I. INTRODUCTION
Plaintiff, "Tabberone," advertised its "New York Yankees Fabric Tissue Box Cover, " "Atlanta Braves Fabric Tissue Box Cover" and Arizona Diamondbacks Fabric Tissue Box Cover" on eBay. Each of these products prominently bore the registered trademarks of the Major League Baseball Clubs. An example is shown below:
Almost immediately, Tabberone brought against MLBP this action for declaratory judgment that it did not infringe the Clubs trademarks or copyrights. Tabberone made these fabric tissue box covers using the MLB Clubs' trademarked, copyrighted fabric (the "Licensed Fabric") that was intended and marked for "individual consumption only." Tabberone claims that "MLBP created its own monster when it released the fabrics" and that it has the right to manufacture any item using the Licensed Fabric and identify its finished products with the Clubs' trademarks (Ex A-2, at 24). In addition, based on MLBP's e-mail to eBay and two e-mails to Tabberone, Tabberone also brought against MLBP affirmative state claims of fraudulent misrepresentation, negligent misrepresentation, tortious business interference and outrageous conduct, and a claim for perjury under federal copyright law.
Tabberone has now moved for summary judgment on all claims, and apparently, MLBP's counterclaims for trademark and unfair competition under federal and state law. Tabberone has not established as a matter of law its defenses to MLBP's claim of infringement of the clubs' trademarks. Tabberone's copyright defense fails because it has not established as a matter of law that it did not transform the copyrighted fabric by using it as a component in the manufacture of a finished commercial product. Also, from a procedural standpoint, Tabberone's motion for summary judgment on its trademark and copyright defenses is not ripe for summary judgment under Rule 56(f) because it was brought before the parties initial disclosures and before MLBP has had any opportunity to conduct discovery on its claims or Tabberone's defenses to its infringement.
Tabberone's affirmative state law claims and claim of perjury under federal copyright law, 17 U.S.C. § 512 (2003), fail as a matter of law and are the subject of MLBP's accompanying Cross Motion for Judgment on the Pleadings or for Summary Judgment. MLBP simply had the right, and the responsibility, to claim that the Clubs' marks were being infringed by Tabberone. Tabberone's differing interpretation of trademark and copyright law is not a basis for a legal cause of action.
II. STATEMENT OF FACTS
A. Statement of Undisputed Material Facts
1. The plaintiffs, Karen Dudnikov and Michael Meadors, operate an e-retail business under the name "Tabberone" that manufactures various home décor fabric items and sells them either through its own website or on eBay. (Ex. A-2 at 1, 3-4.)
2. MLBP, pursuant to an agency agreement, is the licensing agent for all thirty MLB Clubs and is responsible for the enforcement and protection of the Clubs' trademarks and copyrights, including infringement and counterfeiting actions (Orlinsky Decl. ¶2, 6 Ex. A-D.)
3. The New York Yankees, Atlanta Braves and Arizona Diamondbacks trademarks at issue are well-known and are all registered (Orlinsky Decl ¶¶3,6, Ex, A-D)
4. In its licensing capacity, MLBP has granted hundreds of licenses to use the MLB Clubs' trademarks and copyrights for a vast array of goods and services, including apparel, toys, posters, collectibles, and home décor products such as curtains, sheets, pillow cases, blankets, pillows and throws. (Orlinsky Dec. ¶4.)
5. MLBP controls the nature and quality of the products bearing the trademarks and copyrights of the MLB Clubs (Orlinsky Decl. ¶4.) The use of the MLB Clubs' trademarks and copyrights allowed the many hundreds of licensees to enjoy the benefit from the MLB Clubs' goodwill. (See Orlinsky Dec. ¶6.)
6. Many official MLBP licensed products bearing the Club trademarks and copyrights are sold in the eBay marketplace by large and small businesses. (Orlinsky Decl. ¶7.)
7. Tabberone offered for sale three fabric tissue box covers bearing the trademarks of the New York Yankees, Atlanta Braves and Arizona Diamondbacks Clubs on the eBay Internet auction website. (Orlinsky Decl. ¶8, Ex. E-f.)
