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In one of the first appellate decisions to interpret a new law that allows for the restoration of copyright protection for a vast number of foreign works, the 3rd U.S. Circuit Court of Appeals Tuesday lifted an injunction that barred an American company from selling “troll” dolls that allegedly infringe a Danish company’s 1961 copyright. In Dam Things from Denmark v. Russ Berrie & Co. Inc., a unanimous three-judge panel found that the trial judge erred by failing to consider whether the American company’s dolls were “derivative” works that are entitled to a “safe harbor” provision in the new law. Under the safe harbor, the maker of a derivative work is not treated like an infringer but instead is granted a mandatory license. The appellate court also found that U.S. District Judge Nicholas H. Politan of the District of New Jersey erred by making only a cursory comparison of the dolls instead of a more detailed, side-by-side comparison. “Perhaps in the abstract one can believe that ‘a troll is a troll,’ but it is clear that all trolls cannot simply be judged alike, particularly when the inquiry must focus on distinct aspects of each,” U.S. Circuit Judge Marjorie O. Rendell wrote. Rendell, who was joined by Chief U.S. Circuit Judge Edward R. Becker and U.S. Circuit Judge Samuel A. Alito, faulted Politan for his “blanket treatment” when comparing the two companies’ dolls. “As we saw firsthand, these trolls come in all shapes and sizes — small pencil-toppers, and nine-inch ‘giants,’ as well as grandparents, teen-agers, and babies. … It is certainly possible that some of the Russ trolls could be considered to be derivative works while others would not. This exacting comparison needs to be made,” Rendell wrote. Trolls — short, pudgy, plastic dolls with big grins and wild hair — appeared in the 1950s when Thomas Dam, a Danish woodcarver, created a troll figure for his daughter out of rubber. Dam called the first doll the “Good Luck Troll,” telling his daughter that it had the power to bring good luck to whoever possessed it. When Dam saw that his daughter’s toy was attracting attention in the neighborhood, he decided to go into business, first out of his home and later from a factory. By the late 1950s, the dolls were wildly popular, and Dam was selling more than 10,000 per month in Denmark alone. In 1961, Dam was awarded a design patent in the United States for the troll doll design. Soon after, Russ Berrie & Co. began selling trolls manufactured by Dam Things’ U.S. licensee, Royalty Design, using the Dam Things molds. When Royalty Design went bankrupt, Russ Berrie then used the Dam Things molds to manufacture trolls. But in 1965, a federal judge ruled that the Dam Things trolls submitted for patent and copyright protection were in the public domain because they were published in the United States with improper notice: They were marked with “Denmark” and the date or with just the date instead of with the company’s name and date — or with no notice at all. That ruling freed Russ Berrie to expand its troll manufacturing business. By the late 1980s, Russ Berrie claims it had modified the designs and was selling a line of troll products manufactured in China. In the 1990s, Russ Berrie obtained 15 of its own copyrights for designs derived from the original Dam Things troll. But in 2001, Dam Things filed suit, claiming that its copyright had been restored and that Russ Berrie was infringing. In passing � 104A of the Copyright Act, Congress declared that a wide range of foreign works previously in the public domain in this country, perhaps for many years, were once again afforded copyright protection. The new law was part of the Uruguay Round Agreements Act and was designed to bring the United States into compliance with the Berne Convention. Dam Things claimed that its copyright was entitled to automatic restoration under the new law. Russ Berrie argued that such a ruling would give Dam Things an “extraordinary windfall” and impose a huge burden on Russ Berrie. Rendell didn’t dispute the argument but found that the law was nonetheless valid because “the legislature’s purpose in providing these protections for foreign copyright holders was to ensure greater protection for American copyright holders abroad.” But Rendell also found that Russ Berrie might be entitled to some protection since � 104A provides relief for “reliance parties” — American authors who copied the restored works while they were in the public domain in the United States. Under the law, parties who were copying a restored work are given one year to sell the now-infringing works after being given a “notice of intent to enforce” by the author of the restored work. The statute also provides a safe harbor in the form of a mandatory license for authors of “derivative works.” They are allowed to continue manufacturing and selling their work, but they must pay the author of the restored work reasonable compensation. After an injunction hearing, Politan found that Dam Things is likely to win on its claim for restoration. Politan then found that Russ Berrie’s dolls infringed the restored patent and ordered that it cease selling them after Feb. 13, 2002. “This court is convinced that all of the dolls in this case involve one basic troll design; Thomas Dam created this design in 1957 and 1958 in Gjol, Denmark. His company owns the rights to it, and it is entitled to copyright protection for the original design,” Politan wrote. Now the 3rd Circuit has ruled that Politan was correct in holding that the copyright is likely to be restored but that his analysis on the infringement issues was flawed and incomplete. “We believe that the district court’s analysis was too conclusory, given the complex issues of infringement and originality before it, and particularly in light of the unique challenges presented by Section 104A,” Rendell wrote. “We are specifically concerned with the district court’s incomplete consideration of [Russ Berrie's] contention that its trolls would qualify as derivative works.” Rendell found that it was unclear from the lower court record whether Politan had ever addressed the derivative works issue. Instead, she said, it appeared that Politan conflated the derivative works test with the test for infringement. While the former calls for a determination of originality, the latter focuses on findings of similarity. Lawyers for Dam Things argued that Politan clearly did consider the issue of originality since his opinion stated that Russ Berrie’s designs “contain only trivial variations from Dam’s original troll,” according to court records. Rendell disagreed, saying that Politan’s use of the phrase “trivial variations” was not “magic language” that proved he had applied the derivative works test. Instead, she said, the very next paragraph in Politan’s opinion showed that he was intertwining the tests for infringement and derivative works. “The [lower] court seems to have completely intertwined the two tests to a point where it is impossible to determine where one analysis begins and the other ends, if in fact there are two analyses,” Rendell wrote. “Although the court used the ‘trivial variations’ language that is used to distinguish works as derivative, it never once employed the word ‘derivative’ or noted that a second test needs to be applied.” Rendell found that Politan’s analysis was also deficient because he conducted only a generalized comparison of the Dam Things trolls and the Russ trolls. “In order to determine whether one work is a derivative of another, the trial judge must actually compare the exact works at issue. In this case, Dam Things presented its trolls to the district court on one occasion and Russ presented its trolls on a separate occasion. The trolls themselves were never placed into evidence,” Rendell wrote. As a result, Rendell said, Politan never had the opportunity to compare the physical trolls of both Russ and Dam Things side by side. On remand, Rendell said, Politan must look at the allegedly infringing trolls and “individually compare each one” to the Dam Things copyrighted doll to determine the derivative work issue. Dam Things was represented by Robert L. Sherman of Paul Hastings Janofsky & Walker in New York. Russ Berrie was represented by Trent S. Dickey and James M. Hirschhorn of Sills Cummis Radin Tischman Epstein & Gross in Newark, N.J.

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