Thursday, April 04, 2013

Unusual copyright permission term leads to unsuccessful lawsuit

Great British Teddy Bear Co. v. McNeil-PPC, Inc., 2013 WL 1286148 (S.D.N.Y.)

Plaintiff sued McNeil-PPC and Vidal Partnership (an ad agency) for copyright infringement and false advertising, along with violations of NY consumer protection law.  The court dismissed the claims based on emails between the parties (which were necessary parts of the complaint).

Great British makes teddy bears dressed as notable British figures, including Robin Hood, and claims copyright in the bears. Vidal specializes in ads directed at Spanish-speaking markets.  McNeil hired Vidal to produce an online ad campaign for its antihistamine Zyrtec; Vidal’s idea was to show cherished objects revealed as the cause of allergies, with Zyrtec allowing the sufferer to enjoy the objects again. A Vidal business manager, Sullivan-Brady, contacted Great British’s managing director, Jessup, about licensing the Robin Hood bear for use in this campaign.

Matters began well, with Jessup asking for more details but stating “I am sure we will be able to work together.”  Sullivan-Brady explained the basic concept and asked about next steps.  Jessup had questions—why Robin Hood instead of a generic bear, where the ad would be shown, how many people would see it.  He was concerned that people wouldn’t understand that the bears were made from hypoallergenic plush and thus unlikely to trigger allergies.  Sullivan-Brady gave further details and explained that the ad would specify that dust mites on the bear caused the problem.  Jessup responded, “I like that. I am happy for you to include The Great British Robin Hood Bear©TM in your concept. If your client approves the concept we can agree terms and issue a release agreement.”

Sullivan-Brady responded by asking to clarify the costs: “we need to know this up front to factor this into the decision about which concept to use. Please let me know as soon as possible, even if it's only a ballpark figure.”  Jessup didn’t give a figure, but responded that he was looking into “associated costs” and that Great British was well-established in Great Britain but wanted a US distributor.  “[W]e could use some help from a friend like Vidal Partnership. Maybe we could help you with the loan of Robin Hood and you could reach out to some of your friends and introduce The Great British Teddy Bear Co. I guess launching our brand with a U.S. distributer would be easier after 194m people [Sullivan-Brady’s figure for impressions] have seen one of our bears?”

Sullivan-Brady responded, “Yes, I think that launching the brand with a U.S. distributor would be much easier after 194 million people have seen the bear. This could certainly be beneficial to both parties. Please get back to me ASAP with the ‘associated costs’ proposal from your finance department.”  Jessup responded: “I agree that launching the brand with a U.S. distributor would be much easier after 194 million people have seen the bear so my suggestion is that we waive any ‘associated costs’ and in return The Vidal Partnership reach out to some of their friends and introduce The Great British Teddy Bear Co.” He continued:

So to be really clear:

I will send you some free bears.

You can present your concept using our brand with my permission.

If the concept is approved and our bear is used in the advert-Vidal will introduce us to a U.S. Distributer.

Sullivan-Brady replied, “I'm glad we're ‘on the same page’ with this. We would be delighted to do whatever we could to talk you up and help introduce you to a distributor in the US.”  [Note that she’d have been much better off responding, “couldn’t we pay you a reasonable licensing fee instead?”]

Later, when the ad was approved, Sullivan-Brady sent the storyboard showing the ad “almost frame by frame.”  The first frame displays a question in Spanish.  English: “Itchy eyes?”

In the second frame, six arrows pierce the white area and the text. In the third frame, a section of the white area rips away to partially reveal plaintiff's bear. In the fourth, the entire bear, holding an arrow without a suction cup at the end, appears next to the following text, as translated from the Spanish: “It may be the dust mites on your favorite teddy bear.”In the final frame, a message encouraging the viewer to use Zyrtec appears next to the bear.

