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Warner Bros. Wins $2.57 Million Ruling Over 'Wizard of Oz' Merchandise

The defendants attempted to avoid this outcome by arguing that the materials used were in the public domain.

Wizard of Oz Film Still
"The Wizard of Oz"

Exactly eight years after suing over merchandise associated with The Wizard of Oz, Gone With the Wind and several Tom and Jerry short films, Warner Bros. has been handed a $2.57 million victory by a Missouri federal judge.

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Dave Grossman Creations, X One X Productions and Leo Valencia were sued in 2006 on claims of infringing the studio's copyrights, trademarks and publicity rights through the licensing of nostalgia merchandise drawn from publicity materials from the films. The defendants had restored and used movie posters, lobby cards and still photographs that were originally distributed without the requisite copyright notice. Images of famous characters from the films, including Dorothy and Scarlett O'Hara, were then extracted from these publicity materials and licensed for use on items such as shirts, lunch boxes and playing cards.

Although the dispute has been pending for quite some time, it turned heads in 2011 with an opinion from the 8th Circuit Court of Appeals after the district judge had issued a permanent injunction.

One of the central questions in the battle was the issue of what was in the public domain. As most know, Wizard of Oz originated from L. Frank Baum's 1900 children's novel, The Wonderful Wizard of Oz. But it was the distribution of publicity materials without copyright notices that led to a debate over whether the nostalgia merchandise business was built upon materials in the public domain. Warner Bros. asserted that the defendants had modified the extracted materials by doing things like adding a character's signature phrase.

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Then the 8th Circuit weighed in:

"We agree with the district court's conclusion that Dorothy, Tin Man, Cowardly Lion, and Scarecrow from The Wizard of Oz, Scarlett O'Hara and Rhett Butler from Gone With the Wind, and Tom and Jerry each exhibit 'consistent, widely identifiable traits' in the films that are sufficiently distinctive to merit character protection under the respective film copyrights … Put more simply, there is no evidence that one would be able to visualize the distinctive details of, for example, Clark Gable's performance before watching the movie Gone With the Wind, even if one had read the book beforehand. At the very least, the scope of the film copyrights covers all visual depictions of the film characters at issue, except for any aspects of the characters that were injected into the public domain by the publicity materials."

In other words, Warner Bros. got a huge win by getting an appeals court to suggest that public domain work can be potentially resurrected for copyright protection so long as the visual depiction of characters adds distinctiveness to what has come before. The ruling held implications for others doing Oz films as those producers could rely on Baum's original work but have to be super careful about not tripping on the 1939 film.

As for the merchandise at issue, after the 8th Circuit affirmed for the most part the lower court's ruling, the dispute was remanded down for further adjudication, where it spent another few years until U.S. District Judge Henry Autrey this week tallied the damages to be awarded.

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The defendants argued that they earned a total of about $70,000 as a result of the use of the images in question, but there was some battle over whether accurate records were produced.

And so, the judge decided to go with statutory damages for copyright infringement, awarding $10,000 per infringement. That's on the lower end of the statutory damages scale. The judge notes that the 8th Circuit opinion lent some support to the defendants' position that the infringements weren't willful. Still, noting that the movie posters weren't simply copied and reproduced, but rather used for licenses "in ways which were not in the public domain," Judge Autrey feels a $10,000-per-infringement penalty is reasonable. Since plaintiffs submitted proof of 257 registered copyrights (almost all being Tom and Jerry cartoons), it adds up to a total award of $2.57 million.

The money headed Warners' way is likely to rise.

That's because in the judge's opinion (read here), he grants summary judgment to the plaintiff with respect to its trademark and unfair competition claims. In yet another example of why the public domain might not be quite the salvation from intellectual property claims that many perceive it to be, Judge Autrey writes:

"Although Defendants attempt to avoid the finding of a valid trademark by arguing that hundreds of third parties use different images of each of the characters from the films or the cartoons, Defendants cannot overcome the reality that a valid trademark in the images in the films and cartoons as such exists. Plaintiffs' trademarks are solely in the images from the films and cartoons, not from other sources, such as the books which created the fictional characters."

E-mail: Eriq.Gardner@THR.com
Twitter: @eriqgardner