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The 2d U.S. Circuit Court of Appeals has upheld a preliminary injunction issued in favor of a Danish maker of troll dolls. Troll Co. v. Uneeda Doll Co., No. 05-6487-cv. The case involves interpretation of Section 104A of the Copyright Act, a provision enacted as part of the Uruguay Round Agreements Act (URAA) in 1994, to restore copyrights to foreign works that had entered the U.S. public domain because copyright owners had failed to provide notice of copyright. Danish company Dam Things Establishment obtained a U.S. copyright for the troll doll in 1965. But the copyright was quickly invalidated because the dolls had been sold in the United States without proper copyright notice. In 1963 or 1964, Dam Things licensed Uneeda Doll Co. Inc. (UDCI), Uneeda’s predecessor, to produce and distribute a line of troll dolls under the name “Wish-niks.” UDCI sold the dolls until 1996. UDCI sold all of its assets, including its copyrights, to Uneeda. Dam Things transferred exclusive rights to license the trolls to Troll Co. When Troll Co. was about to re-launch the troll dolls in 2005, it learned that Uneeda was selling Wish-niks through Wal-Mart. Troll filed suit and the U.S. District Court for the Southern District of New York granted an injunction. Uneeda appealed, arguing that Troll was unlikely to prevail because it could not establish that it owned the restored copyright and that Uneeda was a “reliance” party under Section 104A, which would have entitled it to a one-year grace period to sell off its inventory. The 2d Circuit affirmed. Writing on behalf of the panel, Judge Jon Newman said that Troll would prove ownership. The issue was whether Uneeda could properly be considered a “reliance” party under the URAA. Does the statute, Newman asked, confer reliance-party status to an entity that “continues” to engage in infringing acts after the 1994 passage of the law? After reviewing legislative history, he said, reliance-party status can only be conferred “on persons whose infringement is ongoing and without more than trivial interruption.” “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,” he said. Here, Uneeda cannot claim reliance status under that provision because it renewed making and selling Wish-niks after a nine- or 10-year hiatus, so there was no “continuation of infringement.”

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