The opinion of the court was delivered by: HAIGHT
Plaintiff Franklin Wittenberg is an international marketer of commercial properties. By virtue of a licensing agreement, he acquired an interest in a voice controlled motorized toy van. Relying upon § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and common law trademark rights, plaintiff moves pursuant to Rule 65, F.R.Civ.P., for a preliminary injunction to restrain defendants Devon Industries, Inc. (Devon), Arnold A. Fisher, The Toy Manufacturers of America, Inc. (TMA) and The Charles Snitow Organization (Snitow) from certain contemplated actions with respect to a comparable toy.
The Court, having held an evidentiary hearing and considered the affidavits of record and arguments of counsel, enters the following Findings of Fact, Discussion, and Conclusion of Law. For the reasons stated below a preliminary injunction will issue against defendants Devon and Fisher, although in a form different from that for which plaintiff prayed. Injunctive relief against defendants TMA and Snitow is denied.
In June of 1977 plaintiff Wittenberg, a commercial marketing entrepreneur, attended a trade show of electronic devices in Chicago. He there observed on display a voice controlled motorized toy van. The phrase "voice controlled" means that, as the result of electronic circuitry, the toy van is able to respond to its owner's spoken commands: "turn left"; "turn right"; "stop"; "back up." The van plaintiff observed at the 1977 Chicago show was named "George": that is to say, the name "George" was written in a distinctive script across the sides of the van and on the back doors; and the box in which the toy was packaged repeated the name "George" and displayed a picture of the van, together with a panel (on the bottom of the box) depicting two children watching the van respond to a series of spoken directions. A van and a box identical to those plaintiff observed at the 1977 Chicago show were admitted as PX 1 and 3 respectively at the hearing.
The concept of a toy that responds to voice commands (free of wires or other direct, umbilical dependencies) is new. In the months following the 1977 show plaintiff was aware of marketing efforts involving "George" it was the subject of television commercials and an article in Business Week. Plaintiff regarded the van as a unique toy. He did not interest himself in the concept until, in late May or early June of 1978, he was approached by individuals associated with a California corporation, doing business in Waterbury, Conn., called Imaginetics International, Inc. (Imaginetics). In negotiations extending into August of 1978, plaintiff was advised, Inter alia, that the voice controlled motorized toy van in question had been invented by one Robert McCaslin, who had patented the invention; that the invention had been identified with the name "George"; that in December, 1975 McCaslin had transferred his right, title and interest in the invention "George" to Imaginetics; and that Imaginetics was the registered owner of a United States trademark designated "George." These advices appear in the preliminary recitals to a licensing agreement executed on August 15, 1978 between Imaginetics and plaintiff (PX 2). The recitals also refer to other parties' complications and disputes not pertinent to resolution of the present motion, except to say that by reason of a joint venture agreement concluded in December, 1977 between Imaginetics and a California corporation called Altaire Industries, Inc., Altaire entered into a purchase agreement with Maker Industrial Co., Ltd. (Maker), a Hong Kong corporation, pursuant to which Maker was to manufacture "George" from a mold created by Maker and paid for by Imaginetics. The licensing agreement between Imaginetics and plaintiff purports to grant to plaintiff, for 17 years, exclusive worldwide rights under the "George" patent and trademark, and all related rights and privileges relating to the "George Concept" (a phrase that reoccurs throughout the licensing agreement). Plaintiff is obligated to return a $ 1 royalty "on the sale to any person of each unit of product embodying the "George Concept' . . ." (PX 2 at P 4a).
Prior to the execution of this licensing agreement with plaintiff, Imaginetics had made other efforts to produce and market "George." The toy was displayed at a number of industry shows. Exposure was obtained on television programs, in magazines (including "Business Week"), and newspapers. Considerable interest was forthcoming. Imaginetics received a substantial quantity of orders. An effort was made by the company to fill some of these orders, but the units produced by the first production runs were defective in performance, and the customers returned them. This led to the joint venture agreement with Altaire, which as noted Supra, contemplated production of the toys by Maker in Hong Kong. No units had actually been produced by Maker at the time plaintiff entered into the licensing agreement of August 15, 1978, although plaintiff was shown a number of unfilled orders and inquiries, which influenced plaintiff to enter into the licensing agreement.
After entering into that agreement, plaintiff entered into a purchase contract with Maker, contemplating the manufacture and sale to plaintiff, by Maker, of 660,000 "George" units. Plaintiff received some 3,000 units under this order in early fall of 1978. He determined that they were defective, an evaluation that was confirmed when three leading retail stores (J. C. Penney, Sears, Roebuck, and Montgomery Ward) tested the toy at plaintiff's request and rejected it. Plaintiff has caused new engineering to be done, has cancelled the purchase contract with Maker in Hong Kong, and intends to produce "George" in the United States, with improved circuitry and performance control. Plaintiff has expended some $ 200,000 in pre-production costs for "George" to date. He plans to begin producing his technically improved version of "George" in spring of 1979.
Defendant Devon acquired its interest in this particular toy when, in a contract effective on January 19, 1979, Devon contracted to purchase a toy known as "Harry" from a company called Maker Industrial (Europe) Ltd., a United Kingdom corporation. Maker (Europe) is closely affiliated with Maker, Hong Kong. Pursuant to that agreement (DX B) Devon has been furnished with a toy named "Harry," made from the same mold as "George," and packaged in a box. The similarities between "George" and "Harry," as well as the similarities between their packagings, are referred to in further detail in the Discussion, Infra, the factual recitations of which are adopted as a part of these Findings of Facts. I may summarize those findings by saying that there is a substantial likelihood of confusion of origin, arising out of the appearances of "George" and "Harry" and their respective packagings.
Devon has engaged in considerable advertising and marketing of "Harry," and intends to display "Harry" at the New York toy fair this month, having obtained a booth for that specific purpose. Shortly before filing of the complaint and application for injunctive relief in this case, plaintiff had learned of Devon's intentions. Plaintiff moved with reasonable dispatch for the relief sought by the present motion, which if granted would restrain Devon from any marketing or advertising of "Harry" in its present form, including the sale of vans made from the molds presently in the possession of Maker in Hong Kong.
Against this factual background, as expanded and clarified in the following "Discussion," the Court turns to the applicable law. I am constrained to note that neither counsel for plaintiff nor for defendants Devon and Fisher furnished the Court with timely memoranda of law. In that regard, plaintiff was in violation of General Rule 9(b) of this Court. The following discussion is based upon the Court's own research.
Plaintiff's application for a preliminary injunction must be measured by the familiar standards of Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 251 (2d Cir. 1973) and Triebwasser v. American Tel. & Tel. Co., 535 F.2d 1356, 1358 (2d Cir. 1976), which the Second Circuit recently applied in a trademark infringement context to require "a showing that there is a probability of success upon trial, together with proof of irreparable injury to plaintiff if the defendant is not enjoined." American Home Products Corp. v. Johnson Chemical Co., Inc., 589 F.2d 103 at 106 (1978).
As to the merits, it is important at the outset to define plaintiff's theories of liability. Plaintiff does not claim infringement of patent rights; nor does he claim infringement of the registered "George" trademark. Counsel expressly disclaimed those theories during the hearing. Plaintiff proceeds upon the bases of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),