[00:00:00] Speaker 05:
Ready to proceed?

[00:00:05] Speaker 04:
Yes, sir.

[00:00:05] Speaker 04:
You're reserving four?

[00:00:07] Speaker 04:
Yes, please.

[00:00:08] Speaker 04:
Fire away.

[00:00:10] Speaker 04:
Good morning, Your Honors.

[00:00:11] Speaker 04:
May it please the court, John Lomas, on behalf of the appellant, Zuru Ink.

[00:00:16] Speaker 04:
This appeal is of a preliminary injunction against first, Zeroux Max, build more branded toy action figures.

[00:00:23] Speaker 03:
There are a lot of issues, and we don't have much time.

[00:00:25] Speaker 03:
Can I just get right to what concerns me?

[00:00:28] Speaker 03:
Sure.

[00:00:29] Speaker 03:
I mean, there's two things, but the main thing is the tape and the injunction on that.

[00:00:36] Speaker 03:
I'm a little confused about the basis for the irreparable harm finding here.

[00:00:43] Speaker 03:
because Lego doesn't sell any tape, does it?

[00:00:49] Speaker 03:
Can you explain to me, I mean, and I found the district court's opinion on this a little opaque.

[00:00:53] Speaker 03:
I mean, obviously I'm going to ask this to my friend, but can you just address the irreparable harm on the tape part?

[00:01:00] Speaker 04:
On the tape, you're correct, LEGO does not have, or at least we're not aware of a competing product that's not in the record.

[00:01:08] Speaker 04:
And then second, the irreparable harm argument that LEGO put forward was based on this idea that there was potential quality issues with certain Zuru products.

[00:01:19] Speaker 03:
Did they put that argument forward with regards to the tape?

[00:01:25] Speaker 04:
No, and that's what I was going to get to.

[00:01:27] Speaker 04:
That argument was only with respect, the discussion of the testimony concerning that argument was only with respect to the action figures, not with respect to the tape, nor the bricks, the three bricks that are subject to the injunction as well.

[00:01:43] Speaker 04:
So I think in both the Omega Tape and the BRICS that there was no discussion of quality issues with either.

[00:01:52] Speaker 02:
Well, the BRICS, the BRICS, there was talk about lost profits.

[00:01:57] Speaker 04:
Well, there might have been talk about lost profits, but not the quality issues.

[00:02:01] Speaker 02:
I understand.

[00:02:02] Speaker 02:
But lost profits in some cases have been deemed to be of sufficient grounds to find irreparable

[00:02:08] Speaker 04:
And I don't think there was any evidence that submitted that they had any lost profits.

[00:02:11] Speaker 04:
It was purely speculative.

[00:02:13] Speaker 04:
In fact, the LEGO witness testified that they had done no analysis of any lost sales from those brick sets.

[00:02:22] Speaker 04:
And for the brick sets, we're talking about only three bricks.

[00:02:28] Speaker 04:
of several dozen different types that come in boxes of 200, 700 bricks.

[00:02:32] Speaker 04:
So for the idea that there could be some harm connected, some significant lost profits connected to value to three design bricks out of all those different hundreds of bricks in the set is pretty far afield in our view.

[00:02:51] Speaker 04:
I'd like to get back to the action figures on the copyright and infringement analysis for both.

[00:02:59] Speaker 04:
uh... the district court analysis uh... i'm sorry yeah just because i want to follow up with what before you get down to that i know you want to get that because it's the heart of the case but the the bond how much did you ask for for the bond did you set a number uh... i'd i'd believe it was tied to uh... it was at least one and a half million dollars of expected cost but i believe it was also testimony concerning the ten uh... uh... ten million dollars of additional

[00:03:28] Speaker 04:
And what's the loss of power damages?

[00:03:30] Speaker 02:
$8 to $10 million in lost sales, possibly $8 to $10 lost.

[00:03:35] Speaker 02:
It was a sworn affidavit by a financial officer of some sort, but not with any charts, not with any backup, not with any statistics, not with any documents.

[00:03:48] Speaker 02:
Sworn statement.

[00:03:52] Speaker 02:
And your adversary's argument is, well, that's without the sworn, without some details.

[00:03:58] Speaker 02:
the court could ignore the sworn state?

[00:04:01] Speaker 04:
Well, I mean, it turns out that, I mean, not in the record before that court at this time, but I mean, this thing has come to fruition with law sales.

[00:04:08] Speaker 04:
And I don't think that the issue there was.

[00:04:11] Speaker 02:
Well, it was not as if there wasn't a considerable period of time in which to produce a piece of paper that would back up the sworn affidavit.

