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TY, INC. v. GMA ACCESSORIES

April 8, 1997

TY, INC., Plaintiff,
v.
GMA ACCESSORIES, INC., and PAUL HARRIS, Defendants.



The opinion of the court was delivered by: NORGLE

 CHARLES R. NORGLE, SR., District Judge:

 "All animals are equal but some animals are more equal than others." George Orwell, Animal Farm, ch. 10 (1945). Perhaps Plaintiff Ty, Inc. ("Ty") would agree.

 Before the court is Ty's Motion for Preliminary Injunction and Expedited Discovery. For the following reasons, the motion is granted.

 I. BACKGROUND *fn1"

 Ty manufactures "Squealer the Pig" ("Ty Pig") and "Daisy the Cow" ("Ty Cow"), soft-sculptured "bean bags" which Ty sells as part of its "The Beanie Babies Collection" ("Beanie Babies"). Ty is the owner of registered copyrights for both of those bean bags. *fn2"

 Defendant GMA Accessories, Inc. ("GMA"), manufactures "Preston the Pig" ("GMA Pig") and "Louie the Cow" ("GMA Cow"), also soft-sculptured bean bags, which GMA sells as part of its "Floppy Friends" collection. *fn3"

 Ty entered a licensing agreement with another company, which is not in the business of manufacturing toys ("Company X"), which allows Company X to use some Beanie Babies designs or trademarks for promotional purposes in Company X's business. Company X's license is effective for a fixed period of time, requires Company X to place a Ty tag on each of the Company X promotional products, and requires that the Company X promotional products will be of a recognizably different size than actual Beanie Babies; and Company X will not produce any bean bag toys, other than the Company X promotional products, for a period of a year after the end of the promotion. Insuper, Ty has approval rights over the Company X promotional products. The agreement includes an acknowledgment by Ty and Company X that the integrity of the Company X promotional products and their materials are important. The agreement also includes a requirement that Company X will include a notation on the packaging of its promotional products that Beanie Babies are available at finer retail stores. Marketing and advertising material will also contain such a notation. In addition, the agreement provides that Ty does not confer any of Ty's intellectual property, including copyrights, to Company X.

 Ty submits that GMA's Pig and Cow are virtually identical to Ty's Pig and Cow. Ty states that Defendant Paul Harris ("Paul Harris"), a store located in shopping malls, displayed and offered for sale both the GMA Pig and the GMA Cow.

 In short, Ty brings this action for copyright infringement, claiming that the GMA Pig and the GMA Cow infringe upon Ty's copyrights. *fn4"

 After filing suit regarding the cows, in an informal attempt to resolve their cow dispute, Ty contacted GMA and Paul Harris, requesting that they cease sale of the GMA Cow. GMA, although denying wrongdoing, later agreed to stop selling the GMA Cow by letter of January 8, 1997, and removed the GMA Cow from Paul Harris shelves. When pre-litigation attempts at informal resolution of the pig dispute were unsuccessful, Ty amended its Complaint to include allegations regarding the GMA Pig. The instant Complaint charges copyright infringement of both the Ty Pig and the Ty Cow.

 Ty moves for entry of a preliminary injunction prohibiting Defendants from "importing, manufacturing, distributing, marketing, and selling . . . products which infringe upon [Ty's Beanie Babies copyrights], and requiring . . . Defendants to produce all copies or reproductions of the [Floppy Friends], all patterns and other means for producing such copies and all advertisements and promotional literature therefor to the Court for impoundment." (Mem. Supp. Mot. Prelim. Inj. at 3.)

 II. DISCUSSION

 In order for the court to enter a preliminary injunction, the movant must demonstrate that (1) it is likely to succeed on the merits, (2) it has no adequate remedy at law, and (3) it will suffer irreparable harm in the absence of preliminary relief. Publications Int'l, Ltd. V. Meredith Corp., 88 F.3d 473, 478 (7th Cir. 1996). If the movant demonstrates these elements, the court then balances the irreparable harm to the movant against the harm which would be suffered by the non-movant, as well as non-parties, if preliminary relief is granted. Id. The court uses a "sliding scale" approach to this balancing; that is, "the more likely it is that [the movant] will succeed on the merits, the less the balance of irreparable harms need weigh toward its side . . . ." Abbott Lab. v. Mead Johnson & Co., 971 F.2d 6, 11-12 (7th Cir. 1992).

 A. Likelihood of Success on the Merits

 The manufacture, distribution and/or sale of an unauthorized copy which is substantially similar to a protected work infringes on the copyright in the work. See 17 U.S.C. §§ 106, 501(a); Wildlife Express Co. v. Carol Wright Sales, Inc., 18 F.3d 502 (7th Cir. 1994) (finding copyright infringement of soft-sculptured animal heads and tails on duffel bags); Atari, Inc. v. North Am. Philips Consumer Elec. Corp., 672 F.2d 607, 614 (7th Cir. 1982). In order to establish copyright infringement, a plaintiff must demonstrate that it owns a valid copyright, and that the defendant copied the protected work. Wildlife Express, 18 F.3d at 507.

 1. Copyright Protection

 Following the Wildlife Express analysis, the court first considers the validity of Ty's claimed copyright. See Id. Certificates of registration, such as those submitted by Ty, are prima facie evidence of valid copyrights. Id. (citing 17 U.S.C. § 410(c)). Although such evidence may be rebutted, id., Defendants make no attempt to do so. As such, the court accepts Ty's supported assertion that the Ty Pig and the Ty Cow are protected.

 2. Copying

 Again, to demonstrate copyright infringement, after establishing that a work is protected, a plaintiff must demonstrate that the defendant copied the protected work. Because direct evidence of copying is often unavailable, courts look for an inference of copying in circumstantial evidence. See Atari, 672 F.2d at 614. Courts may infer copying where (1) the defendant had access to the protected work and (2) the accused work is substantially similar to the protected work. Id. Courts may not draw such an inference where (1) the accused work arose independently without copying or (2) the similarities between the two works are insufficient to demonstrate copying. Wildlife Express, 18 F.3d at 508.

 a. Access

 Defendants dispute that they had access to the Ty Pig and the Ty Cow when creating the GMA Pig and the GMA Cow. Rather, Defendants contend that the GMA Pig and the GMA Cow arose independently. In response, Ty argues that Defendants had access to the Ty Cow and the Ty Cow due to the Beanie Babies' tremendous success. Ty also avers that Paul Harris had been a Beanie Babies customer of Ty's; ...


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