• The Coup de Grâce for Pooh?

    by  • June 19, 2011 • copyright, trademark

    One opposed mark
    The TTABlog brings us the last (?) chapter in the Winnie the Pooh story – well, it’s the last pending action at least, after a state court litigation, an appeal of it, a federal court litigation, and an appeal of it, all of which SSI lost.  But never say never.
    The parties, Disney on one side and Stephen Slesinger, Inc. (SSI) on the other, have been dueling for years over the ownership of the Winnie the Pooh set of properties.  SSI acquired various sticks in various bundles from author A.A. Milne on two different occasions, the first in 1930 and the second in 1932. It then transferred in some way – exactly what rights and the type of transfer are the dispute – to Disney. Early in the district court case A.A. Milne’s widow was unsuccessful in an effort to terminate the copyright grant, after which (according to Disney) SSI transformed its case to one about the trademarks.

    The Trademark Trial and Appeal Board case was a fairly simple one, having to decide only whether SSI was collaterally estopped from claiming that various Disney applications and registrations should be cancelled. The federal court decision left enough wiggle room for SSI to make the argument but it was ultimately unsuccessful; John lays out the details. Formal analysis aside, I thought one fairly compelling point in Disney’s favor was that SSI had prayed that the court “correct the title of any [Disney] registrations to Slesinger” (p. 50, ¶ 137); this count was dismissed and the request therefore effectively denied.

    So what did SSI have to argue with? Mostly an agreement that didn’t differentiate trademark or copyright rights and, as a result, a court decision that didn’t either.  Don’t blame it on the drafters of the agreement; it was almost 30 years ago.  Here’s the grant clause for the non-motion picture assets:

    Schlesinger’s “further rights”

    include the exclusive right in the United States and Canada to use, or license the use of, the characters and illustrations from the said ‘work’ in, on or in connection with various articles of merchandise.

    The “work” is defined as the A.A. Milne books “Winnie the Pooh” and “House at Pooh Corner,” as well as the collections of verse “When We Were Very Young” and “Now We Are Six,” “including the title, illustrations and complete contents thereof.”

    So no explicit delineation of the types of rights that might be encompassed. Thus, in deciding separate counts for trademark, trade dress and copyright infringement, the district court mashed the analysis together, saying simply that SSI “transferred all of its rights in the Pooh works to Disney, and may not now claim infringement of any retained rights.”

    SSI claimed that the district court had therefore not necessarily found that Disney owned the trademarks, only that they weren’t infringed. Since the basis for noninfringement can be either ownership or license, SSI argued that the district court decision wasn’t preclusive as to ownership. 

    A few other facts were in SSI’s favor, most notably that it was entitled to royalties.  This, however, does not mean that the agreement was necessarily a license, as noted by the TTAB:

    “Royalties in an assignment agreement are properly conceived as deferred consideration for the original conveyance of rights, with the amount of consideration pegged to the commercial success of the product.”  Baladevon, Inc. v. Abbott Labs., Inc., 871 F.Supp. 89, 33 USPQ2d 1743, 1748 (D. Mass. 1994) (internal citations omitted).
    Disney, when sending the royalty payments, characterized them as pursuant to a license:

    and Disney described its arrangement with SSI in its Security and Exchange Commission filings as a “licensing agreement.”

    At the end of the day though, what mattered was that there were simply no rights retained by SSI:

    In spite of SSI’s protestations today that “[t]he rights Slesinger obtained from Milne are much broader than the rights Slesinger licensed to Disney in the 1983 Agreement,” SSI Opp’n at 4, the language of the parties’ agreements belies that contention.  Significantly, nowhere in its motion papers does SSI identify precisely what rights it believes it retained. Nor can any such rights be discovered by reading the contracts. SSI received “certain rights” from Milne and “further rights” in later agreements, and granted “those rights it had acquired” to Disney….  The Court is satisfied that under the clear terms of the parties’ agreements, SSI transferred all of its rights in the Pooh works to Disney….

    (The district court, quoted by the TTAB.)

    The TTAB thus concluded that the ownership of the trademarks was a “pivotal issue addressed by the district court” and SSI was precluded from re-arguing it before the TTAB.

    Stephen Slesinger, Inc. v. Disney Enter., Inc., Opp. No. 91179064 et al. (TTAB June 8, 2011) (precedential).
    Milne v. Stephen Slesiger, Inc., No. 2:02-cv-08508-FMC-PLAx (C.D. Cal. Sept. 25, 2009).

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