Opinion
Civil No. 99-1768 (JRT/FLN)
September 5, 2001
Thomas J. Byrnes and Susan L. Christenberry, DEPARTMENT OF JUSTICE, Commercial Litigation Branch, Civil Division, Washington, DC, Robyn A. Millenacker, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Minneapolis, MN, for plaintiff.
Donald Chance Mark, Jr., and Katherine C. Bloomquist, FAFINSKI MARK JOHNSON, Eden Prairie, MN, for defendants.
MEMORANDUM OPINION AND ORDER
On September 18, 2000, this Court granted the government's motion for a preliminary injunction in connection with its claims for copyright infringement, trademark infringement, trademark dilution, false and misleading representations of fact, and false designation of origin. The preliminary injunction concerning the government's copyright infringement claims took effect immediately upon the posting of security in the amount of $10,000 pursuant to Rule 65(c) of the Federal Rules of Civil Procedure. The preliminary injunction with respect to the trademark claims did not take effect until the Court issued its Final Order for Preliminary Injunction on June 22, 2001, setting forth the specific language and characteristics of the disclaimer that defendants were to use in connection with the advertisement, marketing or sale of any product of the United States Mint or any replica of a United States Mint product. This matter is now before the Court on the government's motion for partial summary judgment, seeking a permanent injunction. Because the Court finds that no genuine issues of material fact exist and that the government has carried its burden with respect to the four factors required for a permanent injunction, the Court grants the government's motion as to defendants Washington Mint and Thomas Brokl on both its copyright and trademark claims. However, because genuine issues of material fact remain as to the liability of Novus Marketing, Scott Jagodzinski, and Damian Topousis, plaintiff's motion with respect to them is denied.
BACKGROUND
The copyright claims in this case arise from defendants' alleged production of, or participation in the production of, a gold coin replica of the United States dollar coin featuring an image of Sacagawea ("Sacagawea dollar"). The trademark claims arise from the use of the "Washington Mint" name by defendant Washington Mint, LLC ("Washington Mint") to designate its products. The government alleges that the name is confusingly similar to the registered trademark "United States Mint." The Court extensively discussed the facts of this case in its September 18, 2000 Order and rather than reiterate them again here, the Court incorporates those facts by reference. The material facts in this case have not changed since the Court's earlier Order, and additional facts necessary for the Court's analysis will be included throughout this Order.
DISCUSSION
I. Standard of Review
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56. Only disputes over facts that might affect the outcome of the suit under the governing substantive law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is not appropriate if the dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. Summary judgment is to be granted only where the evidence is such that no reasonable jury could return a verdict for the nonmoving party. Id.
The moving party bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The nonmoving party is entitled to the benefit of all reasonable inferences to be drawn from the underlying facts in the record. Vette Co. v. Aetna Casualty Surety Co., 612 F.2d 1076 (8th Cir. 1980). However, the nonmoving party may not merely rest upon allegations or denials in its pleadings, but it must set forth specific facts by affidavits or otherwise showing that there is a genuine issue for trial. Burst v. Adolph Coors Co., 650 F.2d 930, 932 (8th Cir. 1981).
"The standard for determining whether a permanent injunction should issue is essentially the same as the familiar standard for a preliminary injunction." Randolph v. Rodgers, 170 F.3d 850, 857 (8th Cir. 1999) (citing Amoco Production Co. v. Village of Gambell, 480 U.S. 531, 546 n. 12 (1987)). When faced with a motion for a preliminary injunction, the Court must balance four factors to determine whether injunctive relief is merited: (1) the threat of irreparable harm to the movant; (2) the balance between this harm and the harm to the nonmoving party should the injunction issue; (3) the likelihood of success on the merits; and (4) the public interest. Id. "The standard is the same for a permanent injunction except that the movant must show actual success on the merits. Amoco Production Co., 480 U.S. at 546 n. 12.
