status. And where the seller has not used the mark so as to invest it with trademark-eligible status, the purchaser does not get even that.
Returning to the matter at hand, J.H. Wilkins did not receive a right to obtain trademarks in W & W under the 1958 agreements. Prior to the transactions, the Hensons had not used the characters to symbolize any goodwill, so they had no right to obtain trademarks in them to convey.
Moreover, even if the Hensons did have such a right, and assuming they conveyed it to J.H. Wilkins, it expired due to J.H. Wilkins' extended cessation of use of the characters. See infra, at 13 n.8. What J.H. Wilkins did receive from the Hensons (construing the disputed facts in favor of the defendants) were other rights in W & W which enabled it to use the characters in commerce and thereby develop its own trademark rights in the characters. These other rights of use were not trademark rights, though. Consequently, like the other nontrademark rights under the 1958 agreements, they do not belong to Wilkins because of the break in the chain of title discussed above.
In sum, Wilkins did not succeed to any rights in W & W granted to J.H. Wilkins by the Hensons in the 1958 agreements. The conveyance from Wilkins Coffee Service, Inc. to Seymour Abensohn included only trademark rights in the characters; and Wilkins, as Abensohn's assignee, could not have received anything more. The trademark rights were a nullity by the time they reached Wilkins, because J.H. Wilkins' failure to use W & W as trademarks in the 1960s and 1970s resulted in their abandonment. The whole of the matter is that Wilkins has succeeded to no living rights. Therefore, the plaintiffs' motion for summary judgment on their claim for declaratory relief is granted.
III. The Copyright Claim
The defendants move for summary judgment dismissing the plaintiffs' copyright infringement claim and granting the defendants' related counterclaim
on the grounds that the copyrights in W & W have fallen into the public domain. In their supporting papers, they have advanced two rationales purporting to lead to that conclusion, both of which depart from the facts that J.H. Wilkins sold miniature W & W hand puppets in 1958, that the hand puppets were marked as copyrighted, and that the copyrights were never registered or renewed.
In their initial memorandum, the defendants argued that J.H. Wilkins' production and distribution of the hand puppets was a publication of W & W by which J.H. Wilkins obtained copyrights in the Hensons' original incarnation of those characters.
Under the statute then applicable, the argument continues, those copyrights survived for an initial period of 28 years, see 2 Nimmer, Nimmer on Copyright § 9.01[C] (1992) ("Nimmer") (discussing the 1909 Copyright Act), but expired in 1986 upon the failure of J.H. Wilkins to renew them. Having expired, the copyrights fell into the public domain and may not now be reclaimed as private assets.
The plaintiffs, in response, concede that whatever copyrights J.H. Wilkins obtained through its 1958 hand puppet promotion have become public property. The fallacy in the defendants' argument, the plaintiffs claim, is the assertion that the distribution of hand puppets based on the Hensons' designs gave J.H. Wilkins copyrights in the designs themselves.
Acknowledging that the 1909 Copyright Act provided that copyright in a work could be obtained merely by its public distribution, see 17 U.S.C. § 10 (1909), the plaintiffs contend that the distribution of the hand puppets was not a distribution of the Henson designs because the hand puppets were derivative works rather than exact copies. Moreover, the plaintiffs' argument continues, under both the 1909 Copyright Act and its successor, "the copyright in a . . . derivative work extends only to the material contributed by the author of such a work, as distinguished from the pre-existing material employed in the work. . . ." 17 U.S.C. § 103(b). Accord Gilliam v. American Broadcasting Co., 538 F.2d 14 (2d Cir. 1976). Accordingly, in the plaintiffs' view, the only copyrights J.H. Wilkins obtained through its hand puppet distribution were in its modifications of the Hensons' original puppet designs for W & W; copyrights in the original works themselves were unaffected and did not lapse upon the expiration of J.H. Wilkins' copyrights years later.
As defined by the 1976 Copyright Act, a "derivative work" is
a work based upon one or more preexisting works, such as an . . . art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adopted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."
17 U.S.C. § 101. This definition applies to the J.H. Wilkins hand puppets, plaintiffs claim, because while the hand puppets were obviously based on the Hensons' creations, they are different in several important respects, such as size, color, and facial expression. In support of this assertion, the plaintiffs direct me to the affidavit of Henson Productions' Executive Vice President and Director of Creative Services, and puppet designer, Michael K. Frith, who reviews the hand puppets and concludes that they have "a different overall look and aesthetic appeal" from the Hensons' originals. See Frith 8/20/93 Aff. at PP 5-9. At the very least, plaintiffs say, the Frith affidavit creates a genuine issue of material fact as to the hand puppets status as derivative works, which precludes summary judgment on the copyright claims.
