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March 2011

Fleischer Studios, Inc. v. A.V.E.L.A., Inc. et al. - Doctrine of Indivisibility Permits Copyright Holders to Retain Component Parts, and "Functional" Features Are Not Protected by Trademark Law

Copyright Infringement Claim Failed Because Plaintiff Was Unable to Establish Ownership Through a Chain of Title, and Trademark Infringement Claim Barred Because Defendant's Use of Image was Functional

No. 09-56317; 9th Cir. Cal. (February 23, 2011)

This appeal arises out of the district court's dismissal of Fleischer Studio, Inc's ("Fleischer") copyright and trademark claims against A.V.E.L.A., Inc., Art, Inc., X One X Movie Archive, Inc., and Leo Valencia (collectively "A.V.E.L.A."), on the grounds that Fleischer lacked standing to sue based on lack of evidence of a valid copyright or trademark in the Betty Boop cartoon character. 

Betty Boop is an animated cartoon character that was created by Max Fleischer in the 1930s.  Originally appearing in cartoon films, the Betty Boop image and character is used in the production of toys, dolls and other merchandise, and is highly popular, even today.  Claiming to be the exclusive owner of this character as a result of certain intellectual property purchases in the early 1970s, Fleischer filed this copyright and trademark infringement action against A.V.E.L.A. 

During summary judgment proceedings before the district court, the parties disputed whether Fleischer owned an exclusive copyright in the Betty Boop cartoon character.  Fleischer claimed its ownership arose out of several alternative chains of title; A.V.E.L.A. asserted that the evidence was insufficient to establish each link of Fleischer's alleged chains.  Finding in favor of A.V.E.L.A., the district court granted summary judgment on Fleischer's copyright claims.  The district court also dismissed Fleischer's trademark infringement claim because Fleischer failed to submit proper evidence of a registered federal trademark or common law rights in or to the Betty Boop name or image.  Fleischer then filed this appeal.   

On appeal, the Court held that the district court properly dismissed Fleischer's copyright infringement claim based on lack of evidence of a complete chain of title.  Fleischer had the burden to prove ownership of the Betty Boop character by establishing each link in its chain of title, and in so doing, Fleischer relied on a purchase agreement between Paramount Pictures, Inc. and UM&M TV Corp.  The Court of Appeals held that unambiguous language in the purchase agreement explicitly prohibited the intellectual property rights in the Betty Boop character from transferring to UM&M.  In so holding, the Court rejected the idea that the "doctrine of indivisibility" had any impact on its ruling.  This doctrine, which resulted from judicial interpretation of the 1909 Copyright Act, prohibits a "licensee," or "someone who holds only partial copyright privileges," from copyrighting a work in the licensee's name.  Fleischer argued that if "Paramount retained the copyright to the Betty Boop character, but transferred the copyright in the films to UM&M, the doctrine of indivisibility would have prevented UM&M from renewing its copyright," such that this was evidence "that neither party intended to separate the Betty Boop character and the film rights."  However, the Court disagreed, and held that UM&M obtained the "totality of rights commanded by copyright" for the cartoon character's films, but not the rights to the cartoon character.  The Court further noted that "[w]hile the doctrine of indivisibility may have prohibited UM&M from receiving the film copyright if, for example, it did not obtain the DVD distribution rights to the Betty Boop films it purchased, the doctrine would have no impact on UM&M's attempt to renew its copyright if it did not own a character copyright component part of the film."  In summary, the Court of Appeals held that the "doctrine of indivisibility does not deprive copyright holders of the right to transfer or, in this case, retain the component parts of their copyrights." 

The Court next considered Fleischer's claims that A.V.E.L.A. was infringing on its trademarks, through the sale of Betty Boop dolls, t-shirts and handbags.  The Court of Appeals affirmed the district court's dismissal of Fleischer's trademark infringement claims based on two cases: International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), and Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003).  Relying on Job's Daughters, the Court noted that "functional" features of a product are not protected by trademark law, and concluded that A.V.E.L.A.'s products, its merchandising practices, and the lack of evidence that consumers have inferred a connection between A.V.E.L.A.'s products and Fleischer "reveal that A.V.E.L.A. is not using Betty Boop as a trademark, but instead as a functional product."  Additionally, the Court cited the holding in Dastar Corp.–"where a copyright is in the public domain, a party may not assert a trademark infringement action against an alleged infringer if that action is essentially a substitute for a copyright infringement action" – and concluded that "ruling in Fleischer's favor would prevent the Betty Boop character from ever entering the public domain."  Ultimately, the Court held that "[g]iven that the A.V.E.L.A.'s use of Betty Boop is functional and aesthetic, and because ruling in Fleischer's favor would prevent the Betty Boop character from ever entering the public domain, Fleischer's infringement claim is barred."  

Practical Concerns

Those relying on a chain of title to establish copyright ownership should carefully review the documents which purport to establish such chain when considering whether to file a lawsuit or when negotiating the sale of intellectual property rights, paying careful attention to whether the agreements purport to transfer all of the intellectual property rights or merely component parts of the copyright.  Additionally, prior to filing a trademark infringement lawsuit, practitioners should carefully review the alleged infringer's products, the alleged infringer's merchandising practices, and whether consumers have inferred a connection between the alleged infringer's products and the owner of the trademark, in an attempt to determine whether the alleged infringer is merely using the trademark as a "functional product," which is not protected by trademark law. 

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This opinion may be cited as precedent now.  The result in this case could change, however, if a subsequent petition for rehearing or a petiition for certiorari to the United States Supreme Court is granted. 

Intellectual Property

Intellectual Property