8 Scope of Rights 8 Scope of Rights
8.1 Takeda Pharmaceutical Co. v. Zydus Pharmaceuticals USA, Inc. 8.1 Takeda Pharmaceutical Co. v. Zydus Pharmaceuticals USA, Inc.
Patents
TAKEDA PHARMACEUTICAL COMPANY LIMITED, Takeda Pharmaceuticals North America, Inc., Takeda Pharmaceuticals, LLC, Takeda Pharmaceuticals America, Inc., and Ethypharm, S.A., Plaintiffs-Appellees, v. ZYDUS PHARMACEUTICALS USA, INC. and Cadila Healthcare Limited, Defendants-Appellants.
No. 2013-1406.
United States Court of Appeals, Federal Circuit.
Feb. 20, 2014.
*1361Arlene L. Chow, Hogan Lovells U.S. LLP, of New York, NY, argued for plaintiffs-appellees. With her on the brief were Eric J. Lobenfeld of New York, NY; Catherine E. Stetson and Frederick Liu, of Washington, DC. Of counsel was Philippe Yoland Riesen, of Tokyo, Japan.
Steven J. Moore, Kelley Drye & Warren, LLP, of Stamford, CT, argued for defendants-appellants. With him on the brief was James E. Nealon.
Before PROST, PLAGER, and CHEN, Circuit Judges.
Zydus Pharmaceuticals USA, Inc. and Cadila Healthcare Limited (“appellants” or “Zydus”) appeal from a final judgment of the U.S. District Court for the District of New Jersey finding that appellants had infringed claim 1 of U.S. Patent No. 6,328,-994 (“'994 patent”) and had failed to establish that it was invalid. For the reasons stated below, we reverse the district court’s finding of infringement, but affirm its ruling on invalidity.
Baokground
Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals North America, Inc., Takeda Pharmaceuticals, LLC, Takeda Pharmaceuticals America, Inc.,, and Ethypharm, S.A. (“appellees” or “Takeda”) own patents that claim the formulation for the brand-name drug Preva-cid® SoluTab tm. Prevacid® SoluTab tm contains the active ingredient lansoprazole, which is a proton pump inhibitor used .to treat gastroesophageal reflux disease, or acid reflux. It is the only proton pump inhibitor available as an orally disintegra-ble tablet. A patient taking Prevacid® SoluTab tm simply allows the tablet to disintegrate in his or her mouth, leaving *1362behind thousands of granules which the patient then swallows. The stated objective of the '994 patent is that the formulation contains granules small enough to avoid a feeling of roughness in the patient’s mouth upon disintegration.
In 2010, Zydus filed an abbreviated new drug application (“ANDA”) with the Food and Drug Administration, seeking to manufacture a generic version of Prevacid® SoluTab ™. Takeda then filed suit, alleging that Zydus’s ANDA product infringed multiple claims of several patents. Only claim 1 of the '994 patent remains at issue. Zydus counterclaimed, alleging that claim 1 was invalid for failure to comply with the requirements of 35 U.S.C. § 112.
Claim 1 recites:
An orally disintegrable tablet which comprises (i) fine granules having an average particle diameter of 400 gm or less, which fine granules comprise a composition coated by an enteric coating layer comprising a first component which is an enteric coating agent and a second component which is a sustained-release agent, said composition having 10 weight % or more of an acid-labile physiologically active substrate that is lansoprazole and (ii) an additive wherein said tablet having a hardness strength of about 1 to about 20 kg, is orally disin-tegrable.
994 patent col. 37 11. 43-53. The district court held a claim construction hearing, at which it construed the claim term “fine granules having an average particle diameter of 400 gm or less.” Takeda argued that the term should be construed to include a deviation of ±10%, because it is “universally accepted” that there is a 10% standard of error for particle size measurements. J.A. 154. Zydus, on the other hand, argued that the term should be construed as “precisely 400 gm.” J.A. 496. The district court agreed with Takeda, and construed the term to mean “fine granules up to and including the enteric coating layer having an average particle diameter of 400 gm (±10%) or less.” Takeda Pharm. Co. v. Zydus Pharms. USA Inc., No. 10-1723, 2011 WL 4736306, at *3-4 (D.N.J. Oct. 5, 2011).
The issue of infringement turned on how particle size was measured. During the manufacturing process, individual cores of lansoprazole are enteric coated using a fluid-bed coating process. Inevitably, that process results in a certain portion of the coated cores becoming fused together. These fused multi-cored granules are known as “hard agglomerates.”
Takeda argued that the average particle diameter should be determined by measuring each individual core, regardless of whether they had fused together into a hard agglomerate. Taking that measurement requires “virtual dissection” of hard agglomerates, meaning drawing an artificial line between the two fused cores such that the software will treat them separately for measurement purposes. Obviously, artificially dividing large hard agglomerates into several smaller granules for measurement purposes lowers the average particle size of a sample, making it more likely to infringe claim 1 of the '994 patent. Zydus argued that, to the contrary, because the specification describes measuring particle size after the coating process and says nothing about deagglomeration, it by definition includes hard agglomerates in the measurement of average particle diameter. In support of its position, Zydus pointed out that the actual size of the fused particles is what is relevant to how the granules feel in the patient’s mouth, *1363regardless of the size of the smaller fused cores that make up a hard agglomerate. Under the district court’s claim construction, where the maximum average particle size is 440 jxm, Zydus’s ANDA product would infringe claim 1 of the '994 patent if hard agglomerates were virtually dissected prior to measurement, but would not infringe if hard agglomerates were included in the measurement.
After a bench trial, the district court agreed with Takeda and found that the '994 patent requires measuring the average diameter of each core, regardless of how many cores are in a given hard agglomerate. Takeda Pharm. Co., Ltd. v. Zydus Pharms. USA Inc., No. 10-1723, slip op. at 12-13 (D.N.J. May 7, 2013) (“Opinion”). -Based on that finding, the district court determined that Zydus’s ANDA product infringed claim 1 of the '994 patent. Id: at 19-21. The district court further concluded that Zydus had failed to establish by clear and convincing evidence that claim 1 was invalid. Id. at 25-42. The court then entered an injunction preventing Zydus from manufacturing or selling its ANDA product until the expiration of the '994 patent. Id. at 43-46. Zydus appealed all of the district court’s rulings.
