Monday, September 12, 2011

HELLO KITTY LAWSUIT

While googling Hello Kitty as always I found a old lawsuit against Sanrio from many years ago in my hometown. How odd. According to the plantiffs Sanrio harassed them for selling Hello Kitty fabrics and interfering with their business. Isn't that the pot calling the kettle black. If your selling a false Hello Kitty  item don't you think that's interfering with their business?  It's even frowned upon to buy items from a Sanrio store then resell them. You won't see me doing that because I'm too greedy with my Hello Kitty belongings. I don't even like to share. lol


You got to read it to believe it:

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO


COMPLAINT OF TORTIOUS BUSINESS INTERFERENCE
UNDER COLORADO LAW, PERJURY UNDER 17 U.S.C. §512
AND MISREPRESENTATION UNDER 17 U.S.C. §512(f)
Plaintiffs Karen Dudnikov, and Michael Meadors, pro se, complains of Sanrio, Incorporated ("Sanrio"), and allege as follows:
I. 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. Additionally, this court has jurisdiction under the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. §512 (g) (3) (D) wherein jurisdiction is established in this court as part of the counter notification procedure. Venue is also proper in this judicial district pursuant to 28 U.S.C. § 1391(b) in that a substantial part of the events or omissions giving rise to this law suit, as well as injury to the plaintiffs, have occurred or will occur in this district, as a result of the unlawful acts of the defendant as outlined below.
II. Relevant Factual Background
        2. Plaintiffs Karen Dudnikov, a/k/a TABBERONE, and husband Michael Meadors, are Colorado residents who run a unincorporated home-based business that primarily does business on the eBay internet auction site as well as through a web site, www.tabberone.com.         3. Using the eBay seller name of Tabberone, the plaintiffs hand manufacture fabric items from lawfully acquired copyrighted fabrics and then sell these fabric items on the web site as well as through eBay. The Plaintiffs also buy and resell a variety of collectibles and other items in the same manner. They have been selling fabric items and collectibles on the internet auction site since 1998.
        4. Upon information and belief, defendant Sanrio Inc., is a California corporation with it's headquarters located at 557 Eccles Avenue, South San Francisco, CA 94080.
        5. Upon information and belief, Sanrio has authorized the manufacture and sale of a large variety of fabrics bearing copyrighted images whose rights belong to the defendant (“Hello Kitty Fabrics”). These Hello Kitty Fabrics have been in general public release for several years.
        6. Upon information and belief, Sanrio has actively engaged in threatening and intimidating persons who have attempted to sell items on eBay when the listings are about items being offered for sale made from licensed fabrics depicting the images of the “Hello Kitty” cartoon characters. These actions include threats of litigation through cease and desist letters as well as terminating eBay auctions selling fabric items made from the mentioned fabrics.
        7. This action arises out of defendant's improper use of the eBay VeRO Program to terminate an auction listing by the plaintiffs. The defendant alleged in an affidavit to eBay that the auction by the plaintiffs was infringing because the plaintiffs were infringing upon Sanrio trademarks and/or copyrights.
        8. By this complaint, plaintiffs seek a Declaratory Judgment affirming the right under law to use licensed copyrighted fabrics without further interference from the defendant. Plaintiffs seek a Declaratory Judgment affirming the right to refer to the “Hello Kitty” Characters in disclaimers with these sales and any other similar sales as well as their right to use detailed pictures of the products offered for sale.
        9. Based upon information and belief, Sanrio knows, and its counsel knows, or reasonably should know, the fabric items are not derivatives as defined by federal courts, federal law and recognized authorities on copyrights. Sanrio knows, and their counsel knows, or reasonably should know, that under the Lanham Act, the term "authorized" refers to the counterfeiting of a mark or trademarked product and does not apply to lawfully acquired trademarked material. The intimidation tactics used by Sanrio are therefore illegal and immoral. They rely on the fact people can't fight back because of the potential enormous legal expense.
III. Defendant's Illegal Acts
a. Misrepresentation         10. Based upon information and belief, on or about January 28, 2004, the defendant requested eBay terminate the auction listing by Tabberone, falsely alleging to eBay in an affidavit that the article offered in the auction was an infringing item. The false affidavit filed by the defendant constitutes misrepresentation under 17 U.S.C Section 512(f).
        11. Basic evidence of the false affidavit is that the terminated auction was for a fleece throw manufactured under license to Sanrio. The only change the Plaintiffs made to the fleece throw was to serge the edges. This is prima facie evidence the person(s) responsible for terminating the auctions did not read the listing to make any determination as to whether they were in fact infringing. Therefore, they could not have a “good faith belief” that the auctions were in fact infringing because they had not taken the time to properly ascertain that. Their statement to eBay was deliberate perjury. b. Tortious Business Interference
        12. By listing the item on eBay, a contract existed between the plaintiffs and eBay whereby eBay agreed to host the listing for a period of time. During that time it was reasonable to expect another party to place a bid on the item. Receiving a bid constitutes a binding contract to sell and to buy. The defendant reasonably knew contracts were in effect because the defendant had to look at the listings to affirm information used to terminate the auctions. The defendant improperly instructed eBay to terminate the auction listings effectively and unilaterally canceling the contracts that existed. This action resulted in loss of future revenue and good will to the plaintiffs. The action by the defendant constitutes tortious business interference under Colorado law.
IV. Communications
        13. When questioned about the auction termination, Sanrio could not state specifics as to why the auction was terminated without seeking assistance from the plaintiffs in the way of a digital image of the item that was terminated. The email from Sanrio stated: “E-mail me a digital photo of your item and I will tell you specifically what the problem is.”
        14. What is evident from Sanrio's statements is that Sanrio terminated the auction without bothering to preserve documentation of what the auction actually said or contained. Sanrio was so unconcerned about their actions that preserving evidence wasn't important to them.
        15. Sanrio's last email stated:
“This would apply if you were simply purchasing Licensed Hello Kitty fabric and reselling it "unaltered" for a presumingly higher price than you paid for it. Sanrio Co. Ltd., holds the rights to all "derivitive" products made with their copyrighted character properties. Therefore items made from the Licensed Hello Kitty fabric can be made for personal use only, not for resale without the express permission from Sanrio Co. Ltd., or Sanrio, Inc. “
        16. Based upon the previously established lack of reasonable response by the defendant, the plaintiffs felt further communication would be fruitless. It was apparent these actions would continue. On February 12, 2004, plaintiffs filed a counter notice with eBay pursuant to 17 U.S.C. §512.
V. Arguments
a. Copyrights 1. First Sale Doctrine         17. 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.
        18. The defendant, directly and through licensees, has released different copyrighted fabrics in the last few years through an estimated ten thousand national fabric outlets including Hobby Lobby. 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.
        19. 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.
        20. 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. 2. Derivative Works 21. 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.
        22. 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."
        23. 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.
        24. 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.").
        25. 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).
        26. 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. Indeed, it was the intent of copyright holder the fabric be made into some sort of usable object.