8. Tabberone obtained the New York Yankees, Atlanta Braves and Arizona Diamondbacks trademarks by using the copyrighted Licensed Fabric bearing these marks. (Tabberone's Summ. J. Mem. ¶7.)
9. MLBP's license agreement with the fabric manufacturer provides that all rights arising from use of the Clubs' trademarks and copyright inure to the benefits of MLBP or the Clubs (Orlinsky Decl. ¶5.).
10. MLBP licenses the Licensed Fabric, and it is sold for individual use only. The Licensed Fabric contains the following statement prominently printed on its selvage: "THIS IS FOR INDIVIDUAL CONSUMPTION ONLY. ANY UNAUTHORIIZED USE OF THIS FABRIC IS ROHIBITED AND ILLEGAL.'" (Orlinsky Decl. ¶5). Tabberone believes this kind of fabric is not usually made into articles for commercial sale (Ex. A-2, at 13.)
11. Tabberone made its fabric tissue box covers by combining the MLB Club Licensed Fabric with other materials and it offered these products for sale on eBay as "New York Yankees Fabric Tissue Box Cover, " Atlanta Braves Fabric Tissue Box Cover" and "Arizona Diamondbacks Fabric Tissue Box Cover."
12. Tabberone's advertisement on eBay identifies the product by the Clubs' trademarked name, e.g., " Atlanta Braves Fabric Tissue Box Cover," in the listing and the heading (Orlinsky Decl. Ex.. E-F) and makes numerous references to the Clubs. Tabberone has a photo of the product, which can be enlarged, showing prominently various trademarks of the Clubs. (Orlinsky Decl. Ex. E-F).
13. Tabberone's disclaimer is in a smaller typeface than the rest of the text. (Orlinsky Dec. Ex. E). The disclaimer can only be viewed if a consumer scrolls down the page on his or her computer screen. The product can be purchased without the disclaimer ever being seen.
14. A consumer could find Tabberone's New York Yankees, Atlanta Braves or Arizona Diamondbacks fabric tissue box covers on eBay by typing in the names of those MLB Clubs as key words.
15. Tabberone's use of the New York Yankees, Atlanta Braves and Arizona Diamondbacks marks for its fabric tissue box covers was not authorized by MLBP or those respective Clubs. (Orlinsky Decl. ¶9).
16. EBay developed procedures called "VeRO" that provide for the removal of materials that might infringe intellectual property rights on the eBay marketplace. (Orlinsky Decl. ¶10, Ex. G)
17. In order for Tabberone to offer products for sale on eBay, it would have had to accepts eBay's procedures, including the VeRO procedures, as a condition of selling its products on eBay (Ex. A-4.)
18. In an e-mail dated March 31, 2003, MLBP, following the VeRO procedures advised eBay that it had "a good faith belief" that Tabberone's New York Yankees, Atlanta Braves and Arizona Diamondbacks fabric tissue box covers infringed the three MLB Clubs marks and requested that they be disabled. (Orlinsky Decl. ¶ 11, Ex. H.) ON March 31, 2003, eBay disabled the Tabberone listings. (Orlinsky Decl. Ex. H.)
19. On April 1, 2003, MLBP, responding to an e-mail from Tabberone asking for the basis of eBay's action, advised that a more thorough response would be coming and that Tabberone's use of the MLB trademarks was without authorization and would cause confusion and that its tissue box covers were derivative works in violation of copyright law. (Orlinsky Dec. Ex. I.)
20. Tabberone and MLBP exchanged two further e-mails on April 1. (Orlinsky Decl. 13, Ex. I_J.). MLBP reiterated that it would be sending a more thorough response and stated that "[u]nfortunately MLBP disagrees with your assertions. (Orlinsky Dec. Ex. I.)
21. On April 3, 2003 without further communication, Tabberone filed this lawsuit.
22. MLBP answered Tabberone's Complaint and filed counterclaims for trademark infringement and unfair competition under federal and state laws on June 23, 2003.
23 On June 26, 2003, prior to any discovery and even before initial disclosures, Tabberone filed the pending Motion for Summary Judgment.
B. Statement of Additional Disputed Facts
Tabberone does not distinguished between its legal arguments and factual allegations, there are at least the following disputed material facts at issue.
