IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 02-WM-2402 (PAC)

        1. TABBERS TEMPTATIONS,
        2. KAREN DUDNIKOV, a/k/a TABBERONE,
        3. MICHAEL MEADORS,
        Pro Se Plaintiffs,

v.

        1. Disney Enterprises, a Delaware Corporation
        Defendant.


COMPLAINT and PLAINTIFFS' MOTION FOR DECLARATORY JUDGMENT

TABBER'S TEMPTATIONS
KAREN DUDNIKOV
MICHAEL MEADORS
P.O. Box 87
Hartsel, CO 80449
303-913-6075

pro se Palintiffs

 

 

 

 

(end cover page)

 

 

 

TABLE OF CONTENTS

Nature of the Action 1
The Parties 1
Jurisdiction and Venue 2
Background Facts 3
        Plaintiffs Business 3
        Defendant and Defendant's Unlawful Acts3
Arguments 5
        I. Copyrights 5
                A. First Sale Doctrine 5
                B. Derivative Works 6
                C. Quality Exception 10
        II. Trademarks 11
                A. Trademark Infringing Activities 11
                        1. Fair Use 11
                        2. Confusion 14
                                a. Sophistication of Buyers 14
                                b. Disclaimers 15
                        3. Unauthorized Use 15
III. Other Arguments 16
        A. Disney Compensated 16
        B. Unclean Hands 16
        C. Not Competing With Licensee 19
        D. VeRO Program 19
        E. Disney's VeRO About Me page 20
                1. Responsibility 20
                2. Why does Disney Care 21
                3. Why Can't I Sell 21
                4. What About Craft Items 22
                5. Particular Problem Crafts 22
                6. If I Warn Buyers 22
                7. Can I Use Disney Trademarks 23
                8. Parallel Imports 24
IV. Conclusion 24

 

 

 

 

TABLE OF AUTHORITIES

Cases page
Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 12-13 (2d Cir. 1976) 11
L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir.) (en banc)0, cert. denied, 429 U.S. 857, 490-92 (1976) 7
Car­Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 270 (2d Cir. 1995) 13
Dowbrands, L.P. v. Helene Curtis, Inc., 863 F. Supp. 963, 966-69 (D. Minn. 1994) 12
Feist Publications, 499 U.S. at 348 6
Holzwarth v. Hulse, 14 N.Y.S.2d 181, 181 (Sup. Ct. 1939) 11
Johnson & Johnson v. Seabury & Johnson, 67 A. 36, 38 (N.J. 1907) 11
2 McCarthy, supra, §10:14 at 10-26 13
New Kids on the Block v. News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992) 13
Precious Moments vs La Infantil, 1997, (D.P.R.) 971 F.Supp. 66 8
Quality King Distributors, Inc. v. L'Anzaresearch Int'l, Inc (98 F.3d 1109, reversed) 8
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) 7
Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1058 (7th Cir. 1995) 11
United States Shoe Corp. v. Brown Group, Inc., 740 F. Supp. 196, 198-99 (S.D.N.Y. 1990) 11
U.S. Shoe, 740 F. Supp. at 198-199 12
White-Smith Music Publishing Co. v. Apollo Co., 209 U.S., at 19 8

Statutes

Declaratory Judgment Act, 28 U.S.C. § 2201 1
Lanham Act 15 U.S.C 1
Lanham Act Sections 32, 39, 43 (a), and 43 (c)(1) 2
15 U.S.C. §§ 1114, 1121 and 1125 (a)(c)(1) 2
15 U.S.C. Section 1114 8
15 U.S.C. § 1115(b)(4) 12, 13
Copyright Act 17, U.S.C. § 101 et seq 1, 2
section 109 of the Copyright Act of 1976 5
Section 101 of the Copyright Act 6
17 U.S.C. § 103(b) 6
17 U. S. C. § 102(a) (1982 ed.) 7
Digital Millennium Copyright Act, 17 U.S.C. Section 512 25
Judicial Code of the United States, 28 U.S.C. §§ 1331, 1338 (a) and (b) 2
28 U.S.C. § 1367 2
28 U.S.C. § 1391 (b)(2) 2

Other Authorities

1 Nimmer on Copyright § 3.03 7
1 Nimmer § 3.01, at 3-3 7
Restatement (Third) of Unfair Competition § 28 (1995) 12, 13
3A Louis Altman, Callmann on Unfair Competition, Trademarks and Monopolies § 21.24 (4th ed. 1983) 12
Margreth Barrett, Intellectual Property 760-61 (1995) 12

 

 

 

 