II. Copyright Infringement
As detailed in the Court's September 18, 2000 Order, plaintiff has demonstrated a threat of irreparable harm and that the balance of harms and public interest favor an injunction. Those conclusions have not changed. The Court will therefore focus its analysis on whether plaintiff has demonstrated actual success on the merits. In order to show actual success on the merits for its copyright infringement claim, the government must show that no genuine issues of material fact exist concerning whether defendants infringed a valid copyright. The government must therefore demonstrate (1) existence, ownership and validity of a copyright, and (2) defendants' violation of one of the United States' exclusive rights granted under copyright law. Pinkham v. Sara Lee Corp., 983 F.2d 824, 830 (8th Cir. 1992).
A. Existence, Ownership and Validity
Defendants continue to challenge the validity of the registered copyrights the government seeks to enforce. At the preliminary injunction stage of the proceedings, defendants challenged the validity of the copyrights at issue here based on the government works exception to the Federal Copyright Act, which provides that copyright protection is not available for "any work of the United States government." 17 U.S.C. § 105. The government's copyrights are entitled to a presumption of validity in this case because they are supported by certificates of registration. 17 U.S.C. § 410(c). Defendants now assert the same or similar arguments, again challenging the validity of plaintiff's copyrights, claiming that United States coins are not subject to copyright protection. However, as explained in its earlier Order, the federal government may hold copyrights in this situation because the copyrights were transferred to it by assignment and were not prepared by government employees.
Defendants again argue, as they did at the preliminary injunction stage, that private artists were used as an alternative to government employees in this case in order to circumvent the government works exception. The Court previously found those allegations to be seriously undermined by the facts that were in the record before it at the preliminary injunction stage. The Court noted evidence that the United States Mint had long received complaints concerning the "static" nature of the coin designs it had produced and the lack of public participation in the design process. In response to those concerns and complaints, the United States Mint undertook a new selection process for the design of the dollar coin. The Court also noted that the manner in which the designs were selected belied the contention that the government was engaged in a subterfuge to gain copyright protection. The selection process for the design was anonymous and included works from both private artists and government employees. Based on these facts, the Court concluded that the government was not involved in a subterfuge to circumvent the government works exception and that its copyrights were valid.
That conclusion has not changed and the government has introduced even further uncontroverted evidence to strengthen the record on this point. The government has introduced evidence demonstrating that the committee charged with recommending a design concept to the Secretary of the Treasury for the dollar coin, consisting only of non-United States Mint personnel, recommended that the Treasury invite private artists to participate in the design process for the new dollar coin. This additional fact demonstrates that non-United States Mint personnel sought to include private artists — personnel with no interest in circumventing the government works exception. Moreover, in selecting the finalists for the reverse side of the coin, the Treasury Secretary selected two designs from private artists and two from a United States Mint employee. Had the government actually been engaged in an attempt to circumvent the government works exception, there is no reason that two designs from a government employee would even have been included as finalists. Based on the record before the Court that was discussed in its prior Order and this additional evidence now before the Court, the Court concludes that there is no genuine issue of material fact concerning a subterfuge by the federal government to gain copyright ownership in the New Dollar coin.
The chairman of the committee, Philip Diehl, was the Director of the United States Mint, but was a non-voting member of the committee.
Defendants also challenge the validity of the government's copyrights on the basis that government employees participated in modifications to the copyrighted work, making the final coin design a joint work of the federal government and Glenna Goodacre. The Court does not agree. A "joint work" is "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." 17 U.S.C. § 101. Not only does a joint work require two or more authors, but it also requires that each contribution be independently copyrightable. Childress v. Taylor, 945 F.2d 500, 506 (2nd Cir. 1991); Aalmuhammed v. Lee, 202 F.3d 1227, 1231 (9th Cir. 1999). To "author" a work requires "more than a minimal creative or original contribution to the work." Aalmuhammed, 202 F.3d at 1233. An "author" is "the person whom the work owes its origin and who superintended the whole work, the `master mind.'" Id. (quoting Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 61 (1884)). In order to find that a joint work exists, the Second and Seventh Circuits have also required proof that both parties intended each other to be joint authors. Thomson v. Larson, 147 F.3d 195, 202-05 (2nd Cir. 1998); Erickson v. Trinity Theatre, Inc., 13 F.3d 1061, 1070-71 (7th Cir. 1994). There is simply not enough evidence in the record to create a genuine issue of material fact concerning whether Goodacre's original design, which was slightly altered before minting, constitutes a joint work. Any work done by United States Mint employee Thomas Rogers did not approach the level of a copyrightable contribution nor did it suffice to allow Rogers or the government to claim that it was a joint author. Furthermore, there is absolutely no evidence that either party intended Goodacre's design to be a piece of joint authorship.