1. Whether Tabberone has "made every attempt to avoid any possible confusion." (Tabberone's Summ. J. Mem ¶28.)
2. Whether Tabberone's disclaimer avoids likelihood of confusion. (Tabberone's Summ. J. Mem ¶28.)
3. Whether Tabberone's wording "[Name of Club] Fabric Tissue Box Cover" as opposed to "[Name of Club] Tissue Box Cover." sent "an immediate word message to the browsing public that the item is not a licensed product." (Tabberone's Summ. J. Mem ¶30.)
4. Whether "hand-crafted" means "home-made" (Tabberone's Summ. J. Mem ¶32.)
5. Whether Tabberone used the Clubs' names as only reasonably necessary to describe the products made from the Licensed Fabric. (Tabberone's Summ. J. Mem ¶23.)
6. Whether Tabberone did nothing that would suggest sponsorship or endorsement by the trademark holders. (Tabberone's Summ. J. Mem ¶23.)
7. Whether Tabberone's use of the MLB Clubs' trademarks for its products and eBay advertisement are likely to cause confusion.
8. Whether MLBP intended its Licensed Fabric to be used in the commercial manufacture and sale or products. (Tabberone's Summ. J. Mem ¶¶43, 58.)
9. Whether Tabberone recast, transformed or adapted in any manner the copyrighted License Fabric when Tabberone manufactured its fabric tissue box covers. (Tabberone's Summ. J. Mem ¶ 47.)
III. ARGUMENT
A. Introduction: The Standard for Summary Judgment
The facts that are of record demonstrate that Tabberone has used the New York Yankees, Atlanta Braves and Arizona Diamondbacks trademarks in a manner that is likely to cause confusion, and consequently, has infringed those trademarks and engaged in unfair competition. In addition, Tabberone transformed the copyrighted Licensed Fabric when it manufactured its products and thereby created derivative works in violation of MLBP's and the Clubs rights under copyright law. In all events, there are many genuine issues of material fact that are in dispute and thus Tabberone is not entitled to summary judgment as a matter of law.
B. Tabberone is not Entitled to Summary Judgment on the Claims of Trademark Infringement and Unfair Competition
1. Tabberone's Prominent and Repeated Use of MLB Clubs' Trademarks is Infringement.
a. The clubs have the right to Control the Nature and Quality of Products sold Under Their Marks.
The New York Yankees, Atlanta Braves and Arizona Diamondbacks own the trademarks that Tabberone uses for its products. (See Orlinsky Decl. ¶¶2-3; Ex. A-D.) Their federal registrations, many of which are incontestable, are evidence of the Clubs' "exclusive right to use the registered mark in commerce or in connection with the goods or services specified in the registrations." 15 U.S.C. §§ 1115 (a), 1065. As the owners of their trademarks, the Clubs have the right to control, through MLBP as their licensing agent, the nature and quality of the products sold under their trademarks. See El Greco Leather Prod. Co. v Shoe World, Inc. 806 F.2d 392, 395 (2d Cir. 1986); see also Arvik v Rockmont Envelope co., 155 f.2D 568, 571-72 (10TH Cir. 1946), Moreover, "the actual quality of the goods is irrelevant; it is the control of quality that a trademark holder is entitled to maintain." El Greco Leather Prod. Co., 806 F.2d at 395. Judge Learned Hand famously explained:
His mark is his authentic seal; by it he vouches for the goods which bear it; it carries his name for good or ill. If another uses its, he borrows the owner's reputation, whose quality no longer lies within his own control. This is an injury, even though the borrower does not tarnish it, or divert any sales by its use; for a reputation, like a face, is the symbol of its possessor and creator, and another can use it only as a mask.
Yale Electric Corp. v Robertson, 26 F.2d 972, 974 (2d. Cir 1928).
Tabberone's fundamental mistake in its various trademark infringement and unfair competition claims is that it implicitly believes that, by purchasing the Licensed Fabric bearing the Clubs' trademarks, it has also purchased the Clubs' trademarks and can identify its finished products by those trademarks. This court has recognized the basic proposition that a person does not acquire a trademark by purchasing a product bearing that trademark and, if he alters the product, he cannot sell it under the original trademark. Adolph Coors Co. v. Generson & Sons, Inc., 486F. Supp. 131 at 136 (D.Colo. 1980) (citation omitted) (Holding that the alteration of Coors beer by defendant's failure to follow Coor's handling policy of its beer resulted in damage to Coors' goodwill and infringement of its trademark.)