[00:04:19] Speaker 05:
One of the things you argue is that, on page 73 of the blue brief, that if you prevail at trial,

[00:04:28] Speaker 05:
You can't collect more than the $25,000 Lego is posting.

[00:04:32] Speaker 05:
That's not the law, is it?

[00:04:33] Speaker 05:
I mean, admittedly, the bond is supposed to cover the potential, but that doesn't limit you.

[00:04:42] Speaker 04:
It does limit us in, it actually, that's the only thing that we would be guaranteed for.

[00:04:49] Speaker 05:
I understand, but your statement was just straight up, if you prevail, you can't collect more than the nominal 25,000.

[00:04:55] Speaker 04:
Off the bond.

[00:04:56] Speaker 04:
That's not true.

[00:04:58] Speaker 04:
Well, no, we'd have to have some sort of additional claim for damages or for cost, which would not be... Sure.

[00:05:04] Speaker 04:
Right.

[00:05:08] Speaker 04:
So with respect to the copyright and trademark issue analysis on the figures, of course, any proper infringement analysis needs to start with the identification of the protected legal right.

[00:05:22] Speaker 04:
And here, in this case, the district court did not do that, did not identify, delineate the scope of either the copyright, the protected scope of the copyrights or the trademark at issue, and did not compare the actual protected scope

[00:05:35] Speaker 04:
of the copyright or trademark to the Zuru figures.

[00:05:38] Speaker 05:
With respect to the copyright, the district court's analysis ultimately gives... On page 72 of the red brain, Lego argues that Zuru never argued below that the district court, quote, improperly relied, I suppose, on embodiments of the Lego Friends figures.

[00:06:00] Speaker 05:
Where in the record did Zuru make that argument for the district?

[00:06:02] Speaker 04:
It's in pages 560 to 563 of the appendix.

[00:06:09] Speaker 04:
And the broader point is, though, in addition to just the reliance on additional figures, the broader point is the district court failed to limit the comparison to the proper protected scope of the copyright.

[00:06:24] Speaker 04:
Essentially, the district court decision finds that, or relies on a finding, that Zuru has effectively monopoly rights over a one and a half inch small humanoid toy figure.

[00:06:39] Speaker 04:
And that's not the law.

[00:06:39] Speaker 04:
That humanoid toy figure is an idea.

[00:06:43] Speaker 04:
And ideas, of course, are not protected by copyright.

[00:06:46] Speaker 04:
They're explicitly excluded from copyright protection under the statute.

[00:06:50] Speaker 04:
And the Second Circuit previously addressed the very limited scope of copyright protection that's available to human-like figures, and it's Mattel v. Azraq Hamway opinion, which should be a dispositive here.

[00:07:04] Speaker 05:
You cited 560 to 563?

[00:07:08] Speaker 04:
Yes.

[00:07:12] Speaker 05:
Where did you argue that District Court improperly relied on embodiments of the Lego Friends figures?

[00:07:19] Speaker 05:
I see that.

[00:07:22] Speaker 04:
comparative pictures and so on.

[00:07:35] Speaker 04:
We're here in 560 to 561.

[00:07:38] Speaker 04:
We're depicting the figures that LEGO's expert relied on, the Santa figure.

[00:07:45] Speaker 04:
And we describe that these, right at the bottom of 561, we talk about the plaintiff inaccurately stating that these figures are copyrighted and protected by the copyrights.

[00:07:55] Speaker 04:
they're not the ones that were the deposits that for the copyrighted works and so and this is where this is one example of where we you said they should do it you said the court should we said the court should should conduct a visual comparison of the works of the work yeah that's right

[00:08:15] Speaker 05:
I guess I'm looking at improperly relied on embodiments.

[00:08:18] Speaker 04:
Well, I guess the fundamental point is that the embodiments that they relied on included design features that do not exist in the copyrighted figures, including the yellow head and the two dots and small line for the face.

[00:08:33] Speaker 04:
And so that's one aspect of how the court relied on subject matter that was not, in its comparison, looked at heads of

[00:08:44] Speaker 04:
Lego figures that were the same color as the Zuru figures and had more similar faces, but those faces and that color are not part of the copyrighted work.

[00:08:54] Speaker 04:
And the broader point, again, is that the district court failed to actually limit its analysis to what's the proper scope of the copyright, because one, again, it did what it called a total concept and field.

[00:09:07] Speaker 02:
It doesn't depend on how closely you're focusing on color, faces, and the rest in terms of your analysis?

[00:09:12] Speaker 02:
Well, in all the parts.

[00:09:13] Speaker 04:
Correct.

[00:09:13] Speaker 04:
The total concept and field, it relied on some.