        27. 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)
        28. In Quality King Distributors, Inc. v. L'Anzaresearch Int'l, Inc (98 F.3d 1109, reversed), Justice Stevens noted for a unanimous Supreme 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."
        29. 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 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. The Court rejected the reasoning in Mirage properly concluding Mirage had not placed enough emphasis on "originality". Many law scholars also disagree with Mirage (Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F. 2d 1341.
The only relief the court granted Precious Moments was to require La Infantil to add a label in conjunction with the fabric items because the fabric items were being sold in stores owned by La Infantil and that might be “confusing”.

        30. 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.
3. Quality Exception
        31. Nor can the defendant claim an exception to the First Sale Doctrine citing quality issues.
        32. Ebay 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 4735 positive feedback messages in the last five years with an overall positive satisfaction rating of 99.8%. 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.
Trademarks
1. Fair Use

        33. Fair use of trademarks in conjunction with selling or promoting the sale of goods made by the mark holder is acceptable. Sanrio appears to contend that using the fabric to make fabric items and then to sell a fabric item is a violation because they say so.
        34. 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)
        35. 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.
        36. 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).
2. Disclaimers
        37. The plaintiffs liberally use disclaimers in their eBay auction listings. Such use is prima facie evidence of lack of intent. The lack of positive statements indicating an affiliation affirms there is none in the mind of the buyer. The presence of a statement saying there is no affiliation solidly reinforces that fact to the buyer. The disclaimer in the listing was the same size font, in bold letters, and back-highlighted to attract attention. No reasonable person would conclude that Tabberone was connected with Sanrio in a business relationship. No reasonable person would be confused.
VI. CONCLUSION
        Based upon the above arguments, the plaintiffs firmly believe that the actions of Sanrio are calculated, improper, unethical and illegal and will continue unless stopped. Sanrio, 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. The actions of Sanrio has caused financial harm, present and future, to the plaintiffs, as well as defamed the conduct and character of their business.
        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. Persons selling fabric items made from lawfully acquired copyrighted fabric do not need "authorization" to make and subsequently offer for sale these fabric items.
        4. Auctions terminated for reasons stated in 1, 2 and 3 constitute tortious interference with business.
        5. Auctions terminated for reasons stated in 1, 2 and 3 constitute misrepresentation under 17 U.S.C Section 512(f) and perjury under 17 U.S.C Section 512(c)(3)(A)(vi).
        6. Plaintiffs request the court grant legal costs and any other reimbursements deemed to be appropriate.
        7. Should the issues go to trial, the plaintiffs request a jury trial.
        Respectively submitted this 12th day of February, 2004



 So I wonder who won the case?



DISCLAIMER:  Complete copy and original location of lawsuit found at
http://www.tabberone.com/Trademarks/HallOfShame/Sanrio/lawsuit/complaint.shtml


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