We have jurisdiction under 28 U.S.C. § 1295(a)(1).
Analysis ,
I. Claim Construction
Claim construction is-a question of law that we review without deference. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1455-56 (Fed.Cir.1998) (en banc). Our starting point in construing a claim term must be the words of the claim itself. See Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582- (Fed.Cir.1996); Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed.Cir.2005) (en banc) (“[T]he claims themselves provide- substantial guidance as to the meaning of particular claim terms.”). However, it is axiomatic that the claims “must be read in view of the specification, of which they are a part.” Phillips, 415 F.3d at 1315 (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed.Cir.1995) (en banc), aff'd 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996)). Additionally, a court “should also consider the patent’s prosecution history, if it is in evidence.” Markman, 52 F.3d at 980. Athough courts are permitted to consider extrinsic evidence, such as expert testimony, dictionaries, and treatises, we have cautioned that such evidence is generally of less significance than the intrinsic record. Phillips, 415 F.3d at 1317 (citing C.R. Bard, Inc. v. U.S. Surgical Corp., 388 F.3d 858, 862 (Fed.Cir.2004)).- Ultimately, “[t]he construction that stays true to the claim language and most naturally aligns with the patent’s description of the invention will be, in the end, the correct construction.” Renishaw PLC v. Marposs Societa per Azioni, 158 F.3d 1243, 1250 (Fed.Cir.1998). -
With these principles in mind, we turn to the disputed claim language. Zydus challenges the district court’s construction of the claim term “fine granules having an average particle diameter of 400 |xm or less.” The district court construed that term to include a ± 10% deviation. Zydus argues that it should be construed to require an average particle diameter of “precisely 400 |xm or less.” We agree with Zydus that the district court erred in reading a margin of error into the disputed claim term.
Beginning with the claim language itself — -as we must — there is no indication in *1364the claim that 400 gm was intended to mean anything other than exactly 400 gm. To the contrary, the phrase “400 gm or less” is not qualified by the word “about” or any other indicator of imprecision.
Moreover, the specification confirms that the inventors did not intend to deviate from that clear and unambiguous plain meaning. First, the specification contrasts the “fine granules” of the claimed invention with larger “conventional” granules, which it defines as “400 gm or more of average particle diameter.” '994 patent col. 2 11. 17-18. The specification explains that conventional granules of that size “produce a feeling of roughness in the mouth” — one of the very problems the claimed invention purports to solve. Id. col. 2 11. 16-17. That clear dividing line between the “fine” granules of 400 gm or less (which avoid a feeling of roughness in the mouth) and “conventional” granules of 400 gm or more (which do not) disappears if the “fine granules” are construed as incorporating a 10% deviation. Thus, there can be little doubt that the narrower construction “most naturally aligns with the patent’s description of the invention.” Renishaw, 158 F.3d at 1250.
Second, the specification goes on to explain that the maximum particle size is “practically 425 gm or less,” where “practically” means that “the particles may include a small quantity (about 5 weight % or less) of particles whose particle diameter is out of above described range.” '994 patent col. 5 1. 65-col. 6 1. 8. Elsewhere, the patent defines “average particle diameter” to mean the median particle diameter. See id. col. 5 11. 43-46. It would be impossible for a tablet to comply with the specification’s maximum particle diameter of practically 425 gm (meaning that only 5% of particles have diameters larger than 425 gm) if it had a median particle diameter of 440 pjn (meaning that 50% of the particles are larger than 440 m), as the district court’s claim construction would permit. This tension suggests that the inventors did not intend to incorporate a ± 10% deviation into the average particle diameter of claim 1.
Takeda argues that the inventors effectively acted as their own lexicographers and modified the plain meaning of the term “fine granules” in the specification. The specification states:
In the present invention, “fine granules having an average particle diameter of 400 gm or less, which fine granules comprise a composition coated by an enteric coating layer, said composition having 10 weight % or moré of an acid-labile physiologically active substance” have an average particle diameter of about 400 gm or less, in order that roughness is not felt in the mouth. Preferably, the average particle diameter of the fine granules is 300 to 400 gm.
'994 patent col. 5 11. 57-64 (emphasis added). Takeda maintains that the inventors therefore expressly defined 400 gm as an approximate figure, and that a skilled artisan would know that a standard deviation for particle-size measurements is ±10%. We disagree.
The word “about” is used to modify the phrase “400 gm or less” only three times in the specification. In addition to the passage quoted above, the specification states:
[T]he average particle a[sic] diameter of the included granules must be about 400 gm or less; preferably about 350 gm.
Id. col. 2 11. 20-22. And later, it reiterates:
The “fine granules” have an average particle diameter of about 400 gm or *1365less, preferably 350 |xm or less. Preferably; the average particle diameter of the fíne granules is 300 to 400 pm.
Id. col. 12 11. 58-61. In every one of these instances, the word “about” is immediately followed by a preference for an average-particle size lower than 400 pm. Nowhere does the specification suggest that an average particle size greater than 400 pm (even within 10% of that figure) could achieve the inventive result of avoiding a feeling of roughness in the mouth. Thus, we are' not persuaded that the mere presence of the word “about” at three points in the specification can justify a 10% expansion of claim scope.
Indeed, the remainder of claim 1 demonstrates that the. inventors knew how to express ambiguity in claim language when they so desired; it provides that-the tablet must have a hardness strength of “about 1 to about 20 kg.” '994 patent col. 37 1. 52 (emphasis added). Plainly, then, had the inventors desired the average particle diameter to include a margin of error, they could easily have included - the word “about” in the claim language’. In the absence of their decision to do so, however, we will not take it upon ourselves to rewrite the claim in that way.
This reading of the specification is confirmed by the prosecution history. There, the inventors distinguished the claimed invention over a potentially invalidating pri- or art reference because the reference failed to disclose an average particle diameter of 400 pm or less. J.A. 7228. The inventors explained that “[b]y having the average particle diameter of the granules within 400 pm, the feeling of roughness in a mouth can' be prevented.” J.A. 7228 (emphasis added). In other, words, the inventors have consistently relied on 400 pm as the dividing line between granules that would avoid roughness in the mouth and those that would not — meaning those that were within the scope of the invention, and those that were not. We long ago established that “[w]here there is an equal choice between a broader and. a narrower meaning of a claim, and there is an enabling disclosure that indicates that the applicant is at least entitled' to a claim having the narrower meaning, we consider the notice function of the claim to be best served by adopting the narrower meaning.” Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1581 (Fed.Cir.1996). Thus, even if the two proposed constructions before us presented an “equal choice” — and they do not — the narrower construction would be more appropriate.
