|Plaintiff's gas station|
|Defendant's gas station|
Osment sued Mike’s for copyright infringement, false advertising, and unfair competition. The parties compete in the model railroad industry. Osment claims rights in the “Fill ‘Er Up & Fix ‘Er” gas station and the Dansbury Depot and Coal River Depot, based on an actual station in Jefferson, Colorado. The Dansbury and Coal River models are similar enough that the initial Danbury registration certificate identified the Coal River Depot as a prior registered work, and the parties treated them as a single model.
Osment claims that Mike’s gas station and train depot infringed, and that Mike’s use of photographs of Osment’s models in its sales catalog also infringed and constituted false advertising and unfair competition.
The registration certificates don’t say they’re based on real life buildings in the section entitled "Derivative Work or Compilation," which requires a copyright applicant to identify any preexisting work that its work "is based on or incorporates." (Is the Jefferson Station a preexisting work? The current building appears to be a replica of an earlier station built around 1880, before architectural works were incorporated into US copyright law.) Nor do they acknowledge that Osment’s depot is based on an earlier model, part of assets Osment purchased. Osment filed a supplemental registration for the depot indicating that the earlier model artist was an author, and then another identifying the Jefferson Station as a preexisting work.
Model railroaders demand that buildings look realistic, and thus plaintiffs make models as close to reality as possible. Their usual practice is “to use images of real buildings in the public domain found in publications, historical sources, and the internet to make and sell model buildings that are modeled after those real buildings.” However, they do not replicate actual buildings, but use descriptions of real buildings “to get an idea of the type of building they want to create and then make up a combination of details and architectural elements to make the model more artistic and unique; they base their models on a time period and go to great lengths to get the signage and details correct.” They advertise that their model buildings are "great for modelers who want realistic structures with architecturally correct details" and are "architecturally accurate models that have been specifically researched and developed for the model railroading industry."
Model building requires "selective compression," which involves “applying artistic impression to hold the look of a building, yet compress it to fit a model train layout.” Thus, the buildings aren’t really to scale—one exhibit said that if you enlarged a model building to the size of a real building, “[Y]ou'd go walk inside of it and the furniture would have to be painted on the wall. You couldn't even turn around.” (Presumably some of this is scenes a faire—if everyone has to do this to make the buildings look right, then the difference in proportion from real buildings is not an indicator in itself of creativity, but merely an indicator that the object is a model build for railroaders.)
The Jefferson Station “presents all of the standardized elements typically found in a depot built in the late 1800s, and other train depots similar to it have been observed.” There are many images of it, and before Osment’s version, other companies had sold Jefferson Station replicas (and Osment had access to images of those replicas). Osment’s version, however, has 21 enumerated differences from the Jefferson Station and third-party models, including having a raised platform, three-color paint scheme, and different types of framing rails around the window casings. There are also at least 21 uncontested differences between Plaintiffs' train depot model and Mike's, but “several of their similarities include aspects of how Plaintiffs' model differed from the Jefferson Station and other third-party models.”
Osment doesn’t have a record of how its gas station was designed; none of the pictures in its files are substantially similar to its gas station, but it did employ its usual practice for creating new models. Mike's experts concluded that plaintiffs' gas station is "likely" based on an actual, real-life building because its design is typical of gas stations from the 1920s and 1930s. There are over twenty uncontested differences between plaintiffs’ gas station model and Mike's, but they are also similar in over twenty other uncontested aspects.
Mike’s used photos of Osment’s models in its catalog before Mike's had produced its own models.
Plaintiffs alleged that their reputation was impaired when Mike’s marketed its inferior products and postings on internet blogs began to question the relationship between Plaintiffs and Mike's. They sought $260,000 for this reputational damage, based on 2% of their 2009 annual revenue, since they frequently use a “2% rule” to assess public response, “such as to calculate how many tradeshow attendees would purchase product at a particular show and to determine an expected response rate to a mass mailing for marketing purposes.”
Mike’s moved for summary judgment, arguing that plaintiffs’ copyrights were invalid due to fraud on the Copyright Office or lack of originality. The court disagreed.
