SID & MARTY KROFFT TELEVISION PRODUCTIONS, INC. and Sid & Marty Krofft Productions, Inc., Plaintiffs-Appellants, v. McDONALD'S CORPORATION and Needham, Harper & Steers, Inc., Defendants-Appellees.

SID & MARTY KROFFT TELEVISION PRODUCTIONS, INC. and Sid & Marty Krofft Productions, Inc., Plaintiffs-Appellees, v. McDONALD'S CORPORATION and Needham, Harper & Steers, Inc., Defendants-Appellants.

Nos. 75-1203 and 75-1202.

United States Court of Appeals, Ninth Circuit.

Oct. 12, 1977.

Rehearing Denied Nov. 17, 1977.

Anthony E. Liebig, Lillick, McHose & Charles, Los Angeles, Cal., argued for McDonald's Corp. et al. Melville B. Nimmer, Kaplan, Livingston, Goodwin, Berkowitz & Selvin, Bayard F. Berman and James P. Tierney, Beverly Hills, Cal., argued for Sid & Marty Krofft Television. Appeal from the United States District Court for the Central District of California.

Before CARTER, GOODWIN, and SNEED, Circuit Judges.

JAMES M. CARTER, Circuit Judge: This is a copyright infringement action. Plaintiffs Sid and Marty Krofft Television Productions, Inc., and Sid and Marty Krofft Productions, Inc. were awarded $50,000.00 in their action against defendants McDonald's Corporation and Needham, Harper & Steers, Inc. Defendants were found to have infringed plaintiffs' "H. R. Pufnstuf" children's television show by the production of their "McDonaldland" television commercials.

Plaintiffs argue on appeal that the district court erred in awarding damages pursuant to 17 U.S.C. § 101(b). They contend that the court should have ordered an accounting of profits by defendants or, alternatively, should have awarded statutory "in lieu" damages.

Defendants cross-appeal. They contend that their television commercials did not infringe upon plaintiffs' television series as a matter of law. To find infringement, they suggest, would abridge their first amendment rights. They also refute plaintiffs' contentions as to damages.

We believe that the district court's finding of infringement was not clearly erroneous, and see no merit to defendants' first amendment claims, We find, however, that the district court was in error in awarding damages. We therefore affirm in part, reverse in part, and remand for further proceedings.

Facts In 1968, Sid and Marty Krofft were approached by the NBC television network to create a children's television program for exhibition on Saturday morning.^{Footnote 1} The

Kroffts spent the next year creating the H. R. Pufnstuf television show, which was introduced on NBC in September 1969. The series included several fanciful costumed characters, as well as a boy named Jimmy, who lived in a fantasyland called "Living Island," which was inhabited by moving trees and talking books. The television series became extremely popular and generated a line of H. R. Pufnstuf products and endorsements.

In early 1970, Marty Krofft, the President of both Krofft Television and Krofft Productions and producer of the show, was contacted by an executive from Needham, Harper & Steers, Inc., an advertising agency. He was told that Needham was attempting to get the advertising account of McDonald's hamburger restaurant chain and wanted to base a proposed campaign to McDonald's on the H. R. Pufnstuf characters. The executive wanted to know whether the Kroffts would be interested in working with Needham on a project of this type.

Needham and the Kroffts were in contact by telephone six or seven more times. By a letter dated August 31,1970, Needham stated it was going forward with the idea of a McDonaldland advertising campaign based on the H. R. Pufnstuf series. It acknowledged the need to pay the Kroffts a fee for preparing artistic designs and engineering plans. Shortly thereafter, Marty Krofft telephoned Needham only to be told that the advertising campaign had been cancelled.

In fact, Needham had already been awarded McDonald's advertising account and was proceeding with the McDonaldland project.^{Footnote 2} Former employees of the Kroffts were hired to design and construct the costumes and sets for McDonaldland. Needham also hired the same voice expert who supplied all of the voices for the Pufnstuf characters to supply some of the voices for the McDonaldland characters. In January 1971, the first of the McDonaldland commercials was broadcast on network television. They continue to be broadcast.