ATTACHMENTS

 
  page
1. Email from EbayŽ dated September 4, 2002 4
2. Email from Deborah Perry dated September 4, 2002 4
3. Email to Deborah Perry dated November 18, 2002 4
4. Letter to Disney dated December 15, 2002 4
5. Disney "About Me" page on eBayŽ 5, 16, 20
6. Precious Moments vs La Infantil, 1997, (D.P.R.) 971 F.Supp. 66 8
7. Ebay page showing feedback for Tabberone 11
8. Advertisement for Brother Embroidery Machine. 17
9. Brochure for Brother Embroidery Machine. 17
10. Pages from Brother web site 18
11. Invoice from Springs 18
12. Springs promotional flyer for fabric 19
13. Invoice from Concord 19
14. VeRO Program 20
15. eBay contract statements 20

 

 

(main body of complaint)

 

 
        Plaintiffs Tabber's Temptations, Karen Dudnikov, and Michael Meadors, pro se, (referred to collectively as "Tabberone") complains of Defendant Disney Enterprises ("Disney"), and alleges as follows:

NATURE OF THE ACTION

        1. This is an action for Declaratory Judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201. The claims for relief are covered by the Lanham Act 15 U.S.C., and through the Copyright Act 17, U.S.C. § 101 et seq.

THE PARTIES

        2. Plaintiff Tabber's Temptations is an unincorporated Colorado business that primarily does business on the eBayŽ internet auction site as well as through a web site, www.tabberone.com. Plaintiffs Karen Dudnikov, a/k/a TABBERONE, and husband Michael Meadors, are the sole owners and operators of Tabber's Temptations.

        3. Using the eBayŽ seller name of Tabberone, the plaintiffs manufacture fabric items from lawfully acquired copyrighted fabrics and then sell these fabric items on the web site as well as through eBayŽ.

        4. Upon information and belief, defendant Disney Enterprises is a Delaware Corporation with it's headquarters located at 500 South Buena Vista Street, Burbank, California 91521.

        5. Upon information and belief, Disney has authorized the manufacture and sale of a large variety of fabrics bearing copyrighted images belonging to the defendant. These images include, but are not limited to, Mickey Mouse, Minnie Mouse, The Lion King, Snow White, The Little Mermaid, Tinker Bell, Winnie the Pooh, Buzz Lightyear.

        6. Upon information and belief, Disney has actively engaged in threatening and intimidating persons who have manufactured and attempted to sell fabric items from the above mentioned copyrighted fabrics. These actions include threats of litigation through cease and desist letters as well as terminating eBayŽ auctions featuring fabric items made from the above mentioned copyrighted fabrics.

Jurisdiction and Venue

        7. This Court has jurisdiction over the federal claims in this action under the Trademark Laws of the United States, Lanham Act Sections 32, 39, 43 (a), and 43 (c)(1), 15 U.S.C. §§ 1114, 1121 and 1125 (a)(c)(1), the Copyright Act 17, U.S.C. § 101 et seq. and the Judicial Code of the United States, 28 U.S.C. §§ 1331, 1338 (a) and (b).

        This Court has supplemental jurisdiction over any common law and state statutory claims under 28 U.S.C. § 1367.

        8. Venue is proper in this district pursuant to 28 U.S.C. § 1391 (b)(2), in that a substantial part of the events giving rise to the claims occurred in this judicial district and plaintiffs are doing business within this judicial district.

        9. This action arises out of defendant's improper use of the eBayŽ VeRO Program to terminate auction listings by the plaintiffs. The defendant alleged in an affidavit to eBayŽ that the fabric items made by the plaintiffs was infringing because the plaintiffs used copyrighted fabrics distributed by the defendant. When questioned by the plaintiffs about the terminated auctions, a spokesperson representing the defendant replied the items were infringing because the defendant considered them to be "derivatives".

        10. By this complaint, plaintiffs seek a Declaratory Judgment affirming the right under law to continue making and then selling fabric items from copyrighted fabric without further interference from the defendant. Plaintiffs seek a Declaratory Judgment affirming the right to a fair use of the copyrighted materials in conjunction with these sales.

BACKGROUND FACTS

Plaintiffs' Business

        11. The plaintiffs manufacture a wide variety of fabrics items from a selection of fabrics lawfully purchased through national outlets as well as a bulk supplier. The majority of these fabrics are copyrighted and many portray recognizable copyrighted images belonging to a variety of sources such as Disney, M&M/Mars, Warner Brothers, etc.

        12. The plaintiffs offer these fabric items for sale using the eBayŽ internet auction site using the seller identification of Tabberone. They have been selling fabric items and collectibles on the internet auction since 1999.

        13. The plaintiffs also maintain a web site, www.tabberone.com, through which fabric items and collectibles are also sold. This web site has been in continuous operation since 1999.