[00:09:16] Speaker 02:
It seems to me that even if the district court should have said, in his opinion,

[00:09:21] Speaker 02:
For purposes of doing this comparison, I have the copyright here in my left hand, and I have the accused articles in the right hand, and I'm looking at those instead of looking at article to article.

[00:09:35] Speaker 02:
You have to show that the error was harmful.

[00:09:37] Speaker 02:
Well, no, I think we... And you show that the error was harmful, you're arguing that he should have focused more carefully on the detail.

[00:09:43] Speaker 04:
well, not just the details, but the actual protected elements of the work.

[00:09:47] Speaker 04:
Because what the district court did was it, and it says it, did a total concept and feel analysis.

[00:09:54] Speaker 04:
But the problem with the total concept and feel analysis here is the total concept and feel of these figures

[00:09:59] Speaker 04:
is a small two-inch, one-and-a-half inch, two-inch humanoid type shape.

[00:10:05] Speaker 05:
And as the second circuit... And stepping on one in your periphery.

[00:10:07] Speaker 04:
What's that?

[00:10:07] Speaker 04:
Stepping on one in your periphery, yes.

[00:10:09] Speaker 05:
That adds to the fun.

[00:10:10] Speaker 04:
That adds to the fun.

[00:10:11] Speaker 04:
And the second circuit in that Mattel case addressed a very similar situation.

[00:10:16] Speaker 04:
Five-and-a-half inch figures with very same human form, very same human pose, so same size, form, and pose, and held that.

[00:10:28] Speaker 04:
that the only copyrightable part or the only part subject to the protection of the copyright was the muscular design of the muscularity in those figures because the rest of it is just an idea a human body form a general human body form of a small of a small size and so size first the size is not something that's part of

[00:10:49] Speaker 04:
that's protected by copyright, and then of course the general human form isn't protected by copyright, and then the functional aspects aren't protected by copyright, and the district court didn't

[00:11:00] Speaker 04:
go through and delineate those aspects.

[00:11:03] Speaker 04:
Instead, again, it referred to its total concept and feel.

[00:11:07] Speaker 04:
And when you come back to what's actually just protected by the copyright, there's very little similarity.

[00:11:14] Speaker 04:
The differences far outweigh the similarities.

[00:11:22] Speaker 03:
The district court enjoined the figures on both the copyright and the trademark.

[00:11:26] Speaker 03:
I think you argued that the trademark was improperly based upon a presumption, which is probably not good anymore after eBay.

[00:11:35] Speaker 04:
Right, the irreparable harm aspect, yes.

[00:11:36] Speaker 03:
Does that matter if we affirm on the copyright issue?

[00:11:39] Speaker 03:
I mean, if we conclude that the preliminary injunction was properly given based upon the copyright issue, then does the trademark issue matter?

[00:11:52] Speaker 04:
Does the trademark issue matter for the presumption?

[00:11:54] Speaker 03:
I mean, they're separate... No, no.

[00:11:56] Speaker 03:
No, on the legal issue.

[00:11:57] Speaker 03:
I mean, yeah.

[00:11:58] Speaker 03:
Assume we agree with you that the legal analysis on the trademark is wrong and that can't support an injunction.

[00:12:04] Speaker 03:
Does that do anything to the effect of the injunction because it's also based upon the copyright

[00:12:09] Speaker 04:
I mean, it enjoyed the products based on both, but I mean, if you still have the one, I mean, and if the district court's finding the other, I don't think it only does.

[00:12:19] Speaker 00:
Right.

[00:12:21] Speaker 02:
But of course... If the district court had written in the opinion, I'm entering a preliminary injunction solely because of a violation of both

[00:12:29] Speaker 02:
copyright, patent, and trademark, and link them all up, then you'd have an argument.

[00:12:33] Speaker 02:
But absent that argument, it would seem that the copyright violation would support the injunction, even if the trademark fell apart.

[00:12:42] Speaker 04:
If there was a copyright violation, and again... Oh, yeah, yeah, that's a hypothetical.

[00:12:46] Speaker 04:
No, sure, sure, sure.

[00:12:47] Speaker 04:
And I think it's, again, it's important to come back to what is the protectable stuff.

[00:12:51] Speaker 03:
There are a lot of issues here.

[00:12:52] Speaker 03:
We have to figure out how we're going to write the opinion, even if we disagree with the district court in some respects.

[00:12:58] Speaker 04:
Sure, sure.

[00:12:58] Speaker 04:
No, I understand.

[00:12:59] Speaker 04:
Would you I could I walk through the copyrighted features or is that something that you're I mean what?

