05-6487-cv Troll Co. v. Uneeda Doll Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2006
Heard: December 22, 2006 Decided: April 13, 2007)
Docket No. 05-6487-cv
- - - - - - - - - - - - - - - - - TROLL COMPANY, Plaintiff-Appellee,
v.
UNEEDA DOLL COMPANY, Defendant-Appellant. - - - - - - - - - - - - - - - - -
Before: MESKILL, NEWMAN, and HALL, Circuit Judges.
Appeal from the November 28, 2005, Order of the United States
District Court for the Southern District of New York (Richard Owen,
District Judge), granting a preliminary injunction against Defendant
for infringing a copyright restored pursuant to section 104A of the
Copyright Act, 17 U.S.C. § 104A.
Affirmed.
Barry G. Magidoff, Greenberg Traurig, LLP, New York, N.Y., for Defendant-Appellant.
Craig S. Mende, New York, N.Y. (Michael Chiappetta, Fross Zelnick Lehrman & Zissu, P.C., New York, N.Y., on the brief), for Plaintiff-Appellee.
JON O. NEWMAN, Circuit Judge.
This appeal, concerning so-called “restored” copyrights, requires
the Court to construe for the first time section 104A of the Copyright
Act, 17 U.S.C. § 104A, which was enacted in its present form as part of the Uruguay Round Agreements Act (“URAA”), Pub. L. No. 103-465, 108
Stat. 4809 (1994). The Defendant-Appellant, Uneeda Doll Co.
(“Uneeda”), appeals from the November 28, 2005, order of the District
Court for the Southern District of New York (Richard Owen, District
Judge), preliminarily enjoining Uneeda from manufacturing,
distributing, or selling “Wish-nik” troll dolls, which are alleged to
infringe a restored copyright owned by the Plaintiff-Appellee, Troll
Co. On appeal, Uneeda contends that (1) Troll Co. has not
demonstrated that it owns the restored copyright, and (2) it is a
“reliance party” within the meaning of section 104A and is thus
entitled to sell its existing inventory of Wish-nik dolls during a
one-year sell-off period. We conclude that Troll Co. is likely to
succeed in proving ownership of the restored copyright and that Uneeda
is not a reliance party. We therefore affirm the order of the
District Court.
Background
A brief history of troll dolls. This case involves the copyright
to troll dolls, “those ugly but somehow endearing” plastic dolls with
oversized heads, big grins, pot bellies, and frizzy hair. See EFS
Marketing, Inc. v. Russ Berrie & Co., 76 F.3d 487, 489 (2d Cir. 1996).
The troll doll was first created in the late 1950s by a Danish
woodcarver, Thomas Dam. Dam called his doll a “Good Luck Troll.” By
1961, Dam was selling his troll dolls in the United States.
In 1962, Dam founded a cleverly named Danish company, Dam Things
Establishment, through which he marketed his dolls. In 1965, Dam
Things Establishment obtained a U.S. copyright for the troll doll.
-2- The copyright registration listed Dam Things Establishment as the
author of the dolls and 1961 as the year of first publication. That
same year, however, the copyright was invalidated because some dolls
had been sold in the United States without the proper copyright
notice, and the dolls thereby entered the public domain. See Scandia
House Enterprises, Inc. v. Dam Things Establishment, 243 F. Supp. 450,
454 (D.D.C. 1965). The Good Luck Troll is still protected by
copyright in Denmark.
After the troll dolls entered the public domain, numerous
companies began marketing the dolls in the United States. See EFS
Marketing, 76 F.3d at 489. The market for troll dolls was somewhat
cyclical, as the dolls’ popularity surged every decade or so. The
most recent surge in popularity occurred in the early 1990s. See id.
Thomas Dam died in 1989. Following Dam’s death, his heirs
granted Troll Co., a Danish company, the exclusive right to exploit
and license the troll dolls.
