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January 6, 1993

GUND, INC., Plaintiff,
APPLAUSE, INC., Defendant.

The opinion of the court was delivered by: SHIRLEY WOHL KRAM


 Plaintiff Gund, Inc. ("Gund") moves, pursuant to Rule 65 of the Federal Rules of Civil Procedure, for an order enjoining defendant Applause, Inc. ("Applause") and its agents from directly or indirectly manufacturing, vending, distributing, selling, promoting or advertising a stuffed plush toy dog known as "Skippy," alleging that Skippy infringes on Gund's copyright in a stuffed plush toy dog known as "Muttsy". Gund also moves for a recall of the complained of Skippy dog. *fn1" Applause opposes both motions.

 An evidentiary hearing in this matter was conducted by the Court on December 2 and December 3, 1992. For the reasons stated in the Court's Order dated December 11, 1992 and below, Gund's motions are denied.


 Gund, a privately-held New Jersey corporation, has been in the business of designing, manufacturing and selling high quality, stuffed plush toys since 1898. To create its toys, Gund utilizes in-house designers, who have been in its employ for many years. Gund's toys are made of fine plush fabrics and stuffed with high quality materials. Other components used, such as eyes, noses, and where applicable, neckties or ribbons, are also of top quality. Gund sells its products for retail almost exclusively to what are described as "upscale" department stores and better gift shops across the United States and in many foreign countries.

 Gund developed the design for Muttsy in 1985, and the stuffed toy was first introduced for sale at a Toy Fair in 1986. On February 14, 1986, the Register of Copyrights issued to Gund a Certificate of Registration, No. VA 214-965, covering the Muttsy design. Since 1986, Muttsy has appeared in every fall Gund catalogue and has been actively advertised in mass media, such as New Yorker and other magazines. Muttsy has also been featured in a national television advertising campaign, being seen most recently during the Thanksgiving Day Parade. Muttsy is one of Gund's best selling stuffed toys with more than one million units sold since 1986, accounting for more than 15 million dollars in sales. Presently, Muttsy is available in six sizes, *fn2" which retail from $ 12 to $ 180, and is marketed most frequently in a tan color, although at least two other colors, namely pink and off-white, are available at different times of the year.

 Muttsy is a skinny, floppy, plush toy dog with none of its parts being very rigid. Although Muttsy's design ensures movement and no set position, when dropped on the floor, it generally flops with its face and head drooping downward so that the nose of the animal touches the ground. Its front legs stretch out in front on either side of the nose. Its rear legs bend outwards and stick out to both sides. Because Muttsy is loosely stuffed, it has a distinctly sway back, the middle being considerably lower than both the rump and the front shoulders. The loose stuffing in the mid-section also makes it virtually impossible to hold Muttsy off the floor in a horizontal position without drooping. Muttsy's face is generally oval, with a somewhat defined muzzle and forehead. The ears, which have straight bottom edges, are relatively large and hang straight down. Muttsy's nose is made of dull plastic, and its eyes, which are partially covered with fur, are two colors with no eyelids or lashes. The tail is long and starts very low on the rear. Finishing off the look, Muttsy's fur is made of a very fine fiber, giving the dog a smooth, fine texture.

 The defendant Applause is also in the gift and toy business, selling stuffed animals, and various other gift items, including mugs, pencils and figurines. Applause sells its products to small businesses, gift stores, florist shops, hotel gift shops, drug stores and major department stores.

 Applause began its efforts to design Skippy in approximately September of 1991. As part of the creative process, staff designers at Applause were provided with samples of Muttsy and given instructions to make several specific changes in order to create a new design. The Skippy dog was introduced in June of 1992. It comes in three sizes, and is marketed in three basic colors, black, white and tan.

 According to testimony at the hearing, Gund first became aware that Applause was marketing the allegedly infringing Skippy dog on November 14, 1992. The instant action, alleging copyright infringement by Applause, and seeking a preliminary and permanent injunction, as well as a recall of Applause's infringing product, followed.


 In this Circuit, a party seeking a preliminary injunction must demonstrate (a) irreparable harm and (b) either (1) a likelihood of success on the merits of the case or (2) sufficiently serious questions going to the merits as to make them a fair ground for litigation and a balance of hardships tipping decidedly towards that party. Jackson Dairy, Inc. v. H.P. Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979). See also Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985). With respect to irreparable harm, it is well settled that in copyright infringement cases such harm is ...

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