The Defendant and The Defendant's Unlawful Acts

        14. The defendant is internationally recognized as the holder of copyrights on a large number of animated characters as noted in paragraph 5. The defendant markets directly, and through licensees, a large number of items that portray these copyrighted animated characters.

        15. Based upon information and belief, the defendant aggressively protects the copyrighted images. These actions include policing of flea markets, craft shows, craft malls, and internet auctions sites. At crafts shows and flea markets, when hand-crafted items are found that use the fabrics portraying the copyrighted images owned by the defendant, cease and desist letters are distributed. On the auction sites, the auctions featuring similar fabric items are terminated at the request of the defendant.

        16. Based upon information and belief, Disney counsel knows, or reasonably should know, the fabric items are not derivatives as defined by federal courts, federal law and recognized authorities on copyrights. The intimidation tactics used by Disney are therefore illegal and immoral. They rely on the fact people can't fight back because of the potential enormous legal expense.

        17. Based upon information and belief, on September 4, 2002, the defendant requested eBayŽ terminate three auction listing by Tabberone, falsely alleging to eBayŽ in an affidavit that the articles offered on these auctions were infringing items. (see attachment #1).

        18. When asked, a representative of the defendant, a Deborah Perry, responded that the auctions were terminated because the fabric items were considered to be derivatives and therefore infringing upon the copyrights held by the defendant. (see attachment #2).

        19. Subsequent attempts to get the defendant to cease interfering with auction sales of Tabberone have met with no response. (see attachment #3, #4).

        20. Disney's eBayŽ VeRO "About Me" page reinforces the position stated in paragraph 18. (see attachment #5).

ARGUMENTS

I. COPYRIGHTS

A. First Sale Doctrine

        21. The common-law roots of the first sale doctrine allows the owner of a particular copy of a work to dispose of that copy. This judicial doctrine was grounded in the common-law principle that restraints on the alienation of tangible property are to be avoided in the absence of clear congressional intent to abrogate this principle. This doctrine appears in section 109 of the Copyright Act of 1976. Section 109(a) specifies that this notwithstanding a copyright owner's exclusive distribution right under section 106 the owner of a particular copy or phonorecord that was lawfully made under title 17 is entitled to sell or further dispose of the possession of that copy or phonorecord.

        22. The defendant, directly and through licensees, has released innumerable different copyrighted fabrics in the last few years through an estimated ten thousand national fabric outlets including Wal-Mart, Hancock Fabrics, and Joann Fabrics. It was the intention of the defendant that the fabric be cut, shaped, and sewn into fabric items such as pillows, bedding, wearing apparel, accessories, etc. There is no other purpose for selling uncut fabric.

        23. The Plaintiffs lawfully purchased the copyrighted fabric from retail outlet sources. Since the plaintiffs use of the copyrighted fabric was consistent with the intended purpose of the sale of the fabric, the subsequent sales of the fabric items falls wholly under the First Sale Doctrine.

        24. The only way for this action not to fall under the First Sale Doctrine would be for the Court to consider the fabric items "derivative works". But the fabric items fail to meet the required definition for derivative works.

B. DERIVATIVE WORKS

        25. The primary standard for a 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 fabric would qualify as copyrightable. Laying a pattern on a piece of fabric, 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.

        26. Section 101 of the Copyright Act defines a derivative work as:

    a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

        27. The fabric itself is not copyrighted, only the images on it are. These images are not "recast, transformed, or adapted" in any manner. The fabric is modified into an end product consistent with the intended use, the images are not.

        28. The copyright "extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material." 17 U.S.C. § 103(b); see Feist Publications, 499 U.S. at 348 ("[C]opyright protection [in a factual compilation] extend[s] only to those components of a work that are original to the author.").

        29. A derivative work is copyrightable if it is sufficiently original. 1 Nimmer on Copyright § 3.03. The law requires more than a modicum of originality. This has been interpreted to require a distinguishable variation that is more than merely trivial. L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir.) (en banc) (requiring some substantial, not just a trivial, variation), cert. denied, 429 U.S. 857, 490-92 (1976). As the Court of Appeals for the Second Circuit said in Batlin:

    Originality is . . . distinguished from novelty; there must be independent creation, but it need not be invention in the sense of striking uniqueness, ingeniousness, or novelty, since the Constitution differentiates "authors" and their "writings" from "inventors" and their "discoveries." Originality means that the work owes its creation to the author and this in turn means that the work must not consist of actual copying.

        Id. at 490 (citations omitted).

        31. Indeed, if the secondary work sufficiently transforms the expression of the original work such that the two works cease to be substantially similar, then the secondary work is not a derivative work and, for that matter, does not infringe the copyright of the original work. See 1 Nimmer § 3.01, at 3-3 (stating that "a work will be considered a derivative work only if it would be considered an infringing work" if it were unauthorized).

