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LAUREYSSENS v. IDEA GROUP

July 31, 1991

DIRK LAUREYSSENS, AN INDIVIDUAL, I LOVE LOVE COMPANY, N.V., CREATIVE CITY LIMITED, AND EXTAR CORPORATION, PLAINTIFFS,
v.
IDEA GROUP, INC. AND DAYS OFF DESIGNS, INC., DEFENDANTS.



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

  OPINION

Plaintiffs Dirk Laureyssens ("Laureyssens"), I Love Love Company, N.V. ("ILLC"), Creative City Limited ("CCL) and Extar Corp. ("Extar") have moved for a preliminary injunction restraining defendant Idea Group, Inc. ("IGI") from distributing certain toys which the Plaintiffs assert infringe Laureyssens' copyrights and trade dress. For the following reasons, the motion is granted in part and denied in part.

The Parties

Laureyssens is a designer of various puzzles and toys including the puzzles which give rise to this dispute (the "Laureyssens Puzzles"). In the United States, the Laureyssens Puzzles have been sold under several names, most recently under the name "HAPPY CUBE."

ILLC is a Belgian corporation with its principal place of business in Belgium. ILLC manufactures the Laureyssens Puzzles in Europe and distributes them to certain European countries. ILLC has exported Laureyssens Puzzles for sale in the United States.

CCL is Laureyssens' worldwide representative for licensing the copyrights for the Laureyssens Puzzles.

Extar is a California corporation headquartered in Los Angeles. Extar's Chief Executive Officer is Raphael Berkien ("Berkien"). Extar is the "exclusive United States distributor" of the Laureyssens Puzzles.

IGI is a California corporation with principal offices in Palm Desert, California. IGI was formed to develop and market consumer products including the puzzles at issue in this lawsuit (the "SNAFOOZ Puzzles"), and has been investigating the possibility of marketing various other products.

Richard A. Frohman ("Frohman") is the President and Chief Executive Officer of IGI and Robert D. Stevens ("Stevens") its Executive Vice President.

Proceedings

The Plaintiffs' motion was filed on June 5, 1991. Testimony was heard on July 1 and 2, and the matter was argued and fully submitted on July 10.

THE FACTS

1. The Works at Issue

At issue in this lawsuit are a series of foam rubber puzzles. The puzzles produced by both parties are described as "flat to cube" puzzles, meaning that their six pieces can be assembled in a flat form in a rectangular frame, and can also be assembled into a three-dimensional hollow cube. The cube is formed by joining the six pieces, the cube faces, with each piece being connected to its four neighbors at right angles.

a. The interconnections

The pieces are joined together by means of "notches" cut into the edges and "fingers," the parts of the edge left when the notches are cut out. The fingers fit into the notches and the friction between the two holds the pieces together in the cube form.

The notches and fingers are all cut at right angles to the piece edge and perpendicular to the face of the piece, so that the fingers can interlock with notches in both a planar arrangement, with both pieces lying flat on one surface, and in the perpendicular arrangement necessary to form a cube.*fn1 For ease of reference, this system of connecting pieces in flat and cube form through the use of right-angled notches and fingers in the piece edges will be referred to as "rectilinear interconnections."

Obviously, in order to connect two pieces in either the flat or cube form, the notches on the edge of the first piece must match up with fingers on the adjoining edge of the second piece. The fundamental challenge of the puzzle is to select the proper pieces to join together and to join them in the correct orientation. While this may appear to be a simple or trivial task, in fact the puzzles, particularly the multi-puzzle combinations described in more detail below, are quite challenging.

b. The dimensions

The complexity of the puzzles is to a certain extent dictated by the number of notches and fingers on each edge. In order to join two pieces smoothly in the perpendicular alignment, the depth of the notches — and, correspondingly, the length of the fingers — must be equal to the thickness of the material of which the puzzle is made. Assuming that a single notch or finger is square,*fn2 as is the case in both parties' puzzles, the length of each edge of the cube can be measured in "notch-widths" or "units," one unit being equal to the thickness of the puzzle material. The Laureyssens Puzzles are all based on a cube which has five units per edge, while IGI's puzzles form cubes which are six units in length.*fn3

2.  Laureyssens, Puzzles

Laureyssens first began working with cube puzzles in 1985, when he attempted to design a cube which could be assembled from six identically shaped pieces. After some experimentation, he realized that this was not possible, but he did produce a cube formed from five identical pieces and one piece which was only slightly different.

