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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`No. C 07-3947 SI
`ORDER DENYING CROSS-MOTIONS
`FOR SUMMARY JUDGMENT
`
`PAUL MONTWILLO,
`Plaintiff,
`
` v.
`WILLIAM TULL; DANIEL GIBBY; and
`GIBBY NOVELTIES LLC dba ARSENIC &
`APPLE PIE,
`
`Defendants.
`_____________________________________/
`WILLIAM TULL,
`Counter-claimant,
`
` v.
`PAUL MONTWILLO,
`Counter-defendant.
` /
`
`On April 25, 2008, the Court heard argument on the parties’ cross-motions for summary
`judgment. For the reasons set forth below, the Court DENIES the motions.
`
`BACKGROUND
`This case arises out of a failed business venture between plaintiff Paul Montwillo and defendant
`William Tull to create and distribute dolls designed by Montwillo. As background, several years prior
`to the business venture, Montwillo made several “drag queen” and “Trailer Trash Barbie” dolls by
`dressing Barbie dolls in wigs, applying make-up, and changing their outfits. In 1996, Montwillo began
`selling his dolls at a store owned by Tull in San Francisco, In-Jean-ious Active. Soon thereafter, Mattel,
`Inc., the producer of Barbie Doll, sued Montwillo and In-Jean-ious Active for trademark and copyright
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`For the Northern District of California
`For the Northern District of California
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`United States District Court
`United States District Court
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`infringement.1 Montwillo and In-Jean-ious Active settled the lawsuit with Mattel, Inc. by agreeing, inter
`alia, to refrain from selling any dolls based on Mattel’s Barbie line; imitating or copying or using the
`Barbie line packaging; imitating or copying the body shape or facial features of “Barbie” and “Ken.”
`See Tull Opposition Decl. Ex. 1 (Stipulated Injunction in Mattel case).
`In July 1997, Tull and Montwillo entered into a partnership to create and distribute dolls that did
`not violate the terms of the Mattel settlement. Greenberg Moving Decl. Ex. 2 (Partnership Agreement).
`The Partnership Agreement, signed July 16, 1997, states that Tull “will be primarily responsible for the
`financial investment of startup costs, and upkeep until the business shows a profit. Mr. Tull is also
`responsible for bookkeeping, sales, and distribution.” Id. With respect to Montwillo, the Partnership
`Agreement provides that he “will be primarily responsible for Art Direction, Design, and Advertising
`of the product line. This would include such things as: corporate identification, product design, package
`design, web site design and maintenance, and print advertising.” Id.
`In the fall of 1998, Tull and Montwillo converted the partnership into a limited liability
`company, and registered it with the State of California as Arsenic & Apple Pie, L.L.C. (“AAP”). At
`some time soon thereafter, the two men, with the assistance of Tull’s attorney, David Wong, entered into
`negotiations over the company’s Operating Agreement. The parties dispute the nature of these
`negotiations. Montwillo claims that during the negotiations he removed from the Operating Agreement
`any language that would transfer his rights to the intellectual property of his dolls to AAP. Montwillo
`Moving Decl. ¶ 4. In contrast, Tull states that “[i]n March of 1999, I received back the signed Operating
`Agreement from Montwillo, with no additional changes, additions or deletions. Specifically Montwillo
`did not ask, nor would I have agreed, to remove, alter or insert any language from or into the Operating
`Agreement that would have given Montwillo the intellectual property rights to the Trailer Trash doll
`line. It was the clear understanding of both of us that any intellectual property rights to the dolls that
`may have existed would be the property of Arsenic & Apple Pie, LLC.” Tull Opposition Decl. ¶ 7.
`Section 2.7 of the Operating Agreement states,
`The Managing Members shall be as follows:
`
`1 Montwillo states that for privacy reasons he used the name Paul Hansen, and that is the name
`by which he was sued.
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`Paul Montwillo – Manager in charge of Art Direction, Design and Advertising of
`product line, including but not limited to, corporate identification, product design,
`packaging, web site design, web site maintenance and print advertising.
`William Tull – Manager in charge of Administration, business affairs, accounting,
`distribution, sales and manufacturing.
`Greenberg Moving Decl. Ex. A to Ex. 10 at 8.