        Permission to use the fabric to make fabric items is implied with the retail sale of the fabric.

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

        33. In Quality King Distributors, Inc. v. L'Anzaresearch Int'l, Inc (98 F.3d 1109, reversed), Justice Stevens noted for a unanimous court:

    "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."

        34. 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." (see attachment #6)

        The 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.

        35. Likewise, 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. The fabric must be cut and shaped and sewn to complete the use for which it was intended.

        36. If someone were to take a Disney fast food toy portraying an animated character and mount the toy on a PEZ dispenser, would that qualify as a derivative? PEZ has a patent on the dispenser but not the final shape. Would the "fantasy" dispenser be copyrightable? No. The material change is not enough and the requisite "originality" is absent.

        37. Under the First Sale Doctrine, the plaintiffs do not need, nor require, permission from the defendant to make the fabric items or to sell the fabric items. Since no authorization is required, the claims of the plaintiffs selling "unauthorized" goods is baseless. When M&M/Mars sells a candy dish, they do not require the purchaser only fill the dish with "M&M's"Ž. They cannot place a restriction upon the use of the item. Nor can the defendant stipulate that a certain piece of fabric only be sewn into certain items, such as an apron or a vest. Unfinished fabric is intended to be finished by the purchaser. That completes the sale. Likewise, they cannot restrict the use of fabric sold at retail to "non-commercial home-use only".

        While the use of a disclaimer on the fabric may deter some, the disclaimer itself is not binding upon the purchaser. The wording is specific that the use is intended for home use, not that this use required for purchase. Disclaimers of this nature are limitations on use to which the original owner desires but has no legal claim under the First Sale Doctrine. Owners and manufacturers can limit future use only as far as their on-going responsibility, such as a warranty. An automobile manufacturer can stipulate that using the vehicle for stock car racing invalidates the warranty but they cannot prohibit the purchaser from racing. A bicycle manufacturer cannot claim the bike is for recreational home-use only and cannot be ridden to work or used in a work environment, such as bicycle messenger.

        The purchaser of a coloring book is encouraged to "finish" the book by coloring the pictures offered in any way the purchasers deems fit. If the seller attempted to dictate what characters had to be what colors, no one would reasonably purchase the coloring book, The same applies to fabric. It must be "finished" to have any real value to the purchaser.

        38. Commercial sewing operations rarely purchase fabric at retail. It's not cost effective and it's too time consuming. Additionally, the 100% cotton fabric is unsuitable for most commercial sewing operations. 100% cotton wrinkles badly and makes a poor fabric for commercial sales as it is considered less desirable than blends which make better clothing. Commercial sewing operations rarely make items to order. Commercial sewing operations are assembly line businesses that turn out up to thousands of duplicate items a week. A small home-based business making perhaps ten to twenty hand-crafted items a week from the licensed fabric does not qualify as a commercial sewing operation any more than a lemonade stand run by kids qualifies as a restaurant.

C. QUALITY EXCEPTION

        39. Nor can the defendant claim an exception to the First Sale Doctrine citing quality issues.

        40. eBayŽ has a feedback system that attempts to insure that bad sellers and bad buyers are weeded out of the auction system. For every transaction, it possible for each side to leave feedback of one type: either positive, neutral, or negative. Tabberone has over 3590 positive feedback messages in the last four years with an overall positive satisfaction rating of 99.6%. Indeed, the defendant did not cite any complaints being received about the quality of the workmanship or complaints about being confused as to origin of the products, only that the items were derivatives. The quality of Tabberone's work is more than excellent. (see attachment #7).

II. TRADEMARKS

A. Trademark Infringing Activities

        41. "we request that you please refrain from using Disney characters and licensed Disney goods in connection with products you intend to sell. " (see attachment #1).

1. FAIR USE

        42. Fair use of trademarks in conjunction with selling or promoting the sale of goods made by the mark holder is acceptable.

        43. It is a fundamental principle marking an outer boundary of the trademark monopoly that, although trademark rights may be acquired in a word or image with descriptive qualities, the acquisition of such rights will not prevent others from using the word or image in good faith in its descriptive sense, and not as a trademark. See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 12-13 (2d Cir. 1976); Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1058 (7th Cir. 1995); United States Shoe Corp. v. Brown Group, Inc., 740 F. Supp. 196, 198-99 (S.D.N.Y. 1990); Holzwarth v. Hulse, 14 N.Y.S.2d 181, 181 (Sup. Ct. 1939); Johnson & Johnson v. Seabury & Johnson, 67 A. 36, 38 (N.J. 1907); Restatement (Third) of Unfair Competition § 28 (1995); 3A Louis Altman, Callmann on Unfair Competition, Trademarks and Monopolies § 21.24 (4th ed. 1983); Margreth Barrett, Intellectual Property 760-61 (1995). The principle is of great importance because it protects the right of society at large to use words or images in their primary descriptive sense, as against the claims of a trademark owner to exclusivity. See U.S. Shoe, 740 F. Supp. at 198-199. This common-law principle is codified in the Lanham Act, which provides that fair use is established where "the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, . . . which is descriptive of and used fairly and in good faith only to describe the goods or services of . . . [a] party, or their geographic origin." 15 U.S.C. § 1115(b)(4).