[00:13:05] Speaker 04:
Yeah, so the oh I am okay well well I'll just go through because the I mean the copyright features the design features that are actually subject to copyright are the distinctive trapezoidal torso the thick stubby rectangular legs with the bulge in the front and

[00:13:19] Speaker 04:
the gap from the top of the torso to the arms, the bright yellow head with the face, the two-dot face, and the very short but wide neck.

[00:13:26] Speaker 04:
And none of these things are found in the Zuru products.

[00:13:30] Speaker 04:
In fact, the Zuru Action figures, the only similarities are the square shape at the bottom of the feet, but even those feet are different thickness, different width.

[00:13:40] Speaker 04:
The feet come out farther in the LEGO product from the legs than they do from the Zuru product.

[00:13:46] Speaker 04:
And though both had similar cylindrical shape, the rest of the head is different.

[00:13:51] Speaker 04:
The proportion of the head is outsized in the Zuru figure to the rest of the body.

[00:13:57] Speaker 04:
The head of the Lego figure is smaller proportionally to the rest of the body.

[00:14:02] Speaker 04:
And of course, then there's a yellow, the yellow nature of the head and then the smiley face that does not exist on the Zuru figure.

[00:14:10] Speaker 02:
So ultimately... What's the standard of review?

[00:14:13] Speaker 02:
Clear error?

[00:14:14] Speaker 04:
Well, on that part, in our view, it's a legal issue here because the court did not delineate what was protected by copyright and what wasn't.

[00:14:26] Speaker 04:
And it just looked at a total concept and feel analysis of the entire figure.

[00:14:31] Speaker 04:
And so it did not do a proper legal analysis because it never looked at what was protected.

[00:14:36] Speaker 02:
Perhaps we view that as an error, but your burden is to show that there wasn't, that the error was harmful.

[00:14:43] Speaker 02:
If we look at the copyright on the one hand and the figurines on the other, and agree with the district board judge, then you're in far less.

[00:14:52] Speaker 04:
Well, but I mean, if you're only focusing on the copyrighted features, the differences far outweigh the similarities.

[00:15:00] Speaker 02:
That's then taking the blur of your eyes standard, which seems odd.

[00:15:06] Speaker 02:
But I mean, the notion, especially when children are concerned, you're supposed to pay less attention to detail

[00:15:12] Speaker 02:
and more attention to sort of general presentation?

[00:15:17] Speaker 04:
Well, the evidence in the record suggests that it was undisputed that everyone thought the children would actually look more at the differences.

[00:15:25] Speaker 04:
And LEGO's entire basis of irreparable harm was on the idea that a child may have a bad- Right, but the legal standard, as announced in the case law of the Second Circuit, doesn't depend on the child.

[00:15:39] Speaker 02:
as the ordinary purchaser?

[00:15:41] Speaker 02:
No, but the... You probably should, Dave, in the case that you're saying that it's not.

[00:15:46] Speaker 04:
But the irreparable harm analysis was linked to the idea that the child was confused by the source, that it was a Lego product when it had a bad experience.

[00:15:56] Speaker 04:
But here, the child would see the differences because they're fundamentally different figures.

[00:16:00] Speaker 04:
You're well open, Councilman.

[00:16:01] Speaker 05:
Thank you.

[00:16:02] Speaker 05:
I'm going to give you two minutes.

[00:16:03] Speaker 05:
You've got to be in a lot of your time.

[00:16:11] Speaker 01:
May it please the Court, I'm Beth Alquist with Dave Pitney representing the Epilees, the LEGO Group.

[00:16:17] Speaker 01:
I want to start with Judge Huges' question about irreparable harm that concerned you with respect to the Makita product.

[00:16:23] Speaker 01:
The Makita product itself wasn't accused of infringement.

[00:16:27] Speaker 01:
It was selling – Zuru was selling that product

[00:16:31] Speaker 01:
using infringing images on the product.

[00:16:33] Speaker 01:
And so the irreparable harm that caused that product to be removed was because of the figurines that it was displaying on it.

[00:16:41] Speaker 02:
The court also held...

[00:16:47] Speaker 02:
So there's no claim that the product was faulty, that the legs would fall off or something like that, right?

[00:16:55] Speaker 02:
We're talking now about the packaging.

[00:16:57] Speaker 01:
The problem is that the image that they see, the minifigure figurine or the friends figurine, is then associated with our product.

[00:17:06] Speaker 01:
And in fact, physical specimens were before the court for all of these products.

[00:17:09] Speaker 02:
And the court did say... That will happen in any case, any instance of infringement of the copyright.

[00:17:16] Speaker 01:
That is true.

[00:17:18] Speaker 01:
Right.

[00:17:18] Speaker 02:
And that wouldn't ordinarily be enough for irreparable harm.