We therefore reverse the district court’s claim construction and conclude that the proper construction of the disputed claim term is “fine granules having an average particle diameter of precisely 400 pm or less.”
II. Infringement
As explained above, the dispute as to literal infringement turned on whether the patent required virtual dissection of hard agglomerates prior to particle size measurement. Even using virtual dissection, however, Takeda measured Zydus’s ANDA product as having an average particle diameter of 412.28 pm — well outside the claimed range as we have now construed it. Appellants’ Br. 31; J.A. 8338. Thus, there can be no dispute that Zydus’s ANDA product does not literally infringe *1366claim 1 of the '994 patent.1
We therefore reverse the district court’s finding of literal infringement.
III. Invalidity
Zydus raises several challenges to the validity of the '994 patent based on a failure to satisfy the requirements of 35 U.S.C. § 112. A number of those arguments relatéd to the claim construction adopted by the district court, which we have now reversed, and are therefore moot. We will address the remaining arguments in turn.
A. Indefiniteness
We review a district court’s ruling on indefiniteness de novo, as it is a question of law. ePlus, Inc. v. Lawson Software, Inc., 700 F.3d 509, 516 (Fed.Cir.2012). “Whether a claim is invalid, for indefiniteness requires a determination whether those skilled in the art would understand what is claimed when the claim is read in light of the specification.” Morton Int’l, Inc. v. Cardinal Chem. Co., 5 F.3d 1464, 1470 (Fed.Cir.1993). As always, the party challenging the patent bears the burden of proving invalidity by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, — U.S.-, 131 S.Ct. 2238, 2242, 180 L.Ed.2d 131 (2011).
Zydus argues that the '994 patent is indefinite because it does not specify the method of measurement that should be used to determine average particle diameter.2 Zydus insists that there are several methods that could potentially be used to take that measurement, and the same sample could be either infringing or non-infringing depending on the measurement technique used. Thus, the skilled artisan has no way to determine whether his or her product infringes the '994 patent based on the information provided in the specification.
We disagree. It is true that there was evidence from both parties’ experts that there- are several possible ways to measure average particle diameter. Indeed, the patent specification itself identifies laser diffraction as just one “example” of such a measurement technique, '994 patent col. 5 11. 46-50, and the experts agreed that optical microscopy is another equally viable method. Additionally, the experts agreed that different measurement techniques could indeed produce different results. The variation arises from the difficulty in measuring the average diameter of particles that are not perfect spheres. By necessity, both techniques involve indirect measurements; laser diffraction involves analyzing the diffraction patterns of a laser beam passed through a field of particles, while optical microscopy involves equating a pixelated image with an equivalent spherical diameter. See J.A. 3733-34, 3736-37. Because the two methods use different means of approximating average particle diameter, they can produce different results even for the same sample.
However, we do not believe that the mere possibility of different results from *1367different measurement techniques renders claim 1 indefinite. Rather, the evidence established that both methods of measurement accurately report average particle diameter; the experts agreed that “the correct but differing particle size results obtained using various instruments are all equally correct, but each simply may be expressing its correct results in different terms.” J.A. 3983 (testimony of Zydus’s expert Dr. Harry Brittain); see also J.A. 4148-49 (testimony of Takeda’s expert Dr. Stephen Byrn).
Moreover, there is no evidence that the differences between these techniques are in fact significant; there was evidence before the trial court that although the results may be different, there is a “high degree of correlation for the results” between the two techniques, which should “give equivalent numbers with respect to any variants associated with either technique.” See J.A. 3738, 3792. And indeed, there was no evidence in this case that different measurement techniques in fact produced significantly different results for the same sample. To the contrary, the measurements of Zydus’s ANDA product using laser diffraction and optical microscopy, though not exactly the same, were substantially similar. Compare J.A. 8338 with J.A. 2115. Any theoretical minor differences between the two techniques are therefore insufficient to render the patent invalid. See PPG Indus., Inc. v. Guardian Indus. Corp., 75 F.3d 1558, 1563 (Fed.Cir. 1996) (finding no indefiniteness despite failure to specify which method should be used to measure ultraviolet transmittance because all conventional methods produced “essentially identical results”).3
Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313 (Fed.Cir.2003), on which Zydus relies, does not compel a contrary result. Amgen involved patents relating to the production of erythropoiet-in, a naturally occurring hormone that controls the formation of red blood cells in bone marrow. One of the disputed claims related to an erythropoietin glycoprotein product “having glycosylation which differs from that of human urinary erythropoiet-in,” or uEPO. Id. at 1340. However, the district court had found that “two uEPO preparations produced from the same batch of starting materials could nevertheless have different glycosylation patterns.” Id. at 1341. Thus, the claim itself was a moving target; as we explained, “one must know what the glycosylation of uEPO is with certainty before one can determine whether the claimed glycoprotein has a glycosylation different from that of uEPO.” Id. (emphasis added). We therefore affirmed the district court’s finding that the claims requiring “glycosylation which differs” were invalid for indefiniteness. Id. at 1342. That is a far cry from this case. Here, the claim term itself could not bé more straightforward; as we ruled above, the claim plainly requires an average particle diameter of 400 p,m or less. That there is more than one way of determining the average particle diameter of a particular sample does not render that clear claim language indefinite.4
*1368Therefore, we conclude that Zydus has not met its burden of establishing by clear and convincing evidence that claim 1 of the '994 patent is invalid for indefiniteness.
B. Written Description
The test for written description is “whether the disclosure of the application ... reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.” Ariad Pharm’s., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed.Cir.2010) (en banc). The question of whether a patent specification' contains sufficient written description is a question of fact that we review for clear error. Pozen Inc. v. Par Pharm., Inc., 696 F.3d 1151, 1166 (Fed. Cir.2012).