        44. One could hardly sell a used automobile in the classified ads or other mediums without telling prospective buyers the make and model of the vehicle. The use of pictures of the fabric used to make the item as well as a picture of the finished product does not violate fair use. Having pictures available of the possible fabric selection does not violate fair use.

        45. Regardless whether the protected mark is descriptive, suggestive, arbitrary, or fanciful as used in connection with the product or service covered by the mark, the public's right to use descriptive words or images in good faith in their ordinary descriptive sense must prevail over the exclusivity claims of the trademark owner. See Dowbrands, L.P. v. Helene Curtis, Inc., 863 F. Supp. 963, 966-69 (D. Minn. 1994)

        46. In short, fair use permits others to use a protected mark to describe aspects of their own goods, provided the use is in good faith and not as a mark. See 15 U.S.C. § 1115(b) (4). That is precisely the case here. The "offending" use described by the defendant in paragraph 41 is merely fair use to describe the product(s) offered for sale.

        47. The fair use doctrine permits use of a protected mark by others to describe certain aspects of the user's own goods. See Car­Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 270 (2d Cir. 1995).

        48. The Restatement (Third) of Unfair Competition adopts as a relevant factor the "physical nature of the use in terms of size, location, and other characteristics in comparison with the appearance of other descriptive matter or other trademarks." Restatement (Third) of Unfair Competition §28 cmt. c. (1995).

        The Restatement also observes that the scope of the fair use should be related to the degree to which the descriptive meaning is relevant to the goods with which it is associated in the alleged infringement, and whether there are other terms available to describe the pertinent characteristic. See id. Where a mark incorporates a term that is the only reasonably available means of describing a characteristic of another's goods, the other's use of that term in a descriptive sense is usually protected by the fair use doctrine. See New Kids on the Block v. News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992); 2 McCarthy, supra, §10:14 at 10-26 ("Since the use of a descriptive title cannot serve to prevent others from using the title in a descriptive, non­trademark sense, others may be able to use the title as the only term available.").

        49. As Justice Holmes clarified,

    "A trade mark[sic] only gives the right to prohibit the use of it so far as to protect the owner's good will against the sale of another's product as his. . . . When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo."

2. Confusion

a. Sophistication of Buyers

        50. Persons buying from Tabberone off of eBayŽ are not your average mall shopper. These people are seeking certain products. They are knowledgeable about the products they seek. A shopper in a mall might casually stroll into a store and pick up an item and be confused as to the origin because in most cases they must base their opinion on the item as they look at it and any markings and/or tags. A shopper seeking to buy something on eBayŽ, or the Tabber's Temptations web site, first must pass by several disclaimers as to affiliation and sponsorship, as well as direct and indirect statements that the fabric items offered are hand-crafted and not licensed products. They have to read the description of the product because they cannot handle the item to inspect it. Someone who is considering buying a product they cannot first hold in their hands tends to be a lot more cautious about the purchase. They carefully read the offering.

        51. The mere use of the defendant's marks is not enough to cause confusion. Modern shoppers aren't as stupid as the defendant would have the court believe. There is a television commercial that shows an ice breaker getting stuck in the arctic ice. The ship lowers a Ford 4x4 truck onto the ice. The truck then tows the ship to safety, providing the power and muscle the ship obviously lacks. How many viewers really believe the truck is capable of pulling that ship? They realize it's advertising. The buying public is not stupid.

b. Disclaimers

        52. The plaintiffs liberally use disclaimers in their web site and eBayŽ auction listings. Such use is prima facie evidence of lack of intent. The lack of positive statements indicating an affiliation means there is none in the mind of the buyer. The presence of a statement saying there is no affiliation reinforces that fact to the buyer.

        53. Every time, the browsing shopper must go through several disclaimers on the web site as well as the eBayŽ auction listings. No one is being misled. No reasonable person would believe that the items being offered for sale were anything other than hand-crafted from licensed fabric. No reasonable person would conclude that Tabberone was connected with Disney in a business relationship. No reasonable person would be confused. 3. Unauthorized Use

        54. The Lanham Act plainly refers to someone who, without authorization, uses or imitates another's mark in such a way as to possibly cause confusion. Confusion is the benchmark of Trademark Infringement. Without confusion there is no infringement. The plaintiffs have not counterfeited any products or marks. Use of the fabric is covered under the First Sale Doctrine. No further authorization is required and since there is no confusion or counterfeiting of product or of marks, there is no violation of the Lanham Act.

