United States District Court, D. Arizona
ORDER
Honorable Roslyn O. Silver Senior United States District
Judge
As
established at trial, ducks in nature are often yellow and
usually have wings, bills, and tails. But “[d]ucks do
not naturally wear sunglasses in the wild.” (Doc. 177
at 27). Both parties decided to try to improve on nature by
manufacturing pool floats in the shape of ducks wearing
sunglasses. Plaintiff Great American Duck Races Inc.
(“GAME”) owns copyrights and trademarks covering
its depiction of a duck wearing sunglasses and GAME believes
the pool float manufactured by Defendant Kangaroo
Manufacturing Inc. (“Kangaroo”) infringed those
copyrights and trademarks. GAME also believes Kangaroo
engaged in unfair competition. Based on the evidence
presented at the trial, all of GAME's claims do not
succeed.
BACKGROUND
Many of
the relevant facts were undisputed at trial but to the extent
there were factual disagreements, the following represent the
Court's factual findings. In 1988, Eric Schechter started
GAME. At the time, GAME was focused on conducting fundraising
activities. The fundraising concept was for individuals to
“adopt” a small toy duck and then all the ducks
would “race” on a waterway, such as the Salt
River Canal or in New York Harbor. (Doc. 176 at 36). The
person who had adopted the duck that finished first would win
“a new car [or] prizes, ” which had been donated.
The sponsoring organization would then retain all the
“adoption” fees. (Doc. 176 at 35). Hoping to
prevent knockoffs, Schechter realized he needed to
“brand” or make GAME's races
“unique.” “[O]ne of the ways to do that was
the duck itself.” (Doc. 176 at 33). Thus, Schechter and
a few other individuals designed a unique plastic duck to use
in the fundraising activities. (Doc. 176 at 27, 30).
Schechter
and his collaborators designed a small duck from
“scratch.” (Doc. 176 at 33). GAME's original
duck was similar to the familiar Rubber Duckie of Sesame
Street fame with one crucial alteration: sunglasses. As
explained by Schechter, the sunglasses served no functional
purpose. (Doc. 176 at 34). Rather, the sunglasses were merely
to differentiate GAME's duck from other similar ducks
already available in the market.
GAME
experienced great success in its fundraising business. In
2001, a major retailer approached GAME and asked “to
take the duck and make it into some pool products.”
(Doc. 176 at 38). That inquiry resulted in GAME producing a
few products, such as a “pool-dispensing
chlorinator” with the distinctive GAME duck on the top.
(Doc. 176 at 40). In 2012 or 2013, other retailers asked GAME
to make a large inflatable in the shape of GAME's duck.
(Doc. 176 at 61). In 2015, GAME produced what it calls the
“Giant Inflatable Derby Duck.” That product was
offered for sale in 2016 and it became an immediate hit.
(Doc. 176 at 66, 77-78).
The
Giant Inflatable Derby Duck (“Derby Duck”), when
inflated, measures 81 inches long, 76 inches wide, and 44
inches tall.[1] The Derby Duck is yellow and has a red
bill, which is open. The top of the Derby Duck's head has
a small crest. The Derby Duck is wearing black sunglasses
that are also inflatable, giving them a striking
three-dimensional appearance. The Derby Duck has inflatable
wings and an inflatable tail.[2] The Derby Duck is a "flatbed
float" which means there is a flat surface where
individuals can sit or lie down without touching the water.
(Doc. 176 at 110).
The
Derby Duck is sold in a rectangular box. On the front of that
box is a picture of the Derby Duck in a swimming pool, with
three people sitting on it and one standing next to it. The
name "Giant Inflatable Derby Duck" is written
across the top of the front in blue letters on a white
background. The bottom of the box's front has white
writing on a blue background. The other sides of the box also
have blue backgrounds with white writing. The back of the box
is mostly white with blue writing. The back also has a
different picture, depicting a woman lying on the Derby Duck.
GAME
has sold tens of thousands of its Derby Duck through numerous
retailers. The Derby Duck has appeared in the press and in
viral videos. When purchasing the Derby Duck, consumers
encounter either the product box or two-dimensional pictures.
Consumers usually do not see the Derby Duck inflated prior to
purchasing.
GAME
owns various copyrights and trademarks involving a duck
wearing sunglasses. GAME uses its trademarks in selling
"a wide variety of products and services" including
the Derby Duck as well as "pool lights, chlorinators,
and thermometers." (Doc. 183 at 3). One of GAME'S
trademarks is:
(Image
Omitted)
(Doc.
