Reader's Digest Ass'n v. Conservative Digest, Inc. ( 1986 )

642 F. Supp. 144 (1986)

The READER'S DIGEST ASSOCIATION, INC., Plaintiff,
v.
CONSERVATIVE DIGEST, INC., William R. Kennedy, Jr., Scott Stanley, Jr., James F. Dye, Defendants.

Civ. A. No. 85-3600.

United States District Court, District of Columbia.

May 29, 1986.

Arthur J. Levine, Laurence R. Hefter, Washington, D.C., for plaintiff.

Glenn J. Sedam, Jr., McLean, Va., Manuel S. Klausner, Los Angeles, Cal., for defendants.

MEMORANDUM

GESELL, District Judge.

After a two-day bench trial this Court finds that plaintiff Reader's Digest Association, Inc. is entitled only to slight relief in this trademark and copyright infringement suit which it has relentlessly pursued against Conservative Digest, Inc. Based on the findings of fact and conclusions of law set out below, the Court rejects Reader's Digest's claims for damages, profits and attorney fees and awards only minimum statutory damages and limited injunctive relief designed simply to assure that Conservative Digest will not again use the type of digest covers which precipitated this controversy.

In August, 1985 a new publisher and editorial staff took over the Conservative Digest, a struggling publication directed toward a small, politically conscious conservative readership of about 15,000 subscribers. In October, 1985 a new Conservative Digest emerged in an entirely new format adopting the typical digest size. The issue was unveiled on October 16, 1985 at a Washington press club reception at which the editor noted the similarity between his creation and Reader's Digest. The front cover adopted practically all of the trade dress features of Reader's Digest's well known front cover, including listing its principal contents on the front cover. See Appendix. The placement of the table of contents, magazine name, date, and cover price were identical to that of Reader's Digest. The same large, boldface titles in color were printed in the margin and the center of the page to call attention to particular articles. The typeface for each portion of the cover was identical or substantially the same. In addition, Conservative Digest followed Reader's Digest's back cover and page layouts. The use of anecdotes and feature sections also mimicked Reader's Digest's design.

Conservative Digest thus attempted to achieve instant recognition by copying^[1] the trade dress which had taken Reader's Digest years of study and around one hundred thousand dollars to develop. Reader's Digest began using this trade dress in early 1981 and through distribution to its seventeen million subscribers and heavy promotion has established popular recognition and a secondary meaning which is further evidenced by Conservative Digest's effort to copy it. M. Kramer Manufacturing Co. v. Andrews, 783 F.2d 421, 448 (4th Cir.1986); J. McCarthy, Trademarks and Unfair Competition, §§ 15:12; 23:33 (1984).

While Conservative Digest hoped to take advantage of Reader's Digest's skill in developing the world's most widely read magazine and thus created a likelihood that an inattentive reader might assume that Conservative Digest was affiliated with Reader's Digest in some way, the proof does not establish that there was an intent to palm off the Conservative Digest as a Reader's Digest publication. The opening article in the October issue clearly identified the individuals behind the new Conservative Digest. The confusingly similar cover design appeared on only two issues, October and November, 1985, and these issues were sent only to existing subscribers, with complementary copies being sent to a list of individuals who might be interested due to their political affiliations. There is no proof that any new subscriptions resulted. Newsstand sales to the general public were suspended during these two inaugural issues.

Moreover, when confronted by Reader's Digest, Conservative Digest immediately acted to correct any confusion by wrapping the November issue, which was already going to press, with a prominent disclaimer. The offending cover was then totally abandoned and there is no risk of confusion from the covers used on the December, 1985 and subsequent issues.^[2] With its very small staff, very limited resources, and numerous current business problems, Conservative Digest had no desire or ability to play the role of David against the Goliath Reader's Digest.

Nonetheless, even after Conservative Digest had abandoned the pilfered trade dress, Reader's Digest continued to pursue its already cornered quarry. At pretrial Reader's Digest expanded its claim of copyright infringement of its collective works to include a claim of infringement of its copyright in particular textual matter in its collective works. Both publications used jokes as fillers. Aided by its computerized indexing system, Reader's Digest noted that Conservative Digest used a fox hunting joke, albeit in different form, that had appeared in Reader's Digest in 1943. Further research disclosed ten other jokes in the October, 1985 issue of Conservative Digest which had previously been published in substantially similar form in scattered issues of Reader's Digest since 1950. However, this claim of copyright infringement dissolved at trial upon the undisputed testimony that Reader's Digest was not the source of this material. Conservative Digest took the jokes from periodicals such as Funny, Funny World and joke and anecdote anthologies used by after-dinner speakers, politicians and, apparently, digest editors. Reader's Digest's claim of copyright infringement of its collective works also failed for lack of adequate proof at trial.

Thus the only claims established by the proof were those relating to the cover. Conservative Digest copied Reader's Digest's trade dress in a manner which created a likelihood of confusion sufficient to establish a claim under § 43 of the Lanham Act. 15 U.S.C. § 1125. The copying of the cover design, which is registered with the copyright office,^[3] also infringed Reader's Digest's copyright. 17 U.S.C. §§ 106, 113.