III. OTHER ARGUMENTS

A. Disney Compensated

        55. Disney presumably has received, pursuant to its respective licensing agreements, royalties from the fabric manufacturer and distributors for the initial sale of the fabric. Having been compensated for the fabric and the implied license that goes with the sale of the fabric, the plaintiffs had permission to use the fabric in the manner used. That permissions also carried with it reasonable use of the Disney trademarks and characters.

B. Unclean Hands

        56. "Disney vigorously enforces its intellectual property rights."

        "Disney works hard to preserve the integrity of its name and its copyrights, trademarks and logos. Characters first created more than seventy years ago continue to enjoy widespread popularity because of the management that Disney has exercised to govern the use of its copyrights and trademarks." (see attachment #5).

        57. The above quotes come from the Disney VeRO Program About Me Page. They are prima facie evidence that Disney maintains very high standards and monitors it's licensees closely.

        58. Through it's licensees, such as Brother International Corporation ("Brother"), Disney promotes the sale of embroidery machines that include software that creates the copyrighted animated characters belonging to Disney. The advertising touts the ability to use these images while pointedly omitting any references to "non-commercial home use only" in the advertising. Few people are going to spend $1499 on a machine whereby they can only embroider items for the kids or the grandkids. Through actions like these, Disney is encouraging the commercial violation of it's intellectual property. (see attachment #8)

        The advertisement (attachment #8) was in the Denver Post, December 15, 2002. The advertisement features the PE180 Embroidery Machine that comes with 40 Disney designs built into the machine. List price is $1499, on sale this week for "only $699." This advertisement had to be approved by both Brother and Disney. It is a stock advertisement issued to licensed distributors of the product. Liberal use of the Disney characters is made to promote the product. Nowhere in the two pages of advertisement is it mentioned that the purchaser cannot use the embroidered characters on fabric intended to be sold. Not once. Disney had to approve this advertisement which is plainly deceiving based upon Brother's and Disney's actions and intentions.

        59. A brochure touting the new embroidery machines is available at the stores selling it. (see attachment #9). This six-page full-color advertisement again touts this very special machine and what someone can make with the included Disney characters. On page six, in very small type near the bottom of the page, is the disclaimer that "The embroidery designs built-in within this embroidery machine are for personal use within the home only, and may not be used for business or industrial use in any way." The middle pages of the advertisement have over thirty large and colorful detailed examples of the designs and yet there is no visible disclaimer about use. Why not? Their intention is to sell embroidery machines, not to inform the prospective buyer of pitfalls. This very activity by someone else would be claimed to "cause confusion" in the mind of the public.

        60. The Brother web site, www.brother.com, extensively promotes the new embroidery machines on page after page (see attachment #10). Attachment 10 is just three pages from the web site: the main Disney page, a Mickey shirt page, and a New Products page. All pages graphically shown the included Disney characters and all pages pointedly omit any reference to "home-use only" limitations.

        Indeed, if Aunt Minnie bought this machine and used it a few months before dying and her estate sold the machine to another person, is that person bound by the original licensing agreement (the one in very small print)? Suppose the machine was sold without adequate documentation to show the prohibition for commercial use. How is the subsequent buyer responsible and how is the subsequent buyer to know? The sale of this machine promotes the introduction of infringing articles into the marketplace. Disney wants their money and full control.

        61. Spring Industries ("Springs") is a licensed manufacturer of the Disney copyrighted fabrics. Springs will only fill orders for Disney licensed fabric when a minimum of six bolts of fabric (90 yards) is ordered. No attempt by Springs is made to determine the origin of the order. No home-based, non-commercial sewing operation is going to order 90 yards of fabric for personal use. By filling these large orders, it is assumed Springs has the consent and support of Disney to distribute the licensed copyrighted fabric in quantities that encourage the very use that Disney is attempting to thwart. (see attachment #11). Since it can safely be assumed that Disney asserts strict quality control measures over licensees, Disney therefore knows and approves of the sale of the fabric in this manner and the subsequent use.

        62. Springs also released promotional flyers that explain in detail how to make fabric items from the licensed fabric. These detailed flyers did not contain any disclaimers about the use of the fabric. (see attachment #12). It is reasonable to believe such advertising was approved by Disney.