In that case, the Court summarily dismissed the argument, one which Tabberone makes here (Tabberone's Summ. J. Mem ¶14), that there can be no trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114 (2003), "because it has not reproduced counterfeited, copied or imitated the plaintiff's trademark." Adolph Coors Co., 486 f. Supp. At 135. The court held that §1114 "has been liberally construed to prevent misappropriation of the goodwill of the owner of a trademark." Id. at 135.
Here, Tabberone changed the very nature of the Licensed Fabric when Tabberone combined it with additional fabrics, and transformed it into different goods—goods whose quality is not controlled by MLBP or the Clubs. The use of genuine parts of build a finished product not justify identifying the finished product by the trademark. J. Thomas McCarthy, 4 MCCARTHY ON TRADEMARKS § 25.42 (4th ed. 2002). As the court in Caterpillar, Inc. v. Nationwide Equipment, 877 F. Supp. 611, 615 (M.D. Fla 1994) held: "A product is not 'genuine' unless it is manufactured and distributed under quality controls established by the manufacturer." As trademark owners, MLB Clubs had the right to control the nature and quality of the goods sold under their trademarks.
b. Tabberone's Use of the Clubs' Marks is Likely to Cause Confusion
For trademark infringement and unfair competition actions, whether under state or federal law, the question to determine is whether the use of a mark is likely to cause confusion among purchases or potential purchasers as to the source of the products. See Beer Nuts, Inc. v. Clover Club Foods Co., 805 F. 2d 920, 924 (10th Cir. 1986). Confusion as to source includes confusion as to sponsorship or approval. See Dallas Cowboys Cheerleaders, Inc. v Pussycat Cinema, Ltd., 604 F.2d 200, 205 (2d Cir. 1979).
The evidence strongly indicates that Tabberone's prominent and repeated use of the Clubs' trademarks is likely to cause consumers to believe that Tabberone is selling New York Yankees, Atlanta Braves and Arizona Diamondbacks fabric tissue box covers, and that Tabberone is taking advantage of the reputation and goodwill of those Clubs.
The determination of likelihood of confusion requires the examination of four factors : 1) the similarity of the marks at issue; 2) the intent of the actor in adopting the designation; 3) the relation in use and manner of marketing between he goods or services marketed by the actor and those marketed by the other; and 4) the degree of care likely to be exercised by purchasers. Beer Nuts, Inc., 805 F2d at 925. This list is not exhaustive nor is any one factor determinative. Id. Because likelihood of confusion requires a complex analysis of the effect of symbols and their use on the buying public, summary judgment is rarely appropriate or granted. See Universal Money Ctrs., v AT&T F.3d 1527, 1530 n.2 (10th Cir. 1994) ("[L]ikelihood of confusion is frequently a fairly disputed issue of fact on which reasonable minds may differ").
Similarity of Trademarks. There is no question that Tabberone is using the New York Yankees, Atlanta Braves and Arizona Diamondbacks as trademarks.
Tabberone's Intent. The enormous advantage conferred by the drawing power of the trademarks of sports teams and other such secondary sources is well recognized. See. Univ. of Pittsburg v. Champion Prods., Inc., 686 F.2d 1040, 1047 (3d Cir. 1982). [Footnote: Others have attempted to profit from the popularity and strength of trademarks associated with sports teams. See, e.g., Bost Prof'l Hockey Ass'n v. Dalls Cap Emblem Mfg., 510 F.2d 1004, 1012 (5th Cir. 1975); Nat'l Football League Prop v Wichita Falls Sportswear, Inc., 532 F.supp. 651, 662 (W.D. Wash., 1982).] The evidence ndicates that Tabberone is keenly aware of this advantage and seeks to gain all the benefits that the MLB Clubs' marks represent. This appears from Tabberone's use of the Clubs' marks in its eBay advertisements. Tabberone names and trademarks its fabric tissue box covers by particular Clubs' trademarks, for example "Atlanta Braves Fabric Tissue Box Cover." (See Orlinsky Decl. Ex E and F.) This identification appears as the title of the listing and again in the advertisements descriptions with no reference to Tabberone as the manufacturer of the product. Tabberone makes additional and repeated references to the Clubs' names. The photograph of the product, of course, bears prominently the trademark of the Club, but in the photograph there is no corresponding equally prominent disclaim of sponsorship or approval of the product or even a reference to Tabberone. Further, consumers seeking genuine New York Yankees, Atlanta Braves or Arizona Diamondbacks products on eBay would be sent to Tabberone's MLB Clubs' listings. They would not be able to determine that these products were not, in fact, official New York Yankees, Atlanta Braves or Arizona Diamondbacks products licensed to Tabberone unless they carefully read through Tabberone's advertisements and its fine print disclaimers.