In fact, he designed a series of such puzzles, six of which are the source of this lawsuit (the "Laureyssens Puzzles"). Each was designed by Laureyssens to have a different level of difficulty, and he chose the pieces for the six puzzles so that not only could each individual puzzle be assembled in flat and cube form, but pieces from different puzzles could be assembled to create new cubes and other three-dimensional figures, including a "beam" of two or three cubes joined in a line, a double sized cube, with each side comprised of four pieces, a "cross" of five cubes, and a "star" of six cubes. In selecting the pieces for his puzzles, Laureyssens testified that he was trying not only to satisfy all of the foregoing criteria, but also to select pieces which had "balance," or were aesthetically pleasing to his senses. In fact, he testified that he rejected a number of pieces because he did not like their appearance.

The first commercial puzzles which Laureyssens produced consisted of a set of three of what would eventually be his six puzzles. All three were initially manufactured in white foam. Subsequently these puzzles were colored yellow, green, and blue, corresponding to the puzzles presently marketed in those colors. Laureyssens later added orange, red and purple puzzles to his line.

Of the thirty-six puzzles pieces which make up the series of six Laureyssens Puzzles, there are thirty-four distinct piece shapes: two shapes are repeated, one in the red and blue puzzles, and one in the orange and purple.

The six Laureyssens Puzzles are also identified by the names of various cities: the yellow is called "Tokio", the orange is "Amsterdam," green "New York," blue "Milano," purple "Brussels" and red "Paris." Since he first began marketing these puzzles, Laureyssens has sold them under the names I-QUBE, COCOCRASH, CUBE-IT and HAPPY CUBE.

3.  Laureyssens' Attempts to Protect His Puzzles

In the first phase of designing his puzzles, Laureyssens created about forty distinct puzzle pieces. He initially sought intellectual property protection for his designs by registering them in 1986 with the World Intellectual Property Organization ("WIPO"), an international organization headquartered in Geneva, Switzerland. Although there were more than one hundred pieces depicted in this registration, there are at least some pieces in the Laureyssens Puzzles which were not registered.*fn4

a. The 1987 Registration

Laureyssens first sought United States copyright protection in 1987, when he personally visited the Copyright Office in Washington and prepared his own certificate of copyright registration, Certificate Number TXU 271 722 (the "722 Certificate"). This certificate contained the following entry:

  Nature of Authorship Briefly describe nature of the
  material created by this author in which copyright
  is claimed.
    SCULPTURE, TEXT, ARTWORK, PHOTOGRAPHES
  [sic] AND SAMPLE.

The material which accompanied this registration certificate has not been produced by the Plaintiffs, although Laureyssens testified that he submitted as part of the application a white foam rubber version of the puzzle which is now the yellow Laureyssens Puzzle.

b. The 1988 Registrations

In June 1988, Laureyssens sought to supplement his earlier registration, filing two new certificates, numbered TX 2 332 524 (the "524 Certificate") and TX 2 332 525 (the "525 Certificate"). Both certificates reported the "Nature of Authorship" as "SCULPTURE, TEXT, ARTWORK, PHOTOGRAPHES [sic], & SAMPLES ADDED TO THE WORK." Laureyssens identified the 722 Certificate as a previous registration for the works covered by both the 524 and 525 Certificates.