        63. Springs isn't the only manufacturer of licensed copyrighted fabrics sold in quantity. Concord Fabrics ("Concord") who manufactures Peanuts fabrics does the same thing. (see attachment #13). It is a common practice among fabric manufacturers. Why do they sell in this manner? Because there is nothing wrong with the practice of making fabric items from licensed fabric and then selling the item. If there were, fabric outlets, such as Wal-Mart, would have to post signs warning prospective buyers about the dangers of using licensed copyrighted fabrics because making a baby comforter and giving it away to someone who might introduce that comforter into the stream of commerce would leave someone liable for damages under federal trademark and copyright laws. Ridiculous. The subsequent market is out of the control of the original copyright holder. That is common law as well as the first sale doctrine.

        64. Conclusion: Disney's own marketing techniques have contributed to what Disney perceives to be a problem.

C. Not Competing With Licensee

        65. There is no marketing conflict with any existing licensee. All licensed fabric products are made from other copyrighted fabric therefore the fabric items lawfully manufactured by the plaintiffs do not compete with any licensee.

D. VeRO Program

        66. eBayŽ has a Verified Rights Owners program called the VeRO ProgramŽ that allows verified rights owners to terminate auctions listings when the verified rights owner submits an affidavit stipulating the auction is "infringing" upon their copyright and/or trademark rights. The decision to terminate rests solely in the hands of the VeRO member. This gives the VeRO member the ability to cancel auctions even when the "offending" party, is in fact, within their legal rights to sell. Instead of being compelled to sue in federal court, the VeRO member can intimidate through auction cancellations and the threat of possible suspension from eBayŽ should the offending activity continue. (see attachment #14).

        67. Parties seeking to use the VeRO Program become members of eBayŽ and are therefore subject to the rules and regulations of eBayŽ. As such, Disney accepted and recognized that offering an item for auction is a pending contract to sell. When an item receives a bid, there is a binding contract to buy. Terminating an auction without cause, as alleged in this complaint, constitutes tortious interference with business on the part of Disney. (see attachment #15).

        68. Additionally, the Disney VeRO representatives knew, or reasonably should have known in their capacities as legal or quasi-legal representatives for intellectual property, that the items on auction that were terminated were not infringing, and therefore they willfully and knowingly committed perjury as defined in the Digital Millennium Copyright Act, 17 U.S.C. Section 512.

E. Disney's VeRO About Me Page

        69. The page begins with the notation, "This page is maintained by disneyvero(0)". The information provided is provided by Disney, not eBayŽ as is inferred by the manner in which some questions are presented. (see attachment #5). The following items are addressed to show the likelihood that the improper actions by Disney will continue unless forced to stop.

        70. Q. Why does Disney care about small sellers on eBay?

        A. Disney works hard to preserve the integrity of its name and its copyrights, trademarks and logos. Characters first created more than seventy years ago continue to enjoy widespread popularity because of the management that Disney has exercised to govern the use of its copyrights and trademarks. The auction of infringing merchandise, which is often not of the same quality required of a Disney product, damages Disney's reputation and leads to complaints from consumers and internet users about this poor quality. Consumers may attribute to Disney the inferior quality of unauthorized products purchased over eBay. Disney must be vigilant in protecting the goodwill associated with the Disney name and copyrights and will take action to insure that online auctions of counterfeit goods are ended.

        What is the level of "quality required"? Is it different in the sweat shops in Haiti as opposed the sweat shops in Bangladesh? Or the communist production lines in China? The quality issue was addressed above in C. Quality Execption. However, poor quality alone does not make an item infringing. The item has to first violate the copyright and/or trademark laws to be infringing.

        71. Q. Why can't I sell craft items that use Disney characters?

        A. While the creation of craft items using Disney copyrights is infringing, Disney does not generally dispute craft items made by fans for their personal use. Where, however, those items are listed for sale on eBay, the user is seeking a commercial benefit from his or her infringing conduct."

        Commercial benefit only becomes a factor where there is a copyright infringement or a trademark infringement. Someone who sells a collectible that has increased in value is seeking a commercial benefit. There are no restrictions under the First Sale Doctrine prohibiting commercial benefit.

        72. Q. What about craft items made from licensed products?

        A. The creation of different product from licensed merchandise (such as making light switches from wall paper) is the creation of an unauthorized derivative product. Among the rights owned by the copyright owner is the right to control the creation of derivative works, and the unauthorized production of derivative product may violate this copyright.

        As stated above in Derivative Works, the most basic interpretation of a derivative is that it must be copyrightable on it's own. Light switches made from wallpaper are not derivatives because they could not be copyrighted. The only way the light switches could be considered infringing would be if the wallpaper were counterfeit.

        Basically, Disney is calling everything a derivative when in fact they are not.