1-1 at 12). GAME has devoted considerable resources in
promoting, advertising, and marketing its products and
services using its trademarks.
The
parties have stipulated the Derby Duck "is an original
work of authorship protected under the Copyright Act.”
(Doc. 183 at 3). GAME registered the Derby Duck with the
United States Copyright Office and it is protected under
Copyright Reg. No. VA0002004191. That Copyright is titled
“Giant Inflatable Derby Duck.” A few years after
the Derby Duck was first sold, competitors began to emerge.
Defendant
Justin Ligeri was responsible for production of one of the
Derby Duck's competitors. Ligeri is the owner of
Defendants Kangaroo and Yagoozon, Inc. (Doc. 176 at 124).
Kangaroo was incorporated in 2014 and has offices in Tempe,
Arizona. (Doc. 176 at 124). It purportedly is in the business
of manufacturing “toys [and] novelties for mass
consumption.” (Doc. 176 at 124). It is unclear when
Yagoozon was established but it was not a manufacturer.
Instead, Yagoozon was in the business of “selling
products at retail that it bought from other
manufacturers.” (Doc. 176 at 125). Yagoozon sold
products exclusively on Amazon.com.[3] (Doc. 176 at 124). Neither
Kangaroo nor Yagoozon engaged in normal corporate
formalities, such as regular board meetings. (Doc. 176 at
127). For present purposes, the Court will usually refer
simply to Kangaroo when discussing the activities of Kangaroo
and Yagoozon.
Ligeri
and Kangaroo experienced substantial success selling products
on Amazon. (Doc. 176 at 130). At one point, Ligeri offered
live seminars to teach other individuals how to successfully
sell products on Amazon. In advertising those seminars,
Ligeri very confidently appeared in a video where he
presented his business model. What he would enlighten others
to do was to “create a product for Amazon that people
are looking for already.” (Doc. 176 at 137). At trial,
Ligeri explained that statement meant he instructed people to
“to look for what people are searching for . . . and
then improve upon what the marketplace is offering.”
(Doc. 176 at 139-40). In practice, it was clear that Ligeri
and his companies would identify successful products on
Amazon and then make slightly different versions of those
products without apparent concern about possible intellectual
property violations. That design process was described in
detail at trial.
According
to Bernard Oliver, Kangaroo's product designer, he
received design instructions from David Follett,
Kangaroo's Executive Director. (Doc. 177 at 125). Follett
would “come in with a product that was already in the
field, and he would say: This is a product we are going to
produce under Kangaroo.” (Oliver Deposition at 28).
Follett did not instruct Oliver to copy the product in its
entirety. Instead, Follett would hand Oliver the
“product and say: We want to make something like this,
bigger, brighter. It has got to be better, but basically,
this is the product we are making.” (Id. at
37). In other words, the Kangaroo product was meant to be
“bigger and better” but it was meant to
“look in [the same] realm” as the existing
products. (Id. at 74). When asked whether Kangaroo
investigated intellectual property rights before producing
its products, Oliver stated he was “not really part of
. . . those types of discussions.” In addition, Oliver
did not have time to investigate intellectual property rights
because Kangaroo was operated “like a sweatshop”
where he “worked all day” and only left when he
was “exhausted.” (Id. at 39).
In late
2015 or early 2016, Follett decided Kangaroo should
manufacture “novelty pool floats.” (Doc. 176 at
147). Follett looked at the available pool floats and
discovered four duck pool floats sold by four different
companies. (Doc. 176 at 148). Follett provided the other
companies' products to Oliver and instructed Oliver to
“create the design of a pool float in the form of a
yellow duck with sunglasses [but] make it different from the
yellow duck pool floats” already on the market. (Doc.
176 at 148). Oliver designed the new pool float and Kangaroo
manufactured its own duck-wearing-sunglasses pool float. In
other words, Oliver had the Derby Duck when designing
Kangaroo's duck and, to some extent, modeled
Kangaroo's duck after the Derby Duck. Oliver did not,
however, slavishly copy the Derby Duck. Thus, while there are
some similarities, there are also significant differences.
Kangaroo's
duck is about one-third the size of the Derby Duck. (Doc. 176
at 108). When inflated, Kangaroo's duck is 49 inches
long, 45 inches wide, and 32 inches tall. That size means
Kangaroo's duck can only accommodate one person.
