Monday, October 13, 2014

Court Wars: Star Wars in the Legal System

Tommy writes:

Welcome to Court Wars, an overview of Star Wars related legal cases and lawsuits. Like most collectors who are also attorneys, from my first day of legal research class, I've been trying to find all the times something collecting related was part of a court case. There are a surprising number of them, so this will probably be a regular blog feature. If you know of any, feel free to send them my way!
In any event, here's what's on our docket today:

City of Sharonville vs. Brown (Ohio App. 1 Dist.,1980): 

On 2/15/1979 Brown allegedly took a case of 6 Star Wars Luke Skywalker figures from Kenner Products, his employer, and in the sight of two fellow employees, carried it from the company loading dock and placed it in the trunk of his car. The court of appeals overturned his conviction because the state failed to introduce evidence that the box belonged to Kenner and that the Luke figures had some value. Kenner placed a value of $38.40 on the case though.  

Ideal's Knight of Darkness figure, which bears a striking resemblance to a certain Sith Lord.  (from the Collection of Isaac Lew) 

Ideal Toy Corp. v. Kenner Products Division of General Mills Fun Group (443 F.Supp. 291, 1977):

This is a case concerning a line of figures called "Star Team." Essentially, Ideal Toys is asking the court to tell Kenner that the Star Team line does not infringe on Kenner's Star Wars line. Kenner makes a counter claim against Ideal, saying that the Star Team figures constitute unfair competition. It's the court's job to settle this mess.

The most interesting part of this particular case is probably the facts section, which gives a rundown of how and why Ideal decided to develop the "Star Team" line in the first place. The court says: 

"TCF (Twentieth Century Fox) has granted, since the end of 1976, more than 20 licenses for 'Star Wars' products, from school supplies and bubble gum to bedspreads and model flying robots. This merchandising campaign included an attempt to interest toy manufacturers in producing 'Star Wars' toys.

Marc Pevers, Director of Business Affairs for TCF, wrote to an officer of Ideal on February 14, 1977, announcing the upcoming release of 'Star Wars' and soliciting Ideal's attendance at a presentation at the annual Toy Fair in New York in late-February. A similar letter was written to Zeke Rose of Ideal's public relations firm. A large, glossy black brochure containing pictures and descriptions of 'Star Wars' was enclosed with each letter.

Ideal did not attend the presentation at the Toy Fair, but Rose spoke to Pevers by phone at that time, informing him that Ideal had no interest in the product, that science fiction films were chancy, films themselves (were) risky as merchandising properties because of their frequently short release life. Furthermore, there was no television series and also that Star Wars itself was a rather ordinary property and all the elements of Star Wars had been done before, that there was a complete lack of interest on Ideal's part.

Pevers received the same response from Herb Sand, an Ideal executive, and from another member of Ideal's public relations firm. Unlike Ideal, however, Kenner expressed interest in the license and entered into an agreement with TCF in April 1977.

In May 1977, 'Star Wars' was released to critical acclaim and virtually instant popularity. According to Ideal, this acclaim, together with the continued popularity of the television show 'Star Trek,' the publicity surrounding the American space shuttle, the expected release of other space movies, and the fact that other toy companies were bringing out space toys, led Ideal to reexamine its opinion of such toys. Julius Cooper, Ideal's Senior Vice President for Research and Development, testified that the market for toys is very much affected by fads and trends, which often originate in a motion picture, a television show or a 'happening.' Mr. Cooper stated that 'the toy industry tries to capitalize on these events because children are very well aware of what is current and we therefore always try to bring out toys, games, dolls that take advantage of these fads.'"

The court goes on to discuss another meeting between Ideal and Fox: 

"In late-June, Pevers met with Stuart Simms, a marketing executive with Ideal, to discuss a TCF series called 'Young Daniel Boone.' Simms, however, opened and closed the meeting by asking whether there were any licenses available on 'Star Wars' which would interest Ideal. Pevers indicated that no such licenses remained."

Thwarted yet again, Ideal had decided in the meanwhile that its best course of action was to abandon trying to somehow steal the Star Wars license away from Kenner and develop a space themed line of their own. If they couldn't correct their mistake of passing on Star Wars, they'd simply release their own space toys: 

"At the end of May, however, Ideal determined that it was necessary to capitalize on the space toy fad as quickly as possible. Accordingly, Cooper testified, Ideal 'decided to go back into (its) old archives of tools and molds and see what toys (it) perhaps could make with the least amount of investment.'"

So, Ideal began their hunt:

"The first toy it reexamined was the 'Alien Invader,' a 'Zeroid-type toy,'…”  but they decided that the "…Alien Invader was too complicated…”

By "too complicated" Ideal means "too expensive to produce." They wanted something cheap so that it could compete with Kenner's official Star Wars products. The toy did give them someplace to start though:

Ideal then went on to look at the Zeroids themselves. All but one of these toys had arms capable of throwing small missiles and were therefore rejected because Ideal has operated since 1970 under a safety regulation that its toys not launch projectiles.” 