`During the years of the Arsenic and Apple Pie Partnership and later during the Arsenic and
`Apple Pie LLC,2 Montwillo designed, developed and helped market the first three Trailer Trash Doll
`models: “Trailer Trash Doll,” “Blonde Drag Queen,” and “Redhead Drag Queen.”3 Montwillo also
`developed a pre-production prototype of the “Talking Pregnant Trailer Trash Doll.” It is undisputed that
`all dolls were manufactured, developed, financed and distributed by Arsenic. Montwillo Depo. 70:18-
`71:7; Tull Moving Decl. ¶ 10. It is also undisputed that Montwillo was actively involved in the design
`and artwork of the cardboard package in which each doll was sold; on the back of each box, there was
`a copyright notice on behalf of Arsenic & Apple Pie. Montwillo Depo. 41:17-21; 67:9-68:6; 70:11-17;
`Greenberg Moving Decl. Ex. 3.
`AAP was not profitable; from its inception in 1999 until its dissolution in 2004, AAP lost money
`every year except in 2000, when it showed a profit of $6,140. Tull Opposition Decl. ¶ 14 (stating yearly
`net losses for AAP ranged from $2,096 to $31,662).
`Tull states that on or about March 10, 2003, he learned that Montwillo had filed a Voluntary
`Petition in bankruptcy court in March of 2002. Montwillo Moving Decl. Ex. C; Greenberg Moving
`Decl. Ex. 4 (petition); Tull Opposition Decl. ¶¶ 12-13. Schedule B of Montwillo’s Petition listed his
`membership interest in AAP as the most significant asset that he owned. Greenberg Moving Decl. Ex.
`
`2 In an effort to buttress his copyright claims, Montwillo asserts that he began creating the
`Trailer Trash dolls prior to signing the LLC agreement in 1999, and as support has submitted
`correspondence and other documents, such as invoices, dating as early as August 1997. However,
`Montwillo and Tull entered into the AAP Partnership Agreement in July 1997, so Montwillo’s
`contention is unavailing.
`
`3 These three dolls, along with “Talking Pregnant Trailer Trash Doll,” and “Male Mullet Trailer
`Trash Doll,” are the five dolls at issue in this lawsuit.
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`the bankruptcy of a Member;
`
`4.4 However, Montwillo stated on the Petition that he did not own any “patents, copyrights, and other
`intellectual property.” Id.
`In response to learning about Montwillo’s bankruptcy Petition, Tull invoked Section 8.3 of the
`Operating Agreement, which provides:
`8.3 On the happening of any of the following events (Triggering Events) with respect to
`a Member, the Company and the other Members shall have the option to purchase all or
`any portion of the Membership Interest in the Company of such member (Selling
`Member) at the price and on the terms provided in Section 8.7 of this Agreement:
`. . .
`(b)
`. . .
`Each Member agrees to promptly give Notice of a Triggering Event to all other Members.
`Greenberg Moving Decl. Ex. A to Ex. 10 at 24.
`By letter dated April 7, 2003, Tull’s attorney informed Montwillo that due to Montwillo’s
`bankruptcy filing, Montwillo’s membership interest in AAP was subject to repurchase, and that Tull had
`determined that Montwillo’s membership interest had a fair market value of $1. Montwillo Moving
`Decl. Ex. C. In a letter dated May 2, 2003, Montwillo rejected Tull’s $1 offer, stated that he had
`repeatedly informed Tull of his intention to file for bankruptcy and that he had promptly notified Tull
`of the bankruptcy petition. Montwillo Moving Decl. Ex. D; see also id. ¶ 15 (stating that Tull never told
`him that he intended to dissolve company upon Montwillo’s bankruptcy filing). Montwillo also stated
`that he believed that the fair market value of his interest in the company was $16,000, and that the two
`men had previously discussed and agreed on that amount. Id.
`Montwillo and Tull then engaged in negotiations over the value of Montwillo’s share, and
`exchanged drafts of an “Agreement For Purchase of Membership Interest and Doll Proprietary Rights.”
`Id. Ex. E. The draft agreement, which appears to have been drafted by Tull’s attorney, states, inter alia,
`Included within the terms of the sale of Membership Interest contemplated by the
`Agreement and subject to the terms and conditions of the same, are any intellectual
`rights, claims, property interests, proprietary claims or other intellectual property rights
`to two doll concepts which Seller [Montwillo] has previously conceived and developed,
`
`4 On Schedule B, “Personal Property,” Montwillo listed his interest in Arsenic & Apple Pie
`LLC, valued at $6000.00. Greenberg Moving Decl. Ex. 4.