However, the remedies available for these violations are limited because the offending design was withdrawn almost immediately after suit was filed. Although Reader's Digest pressed for damages, confiscation of Conservative Digest's profits, and treble damages under § 35 of the Lanham Act, 15 U.S.C. § 1117, it did not offer any proof of any actual confusion in the market place or diversion of business to provide a basis for monetary damages. Conservative Digest did not gain any sales by mimicking Reader's Digest's trade dress in the October and November issues since these issues were sold only to pre-existing subscribers. There were no news-stand sales of Conservative Digest and, ironically, newsstand sales of Reader's Digest are accomplished by pasting a removable sheet entirely over the very trade dress cover which the publisher now seeks to protect so zealously.

Consequently, there is no basis for awarding monetary damages on Reader's Digest's trademark claim. The trademark laws were not intended to provide windfalls. Damages cannot be awarded where there is no proof of actual damages. Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154, 161 (1st Cir.1977). Although proof of actual damages is not always essential to award profits, since there is no indication of any diversion of sales or unjust enrichment, an award of Conservative Digest's profits would be unwarranted and inequitable in this case. Morgenstern v. Searle, 253 F.2d 390, 394 (3d Cir.1958).

Reader's Digest is entitled to the statutory damages it has elected under the copyright act for the infringement of its copyrighted cover. 17 U.S.C. § 504. There is no indication that any actual injury has occurred and the Court finds that a minimal award of $250 on each issue is a just award under all the circumstances. Since there is no indication that individual defendants Dye and Kennedy participated in designing the offending covers the damage judgment shall not be entered against them. Conservative Digest and Mr. Stanley, the editor who the Court has found copied Reader's Digest's cover, will be held jointly and severably liable for these damages.

Reader's Digest has also pressed for attorneys fees and Conservative Digest has countered by demanding that Reader's Digest pay its lawyers because of the failure of proof on Reader's Digest's claim of infringement of its copyrighted anecdotes and the manner in which this suit has been carried forward. No award of attorney fees is appropriate for Reader's Digest under the copyright or trademark laws since it accomplished nothing substantial by trial. While the parties' inability to resolve this dispute amicably may be "extraordinary," this is not an "extraordinary" case within the meaning of the trademark statute. 15 U.S.C. § 1117. Conservative Digest was grossly irresponsible in copying Reader's Digest's design but apparently had no intent to palm off or create confusion among customers and ceased the infringement before any harm resulted. Conservative Digest's claim for fees is also inappropriate given its own unclean hands and the absence of any proof that Reader's Digest's copyright claims were frivolous or brought in bad faith.

Aside from the minimal statutory damages, the only relief that can be awarded is a limited injunction. Reader's Digest has been unable to show that there is any risk that the now contrite Conservative Digest would ever again attempt the wholesale appropriation of Reader's Digest's property rights in its trade dress. Moreover, Reader's Digest is in the process of experimenting with new variations of its trade dress and has been unable to propose an injunction that would not unnecessarily interfere with the creative energies of both publications. Accordingly, judgment is entered for the Reader's Digest Association, Inc. in the form attached, coupled with the attached limited permanent injunction to prevent further use of the offending covers by Conservative Digest, Inc. The claims against the individual defendants Dye and Kennedy will be dismissed for lack of adequate proof that they participated in Conservative Digest's infringement of Reader's Digest's rights.

ORDER OF JUDGMENT AND PERMANENT INJUNCTION

For reasons stated in a Memorandum filed with this order, it is hereby

ORDERED that defendant Conservative Digest, Inc., its directors, officers, agents, servants, employees, representatives, attorneys, successors and assigns, and all persons in active participation or concert with them are hereby permanently enjoined and restrained from publishing, distributing, mailing, selling, reproducing in advertising or reprints, or otherwise conveying to any person the covers of the October, 1985 and November, 1985 issues of the Conservative Digest; and it is further

ORDERED that defendant Conservative Digest, Inc. is directed to deliver to plaintiff by June 30, 1986, at defendant's expense, all plates, molds, matrices, masters, tapes, film negatives or other articles by means of which copies of the October, 1985 and November, 1985 covers of the Conservative Digest may be reproduced; and it is further

ORDERED that judgment is entered for the Reader's Digest Association, Inc. against defendants Conservative Digest, Inc. and Winfield Scott Stanley, Jr., jointly and severally, in the amount of $500 statutory damages under 17 U.S.C. § 504(c); and it is further

ORDERED that plaintiff's claims against defendants Kennedy and Dye are dismissed with prejudice on the merits for want of proof at trial; and it is further

ORDERED that the Reader's Digest Association, Inc. is awarded its costs as set by the Clerk for its action against defendants Conservative Digest, Inc. and Winfield Scott Stanley, Jr. Defendants Kennedy and Dye shall bear their own costs.

APPENDIX

NOTES

[1] Mr. Stanley, Conservative Digest's new editor-in-chief, testified that he did not copy Reader's Digest's front cover but by chance happened to achieve complete identity while casually developing his own ideas for a new cover using a design computer. This testimony, reminiscent of Greek mythology recording the birth of Athena who sprang full-grown from the head of Zeus, is not worthy of belief and is rejected. Stanley is a lifetime student of digests and was fully aware of Reader's Digest's distinctive trade dress and its success and recognition in the marketplace.

[2] The October, 1985 cover reappeared in a January, 1986 reprint, but this appeared to be the work of some ill-informed agents of one of the defendants and was quickly terminated. No further reprints have appeared.

[3] The presumptive validity of the copyright of the cover design was not seriously contested by Conservative Digest at trial. See 17 U.S.C. § 410(c).