Under the category of "DERIVATIVE WORK OR COMPILATION," the 524 Certificate contained the following entry:

  6.b. Material Added To This Work. Give a brief
  general statement of the material that has been
  added to this work and in which copyright is
  claimed.
    NEW TEXTS FOR ARENA; NEW DRAWINGS IQUBE, TATO,
  AUTOSAFARI; TEERLING AND PHOTOGRAPHES
  [sic]

Attached to the 524 Certificate are twenty-four pages of written material which include diagrams describing how to assemble 120 different cubes as well as twenty-eight more complex puzzles, and several diagrams showing how some of the 120 cube puzzles could also be assembled in flat form. Among this latter category are all six of the Laureyssens Puzzles: the yellow puzzle is identified in the registration certificate as Number 4, the blue as Number 19, the green as Number 22, orange as Number 51, red as Number 55, and purple as Number 58. See 524 Certificate App. at 25. The material attached to the 524 Certificate also includes three photographs of empty frames and assembled and partially assembled cubes.

On the 525 Certificate, Laureyssens listed the following as "Material Added To This Work:"

  TEXT EDUCATIONAL REPORT, NEW MODELS, NEW TEXT,
  COPY OF INTERNATIONAL MODEL DEPOSIT 1986.

There are twenty-one pages of written material attached to the 525 Certificate. Most of the text of this material is in a foreign language (which appears to be Dutch). Included are sketches and drawings of over one hundred puzzle piece shapes, many of which are not pieces in any of the Laureyssens Puzzles. Also, as with the WIPO registration above, there are at least some pieces from the Laureyssens puzzles which are not depicted in the 525 Certificate, again including the red puzzle piece from the HAPPY CUBE package. On one page there is a diagram indicating that the idea of the puzzles is to convert it from the flat arrangement to a cube. Interestingly, while the pieces displayed are those of the yellow Laureyssens Puzzle, the flat arrangement shown is not the one used for that puzzle. See 525 Certificate App. at 4. A later page includes a diagram of the pieces from the yellow puzzle assembled in yet a third distinct flat arrangement. Id. at 9. None of the other five Laureyssens Puzzles are depicted in the 525 Certificate.

c. The 1991 Registrations

In March 1991, Laureyssens filed six new certificates of registration, one for each of his puzzles (the "1991 Certificates"). Each certificate indicates that the "Nature of Authorship" is "Shape of pieces (Sculpture)."*fn5 Although none of the certificates originally referred to any of Laureyssens' prior registrations, Laureyssens corrected this omission by six amendments filed in June 1991.

Laureyssens has always marketed his puzzles with a proper notice of copyright attached.

4.  The Plaintiffs' Marketing Efforts

Laureyssens first presented the Laureyssens Puzzle for sale in the United States at the 1988 International Toy Fair held in New York City. Shortly thereafter, he entered an agreement with Sentinel International Packaging ("Sentinel") to market the puzzles in the United States. This arrangement collapsed when Sentinel encountered financial difficulties, and Laureyssens decided to market the puzzles himself.

a. Laureyssens' Packaging

When the name was changed to HAPPY CUBE, because of a trademark conflict, the only aspect of the packaging which changed was the name. In the HAPPY CUBE packaging, each letter in the word "HAPPY" is a different color, and the word "CUBE" is entirely in the sixth color.

The packages are displayed for marketing in a six-tiered cardboard "step display," which features the multi-colored HAPPY CUBE logo on a black background. The display also features drawings of several multi-puzzle assemblies and a single picture of a one-color cube.

b. Laureyssens' Marketing Efforts

Since the introduction of the Laureyssens Puzzles into the marketplace, Plaintiffs have sold approximately 103,000 Laureyssens Puzzles in the United States and have orders for nearly an additional 250,000. Approximately 90,000 of these puzzles were marketed in the HAPPY CUBE/CUBE-IT packaging having rainbow-colored lettering against a black background.