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`identified for the purposes of the agreement as the:
`(1) “Pregnant” doll
`(2) “Mullet” doll
`
`. . .
`Buyer shall receive Seller’s entire 50% managing membership Interest in Arsenic &
`Apple Pie, LLC. The sale and purchase of said membership interest shall include,
`without limitation, all property rights, assets, inventory, profits, bonuses, commissions,
`salaries or other forms of distribution or compensation associated with said membership
`interest, as well as all claims and rights under leases, contracts copyrights, service marks,
`trademarks, trade names, trade secrets, and licenses held or asserted by the
`aforementioned company.
`Buyer shall also receive physical possession of and all property and intellectual property
`rights to the “Pregnant” and “Mullet” dolls developed by Seller.
`. . .
`SELLER HEREBY WARRANTS TO BUYER WITH RESPECT TO THE
`MEMBERSHIP INTEREST AND DOLL PROPRIETARY RIGHTS THAT GOOD
`AND VALID TITLE EXISTS AND IS HEREBY TRANSFERRED TO BUYER AND
`BUYER ALONE. . . .
`Id. Ex. C.
`Montwillo and Tull never signed the agreement, and in June 2004, Tull initiated the dissolution
`and windup of AAP. AAP was formally dissolved on July 12, 2004. Tull Opposition Decl. ¶ 13.
`According to Tull, at the time of the dissolution, AAP’s tangible assets consisted primarily of unsold
`doll inventory with a book value of $35,763. Id. ¶ 14. AAP had outstanding liabilities of $88,283,
`primarily consisting of unpaid loans owed to Tull. Id. As provided by the terms of the Operating
`Agreement, AAP liquidated its assets and offered them for sale to the highest bidder. Id. There were
`no bids or offers, and the debts of AAP were paid in order of priority, with third party vendors paid first.
`Id. After satisfaction of AAP’s third party debts, there was still an additional $70,000 in unpaid loans.
`Tull states that he “elected to receive the remaining doll inventory and the intellectual property rights
`to all five doll designs and concepts in satisfaction of my loans to Arsenic.” Id. Tull also states that
`“[w]ith no assets remaining, neither Montwillo nor I received anything in consideration of our member
`interests in Arsenic upon dissolution.” Id.
`On July 15, 2004, Tull sold defendant Daniel Gibby (Tull’s domestic partner) the left-over
`“Trailer Trash” doll inventory and the intellectual property rights to the dolls and designs. Id. ¶ 15.
`
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`According to Tull,
`I believe Gibby then transferred the dolls and the intellectual rights to the dolls to
`[defendant] Gibby Novelties, LLC, a company he had just formed. Gibby Novelties,
`LLC has since sold off the existing trailer trash doll inventory, barely breaking even. It
`also further developed and produced two new talking dolls, roughly based on the two
`abandoned doll concepts acquired from Arsenic, vis-a-vis Tull and Gibby, but with vast
`differences so as to be entirely distinct and distinguishable.
`Id. ¶ 15.
`In July of 2004, unbeknownst to Tull, Montwillo filed copyright registrations with the Copyright
`Office for the five Trailer trash dolls and concepts. On July 2, 2004, Montwillo filed registrations for
`the two undeveloped doll concepts, “Talking Pregnant Trailer Trash Doll” and “Male Mullet Trailer
`Trash Doll.” Greenberg Moving Decl. Ex. 5 & 6. On July 13, 2004, Montwillo submitted registrations
`for “Trailer Trash Doll,” “Redhead Drag Queen,” and “Blonde Drag Queen.” Id. Ex. 7-9.
`On July 13, 2004, Montwillo also sent a letter by certified mail to Tull’s attorney, stating that
`Montwillo did not agree to the dissolution of AAP, and stating that he owned the copyrights to the five
`doll designs. Id. Ex. 10. Montwillo’s letter offered to give exclusive license to the five designs for
`$10,000 each. Id. Montwillo testified in his deposition that his July 13, 2004 letter was intended to send
`notice to AAP that AAP was violating his copyrights. Montwillo Depo. 107:18-25.