Prior to the advent of the McDonaldland advertising campaign, plaintiffs had licensed the use of the H. R. Pufnstuf char-

acters and elements to the manufacturers of toys, games, lunch boxes, and comic books. In addition, the H. R. Pufnstuf characters were featured in Kellogg's cereal commercials and used by the Ice Capades. After the McDonaldland campaign, which included the distribution of toys and games, plaintiffs were unable to obtain new licensing arrangements or extend existing ones.^{Footnote 3}

In the case of the Ice Capades, the H. R. Pufnstuf characters were actually replaced by the McDonaldland characters.

Plaintiffs filed suit in September 1971. The complaint alleged, inter alia, that the McDonaldland advertising campaign infringed the copyrighted H. R. Pufnstuf television episodes as well as various copyrighted articles of Pufnstuf merchandise. ^{Footnote 4}

By way of relief, plaintiffs sought compensatory damages of $250,000, an order for an accounting of profits attributable to the infringements, or, in the alternative, statutory "in lieu" damages, as provided by 17 U.S.C. § 101(b). Prior to trial, the district court signed a Pre-Trial Conference Order that was "approved as to form and content" by counsel for both sides. It provided that "[t]he prayer for relief raises issues of injunctive relief and an accounting which are questions for the Court." The three week jury trial began on November 27, 1973. The jurors were shown for their consideration on the question of infringement: (1) two H. R. Pufnstuf television episodes; (2) various items of H. R. Pufnstuf merchandise, such as toys, games, and comic books; (3) several 30 and 60 second McDonaldland television commercials; and (4) various items of McDonaldland merchandise distributed by McDonald's, such as toys and puzzles. The jury was instructed that it was not to consider defendants' profits in determining damages, but could consider the value of use by the defendants of plaintiffs' work.

A verdict in favor of plaintiffs was returned and damages of $50,000.00 assessed. After the verdict, the parties briefed the question of whether plaintiffs were entitled to additional monetary recovery in the form of profits or statutory "in lieu" damages. The district court denied plaintiffs' claim for such relief. The court found that these matters were properly for the jury to consider so that it would not exercise its discretion in hearing further evidence. These appeals followed.

I. INFRINGEMENT Proof of Infringement It has often been said that in order to establish copyright infringement a plaintiff must prove ownership of the copyright and "copying" by the defendant. See, e. g., Reyher v. Children's Television Workshop,  533 F.2d 87, 90 (2 Cir. 1976); Universal Athletic Sales Co. v. Salkeld,  511 F.2d 904, 907 (3 Cir. 1975); 2 M. Nimmer on Copyright § 141 at 610-11 (1976) (hereinafter "Nimmer"). "Copying," in turn, is said to be shown by circumstantial evidence of access to the copyrighted work and substantial similarity between the copyrighted work and defendant's work. Reyher v. Children's Television Workshop, supra, 533 F.2d at 90; 2 Nimmer § 141.2 at 613. But an analysis of the cases suggests that these statements frequently serve merely as boilerplate to copyright opinions.

Under such statements, infringement would be established upon proof of ownership, access, and substantial similarity. Application of this rule, however, would produce some untenable results. For example, a copyright could be obtained over a cheaply manufactured plaster statue of a nude. Since ownership of a copyright is established, subsequent manufacturers of statues of nudes would face the grave risk

of being found to be infringers if their statues were substantially similar and access were shown. The burden of proof on the plaintiff would be minimal, since most statues of nudes would in all probability be substantially similar to the cheaply manufactured plaster one. ^{Footnote 5}

Clearly the scope of copyright protection does not go this far. A limiting principle is needed. This is provided by the classic distinction between an "idea" and the "expression" of that idea. It is an axiom of copyright law that the protection granted to a copyrighted work extends only to the particular expression of the idea and never to the idea itself. Mazer v. Stein,  347 U.S. 201, 217-18, 74 S.Ct. 460, 98 L.Ed. 630 (1954); Baker v. Selden,  101 U.S. 99, 10203, 25 L.Ed. 841 (1879). This principle attempts to reconcile two competing social interests: rewarding an individual's creativity and effort while at the same time permitting the nation to enjoy the benefits and progress from use of the same subject matter.

