Property, intangible

a blog about ownership of intellectual property rights and its licensing

“New Discovered” Doesn’t Mean “I Just Now Went Looking”

American Plastic Equipment, Inc. claimed to own the copyright in toy action figures first manufactured by Louis Marx & Co. Defendant Toytrackerz, LLC made replicas and was sued. In its original decision (blogged here and here), the court found that there were two defects in American Plastic’s chain of title. The first break was in the context of a bankruptcy, where the court found that there was no proof that secured creditor Chemical Bank had actually acquired the copyrights in the bankruptcy proceeding. The second break was an oral assignment instead of a written one.

So American Plastic gets a new lawyer and goes digging for the missing documents. For the first break in the chain of title, American Plastic went back to the bankruptcy files and located the Louis Marx & Co. transfer to Chemical Bank. For the second, the plaintiff coughed up a nunc pro tunc copyright assignment, dated after it had lost on summary judgment.

The court considered the motion under Fed. R. Civ. P. 60(b), which allows for relief from judgment for, inter alia, newly discovered evidence. To be successful under 60(b), the movant must show that it could not have known of and obtained the evidence through diligence prior to the court’s order. That was the death knell; the bankruptcy documents had been there all along, it was only that American Plastic had to go to the trouble of getting them. The nun pro tunc assignment failed too; it was not “newly discovered,” but “newly created.”

The plaintiff’s dying gasp was to claim that a transfer, when it is an assignment-back, can be oral, which can only be challenged by the other party to the transaction (citing Arnstein v. Porter, 154 F.2d 464 (2d Cir.1946); Kingsrow Enters., Inc. v. Metromedia Inc., [1978 WL 952,] 203 U.S.P.Q. 489 (S.D.N.Y.1978); Law v. Nat’l Broad. Co., 51 F.Supp. 798 (S.D.N.Y.1943)). The court decided this was an argument under subparagraph (1) of 60(b), which allows for a relief from judgment where there has been a mistake, including a judicial mistake. But whether the court had the law right or wrong didn’t matter, because it was an argument that the plaintiff could have made originally but didn’t.

Better lawyering a little too late. Looking for comments on another defendant’s likelihood of success in arguing that collateral estoppel prevents American Plastic from claiming copyright ownership in a subsequent suit.

American Plastic Equip., Inc. v. Toytrackerz, LLC, No. 07-2253-DJW (D. Kan. Mar. 31, 2010).

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