It should be noted that not all toy companies at the time operated under this regulation, such as Kenner's Rocket Firing Boba Fett prototype, which was ultimately canceled in part due to a choking death related to a missile fired from a Battlestar Galactica toy. Although this case is taking place years before that fatal incident, the possibility of such a tragedy is already on Ideal's mind. Cynics might also argue that Ideal is attempting to cut costs to the bone in this new line, and a rocket firing mechanism would be too expensive for them to produce anyway, but framing it like a moral stand they are taking probably sounds better from a public relations standpoint. They're not cheap; they're protecting children!

Attention then focused on the remaining Zeroid, 'Zogg,' and the decision was made to adapt that toy. The 1970 Zogg had an elaborate head of squarish shapes with six tube-like protrusions in the 'face' and an antenna grid on top. This head constituted about one-third of the cost of the toy and was eliminated in favor of a simple hemispherical dome of clear plastic. Cooper testified that this change was made for ease of manufacture and because Cooper wanted the light contained in the original Zogg to shine through the entire head.”

Ideal decided to change the colors and remove anything else which would be expensive to produce:

Having concluded that it wished to bring out a 'complete line of toys,' Ideal went on to consider other possibilities. Cooper testified that '(w)e wanted two good guys and that's why we chose the second robot to go along with the Zeroid.' Once again Ideal went back into its archives to look for a mold and chose a human figure patterned after a detective named ‘J. J. Armes.’ Cooper stated that this figure was chosen because it was ‘the easiest mold to get’...”

Personally, I think that's the best reason for choosing a particular mold that I've ever heard.

“...As with the Zeroid toy, alterations were made in the earlier product. Wanting to make the figure look like a robot, Ideal ‘went into the mold,’ engraving various lines and metallic-appearing features which then appeared as raised surfaces on the molded toy.”

They sculpted a completely new head for the figure and molded the body in a different color plastic. So, now Ideal had two figures ready to go in their new space line. They wanted at least one more though, so the process continued.

Having chosen two robot friends, Ideal decided that a complete line of toys required a third figure to create an adversary relationship with the two robots and thus sought to find a ‘bad guy.’ Again the archives were examined, and Ideal selected a figure known as ‘Captain Action.’" 

They chose that particular figure to be their villain because: " was larger than the two good-guy characters.”
They molded the body in a different color plastic, then instructed their sculpting department to create a new head and that the sculptor should: "...(m)ake up your own fantasy of what kind of a villain you want with a black head to go with a black body."

So, we have one figure chosen because it was cheap, one chosen because that particular mold was the easiest to access and now one which was chosen because it was tall. To top it off, the sculpting department was given instructions which were basically "Meh. Do whatever you want." Again, the more cynical collectors among us would probably argue that the instructions given to the sculpting department were actually probably something like: "Just do something that looks as close to Darth Vader as you can get without sculpting Darth Vader."

Their new character and line needed names though: 

“...The name given to the evil figure was 'Knight of Darkness.' Cooper testified that the name had first been used for a 'black knight in a very modern black knight type of outfit' who was intended to be part of a series of ‘villainous motorcycle riders.'" 

As for the line itself, it was decided that the: “...set of three action figures and spaceship [should be] sold under the trademark ‘Star Team’…” which was “apparently an acronym for ‘Space Travel and Reconnaissance,’ although no trademark claim was made for those terms and they are not repeated in the current use.”

Now that they had their toys and their line, all that was left was to create a box design for it. Their design didn't exactly thrill Kenner or Fox though:

“Cooper testified at trial that this packaging was being changed somewhat as a result of earlier discussions between TCF and Ideal. He stated that at a conference between representatives of the two companies the montage of the three figures 'was the thing that Twentieth Century seemed to object to the most of anything,' and that 'to avoid any conflict at all' that montage was being replaced on each of the three boxes by a depiction of the individual characters contained in that particular package, a change which will be reflected in the next printing of packages.”

Kenner does not like the figures. Or the names. Or the box design. To them, everything about the line seems to indicate that it was designed to be easily confused with their Star Wars merchandise and beat Kenner to market with figures. They think Ideal has designed a line which consumers will assume is somehow related to Star Wars. The Star Team line was seemingly rushed through production, with no real thought given to anything but low cost, and choices were made in the design process which made the toys look a great deal like licensed Star Wars items.

Kenner objects to Ideal about the line either during a meeting such as the one Fox had with Ideal about the box design, or directly through a cease & desist letter (the court record isn't clear on that point). Ideal believes the toys are fine though and apparently tells Kenner that no changes will be made. Ideal must have still been worried about being sued though and filed this declaratory judgment action to have the court decide the matter and put the issue to rest.