Zydus argues that claim 1 addresses average particle size in the finished tablet, while the specification only teaches how to measure particle size pre-tableting with no discussion of how to ensure particle size is. not altered by that process. Thus, Zydus argues that the specification does not demonstrate that the inventors were in possession of the claimed invention — tablets with particles of 400 ¡xm or less posi-tableting.
However, Zydus’s argument depends on there actually being an impact on particle size from the tableting process, and the evidence showed the opposite. Indeed, actual testing conducted by Takeda’s expert showed no effect from compression forces on the granules in Zydus’s ANDA product. J.A. 3756-57, 3872-73. This case is therefore distinguishable from Eli Lilly & Co. v. Teva Pharmaceuticals USA, Inc., 619 F.3d 1329 (Fed.Cir.2010), on which Zydus relies. There, we upheld a finding of invalidity where the invention related to particle size of a formulated drug but the specification only disclosed how to measure particle size pre-formulation. Id. at 1345. However, the evidence in that case demonstrated that the particle size of Teva’s product fell outside the claimed range before formulation and within it after formulation. Id. at 1344. Thus, without disclosing how to measure particle size post-formulation, the inventors had not demonstrated that they had in fact invented a formulated drug with sufficiently small particles. By contrast, here, the evidence established only a hypothetical possibility that tableting could affect particle size in a relevant way.5 We simply cannot say that the district court committed clear error by finding that such evidence was not clear and convincing proof of invalidity.6
C. Enablement
Under the enablement requirement of 35 U.S.C. § 112, “the specification *1369must enable one of ordinary skill in the art to practice the claimed invention without undue experimentation.’ Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., - 699 F.3d 1340, 1355 (Fed.Cir.2012) (quoting Nat’l Recovery Techs., Inc. v. Magnetic Separation Sys., Inc., 166 F.3d 1190, 1196 (Fed.Cir.1999)). Enablement is a question of law that we review de novo based on underlying factual findings. CFMT, Inc. v. Yieldup Int’l Corp., 349 F.3d 1333, 1337 (Fed.Cir.2003).
Zydus argues that the patent is invalid for lack of enablement because a skilled artisan would not be able to determine the average particle diameter using the coulter counter method of measurement without undue experimentation. The district court concluded that Zydus had not met its burden of establishing , lack of enablement by clear and convincing evidence because it had submitted only “conclusory statements” regarding the amount of experimentation necessary, and because there was no dispute that a skilled artisan would know how to measure particle size using laser diffraction and/or optical microscopy. See Opinion at 29-30.
We agree with the district court. It is well established that the “enablement requirement is met if the description enables any mode of making and using the invention.” Johns Hopkins Univ. v. Cell-Pro, Inc., 152 F.3d 1342, 1361 (Fed.Cir.1998) (emphasis added) (internal quotation marks omitted). Thus, because the patent identifies laser diffraction as a viable measurement technique, and there is no dispute that a skilled artisan would know how to use laser diffraction to measure particle diameter, Zydus has not established that the patent is invalid for lack of enablement on this basis.
However, we note for the record that if the district court had been correct that the patent requires deagglomeration prior to particle size measurement, we would be forced to reach a different conclusion regarding enablement. Specifically, nothing in the written description directs a skilled artisan to evaluate whether a sample contains “more than nominal” hard agglomerates prior to measurement, such that optical microscopy should be used, nor does it explain how one would make that determination. Similarly, it does not explain how to conduct virtual dissection of deagglom-erates using optical microscopy. Thus, if the patent required deagglomeration prior to measurement in certain circumstances, as the district court found that it did, it could not be said that the written description informed a skilled artisan how to make and use the claimed invention. However, for the reasons that follow, we believe that the district court clearly erred in making that finding and will not invalidate the patent on that basis.
Takeda argues that the skilled artisan would simply have known to use optical microscopy (and deagglomeration) when a sample contains more than “nominal” hard agglomerates. But the virtual dissection of agglomerates runs counter to the lone methodology disclosed in the specification. The only method of measurement discussed in the specification is laser diffraction, which cannot account for hard agglomerates. Indeed, there is no indication in the specification that the inventors themselves undertook deagglomeration of their own samples prior to measurement, or even evaluated whether deagglomeration was necessary. We cannot conclude that the patent affirmatively requires a step that was entirely absent from (and even precluded by) the procedure described in the specification.
And indeed, this conclusion is entirely consistent with the underlying objective of *1370the patent; ’ it is the actual size of the granule itself — regardless of how many cores it is comprised of — that determines whether or not the granules have a rough feeling in the mouth. If large hard agglomerates are “virtually” dissected (a telling phrase) for measurement purposes, a sample could be measured as having an average particle diameter of 400 |xm or less despite the fact that the actual size of the granules would create significant roughness in the mouth.
In light of our conclusion that the '994 patent does not require deagglomeration prior to particle size measurement, we conclude that it is not invalid for lack of enablement based on a failure to explain when and how to do so.
Conclusion
For the foregoing reasons, we reverse the district court’s claim construction ruling and resulting finding of literal infringement, affirm the court’s judgment of no invalidity, and remand for further proceedings consistent with this opinion.
REVERSED-IN-PART, AFFIRMED-IN-PART, AND REMANDED.
8.2 Benay v. Warner Bros. Entertainment, Inc. 8.2 Benay v. Warner Bros. Entertainment, Inc.
Copyright
Aaron BENAY; Matthew Benay, individually, Plaintiffs-Appellants, v. WARNER BROS. ENTERTAINMENT, INC., a Delaware corporation; Radar Pictures, Inc., a California corporation; Bedford Falls Productions, Inc., a California corporation; Edward Zwick, an individual; Marshall Herskovitz, an individual; John Logan, an individual, Defendants-Appellees.
No. 08-55719.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Oct. 8, 2009.
Filed June 9, 2010.
*622Sylvia Havens, Los Angeles, CA, for the appellants.
George R. Hedges, Gary E. Gans, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, Jaime Wayne Marquart, Daryl Marc Crone, Baker Marquart Crone & Hawxhurst, LLP, Los Angeles, CA, for the appellees.
David Aronoff, Lathrop & Gage LLP, Los Angeles, CA, for appellee Radar Pictures, Inc.
Before: W. FLETCHER and RICHARD R. CLIFTON, Circuit Judges, and JAMES K. SINGLETON,* Senior District Judge.
