Ruling – Harry Potter
2nd US Circuit Court of Appeals, No. 02-9405
Scholastic, Inc., J.K. Rowling and Time Warner Entertainment Company, L.P.
A federal appeals court has upheld a rare $50,000 judicial sanction against a woman who claimed that the Harry Potter books copied her work. In addition, the appeals court upheld the dismissal of her claims and affirmed the trial court order that she pay her opponents’ attorneys fees.
US District Judge Allen G. Schwartz of the Southern District of New York had found that there was “clear evidence” that Nancy Stouffer had committed fraud in presenting her evidence of copyright infringement.
Stouffer had based her claims on some booklets that her company had produced in the 1980s. It was undisputed that Stouffer’s company never sold any of these booklets, although some were sold in 2001 by a Maryland publishing company. One booklet called “Rah” told the story of the Muggles, tiny hairless creatures with elongated heads and plump bellies. The word “muggles” is used in the Harry Potter stories to denote the ordinary human beings who do not have magical powers.
Stouffer also claimed to have created a coloring book version of a third booklet called “Larry Potter and His Best Friend Lily.” It is a story about the sadness a young boy feels when he is forced to wear glasses for the first time. The famous Harry Potter is also a young boy who wears glasses.
In September 1999, Stouffer wrote to Scholastic, Inc., publisher of the Harry Potter books, to complain that the books violated her trademark rights in the term “muggles.” The letter did not mention any infringement based on her Larry Potter character. When Scholastic could not resolve Stouffer’s claims, they brought a declaratory judgment action. Stouffer counterclaimed for trademark infringement, dilution and copyright infringement. Scholastic filed a motion for summary judgment and the trial judge granted the motion, dismissing Stouffer’s claims.
The appeals court agreed that Stouffer’s claims were properly dismissed because “no reasonable juror could find a likelihood of confusion as to the source of the two parties’ works.” The appeals court explained, “Stouffer’s and Plaintiffs’ marks are used in two very different ways. Rowling’s use of the term ‘Muggles’ describes ordinary humans with no magical powers while Stouffer’s ‘Muggles’ are tiny, hairless creatures with elongated heads. Further, the Harry Potter books are novel-length works and whose primary customers are older children and adults whereas Stouffer’s booklets appeal to young children. Accordingly, the District Court correctly dismissed Stouffer’s trademark claims.”
The appeals court also found dismissal of the copyright claims proper “because no reasonable juror could find a substantial similarity between Stouffer’s illustration of Larry Potter and Plaintiffs’ illustration of Harry Potter. …[A]side from the fact that both illustrations depict a boy wearing glasses, there is no similarity between the two works.”
Finally, the appeals court affirmed the sanctions against Stouffer. The trial judge had imposed a $50,000 sanction after finding that seven exhibits presented by Stouffer were altered. The evidence also showed that Stouffer presented some false invoices for sales of her booklets. Both the sales person listed on the invoices and the customer listed testified that they were fraudulent.
Even the Larry Potter book presented by Stouffer as having been created in the 1980s was apparently altered. The book had no title page and it referred to the main character throughout the book as “Larry.” The one reference to “Larry Potter” was printed in a typeface that was not available until 1993.
Stouffer admitted that the evidence had been altered, but she explained that it had been altered as part of continuing work on the project. She said that she had not realized that the alterations had been done and did not know when they were done, but that they certainly had not been done in anticipation of this litigation.
The trial judge found it very suspicious that all the alterations were regarding matters important to bolster Stouffer’s claims. He concluded “that Stouffer has perpetrated a fraud on the Court through her submission of fraudulent documents as well as through her untruthful testimony.”
The appeals court agreed and affirmed not only the $50,000 sanction, but also the award of attorney’s fees. The court further ordered Stouffer to pay all the plaintiffs’ attorney’s fees and costs incurred on appeal.
Judges: Rosemary S. Pooler, Barrington D. Parker, Jr., Richard C. Wesley.
Plaintiff counsel: Dale M. Cendali, O’Melveny & Myers, LLP; Edward H. Rosenthal, Frankfurt Kurnit Klein & Selz, PC.
Defense counsel: Thomas S. McNamara, Indik & McNamara, PC.