        73. Q. Are there particular types of problem crafts?

        A. There are particular types of product for which Disney receives more complaints and which, on investigation, are often fake. These include original artwork, address labels, light switches and paper piecings.

        No mention of fabric items here. Disney does mention "fakes", or counterfeits, but awfully acquired fabric isn't counterfeit and the end product isn't a derivative.

        74. Q. Can I sell unauthorized product if I warn buyers that the product isn't real?

        A. No. Even if you are not deceiving a buyer, a later purchaser might be deceived. Even if the infringing product is not resold, the product itself communicates a wrong impression about the quality and characteristics of authentic merchandise. Deception of the purchaser is not required for a seller to be liable for damages under either the Trademark Act or the Copyright Act.

        Disney argues a concern about subsequent confusion should the fabric items reenter the stream of commerce at a future date. The fact the fabric items lack identifying tags could cause potential future purchasers to be misled into believing the items are licensed products when in fact they are not. This claim is self-defeating.

        If someone's aunt decided to make a baby comforter out of some of the licensed fabric and then present it as a gift, she has done nothing wrong. The fact she has not attached an identifying tag to the item is of no consequence. A couple of years later, the recipient of the comforter decides the child is too big for this item and decides to sell it at a flea market. Is she doing something wrong? There's no tag attached to the product? Suppose John Doe buys the comforter and later sells it to a collector. Where does it stop and to whom belongs the "blame"? This kind of activity cannot be regulated nor has it ever been the intent to do so.

        Someone purchasing a licensed product with identifying tags is not prohibited from removing those tags should they desire. Does such an action then prohibit that person from selling the item in the future? There is a potential for future confusion and misrepresentation once those tags are removed.

        The possibility of future confusion is relevant when a party is counterfeiting another's mark or product. That does not apply to fabric items made from licensed copyrighted fabric or variations that are not derivatives.

        Disney also deliberately misstates liability under trademark laws. Deception creates confusion. Without confusion there is no trademark violation. The Lanham Act is specific about the need of the likelihood of confusion.

        75. Q. Can I use Disney trademarks, artwork or music to make my listing more appealing?

        A. No. The use of trademarks, logos, trade names, artwork or music owned by others, including Disney, may wrongly imply that your listing is authorized, sponsored or approved by that third party and it may dilute the value of those intellectual property rights, in violation of both state and federal law. The use of trademarks as keywords to drive traffic to your listing may violate trademark laws as well as eBay's own policies…"

        No one is disputing that using trademarks and/or copyrighted figures to "promote" the auction sale is infringing. However, using pictures of the item for sale, even if that item contains copyrighted images of animated characters, is permissible as "fair use" under the Lanham Act (see above Fair Use). Disney is a trademark. How does one fairly sell a Mickey Mouse watch without mentioning Disney, Mickey Mouse, or showing a picture of the watch? But that is what Disney would have the public believe is the law.

Parallel Imports

        76. Disney also wrongfully states that "it is a violation of federal law to import or sell product in the United States that was released for sale in other markets" claiming they are parallel imports. In Quality King Distributors, Inc. v. L'Anzaresearch Int'l, Inc (98 F.3d 1109, reversed), the Supreme Court blew that theory out of the water. So why does Disney persist in presenting such an obviously flawed statement? To deceive and to confuse.

IV. CONCLUSION

        Based upon the above arguments, the plaintiffs firmly believe that the actions of Disney are calculated, improper, and illegal and will continue unless stopped. Disney, like many other companies, is using the threat of federal court action to interfere with businesses conducting business legally and within the applications of federal law. Therefore the plaintiffs request the court issue a declaratory judgment affirming:

        1. Persons selling copyrighted items are allowed reasonable "fair use" of images and descriptions that pertain to the items being offered without interference and threats from the copyright and trademark holder.

        2. Persons selling fabric items made from lawfully acquired copyrighted fabric are protected by the "First Sale Doctrine" because the fabric items do not qualify as derivatives as defined in Copyright Law.

        3. "Cease and Desist" letters (or emails) that reference the above items (2 & 3) are illegal and a violation of professional ethics.

        4. Misleading and incorrect statements on the VeRO Program "About Me" pages must be corrected to reflect current federal rulings and federal regulations.

        5. Auctions terminated for reasons stated in 1 and 2 constitute tortious interference with business.

        6. Auctions terminated for reasons stated in 1 and 2 constitute perjury under 17 U.S.C Section 512.

        Respectively submitted this 24th day of December, 2002

 

 

 

  _______________________________ ________________________________

Tabber's Temptations
Karen Dudnikov
Michael Meadors
3463 Maskoke Trail
P.O. Box 87
Hartsel, Colorado 80449
PRO SE DEFENDANTS

303-913-4702
303-913-6075