Plaintiffs are two brothers, Aaron and Matthew Benay, who wrote and copyrighted a screenplay, The Last Samurai (“the Screenplay”). The Benays contend that the creators of the film The Last Samurai (“the Film”) copied from the Screenplay without permission. They sued Warner Brothers Entertainment, Inc., Radar Pictures, Inc., Bedford Falls Productions, Inc., Edward Zwick, Marshall Herskovitz, and John Logan (collectively “Defendants”), who wrote, produced, marketed, and/or distributed the Film. Inter alia, the Benays alleged copyright infringement under federal law and breach of contract under California law.
The district court granted summary judgment to Defendants on the copyright and breach of contract claims. We affirm on the copyright claim. We reverse and remand on the breach of contract claim.
I. Background
The Benays wrote their Screenplay between 1997 and 1999. They registered it with the Writers Guild of America in 1999 and with the federal copyright office on February 23, 2001. The Benays’ agent, David Phillips, “pitched” the Screenplay to the president of production at Bedford Falls, Richard Solomon, on the telephone sometime between May 9, 2000, and May 12, 2000. Phillips provided a copy of the Screenplay to Solomon on May 16, 2000. According to Phillips, he provided the Screenplay with the implicit understanding *623that if Bedford Falls used it to produce a film, the Benays would be appropriately compensated. Solomon informed Phillips after receiving the Screenplay that Bed-ford Falls had decided to “pass” because it already had a similar project in development.
The Benays point to circumstantial evidence that, in their view, indicates that important aspects of the Film were copied from the Screenplay. Defendants contend that the Film was developed independently of the Screenplay. The Screenplay and the Film are similar in some respects and dissimilar in others.
The protagonist in the Screenplay is James Gamble, a successful West Point professor with a beautiful wife and a five-year-old son. Gamble travels to Japan at the request of President Grant. Gamble owes a debt to the President because then-General Grant saved Gamble’s career after he accidentally killed eight of his own men during the Civil War. Gamble is initially successful in training and leading the Japanese Imperial Army, which is victorious in its first battle against the samurai. However, that battle turns out to be a strategic blunder because it incites a fall samurai rebellion led by a treacherous samurai named Saigo. Gamble’s five-year-old son is killed during Saigo’s attack on a Christian church service. The death of his son leads Gamble to launch an attack against Saigo, which results in a devastating loss for the Imperial Army. Gamble falls into an opium-aided stupor, in which he is haunted by his failure, his mistake during the Civil War, and the death of his son. Gamble eventually is pulled out of this crisis by his wife and by Masako, a female samurai warrior who has double-crossed Saigo. The remainder of the Screenplay consists of Gamble’s campaign to exact revenge. A series of battles unfolds between the Imperial Army, led by Gamble, and the samurai rebels. The conflict eventually ends with Gamble killing Saigo in a sword fight with the help of Masako, who dies in the fight. Gamble returns to the United States, where he lives in a Japanese-style house with his wife and a newborn child named Masako.
The protagonist in the Film is Nathan' Algren, an unmarried alcoholic. He is haunted by his role in an attack on an innocent tribe during the Indian Campaigns. He has just been fired from his dead-end job hawking Winchester rifles when he is recruited by his former commander to train the Japanese Imperial Army in modern warfare. He travels to Japan as a mercenary. After Algren is captured by the samurai at the end of a disastrous first battle, he is exposed to traditional samurai culture. Algren bonds with Katsumoto, the honorable leader of the samurai rebellion, and falls in love with Taka, the widow of a samurai Algren killed while fighting for the Imperial Army. Algren assimilates into a samurai village, eventually joining the samurai in a final futile battle against the modernized Imperial Army. After the samurai army is devastated, Algren confronts the young Emperor and teaches him the value of traditional samurai culture before returning to live with Taka in the samurai village.
The Benays filed suit on December 5, 2005, exactly two years after the public release of the Film. They asserted claims of copyright infringement under federal law, and breach of contract, breach of confidence, and intentional interference with prospective economic advantage under California law. Only the copyright and breach of contract claims survived to the summary judgment stage. The district court granted summary judgment to Defendants on both claims.
The Benays timely appealed the grant of summary judgment.
*624II. Standard of Review
We review de novo the district court’s grant of summary judgment, viewing the evidence in the light most favorable to the non-moving party to determine the presence of any issues of material fact. See Kouf v. Walt Disney Pictures & Television, 16 F.3d 1042, 1044 (9th Cir.1994).
III. Discussion
A. Copyright Claim
To prevail on their copyright infringement claim, the Benays “must demonstrate ‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.’ ” Funky Films, Inc. v. Time Warner Entm’t Co., 462 F.3d 1072, 1076 (9th Cir.2006) (quoting Feist Pubs., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). Defendants do not deny that the Benays own a valid copyright, but they deny having copied from the Screenplay. The issue before us on appeal is whether there is substantial similarity between protected elements of the Screenplay and comparable elements of the Film. See id. (“Absent evidence of direct copying, proof of infringement involves fact-based showings that the defendant had access to the plaintiffs work and that the two works are substantially similar.” (quotation omitted)).
“ ‘When the issue is whether two works are substantially similar, summary judgment is appropriate if no reasonable juror could find substantial similarity of ideas and expression.’ ” Id. (quoting Kouf 16 F.3d at 1045). Substantial similarity is a fact-specific inquiry, but it “ ‘may often be decided as a matter of law.’ ” Id. (quoting Sid & Marty Krofft Television Prods., Inc. v. McDonald’s Corp. (“Krojft ”), 562 F.2d 1157, 1164 (9th Cir.1977)). “Indeed, ‘[w]e have frequently affirmed summary judgment in favor of copyright defendants on the issue of substantial similarity.’ ” Id. at 1077 (quoting Shaw v. Lindheim, 919 F.2d 1353, 1355 (9th Cir.1990)).