Tabberone also makes the argument that ordinary consumers would readily understand from the titles of the listings that the New York Yankees, Atlanta Braves or Arizona Diamondbacks trademarks referred only to the fabric bearing the marks as opposed to the fabric tissue box covers themselves. (Tabberone Summ. J. Mem. ¶30.) There, of course, is no factual support for a claim that consumers would parse the identification of goods in this manner and arrive at such an interpretation. For example, a consumer seeing an ad for "New York Yankees cotton t-shirts" would not assume the t-shirts were made with New York Yankees cotton.
Use and Marketing. The fame of the New York Yankees, Atlanta Braves and Arizona Diamondbacks marks and their well-known extensive licensing on a wide variety of products makes it likely that persons encountering Tabberone's home décor products would believe that Tabberone's products are sponsored or approved by those MLB Clubs. In fact, MLBP has licensed the MLB Clubs' marks for various home décor products and for hand-crafted items and eBay is a marketplace through which many MLB licensed products are sold. Persons encountering products on eBay, as elsewhere, would, and should, expect that products bearing the MLB Clubs' trademarks are official MLB Club Products.
Tabberone holds itself out as a commercial enterprise in its eBay advertisements. While it advertises that its fabric tissue box covers are hand-crafted, this does not indicate to purchasers that those fabric covers are not licensed. Many commercial products from hand painted toys to fine china are hand-crafted. Contrary to Tabberone's argument, "hand-crafted" does not mean 'home made;" it means hand-crafted. (See Tabberone Summ. J. Mem. ¶ 32.) In any event, MLBP has licensed unique, hand-crafted products, such as quilts.
Predictably, Tabberone points to its textual disclaimers to excuse its prominent unauthorized trademark use of MLB Clubs' trademarks. (See Tabberone Sum J. Mem. ¶ 28, 31). Disclaimers are notoriously ineffective to dispel confusion. Charles of the Ritz Group, Ltd. v. Quality King. Distrib., Inc., 832 F.2d 1317, 1324 (2d Cir. 1997) (referring to a "growing body of academic literature that disclaimers…are generally ineffective"). Also disclaimers many times are evidence of an intent to confuse where they are difficult to read or are ambiguous. Wichita Falls Sportswerar, Inc., 532 F. Supp. At 661; see Laite, 756 F. 2d at 1547; Dalls Cap & Emblem Mfg., 510 F.2d at 1013.
The Tabberone disclaimer appears in a box in the middle of the text of the advertisement in a smaller font than the rest of the text. It seems to have been designed and placed so that it would be skipped and not make an impression on the public. A potential purchaser would have had to scroll down to have seen the disclaimers. Indeed, the products could be bid on and purchased without the consumer ever seeing the disclaimer. Further, the only identifying trademarks in the photograph of Tabberones' products are the Clubs' trademarks.
Purchasers Likely Degree of Care. The final factor is the degree of care likely to be exercised by potential purchasers. The Tabberone tissue box covers are inexpensive, apparently less than $10. People do not spend a lot of time or consideration purchasing inexpensive items and are more likely to be confused as to their origin. Sally Beauty Co. v. Beautyco, Inc. v. Marianna Im., 304 F.3d 964, 975 (10th Cir. 2002) ("[B}uyers typically exercise little care in the selection of inexpensive items.")
