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TY, INC. v. PUBLICATIONS INTERN.

January 24, 2000

TY, INC., PLAINTIFF,
V.
PUBLICATIONS INTERNATIONAL, LTD., AND PENGUIN PUTNAM, USA, DEFENDANTS.



The opinion of the court was delivered by: Zagel, District Judge.

MEMORANDUM OPINION AND ORDER

Ty, Inc. makes Beanie Babies® which have been, to my perception, extraordinarily popular toys both in terms of the sheer number (over a billion) of them which have been distributed and the very number of years (at least five) that they have been prominent in the marketplace.*fn1

The defendants do not make rival products — plush toys; they make books about Beanie Babies®. Ty has designed and sold over 200 different Beanie Babies®. New ones are issued periodically and older ones are retired; that is to say, Ty stops making additional toys of a model it retires. By making many different styles of Beanie Babies®, Ty creates the possibility that some people will wish to collect them. I have personal knowledge of at least two such persons, both of them in the early stages of the American educational process. One of these collectors displays her gift for cataloguing and her nascent interest in zoology by organizing her collection into Beanie mammals, Beanie aquatic creatures (excluding aquatic mammals), Beanie prehistoric creatures, Beanie flying creatures and Beanie mythical creatures. There may have been, over the years, other organizing principles of the collection, but I was unable to sustain my interest long enough to grasp them fully. The other collector is primarily interested in the projected cash value of the toys, particularly the discontinued models, all to the end of financing a planned period of attendance at medical school in the far-off future.

By design, the Beanie Babies® become collectibles, and around them has arisen a business devoted to serving the interest of the collectors by providing them with information about Beanie Babies®. There are books and websites that offer exhaustive lists, with photographs, of all known Beanie Babies® and information about the current and projected market value of each Beanie Baby.*fn2 There is information too about peripheral Beanie Baby facts, i.e., the different kinds of heart-shaped hang tags that come with each toy and how these tags evolved over time. Beanie Babies® are privately traded and sold among collectors, and there are auctions over the internet. Perhaps there are chat rooms for devotees. According to the defendants, there is a gray-market for certain Beanie Babies® meant for sale only in the U.K. and Canada, but nonetheless desired by collectors in the United States. Leaving to one side the average age of the collectors, this is much like the world of baseball card enthusiasts.

The defendants produce and sell a book about Beanie Babies®, which includes an historical essay on the subject and a Baby-by-Baby catalogue, a page per Baby. Each page has a picture of the toy, its date of birth, date of release, date of retirement, if any, and its estimated value along with other data, including such things as misprinted labels, which are rare and increase value. The author also rates some as Highly Recommended, as is Floppity (the lilac rabbit). Gobbles (the turkey) is not highly recommended. According to defendants, prices range from the $5-7 category, into which many fall, all the way to the rarefied upper values of Bongo (the monkey) (tan-tailed Nana only) at $4000, Peanut (the elephant) (royal blue only) $5000, and Punchers (not Pinchers) (the lobster) at $4750.

Ty holds copyrights to the original soft sculptures marketed as part of its line of toys, and it has trademark registrations for the marks associated with the product and its heart-shaped hang tags. It has common-law trademarks too. It wants me to enjoin defendants from publishing and selling its books: For the Love of Beanie Babies and Beanie Babies Collector's Guide. The books' covers do contain the legend: This publication is not authorized or licensed by Ty, Inc. Publications International, Ltd. is not affiliated with Ty, Inc.

Ty obviously is not displeased, in principle, with books or magazines for collectors of the toys — this is precisely what the creator of collectibles wants to occur. The company has licensed three such publications and is willing to license others. Indeed, Ty has licensed a corporation to form the BEANIE BABIES OFFICIAL CLUB. The club gives out information about the toys and sells related products. At least one licensee has complained to Ty about competing with defendants' unlicensed product. But, says Ty, the defendants here do not have licenses, and their books display unauthorized photographs of the copyrighted Babies and the trademarks. Ty wants the defendants stopped, as they have had others stopped in this Court. See Ty Inc. v. West Highland Pub. Inc., 98 C 4091, 1998 WL 698922 (N.D.Ill. 1998) (Norgle, J.).