`Montwillo filed suit against Tull, Gibby, and Gibby Novelties LLC on August 1, 2007, alleging
`a claim of copyright infringement. Tull counterclaimed for conversion, breach of contract, and breach
`of covenant of good faith and fair dealing.
`
`LEGAL STANDARD
`Summary adjudication is proper when “the pleadings, depositions, answers to interrogatories,
`and admissions on file, together with 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).
`
`In a motion for summary judgment, “[if] the moving party for summary judgment meets its
`initial burden of identifying for the court those portions of the materials on file that it believes
`demonstrate the absence of any genuine issues of material fact, the burden of production then shifts so
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`that the non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, specific facts
`showing that there is a genuine issue for trial.” See T.W. Elec. Service, Inc., v. Pac. Elec. Contractors
`Ass’n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986). In
`judging evidence at the summary judgment stage, the Court does not make credibility determinations
`or weigh conflicting evidence, and draws all inferences in the light most favorable to the non-moving
`party. See T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
`Corp., 475 U.S. 574 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). The evidence
`presented by the parties must be admissible. Fed. R. Civ. P. 56(e). Conclusory, speculative testimony
`in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary
`judgment. Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
`
`DISCUSSION
`
`I.
`
`Timeliness
`Defendants contend that plaintiff’s copyright infringement claim is barred by the three-year
`statute of limitations. 17 U.S.C. § 507(b) provides that no civil action for copyright infringement shall
`be maintained unless it is commenced within three years after the claim accrued. Plaintiff filed this
`lawsuit on August 1, 2007. Defendants cite Montwillo’s deposition testimony in which he stated that
`he believed his July 13, 2004 letter was providing notice to AAP and Tull (through Tull’s lawyer) that
`“they” were infringing his copyrights. Plaintiff responds that his July 13, 2004 letter was only providing
`notice to AAP, not to Tull, Gibby or Gibby Novelties. Further, plaintiff states that AAP’s assets were
`sold to Gibby, and then Gibby Novelties, after he wrote his July 13, 2004 letter, and that he did not learn
`about the sale/transfer until September 2004 when he hired an attorney to represent him and investigate
`the matter.
`Defendants have not submitted any evidence showing that plaintiff knew about the dissolution
`of AAP and the sale and transfer of the doll inventory prior to August 1, 2004. Based upon this record,
`the Court finds that plaintiff’s copyright infringement claim is not time-barred.
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`II. Work for hire
`The Copyright Act of 1976 defines a “work for hire” to mean “a work prepared by an employee
`within the scope of his or her employment” or, for certain types of works, “a work specially ordered or
`commissioned.” 17 U.S.C. § 101 (emphasis added). Defendants contend that the five dolls and doll
`designs are “works for hire” owned by AAP. Plaintiff contends that the doctrine is inapplicable because
`he was not an “employee” of AAP. As support, plaintiff cites defendant’s response to a Request for
`Admission admitting that “Paul Montwillo was never an employee of Arsenic & Apple Pie, LLC.”
`Sommers Moving Decl. Ex. G & H.
`Defendants primarily rely on The Martha Graham School & Dance Foundation v. Martha
`Graham Center of Contemporary Dance, 224 F. Supp. 2d 567 (S.D.N.Y. 2002). In that case, the court
`held that the Martha Graham Center of Contemporary Dance owned the copyrights to numerous dances
`choreographed by Martha Graham under the “work for hire” doctrine. However, as plaintiff correctly
`notes, the Martha Graham court found that Martha Graham was an “employee” of the Center, and noted
`that she was a salaried employee of the Center and received employment benefits. Id. at 589.
`Here, it is undisputed that plaintiff was not an “employee” of AAP. Defendants have not cited
`any cases applying the “work for hire” doctrine to a non-employee, and the Court is not aware of any
`such authority. In the absence of any such authority, and because the statute defines a “work for hire”
`as “a work prepared by an employee . . .”, the Court finds that the “work for hire” doctrine is
`inapplicable.
`
`III. Do the designs warrant copyright protection?