The real task in a copyright infringement action, then, is to determine whether there has been copying of the expression of an idea rather than just the idea itself. "[N]o one infringes, unless he descends so far into what is concrete [in a work] as to invade . . . [its] expression." National Comics Publications v.

Fawcett Publications,  191 F.2d 594, 600 (2 Cir. 1951). Only this expression may be protected and only it may be infringed. ^{Footnote 6}

The difficulty comes in attempting to distill the unprotected idea from the protected expression. No court or commentator in making this search has been able to improve upon Judge Learned Hand's famous "abstractions test" articulated in Nichols v. Universal Pictures Corporation, 45 F.2d 119 (2 Cir. 1930), cert, denied, 282 U.S. 902, 51 S.Ct. 216, 75 L.Ed. 795 (1931): "Upon any work, and especially upon a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may perhaps be no more than the most general statement of what the play is about, and at times might consist of only its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his 'ideas,' to which, apart from their expression, his property is never extended." 45 F.2d at 121.

See also Chafee, Reflections on the Law of Copyright, 45 Colum.L.Rev. 503 (1945); Esezqbar, Concepts in Copyright Protection, 23 Bull.Cprt.Soc, 258 (1976); Note, "Expression" and "Originality" in Copyright Law, 11 Washburn L.J. 400 (1972).

The test for infringement therefore has been given a new dimension. There must be ownership of the copyright and access to the copyrighted work. But there also must be substantial similarity not only of the general ideas but of the expressions of those ideas as well. Thus two steps in the analytic process are implied by the requirement of substantial similarity.

The determination of whether there is substantial similarity in ideas may often be a simple one. Returning to the example of the nude statue, the idea there embodied is a simple one'a plaster recreation of a nude human figure. A statue of a horse or a painting of a nude would not embody this idea and therefore could not infringe. The test for similarity of ideas is still a factual one, to be decided by the trier of fact. See International Luggage Registry v. Avery Products Corp.,  541 F.2d 830, 831 (9 Cir. 1976); Williams v. Kaag Manufacturers, Inc.,  338 F.2d 949, 951 (9 Cir. 1964).

We shall call this the "extrinsic test." It is extrinsic because it depends not on the responses of the trier of fact, but on specific criteria which can be listed and analyzed. Such criteria include the type of artwork involved, the materials used, the subject matter, and the setting for the subject. Since it is an extrinsic test, analytic dissection and expert testimony are appropriate. Moreover, this question may often be decided as a matter of law.

The determination of when there is substantial similarity between the forms of expression is necessarily more subtle and complex. As Judge Hand candidly observed, "Obviously, no principle can be stated as to when an imitator has gone beyond copying the 'idea,' and has borrowed its 'expression.' Decisions must therefore inevitably be ad hoc." Peter Pan Fabrics, Inc. v. Martin Weiner Corp.,  274 F.2d 487, 489 (2 Cir. 1960). If there is substantial similarity in ideas, then the trier of fact must decide whether there is substantial similarity in the expressions of the ideas so as to constitute infringement.

The test to be applied in determining whether there is substantial similarity in expressions shall be labeled an intrinsic one'depending on the response of the ordinary reasonable person. See International Luggage Registry v. Avery Products Corp., supra, 541 F.2d at 831; Harold Lloyd Corp. v. Witwer, 65 F.2d 1, 18-19 (9 Cir. 1933). See generally Nimmer § 143.5. It is intrinsic because it does not depend on the type of external criteria and analysis which marks the extrinsic test. As this court stated in Twentieth Century-Fox Film Corp. v. Stonesifer, 140 F.2d 579, 582 (9 Cir. 1944): "The two works involved in this appeal should be considered and tested, not hypercritically or with meticulous scrutiny, but by the observations and impressions of the average reasonable reader and spectator." Because this is an intrinsic test, analytic dissection and expert testimony are not appropriate.