Defendants begin by saying that no injunction may issue against publication of its books because the First Amendment prohibits such injunctions. They rely heavily upon Time, Inc. v. Hill, 385 U.S. 374, 87 S.Ct. 534, 17 L.Ed.2d 456 (1967), which held that the First Amendment protected a magazine from an invasion of privacy suit (absent knowing or reckless falsity) by a family, an incident from whose life was falsely portrayed by Life magazine. The case is memorable for its divisions: two Justices joined the majority opinion only "in order for the Court to be able to agree on an opinion in this important case." 385 U.S. at 398, 87 S.Ct. 534 (Black and Douglas, JJ.). It is memorable for its alignments: Brennan, Stewart, White (with Black and Douglas) vs. Harlan vs. Fortas, Clark and Warren. It is memorable for the fact that Richard M. Nixon argued for Hill. It is memorable that false portrayals did not cast the plaintiffs in a bad light. It is not memorable for any discussion of the relationship of copyright and trademark protection to the ambit of First Amendment protection.

The Supreme Court did address that relationship in Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562, 97 S.Ct. 2849, 53 L.Ed.2d 965 (1977), a case in which a human cannonball sued a television station for videotaping his entire 15-second act and then broadcasting it. Zacchini thought that the free broadcast might reduce the number of persons willing to pay to see it. Over objection that Time, Inc. v. Hill precluded a lawsuit over the broadcast, the Court wrote:

The Constitution no more prevents a State from requiring respondent to compensate petitioner for broadcasting his act on television than it would privilege respondent to film and broadcast a copyrighted dramatic work without liability to the copyright owner. 433 U.S. at 575, 97 S.Ct. 2849.

In Cohen v. Cowles Media Co., 501 U.S. 663, 669, 111 S.Ct. 2513, 115 L.Ed.2d 586, the Court said: "The press, like others interested in publishing, may not publish copyrighted material without obeying copyright laws."

These cases do not destroy defendants' argument, because, they concede, at least at this stage, that they might be liable for damages. It is the prior restraint, the injunction against further distribution, which, they say, is a violation of the First Amendment. Taken literally, the words of the Supreme Court authorize injunction, because "obeying copyright laws" usually includes obeying orders to stop violating the copyright. But the Supreme Court has not explicitly said that copyright injunctions are permissible against the press, although there is a hint that such injunctions are legal in San Francisco Arts & Athletics v. United States Olympic Committee, 483 U.S. 522, 107 S.Ct. 2971, 97 L.Ed.2d 427 (1987) (upholding injunction against use of the term "Olympics" to describe an athletic competition where Congress had granted exclusive use of word to the United States Olympic Committee).

The hint must be fairly strong because there are not many reported cases in which challenges to copyright or trademark injunctions are made upon First Amendment grounds. Those challenges that are made have been summarily rejected. A parodist once wrote a poem about the O.J. Simpson murder trial entitled The Cat NOT in the Hat! A Parody by Dr. Juice, which was found to be an infringement of The Cat in the Hat, by Dr. Seuss. On appeal, the panel of the Ninth Circuit said in a footnote that it "reject[s] outright [the] claim that the injunction in this case constitutes a prior restraint in violation of free speech guaranteed by the United States Constitution." Dr. Seuss Enterprises L.P. v. Penguin Books, 109 F.3d 1394, 1403 n. 11 (9th Cir. 1997). The short shrift given to the claim is typical of all the cases cited by the Ninth Circuit. I too reject the bald claim that the injunctive relief sought violates the First Amendment absent extraordinary circumstances. I deny the motion to strike the request for injunctive relief. The fair use doctrine, which I address in a moment, is adequate protection of the defendants' constitutional right to comment upon and criticize the Beanie Babies, individually or as a whole.

The standards for preliminary injunction are well known. I am to consider likelihood of success (more than negligible is the minimum), inadequacy of money damages or irreparable harm, the balance of harms to the parties from the wrongful granting or denial of injunctive relief and the consequences of the ruling to the public. These factors are somewhat interdependent, because an overwhelmingly good case on the merits might justify an injunction even if the harm of denying the injunction is not very great. Storck U.S.A., ...


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