As it did in the September 2000 Order, the Court finds that the registered copyrights are valid and enforceable.
B. Infringement by Washington Mint
The Court also concludes that defendant Washington Mint infringed the United States exclusive copyright. In order to establish infringement, a claimant must demonstrate both ownership of the copyright and "copying" by the defendant. Moore v. Columbia Pictures Indus., Inc., 972 F.2d 939, 941 (8th Cir. 1992). The Washington Mint admitted that it deliberately copied the design depicted on the Sacagawea dollar. As the Court noted in its previous Order, whether Washington Mint infringed the government's copyright therefore depends upon whether an individual who reproduces a derivative work may be liable to the owner of the copyright in the original work, to the extent the reproduction copies substantial portions of the original work. The Court concluded that infringement does result under such a scenario.
Defendants now reassert their earlier argument that the derivative work in this case is not deserving of copyright protection. Again, this is an issue the Court addressed in its September Order. The Court found, and continues to believe, that Washington Mint is liable for violating the government's copyright in Goodacre's original sculpture to the extent the coin contained portions of the design depicted in the sculpture. Defendants have introduced no new evidence which persuades the Court to reconsider its earlier decision. The Court is convinced, as it was at the preliminary injunction stage of this litigation, that the actual Sacagawea dollar contains substantial portions of the design depicted in Goodacre's original sculpture, in which the government holds a valid copyright. Upon comparing Goodacre's original design with that of Washington Mint's replica, the Court finds that there is no genuine fact issue concerning the substantial similarity of the two. Accordingly, the Court finds that the Washington Mint infringed the government's valid copyright.
C. Liability of Individual Defendants and Novus Marketing
In order to establish personal liability for copyright infringement, the government must demonstrate that a particular defendant is either directly and personally involved in the infringing activity or had the right and ability to supervise that activity and a financial interest in it. Pinkham, 983 F.2d at 834. With respect to defendant Thomas Brokl, CEO of Washington Mint, the Court finds that he was directly involved in designing and producing the replica of the Sacagawea dollar. Accordingly, Brokl is liable for infringement. However, fact questions exist concerning the liability of defendants Novus Marketing, Scott Jagodzinski, and Damian Topousis. Because of the complicated relationship between Novus and Washington Mint as well as the involvement of Jagodinski and Topousis, the Court concludes those issues should be submitted to the jury.
III. Trademark Infringement
To establish trademark infringement, plaintiff must demonstrate that (1) it has a valid, protectable mark, and (2) that defendants' mark is likely to cause confusion or to cause mistake or deceive as to the source of the goods. 15 U.S.C. § 1114; Minnesota Mining and Mfg. Co. v. Taylor, 21 F. Supp.2d 1003, 1004 (D.Minn. 1998). The factors courts look at to determine if confusion exists are: (1) the strength of the owner's mark; (2) the similarity between the owner's mark and the alleged infringer's mark; (3) the degree to which the products compete with each other; (4) the alleged infringer's intent to pass-off the goods as those of the trademark owner; (5) incidents of actual confusion; and (6) the type of product, its costs and conditions of purchase. Co-Rect Prods., Inc. v. Marvy! Advertising Photography, Inc., 780 F.2d 1324, 1330 (8th Cir. 1986) (citing SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980)).