`Defendants also contends that plaintiff’s dolls and doll designs are not sufficiently original to
`warrant copyright protection. Section 102(a) of the Copyright Act of 1976 provides that copyright
`protection extends to “original works of authorship.” In Feist Publications, Inc. v. Rural Telephone
`Service Company, 499 U.S. 340 (1991), the Supreme Court explained that “the requisite level of
`creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade
`quite easily, as they possess some creative spark, ‘no matter how crude, humble or obvious’ it might
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`be.” Id. at 345 (quoting (quoting 1 M. Nimmer & D. Nimmer, Copyright § 1.08[C][1] (1990)).
`Defendants bear the burden of proving the invalidity of plaintiff’s copyrights. Ets-Hokin v. Skyy Spirits,
`Inc., 225 F.3d 1068, 1076 (9th Cir. 2000)
`Defendants invoke the doctrine of “scènes à faire,” and contend that because plaintiff used
`stereotypical, genre elements of “trailer trash” and “drag queens,” the dolls lack originality. “Under the
`. . . doctrine of scènes à faire, courts will not protect a copyrighted work from infringement if the
`expression embodied in the work necessarily flows from a commonplace idea.” Id. at 1092; see also
`id. at 1092 n.17 (“Nimmer explains:[F]or example, if two scenarios wish to treat the unprotected idea
`of police life in the south Bronx, for each it will be only natural to depict [certain stereotypical, stock
`scenes].”).
`The Court finds that plaintiff’s dolls and doll designs are sufficiently original to warrant
`copyright protection. As the Ninth Circuit has repeatedly stated, “the requisite level of creativity is
`extremely low.” CDN Inc. v. Kapes, 197 F.3d 1256, 1260 (9th Cir. 1999) (holding retail price list
`copyrightable); see also Urantia Foundation v. Maaherra, 114 F.3d 955, 959 (9th Cir. 1997) (holding
`that the arrangement of divine revelations met the level of creativity required for copyright); Los
`Angeles News Serv. v. Tullo, 973 F.2d 791 (9th Cir. 1992) (holding that raw news videotape is original
`and copyrightable). Here, plaintiff made creative decisions about the dolls’ hairstyles, clothing, make-
`up, accessories, facial features, and so forth. Plaintiff’s dolls and doll designs contain more than a
`minimum amount of creativity and originality.
`
`IV.
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`Ownership of copyright/implied license
`Defendants argue that the facts show that the parties intended for AAP to own the dolls and doll
`designs, and that to the extent plaintiff ever owned any intellectual property rights he implicitly assigned
`them and/or waived his rights in various ways.5 Defendants argue that plaintiff voluntarily agreed to
`contribute any doll designs he may have had in exchange for a share in the partnership, and later the
`
`5 Defendants also contend that plaintiff transferred his copyright ownership to the partnership,
`and later the LLC, through Paragraph 3 of the written partnership agreement. The Court finds this
`contention lacks merit, as Paragraph 3 of the agreement only states the job responsibilities of Montwillo
`and Tull, and does not address in any way the ownership or transfer of any copyrights.
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`LLC. Defendants emphasize the fact that plaintiff designed the doll packages which identified AAP as
`the copyright owner, and also that plaintiff denied owning any copyrights in his 2002 bankruptcy
`petition.
`The Court finds that there are issues of fact regarding whether plaintiff granted an implied
`nonexclusive license. As an initial matter, the Court finds that defendants have sufficiently raised the
`defense of an implied license in the answer by pleading that plaintiff transferred his rights (to the extent
`he owned the copyrights) to the partnership and LLC, and that plaintiff, by his conduct, waived his
`rights he may have against defendants. Nonexclusive licenses may be implied from conduct. See Oddo
`v. Ries, 743 F.2d 630, 634 (9th Cir. 1984). “When the totality of the parties’ conduct indicates an intent
`to grant such permission, the result is a nonexclusive license.” 3 Nimmer § 10.03[A][7; see also
`Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505, 516 (4th Cir. 2002) (discussing factors
`to consider in determining existence of an implied license). The Court finds that there are numerous
`issues of fact regarding the parties’ conduct and whether plaintiff intended to grant a nonexclusive
`license to the partnership, and to Tull. Accordingly, the Court finds that summary judgment on this
`issue is inappropriate.
`
`CONCLUSION
`For the foregoing reasons, the Court hereby DENIES the parties’ cross-motions for summary
`judgment. (Docket Nos. 31 & 36).
`
`IT IS SO ORDERED.
`
`Dated: June 2, 2008
`
`
`SUSAN ILLSTON
`United States District Judge
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