Finally, consumers use eBay search engine to obtain an initial listing of products related to their search terms. The absence of any disclaimer on the initial listing of Tabberone's fabric tissue box covers, which featured only the title to the product, e.g., "Atlanta Braves Tissue Box Cover" and a photograph of the product, which certainly caused initial interest confusion, even if the consumer ultimately were to click through to the advertisement and then scroll down its computer screen and find the Tabberone disclaimer. Initial interest confusion is caused when someone uses another's trademark and misappropriates the trademark owners good will by drawing traffic and interest based on the trademark owner's mark. McCarthy, supra, § 23:6 ("Infringement can be based upon confusion that creates initial customer interest even though no actual sale is finally completed as a result of confusion"). See Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 204 (5th Cir. 1998) Tabberone has succeeded in drawing customers by improperly using the Clubs' trademarks, even if some consumers later discover its products are not authorized.
2. Tabberone's Trademark Infringement Defenses are Unavailing.
a. The Clubs' Licensed Fabric Used by Tabberone is Not a "Monster" That Allows Tabberone to Cause Confusion.
Tabberone argues that MLBP is estopped from protecting the Clubs' goodwill because MLBP licensed unfinished fabric for individual use in the home. Tabberone says "MLBP created its own monster when they released the fabrics." (Ex., A-2, at 54; Tabberone's Summ. J.) As this Court held in Adolph Coors, 486 f. Supp at 136, Tabberone's purchase of the Licensed Fabric is not a right to alter that product and cause confusion and to misappropriate the goodwill of the trademark owner.
b. MLBP's Trademark Infringement Claims are Not Preempted by Copyright Law
Tabberone argues that copyright law entirely preempts that of trademark law, and thus, any trademark claim brought my MLBP cannot survive. This notion is contrary to basic hornbook law. Patents, copyrights, and trademarks protect fundamentally different things. Trademark and unfair competition laws protect reputation and prohibit confusion; copyright law protects expression and its creators. See McCarthy, supra, §6:3. Any given product may be subject to the protections of both copyright and trademark at the same time, and recovery may be had for infringement of both – even when the violation arises from the same conduct. Id. § 6:5 §6:16; see, e.g., Swarovski Am., Ltd. v. Silver Deer, Ltd., 537 F. Supp. 1201 (D. Colo. 1982).
c. Tabberone's Use of MLPB's Trademarks is not Fair Use.
Tabberone's argument that its use of the Clubs's trademarks for its products is fair use fails. A trademark can be used fairly and descriptively. See Lanham Act § 33(b)(4), 15 U.S.C. § 1115(b)(4). However, most fundamentally the use must be fair and cannot cause a likelihood of confusion. See Satarains, Inc. v Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir. 1983)(stating that fair use allows use of a term "in its primary, descriptive sense so long as such use does not lead to customer confusion as to the source of the goods or services"). McCarthy, supra, §11:47. Further, Tabberone's use of the Clubs' trademarks does not satisfy the three elements of a fair use defense: "1) the use of the term is not as a trademark or service mark; 2) Defendant uses the term 'fairly and in good faith'; and 3) 'only to describe' its goods or services." McCarthy, supra, § 6:49 (citing Seaboard See Co. v Bemis Co., 632 F. Supp. 1133, 1138 (N.D. Ill. 1986)); see also New Kids on the Block, 971 F.2d at 308.
First, Tabberone uses the Clubs' marks, not in a purely descriptive sense, but as trademarks for its products. See Selchow & Righter Co. v. Decipher, Inc., 598 F. Supp. 1489, 1503 (e.D. Va 1984) (The use of TRIVIAL PURSUIT trademark was impermissible where "[r]ather than describing an aspect of its own products, [defendant's] use of the [plaintiff's] trademark, in large print in numerous locations on its box, serves to sell its products")
Second, Tabberone's use of the Clubs' trademarks is not fair nor is it apparently in good faith. This is evident from the prominence of the Clubs' marks as used in Tabberone's titles for its eBay advertisements and photographs without corresponding disclaimers and the repeated references to the Clubs' trademarks, Major League Baseball and MLB. Third, Tabberone does not limit its use of the Clubs' trademarks solely to describe the Licensed Fabrics. See Caterpillar, Inc., 877 F. Supp. At 615 ("Defendant must use Plaintiff's mark discreetly, not with an emphasis likely to lead the public into a false belief that the entire new product was manufactured by [Defendant]."). See also Jerome Gilson, 2 TRADEMARK PROTECTION AND PRACTICE, § 5.09[3](ed. 2003) ("Giving undue prominence to a component or ingredient trademark, so that the public would tend to believe that the component or ingredient originates with the manufacturer, is ordinarily unlawful."). Here, Tabberone uses the Licensed Fabric as a bootstrap to sell its fabric tissue box covers as genuine Club marked and sponsored products.
