This Costume is Bananas: Third Circuit Judge Thomas Hardiman wrestles with validity of copyright for full-body banana costumes. 

An interlocutory appeal in copyright infringement litigation between Kangaroo Manufacturing and Rasta Imposta raises a question of first impression – whether a banana costume’s “costume’s non-utilitarian, sculptural features” are copyrightable. 

Kangaroo Manufacturing sells a banana costume that it concedes is “substantially similar” to the banana costume sold by Rasta Imposta, but “contends the banana is unoriginal because its designers based the design on a natural banana,” arguing that “depictions of natural objects in their natural condition can never be copyrighted.”

The Third Circuit panel agreed that “if copyrighting a design feature would effectively monopolize an underlying idea” then the so-called merger doctrine “exists to deny that protection,” and noted that merger “is most applicable where the idea and the expression are of items found in nature, or are found commonly in everyday life.”

However, the panel concluded that Rasta’s banana costume would not effectively monopolize the underlying idea “because there are many other ways to make a costume resemble a banana.”

Here too, copyrighting the banana costume’s non- utilitarian features in combination would not threaten such monopolization. Kangaroo points to no specific feature that necessarily results from the costume’s subject matter (a banana). Although a banana costume is likely to be yellow, it could be any shade of yellow—or green or brown for that matter. Although a banana costume is likely to be curved, it need not be—let alone in any particular manner. And although a banana costume is likely to have ends that resemble a natural banana’s, those tips need not look like Rasta’s black tips (in color, shape, or size).

Interesting side note: line-drawing in this space is fraught with peril!  Also recently in the news:  It looks like a duck…but not enough like the other duck. 

And finally, note that intellectual property litigation is not just banana costumes and inflatable ducks.  Even in such seemingly frivolous context, the line-drawing is a challenging task.  Hence, NJCJI’s continued opposition to the “patent troll” legislation, which would add state Consumer Fraud Act remedies to the mix.

Prime beach reading has been posted on SSRN. 

The potential for self-dealing for attorneys representing plaintiff classes is a persistent problem.  NJCJI has repeatedly pointed out that the class action model is a deeply flawed mechanism for delivering relief to class members, with attorneys more often creating the illusion of relief for class members while delivering significant fees to themselves.

The problem is especially pronounced in securities class action litigation, where the litigation effectively works to return shareholders’ own dollars back to themselves, minus the attorney fees and other transaction costs.  Attorneys have much stronger incentive to generate fees than does representative plaintiff to monitor fees, though the Rules of Civil Procedure attempt to address this flawed incentive structure by charging judge to monitor and approve fees. 

This recent study examines to what extent attorneys have nevertheless been able to game the judicial scrutiny to secure significant fees without regard to incremental value brought to the litigation.  Sadly, the authors conclude that:

plaintiffs’ attorneys are receiving windfall fee awards in mega-settlement cases at shareholders’ expense. Although there typically is strong evidence of corporate wrongdoing in cases leading to the mega-settlements, this evidence often comes to light prior to the involvement of plaintiffs’ attorneys through restatements, SEC and other government investigations, and/or the termination of top officers. … Knowing that a large settlement is likely, plaintiffs’ attorneys may anticipate a need to justify a large fee award—leading them to “make work.”

Dovetailing with current trends at the state level, Senate Democrats have recently introduced legislation that would reform arbitration. The bill, dubbed the “FAIR” Act, pushed primarily by Senator Richard Blumenthal of Connecticut, would seek to eliminate arbitration clauses in employment and consumer cases.

On April 2^nd, the Senate Judiciary Committee, still controlled by Senate Republicans, held testimony from a wide-ranging panel of attorneys expressing divergent views on America’s current arbitration system with a focus on the costs and benefits it presents to businesses and consumers. Some panelists argued that arbitration in employment and consumer contracts is utilized primarily by companies and employers to avoid costly and time-consuming litigation. While Alan Kaplinsky and Victor Schwartz had the opportunity to explain to the committee how arbitration clauses in such contracts helps to contain legal costs for all parties.

Victor Schwartz, who co-chairs the public policy group for Shook, Hardy & Bacon, presented arbitration as an efficient means of resolving disputes. In his testimony, Schwartz explained that a voluntary contract is unfair by reason of it including a “take it or leave it” provision ignores the simple fact that potential employees and consumers can just “leave it”. In addition, the forum setting of arbitration proceedings affords individuals a degree of privacy often not granted by the courts who may otherwise wish to avoid the potential harm a public hearing would have on themselves or their loved ones. After all, confidentiality is not a benefit that only companies can derive a benefit from.

Addressing the myth that the high “win” rate of businesses at arbitration proceedings shows that they are biased against claimants, Mr. Schwartz explained that parties often settle cases for reasons independent of the claim’s actual merits, such as nuisance value, before even reaching the formal arbitration proceedings. And as a result, cases that reach formal arbitration are often relatively low-merit claims. Legislation such as the misleadingly named “FAIR” Act would actually shift increased litigation costs onto all consumers and employees and deprive everyone of a swift method of resolving contractual disputes.

Contributed by:  Anthony Zelich – NJCJI Law Clerk

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