“The Ninth Circuit employs a two-part test for determining whether one work is substantially similar to another.” Shaw, 919 F.2d at 1356. To prevail in their infringement case, the Benays must “prove[ ] both substantial similarity ... under the ‘extrinsic test’ and substantial similarity ... under the ‘intrinsic test.’ ” Id. (emphasis in original). “The ‘extrinsic test’ is an objective comparison of specific expressive elements.” Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th Cir.2002). “The ‘intrinsic test’ is a subjective comparison that focuses on ‘whether the ordinary, reasonable audience’ would find the works substantially similar in the ‘total concept and feel of the works.’ ” Id. (quoting Kouf, 16 F.3d at 1045). On a motion for summary judgment, we apply only the extrinsic test. The intrinsic test is left to the trier of fact. See Swirsky v. Carey, 376 F.3d 841, 844-45 (9th Cir.2004); Funky Films, 462 F.3d at 1077. If the Benays fail to satisfy the extrinsic test, they cannot survive a motion for summary judgment. See Olson v. Nat’l Broad. Co., 855 F.2d 1446, 1448-49 (9th Cir.1988).
“The extrinsic test is an objective test based on specific expressive elements: the test focuses on articulable similarities between the plot, themes, dialogue, mood, setting, pace, characters, and sequence of events in two works.” Kouf, 16 F.3d at 1045 (quotation omitted). “A court must take care to inquire only whether the protectable] elements, standing alone, are substantially similar.” Cavalier, 297 F.3d at 822 (emphasis and quotation omitted). “Copyright law only protects expression of ideas, not the ideas themselves.” Id. at 823. “Familiar stock scenes and themes that are staples of literature are not protected.” Id. “Scenes-a-faire, or situations *625and incidents that flow necessarily or naturally from a basic plot premise, cannot sustain a finding of infringement.” Id. Historical facts are also unprotected by copyright law. Narell v. Freeman, 872 F.2d 907, 910-11 (9th Cir.1989).
Under the “inverse ratio” rule, if a defendant had access to a copyrighted work, the plaintiff may show infringement based on a lesser degree of similarity between the copyrighted work and the allegedly infringing work. See Shaw, 919 F.2d at 1361 (citing 2 M. Nimmer, Nimmer on Copyright § 143.4, at 634 (1976)); see also Rice v. Fox Broad. Co., 330 F.3d 1170, 1178 (9th Cir.2003). For purposes of the Benays’ copyright claim, we assume without deciding that the inverse ratio rule applies to lower the burden on the Benays to show similarity. Even if the Defendants had access to the Screenplay, the Benays have not shown sufficient similarity between the Screenplay and the Film to maintain an infringement claim under federal copyright law.
The Benays point to a number of similarities between the Screenplay and the Film. Both have identical titles; both share the historically unfounded premise of an American war veteran going to Japan to help the Imperial Army by training it in the methods of modern Western warfare for its fight against a samurai uprising; both have protagonists who are authors of non-fiction studies on war and w;ho have flashbacks to battles in America; both include meetings with the Emperor and numerous battle scenes; both are reverential toward Japanese culture; and both feature the leader of the samurai rebellion as an important foil to the protagonist. Finally, in both works the American protagonist is spiritually transformed by his experience in Japan.
We agree with the district court that “[w]hile on cursory review, these similarities may appear substantial, a closer examination of the protectable elements, including plot, themes, dialogue, mood, setting, pace, characters, and sequence of events, exposes many more differences than similarities between Plaintiffs’ Screenplay and Defendants’ film.” The most important similarities involve unprotectable elements. They are shared historical facts, familiar stock scenes, and characteristics that flow naturally from the works’ shared basic plot premise. Stripped of these unprotected elements, the works are not sufficiently similar to satisfy the extrinsic test.
1. Plot and Sequence of Events
In applying the extrinsic test, we look “beyond the vague, abstracted idea of a general plot.” Berkic v. Crichton, 761 F.2d 1289, 1293 (9th Cir.1985). Though the Screenplay and the Film share the same basic plot premise, a closer inspection reveals that they tell very different stories.
In both the Screenplay and the Film, an American war veteran travels to Japan in the 1870s to train the Imperial Army in modern Western warfare in order to combat a samurai uprising. Not surprisingly, the stories share similar elements as a result of their shared premise. In both, the protagonist starts in America and travels to Japan where he meets the Emperor, who is struggling to modernize Japan. Both protagonists introduce modern warfare to the Imperial Army, using contemporary Western weaponry and tactics. Both works feature a Japanese foil in the form of the leader of the samurai rebellion. And in both works the protagonist suffers a personal crisis and is transformed as a result of his interaction with the samurai.
Despite these similarities, the two narratives are strikingly different. We agree with the district court’s characterization:
*626Plaintiffs’ protagonist, Gamble, emerges from domestic security, to despair at the loss of his son, to revenge and triumph when he defeats his ruthless antagonist, Saigo. In contrast, the protagonist in Defendants’ film moves from isolation and self-destructive behavior, to the discovery of traditional values and a way of life that he later comes to embrace. Thus, unlike Plaintiffs’ Screenplay, which is largely a revenge story, Defendants’ film is more a captivity narrative reminiscent in some respects to Dances With Wolves.
(quotation omitted).
While the works share a common premise, that premise contains unprotectable elements. For example, there actually was a samurai uprising in the 1870s, the Satsuma Rebellion, led by Saigo Takamori, who is sometimes referred to as “The Last Samurai.” See Charles L. Yates, Saigo Takamori in the Emergence of Meiji Japan, 28 Mod. Asian Stud. 449, 449 (1994); Kenneth G. Henshall, A History of Japan: From Stone Age to Superpower 78 (Pal-grave Macmillan 2d ed.2004) (1999). While there is no clear historical analogue to the American protagonist who travels to Japan to help fight the samurai rebellion, it is not surprising that a Hollywood film about the rebellion would insert an American character.
This case is similar to Funky Films, in which the two works at issue told the story of a small funeral home operated by two brothers after the sudden death of their father. 462 F.3d at 1077. The works shared numerous similarities: in both works the older brother moved home from a distant city, was creative in contrast to his conservative younger brother, and initially had no interest in becoming involved in the family business; in both the business was financially fragüe; in both a rival funeral home attempted to take over the home but failed; and in both the younger brother changed his church affiliation in order to increase their client base. Id. at 1077-78. However, closer examination of the works revealed one to be essentially a murder mystery and the other to be a study of “the way the characters struggle with life in the wake of the cataclysmic death of [their] father.” Id. at 1078 (emphasis omitted). We therefore held that the plots developed “quite differently” and rejected the plaintiffs’ copyright claim. Id. Similarly, the Screenplay and Film in the case now before us tell fundamentally different stories, though they share the same premise and a number of elements that follow naturally from that premise.
