LEGO A/S V. ZURU INC

NOTE: This disposition is nonprecedential. United States Court of Appeals for the Federal Circuit ______________________ LEGO A/S, LEGO SYSTEMS, INC., LEGO JURIS A/S, Plaintiffs-Appellees v. ZURU INC., Defendant-Appellant ______________________ 2019-2122 ______________________ Appeal from the United States District Court for the District of Connecticut in No. 3:18-cv-02045-AWT, Senior Judge Alvin W. Thompson. ______________________ Decided: January 15, 2020 ______________________ ELIZABETH A. ALQUIST, Day Pitney LLP, Hartford, CT, argued for plaintiffs-appellees. Also represented by JOHN W. CERRETA. JOHN WILLIAM LOMAS, JR., Dentons US LLP, Washing- ton, DC, argued for defendant-appellant. Also represented by TAMI LYN AZORSKY, ROBERT TYLER GOODWYN. ______________________ 2 LEGO A/S v. ZURU INC. Before WALLACH, CLEVENGER, and HUGHES, Circuit Judges. CLEVENGER, Circuit Judge. This is an interlocutory appeal of Appellant, ZURU Inc. (“ZURU”), from an order of the District Court for the Dis- trict of Connecticut granting Appellees LEGO A/S (“LAS”), LEGO Systems, Inc. (“LSI”), and LEGO Juris A/S (“LJAS”) (collectively, “LEGO”) a preliminary injunction directed to ZURU products accused of infringing various LEGO copyrights, trademarks, and design patents. LEGO A/S v. ZURU Inc., No. 3:18-cv-2045(AWT), 2019 WL 4643718 (D. Conn. July 8, 2019). This Court has jurisdiction pursuant to 28 U.S.C. §§ 1292(a), (c) and 1295(a). For the reasons discussed below, we affirm-in-part, vacate-in-part, and re- mand. BACKGROUND I. Facts On December 13, 2018, Appellee, LEGO, filed a Veri- fied Complaint in the District of Connecticut against Ap- pellant, ZURU. LEGO is an industry leader in designing and manufacturing toys and play materials for children of all ages worldwide, including toy building elements, figurines, and toy sets in the construction toy category. ZURU is a corporation formed under the laws of the British Virgin Islands that has offices in Hong Kong and similarly de- signs, manufactures, and markets toys and consumer products. ZURU launched its allegedly infringing products (i.e., the ZURU Action Figures, Max Build More Bricks, and MAYKA Toy Tape) in early October 2018. On Novem- ber 12, 2018, LEGO demanded by letter that ZURU cease and desist from the sale of products that allegedly infringe LEGO’s patents, trademarks, and copyrights. The letter requested compliance by November 26, 2018. When no substantive answer was received, LEGO sent a second LEGO A/S v. ZURU INC. 3 demand letter to ZURU on December 3. On December 5, ZURU provided LEGO with a substantive response stating that it would not cease sale of the Max Build More products and would not comply with LEGO’s demands. Thereafter, LEGO informed ZURU that it would be filing suit and seeking a temporary restraining order (“TRO”). In response, on December 13, ZURU sent another email claiming it would remove the allegedly infringing products from its website and that it would recall products currently with Walmart to moot any need for LEGO to file for a TRO or preliminary injunction. However, because LEGO believed ZURU’s products remained up on the Walmart website for sale, LEGO sought relief from the court. II. Procedural History Contemporaneous with the filing of its Complaint, LEGO moved on December 13, 2018 for a TRO and preliminary injunction in the District of Connecticut restraining ZURU from manufacturing, selling, offering for sale, dis- playing, and importing products that allegedly infringe LEGO’s copyrights, trademarks, and design patents. The District of Connecticut heard the evidence and ar- gument of the parties, and then promptly granted a TRO at a December 14, 2018 hearing. The district court then considered a full round of briefing, considered the parties’ evidence at a two-day preliminary-injunction hearing on February 14–15, 2019, and granted LEGO’s motion for preliminary injunctive relief on July 8, 2019. This is an interlocutory appeal of the district court’s order granting a preliminary injunction. ZURU timely no- ticed this appeal the day after the district court entered its order granting a preliminary injunction. 