The restoration of the Good Luck Trolls copyright. Congress
enacted the URAA on December 8, 1994. Among other things, the URAA
amended1 section 104A of the Copyright Act to bring the United States
into compliance with the Berne Convention,2 which it had joined in
1 Congress had enacted section 104A one year earlier to comply with
the North American Free Trade Agreement. See Dam Things from Denmark
v. Russ Berrie & Co., 290 F.3d 548, 554 (3d Cir. 2002). The URAA
supplanted that previous version of section 104A. See id. 2 Berne Convention for the Protection of Literary and Artistic
-3- 1989. See Dam Things from Denmark v. Russ Berrie & Co., 290 F.3d 548,
554 (3d Cir. 2002). Section 104A restores copyrights for a wide range
of foreign works that had previously entered the public domain in the
United States because of noncompliance with certain formalities,
primarily notice of copyright, imposed by United States copyright law.
See 17 U.S.C. § 104A(h)(6); see also Dam Things from Denmark, 290 F.3d
at 554-55.
The parties do not dispute that the Good Luck Troll copyright was
automatically restored pursuant to the URAA on January 1, 1996. Upon
learning of the restoration, Troll Co. applied for, and was granted,
a registration certificate in 2000. The registration lists Thomas Dam
as the author and Troll Co. as the owner of the copyright, and it
states 1957 as the date of first publication. After receiving the
registration, Troll Co. began enforcing its restored copyright.
Uneeda’s manufacture and marketing of Wish-nik dolls. In 1963 or
1964, Dam Things Establishment licensed Uneeda Doll Co., Inc.
(“UDCI”), Uneeda’s predecessor, to produce and distribute a line of
troll dolls under the name “Wish-niks.” The record shows that UDCI
sold Wish-niks periodically between 1965 and 1984. According to
UDCI’s chairman, however, UDCI also sold Wish-niks “at least through
1994 and probably up to 1996.” In 1996, UDCI sold all of its assets,
including its copyrights, other intellectual property rights, and
goodwill, to Uneeda.
Works, Sept. 9, 1886 (Paris Text 1971), S. Treaty Doc. No. 99-27
(“Berne Convention”).
-4- In 2001 and 2004, Troll Co.’s president met Wilson Lee, a manager
of Uneeda’s Hong Kong affiliate, at a toy fair in Germany. On both
occasions, Lee allegedly informed him that Uneeda was no longer
manufacturing or selling troll dolls and had no intention of doing so
in the future. Notwithstanding these discussions, just as Troll Co.
was planning a major relaunch of its troll dolls, it learned in August
2005 that Uneeda was selling newly produced Wish-niks to Walmart. The
Wish-niks contained copyright notices in Uneeda’s name. Walmart
withdrew the dolls after Troll Co. informed it that the dolls
infringed its copyright.
The District Court proceeding. Troll Co. commenced this
copyright infringement action in the U.S. District Court for the
Southern District of New York on October 7, 2005.3 Troll Co. served
Uneeda with written notice of its intent to enforce the copyright (a
procedure sometimes required under section 104A, as discussed below)
on October 18, 2005. After a hearing, the District Judge granted
Troll Co.’s motion for a preliminary injunction in an order entered
November 28, 2005. See Troll Co. v. Uneeda Doll Co., 400 F. Supp. 2d
601 (S.D.N.Y. 2005). Finding “direct evidence of actual copying,” the
District Judge concluded that Uneeda’s sales of Wish-niks threatened
irreparable harm to Troll Co. See id. at 603. He also concluded that
3 Several days earlier, Uneeda had filed a declaratory judgment
action against Troll Co. and its licensee in the U.S. District Court
for the Central District of California, No. 2:05-cv-07185. That
action was later transferred to the Southern District of New York.
-5- Troll Co. was likely to succeed on the merits of its copyright
infringement claim, rejecting Uneeda’s claim to protection as a
“reliance party” under the URAA. See id. at 603-04. Accordingly, he
preliminarily enjoined Uneeda from manufacturing, distributing, or
selling Wish-nik dolls pending resolution of the case. See id. at 604.
Discussion
The standards for obtaining a preliminary injunction and for
appellate review of the grant of such an injunction are well known and
need not be repeated. See Forest City Daly Housing, Inc. v. Town of
North Hempstead, 175 F.3d 144, 149 (2d Cir. 1999) (preliminary
injunction standards); Nicholson v. Scoppetta, 344 F.3d 154, 165 (2d
Cir. 2003) (appellate review standard).
Uneeda does not challenge the District Court’s conclusion that
Troll Co. would suffer irreparable harm without a preliminary
injunction. The issue on appeal is whether Troll Co. is likely to
succeed on the merits of its infringement claim. Uneeda argues that
Troll Co. is unlikely to succeed because (1) Troll Co. has not
established that it owns the restored copyright, and (2) Uneeda is a
reliance party within the meaning of section 104A, entitling it to
sell off its inventory of Wish-niks for one year following Troll Co.’s
service of a notice of intent to enforce the restored copyright.
I. Ownership of the Restored Copyright
Uneeda contends preliminarily that the District Court erred in
determining that Troll Co. owns the restored copyright.4 We conclude
4 Although this argument was advanced in the District Court, Judge
-6- that Troll Co. is likely to succeed in proving ownership because
evidence submitted to the District Court supports a determination that
Troll Co. owns the restored copyright. Troll Co.’s president
testified that, after Dam’s death in 1989, Dam’s heirs transferred
Dam’s rights to the troll dolls to Troll Co. In addition, the 2000
copyright registration lists Troll Co. as the owner.5
According to Uneeda, Troll Co.’s trial court evidence contradicts
evidence submitted to the Copyright Office and the U.S. District Court
for the District of New Jersey. First, Uneeda points out, the
original 1965 registration certificate listed Dam Things
Establishment, not Dam himself, as the “author” of the Good Luck
Trolls. Consequently, Uneeda argues, Troll Co. must establish a chain
of ownership from Dam Things Establishment, not from Dam through his
heirs, as Troll Co. argued in the District Court. But the URAA
specifies that authorship is to be determined by reference to the
source country’s law, not by reference to U.S. copyright registration.
Owen did not explicitly discuss Uneeda’s ownership argument in his
opinion. However, a determination that Troll Co. owns the restored
copyright is implicit in the District Court’s opinion. 5 We recognize that the registration is not prima facie evidence
of ownership because it was made more than five years after the first
publication. See 17 U.S.C. § 410(c). Nevertheless, it may carry some
evidentiary weight. See id. (“The evidentiary weight to be accorded
the certificate of a registration made thereafter shall be within the
discretion of the court.”).
-7- See 17 U.S.C. § 104A(b); see, e.g., Alameda Films S A v. Authors
Rights Restoration Corp., 331 F.3d 472, 477 (5th Cir. 2003) (applying
Mexican law). Neither party submitted evidence of Danish law to the
District Court. In any event, to obtain a preliminary injunction,
Troll Co. needed to show only that it was likely to prove ownership,
and it seems likely that Danish law would consider Dam to be the
“author” of the troll dolls since he created the dolls several years
before he established Dam Things Establishment.6
Second, Uneeda contends that Troll Co. is estopped from arguing
that it acquired rights to the troll dolls from Dam’s heirs because it
6 Section 104A(b) does not explicitly state that ownership vests
in an author’s heirs if the author is deceased. Nor does it explain
what, if any, effect should be given to an author’s pre-restoration
transfer of his ownership rights. Cf. 6 William F. Patry, Patry on
Copyright § 24:31 (2007) (stating that “where the author is dead on
the date of restoration, ownership of the restored copyright will be
determined by the law of successorship of the source country,” but
that transferees of an initial author must pursue a state court
contract action to secure rights to a restored copyright); 3 Melville
B. Nimmer & David Nimmer, Nimmer on Copyright § 9A.04[B][2][b] (2006)
(discussing the ambiguity of this provision). Because the parties
have not raised these issues, we will assume, as the District Court
apparently did, that the restored copyright vests in the author’s
heirs and that courts can give effect to heirs’ pre-restoration
transfer of rights.
-8- represented to the U.S. District Court for the District of New Jersey
in another action that it acquired those rights from Dam Things
Establishment. See Dam Things from Denmark, 290 F.3d at 553 n.3. The
doctrine of judicial estoppel does not prevent Troll Co. from
asserting a different theory of ownership in this case.7 In any event,
even if it is unclear whether Troll Co. obtained ownership of the
copyright from Dam Things Establishment, as the Third Circuit stated,
or from Dam’s heirs, as Troll Co. claims here, Troll Co. is likely to
prove ownership one way or the other.
7 “The doctrine of judicial estoppel prevents a party from
asserting a factual position in one legal proceeding that is contrary
to a position that it successfully advanced in another proceeding.”
Rodal v. Anesthesia Group of Onondaga, P.C., 369 F.3d 113, 118 (2d
Cir. 2004). A party invoking judicial estoppel must show that (1)
another party advanced an inconsistent position in another proceeding
and (2) the first tribunal adopted that position in some manner. See
id. Even if Troll Co.’s theories of ownership are factual positions,
and even if the Third Circuit or the New Jersey district court adopted
Troll Co.’s theory of ownership, the two theories of ownership are not
necessarily contrary to one another. The district court in Dam Things
from Denmark also mentioned a 1989 agreement between Dam’s heirs and
Troll Co. confirming Troll Co.’s exclusive rights to the Good Luck
Troll designs. See Dam Things from Denmark v. Russ Berrie & Co., 173
F. Supp. 2d 277, 280 (D.N.J. 2001), rev’d on other grounds, 290 F.3d
548 (3d Cir. 2002).
-9- II. Whether Uneeda Is a Reliance Party
Uneeda’s primary argument on appeal is that Troll Co. cannot
bring an action at this time to enjoin Uneeda’s sales because Uneeda,
as a reliance party under the URAA, is entitled to a one-year sell-off
period. To understand this argument, it is necessary to review the
URAA’s provisions in some detail.
A. The URAA
Congress enacted the URAA on December 8, 1994, to bring the
United States into compliance with the Berne Convention’s Rule of
Retroactivity.8 See Dam Things from Denmark, 290 F.3d at 554; see also
6 William F. Patry, Patry on Copyright § 24:18 (2007) (“Patry”); 3
Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 9A.02 (2006)
(“Nimmer”). The URAA restored copyright protection for foreign works
that had fallen into the public domain for technical reasons unrelated
to expiration of the copyright term. Congress’s intention in
restoring such protection to foreign copyrights was to secure similar
protection for American copyright holders abroad. See Dam Things from
Denmark, 290 F.3d at 554.
The URAA restores copyrights as of January 1, 1996,9 for original
8 See Berne Convention art. 18. 9 The date of restoration, as specified by Congress in 1997, see
Pub. L. No. 105-80, 111 Stat. 1529 (1997), is January 1, 1996, if the
source country of the work was an adherent to the Berne Convention or
a World Trade Organization member on that date. See 17 U.S.C. §
104A(h)(2)(A). A leading commentator contends that the restoration
-10- works that (1) are not in the public domain of their source countries
through expiration of their copyright terms, (2) are in the public
domain in the United States because of noncompliance with legal
formalities, (3) have at least one author who was a national or
domiciliary of an eligible country,10 and (4) were first published in
an eligible country and were not published in the United States within
thirty days of first publication. See 17 U.S.C. § 104A(h)(6). A
copyright restored under section 104A “vests initially in the author
. . . of the work as determined by the law of the source country of
the work.” Id. § 104A(b). The parties do not dispute that the
invalidated troll doll copyright qualifies for restoration under these
provisions.
Much of section 104A concerns the enforcement of restored
copyrights against parties that were legitimately exploiting works in
reliance on their public domain status. The statute creates a
category of prior exploiters called “reliance parties,” who may
continue to exploit the work until the owner of the restored copyright
makes known its intent to enforce its copyright. The statute creates
three categories of reliance parties:
date, which he equates with what he contends is the effective date, is
January 1, 1995. See 6 Patry §§ 24:26-24:28. We take no position on
this controversy, which has no bearing on our decision. 10 Eligible countries include World Trade Organization member
countries and adherents to the Berne Convention. See 17 U.S.C. §
104A(h)(3).
-11- (A) [any person who,] with respect to a particular work, engages in acts, before the source country of that work becomes an eligible country, which would have violated section 106 if the restored work had been subject to copyright protection, and who, after the source country becomes an eligible country, continues to engage in such acts;
(B) [any person who,] before the source country of a particular work becomes an eligible country, makes or acquires 1 or more copies . . . of that work; or
(C) [any person who,] as the result of the sale or other disposition of . . . significant assets of a person described in subparagraph (A) or (B), is a successor, assignee, or licensee of that person.
17 U.S.C. § 104A(h)(4). Thus, subsections (A) and (B) make the status
of a reliance party turn on whether a person took certain actions with
respect to a work prior to the date that the source country of that
work became an eligible country. And, for purposes of subsections (A)
and (B), a source country that was a member of the Berne Convention
when the URAA was enacted (including Denmark) became an eligible
country on the date of the URAA’s enactment, December 8, 1994. See
id. § 104A(h)(3)(B); Hoepker v. Kruger, 200 F. Supp. 2d 340, 345-46
n.5 (S.D.N.Y. 2002); see also 6 Patry § 24:39; 3 Nimmer
§ 9A.04[C][1][b][i]-[ii]. The District Court mistakenly looked to the
date of copyright restoration, January 1, 1996, rather than the date
of the URAA’s enactment, to determine the date when Denmark became an
eligible country and hence whether Uneeda or its predecessor was a
reliance party by reason of having acted with respect to the troll
dolls prior to that date. See Troll Co., 400 F. Supp. 2d at 603. This
error was understandable, as several other courts have also tied
reliance party status to the date of copyright restoration. See
-12- Peliculas y Videos Internacionales, S.A. v. Harriscope of Los Angeles,
Inc., 302 F. Supp. 2d 1131, 1137 (C.D. Cal. 2004); Dam Things from
Denmark v. Russ Berrie & Co., 173 F. Supp. 2d 277, 285 n.9 (D.N.J.
2001), rev’d on other grounds, 290 F.3d 548 (3d Cir. 2002).
An owner of a restored copyright may not enforce its copyright
against a reliance party without first giving notice, either
constructive or actual, of its intent to enforce the copyright. Until
January 1, 1998, an owner of a restored copyright could file a notice
of intent to enforce its copyright with the Copyright Office, thereby
putting all reliance parties on constructive notice of its intent. See
17 U.S.C. § 104A(e)(1). Troll Co. did not file such a notice.
Alternatively, at any time, a copyright owner may serve a notice of
intent directly on a reliance party. See id. § 104A(e)(2). Troll Co.
served a notice of intent on Uneeda on October 18, 2005. After
receiving actual or constructive notice of intent to enforce, a
reliance party must cease making copies of the protected work. See id.
§ 104A(d)(2)(A)(ii)(III), (B)(ii)(III). However, the reliance party
is entitled to a twelve-month grace period in which to sell off its
already existing copies. See id. § 104A(d)(2)(A)(ii)(I), (B)(ii)(I);
see also Dam Things from Denmark, 290 F.3d at 555.
B. Uneeda’s Claim to Reliance Party Status
Uneeda contends that its predecessor, UDCI, was a reliance party
under subsection 104A(h)(4)(A) because UDCI continued to engage in
infringing acts after Denmark became an eligible country upon the
URAA’s enactment, and under subsection 104A(h)(4)(B) because UDCI made
at least one copy of the troll doll before the URAA’s enactment.
-13- Accordingly, Uneeda further contends, it is a reliance party under
subsection 104A(h)(4)(C) because it is UDCI’s successor, and it is
therefore entitled to the URAA’s twelve-month sell-off period.
Uneeda’s subsection 104A(h)(4)(A) contention. Because subsection
104A(h)(4)(A) confers reliance party status on a person who
“continues” to engage in infringing acts after December 8, 1994,
Uneeda’s subsection (A) contention requires us to construe the term
“continues,” which is, as far as we are aware, a task courts have not
previously undertaken.11 Troll Co. argues that the provision contains
a “continuing acts requirement” and that resuming sales after nine or
ten years, as Uneeda did, does not satisfy this requirement. Uneeda
responds that the language of subsection (A) does not require the
infringing activity to be uninterrupted and that the periodic renewal
of cyclical exploitation “continues” such exploitation.
The text of the statute is ambiguous and could support either
11 Uneeda cites two cases in which courts concluded that defendants
were entitled to reliance party status notwithstanding several-year
gaps between the first exploitation or acquisition and post-
restoration exploitation. See Peliculas y Videos Internacionales,
S.A. v. Harriscope of Los Angeles, Inc., 302 F. Supp. 2d 1131 (C.D.
Cal. 2004); Hoepker v. Kruger, 200 F. Supp. 2d 340 (S.D.N.Y. 2002).
However, it does not appear that the plaintiffs in those cases argued
that gaps in exploitation precluded reliance party status. Because
these cases did not expressly consider this issue, they provide little
value to our analysis here.
-14- interpretation. Given the statute’s ambiguity, it is appropriate to
consider the legislative history. See Rombro v. Dufrayne (In re Med
Diversified, Inc.), 461 F.3d 251, 255 (2d Cir. 2006). The Chairman of
the House Subcommittee on Intellectual Property and Judicial
Administration stated:
A key to the reliance party status under this provision is the requirement that the person have continued to engage in the described conduct. This requirement incorporates the continuing infringement doctrine and is also relevant to section 104A(4) concerning statutory damages and attorney’s fees.[12] Under this doctrine and section 104A, the defendant must have engaged in an ongoing series of acts. Cessation of that activity for an appreciable period of time will deprive one of reliance party status.
140 Cong. Rec. E2263, E2264 (Oct. 8, 1994) (statement of Rep. Hughes).
The Chairman’s reference to statutory damages and attorney’s fees
indicates that he understood the “continuing infringement doctrine” as
the principle that “infringement ‘commences’ for the purposes of
[determining whether infringement commences before a copyright’s
registration] when the first act in a series of acts constituting
continuing infringement occurs.” Johnson v. Jones, 149 F.3d 494, 506
(6th Cir. 1998).
Under 17 U.S.C. § 412, a plaintiff may not recover statutory
12 Section 104A(4) does not exist. The Chairman presumably meant
to refer to section 104A(d)(4), which states that, for purposes of 17
U.S.C. § 412 (discussed below), “infringement shall be deemed to have
commenced before registration when acts which would have constituted
infringement had the restored work been subject to copyright were
commenced before the date of restoration.”
-15- damages or attorney’s fees for any infringement “commenced” before the
effective date of a copyright’s registration. The courts have held,
based on the provision’s text, legislative history, and purpose, that
a plaintiff may not recover statutory damages and attorney’s fees for
infringement occurring after registration if that infringement is part
of an ongoing series of infringing acts and the first act occurred
before registration. See, e.g., id. at 505-06 (holding that the
purposes of section 412 “would be thwarted by holding that
infringement is ‘commenced’ for the purposes of § 412 each time an
infringer commits another in an ongoing series of infringing acts,”
and citing cases); Singh v. Famous Overseas, Inc., 680 F. Supp. 533,
535 (E.D.N.Y. 1988) (“That verb [commenced] generally presupposes as
a subject some kind of activity that begins at one time and continues
or reoccurs thereafter.”).
The legislative history of section 104A suggests that Congress
understood section 412 to mean that a post-registration act of
infringement will not be deemed to have commenced before registration
if the infringing activity ceased for an appreciable period of time.
In such a case, the copyright owner could recover statutory damages
and attorney’s fees for that new, post-registration act of
infringement. By using the word “continues,” Congress must have
intended to incorporate this same principle into subsection
104A(h)(4)(A).13 We therefore construe subsection 104A(h)(4)(A) to
13 See also 6 Patry § 24:40 (“There is no definition of ‘continue’
because Congress wanted the doctrine of continuing infringement
-16- confer reliance party status only on persons whose infringement is
ongoing and without more than trivial interruption. This limitation
is consistent with the purpose of the URAA’s reliance provisions. A
party that has invested time and resources into ongoing exploitation
of a work in reliance on the work’s public domain status would incur
substantial harm from the sudden inability to engage in that business;
the URAA therefore requires owners of restored copyrights to notify
such parties of their intent to enforce and gives those parties a year
after notification to sell off their inventories. By contrast, a
party that has voluntarily ceased exploitation for a non-trivial
period of time, here, nine or ten years--even where such exploitation
was episodic due to the cyclical nature of consumers’ interest in the
product--has a less substantial interest in being able to resume that
exploitation after restoration.14
Applying this standard to this case, we first observe that UDCI
initially may have been a reliance party under subsection
104A(h)(4)(A) following the URAA’s enactment. According to the
evidence before the District Court, UDCI “sold Wish-nik dolls
beginning in 1992 and continuing into the mid-1990s, at least through
developed by the courts to apply. . . . Without setting an outside
limit, a cessation of one year is beyond that permitted under the
section.”). 14 We express no opinion on whether an exploiter of seasonal, as
opposed to cyclical, goods, e.g., a seller of holiday merchandise,
could qualify as a reliance party.
-17- 1994 and probably up to 1996.” Because the District Court mistakenly
deemed reliance party status to turn on the date of restoration,
January 1, 1996, it concluded that UDCI could not have been a reliance
party. However, as explained above, the critical date for assessing
reliance party status is December 8, 1994. If the District Court were
to credit Uneeda’s evidence and find that UDCI sold Wish-niks in 1995,
UDCI would have been a reliance party under subsection 104A(h)(4)(A)
because it would have continued to engage in infringing acts after
December 8, 1994.
Notwithstanding this observation, we need not remand the case for
reexamination of UDCI’s claim to reliance party status. Even if we
assume that UDCI was a reliance party for some period of time, UDCI
and Uneeda, as its successor, would have retained that status only to
the extent that they continued to engage in such infringing acts. For
the reasons set forth above, Uneeda’s renewed manufacture and sale of
Wish-niks after a nine- or ten-year hiatus is not a continuation of
infringement under subsection 104A(h)(4)(A). Accordingly, Uneeda
cannot claim protection as a reliance party under this provision.
Uneeda’s subsection 104A(h)(4)(B) contention. In the alternative,
Uneeda claims that UDCI qualified as a reliance party under subsection
104A(h)(4)(B) because it made or acquired at least one copy of the
troll doll before the URAA’s enactment. The parties urge competing
interpretations of subsection 104A(h)(4)(B). According to Uneeda, the
provision allows anyone who made or acquired a copy of a work before
the URAA’s enactment to manufacture additional copies after
restoration. Under this interpretation, Uneeda would be able to
-18- manufacture new Wish-niks after the copyright’s restoration because
UDCI made Wish-niks before the URAA’s enactment. Troll Co. argues for
a narrower interpretation that would permit a party who acquired or
made one or more copies of a work before the URAA’s enactment only to
dispose of those particular copies. Under this interpretation of
subsection 104A(h)(4)(B), UDCI and Uneeda, as its successor, could
sell Wish-niks manufactured before the URAA’s enactment, but they
could not manufacture new Wish-niks.
The text of subsection 104A(h)(4)(B) is ambiguous on this point,
and there is no legislative history clarifying Congress’s intent.
However, it is an elemental principle of statutory construction that
an ambiguous statute must be construed to avoid absurd results. See,
e.g., Frank G. v. Board of Education, 459 F.3d 356, 368 (2d Cir.
2006). Uneeda’s proposed interpretation would render the statute
absurdly broad: any entity that purchased even one Wish-nik doll many
years ago while the troll dolls were in the public domain could decide
to begin manufacturing troll dolls after the restoration of the
copyright and thereby become a reliance party.15 Conferring reliance
party status on such entities would be incompatible with the URAA’s
15 See also 6 Patry § 24:40 (distinguishing between subsections (A)
and (B) on the ground that (A) “focuses on particular infringing acts,
whereas . . . (B) focuses on particular copies”); 3 Nimmer
§ 9A.04[C][1][a] (advocating the narrow interpretation of this
provision because the broader interpretation would “qualif[y] even a
casual book collector with an old volume languishing on the shelf”).
-19- dual goals of restoring copyright protection and safeguarding
legitimate reliance interests. Because we must interpret the statute
to avoid such an absurd result, we conclude that Congress intended to
limit the benefit of reliance party status under subsection
104A(h)(4)(B) only to those copies made or acquired before the URAA’s
enactment.
Because Uneeda intends to sell recently manufactured Wish-niks
and does not claim to be disposing of Wish-niks made by UDCI before
the URAA’s enactment, it is not entitled to reliance party status as
UDCI’s successor under subsections 104A(h)(4)(B)-(C).
Conclusion
For the foregoing reasons, the District Court’s order granting
preliminary injunctive relief to Troll Co. is affirmed.
-20-