2. Characters
The Benays point to similarities between various characters in the two works, most notably the American protagonists. But on close inspection there are only a few similarities that have significance under copyright law. Most of the similarities are either derived from historical facts or are traits that flow naturally from the works’ shared premises. See Olson, 855 F.2d at 1451-53 (noting that only distinctive characters are protectable, not characters that merely embody unprotected ideas).
The most similar characters in the two works are the American protagonists, but the differences between them at least equal the similarities. The Benays’ protagonist, Gamble, begins the Screenplay as a happily married and successful West Point professor, while the Defendants’ protagonist, Algren, begins the Film as an unmarried loner, a drunk, and a failure, with a meaningless job selling Winchester rifles; Gamble’s flashbacks are to his accidental killing of eight of his own men during a Civü War battle, while Algren’s are to his role in a brutal attack on an innocent Indian tribe; and Gamble gains *627an appreciation of Japanese culture and honor but returns to America at the end of the Screenplay, while Algren fully assimilates into the samurai way of life by the end of the Film.
Although both works include the leader of the samurai rebellion as a central character, he is based on a historical figure, Saigo Takamori, and is therefore unprotected for copyright purposes. Moreover, the Screenplay’s Saigo is a treacherous and ruthless warlord who deceives the Emperor, attacks a church service resulting in the death of Gamble’s son, and is killed by Gamble at the end of the Screenplay. By contrast, the Film’s Katsumoto is an honorable and spiritual samurai who respects the Emperor, fights only to preserve the honor of the samurai way of life, and becomes a friend and mentor to Algren by the end of the Film.
The two works present the Japanese Emperor in starkly different ways. The Emperor in both works seeks to modernize Japan. The Screenplay’s Emperor is confident, wise, and forward-looking. The Film’s Emperor, on the other hand, is young and tentative, torn between modernization and traditional Japanese culture, and is bullied by his advisors.
There are a number of important characters in the Film and the Screenplay who have no obvious parallel in the other work. In the Screenplay, Gamble’s wife Britany and his son Trevor play an important role in the development of the plot. Trevor’s death is the catalyst for Gamble’s opium-aided breakdown and is the motivation for his revenge against Saigo. Gamble’s relationship with his wife Britany is tested throughout the movie. The Screenplay also includes a character named Masako, a beautiful samurai warrior who betrays Saigo to help Gamble. In the Film, Algren is childless. He falls in love with Taka, the widow of a samurai warrior. But Taka plays a very different role in the Film from the roles played by Britany and Masako in the Screenplay. Taka helps Algren assimilate into samurai culture and shares few character traits with Britany. Taka is graceful and giving, while Britany is fiery and strong-willed. Unlike Masako, Taka is not a warrior. In the Screenplay, Britany’s father plays an important role in getting Gamble to Japan and is the central figure in a side-plot in which he attempts to break up Gamble’s marriage. There is no parallel character or side-plot in the Film. Finally, the Film includes Algren’s former commander during the Indian Campaigns, whom Algren despises. There is no parallel character in the Screenplay.
3. Theme
The district court noted that “both works explore general themes of the embittered war veteran, the ‘fish-out-of water,’ and the clash between modernization and traditions.” But to the extent the works share themes, those themes arise naturally from the premise of an American war veteran who travels to Japan to fight the samurai. Moreover, the works develop those themes in very different ways. The Screenplay exalts the Americanized modernization of Japan, expressed by Gamble triumphantly raising the American flag over Iwo Jima after killing Saigo. It characterizes samurai as part of an ugly class system from Japan’s feudal past, and is largely positive about the role of westerners in modernizing Japan. By contrast, the Film is ambivalent toward modernization and is nostalgic for disappearing Japanese traditions. The Film treats the samurai tradition as an honorable way of life, sadly left behind by modernization, and treats westerners as self-interested and exploitative.
4. Settings
Given that both works involve an American war veteran who travels to Japan to *628help the Emperor fight a samurai rebellion, it is not surprising that they share certain settings: a scene of the protagonist sailing into Japan, scenes in the Imperial Palace, scenes on the Imperial Army’s training grounds, and battle scenes in various places in Japan. These are all scenes-a-faire that flow naturally from the works’ shared unprotected premise and are therefore disregarded for purposes of the extrinsic test. See Cavalier, 297 F.3d at 824 (“[T]his setting naturally and necessarily flows from the basic plot premise ... [and] therefore ... constitutes scenes-a-faire and cannot support a finding of substantial similarity.”).
Some of the settings are strikingly dissimilar. As the district court noted, the “American settings of the two works are drastically different.” The Screenplay opens at West Point with a classroom scene, a snowball fight, and a scene in Gamble’s comfortable home. The Film, on the other hand, opens at a San Francisco convention hall where the drunk Algren is hawking Winchester rifles. In Japan, the Screenplay includes scenes in samurai castles and in an opium den where Gamble has a spiritual crisis, none of which is in the Film. The Film includes extended scenes in a samurai village. No such village appears in the Screenplay.
5. Mood and Pace
Both works contain violent action scenes. But we agree with the district court that the Screenplay “has a triumphant mood” and “is a fast-paced adventure/intrigue story,” while the Film “is more nostalgic and reflective in mood” and employs “leisurely sequences” in addition to its battle scenes. The two works have opposing perspectives on the modernization of Japan and the end of samurai culture. Further, the pacing of the two works is substantially different. The Screenplay jumps from battle scene to battle scene, while the Film has a long period of relative calm in which Algren is held in captivity in the samurai village.
6. Dialogue
There are limited similarities in dialogue between the two works. The Benays point to both works’ use of the term “gaijin.” But this word, which means “foreigner” or “stranger” in Japanese, naturally flows from the narrative of an American military advisor in Japan. See Grosso v. Miramax Film Corp., 383 F.3d 965, 967 (9th Cir.2004) (finding no substantial similarity where “the only similarities in dialogue between the two works come from the use of common, unprotectable poker jargon”). The Benays also point to the use of voice-overs by the protagonists in the two works. But the use of voice-overs is a common cinematic technique. A significant difference between the dialogues is that the Screenplay is written almost entirely in English (except for occasional words like “gaijin”), whereas the Film contains substantial exchanges entirely in Japanese. Cf. Shaw, 919 F.2d at 1358 (finding dialogue similar where “Plaintiffs’ expert has set forth, side-by-side, dialogue from a variety of characters which almost match”).