In addition to marketing the Laureyssens Puzzles under the HAPPY CUBE line as games of skill, the Plaintiffs have made efforts to sell the puzzles as novelty items, to be imprinted with corporate logos or promotional messages. In these marketing efforts, the Plaintiffs have produced puzzles in colors and designs other than the six colors used in the HAPPY CUBE line.

Extar has organized a nationwide sales force which presently consists of forty sales representatives, each of whom is, according to Extar's CEO Berkien, "committed to selling at least 100,000 Laureyssens puzzles per month," June 4, 1991 Berkien Declaration at ¶ 5, but the nature of this commitment has not been explained. Berkien also stated that since 1988, Extar has sold more than $50,000 worth of Laureyssens Puzzles in the United States, id., although during his June 11 deposition, taken one week after his declaration was signed, Berkien was unable to confirm this statement or to elaborate on Extar's sales. Berkien Deposition at 65.

Plaintiffs have advertised the Laureyssens Puzzles in trade magazines such as the New York Toy Fair Directory and the National Conventioneer.

Since Laureyssens' original attempt to market his puzzles at the 1988 New York Toy Fair, Plaintiffs have exhibited the Laureyssens Puzzles at toy and novelty shows including the Dallas Toy Fair in 1989 and 1990, the New York International Toy Fair in 1990 and 1991, the Chicago Premium Show in 1990, and the New York Premium and Incentive Show in 1989. They intend to exhibit their product at the Dallas Toy Fair, the Chicago Premium Show, the Denver Toy Fair, and the Los Angeles Toy Fair in 1991. During the 1990 Dallas Toy Fair, the Laureyssens Puzzles were filmed and broadcast on a nationwide newscast by NBC Television, although there was no evidence concerning the type or extent of this coverage.

The Plaintiffs have distributed their promotional leaflets showing the black and rainbow colored presentation of the HAPPY CUBE packaging at the aforementioned toy and premium shows. They had planned to launch a multimedia advertising campaign beginning on July 4, 1991, which was to include nationwide television advertising. The Laureyssens Puzzles have also been shown on the television show "Family Feud," broadcast in early 1991. Plaintiffs have contracted with the National Football League to produce Laureyssens Puzzles bearing the logos of NFL teams on the cubes.

Laureyssens testified that ILLC had spent approximately $80,000 in connection with the United States marketing of the puzzles at issue. Plaintiffs altogether claim to have expended approximately $180,000.00 in connection with the advertising and promotion of their Laureyssens Puzzles.

In 1990, Extar entered into an agreement with Strottman International, Inc. ("Strottman"), a supplier of premium and novelty products to packagers such as fast-food and breakfast cereal companies. The agreement granted Strottman exclusive promotional rights to the Laureyssens Puzzle in the premium industry.

5. IGI

a. The Proumen/Miner Puzzles

In April 1989, Frohman, in his then-capacity as package designer and salesperson for South Coast Packaging Associates, Inc., was approached by Richard Proumen ("Proumen") and Gary Miner ("Miner") to quote price estimates for display packaging for a series of flat foam rubber puzzles which they were marketing (the "PM Puzzles"). As it later developed, the PM puzzles were copies of the Laureyssens Puzzles.

Frohman provided Proumen and Miner with price quotes for basic packaging of the PM puzzles, but advised them that the product would be more marketable if they used a different presentation with more elaborate packaging and graphics. After considering Frohman's advice, Proumen and Miner advised him that they could not follow it due to a lack of financing. Frohman, believing that the PM Puzzles could be a success, expressed an interest in licensing the puzzles from them.

In or about August 1989, IGI was incorporated, primarily for the purpose of marketing the PM Puzzles. Since its incorporation, IGI has not marketed any product other than the SNAFOOZ puzzles at issue in this litigation, although it is presently investigating several new products.

Negotiations between Proumen, Miner and Frohman resulted in a license agreement dated December 5, 1989 between The Arista Group and IGI, under which IGI was to have the exclusive United States marketing rights to the PM Puzzles in exchange for a royalty on sales and an agreement to sell a certain minimum number of the puzzles per year. IGI planned to market the puzzles in six different colors: red, yellow, blue, orange, green and purple — the same colors used by Laureyssens.