[00:17:21] Speaker 02:
That just is infringement.

[00:17:25] Speaker 02:
Your reputational argument, your, oh my god, everybody will think that Lego is crummy.

[00:17:30] Speaker 02:
The only evidence I saw that supported that was that in one instance, the legs fell off.

[00:17:38] Speaker 02:
And so there was somebody said, oh, it's great.

[00:17:40] Speaker 02:
Yeah, but the product was faulty.

[00:17:43] Speaker 02:
and giving you the benefit of that argument for showing that there would be harm to reputation and all the rest, that doesn't carry over to the tape product in my mind.

[00:17:55] Speaker 01:
And I think there's evidence in the record that it did carry over to the tape product.

[00:17:58] Speaker 01:
Where?

[00:17:59] Speaker 01:
The physical specimens of the tape product.

[00:18:01] Speaker 02:
Where shows that there is something, the image breaks down or that the, how is LEGO's name disparaged

[00:18:11] Speaker 02:
by the image that's on the package?

[00:18:14] Speaker 01:
The image is substantially similar to our genuine product.

[00:18:17] Speaker 02:
How about a site?

[00:18:20] Speaker 02:
We're looking for something, because let's assume that, in my judgment, if we took away the leg fell off on the figures, you wouldn't be able to show irreparable harm on that ground.

[00:18:33] Speaker 01:
In addition to the legs falling off problem, there was clutch power problem.

[00:18:38] Speaker 01:
So clutch power.

[00:18:39] Speaker 01:
Clutch power is what the witnesses explained in the Lego system as how the knobs sticks together.

[00:18:46] Speaker 02:
That's not on the label.

[00:18:48] Speaker 02:
The tape product doesn't have any stick problem.

[00:18:51] Speaker 01:
Well, it actually does.

[00:18:53] Speaker 03:
Where's the evidence on that?

[00:18:54] Speaker 03:
That's the problem.

[00:18:56] Speaker 03:
I mean, all I see is this figure infringes our patents and doesn't link up the actual product that was enjoined with irreparable harm.

[00:19:08] Speaker 01:
And so in this case, so it was all of it, right?

[00:19:12] Speaker 01:
So it's the clutch bow.

[00:19:13] Speaker 01:
Can you be specific?

[00:19:14] Speaker 01:
Yes.

[00:19:14] Speaker 03:
Where is specific evidence that the infringing image on the tape product somehow has irreparable harm based on the tape product, not on all this other stuff?

[00:19:31] Speaker 03:
Record site.

[00:19:32] Speaker 01:
I don't have a record site for a specific tape product, but in the whole,

[00:19:36] Speaker 01:
The court found irreparable harm because of so many different products.

[00:19:41] Speaker 03:
These are different products.

[00:19:42] Speaker 03:
He can enjoy the other stuff because he found that there's quality issues, there's market share issues, there's loss of profits.

[00:19:50] Speaker 03:
None of those, there's no evidence supporting that with regard to the tape product.

[00:19:54] Speaker 03:
You don't even make the tape product, so you can't have loss of profit or market share issues with, remember, the tape product.

[00:20:01] Speaker 03:
The only thing I could potentially see is them associating the tape product with you and therefore having quality products.

[00:20:08] Speaker 03:
But I didn't see any evidence that the tape product was inferior.

[00:20:11] Speaker 01:
There is no evidence in the record specifically that the tape product is inferior.

[00:20:16] Speaker 03:
So what is the evidence for irreparable harm on the tape product?

[00:20:19] Speaker 01:
It is associating our trademark

[00:20:21] Speaker 01:
and our copyrights with a different program.

[00:20:24] Speaker 05:
You're saying it's causing the consumer to purchase the otherwise inferior product.

[00:20:30] Speaker 01:
Yes, Your Honor.

[00:20:32] Speaker 01:
Exactly.

[00:20:32] Speaker 01:
But the product is not inferior.

[00:20:35] Speaker 01:
The physical specimen in the record that the court indicated he looked at shows that it's inferior.

[00:20:42] Speaker 01:
It's not inferior to a Lego product because we don't sell it, but it is not a quality product.

[00:20:48] Speaker 03:
You say that, but you don't have any evidence.

[00:20:50] Speaker 01:
The only evidence is the actual physical specimen.

[00:20:53] Speaker 02:
Okay, so what about the irreparable harm on the blocks?

[00:20:58] Speaker 02:
Give me a record site to the irreparable harm on the blocks.

[00:21:03] Speaker 01:
On the patent infringement.

[00:21:05] Speaker 01:
On the patent infringement.

[00:21:09] Speaker 01:
instances that the court found for irreparable harm on the blocks.

