the Ninth Circuit says is that a functional change to fabric, i.e., making it into an apron, does not make it a derivative.

3. To claim infringement under the copyright laws the owner must first show the protected item was copied. Using a lawfully acquired copy does not meet this requirement. To claim infringement under trademark laws, the owner has to establish the likelihood of confusion. The auction listings plainly stated the items were made from licensed material and the seller was not associated with the manufacturer. There is no infringement under these statutes.

It is my intention to resume my listing of fabric items made from Disney fabric. Since I am not violating any laws, I would like you to please inform the eBay VeRO Program you are retracting the complaint filed and that Disney will not interfere with any more of my auctions.

Sincerely yours,

Karen Dudnikov
a.k.a. Tabberone

PO Box 87
Hartsel, CO 80449