A. Infringement by Washington Mint
In its previous Order, the Court concluded that the government owns a registered trademark in the name, "United States Mint." At the preliminary injunction stage of this proceeding, defendants argued that the government's trademark was invalid because articles of legal tender are not "goods" subject to Lanham Act protection. Defendants further argued that because none of the infringement allegations involved non-monetary items, that its trademark was unenforceable. The Court rejected those two arguments in its September 18, 2000 Order. Defendants now raise those arguments anew, requesting that the Court reconsider its earlier position. For the same reasons expressed in its September Order, the Court finds that the government has a protectable mark in the name "United States Mint."
The Court previously explained that defendants provided no authority for the proposition that the products manufactured by the United States Mint are not "goods in commerce." The Court also reasoned that the United States Mint acts as a business in competition with other coin producers and is therefore entitled to trademark protection.
The Court also previously concluded that plaintiff had produced sufficient evidence to demonstrate a likelihood of confusion between its mark and the marks of defendant Washington Mint. Defendants now argue that the mark, "The Washington Mint, LLC," is a legitimate trademark and that plaintiff should be estopped from claiming infringement because the United States government was ultimately responsible for registering the mark. Defendants also argue that actual confusion is a fact issue that should be submitted to a jury. The Court finds these arguments unpersuasive.
As noted in the Court's earlier Order, actual confusion is not essential to a finding of trademark infringement. SquirtCo, 628 F.2d at 1091. In this case, the Court does not believe that the issue of actual confusion needs to be submitted to a jury. The government has already demonstrated a sufficient likelihood of confusion to merit a permanent injunction, even before its additional evidence of actual confusion now in the record. As explained in the Court's September Order, the government introduced compelling evidence concerning the strength of its mark and that the "United States Mint" and "Washington Mint" are confusingly similar. Additionally, the Court found that there was significant market overlap between the United States Mint and Washington Mint.
However, the Court noted that there was evidence of actual confusion before it, in the form of letters and affidavits.
Further, the Court found that an intent to pass off could be inferred from the facts before the Court at that time. There is now even more evidence before the Court on this factor. A Washington Mint business plan document states that, "[t]he name `The Washington Mint' carries an implied endorsement by the government, which according to Bill Whitehead and Fred Berg, creates a certain amount of customer loyalty." Given this clear evidence of Washington Mint's intention to pass its goods off as those sponsored by the United States government, in addition to the other evidence in the record, the Court has no doubt that Washington Mint's mark is likely to cause confusion.
As noted above, because there is such a strong record before the Court concerning likelihood of confusion, the Court does not find it necessary to submit the issue of actual confusion to the jury. The government's additional evidence of actual confusion now in the record, in the form of Dr. Jessica Pollner's observations and survey evidence, is therefore not critical to the Court's determination.
Finally, the Court does not believe that the equitable remedy of estoppel is appropriate in this case. While the United States government did initially approve the Washington Mint mark through its Patent and Trademark Office, the type of acquiescence that normally justifies estoppel is not present in this case. Accordingly, the Court concludes that Washington Mint infringed plaintiff's trademark.
B. Liability of Individual Defendants and Novus Marketing
An individual defendant may be held liable for trademark infringement if he or she directly participated in the infringement, Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3rd Cir. 1978), or intentionally induced another to infringe a trademark. Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996). The standard for personal liability for trademark infringement is higher than that of copyright infringement. Despite this heightened standard, the Court nonetheless finds that Thomas Brokl, through his actions of approving and modifying advertisements from which the government's infringement claims arise, is liable for trademark infringement. As it concluded with respect to the government's claims for copyright infringement, the Court finds that genuine issues of material fact exist concerning the liability of Novus Marketing for trademark infringement.
CONCLUSION
Plaintiff is granted summary judgment as to defendants Washington Mint and Thomas Brokl on its copyright and trademark claims. Accordingly, the Court enters a permanent injunction enjoining and restraining Washington Mint and Thomas Brokl from designing, producing, advertising, marketing or selling any copy, replica or other reproduction of the work of Glenna Goodacre protected by United States copyright registered as copyright number VA-966-985.