[00:21:13] Speaker 01:
One was that it would become a compulsory license.

[00:21:16] Speaker 01:
The court said in his ruling that allowing these bricks to be sold turns into a compulsory license if we allow it.

[00:21:25] Speaker 01:
And David Buxbaum testified below that the LEGO Group does not and has never licensed any

[00:21:33] Speaker 01:
of its patents or copyrights or trademarks to competitor manufacturers.

[00:21:41] Speaker 01:
They would be allowed to sell it if it's not enjoined.

[00:21:44] Speaker 01:
And we don't license any other manufacturer to do that.

[00:21:52] Speaker 03:
You know, there's not enough to give an injunction, and so there are damages or some kind of license.

[00:21:57] Speaker 03:
That's not support itself for the injunction.

[00:22:00] Speaker 03:
You have to give other support for the injunction.

[00:22:02] Speaker 01:
And the other support for the injunction with respect to the bricks.

[00:22:07] Speaker 01:
The other is, is again, it was the clutch power exhibit one in evidence.

[00:22:11] Speaker 01:
the witnesses had and talked about the lack of clutch power so that it was an inferior product.

[00:22:16] Speaker 03:
Was there a market share, is there any market share or potential loss of market share directly attributable to these few bricks?

[00:22:24] Speaker 01:
So to the few bricks specifically, no.

[00:22:26] Speaker 01:
There was no record evidence of that.

[00:22:28] Speaker 02:
So can you cite us the specific records on the clutch power in so far as the blocks are concerned?

[00:22:36] Speaker 02:
As opposed to the figurine, the legs on the image wouldn't fit.

[00:22:43] Speaker 02:
So you've got the record.

[00:22:45] Speaker 02:
Give me a site for the clutch power as to just the box.

[00:22:53] Speaker 02:
I understand the clutch power as part of the problem with the legs falling off, because that's part of the reason why the legs fell off on the figures, because they weren't tight enough stuck together.

[00:23:04] Speaker 02:
So the clutch power of the blocks is a different matter.

[00:23:09] Speaker 01:
That was Liz Knight's testimony.

[00:23:11] Speaker 01:
She was a legal expert.

[00:23:13] Speaker 01:
Where is that?

[00:23:15] Speaker 01:
And I believe it is in the appendix.

[00:23:39] Speaker 01:
I'm sorry, Your Honors, I don't have the site off the top of my head.

[00:23:41] Speaker 01:
It is her testimony in the appendix.

[00:23:48] Speaker 01:
And it is also the court's physical inspection of Exhibit 1, where you could feel the difference between the products and the clutch power, which the court relied upon as well.

[00:23:56] Speaker 02:
Okay, so what's your response to the argument that the district court flubbed it here because instead of comparing

[00:24:04] Speaker 02:
text of a copyright to an accused article and compared an article to an embodiment.

[00:24:11] Speaker 01:
So in this case, the copyright is the 3D sculpture itself.

[00:24:16] Speaker 01:
The court did receive evidence.

[00:24:18] Speaker 02:
The copyright is words on a page.

[00:24:22] Speaker 01:
In this instance, all you can give to the copyright officer are photographs of the sculpture, but what is protected is the shape.

[00:24:33] Speaker 01:
What is protected is the sculpture itself.

[00:24:35] Speaker 01:
And the evidence in this case is that first, the court did look at the deposit materials, which are the pictures, but also the court had exemplars.

[00:24:45] Speaker 01:
And David Buxbaum testified at appendix page 505 that the exemplars were representative samples of what was in the deposit materials.

[00:24:55] Speaker 01:
And in fact, Zuru's briefs called them representative samples of what was in the deposit materials.

[00:25:01] Speaker 01:
And it is that shape and that form that is protected.

[00:25:04] Speaker 01:
It is not a 2D image, it's a 3D image.

[00:25:07] Speaker 01:
And so, of course, the court in deciding a 3D sculpture

[00:25:11] Speaker 01:
should look at both of them.

[00:25:13] Speaker 01:
And in fact, courts regularly do that.

[00:25:15] Speaker 01:
Visual comparisons are of actual products in most of the cases, and definitely the toy cases cited by both parties in the Second Circuit in this case.

[00:25:24] Speaker 05:
Would you agree with me that Rule 65C requires a bond to be posted in an amount sufficient to compensate a party in the event that it was wrongfully enjoined?

[00:25:36] Speaker 01:
Yes, Your Honor.

[00:25:37] Speaker 05:
How do we arrive at $25,000?

[00:25:38] Speaker 01:
So to answer, I believe, again, it was Judge Hughes's question to the other side.