This same type of bifurcated test was announced in Arnstein v. Porter, 154 F.2d 464, 468-69 (2 Cir. 1946), cert, denied, 330 U.S. 851, 67 S.Ct. 1096, 91 L.Ed. 1294 (1947). The court there identified two separate elements essential to a plaintiff's suit for infringement: copying and unlawful appropriation. Under the Arnstein doctrine, the distinction is significant because of the different tests involved. "[T]he trier of fact must determine whether the similarities are sufficient to prove copying. On this issue, analysis ('dissection') is relevant, and the testimony of experts may be received to aid the trier of facts. * * * If copying is established, then only does there arise the second issue, that of illicit copying (unlawful appropriation). On that issue . the test is the response of the ordinary lay hearer; accordingly, on that issue, 'dissection' and expert testimony are irrelevant." 154 F.2d at 468 (footnotes omitted).

We believe that the court in Arnstein was alluding to the idea-expression dichotomy which we make explicit today. When the court in Arnstein refers to "copying" which is not itself an infringement, it must be suggesting copying merely of the work's idea, which is not protected by the copyright. To constitute an infringement, the copying must reach the point of "unlawful appropriation," or the copying of the protected expression itself. We analyze this distinction in terms both of the elements involved'idea and expression'and of the tests to be used'extrinsic and intrinsic'in an effort to clarify the issues involved.

The Tests Applied In the context of this case, the distinction between these tests is important. Defendants do not dispute the fact that they copied the idea of plaintiffs' Pufnstuf television series'basically a fantasyland filled with diverse and fanciful characters in action. They argue, however, that the expressions of this idea are too dissimilar for there to be an infringement. They come to this conclusion by dissecting the constituent parts of the Pufnstuf series'characters, setting, and plot'and pointing out the dissimilarities between these parts and those of the McDonaldland commercials.

This approach ignores the idea-expression dichotomy alluded to in Arnstein and analyzed today. Defendants attempt to apply an extrinsic test by the listing of dissimilarities in determining whether the expression they used was substantially similar to the expression used by plaintiffs. That extrinsic test is inappropriate; an intrinsic test must here be used. As the court in Arnstein stated: "Whether (if he copied) defendant unlawfully appropriated presents, too, an issue of fact. The proper criterion on that issue is not an analytic or other comparison of the respective . . . compositions . ... The plaintiff's legally protected interest in the potential financial return from his compositions which derive from the lay public's approbation of his efforts. The question, therefore, is whether defendant took from plaintiff's works so much of what is pleasing to the [eyes and] ears of lay [persons], who comprise the audience for whom such popular [works are] composed, that defendant wrongfully appropriated something which belongs to the plaintiff. Surely, then, we have an issue of fact which a jury is peculiarly fitted to determine." 154 F.2d at 472-73 (footnotes omitted). Analytic dissection, as defendants have done, is therefore improper.

Defendants contest the continued viability of Arnstein. It is true that Arnstein's alternative holding that summary judgment may not be granted when there is the slightest doubt as to the facts has been disapproved. See, e. g, First National Bank of Arizona v. Cities Service Co.,  391 U.S. 253, 288-90, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Beal v. Lindsay,  468 F.2d 287, 291 (2 Cir. 1972); Janis v. Wilson, 385 F.Supp. 1143, 1147 (D.S.D.1974); Keller v. California Liquid Gas Corp., 363 F.Supp. 123, 126 (D.Wyo.1973). But the case's tests for infringement have consistently been approved by this court. See, e. g., GoodsonTodman Enterprises, Inc. v. Kellogg Co.,  513 F.2d 913, 914 (9 Cir. 1975); Overman v. Loesser,  205 F.2d 521, 523 (9 Cir. 1953). They have also been accepted by other courts. See, e. g., Universal Athletic Sales Co. v. Salkeld, supra, 511 F.2d at 907; Scott v. WKJG, Inc.,  376 F.2d 467, 469 (7 Cir. 1967). ^{Footnote 7}

We believe Arnstein is still good law.