C. Tabberone's Copyright Defense Should Be Denied Because Its Tissue Box Covers are Derivative Works.
Tabberone does not have the right to use MLBP's copyrights, because Tabberone's fabric tissue box covers constitute derivative works. A copyright owner has the right to prevent others from copying its fixed expression and from creating derivative works employing that expression. The right to produce such derivative works is protected by the Copyright Act of 1976, 17 U.S.C. § 106(2) (2003). A derivative work includes any work based on the copyrighted work where it has been "recast, transformed, or adapted." (Emphasis added).
Congress intended broadly that a violation of the right to make derivative works would occur when the infringing work "incorporates[s] a portion of the copyrighted work in some form." Mirage Ed., Inc. v Albuquerque A.R.T. Co., 856 F.2d 1341, 1343-44 (9th Cir. 1988) (quoting 1976 U.S.Code cong. & Admin. News 5659, 5675 (emphasis added)). Further, the language "recast, transformed, or adapted" of the statute includes more than mere reproduction of the original copyright. Id. at 1344. Courts have recognized derivative works violations, where actual reproduction of a copyright was not involved. See, e.g., id. at 1343 ("By borrowing and mounting the preexisting, copyrighted individual art images without the consent of the copyright proprietors…appellant has prepared a derivative work and infringed the subject copyrights."); Data Prod., Inc. V. Reppart, No. 89-1291-K, 1990 U.S. Dist. LEXIS 16330, at *14 (D. Kan. Nov. 29, 1990)(finding derivative works violations where defendants modified and sold computer programs). Because Tabberone has "transformed" the form and function of the fabric into an entirely different product – a product that is situated in a different market than that of uncut fabric – and marketed and sold that product instead of using it strictly on an individual basis, the fabric tissue box covers must be considered derivative works.
While Tabberone criticizes the Ninths Circuit's decision in the Mirage case, the reasoning of Mirage is sound and the case is good law. See, e.g., Munoz V. Albuquerque A.R.T., Co. No. 93-35743, 1994 U.s. App. LEXIS 29405, at *3-4 (9th Cir. Oct. 19,m 1994). Transformation such as Tabberone's taking the Licensed Fabric, cutting and sewing the fabric, and adding additional material to make a new, finished product transform the fabric into a new product creates an original derivative work. (Summ. J. Mem ¶ 51.).
Tabberone further claims that its use of any MLBP or Club copyrights is lawful under the First Sale Doctrine, found at 17 U.S.C. § 109 (a). This provision only allows for the purchase and subsequent transfer of a particular copyrighted item. See Mirage Ed., Inc., 856 F.2d at 1344. The first sale doctrine does not obviate a copyright holder's right to derivative works. Id.; Data Prod., inc., 1990 U.S. Dist. LEXIS 16330, at *13-14. Thus, the mere sale of the fabric to Tabberone without a specific transfer by MLBP or the Clubs of its exclusive right to prepare derivative works does not transfer that right to Tabberone. Consequently, the first sale doctrine does not bar a claim of copyright infringement in this matter. See Mirage Ed., Inc., 856 F.2d at 1344; Data Prod., inc., 1990 U.S. Dist. LEXIS 16330, at *13-14.
Finally Tabberone does not any implied license to transform the Clubs' Licensed Fabric into an article of commerce because the Licensed Fabric contains a specific statement on the selvage of the fabric prohibiting such commercial use.
D. Tabberone's Motion for Summary Judgment is Premature at This Time As there are Many Outstanding Genuine Issues of Material Fact.