According to Frohman, in the fall of 1989 he shopped around to determine whether or not there were any products on the market which would compete with the PM Puzzles. Although he did come across a number of items that assembled into a cube in some fashion, he believed that none of them were competitive with the PM Puzzles. He did not learn of the Laureyssens Puzzles.

b. IGI's Packaging

IGI has marketed its SNAFOOZ Puzzles in several different packaging styles. All of its packages feature the SNAFOOZ logo in rainbow-colored lettering on a black background. The logo is displayed prominently across the top of the package in type which is quite distinct from that used by the Plaintiffs for their logo. The simplest packaging style consists of a puzzle assembled in its flat form wrapped in clear plastic "shrinkwrap" with a cardboard wraparound insert. As opposed to the Laureyssens packaging, the SNAFOOZ insert displays a picture of an assembled cube, and the back of the package includes directions and pictures of the different multi-puzzle combinations which can be formed from the SNAFOOZ Puzzle pieces.

IGI also markets SNAFOOZ puzzles in blister packs of one, three and six puzzles, with the SNAFOOZ logo printed on the cardboard backing in rainbow colors on a black background. The primary distinguishing feature of the blister packs is that one puzzle is already assembled in cube form in the package, offering a graphic and readily understandable image of the object of the puzzle. On the back of the cardboard backing are the same directions and pictures of the single and multi-cube assemblies as those on the individual flat package.

IGI's current packaging for its SNAFOOZ Puzzles is identical to that which it designed for the PM Puzzles.

c. The 1990 Toy Fair

IGI had two or three dozen prototype PM Puzzles manufactured, as well as prototype packaging, for use at IGI's display booth at the 1990 New York International Toy Fair. IGI also created and printed a promotional brochure for the fair. During the toy fair, IGI took several hundred dollars worth of orders for the PM Puzzles.

During the 1990 Toy Fair, Laureyssens became aware that IGI was manufacturing and marketing puzzles which were similar to his. Upon investigating, he discovered that the puzzles offered by IGI were in fact identical to his own. Laureyssens objected to the IGI personnel at the booth, claiming that the PM Puzzles infringed the copyrights on his puzzles.

On February 18, 1990, a cease and desist letter from ILLC was delivered by hand to the IGI booth at the New York Toy Fair. Also, on February 21, the last day of the fair, Plaintiffs forwarded a cease and desist letter directly to IGI, demanding that it immediately discontinue the manufacture and sale of the infringing SNAFOOZ puzzles.

On March 19, 1990, IGI admitted to the Plaintiffs' that "We acknowledge that our puzzles apparently were copied from a sample obtained through your French distributor or licensee and, in its [sic] present form, cannot be marketed in the United States without your permission."

d. Negotiations Between IGI and Laureyssens

Upon discovering that the PM Puzzles were, in fact, the Laureyssens Puzzles and that Proumen and Miner were not authorized to distribute and license the puzzles, Frohman attempted to negotiate a license with Laureyssens for United States distribution rights.

After negotiations between IGI and Laureyssens failed, Frohman assured Laureyssens and the other Plaintiffs that IGI would cease marketing the infringing puzzles.

At some point in March, 1990 IGI also began to consider designing and marketing its own flat-to-cube puzzles, similar but not identical to those of Laureyssens. When it first consulted its attorney about the ramifications of designing puzzles which were based on six units per edge instead of the five units used by Laureyssens, the attorney cautioned IGI that "if five of your six segments match Laureyssens' five segments it may constitute substantial similarity."*fn6

Frohman testified that in early April of 1990 shortly before the negotiations between IGI and Laureyssens broke off, Laureyssens' counsel indicated to IGI that if IGI produced its own flat-to-cube puzzles in which none of the individual pieces were copies of any of Laureyssens' pieces then Laureyssens would have no grounds for a claim of copyright infringement.

e. IGI's Design of the SNAFOOZ Puzzles

After the breakdown of negotiations with Laureyssens, IGI proceeded with its plans to design and develop its own flat-to-cube puzzle, using six units per side to ensure that none of its puzzle pieces matched any of those used by Laureyssens. IGI clearly intended to copy the idea underlying the Laureyssens Puzzles, while at the same time making its puzzles different enough to avoid infringing Laureyssens' copyright.