4 LEGO A/S v. ZURU INC. STANDARD OF REVIEW When reviewing the grant of a preliminary injunction as to alleged trademark or copyright infringement, legal is- sues over which it does not have exclusive subject matter jurisdiction, this Court applies the law of the regional circuit. Nitro Leisure Prods., L.L.C. v. Acushnet Co., 341 F.3d 1356, 1359 (Fed. Cir. 2003); Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 837 (Fed. Cir. 1992). In the Sec- ond Circuit, a party seeking a preliminary injunction must demonstrate four things: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm in the absence of injunctive relief; (3) that the balance of hardships favors the moving party; and (4) that the public interest would be served. Salinger v. Colting, 607 F.3d 68, 79-80 (2d Cir. 2010). The Second Circuit reviews a district court’s decision to grant a preliminary injunction for abuse of discretion. Oneida Nation of New York v. Cuomo, 645 F.3d 154, 164 (2d Cir. 2011); Red Earth LLC v. United States, 657 F.3d 138, 144 (2d Cir. 2011). In the Second Circuit, a district court has necessarily abused its discretion when it has “‘(1) based its ruling on an erroneous view of the law, (2) made a clearly erroneous assessment of the evidence, or (3) rendered a decision that cannot be located within the range of permissible decisions.’” Oneida, 645 F.3d at 164 (quoting Lynch v. City of New York, 589 F.3d 94, 99 (2d Cir. 2009)). “Under abuse of discretion review, the factual findings and legal conclusions underlying the district court’s decision are ‘evaluated under the clearly erroneous and de novo standards, respectively.’” Id. (quoting Garcia v. Yon- kers Sch. Dist., 561 F.3d 97, 103 (2d Cir. 2009)). On the other hand, when reviewing the grant of a preliminary injunction as to alleged patent infringement, this Court applies its own precedents. Revision Military, Inc. v. Balboa Mfg. Co., 700 F.3d 524, 525 (Fed. Cir. 2012) (“[A] preliminary injunction enjoining patent infringement pursuant to 35 U.S.C. § 283 involves substantive matters unique to patent law and, therefore, is governed by the law LEGO A/S v. ZURU INC. 5 of this court.” (quotation and citation omitted)). To obtain a preliminary injunction, a party must establish “that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest.” Luminara Worldwide, LLC v. Liown Elecs. Co., 814 F.3d 1343, 1352 (Fed. Cir. 2016) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). Like the Second Circuit, this Court reviews a district court’s decision granting a motion for preliminary injunction under an abuse of discretion standard. Id. at 1351–52. An abuse of discretion has occurred when “the court made a clear error of judgment in weighing rel- evant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.” Erico Int’l Corp. v. Vutec Corp., 516 F.3d 1350, 1353 (Fed. Cir. 2008) (quoting Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed. Cir. 1996)). DISCUSSION1 I. The ZURU Action Figures The first issue we consider is the district court’s entrance of a preliminary injunction on the MAX Build More 15 MAX Figures set (the “ZURU Action Figures”) for its alleged infringement of registered LEGO copyrights and trademarks. Both parties have acknowledged that should this Court affirm the district court’s entrance of a preliminary injunction as to the ZURU Action Figures for either of LEGO’s copyright or trademark infringement claims, the product remains enjoined. Because we conclude that the 1 For each of the various products covered by the district court’s preliminary injunction, ZURU contests some, but not all, of the factors necessary to secure a preliminary injunction. We address only those factors contested by ZURU on appeal. 6 LEGO A/S v. ZURU INC. district court did not abuse its discretion in entering the preliminary injunction with respect to LEGO’s copyright infringement claim as to the ZURU Action Figures, we do not reach ZURU’s alleged trademark infringement for pur- poses of this appeal. A. Likelihood of Success on the Merits To maintain an action for copyright infringement in the Second Circuit, “a plaintiff must establish ‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.’” Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011) (quoting Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). The district court found, and ZURU does not dispute, that LEGO owns valid copyrights, including Registration Numbers VA0000655230 and VA0000655104 (the “Minifigure Copy- rights”), covering the 3D sculpture of certain figurines (the “Minifigure Figurines”). “To satisfy the second element, plaintiff ‘must also show copying by defendants. Copying may be inferred where a plaintiff [1] establishes that the defendant had access to the copyrighted work and [2] that substantial simi- larities exist as to protectible material in the two works.’” Leary v. Manstan, 118 F. Supp. 3d 460, 465 (D. Conn. 2015) (quoting Walker v. Time Life Films, Inc., 784 F.2d 44, 48 (2d Cir. 1986)). The district court found, and ZURU does not dispute, that ZURU had access to LEGO’s products.

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