Kangaroo's duck is yellow with a closed orange bill.
Unlike the Derby Duck, Kangaroo's duck is a ring instead
of a flat surface. Also, Kangaroo's duck has wings and a
tail that are drawn on instead of being inflatable like the
Derby Duck. Like the Derby Duck, however, Kangaroo's duck
has a small crest on its head and is wearing sunglasses. But
the sunglasses on Kangaroo's duck are not completely
black and they are not inflatable. Instead, the sunglasses
are drawn on and have partially grey lenses and partially
grey temples.
Kangaroo
sold its duck in a rectangular box. The cover of
Kangaroo's box is dominated by a picture of a young woman
sitting on the duck. The cover consists of a blue and white
background, with bubbles in the blue portions to evoke water.
In the upper left of the box is writing in mostly black
lettering stating “‘HUGE' 49” Yellow
Duck Pool Float.” The back of the box contains a
picture of the duck. The sides of the box are also blue and
white with a picture of Kangaroo's duck along with the
same lettering stating “‘HUGE' 49”
Yellow Duck Pool Float.”
When
asked why Kangaroo decided to put sunglasses on its duck,
Follett explained that “[s]unglasses are cool”
and because “[p]eople wear sunglasses at the
beach.” (Doc. 177 at 131). Kangaroo manufactures other
floats depicting animals wearing sunglasses, such as a
flamingo. (Doc. 177 at 131). Kangaroo also manufactures a
duck float that does not have sunglasses. (Doc. 177 at 132).
Sometime
in 2016, Kangaroo and Yagoozon began selling their
duck-wearing-sunglasses float on Amazon. However, GAME was
not able to present evidence establishing how Kangaroo's
duck was listed on Amazon because the information was
destroyed or was otherwise unavailable. Thus, it is unknown
whether Kangaroo's Amazon listing included a picture of
the box or merely displayed pictures of the duck. It is also
unknown how prominently Kangaroo identified itself in the
listing. For example, the listing might have emphasized the
source of the duck was Kangaroo or the listing might not have
indicated a source. In short, the Court has no material and
admissible evidence of how Kangaroo marketed its duck or how
consumers encountered the Kangaroo duck.
Around
January 2017, GAME saw Kangaroo's duck listed for sale on
Amazon. GAME complained to Amazon and Amazon immediately
removed the listing. GAME also wrote to Kangaroo and claimed
Kangaroo had “been selling a strikingly similar,
knock-off version” of the Derby Duck. According to
GAME, Kangaroo's duck had “virtually the same
appearance as” the Derby Duck. GAME requested Kangaroo
“immediately stop all sales and distribution” of
its duck. It is unclear whether Kangaroo responded to that
letter but GAME filed the present suit a few days later.
There was no evidence at trial that Kangaroo continued to
sell its duck.
ANALYSIS
Pursuant
to the operative complaint, GAME believes Kangaroo's duck
infringes its copyright for the Derby Duck. GAME also
believes Kangaroo has committed trademark infringement as
well as federal and common law unfair competition. Prior to
trial, GAME dismissed its claims for monetary relief. (Doc.
151). Accordingly, the only remaining issues are
Kangaroo's liability and, if liability exists, whether
GAME is entitled to a permanent injunction forbidding
Kangaroo from marketing and selling its duck.
I.
Copyright Infringement
To
prevail on its copyright infringement action, GAME needed to
prove two things: (1) that it owns a valid copyright in the
Derby Duck and (2) Defendants copied protected elements of
the Derby Duck. Rentmeester v. Nike, Inc., 883 F.3d
1111, 1116 (9th Cir. 2018). The parties stipulated that GAME
owns a valid copyright, leaving only the second element at
issue.
As
recently explained by the Ninth Circuit, “the second
element has two distinct components: ‘copying' and
‘unlawful appropriation.'” Id. at
1117. “Proof of copying by the defendant is necessary
because independent creation is a complete defense to
copyright infringement.” Id. And
“[p]roof of unlawful appropriation . . . is necessary
because copyright law does not forbid all copying.”
Id. Among other limitations, copyright law does not
prohibit the copying of “‘ideas' or
‘concepts' used in the plaintiff's work.”
Id. Rather, copyright law only prohibits copying
“the plaintiff's expression of those ideas or
concepts to render the two works ‘substantially
similar.'” Id.
A.
...