In late April or early May 1990, Frohman approached a computer software programmer about the possibility of creating a series of six-segment-per-side puzzle designs similar to the Laureyssens Puzzles with multi-puzzle interconnectability and varying degrees of difficulty. The parties entered into an agreement, but the programmer subsequently sought more money and the agreement was cancelled.

Thereafter, Stevens, through a friend, contacted Eric Brewer ("Brewer"), a graduate student in computer science at Massachusetts Institute of Technology, about creating a series of puzzles for IGI. On or about July 17, 1990, Stevens called Brewer and described to him the nature of the puzzle that IGI wished to develop, i.e., a flat-to-cube structure with six units per side, rectilinear interconnections and multi-puzzle interconnectability. In response to this description of IGI's requirement, Brewer, prior to seeing any puzzle samples or prototypes, believed that he knew how to approach the problem, and told Stevens that he could write a program to generate the puzzles without much difficulty.

On July 28, 1990, Stevens met with Brewer. He brought to the meeting two of the PM Puzzles (which IGI had admitted were copies of the Laureyssens Puzzles) which had been taken off the market after the New York Toy Fair. Brewer took these puzzles with him when he left the meeting. IGI and Brewer subsequently entered into an agreement effective August 4, 1990, the addendum to which set forth the parameters for the required six single puzzle designs and the additional criteria for more complex multiple puzzle structures.

Other than understanding the general concept of the PM Puzzles and measuring the difficulty level of those puzzles by assembling and disassembling them, Brewer asserts that he made no use of the PM Puzzles in creating the SNAFOOZ Puzzles.

On August 25, 1990, Brewer sent to IGI a letter describing six six-unit-per-side puzzle designs (the "SNAFOOZ Puzzles") and including diagrams showing how the pieces could be assembled into cubes and other more complex structures, along with a computer disc containing all of his programming, including the source code.

IGI thereafter arranged to have the new puzzles manufactured. From September 1, 1990 to February 1, 1991, IGI ordered and received approximately 300,000 SNAFOOZ Puzzles from its manufacturer in Korea. Associated packaging and display materials were manufactured locally. Although the Plaintiffs have suggested that the foam material of the SNAFOOZ Puzzles may contain toxic substances which would make it unsafe for children, there has been no evidence to support this supposition.

Late in 1990, while IGI was in the process of preparing to launch the SNAFOOZ Puzzles at the 1991 New York Toy Fair, IGI's counsel received a letter from Plaintiffs' counsel dated November 13, 1990 requesting assurances from IGI that it had no intention of infringing the alleged copyrights in the Laureyssens Puzzles. By letter dated February 7, 1991, IGI's counsel confirmed that IGI would no longer market the PM Puzzles.

Immediately prior to the 1991 New York Toy Fair at which the SNAFOOZ Puzzles were exhibited for the first time, IGI conducted a direct mail campaign and placed advertisements in the 1991 New York Toy Fair Directory and in various trade publications for the SNAFOOZ Puzzles.

Apart from a visit by Laureyssens to IGI's showroom at the 1991 New York Toy Fair, Laureyssens made no effort to stop IGI from selling the SNAFOOZ Puzzles at the fair.

At the end of the week of the Toy Fair, Laureyssens requested a meeting with IGI and himself. At the meeting, neither Laureyssens nor his counsel asked IGI to stop selling the SNAFOOZ Puzzles nor ...


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