Disney entitled to summary judgment based on collateral estoppel

United States of America
To avoid expensive litigation and the potential loss of valuable rights, always use clear and precise language when entering into a contract for the transfer of a trademark. Further, remember that enforcement of trademark rights against another ultimately requires clear ownership of the trademark rights one wants to enforce. 

These basic legal rules were made painfully clear to the plaintiff in the consolidated proceedings before the Trademark Trial and Appeal Board (TTAB) between Stephen Slesinger Inc and Disney Enterprises Inc (Stephen Slesinger Inc v Disney Enterprises Inc (Opposition 91179064 et al, June 8 2011)). The TTAB eventually granted Disney’s motion for summary judgment based on collateral estoppel regarding the ownership of the trademarks derived from Winnie-the-Pooh and other characters (the Pooh works). The TTAB’s jurisdiction in this matter was limited to the registration and maintenance of the various registrations covering the Pooh works. 

Summary judgment is a procedural method of disposing of cases in which there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Because its effect is to end the case, the moving party has the burden of showing the absence of evidence to support the non-moving party’s case and that it is entitled to judgment as a matter of law. The record must be viewed by the court in a light favourable to the party opposing the summary judgment motion and all justifiable inferences are to be drawn in the non-movant's favour. 

Collateral estoppel is an equitable defence raised by a defendant that says that, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is normally conclusive in a subsequent suit between the same parties in the prior litigation. For collateral estoppel to apply, the following four requirements must be met:
  • the issue in the later litigation must be identical to the issue involved in the prior litigation;
  • the issue must have been raised, litigated and actually adjudged in the prior litigation;
  • the determination of this issue must have been necessary and essential to the resulting judgment in the prior litigation; and
  • the party precluded must have been fully represented in the prior litigation. 
Each of these factors were discussed and resolved in Disney’s favour in the TTAB’s clear decision.

This dispute between the parties stemmed from poorly drafted transfer and contractual documents dating from 1930, 1961 and 1983. In 1930 AA Milne (the creator of Winnie the Pooh) transferred to Slesinger “exclusive merchandising and other rights based on the Pooh works in Canada and the United States". In 1961 Slesinger granted exclusively to Disney the rights it had acquired in the Pooh works in the 1930 agreement. In 1983 Milne’s successors, Slesinger and Disney signed an agreement revoking the 1930 and 1961 agreements in an attempt to resolve the parties’ previous disputes (copyright and trademark misuses) and clarify their respective contractual arrangements. The parties have operated under the 1983 agreement and Disney has paid royalties to Slesinger. 

The interpretation of the 1983 agreement was at the crux of the current dispute. Slesinger contended that certain rights in the Pooh works were reserved to it. Disney contended that the 1983 agreement assigned all ownership in the Pooh works to it, subject to the payment of ongoing royalties. After several oppositions and counterclaim cancellations were filed, the parties suspended the consolidated proceedings at the US Patent and Trademark Office when, in 2009, Milne ex rel Coyne sued Slesinger Inc in the US District Court for the Central District of California, and Disney was named counter-defendant in that civil action. 
 
The district court entered an order dated September 2009 granting Disney’s motion for summary judgment on several of Slesinger’s counterclaims and denied Slesinger’s cross-motion for summary judgment. It then entered a final judgment dated October 2009 concluding that Slesinger may not now claim infringement by Disney of any retained rights, and dismissed with prejudice all of Slesinger's counterclaims against Disney on the merits. Disney relied on the district court's ruling to move for summary judgment in the consolidated opposition proceedings.

Slesinger’s attempt to convince the TTAB that the prior district court ruling was not whether certain rights were licensed or assigned to Disney, but limited to its challenged uses of the Pooh works by Disney resulting in likelihood of confusion, was not persuasive. The TTAB reviewed the clear language of the final judgment, the stipulation of the parties that no appeal would be taken from that final judgment, and the underlying facts that the district court had to consider in order to reach its conclusion of law that no factual issue remained - and, specifically, the district court’s finding that, under the agreements and 50 years of operating under them, Slesinger had transferred all of its rights in the Pooh works to Disney. The TTAB agreed that summary judgment based on collateral estoppel was proper and, therefore, dismissed the consolidated oppositions and cancellation proceedings with prejudice.

Brian Edward Banner, H&A Intellectual Property Law PLLC, Alexandria

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