Summary judgment on the trademark, unfair competition and copyright issues is simply inappropriate at this juncture. The Supreme Court has flatly stated that Rule 56(f) requires "that summary judgment be refused where the nonmoving party has not had the opportunity to discover information that is essential to his opposition." Anderson V. Liberty Lobby, Inc., 477 U.S. 242, 250n.5 (U.S. 1986). "Only in the rarest cases may summary judgment be granted against a plaintiff who has not been afforded the opportunity to conduct discovery." Hellstrom v. United States Dept' of Veterans Affairs, 201 F.3d 94, 97 (2nd Cir 2000). As explained above, there are many material facts regarding Tabberone's trademark infringement, unfair competition and copyright claims that are the subject of dispute. Accordingly, summary judgment must be denied.
E. Tabberone's State Law and Federal Perjury Claim Fail As A Matter of Law
Each of the state law claims and the perjury claim under 17 U.S.C. § 512 that Tabberone brings in its motion rests on the assumption that is was somehow inappropriate for MLBP to assert rights to the Clubs' marks. Protecting the use of MLB Clubs' trademarks is not only a privilege that MLBP holds, it is a duty that must be taken seriously in order to maintain the enforceability of these trademarks. See e.g., Fuji Photo Film Co v. Shinohara Shoji Kabushiki Kaisha, 754 F. 2d 591, 602 (5th Cir. 1985)("A trademark holder is required to police his mark.") While Tabberone may disagree with MLBP's legal position, and may even be outraged by it, MLBP committed no wrongdoing by notifying eBay of its beliefs. In fact, the Precious Moments case that Tabberone relies heavily upon in its motion actually granted relief for a trademark claim similar to MLBP's trademark claim against Tabberone. See Precious Moments, Inc. v La Infantil, Inc., 971 F. Supp. 66, 69 (d.P.R. 1997).
Most significantly, Tabberone does not claim or allege any misstatement of fact by MLBP or any statement any MLBP that Tabberone justifiably relied upon to its detriment. Accordingly, Tabberone's claims for (1) fraudulent misrepresentation (2) negligent misrepresentation and (3) misrepresentation under 17 U.S.C. § 512 (mischaracterized as "perjury") all must fail. "Expressions of opinion cannot support a misrepresentation claim." Ehaffy, Rider, Windholz, & Wilson v. Central Denver Bank, 892 P.2d 230, 237 (Colo. 1995).
For its tortious interference claim, Tabberone has failed to allege facts showing MLBP improperly interfered with its contracts. Under the Restatement (Second) of Torts § 767, incorporated into Colorado state law by Memorial Gardens, Inc. Olympian Sales & management Consultants, Inc., 690 F. 2d 207, 210 (Colo. 1984) instituting a lawsuit or the threat of a lawsuit is improper only "if the actor has no belief in the merit of the litigation" or if the actor "institutes or threatens to institute the litigation in bad faith, intending only to harass the third parties and not to bring his claim to definitive adjudication." Restatement (Second) of Torts § 767, comment c. Throughout the course of MLBP's communication with Tabberone, MLBP continuously asserted its belief in the merit of its position, and asserted its intention to pursue protection of the Clubs's trademarks and copyrights. In reporting Tabberone's listings to eBay, MLBP followed procedures that were set up by eBay and that Tabberone accepted to sell its products over eBay. Finally, MLBP did not complain to any third party.
MLBP assertion of rights under copyright and trademark law does not rise to the level of conduct which is "beyond all possible bounds of decency," nor are its actions so "atrocious" as to be "utterly intolerable in a civilized community" that is required for a claim of outrageous conduct under Colorado law. Bob Blade Builders v. Gamling, 18 P.3d 859, 866 (Colo. App. 2001). A trademark and copyright owner's desire to protect its intellectual property rights is an action that is neither outrageous or extreme, but rather something that occurs in the ordinary course of business.
Rather than showing severe emotional distress, it appears Tabberone has relished its recent legal experiences, and particularly the federal action it filed against MLBP. This is evidenced by plaintiff's own website which touts its apparent success in its intellectual property disputes and the traffic those disputed bring to its website. (Ex. A-3). In addition, Tabberone has issued three press releases, and, publicized a Fox television news story concerning this action.
IV. CONCLUSION
For the foregoing reasons, the Court should deny Tabberone's motion. MLBP respectfully requests oral argument on this motion.
Date: July 18, 2003