Since the intrinsic test for expression is uniquely suited for determination by the trier of fact, this court must be reluctant to reverse it. See International Luggage Registry v. Avery Products Corp., supra, 541 F.2d at 831; Caddy-Imler Creations, Inc. v. Caddy,  299 F.2d 79, 82 (9 Cir. 1962). As this court said in Williams v. Kaag Manufacturers, Inc., supra, 338 F.2d at 951: "We have commented frequently on the inappropriateness of substituting our judgment for that of the trial judge on questions of fact. The more vague the test, the less inclined we are to intervene." As a finding of fact, a conclusion as to the question of copying is subject to the "clearly erroneous" standard. Fed.R.Civ.P. 52(a). But it follows that this court will be less likely to find clear error when the subjective test for copying of expression has been applied.

The present case demands an even more intrinsic determination because both plaintiffs' and defendants' works are directed to an audience of children. This raises the particular factual issue of the impact of the respective works upon the minds and imaginations of young people. As the court said in Ideal Toy Corp. v. Fab-Lu Ltd., 261 F.Supp. 238, 241-42 (S.D.N.Y.1966), aff'd,  360 F.2d 1021 (2 Cir. 1966): "In applying the test of the average lay observer, [children] are not to be excluded'indeed they are the 'far-flung faithful . . . . audience.' The television advertising campaign of plaintiff was directed toward acquainting these youngsters with . . .its new teenage and pre-teen dolls. The impression of the faces and general appearance of the dolls was upon them. . . . [T]he dolls create the same impression, both with respect to their appearances and the play'uses for which they are suited. It is the youngsters who, on the basis of this impression, go to the stores with their parents or at home make their wishes known for the dolls they desire after television has made its impact upon them. In their enthusiasm to acquire . [the dolls] they certainly are not bent upon 'detecting disparities' or even readily observing upon inspection such fine details as the point at which the necks are molded" (citations and footnotes omitted). The H. R. Pufnstuf series became the most popular children's show on Saturday morning television. This success led several manufacturers of children's goods to use the Pufnstuf characters. It is not surprising, then, that McDonald's hoped to duplicate this peculiar appeal to children in its commercials. ^{Footnote 8}

It was in recognition of the subjective and unpredictable nature of children's responses that defendants opted to recreate the H. R. Pufnstuf format rather than use an original and unproven approach. Defendants would have this court ignore that intrinsic quality which they recognized to embark on an extrinsic analysis of the two works. For example, in discussing the principal characters'Pufnstuf and Mayor McCheese'defendants point out: " 'Pufnstuf wears what can only be described as a yellow and green dragon suit with a blue cummerband from which hangs a medal which says 'mayor'. 'McCheese' wears a version of pink formal dress''tails''with knicker trousers. He has a typical diplomat's sash on which is written 'mayor', the 'M' consisting of the McDonald's trademark of an 'M' made of golden arches." So not only do defendants remove the characters from the setting, but dissect further to analyze the clothing, colors, features, and

mannerisms of each character. We do not believe that the ordinary reasonable person, let alone a child, viewing these works will even notice that Puf nstuf is wearing a cummerbund while Mayor McCheese is wearing a diplomat's sash.

Duplication or near identity is not necessary to establish infringement. Range v. Lee,  441 F.2d 579, 582 (9 Cir. 1971); Williams v. Kaag Manufacturers, Inc., supra, 338 F.2d at 951. As this court stated in Universal Pictures Co., Inc. v. Harold Lloyd Corp., infra, 162 F.2d 354, at 360: "[A]n infringement is not confined to literal and exact repetition or reproduction; it includes also the various modes in which the matter of any work may be adopted, imitated, transferred, or reproduced, with more or less colorable alterations to disguise the piracy." And, as Judge Learned Hand put it, copyright "cannot be limited literally to the text, else a plagiarist would escape by immaterial variations." Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2 Cir. 1930).