Jessup wrote to remind Sullivan-Brady about their licensing arrangement: “I will send you some free bears[.] You can present your concept using our brand with my permission[.] If the concept is approved and our bear is used in the advert-Vidal will introduce us to a U.S. Distributer[.] Let me know which friendly distributer you will be introducing us to.”  This was when things began to sour. Sullivan-Brady replied, “I'm still doing research on distributors because, as I said in previous emails, we're happy to talk you up and rave about the bear but we're an ad agency, so we don't really deal with the distribution end of business at all. However, I'm doing my best to find someone to put you in contact with.”  After several more rounds of this, Sullivan-Brady made increasingly clear that she didn’t have relevant contacts, and Jessup wrote “In light of you not fulfilling your side of the bargain I have no option but to withdraw my permission for our intellectual property to be used by your agency in any advertisement.”

Sullivan responded, “In our original email trail, I specified to you that we are an advertising agency and we do not have any clients in the toy business. That said, I have been making a good faith effort to find a distributor for you, in the spirit of our agreement, however there have been some hiccups and delays due to the fact that this is not my normal area of expertise and I am starting from scratch.”  Jessup accepted this for a few weeks, but then wrote, “We have been patient-I will require confirmation by return that you have not used our product in your advertisement or preferably that you have honoured our agreement and you now have a distributer ready to meet us.”  Sullivan-Brady wrote back, stating that she’d (unsuccessfully) made contact with the president of Gund, and was working on contacts with Hallmark and Toys R Us.  She stated that, given Jessup’s urgency, she didn’t think she could fulfill his hopes quickly.  “I regret that the timeframe that you had in mind was not clearer when we made our agreement, however I did say to you several times that this is not my field and that neither I nor the agency have any contacts in this field. That said, yes, we did use the bear in our advertising, as I told you. At this point we should come to a clear agreement as to how best to move forward. I am willing to continue working to get you an introduction you to a distributor.” Jessup wrote again for details about the ad, which Sullivan-Brady provided, along with statements about her good-faith but unsuccessful efforts to use her contacts to find distributors. 

The final ad differed in minor respects from the storyboard, most notably in that the bear in the ad held several arrows in a quiver instead of one unsheathed arrow. Jessup then asked whether the ad had audio commentary; Sullivan-Brady confirmed that it didn’t.  Jessup sent a C&D and the ad was pulled the next day.

Copyright: “It is clear from the undisputed emails that there is absolutely no merit to the claim of copyright infringement.”  The emails detailed Great British’s permission to develop the ad. While finding a US distributor clearly became, “in plaintiff’s mind, the most important part of the relationship between the two parties.” But Great British’s permission continued.  It responded “congratulations!” when Jessup saw the storyboards.  Even when Jessup emailed purporting to withdraw Great British’s permission, “the parties then continued to exchange emails dealing with the unsuccessful attempts by the defendant to obtain the distributor, and those emails make clear that, in both parties' minds, defendant still had permission to use plaintiff's bears.” When the C&D was sent, the ad was pulled the next day.  “What all this confirms is that defendant had permission to use plaintiff's bear in the advertisement until the problem about the distributor led plaintiff to withdraw that permission, at which time defendant immediately stopped the advertisement.” Without unauthorized use, there could be no infringement.

False advertising: Great British alleged that the ad caused the false impression that its bear might cause allergies, either in itself or by attracting dust mites, and that the arrow it carried might cause injury.  No matter the theory, Great British acquiesced to this portrayal.  Jessup explicitly approved the dust mite concept, and he never objected to the full storyboard, but rather congratulated Sullivan-Brady when McNeil approved the ad.  The storyboard didn’t differ from the final ad in any relevant way.  The storyboard showed arrows piercing the frame of the ad and contained a line about dust mites.

NY GBL §§ 349 and 350: These are consumer protection laws. Thus, a plaintiff must identify consumer oriented misconduct – mere confusion or deception among consumers isn’t enough; harm to them is required. Here, Great British didn’t allege specific and substantial injury to the public at large.  “Perhaps it is true that some people, after glancing at defendants' advertisement, wrongly inferred that plaintiff's bear carries lethal weapons and is made of hyper-allergenic materials. This wrongful belief would, at worst, deprive a child or teddy-bear aficionado of a lovely toy. It would have no further impact on the buying public. That is to say, the real injury here is not be borne by public; it is borne by plaintiff, in the form of reduced sales.”

[Note that the opinion didn’t address any potential breach of contract or unjust enrichment claim. However, without copyright damages, such a claim may be cost-unjustified.]

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