The registration certificate is prima facie evidence of validity, but fraud on the Copyright Office is a defense. A defendant must show that in applying for the copyright at issue the applicant knowingly or intentionally failed to disclose a material fact. Plaintiffs argued that, when it developed the train depots using the artist’s model, it was not aware of the connection to the Jefferson Station. Mike’s pointed to evidence in its favor, including “images of the Jefferson Station in texts that Plaintiffs review, other … models of the Jefferson Station on the market, and Plaintiffs' desire to ‘simulate real life’ in its models,” and the court noted that even after plaintiffs found out about the artist’s use of the Jefferson Station it did not initially file a supplemental registration noting this fact. But this was not enough to grant summary judgment in Mike’s favor; a factual dispute remains. And this was, of course, also true for the gas station, where there wasn’t a single reference photo in plaintiffs’ files substantially similar to the gas station. Mere failure to disclose use of a preexisting work doesn’t invalidate a registration; the omission must be knowing or intentional.
Originality was also not suitable for summary judgment. For the gas station, there was a question of fact as to whether plaintiffs based their model on a preexisting gas station. For the train depot, the record created factual questions of whether the models were independent creations possessing the necessary minimal creativity. Unlike the Meshwerks case, which involved conversion of 3D measurements into 2D wireframes, Osment didn’t simply copy Jefferson Station into a different medium, but engaged in “selective compression.” (Though again this might be scenes a faire on further examination.)
Moreover, there were visual differences between Osment’s model and the Jefferson Station, creating a factual question on originality. Though Mike’s argued that the differences were “minor and trivial,” citing L. Batlin & Son, the court refused to find as a matter of law that the specific design elements at issue were trivial: the court identified “ostensible visual differences in the setting of the depots, color scheme, signage, bracket design, number of chimneys, window frame design, and back-of-the-building door and awning design.” These differences, along with the selective compression, exceeded the copying in Meshwerks and Batlin: “Plaintiffs' models do not appear to be mere replications of other objects in a different medium.” Likewise, plaintiffs maintained that the gas station was not substantially similar to any real-life building, creating a question of fact.
Mike’s then argued that any copyright would be thin and thus the minor variations concededly present in its products avoided infringement. This too could not be decided on summary judgment. Copyright specifically contemplates that authors can have rights in derivative works based on public domain works, limited to those elements that are original to the author of the derivative work. Rather than applying a “virtual identity” standard for infringement, the court found that the scope of plaintiffs’ copyrights was a question of fact. Indeed, the court suggested, the apparently enhanced standard for infringing a thin copyright may be nothing more than shorthand for the general substantial similarity test when only a few elements of a work are protected.
False advertising/unfair competition: courts have repeatedly found the use of photos of another party’s products, mislabeled as the advertiser’s, to be a false designation of origin. This court was not about to disagree on defendant’s motion for summary judgment, even though Mike’s argued that its photos were “dissimilar” to plaintiffs’ models. “The Court is aware of no law, nor has Mike's pointed to any, to support the proposition that as a matter of law, the Lanham Act is not violated if alterations are made to another's product photographs before appropriating them.” That actually does raise an interesting issue—at some point, Photoshopped alterations might be enough to avoid passing off, if what was advertised was a prototype of defendant’s product. Or, if the product itself was sufficiently altered, defendant might properly be described as the source. See Bretford Mfg., Inc., v. Smith Sys. Mfg. Corp., 419 F.3d 576 (7th Cir. 2005). But the facts here aren’t clear enough to give Mike’s summary judgment.
Damages: Mike’s arguments about damage calculations were more appropriate for a jury. There was enough evidence of reputational damage to move forward with a Lanham Act claim, including “commentary on internet blogs that there might exist a relationship between Plaintiffs and Mike's,” since Mike’s didn’t contest plaintiffs’ assertion that Mike’s products were inferior. “Plaintiffs' basis of their loss calculation on a company rule of thumb--that conservatively accounts for public response--also creates a submissible case to a jury.” I’m not sure that all courts would consider this a rational basis for a damages calculation—I think it pretty much defies logic to say that all reputational hits/spikes, however disseminated and to whomever, have the same effects (suppose defendant had instead falsely advertised that Osment’s depots were coated in lead paint?)—but okay.
Practice point: don’t use photos of competitors’ products in your own catalogs, unless you’re explicitly comparing your product to theirs. Just don’t.