We have viewed representative samples of both the H. R. Pufnstuf show and McDonaldland commercials. It is clear to us that defendants' works are substantially similar to plaintiffs'. ^{Footnote 9}

They have captured the "total concept and feel" of the Pufnstuf show. Roth Greeting Cards v. United Card Co.,  429 F.2d 1106, 1110 (9 Cir. 1970). We would so conclude even if we were sitting as the triers of fact. There is no doubt that the findings of the jury in this case are not clearly erroneous.

Unity of Idea and Expression Defendants argue that dissection is proper and that duplication or near identity is necessary because the competing works are things, rather than dramatic works. They cite numerous cases in which infringement was found because the defendants' works were nearly identical to those of the plaintiffs. See, e. g., Bleistein v. Donaldson Lithographing Co.,  188 U.S. 239, 250, 23 S.Ct. 298, 47 L.Ed. 460 (1903) (circus posters); Sunset House Distributing Corp. v. Doran,  304 F.2d 251, 252 (9 Cir. 1962) (plastic Santa Glaus); King Features Syndicate v. Fleischer, 299 F. 533, 534 (2 Cir. 1924) (doll). Defendants fail to perceive, however, that near identity may be required in some cases not because the works are things, but because the expression of those works and the idea of those works are indistinguishable.

Herbert Rosenthal Jewelry Corp. v. Kalpakian,  446 F.2d 738 (9 Cir. 1971), upon which defendants rely, is illustrative of this point. In that case, plaintiff sued for infringement of its jeweled bee pin, claiming it should be protected against the manufacture of any substantially similar object. This court responded: "What is basically at stake is the extent of the copyright owner's monopoly' from how large an area of activity did Congress intend to allow the copyright owner to exclude others? We think the production of jeweled bee pins is a larger private preserve than Congress intended to be set aside in the public market without a patent. A jeweled bee pin is therefore an idea that defendants were free to copy. Plaintiff seems to agree, for it disavows any claim that defendants can-

not manufacture and sell jeweled bee pins and concedes that only plaintiffs' particular design or expression of the jeweled bee pin idea is protected under its copyright. The difficulty, as we have noted, is that on this record the idea and its expression appear to be indistinguishable. There is no greater similarity between the pins of plaintiff and defendants than is inevitable from the use of jewel-encrusted bee forms in both. "When the idea and its expression are thus inseparable, copying the expression will not be barred, since protecting the expression in such circumstances would confer a monopoly of the idea upon the copyright owner free of the conditions and limitations imposed by the patent law." Id. at 742.

See also Herbert Rosenthal Jewelry Corp. v.

Honora Jewelry Co., Inc.,  509 F.2d 64, 65 (2 Cir. 1974).

The idea and the expression will coincide when the expression provides nothing new or additional over the idea. Thus, the expression of a jeweled bee pin contains nothing new over the idea of a jeweled bee pin. Returning to our own example, the idea of a plaster statute of a nude will probably coincide with the expression of that idea when an inexpensive manufacturing process is used. There will be no separately distinguishable features in the statute's expression over the idea of a plaster nude statute. ^{Footnote 10}

The complexity and artistry of the expression of an idea will separate it from even the most banal idea. Michaelangelo's David is, as an idea, no more than a statute of a nude male. But no one would question the proposition that if a copyrighted work it would deserve protection even against the poorest of imitations. This is because so much more was added in the expression over the idea.

When idea and expression coincide, there will be protection against nothing other than identical copying of the work. When other defendants made jeweled bees from the same molds as plaintiffs, they were held liable. See Herbert Rosenthai Jewelry Corp. v. Grossbardt,