Kenner still feels that the toys are knock-offs and files a counterclaim against Ideal, saying that Kenner challenges: "...these three figures and the manner in which they are sold as unlawful usurpation of their rights in the movie 'Star Wars.'"

The court then discusses the Star Wars brand itself:

"The right to make toys based on these characters was licensed by TCF to Kenner, as discussed above. Kenner has plans to market toys based on 12 of the characters, including the three discussed above." (The court discussed R2, C-3PO and Darth Vader in order to compare them to the Star Team figures in question, which they resemble.) "These figures will be approximately two to four inches high. Currently, however, no figures have been produced, and none was introduced into evidence, either as a model or as an actual production figure. Instead, Kenner is now selling an 'Early Bird Certificate Package' containing a paper certificate which entitles the recipient to 'receive between February 1 June 1, 1978, before they're available in stores, posable Action Figures of: Luke Skywalker, Princess Leia, Chewbacca, and Artoo-Detoo.' Craig Stokely, vice-president of product planning for Kenner, testified that these four were chosen to 'introduce an array of products that would have strong boy-girl appeal and represent four of the strongest characters for our initial introduction.'

The representative from Kenner argues that:

"...(I)t's my opinion that the amount of merchandise offered to the consumer and perceived by the consumer as falling within a licensed property, the greater amount of merchandise offered the greater the dilution and the shorter the life of that property."

I'm not sure time has told on that point, Kenner.  In fact, I think the approximately 100,000 different items which have been produced under the Star Wars banner in the last 37 years would say different. Kenner went on to say that the Star Team line:

"...represents to the trade that the Star Wars characters are not unique and are not totally offered by Kenner Products and that this perception weakens the degree of support that the trade will give the Kenner products."

The case itself rests on several different legal issues which don't really concern us, but the court rules for Ideal saying among other things, that they find:

"...entirely credible the explanation given by Cooper concerning the changes that were made in preexisting toys and the reasons for developing these toys. Certainly Cooper was aware of 'Star Wars' and intended to capitalize on the fad which it was creating. He was also concerned with possible infringement and instructed those developing the toys to avoid copying the 'Star Wars' characters."

Personally, I'm not sure if "design whatever you want" should really be interpreted as "design something that doesn't look like Star Wars," but I'm not the court, so what do I know. In any case, the decision goes on to say that:

"...the effect of the sales of Ideal toys on Kenner toys is pure speculation; no objective evidence has been presented that the Ideal toys have weakened or will weaken the market for the 'Star Wars' movie or product derived therefrom."

So, Ideal got to continue producing their figures. Collectors have different opinions on whether or not the line is truly a knock-off or not, but in either case, it's interesting to see the drama behind it.

As a last note on this case, there was actually a survey performed on this issue by one of the parties, which found that of 422 children surveyed, 65% made an "association" between Star Wars and Star Team. Of the 426 adults who took part in the study, 59% made an "association."  

Lucasfilm Ltd. v. Media Market Group, Ltd. (182 F.Supp.2d 897, 2002):

This case concerns the Star Ballz film. LFL sued over an animated Star Wars pornographic film that was/is being marketed at conventions and the like. LFL loses the case based on parody protections. Best part of case is the judge's comment: "In this case, no reasonable consumer is likely to be confused between Star Wars and Starballz, which is labeled as an adult film, is animated, and is rarely sold in the same marketing channels as Star Wars." 

General Mills Fun Group, Inc., Kenner Products Div. v. Lindley (1 Ohio St.3d 27, 1982):

It's a rather complicated tax law case, but it includes a neat rundown of the exact business process behind the manufacture of Kenner's boxes during the vintage era.

"Appellant, General Mills Fun Group, Inc., Kenner products Div., a manufacturer of toys, purchases boxes to package its products for marketing. In order to acquire the desired boxes, appellant first purchases artwork from outside suppliers. This artwork is then transferred by appellant to lithographers for their use in the preparation of color films known as 'color separations.' The color separations are sold to appellant by the lithographers, and the artwork is transferred back to appellant. Appellant retains the artwork and transfers the color separations to a box manufacturer which uses them to produce printing plates. The printing plates are used by the box manufacturer to imprint an image or descriptive information about the toys on the boxes. The boxes are thereafter sold to appellant for use in packaging the toys." 

The court also gives a rundown of the action figure production process: 

"Additionally, the commissioner levied an assessment on appellant's purchase of wax figures or sculptures which are used as models for the products appellant manufactures. After appellant purchases these sculptures, they are delivered to an outside supplier who uses them to make molds or casts. In the process of producing the casts, the wax figures are destroyed." 

Essentially, Kenner is saying that they shouldn't have to pay taxes on this stuff because: "...its purchases of artwork, color separations and sculptures are exempt from sales and use taxation because it 'resold' those items to outside suppliers." 

They lose and are forced to pay the taxes on the boxes and sculpts.

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