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Hit Entertainment, Inc. v. National Discount Costume Co.

March 26, 2008

HIT ENTERTAINMENT, INC., A DELAWARE CORPORATION, ET AL. PLAINTIFFS,
v.
NATIONAL DISCOUNT COSTUME CO., INC., A CALIFORNIA CORPORATION, DBA NDC CLUB, DBA COSTUME ENTERPRISES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

DENYING IN PART MOTION FOR ORDER GRANTING IN PART AND SUMMARY JUDGMENT

Plaintiffs HIT Entertainment, Inc. ("HIT"), Lyons Partnership, L.P. ("Lyons"), and Gullane (Delaware) LLC ("Gullane"), and Thomas Licensing, LLC ("Thomas Licensing") (collectively "Plaintiffs") have filed a motion for summary judgment on their federal and California trademark claims and their copyright infringement claim. For the reasons discussed below, Plaintiffs' motion for summary judgment is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

Lyons is the creator and owner of the famous "Barney" children's characters, "Barney," "Baby Bop," and "BJ" (collectively the "Barney Characters"). Lyons owns numerous federal trademark and service mark registrations and numerous federal copyrights for these characters. (Slocum Decl. ¶ 8, Exs. 7, 8.)

HIT Entertainment Limited, one of the HIT Entertainment group of companies, owns all U.S. trademarks related to the "Bob the Builder" character. (Slocum Decl. ¶ 19.) HIT Entertainment Limited and Keith Chapman are joint owners of the copyright in the "Bob the Builder" character. (Id.) HIT Entertainment Limited has licensed to HIT the sole and exclusive right to exploit and distribute the "Bob the Builder" character and property in the United States. (Id.) HIT has obtained copyright registrations for the "Bob the Builder" series episodes and for related videotapes, DVDs and books. (Id. at ¶ 24, Ex. 7.) HIT has also obtained registrations of several federal trademarks and service marks related to the "Bob the Builder" series and character. (Id. at ¶ 25, Ex. 8.)

In 1987, Gullane obtained an exclusive license of all television and merchandising rights related to the "The Railway Series" featuring "Thomas the Tank Engine." (Slocum Decl. ¶¶ 28-29.) In 2005, Gullane assigned these rights to Thomas Licensing. (Id.) In 1998, Gullane obtained an exclusive license for all U.S. publishing rights to the Railway Series. (Id. at ¶ 30.) Gullane and its predecessors and affiliates have secured copyright registrations for the Thomas series episodes and for related videotapes, DVDs, and books. (Id. at ¶ 34, Ex. 10.) Gullane and its predecessors and affiliates have also obtained registration of federal trademarks and service marks related to the Thomas series and to the Thomas character. (Id. at ¶ 35, Ex. 11.)

Lyons, HIT, and Thomas Licensing take precautions to protect their characters' images and do not license the manufacture, distribution, sale, or rental of any costumes for adults depicting their characters. (Slocum Decl. ¶¶ 40, 42, 43.) Plaintiffs do not license adult costumes for commercial use to ensure that young children will not be distressed or upset by the conduct of unauthorized impersonators in knock-off costumes. (Id. at ¶ 44.) Authorized personal appearances by the Barney Characters and Bob the Builder are carefully choreographed, and significant training is required for the performer wearing the costume. (Id. at ¶¶ 41-42, 45.) Thomas is not ever represented by a costumed person, but, rather, by an appropriately decorated train. (Id. at ¶ 45.)

In 1996, Lyons commenced Case No. 96cv987 against National Discount Costume, Inc. ("NDC"), AIQ, Inc., American Chinese Times, Inc., Happy Face Co., Inc., and NDC owners Ai Quach and Huongle ("Le") Quach (collectively "NDC Defendants"), alleging that they were manufacturing, selling and/or offering for sale costumes imitating and infringing Lyons' registered copyrights and trademarks in the characters "Barney," "Baby Bop," and "BJ" (collectively "Barney Characters"). In August 1996, the parties entered into a settlement agreement and stipulated to a permanent injunction.

On October 11, 2005, Shawn Lewis, an investigator hired by Lyons, placed an order with an NDC employee named "Nikki" for adult-sized costumes of "Bob the Builder," "Thomas the Tank Engine," and "Clifford the Big Red Dog" (owned by Scholastic, Inc.) (Lewis Decl. (Ex. 31 to Weisz Decl.) ¶ 15.) The order was filled and the costumes were shipped to Lewis's office. (Id. at ¶ 16.) Photographs of the allegedly infringing "Bob the Builder" and "Thomas the Tank Engine" costumes received by Lewis are attached as Exhibit 5 to Lewis's Declaration.

On October 25, 2005, Lewis placed an order with Nikki for adult-sized costumes of "Baby Bop," "BJ," and "Dorothy the Dinosaur" (owned by The Wiggles Pty Ltd.). (Lewis Decl. ¶ 17.) Nikki told Lewis that she would have to confirm the availability of the "Baby Bop" costume with her boss "Lee." (Id.) All three costumes were shipped to Lewis. Photographs of the "Baby Bop" and "BJ" costumes received by Lewis are attached as Exhibits 9 and 10 to Lewis's Declaration.

On November 8, 2005, Lewis placed an order with Nikki for an adult-sized "Barney" costume. (Lewis Decl., ¶ 19.) A copy of the dinosaur costume that was delivered to Lewis is attached as Exhibit 13 to Lewis's Declaration.

On March 17, 2006, HIT, Gullane, and Thomas Licensing commenced this action against NDC (dba NDC Club, dba Costume Enterprises, Inc.), Ai Quach, and Huongle Quach.*fn1 On March 27, 2006, the Court issued a temporary restraining order in both this case and Case No. 96cv987, enjoining Defendants from engaging in infringing activity and authorizing the U.S. Marshals to seize certain evidence. On April 26, 2006, the Court issued a Preliminary Injunction Order which provides:

Defendants, their officers, agents, and anyone acting in concert with them are preliminarily enjoined from infringing Plaintiffs' copyrights and trademarks. Defendants are prohibited from, among other things, advertising, importing, distributing, manufacturing, selling, or offering for sale costumes which depict characters that are the same as or substantially similar to Plaintiffs' protected characters. (Preliminary Injunction Order ¶ 1.)

Among the items seized was a four-color advertising catalog of costumes which included costumes resembling Plaintiffs' protected characters as well as costumes resembling other well-known characters such as Mickey Mouse, Minnie Mouse, Winnie the Pooh, and Care Bears. (Ex. 18 to Weisz Decl.) There were hundreds of these catalogs ready for mailing next to large manila envelopes in the NDC office area. (Weisz Decl. ¶ 34.) Next to these catalogs were stacks of corresponding price lists which used the trademark protected names of the characters in addition to the generic description of the characters -- e.g., "Barney $475.00 -- purple dino." (Id. at ¶ 38, Ex. 20.) Also seized were molds, heads, and bagged costumes of Plaintiffs' protected characters. (Weisz Decl. Ex. 22.) Seized invoices show that orders for costumes resembling trademarked characters were usually documented as a "Special Order" or "Costume" order. (Id. at ¶ 49.) However, some invoices referenced the trademarked characters by name, codename and/or catalog number. (Weisz Decl. ¶ 48.) Based on this small subset of invoices alone, there were 20 sales of allegedly ...


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