Apparently conceding that the relationship between the hand puppets and the Henson designs is a factual issue which bars summary judgment on their first theory, see Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27, 35 (2d Cir. 1982); Sargent v. American Greetings Corp., 588 F. Supp. 912, 919 (N.D. Ohio 1984), the defendants, in their reply memorandum, advance a second theory. The second theory avoids the factual issue by assuming the hand puppets to be derivative works. Nevertheless, defendants say, it still leads to the conclusion that the copyrights in W & W are in the public domain. Development of the argument requires a brief explication of copyright law.
Before the Copyright Act of 1976, there were two regimes of copyright protection, common law copyright, which arose automatically upon the creation of a work, and statutory protection, which arose upon publication of the work and compliance with the requirements of the 1909 Copyright Act. A work was not permitted to enjoy both common law and statutory copyright protection simultaneously. Thus, upon publication of a work, its congenital common law protection withered and eligibility for statutory protection sprang up in its place. See Roy Export Co. Estab. of Vaduz v. Columbia Broadcasting, 672 F.2d 1095, 1101 (2d Cir.), cert. denied, 459 U.S. 826, 74 L. Ed. 2d 63, 103 S. Ct. 60 (1982).
Applying these principles, when J.H. Wilkins distributed its hand puppets, marked copyrighted as of 1958, the common law copyright on those works was forfeited in favor of statutory protection. This no one disputes. The defendants, however, contend that such distribution also extinguished the common law copyrights in the original versions of W & W as well. Publication of the derivative hand puppets, they reason, also constituted a publication of the elements shared by the original versions. 1 Nimmer § 4.12[A]. Consequently, the defendants maintain, distribution of the hand puppets destroyed the common law copyrights on the original versions of W & W, leaving statutory copyright as the only means of protection for those works. No statutory copyrights were ever procured, the argument concludes, so when the copyrights on the hand puppets lapsed, causing the hand puppets to fall into the public domain, there was nothing to keep the Hensons' original designs, which had been incorporated into the hand puppets, from becoming public property as well.
The plaintiffs respond to this analysis by reference to the 1909 Copyright Act. They note that Section 7 of that statute provides:
Other versions of works in the public domain or of copyrighted works when produced with the consent of the proprietor of the copyright in such works . . . shall be regarded as new works subject to copyright under the provisions of this title; but the publication of any such new works shall not affect the force or validity of any subsisting copyright upon the matter employed or any part thereof, or be construed to imply an exclusive right to such use of the original works, or to secure or extend copyright in such original works.
The plain meaning of this section, the plaintiffs claim, is that the publication of a derivative work does not alter or destroy copyrights in the original work. Moreover, they say, this rule is the same whether the copyright in the original work be common law or statutory. Accordingly, the common law copyright in the Hensons' original W & W puppets survived the lapse of the hand puppet copyrights and, under the Copyright Act of 1976, will not expire until December 31, 2002, at the earliest.
In Stewart v. Abend, 495 U.S. 207, 109 L. Ed. 2d 184, 110 S. Ct. 1750 (1990), the Supreme Court agreed with the plaintiffs' reading of the 1909 Copyright Act. Section 7, Justice O'Connor wrote, was intended to "limit the effect of the publication of the derivative work on the underlying work," so that "copyright in . . . the pre-existing work . . . is not abrogated by publication of the new work." 495 U.S. at 232, 231. In addition, the Court indicated that this rule applied regardless of whether the copyright in the underlying work was common law or statutory. Id. at 233 (the addition of the word "publication" to Section 7 of the 1909 Copyright Act was "to ensure that the publication of a 'new compiled work' without proper notice, including smaller portions that had not been previously published and separately copyrighted, would not result in those sections moving into the public domain."). Accord Gilliam, 538 F.2d at 19-20 n. 3 (Section 7's declaration that copyrights in derivative works do not affect the force or validity of copyrights in underlying works applies whether the underlying copyright is common law or statutory). But see Roy Export Co., 672 F.2d at 1103-1104 n. 18 (describing note 3 in Gilliam as dicta).
In view of Abend, I hold that the distribution of W & W hand puppets by J.H. Wilkins did not vitiate the common law copyrights in the Hensons' original designs of those characters.
The defendants' second summary judgment theory is, therefore, rejected, and none other having been offered, summary judgment on the copyright claims is denied.
IV. Trademark Infringement, Unfair Competition Dilution & Publicity
The defendants move for summary judgment on the plaintiffs' trademark infringement, unfair competition, dilution, and publicity claims on several grounds. These claims are all based on the defendants' use of the Muppet and Henson marks in connection with their efforts to market W & W.
The defendants' first argument for summary judgment is that they are entitled to truthfully describe W & W as Muppets created by Jim Henson. They rest their claim of entitlement on their status as copyright proprietors of W & W, the fact that W & W are in the public domain, and the fair use doctrine. The first two of these basis have been rendered indefensible by my holdings that the defendants are not successors of any copyright rights conveyed to J.H. Wilkins and that W & W are not in the public domain. All that remains to be considered, therefore, is the question of fair use.
The so-called "fair use" defense provides that use of a registered trademark by an unauthorized party does not constitute infringement where:
the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, . . . which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin . . .