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holding that "the question of ownership is immaterial to standing," and that to maintain a Section 1125 claim a plaintiff "must show that it has a commercial interest in the allegedly misused mark that is likely to be damaged"
Summary of this case from Nova Wines, Inc. v. Adler Fels Winery LLCOpinion
No. CV 04-8813 SJO (PJWx).
November 11, 2005
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Defendants Unique Motorcars, Inc. and Unique Performance, Inc.'s Motion for Summary Judgment, or Alternatively for Summary Adjudication pursuant to Rule 56 (c) of the Federal Rules of Civil Procedure (Fed.R.Civ.P.) Having considered the documents submitted, the Court deemed the matter appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local Rule 7-15. Upon thorough review of the evidence, points of law and arguments submitted by counsels, Defendants' Motion for Summary Judgment, or Alternatively for Summary Adjudication is GRANTED in its entirety.
I. FACTUAL BACKGROUND
Plaintiffs Denice Shakarian Halicki, The Original Gone in 60 Seconds, LLC, and Halicki Films, LLC (collectively, "Plaintiffs") filed an action for copyright ("Claim 1") and common law and federal trademark infringements ("Claims 2 and 3"), statutory unfair competition ("Claim 4") and intentional and negligent interference with prospective economic advantage ("Claims 5 and 6") against multiple defendants, including Unique Motorcars, Inc. and Unique Performance, Inc. (collectively with other defendants, "Defendants"). (See Second Amended Complaint (hereinafter, "SAC").)
Plaintiff Halicki is the widow of Toby Halicki, who directed, produced, acted in and marketed the original film "Gone in 60 Seconds" (the "Original Picture"). (Statement of Genuine Issues in Opp'n to Mot. for Summ. J., Unique's Alleged Uncontroverted Facts ("Unique AUF") ¶¶ 1, 4-5; Morin Decl. ¶¶ 3, 6, Exs. A, D.) Toby Halicki registered a copyright for the Original Picture. (Unique AUF ¶ 3; Morin Decl. ¶ 5, Ex. C.) The Original Picture starred "Eleanor," a yellow 1971 Fastback Mustang, customized by Toby Halicki to have the appearance of Mach 1 Fastback Mustang. (Unique AUF ¶ 2; Morin Decl. ¶¶ 3-4, Exs. A, B.)
Upon Toby Halicki's death, pursuant to the Order for Preliminary Distribution Upon Bond and Order on Stipulation Regarding Authorization for Special Administrator to Transfer Film Rights to Beneficiary, Plaintiff Halicki obtained ownership of the 1971 Ford Mustang, and "all right, title and interest, including copyrights, of the film `Gone in 60 Seconds' which were owned by the decedent and subject to administration as part of the Estate." (Unique AUF ¶¶ 6-7; Morin Decl. ¶¶ 7-8, Exs. E, F.) Plaintiff Halicki began marketing the Original Picture on DVD and VHS, set up a "Gone in 60 Seconds" website, sold "Gone in 60 Seconds" branded baseball caps, licensed the "Eleanor" name and likeness for a line of toy cars, and exhibited Eleanor from the Original Picture at car shows. (Statement of Genuine Issues in Opp'n to Mot. for Summ. J., Pl.'s Added Uncontroverted Facts ("Pl.'s AUF") ¶ 8; Halicki Decl. ¶ 6, Ex. 4.)
Defendants dispute that Plaintiffs' use of the term "Eleanor" is vague and ambiguous in that it cannot be ascertained from the statement whether Plaintiff refers to the vehicle from the Original Picture or the Remake Picture. (Def. Unique Motorcars, Inc.'s Rep. to Pl.'s Statement of Genuine Issues in Opp'n to Mot. for Summ. J., Pl.'s AUF ¶ 8; Halicki Decl. ¶ 6; Defs. Unique Motorcars, Inc. and Unique Performance, Inc.'s Objection to the Decl. of Denice Shakarian Halicki in Opp'n to Def.'s Mot. for Summ. J. ¶¶ 5-6.) However, the context of the statement indicates that Plaintiffs referred to Eleanor from the Original Picture. Furthermore, the introductory statement, "[u]pon receiving rights in Eleanor and the Original Film in the 1995," indicates that Plaintiffs make reference only to Eleanor from the Original Picture. (Pl.'s AUF ¶ 8.)
In an agreement dated May 17, 1995, Plaintiff Halicki contracted with Hollywood Pictures ("HPC"), a division of the Walt Disney Co. ("Disney") to do a remake of the Original Picture. (Unique AUF ¶ 11; Pl.'s AUF ¶¶ 11, 16; Morin Decl. ¶ 10, Ex. H (the "Agreement"); Halicki Decl. ¶ 10.) The Agreement assigned to HPC Plaintiff Halicki's "all right, title and interest of every kind and nature . . . in and to sequels to and/or remakes of the [Original Picture and related properties]." (Unique AUF ¶ 12; Morin Decl. ¶ 10, Ex. H). However, the Agreement specifically reserved the following rights to Plaintiff Halicki: (1) the right to continue to distribute and exhibit the Original Picture; (2) the right to continue to manufacture, sell and distribute and merchandise utilizing the car known as "Eleanor" from the Original Picture; (3) the right to publish and distribute printed versions of the text of and about the Original Picture; and (4) the right to produce sound records of the original soundtrack of the Original Picture. (Pl.'s AUF ¶ 16; Unique AUF ¶ 13; Morin Decl. ¶ 10, Ex. H.)
On September 19, 2000, Plaintiff Halicki assigned to the Original Gone in 60 Seconds, LLC the exclusive right to copy, distribute, exhibit, market, advertise, derive revenues from, turn to account, perform, and otherwise exploit all distribution and exploitation rights of Plaintiff Halicki in the Original Picture. (Pl.'s AUF ¶ 27; Unique AUF ¶ 20; Morin Decl. ¶ 15, Ex. N.) However, specifically excluded from the rights conveyed to the Original Gone in 60 Seconds, LLC are any rights of Disney's rights in the Original Picture. (Pl.'s AUF ¶ 27; Morin Decl. ¶ 15, Ex. N.)
On May 11, 2001, the Denice Shakarian Halicki Trust was formed to which Plaintiff Halicki assigned all of her right, title and interest in all of her property. (Unique AUF ¶ 23; Morin Decl. ¶ 16, Ex. P.)
Soon after Disney released the remake of "Gone in 60 Seconds" (the "Remake Picture"), Plaintiff Halicki exhibited the Original Eleanor at car shows, including the Hollywood Star Cars" charity event and Concourse on Rodeo where she met Defendant Carroll Shelby and spoke with him. (Pl.'s AUF ¶¶ 21, 24-26; Halicki Decl. ¶¶ 14-15, 17; Aronson Decl. ¶ 3, Ex. 2.)
On September 28, 2001, Defendant Carroll Hall Shelby Trust applied for registration of the trademark "Eleanor" for model cars. (Helfing Decl., Ex. 5.) However, Defendants have not directed the Court to any evidence showing that the "Eleanor" trademark for toys was registered. ( See Id.)
On August 30, 2002, Defendant Carroll Hall Shelby Trust also applied for registration of the trademark "Eleanor" for automobiles and structural parts of automobiles. Exhibit 6 to the Helfing Declaration states that the Carroll Hall Shelby Trust is the registered owner of the "Eleanor" trademark for automobiles and structural parts of automobiles. (Helfing Decl., Ex. 6.)
Pursuant to a License Agreement dated September 10, 2002, Defendant Carroll Shelby Licensing authorized Defendant Unique Motorcars, Inc.'s use of certain trademarks and copyrightable material, including "Shelby GT-500" and "Eleanor" for use in connection with the manufacture, production and sale of vehicles and merchandise relating to any 1960's Shelby automobiles, or variants thereof. (Unique AUF ¶ 25; Hasty Decl. ¶ 6, Ex. 1.) Thereafter, Defendant Unique Motorcars, Inc. began to manufacture, produce and sell vehicles similar in appearance to the 1967 Shelby GT-500 "Eleanor" character in the Remake Picture. (Unique AUF ¶ 27; Hasty Decl. ¶ 4.)
Plaintiffs purport to dispute this statement as vague and ambiguous, but fail to offer any evidentiary basis for this dispute.
On May 11, 2004, Plaintiffs received registrations for the mark "Gone in 60 Seconds" for baseball caps. (Halicki Decl. Ex. 6.)
On October 25, 2004, Plaintiff Halicki instituted this action against Defendants alleging, inter alia, unauthorized creation of "replicas of Eleanor from `Gone in 60 Seconds'," and improper reference to, and/or use of the terms "Eleanor" and "Gone in 60 Seconds" in the marketing of the automobiles manufactured and sold by Defendant Unique Motorcars, Inc. (Unique AUF ¶ 38; Morin Decl. ¶ 18, Ex. A.)
On March 22, 2005, almost five months after they filed the instant action, Plaintiffs received registrations for the mark "Gone in 60 Seconds" for toy model cars and toy model kits. (Halicki Decl., Ex. 5.) Further, Plaintiffs did not apply to register the "Eleanor" mark for various purposes until May 27, 2005, more than seven months after they filed the instant action. ( Id., Ex. 7.)
Defendants in turn filed the present Motion for Summary Judgment, or Alternatively for Summary Adjudication. The issues presented are whether: (1) Plaintiffs' claims for relief for copyright infringement, common law trademark infringement, federal unfair competition and false advertising, statutory unfair competition, intentional and negligent interference with prospective economic advantage, constructive trust/accounting, and declaratory relief are barred because Plaintiffs lack standing to assert such claims; and (2) Plaintiffs' claims for relief for common law trademark infringement and federal unfair competition and false advertising are barred by the doctrine of fair use. (Def. Unique Motorcars, Inc. and Unique Performance, Inc.'s Mot. for Summ. J., or Alternatively for Summ. Adjudication ("Mot.") at 2-3.) For the reasons stated below, the Court GRANTS the Motion in its entirety.
II. LEGAL STANDARD
Rule 56(c) of the Federal Rules of Civil Procedure sets forth the standard for granting a motion for summary judgment. It states in part:
The judgment sought 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(c) (2003).
This standard has been explained by the Supreme Court of the United States in Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (1986), and Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
In Anderson, the Court set out the requisites needed to show there is no genuine issue as to a material fact.
As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.Anderson, 477 U.S. at 248. The Court also held that "it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Id.
Regarding the existence of a genuine issue of material fact, the Court held that, summary judgment is not appropriate if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. However, the Court also noted that "there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249. The nonmoving party has the burden of producing operative facts, and the "mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Id. at 252. If the operative facts are not presented, summary judgment is appropriate.
Once the moving party has met its burden under Rule 56(c), the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. 586. However, any inferences from the underlying facts must be viewed in light most favorable to the nonmoving party. Id. at 587.
In Celotex, the Court explained that the nonmoving party must designate specific facts showing a genuine issue for trial. 477 U.S. at 322. Summary judgment is appropriate if a party, after adequate time for discovery, "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. The moving party is not required to prove the absence of a genuine issue of fact, even with respect to an issue on which the nonmoving party bears the burden of proof. Id. at 325. "Instead . . . the burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. The Celotex Court also stated that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses," Id. at 323-324, and that the summary judgment procedure should not be regarded as a "disfavored procedural shortcut" but should be viewed as an "integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Id. at 327.
III. DISCUSSION
A. Copyright Infringement
A plaintiff asserting copyright infringement must prove: (1) ownership of a valid copyright; and (2) infringement, i.e., unauthorized copying of protected elements of the plaintiff's work. Sony Pictures Entm't., Inc. v. Fireworks Entm't. Group, Inc., 156 F. Supp. 2d 1148, 1156 (C.D. Cal. 2001) (citing Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir. 2000)). Defendants in this case contend that Plaintiffs lack standing to bring copyright infringement cause of action against them.
1. Derivative Work
The Court first addresses whether Plaintiffs have standing to bring a copyright infringement on the grounds that the Eleanor in the Remake Picture (the "Remake Eleanor") is a derivative work of the Eleanor in the Original Picture (the "Original Eleanor"). (Opp'n at 9.) If the Remake Eleanor is deemed a derivative work of the Original Eleanor, Plaintiffs, as the author of the Original Eleanor, would also have the exclusive right to the Remake Eleanor. 17 U.S.C. § 103 (a).
"The subject matter of copyright . . . includes compilations and derivative works. . . ." 17 U.S.C. § 103(a).
A "derivative work" is "a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version . . . or any other form in which a work may be recast, transformed, or adapted." 17 U.S.C. § 101. An author of a copyrighted work holds a bundle of exclusive rights in the copyrighted work, including the right to incorporate the work into derivative works. Lamb v. Starks, 949 F. Supp. 753, 756 (N.D. Cal. 1996) (citing Stewart v. Abend, 495 U.S. 207, 223 (1990)). However, the aspects of a derivative work added by the derivative author are the property of the derivative author while the owner of the pre-existing work retains the interest in those elements drawn from the original work. Stewart, 495 U.S. at 223 (quoting Russell v. Price, 612 F. 2d 1123, 1128 (9th Cir. 1979), cert. denied, 446 U.S. 952 (1980)); see also 17 U.S.C. § 103(b).
"The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material." 17 U.S.C. § 103(b).
Plaintiffs rely on Lamb to establish the Remake Eleanor as a derivative work of the Original Eleanor. 949 F. Supp. 753; (Mem. of P. A. in Opp'n to Defs. Unique Motorcars, Inc. and Unique Performance, Inc.'s Mot. for Summ. J. or Alternatively Summ. Adjudication ("Opp'n") at 9.) However, Plaintiffs' reliance on Lamb is misplaced because HPC and its successors modified the character Eleanor in the Remake Picture rather than merely reducing the copyrighted work into a shorter version or preview of the original work. 949 F. Supp. 753 (defendant copied an unregistered 2 minute 40 second trailer for plaintiff's 75 minute long copyrighted movie). Unlike the situation in Lamb, the Eleanor in the Remake Picture is not a derivative work of the Eleanor in the Original Picture. Id. at 756. Although Disney, HPC's successor to the Agreement, could have maintained the character Eleanor in its original physical appearance, Disney depicted the Eleanor character as another model with a different appearance in the Remake Picture. The Original Eleanor is a yellow 1971 Fastback Mustang customized to have the appearance of a Mach 1 Fastback Mustang. (Unique AUF ¶¶ 2, 18; Morin Decl. ¶¶ 3-4, 13, 20, Exs. A, B, K, T.) The Remake Eleanor, however, has the appearance of a silver 1967 Shelby GT-500, an obvious deviation from the yellow Fastback Mustang. (Unique AUF ¶ 18; Morin Decl. ¶¶ 13, 20, Exs. K, T.) In producing the Remake "Gone in 60 Seconds," Disney created a derivative work with some portions of the Original Picture recast and transformed. However, the distinctive appearance of a character in the motion picture, the Remake Eleanor, is a new element added by Disney, not subject to the original author's claim of ownership. Stewart, 495 U.S. at 223. Based on the foregoing, no reasonable jury can find the Remake Eleanor to be a derivative work of the Original Eleanor.
Furthermore, Plaintiffs' claim of right in the Remake Eleanor as a derivative work of the Original Eleanor is inconsistent with the intentions of the parties to the Agreement. The preamble of the Agreement grants HPC the right to:
all sequel, remake and allied, ancillary and subsidiary rights therein of every nature and description in and to the existing motion picture entitled "Gone in Sixty Seconds" (the "Original Picture") and any and all underlying rights thereto (collectively, the "Property," provided that "Property" shall not include the rights reserved to Owner [Halicki] pursuant to Paragraph 5) in connection with possible motion picture (the "picture[s]") to be based in whole or in part upon the Property.
(Agreement at 1.) The preamble unambiguously assigns to HPC the aforementioned rights subject only to the rights reserved to Plaintiff and her successors in interests pursuant to Paragraph 5. Among the four types reserved by Plaintiff Halicki was "the right to manufacture, sell and distribute merchandise utilizing the car known as `Eleanor' from the Original Picture." (Agreement ¶ 5(b)).
In the same paragraph, however, the HPC and Halicki expressly agreed that Plaintiff Halicki's reserved rights relate "only to material written or authorized by Toby Halicki, and not to any screenplay, characters, teleplay, music, lyrics or sequels written by or for or authorized by HPC, even though the same may contain characters or other elements contained in [the Original Picture and related property]." ( Id. ¶ 5.) Therefore, the plain language of the Agreement suggests that the parties sought to keep the rights in their respective Eleanor characters separate and distinguished, not subject to each other's claim of right.
The court's objective in construction of the language used in the contract is to determine and to effectuate the intention of the parties. Winet v. Price, 4 Cal. App. 4th 1159, 1166 (1992). It is the outward expression of the agreement, rather than a party's unexpressed intention, which the court will enforce. Id.
If contractual language is clear and explicit, it governs. Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264 (1992) (citing Cal. Civ. Code § 1638).
Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. Bay Cities Paving Grading, Inc. v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 854, 867 (1993) (citing Cal. Civ. Code § 1636). Such intent is to be inferred, if possible, solely from the written provisions of the contract. Bay Cities Paving Grading, 5 Cal. 4th at 867 (citing Cal. Civ. Code § 1639). "The clear and explicit meaning of these provisions, interpreted in their ordinary and popular sense, unless used by the parties in a technical sense or a special meaning is given to them by usage, controls judicial interpretation." Id.
A contract is ambiguous when it is capable of two or more constructions both of which are reasonable. Suarez v. Life Ins. Co. of North America, 206 Cal. App. 3d 1396, 1402 (1988). "Courts will not adopt a strained or absurd interpretation in order to create an ambiguity where none exists." Bay Cities Paving Grading, 5 Cal. 4th at 867 (1993). "The language in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract." Bank of the West, 2 Cal. 4th at 1265.
Based on the unambiguous terms of the contract, the Court concludes that Plaintiffs do not have exclusive right as to the Remake Eleanor because Plaintiff Halicki has transferred to HPC all her "right, title and interest of every kind and nature to:" ( see Agreement ¶ 4,)
all sequel, remake and allied, ancillary and subsidiary rights therein of every nature and description in and to the existing motion picture entitled "Gone in Sixty Seconds" (the "Original Picture") and any and all underlying rights thereto (collectively, the "Property").
(Agreement ¶ 5.) The right to the Remake Eleanor was not amongst those reserved by Halicki in Paragraph 5. Consequently, without a claim of ownership of an exclusive right under a copyright as to the Remake Eleanor, the alleged derivative work, Plaintiffs cannot institute an action for copyright infringement on the Remake Eleanor. Melville B. Nimmer David Nimmer, 2-7 Nimmer on Copyright, § 7.16[B][2] (2005); see also, Lamb, 949 F. Supp. at 756.
2. Beneficial Owner
Alternatively, Plaintiffs claim standing on the basis of beneficial ownership. (See Opp'n at 9.) Section 501(b) states that the "legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501 (emphasis added). The legislative history accompanying the Copyright Act states that "[a] `beneficial owner' for this purpose would include, for example, an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th Cir. 2003) (citing H.R. Rep. No. 94-1476 at 159, reprinted in 1976 U.S. Code Cong. Ad. News 5659, 5775 (1976) (emphasis added)).
In the case at hand, in exchange for HPC's option to acquire the rights granted in Paragraph 4 of the Agreement, the Halicki-HPC Agreement granted Plaintiff Halicki, among other things, certain royalties. (Agreement ¶ 3). Paragraph 7 of the Agreement specifically provides that upon the satisfaction of certain condition precedents, Plaintiff Halicki and her successors-in-interest shall be entitled to receive royalty derived from the sale of items of merchandise in connection with the Remake Picture or "the Property." (Opp'n at 9.) The term "property" is defined in Agreement as the Original Picture and "all the underlying rights thereto." (Agreement at 1.) Plaintiffs point to Paragraph 7 of the Agreement and the Plaintiffs' entitlement to a royalty as basis for standing based on "beneficial ownership." ( Id.); 17 U.S.C. § 501 (b).
Plaintiffs rely on Cortner v. Israel, 732 F.2d 267, 268 (2d Cir. 1984) to support their claim that they have beneficial ownership standing. In Cortner, the authors of an original musical work assigned all their rights to a broadcasting company in exchange for royalties for various rights granted. 732 F.2d at 269. The broadcasting company in turn commissioned the defendants to write a new, similar derivative work to the original work. Id. at 270. The court in that case held that the original authors have a sufficient beneficial interest in the original copyright to give them standing to sue third-party infringers. Id. at 271. The court reasoned that "when a composer assigns copyright title to a publisher in exchange for the payment of royalties, an equitable trust relationship is established between the two parties which gives the composer standing to sue for infringement of that copyright." Id. "Otherwise," the court continued, "as the beneficial owners, the authors' interest in the copyright could be diluted or lessened by a wrongdoer's infringement." Id.
Plaintiffs have cited to no Ninth Circuit authority to support their position that they have standing to bring a copyright claim under the facts presented in this case.
Further, as Circuit Judge Winter observed in his concurring opinion in Cortner, the discussion on whether the plaintiffs in Cortner have a sufficient beneficial interest in the original copyright to allow them to bring infringement actions "is entirely unnecessary to the ruling on the judgment and is thus gratuitous dicta." Id. at 272. Judge Winter opined that "[t]o purport to rule on this question is particularly inappropriate since the issue is hotly contested and has no governing precedent in this court." Id. Indeed, in Cortner, the majority opinion affirmed the district court's dismissal of plaintiffs' complaint on the grounds that defendant broadcasting company was the owner of legal title to the underlying copyrighted theme, and therefore, cannot be held liable for infringement under the Copyright Act, notwithstanding the dicta that plaintiffs have standing to sue for infringement of their beneficial interest in the copyright. Id.
Of equal importance, Cortner is distinguishable. Here, Plaintiffs submit that under Paragraph 7, Plaintiff Halicki and her successors in interest are due a royalty on any revenue derived by HPC from the sale of "Gone in 60 Seconds"-related merchandise. (Opp'n at 9.) However, as discussed above, the Remake Eleanor is not a derivative work of the Original Eleanor, and the parties intended the two characters to remain distinguishable with separate identities. Plaintiffs retained and reserved rights pertaining only to the Original Eleanor. ( See Agreement ¶ 5.) Further, with respect to the royalty provision of Paragraph 7, Plaintiffs' right is only in a percentage of the potential sale of merchandise in connection with the Remake Picture, not the character Eleanor itself. (Agreement ¶ 7.)
As stated above, § 501(b) states that the "legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501 (emphasis added). An example of a beneficial owner is "an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees." Warren, 328 F.3d at 1144. Here, Plaintiffs never parted with legal title to the copyright pertaining to the Remake Eleanor in the first instance. Accordingly, Plaintiffs are not the class of people Congress had in mind when they enacted the beneficial ownership provision under § 501(b).
The other case Plaintiffs relied upon for the basis of beneficial ownership standing, Kamakazi Music Corp. v. Robbins Music Corp., 534 F. Supp. 69, 73 (S.D.N.Y. 1982), is also inapposite because that case involves the exchange of plaintiffs' copyrights in songs for royalties from the exploitation of the publishing rights for those songs.
Like the plaintiffs in Cortner, the plaintiffs in Kamikazi initially had legal title to the copyright but had parted with that title in exchange for percentage royalties based on the exploitation of that property that was transferred. In contrast, Plaintiffs never had legal title over the Remake Eleanor in the first instance.
This interpretation of the rights granted to HPC in the Agreement is consistent with Paragraph 5(b) of the Agreement which reserves to Plaintiff Halicki the "right to manufacture, sell and distribute merchandise utilizing the car known as `Eleanor' from the Original Picture." (Agreement ¶ 5.) That Paragraph further provides that:
It is expressly agreed that [Plaintiffs'] reserved rights under this Paragraph 5 relate only to material written or authorized by Toby Halicki, and not to any screenplay, characters, teleplay, music, lyrics or sequels written by or for or authorized by HPC, even though the same may contain characters or other elements contained in the Property.
( Id.).
HPC and Plaintiff Halicki's intent to make the two Eleanor characters from the Original and the Remake separate and distinct is also evidenced in Paragraph 4(c) of the Agreement which provides in relevant part that Halicki "shall not have any right, title or interest whatsoever" in or to any character or other material of any kind "created by or for HPC in the exercise of HPC's rights hereunder." (Agreement ¶ 4(c).)
A beneficial owner is not limited to "an author who parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees." H.R. Rep. No. 1476. However, the House of Representative Report specifically identifies the person receiving the royalties to have parted with legal title to the copyright, rather than a general interest in a copyright. The Court is reluctant to expand the category of "beneficial ownership" to those who have no formal claim to legal ownership.
Further, copyright law was intended to encourage creative authorship. Miller v. Glenn Miller Prods., 318 F. Supp. 2d 923, 938 (C.D. Cal. 2004). Establishing an individual with no formal or present legal interest to the copyright as a beneficial owner would not further the basic policy of encouraging creative authorship. Id. Therefore, Plaintiffs' royalty interest in the HPC and its successor's merchandising right in connection with the Remake Picture is insufficient to accord them standing in the copyright infringement cause of action.
Moreover, assuming arguendo that Plaintiffs have standing as "beneficial owners," Plaintiff Halicki appointed HPC as her irrevocable attorney-in-fact with the right to bring, prosecute, defend and appear in suits concerning any interference with any of the copyrights granted to HPC. (Agreement ¶ 11(f).) Paragraph 11, entitled "Copyrights," and more specifically, sub-paragraph (a) states:
only insofar as said copyrights pertain to or affect any of the rights, privileges and property herein granted to HPC, and subject to Paragraph 5 . . . Owner [Halicki] further grants and assigns to HPC an exclusive, irrevocable license, in perpetuity, in and to any and all of Owner's right, title in and to any and all copyrights in and to the Property and each and every part thereof contained therein, together with all benefits of said copyrights and all remedies thereunder, and all actions and causes of action for infringement or violation of said copyrights, or any other rights in the property or relating thereto, and all damages, profits, penalties and other recoveries and all other rights of every kind and character which owner may now or hereafter have directly or indirectly as a result of any such violation.
(Agreement, 11(a) (emphasis added).) Sub-paragraph (f) further provides that:
Owner hereby appoints HPC . . . as Owner's irrevocable attorney-in-fact, with the right but not the obligation, for the sole benefit of HPC, and at HPC's expense to bring, prosecute, defend and appear in suits, actions and proceedings of any nature under or concerning all copyrights in and to the Property and all renewals thereof, or concerning any infringement of any such copyright or renewal copyright or any interference with any of the rights herein granted to HPC; and to take such action as HPC may deem advisable to enforce, protect and/or defend any of the rights, privileges and property herein granted to HPC under any and all such copyrights and renewals thereof . . . and to litigate, collect and receipt for all damages arising from any infringement of any such rights.
(Agreement ¶ 11(f) (emphasis added).) Paragraph 4 of the Agreement grants HPC the right to manufacture, sell, furnish, supply and distribute merchandise which makes reference to the Remake Picture produced under the Agreement or any part thereof, including the characters from the Remake Picture. (Agreement ¶ 4 (j).) Here, the alleged infringement is on the right to manufacture products relating to the Remake Picture and Remake Eleanor. Pursuant to sub-paragraphs (a) and (f), any interference with the right to manufacture, sell, furnish, supply and distribute Remake Picture and/or Remake Eleanor is subject to HPC's sole right to sue for copyright infringement. Neither Halicki nor her successors-in-interest have the right to sue for infringement upon the Remake Picture or the Remake Eleanor.
For all the foregoing reasons, the Court GRANTS Defendants' Motion as to the copyright infringement claim.
B. Common Law Trademark Infringement, Federal Unfair Competition, and False Advertising
To bring a claim for trademark infringement under the common law or the Lanham Act, the plaintiff must demonstrate the three elements, namely: (1) a valid, protectable mark; (2) the defendant's use of the mark; and (3) the likelihood of consumer confusion. Donchez v. Coors Brewing Co., 392 F.3d 1211, 1219 (10th Cir. 2004) (observing that the elements of common law trademark infringement are similar to those required to prove unfair competition under § 43(a) of the Lanham Act: to wit, a plaintiff must establish a protectable interest in its mark, the defendant's use of that mark in commerce, and the likelihood of consumer confusion). Plaintiffs concede that the common law and Lanham Act standing requirements are similar.
1. Standing
Standing is a "threshold issue in every federal case, determining the power of the court to entertain the suit." Nat'l Licensing Assoc., LLC v. Inland Joseph Fruit Co., 361 F. Supp. 2d 1244, 1259 (E.D. Wash. 2004) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)). Standing cannot be "inferred argumentatively from averments in the pleadings," but rather "must affirmatively appear in the record." Nat'l Licensing Assoc., 361 F. Supp. 2d at 1248. Additionally, the burden of establishing standing remains at all times with the party invoking federal jurisdiction. Warth, 422 U.S. at 518 ("It is the responsibility of the complainant clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers.").
Under the common law, the plaintiff instituting trademark infringement action was required to prove ownership of the trademark. Quabaug Rubber Co. v. Fabiano Shoe Co., Inc., 567 F.2d 154, 160 (1st Cir. 1977) (citing Restatement of Torts § 711). The common law unfair trade practices, formally governed by the traditional principles of the tort laws, yielded to rapidly developing, independent bodies of law at the federal level, thereby diminishing reliance on the traditional principles of tort law. Restatement (Second) of Torts, Division 9 (Interference with Advantageous Economic Relations), Introductory Note, Part 1.
Unlike the common law, under § 43(a) of the Lanham Act, the question of ownership is immaterial to standing. Murphy v. Provident Mutual Life Ins., Co., 756 F. Supp. 83, 86 (D. Conn.), aff'd, 923 F.2d 923 (2d Cir. 1990); Silverstar Enters., Inc. v. Aday, 537 F. Supp. 236, 241 (S.D.N.Y. 1982)); 15 U.S.C. § 1125(a). Section 43(a) allows "any person who believes that he or she is likely to be damaged" by the proscribed conduct to bring a civil action. 15 U.S.C. § 1125 (a). "Despite § 43(a)'s broad language, to maintain a § 43(a) claim, the plaintiff must show that it has a commercial interest in the allegedly misused mark that is `likely to be damaged.'" Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1109 (9th Cir. 1992). "Without a protectable interest, plaintiff lacks also standing to bring its Lanham Act claim under § 43(a)." Nat'l Licensing Ass'n, 361 F. Supp. 2d at 1257. Thus, in an infringement action, the proper plaintiff is "the registrant or one with a proprietary interest in the property — one who bears the risk of invalidity or restriction." Nat'l Licensing Assoc., 361 F. Supp. 2d at 1259.
Here, Plaintiffs cannot claim standing as a registrant of "Eleanor." The trademark "Eleanor" is registered to Defendant Carroll Hall Shelby Trust with the registration number 2837333 for "vehicles, namely, automobiles, engines for automobiles, and structural parts of automobiles." (Morin Decl. ¶ 19, Ex. S.) Although Plaintiff Halicki has applied to register the trademark "Eleanor" for various classes of goods and services, including cars and automotive parts, seven months after this action was commenced, Plaintiffs have not proffered any evidence showing that this mark has been registered in favor of Plaintiffs. Therefore, Plaintiffs may not claim standing in this instance as a registrant of the mark "Eleanor."
Further, Plaintiffs claim to own two trademarks for the phrase "Gone in 60 Seconds." Halicki Decl. ¶ 7. However, the two marks are for "toy model cars and toy model car kits," (registration number 2935200) and "baseball caps" (registration number 284021). (Halicki Decl. ¶ 7, Exs. 5, 6.) Trademark law allows multiple people to own and register the same mark for different classes of goods and services. Lockheed Martin Corp. v. Network Solutions, 985 F. Supp. 949, 964 (C.D. Cal. 1997). Defendants are not in the business of manufacturing or selling baseball caps. Rather, Defendants only manufacture, produce, and sell restored vehicles fitted and detailed to replicate, in appearance, the 1960's Shelby GT-500 and GT-350 Cobra automobiles, originally manufactured by Shelby. (Mot. at 10.) Because Plaintiffs are not the registered owner of "Gone in 60 Seconds" for vehicles or automobiles, Plaintiffs may not claim standing in this instance as a registrant.
Further, with respect to the Plaintiffs' right to the "Gone in 60 Seconds" mark for "toy model cars and toy model car kits," such right is limited to the unambiguous reservation of right in Paragraph 5 of the Agreement. A brief discussion on toy model cars is in order because as mentioned previously, in 2001, Defendant Carroll Hall Shelby Trust applied for registration of the trademark "Eleanor" for model cars. (Helfing Decl., Ex. 5.) The preamble of the Agreement grants HPC the right to:
all sequel, remake and allied, ancillary and subsidiary rights therein of every nature and description in and to the existing motion picture entitled "Gone in Sixty Seconds" (the Original Picture") and any and all underlying rights thereto (collectively, the "Property," provided that "Property" shall not include the rights reserved to Owner [Halicki] pursuant to Paragraph 5) in connection with possible motion picture (the "picture[s]") to be based in whole or in part upon the Property.
(Agreement at 1 (emphasis added).) The preamble unambiguously assigns to HPC the aforementioned rights subject only to the rights expressly reserved to Plaintiff Halicki and her successors in interests pursuant to Paragraph 5. Among the four rights reserved by Plaintiff Halicki was "the right to manufacture, sell and distribute merchandise utilizing the car known as `Eleanor' from the Original Picture." (Agreement ¶ 5(b).) In the same paragraph, the HPC and Halicki expressly agreed that Plaintiff Halicki's reserved rights relate "only to material written or authorized by Toby Halicki, and not to any . . . characters . . . written by or for or authorized by HPC, even though the same may contain characters or other elements contained in [the Original Picture and related property]." ( Id. ¶ 5.) Therefore, the plain language of the Agreement suggests that the parties to that Agreement limited Plaintiff Halicki's right to manufacture, sell, and distribute merchandise relating to the Original Gone in 60 Seconds to merchandise utilizing the Original Eleanor. Plaintiffs have made no allegations, nor proffered any evidence, that Defendants manufactured, produced or sold toy model cars and toy model car kits "utilizing the Original Eleanor."
Further discussion of Plaintiffs' standing in the matter vis a vis Plaintiffs' proprietary interest requires the Court to determine whether the alleged violation of the Lanham Act in the present case involves false advertising or false endorsement. The Ninth Circuit stated that section 43(a) of the Lanham Act "prohibits the use of false designation of origin, false descriptions, and false representations in the advertising and sale of goods and services." 15 U.S.C. § 1125(a); Kournikova v. General Media Communications, Inc., 278 F.Supp.2d 1111, 1116 (C.D. Cal. 2003) (citing Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1106 (9th Cir. 1992) (internal citation omitted)). Under the § 43(a) jurisprudence, there are two distinct protectable interests: (1) protection against unfair competition in the form of an action for false advertising; and (2) protection against false association in the form of a lawsuit for false endorsement. Kournikova, 278 F.2d at 1116-1117 (citing Waits, 978 F.2d at 1109). A false advertising case is based on a misrepresentation in the marketplace that causes "a discernibly competitive injury." Kournikova, 978 F.2d at 1117 (citing Waits, 978 F.2d at 1109.) On the other hand, false endorsement claim is more appropriate where the plaintiff alleges unauthorized use of a celebrity's identity, which is likely to confuse consumers as to the plaintiff's sponsorship or approval of the product. Kournikova, 978 F.2d at 1119 (citing Waits, 978 F.2d at 1110).
a. Standing for False Advertising Cause of Action
Standing for a false advertising claim requires showing that: (1) the plaintiff competes with the defendant in some marketplace; (2) the plaintiff has alleged a discernibly competitive injury resulting from a misrepresentation in the marketplace; and (3) the misrepresentation implicates some purpose of the Lanham Act regarding the use of trademark, such as protection of trademarks or prevention of unfair competition. Kournikova, 978 F.2d at 1117 (internal citations omitted).
Here, Plaintiffs cannot satisfy the first and second elements. In addressing the first element, whether or not Plaintiffs compete with Defendants, the Court considers "whether or not the two parties vie for the same dollars from the same consumer group." Id. at 1117. Here, Plaintiffs do not claim to be in the business of manufacturing, selling and distributing automotive vehicles. Although Plaintiffs have hopes of working with Ford on a "Gone in 60 Seconds" or "Eleanor" branded automotive project, there is no indication that Plaintiffs have begun to, by themselves or with others, manufacture, sell or distribute automobiles. (Pl.'s AUF ¶¶ 35-36; Halicki Decl. ¶¶ 22-23.) Thus, between the parties in this matter, the only source of motor vehicles that resembles "Eleanor," whether from the Original Picture or the Remake Picture, is Defendants. Accordingly, the parties do not "vie for the same dollars from the same consumer group" and they are not in competition of each other.
Plaintiffs have also failed to produce even a scintilla of evidence showing that Defendants are competing with Plaintiffs in the sale of toy model cars and toy model car kits utilizing the Original Eleanor.
"[I]t is not [the task] of the district court, to scour the record in search of a genuine issue of triable fact. [The courts] rely on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). See also Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001) ("The district court need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found.").
In any case, assuming arguendo that Defendants are also engaged in the sale of toy model cars and toy model car kits, Plaintiffs would still have no standing to bring the trademark action because, as stated above, Plaintiff Halicki has transferred all her rights of every nature to the Property to HPC, subject only to rights prescribed in Paragraph 5.
As to the second element, the Ninth Circuit provides that if one participant in the marketplace makes false statements that could theoretically draw consumers away from similar offerings of other participants in the same marketplace, the plaintiff has competitive injury. Waits, 978 F.3d at 1108-1109; Kournikova, 978 F.2d at 1117-1118. In Kournikova, plaintiff Kournikova, a popular tennis player brought suit against the defendant for publishing in Penthouse Magazine partially nude photographs of another woman falsely identified as Kournikova. Kournikova, 978 F.2d at 113. Kournikova brought an action under section 43 of the Lanham Act for false advertising and false endorsement. Id. The court in that case held that the false advertising claim lacks merit because Kournikova presents no evidence that she has suffered any competitive injury resulting from the defendant's conduct. Id. at 1119. The court explained that nothing in the false advertising cause of action focuses on losses that would flow from Kournikova's position as a competitor for male dollars spent on photographs of young, attractive women. Id. at 1119. Here, like the case in Kournikova, Plaintiffs are competing for the use of the marks "Eleanor" and "Gone in 60 Seconds," not for the consumers' dollars spent on the automotive vehicles like the ones produced and sold by Defendants. Furthermore, Plaintiffs present no evidence of financial loss due to, or in connection with Defendants' manufacture or sale of the automobiles resembling "Eleanor," be it the Original Eleanor or the Remake Eleanor. Therefore, there is no "competitive injury" for standing under a false advertising claim.
Based on the foregoing, no reasonable jury could find Plaintiffs to be in competition with Defendants. Of equal importance, there is no evidence that Plaintiffs have suffered any competitive injury resulting from Defendants' conduct. Consequently, Plaintiffs lack standing to bring a false advertising claim.
b. Standing for False Endorsement Cause of Action
Here, a false endorsement claim under section 43(a) of the Lanham Act may be more appropriate. As stated supra, where a celebrity's identity is inappropriately used, which is likely to confuse consumers as to the plaintiff's sponsorship or approval of the product, a false endorsement claim is the appropriate cause of action. Kournikova, 278 F. Supp. 2d at 1119 (citing Waits, 978 F.2d at 1110). In this case, Plaintiffs carefully cultivated "Eleanor" as the main star character in the Original Picture. (Halicki Decl. ¶ 3.) Only Eleanor received starring billing in the front credits of the Original Picture, and "Eleanor" is featured prominently in the advertising, public relations and marketing of the Original Picture. ( Id. ¶¶ 3, 5.) As such, Eleanor of the Original Picture should be considered a celebrity with a distinct identity. Similarly, Eleanor of the Remake Picture is also a celebrity that can lend its sponsorship or approval of a product. This is evidenced by the fact that the Remake Eleanor is exhibited at car shows along with the Original Eleanor, and that Defendants explicitly make reference to "Eleanor" in "Gone in 60 Seconds" in furtherance of their marketing efforts. ( Id. ¶ 14; Hasty Decl. ¶ 6.) Likewise, although not a character, the motion pictures, both the Original Picture and the Remake picture, are like a celebrity because the well recognized name "Gone in 60 Seconds" is capable of supporting, promoting or lending credibility to a product. Further, Plaintiffs allege that Defendants impermissibly used Plaintiffs' trademarks "Eleanor" and "Gone in 60 Seconds" in an attempt to pass [Defendants'] goods off as coming from the single source for Eleanor and the "Gone in 60 Seconds" film. (SAC at 10.) Also, Plaintiffs contend that Defendants have been conducting themselves as if they received "the blessings of the rights holder of the film and character." (Opp'n at 17.) The averments in the Second Amended Complaint and the Opposition suggest a claim of false endorsement rather than false advertising. Therefore, it would have been more appropriate for Plaintiffs to raise a false endorsement claim.
The Ninth Circuit set forth that in order to have standing in a false endorsement claim, a plaintiff need not plead or prove "actual competition" in the traditional sense. Kournikova, 278 F. Supp. 2d at 1119-1120 (citing Waits, 978 F.2d at 1110; Smith v. Montoro, 648 F.2d 602, 603 (9th Cir. 1981)). Rather, it extends to "a purported endorser who has an economic interest akin to that of a trademark holder in controlling the commercial exploitation of his or her identity." Kournikova, 278 F. Supp. 2d at 1119-1120 (citing Waits, 978 F.2d at 1110; Montoro, 648 F.2d at 603).
Here, Plaintiffs claim to have standing on the basis of merchandising royalty in connection with the exploitation of the "Eleanor" and "Gone in 60 Seconds" marks. Opp'n at 10; Agreement ¶ 7. That is, the Agreement accords Plaintiffs certain merchandising royalty based on the sale of merchandise in connection with the Remake Picture. (Agreement ¶ 7.) However, such contractual right is too minimal in order to establish sufficient economic interest to institute a false endorsement lawsuit. The case law specifically requires an "economic interest akin to that of a trademark holder in controlling the commercial exploitation of [the mark]." Kournikova, 278 F. Supp. 2d at 1119-1120 (citing Waits, 978 F.2d at 1110; Montoro, 648 F.2d at 603). In the instant case, Plaintiffs have no control on the choice and manner of exploiting marks at issue inasmuch as Plaintiff Halicki granted to HPC "all right, title and interest of every kind and nature," including "the right to manufacture, sell, furnish, supply and distribute, products . . . merchandise and commodities . . ., which make reference to or are based upon or adopted from the [the Original Picture and related property] . . ., including, but not limited to, the characters. (Agreement ¶ 4(j).) According to Paragraph 4(j), only HPC and its successors may control the commercial exploitation of the marks "Eleanor" and "Gone in 60 Seconds" as related to the Original Picture and related property. Therefore, the quantum of economic interest owned by Plaintiffs is insufficient to afford standing for a false endorsement cause of action.
Consequently, whether Plaintiffs bring a false advertisement claim or false endorsement cause of action, Plaintiffs lack standing under section 43(a) of the Lanham Act. 15 U.S.C. § 1125.
Because Plaintiffs have no standing to bring the federal trademark claims, the Court need not reach the issue of whether Defendants could raise nominative fair use defense.
C. Statutory Unfair Competition
Defendants also claim that Plaintiffs lack standing to allege statutory unfair competition pursuant to section 17200 of California Business and Professions Code. Cal. Bus. Prof. Code § 17200. The law of unfair competition has historically addressed "the wrongful conduct in commercial enterprises which resulted in business loss to another, ordinarily caused by the use of unfair means in drawing away customers from a competitor." Southwest Marine, Inc. v. Triple a Machine Shop, Inc., 720 F. Supp. 805, 808 (N.D. Cal. 1989) (citing Met-Film Assoc., Inc. v. MCA, Inc., 586 F. Supp. 1346, 1361 (C.D. Cal. 1984). This legal concept as codified provides that:
As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.
Cal. Bus. Prof. Code § 17200. Furthermore, section 17204, as amended in 2004, limits standing to bring an action under the unfair competition law to "any person who has suffered injury in fact and has lost money or property as a result of such unfair competition." Cal. Bus. Prof. Code § 17204.
The parties do not dispute that a plaintiff alleging a § 17200 cause of action is required to have suffered an injury in fact. (Mot. at 18-20; Opp'n at 13-14.) However, Defendants do challenge Plaintiffs' allegation of injury suffered. Plaintiffs have retained interest in the Original Eleanor and continue to exploit the character from the Original Picture by setting up the website, by selling Original Eleanor related merchandise, and by exhibiting the Original Eleanor in car shows and museums. (Halicki Decl. ¶¶ 5-6, 14, 17.) However, other than a merchandising royalty, the Plaintiffs have little interest in the Remake Eleanor, to which Defendants make references in connection with their automobiles. (Agreement ¶¶ 5, 7.) Moreover, there is no evidence of Disney producing or selling vehicular merchandise based on or relating to the Eleanor in the Remake Picture, nor do Plaintiffs establish the adverse effect that Defendants' competition in the market has on Disney's profits or Plaintiffs' royalty interest. Plaintiffs' claim of injury remains speculative to date, and Plaintiffs have failed to establish that she has "suffered injury in fact and has lost money or property." Cal. Bus. Prof. Code § 17204. Therefore, the Plaintiffs lack standing as to this issue. Defendants' Motion for Summary Judgment is hereby GRANTED as to Plaintiffs' statutory unfair competition cause of action.
D. Intentional and Negligent Interference with Prospective Economic Advantage
A plaintiff alleging a claim for intentional or negligent interference with prospective economic advantage must show: (1) that an economic relationship containing the probability of future economic benefit existed between plaintiff and a third party; (2) defendant's knowledge thereof; (3) an intentional or negligent act by defendant to disrupt that economic benefit; (4) that the relationship was actually disrupted; and (5) that plaintiff was damaged. N. Am. Chem. Co. v. Superior Court of Los Angeles County, 59 Cal. App. 4th 764, 783 (Cal.App. 1997); Conkle v. Jeong, 73 F.3d 909, 918 (9th Cir. 1995) (citing Blank v. Kirwan, 216 Cal. Rptr. 718, 730 (Cal. 1985).
Plaintiffs contend that Plaintiff Halicki initiated the Ford Motor Company to work on a "Gone in 60 Seconds" and/or "Eleanor" branded project, but the efforts failed because Defendants "blanketed the market" and no one from Ford followed up on the offer. (Opp'n at 12; Pl.'s AUF ¶ 35; Halicki Decl. ¶ 22.) Plaintiffs further allege that Defendant Carroll Shelby may have interfered with Plaintiffs' dealings with Ford, and Shelby's interference, speculative at best, is imputed to Defendants Unique Motorcars and Performance. (Opp'n at 13.)
First, Plaintiffs fail to show that they have an economic relationship with Ford, much less one with probability of future economic benefit. No jury can reasonably conclude that Plaintiffs' initial inquiry with Ford and a non-committal response to that inquiry establish an economic relationship.
Both Plaintiffs and Defendant Carroll Shelby agree that they met at various events, including the Petersen Automotive Museum Star Car event, Cars on Rodeo car show, and Concourse on Rodeo. (Pl.'s AUF ¶¶ 23-26; Aronson Decl. ¶ 3, Ex. 2.) However, Plaintiffs fail to show evidence that Carroll Shelby knew of Plaintiffs' intention to engage Ford in a "Gone in 60 Seconds"/"Eleanor" branded project, or even the Plaintiffs' desire to work on such project.
Plaintiffs are also unable to establish an "intentional and improper" act by Defendants that caused a viable Ford proposal to "wither on the vine." (Opp'n at 12, 19-20.) Plaintiffs point to Defendants' conversation with Ford about featuring Defendants' GT-500E at a Mustang event. ( Id.; Pl.'s AUF ¶ 48; Aronson Decl. ¶ 5, Ex. 3.) However, there is no evidence that Defendants and the Ford representative discussed Plaintiffs or their inquiry about the branded project. Further, except for the fact that both Plaintiffs and Defendants want to deal in automobile production and sales using the brand name "Eleanor" and/or "Gone in 60 Seconds," there is little relationship between the parties to establish duty required to prove negligence by Defendants.
Moreover, Plaintiffs fail to draw a causal connection between Ford's lack of response to Plaintiffs' proposal, and Defendants' activities of manufacturing automobiles resembling the Remake Eleanor. Ford's decision not to pursue Plaintiffs' branded project proposal may be entirely unrelated to Defendants' business activities, for example, history of low profit margin on branded products, unwillingness to deal with other's property interest in the Ford's production.
Finally, Plaintiffs provide no evidence that Plaintiffs suffered damages because of the failed agreement between Plaintiffs and Ford.
Based on the foregoing, the Court GRANTS Defendants' Motion with respect to Plaintiffs' fifth and sixth claims, intentional and negligent interference with prospective economic advantage claims.
E. Constructive Trust/Accounting
Section 1117 of the Lanham Act provides, in pertinent part:
When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 43(a) or (d) [ 15 U.S.C. § 1125(a) or (d)], or a willful violation under section 43(c) [ 15 U.S.C. § 1125(c)], shall have been established in any civil action arising under this Act, the plaintiff shall be entitled, subject to the provisions of sections 29 and 32 [ 15 U.S.C. §§ 1111, 1114], any subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.15 U.S.C. § 1117 (a).
A constructive trust is imposed because the person holding title to property would wrongfully profit if he or she were permitted to keep the property. In re: Hal Taylor, 133 F.3d 1336, 1342 (10th Cir. 1998) (citing Restatement (Second) of Trusts at 326). Thus, a constructive trust is remedial in character. In re: Hal Taylor, 133 F.3d 1336, 1342 (10th Cir. 1998) (citing Restatement (Second) of Trusts at 326). The plain reading of section 1117 of the Lanham Act provides for equitable relief such as constructive trust or accounting of defendant's profits. 15 U.S.C. § 1117(a). Further, it has been opined that an accounting is necessary to prevent unjust enrichment, and the court's failure to award an accounting of profit is generally a per se abuse of discretion. Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117 (9th Cir.), cert. denied, 391 U.S. 966 (1968).
In this case, however, there is no showing of actual violation of section 43 of the Lanham Act, as is required by the statute, in order to grant relief in the form of recovery of defendant's profit or constructive trust. 15 U.S.C. § 1117(a). Rather, as stated supra, Plaintiffs failed to meet the burden of showing that they have standing to institute an action under the Lanham Act.
Plaintiffs allege, and the parties agree on the common law constructive trust elements: (1) the existence of a res; (2) the plaintiff's right to that res; and (3) the defendant's gain of the res by fraud, accident, mistake, undue influence, violation of a trust or other wrongful act. (Mot. at 9; Opp'n at 11) (citing Kraus v. Willow Park Pub. Golf Course, 73 Cal.App. 3d 354, 373 (Cal.App. 1977).
Here, the "res" is the use of the "Eleanor" and "Gone in 60 Seconds" marks in connection with manufacturing and selling automobiles and related goods. (Opp'n at 11.) Plaintiffs have the right to use the marks as is relevant to Plaintiffs' reserved rights pursuant to the Halicki-HPC Agreement, and Plaintiffs' reserved rights pertain only to the Original Picture and the Original Eleanor. (Agreement ¶ 5.) As already discussed above, having granted "all right, title and interest of every kind and nature . . . to sequels to and/or remakes," other than the royalties, Plaintiffs have little interest in the Remake Picture or Remake Eleanor. ( Id. ¶¶ 3-4, 7.) Thus, the actual legal title lies with Disney, HPC's successor in interest, not with Plaintiffs.
Plaintiffs cannot meet the requirements necessary to prove that Defendants hold property in trust for Plaintiffs. Accordingly, Defendants' Motion for Summary Judgment as to the constructive trust cause of action is GRANTED.
F. Declaratory Relief
Plaintiffs also petition the Court to enter judgment declaring the cancellation of the "Eleanor" trademark held by Defendant Carroll Hall Shelby Trust. In addition, Plaintiffs request the Court to adjudge that the "GT-500" mark registration does not grant right to use the "Eleanor" or "Gone in 60 Seconds" marks.
Section 1064 of the Lanham Act provides that "a petition to cancel a registration of a mark . . . may . . . be filed by any person who believes that he is or will be damaged by the registration of a mark. . . ." 15 U.S.C. § 1064. A petition for cancellation of a trademark does not require proof of actual damage. Star-Kist Foods, Inc. v. P.J. Rhodes Co., 735 F.2d 346, 349 (9th Cir. 1984) (internal citations omitted). "The Lanham Act requires only that the cancellation petitioner plead and prove facts showing a `real interest' in the proceeding in order to establish standing." Id. (citing International Order of Job's Daughters v. Lindeburg Co., 727 F.2d 1087, 1092 (Fed. Cir. 1984); Rosso and Mastracco, Inc. v. Giant Food, Inc., 720 F.2d 1263, 1265 (Fed. Cir. 1983)). Showing of real interest requires proof of personal interest, and "real controversy between the parties." Star-Kist Foods, 735 F.2d at 349 (citing Lipton Indus., Inc. v. Ralston Purina Co., 670 F.2d 1024, 1026 (C.C.P.A. 1982)). Such task requires case-by-case analysis of facts surrounding each cancellation dispute. Star-Kist Foods, 735 F.2d at 349.
As in all federal cases, a plaintiff seeking declaratory relief must also satisfy Article III standing. Malowney v. Federal Collection Deposit Group, 193 F.3d 1342, 1347 (11th Cir. 1999). As the parties agree, a plaintiff must show: (1) an injury in fact — an invasion of a legally protected interest which is concrete and particularized and actual or imminent; (2) that the injury is fairly traceable to the challenged action of the defendant; and (3) that the injury will be redressed by a favorable decision. ABC Nat'l Line Erection Apprenticeship Training Trust v. Aubry, 68 F.3d 343, 346 (9th Cir. 1995) (citation omitted).
Here, Plaintiffs challenge the use of the "Eleanor" mark by Defendant Carroll Hall Shelby Trust. However, as discussed supra, Plaintiffs' exclusive rights lie only with the Original Eleanor and the exploitation of that property. Moreover, Plaintiffs have yet to show conclusive evidence that Plaintiffs have suffered injury — actual or imminent. Plaintiffs' claim of invasion of Plaintiffs' "concrete and particularized interest" in the "Eleanor" mark by Defendants Carroll Hall Shelby Trust is without any evidentiary support such as loss of profit from merchandising the Original Eleanor.
Therefore, the Court GRANTS Defendants' Motion for Summary Judgment as to Plaintiffs' eighth claim for relief.
G. Shelby Defendants' Motion for Partial Adjudication
Defendants Carroll Shelby International, Inc., Carroll Shelby, Carroll Shelby Licensing, Inc., Carroll Shelby Engineering, Inc., Carroll Shelby Motors, Inc., Carroll Shelby Distribution International, Inc., Carroll Hall Shelby Trust, Unique Motorcars, Inc., Unique Performance, Inc., and Sanderson Sales and Marketing (collectively, "Shelby Defendants") also filed a Motion for Partial Summary Adjudication pursuant to Rule 56(d) of the Federal Rules of Civil Procedure. The Motion was limited to Plaintiffs' second claim for common law trademark infringement and third claim for federal unfair competition and false advertising. Because, as discussed above, Plaintiff has no standing to bring these two claims, this Motion, which merely parrots Defendants Unique Motorcars, Inc. and Unique Performance Inc.'s Motion for Summary Judgment, is rendered MOOT by the Court's ruling on the latter motion.
H. Plaintiffs' Motion for Summary Adjudication of Affirmative Defenses of Shelby Entities
Plaintiffs also filed a Motion for Summary Adjudication of Affirmative Defenses of Shelby Entities. Among other things, Plaintiffs contend that the Shelby Defendants' thirteenth affirmative defense based on lack of standing is barred because the undisputed material facts demonstrate that, as a matter of law, Plaintiffs have standing to bring each and every claim contained in their Second Amended Complaint. Local Rule 7-3 requires counsel of the moving party to first contact opposing counsel "to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution." Here, although the Plaintiffs, the moving party, allegedly met with counsel for the Shelby Defendants, Plaintiffs' counsel allegedly did not disclose the basis of the instant motion. Plaintiffs' Reply does not refute this allegation. Because Plaintiffs have failed to comply with Local Rule 7-3, the Court will not consider this Motion. The Court finds that Plaintiffs have engaged in a mere pro forma attempt to comply with Local Rule 7-3, which the Court does not consider to be an earnest effort to bring about the goals of the rule.
Further, assuming arguendo that Plaintiffs complied Local Rule 7-3, Plaintiffs' Motion is rendered moot by this Court's granting of Defendants Unique Motorcars, Inc. and Unique Performance Inc.'s Motion for Summary Judgment, which effectively dismisses all of Plaintiffs' claims against all the Defendants. Because Plaintiffs' claims have been dismissed, the Court need not reach the issue of whether the Shelby Defendants' affirmative defenses are barred as a matter of law.
IV. RULING
For the reasons stated above, the Court hereby GRANTS Defendants' Motion for Summary Judgment or Alternatively for Summary Adjudication.