[00:25:44] Speaker 01:
Zuru never suggested an amount of a bond at all.

[00:25:47] Speaker 01:
In appeal, it refers only to a declaration below that the court questioned the witness about during the preliminary injunction hearing.

[00:25:56] Speaker 01:
And the court found that testimony to not be credible that the $8 to $10 million losses.

[00:26:02] Speaker 02:
How do we know that the judge found that to be not credible?

[00:26:07] Speaker 01:
In that, he questioned it and then didn't credit it.

[00:26:09] Speaker 02:
Where did we have that colloquy in the record?

[00:26:12] Speaker 01:
That is at the appendix 1286 through 1288.

[00:26:15] Speaker 05:
1286 through?

[00:26:18] Speaker 01:
1288.

[00:26:21] Speaker 03:
Did you suggest the $25,000 number?

[00:26:24] Speaker 01:
No, Your Honor.

[00:26:25] Speaker 03:
So the district court just came up with this on its own?

[00:26:28] Speaker 01:
Yes, Your Honor.

[00:26:29] Speaker 01:
And based in part on the overwhelming evidence of the likelihood of success on the merits,

[00:26:34] Speaker 01:
and specifically on many different types of intellectual property.

[00:26:38] Speaker 01:
So this court found so much wrong, and courts in the Second Circuit do have no bonds when there's overwhelming evidence of likelihood of success on the merits, which is what happened in this case.

[00:26:51] Speaker 05:
I'm looking.

[00:26:51] Speaker 02:
I don't see it.

[00:26:53] Speaker 02:
1286, I'm looking for.

[00:26:54] Speaker 05:
Oh, it's 1290.

[00:26:56] Speaker 05:
Oh.

[00:27:01] Speaker 01:
In our version.

[00:27:09] Speaker 03:
Okay.

[00:27:13] Speaker 03:
So the standard is not what they could get in damages if they won, you know, in its entirety, like if they win.

[00:27:23] Speaker 03:
you know, and they can show that they would have been out a million dollars, it's a sliding scale that balances the possibility of relief with the amount of relief.

[00:27:34] Speaker 03:
That's exactly... So if they have a one percent chance of winning a one million dollars, they shouldn't get a one million dollar bond.

[00:27:39] Speaker 01:
That is correct.

[00:27:40] Speaker 03:
Is that the Second Circuit law?

[00:27:42] Speaker 03:
The Second Circuit... Can you assign me a case for that?

[00:27:45] Speaker 01:
The Second Circuit law, more specifically, is that if there's such overwhelming evidence, you can find no bond.

[00:27:50] Speaker 01:
There's broad discretion in this case.

[00:27:53] Speaker 01:
And there are cases that I can say for that that that are actually not in the briefs, but there's two Second Circuit two cases within the Second Circuit.

[00:28:03] Speaker 01:
I should say one is lighting and supplies versus sunlight.

[00:28:08] Speaker 01:
which is an Eastern District of New York case.

[00:28:10] Speaker 01:
The other is New York City Triathlon LLC versus New York City Triathlon Club, obviously a trademark case, also in the Southern District of New York in 2010.

[00:28:21] Speaker 01:
Both of those cases found that

[00:28:24] Speaker 01:
It's such an overwhelming likelihood of success that no bond is necessary.

[00:28:28] Speaker 01:
And the court was well within its discretion in the absence of any evidence from Zuru about what the bond should be to set what it deemed to be an appropriate bond in this case.

[00:28:40] Speaker 03:
Can I just make sure your answer on the other question I asked your friend, if we agree with the district court on the injunction based on the copyright for the figures, but disagree with the trademark analysis, does that alter in any way the scope of the injunction or whether it should be affirmed?

[00:28:59] Speaker 01:
It does not.

[00:29:01] Speaker 01:
The scope of the injunction would be the same.

[00:29:05] Speaker 02:
Your Honors, I'd like to... But if we found that there was insufficient evidence for irreparable harm on the tape product and or the box, then we would send it back and that piece of the preliminary junction had to be carved out, right?

[00:29:23] Speaker 01:
That's true, Your Honor.

[00:29:25] Speaker 01:
With respect to the box, it is the same.

[00:29:28] Speaker 01:
So the box, to be specific, was both patent infringement because the bricks were in there.

[00:29:33] Speaker 01:
They also used the infringing images

[00:29:35] Speaker 01:
on their product.

[00:29:36] Speaker 01:
And so certainly that the evidence, the overwhelming evidence of likelihood of success on the merits in trademark and in copyright, the irreparable harm can be caused there because the same low quality of play could certainly be infused into the images that are on the box and, for that matter, onto the tape.