While the government also seeks an injunction in connection with its trademark claims that would enjoin defendants from any further use of the name "Washington Mint," the mark "The Washington Mint, LLC," or the domain name "www.washingtonmint.com," in connection with any United States Mint product or replica, the Court does not believe that such a broad injunction is necessary or appropriate. Instead, the Court enters a permanent injunction that requires Washington Mint to disclaim any affiliation with the United States government in a bold, noticeable, and clearly stated disclaimer.
Washington Mint is to include the following language in any advertisements, order forms, marketing materials or web pages for any replica products of the United States Mint:
The Washington Mint, LLC is not affiliated with the United States Government or any government agency in any way. The United States Government does not endorse the coinage of the Washington Mint. This language is to be prominently displayed at the top of any Washington Mint advertisements or other marketing materials for replicas of United States Mint products. The disclaimer is to appear in an easily readable font of at least 12 point and is to be placed within the photograph box of any advertisement or other marketing material. The disclaimer is not to be included with other text below the photograph box, but is to be placed immediately adjacent to or below the actual photograph used in the advertisement or marketing material. The language is also to be in a different color than the background of the photograph box in which it is placed so that the language is clear and noticeable. Again, to be clear, this disclaimer language as well as the placement, size, and color requirements set forth above are to be included in all Washington Mint advertisements, order forms, web pages or other marketing materials that include replicas of United States Mint products.
The remaining claims against Novus Marketing, Jagodzinski and Topousis are to be tried to a jury.
In addition, the issue of "willful" copyright infringement on the part of the Washington Mint, Thomas Brokl, or the remaining defendants is also a fact question that must be tried to a jury.
ORDER
Based on the foregoing, and all of the records, files and proceedings herein, IT IS HEREBY ORDERED that:1. The government's motion for summary judgment seeking a permanent injunction [Docket No. 153] is GRANTED in part.
2. In connection with the government's copyright infringement claims, the Washington Mint and Brokl, and any and all of their successors, employees, agents, heirs, and assigns are hereby permanently ENJOINED and RESTRAINED as follows:
a. The enjoined parties shall not design, produce, advertise, market or sell any copy, replica or other reproduction of the work of Glenna Goodacre protected by the United States Mint's assigned copyright registered as copyright number VA-966-985. This injunction explicitly includes, but is not limited to, any replica of the Sacagawea dollar coin that the Washington Mint currently produces and sells or has produced and sold in the past, and requires the enjoined defendants immediately to cease the production, marketing and sale of this product. The injunction set forth in this paragraph shall take effect immediately.
3. In connection with the government's trademark infringement, trademark dilution, and false advertising claims, the Washington Mint and Brokl, and any and all of their successors, employees, agents, heirs, and assigns are hereby permanently ENJOINED and RESTRAINED as follows:
a. The enjoined parties are prohibited from using or contributing to the use of the "Washington Mint" trade name, the registered trademark "The Washington Mint LLC," or the Internet domain name "washingtonmint.com" in connection with the advertisement, marketing or sale of any product of the United States Mint or any replica of a United States Mint product, unless each page of the advertisement, web page, order form, or other marketing tool used also contains a noticeable, clear, and boldly written disclaimer of any association with the United States government.
b. The disclaimer shall consist of the following language: The Washington Mint, LLC is not affiliated with the United States Government or any government agency in any way. The United States Government does not endorse the coinage of the Washington Mint.
The disclaimer shall appear immediately adjacent to or below the photograph that is used in the advertisement or marketing material and shall be placed inside the photograph box. The language is not to be placed with other text in the body of the advertisement. The language shall be at least 12 point font and is to be a different color from the background of the photograph box in which it is placed.
c. The injunction set forth in this paragraph shall take effect immediately and no security need be posted pursuant to Rule 65(c) of the Federal Rules of Civil Procedure.
4. The government's motion is DENIED in all other respects.