[00:29:55] Speaker 01:
It could be the same issue.

[00:29:58] Speaker 01:
Your honors, I will address one, what we called the heart of the case before, the comparison of the idea, as opposing counsel points out, and the expression of the idea.

[00:30:12] Speaker 01:
In this case, they are saying that there's only one idea, and it's a small figurine, a small humanoid figurine.

[00:30:20] Speaker 01:
There are actually two before this court, both made by LEGO, that demonstrate the difference between the overall look and feel

[00:30:27] Speaker 01:
of the figurines.

[00:30:28] Speaker 01:
On page five of our brief that we've been talking about, the minifigure figurine, there's an image that appears there.

[00:30:34] Speaker 01:
And on page eight of our brief, the red brief, the friends figurine appears there.

[00:30:40] Speaker 01:
Both of those are different expressions of this same idea Opposing Council refers to.

[00:30:45] Speaker 01:
They're very different.

[00:30:47] Speaker 01:
They're protected by different copyrights and they have a different overall look and feel.

[00:30:53] Speaker 01:
Zuru didn't go out and create its own humanoid figurine that's small, that can work with these products.

[00:31:00] Speaker 01:
It copied the minifigure figurine.

[00:31:03] Speaker 01:
And so for them to argue here that somehow it's only an idea and they're allowed to do what they've done,

[00:31:09] Speaker 01:
I think that the comparison of the friends and the minifigure figurine demonstrates for the court that there can be very different expressions, a whole range of different expressions, but what Zuru did here was copy ours, and that's what's inappropriate.

[00:31:23] Speaker 01:
I see my time is about up.

[00:31:24] Speaker 01:
Unless there are further questions, we ask that the court affirm that this report's ruling in all respects.

[00:31:29] Speaker 01:
Thank you.

[00:31:29] Speaker 04:
Thank you, counsel.

[00:31:35] Speaker 04:
You have two minutes.

[00:31:39] Speaker 04:
So again, with respect to copyright, again, the issue is not just the fact that there's an idea at issue, it's what is protectable and what's not.

[00:31:48] Speaker 04:
The size of the figure is not protectable.

[00:31:51] Speaker 04:
In fact, Lego cited a case in the same district court that it has against another party, 2019, Westlaw 338-7330,

[00:32:01] Speaker 04:
which incorporates an earlier finding from the same district court, 874 F sub second at 95102, specifically referring to the fact that the size of the figure is not protected.

[00:32:12] Speaker 04:
And then, so what we're left with are the design features of that figure, which are the trapezoidal shape, the bulge with the legs, the yellow head, and the small two dots for the eyes and the mouth, the small line for the mouth.

[00:32:26] Speaker 04:
And that does not appear in any of the zero action figures.

[00:32:31] Speaker 04:
The other thing is, with respect to the harm and the quality issue, at Appendix 361, where the review about the body coming apart, the person says, awesome set, my boys love them.

[00:32:46] Speaker 04:
All of the reviews were positive.

[00:32:48] Speaker 04:
There was not one review that was negative and said that they did not like the product.

[00:32:53] Speaker 04:
So the evidence shows that the actual users of the product very much enjoyed it.

[00:33:00] Speaker 04:
With respect to the trademark issue... Oh, actually, with respect to the...

[00:33:09] Speaker 02:
uh... on the on the blocks of the figures uh... because i mean the figures are made differently to actually move right that's another feature that's different from the the uh... uh... your adversary is suggesting that there was evidence in the record that the blocks themselves as manufactured by your client had clutch problems and i think that the lego product doesn't have clutch problems and therefore there's a disparagement of

[00:33:38] Speaker 02:
Lego's reputation by the sale of a clutchless product.

[00:33:43] Speaker 04:
My regulation of that testimony is that it was referring, it was in connection with the figures and that

[00:33:51] Speaker 04:
how they come apart and stick together and stay together.

[00:33:54] Speaker 04:
That's the clutch power.

[00:33:55] Speaker 04:
But the zuru figures are different than the lego figures because the lego figures are meant to... The legs aren't meant to turn around or move like the zuru figures are meant to do.

[00:34:05] Speaker 04:
So that issue is related to the fact that the zuru figures have a function, moving their legs all the way around, rotating from the entire body.

[00:34:14] Speaker 04:
And based on the issues that we've described about the court failing to define the proper scope of the copyright and the trademark before doing its analysis, we believe that preliminary injunction should be reversed because it was an abuse of discretion, and also for the issues with the irreparable harm we discussed.

[00:34:32] Speaker 04:
Thank you.

[00:34:35] Speaker 05:
The matter will stand submitted.

[00:34:36] Speaker 05:
Thank you, counsel.