7. Title
A title standing alone cannot be copyrighted, but the copying of a title “may ... have copyright significance as one factor in establishing” an infringement claim. Shaw, 919 F.2d at 1362 (quotation omitted). The Benays make much of the fact that the two works share the title “The Last Samurai.” The Defendants respond that the identity of titles is not significant because Saigo Takamori, the historical figure on which much of the Film is based, is sometimes referred to as “The *629Last Samurai.” See Charles L. Yates, supra, at 449. The limited copyright significance of the shared title in this case is insufficient to overcome the overall lack of similarities between protected elements of the works.
8. Summary
“At a very high level of generality, both works share certain plot similarities.” Funky Films, 462 F.3d at 1081. “But ‘[gjeneral plot ideas are not protected by copyright law; they remain forever the common property of artistic mankind.’” Id. (quoting Berkic, 761 F.2d at 1293); see also Cavalier, 297 F.3d at 824 (“[Bjasic plot ideas, such as this one, are not protected by copyright law.”). A number of similarities between the works arise out of the fact that both works are based on the same historical events, take place at the same time and in the same country, and share similar themes. These similarities are largely between unprotected elements — historical facts, characteristics that flow naturally from their shared premise, and scenes-a-faire. See Berkic, 761 F.2d at 1293-94. Considering the Screenplay and the Film in their entire-ties, we conclude that the district court was correct in granting summary judgment to the Defendants on the Benays’ federal copyright claim.
B. Breach of Contract Claim
The Benays assert a claim for breach of an implied-in-fact contract under California law. Contract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas. Other previously important state-law protections, such as those against plagiarism, have been preempted by federal copyright law. See 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright (“Nimmer”) § 19D.02 (Matthew Bender, rev. ed.2009). Contract claims for the protection of ideas are not preempted by copyright law if they allege an “extra element.” As we wrote in Grosso, “To survive preemption, the state cause of action must protect rights that are qualitatively different from the rights protected by copyright: the complaint must allege an “extra element” that changes the nature of the action.” Grosso, 383 F.3d at 968 (quoting Del Madera Props. v. Rhodes & Gardner Inc., 820 F.2d 973, 977 (9th Cir. 1987)). The “extra element” in this case is “the bilateral expectation of compensation.” Id.
To establish a case for breach of an implied-in-fact contract based on the submission of their Screenplay, the Benays must establish that: (1) they submitted the Screenplay for sale to Defendants; (2) they conditioned the use of the Screenplay on payment; (3) Defendants knew or should have known of the condition; (4) Defendants voluntarily accepted the Screenplay; (5) Defendants actually used the Screenplay; and (6) the Screenplay had value. Mann v. Columbia Pictures, Inc., 128 Cal.App.3d 628, 647 n. 6, 180 Cal.Rptr. 522 (1982); see also Faris v. Enberg, 97 Cal.App.3d 309, 318, 158 Cal.Rptr. 704 (1979).
It is settled law in California that novelty is not required for an implied-in-fact contract claim arising out of unauthorized use. See Desny v. Wilder, 46 Cal.2d 715, 733, 299 P.2d 257 (1956) (disclosure of an idea may be protected by “contract providing that it will be paid for regardless of its lack of novelty” (quotation omitted)); Chandler v. Roach, 156 Cal.App.2d 435, 441-42, 319 P.2d 776 (1957). Defendants do not rely on any purported lack of novelty in the Benays’ Screenplay. Instead, they contend that we should affirm .the district court on any of three grounds. A grant of summary judgment may be affirmed on an alternative, ground so long as that ground is fairly supported by the record. See Security Life Ins. Co. of Am. v. Meyling, 146 F.3d 1184, 1190 (9th Cir.1998). The three grounds on which Defen*630dants rely are: (1) the Benays cannot establish the requisite fifth element of their contract claim, actual use of the Screenplay by the Defendants; (2) the Benays failed to file their contract claim within two years of the breach of contract, as required by the California statute of limitations; and (3) there was no privity of contract between the Benays and any of the Defendants other than Bedford Falls. We decline to affirm on any of these three grounds.
1. Actual Use of the Screenplay by Defendants
It is undisputed that defendants Edward Zwick and John Logan were working on a script entitled West of the Rising Sun before the Benays’ Screenplay was pitched to Richard Solomon. In West of the Rising Sun, a Civil War veteran joins a samurai and helps him lead a cattle drive in Japan. On April 12, 2000, Zwick sent a fax to Logan in which he described the theme of West of the Rising Sun: “There’s some nice political intrigue: a cattle drive to a starving city as provocation for a civil war; a rich and modern metaphor in the introduction of an American passion (beef) and an American agenda (trade), to a culture that has lived happily for thousands of years without either.” The Benays’ agent pitched the Screenplay to Solomon about a month later, sometime between May 9 and 12, and delivered it to Solomon on May 16.
West of the Rising Sun eventually evolved into the Film, The Last Samurai. The Film differs from West of the Rising Sun, and resembles the Screenplay, in two particularly important respects. First, the Civil War veteran is no longer a transplanted American cowboy helping to lead a Western-style cattle drive; he is now a military expert helping to modernize the Japanese Imperial Army. Second, the veteran no longer comes to Japan to work side-by-side with the samurai; he now comes to Japan to fight against the samurai. The parties dispute when this evolution took place and what, if anything, the evolution owes to the Benays’ Screenplay.
Defendants’ argument on appeal is not based on a factual contention that defendants Zwick and Logan did not have access to, and therefore could not have used, the ideas in the Benays’ screenplay in transforming West of the Rising Sun into the Film. Rather, Defendants contend that the Screenplay and the Film lack substantial similarity and that therefore, as a matter of law, the Benays cannot prove use of their Screenplay under California contract law.
Similar to the inference of copying in copyright law, California contract law “permits actual use of a plaintiffs idea to be inferred from evidence of access and similarity .... [T]his inference is not binding; defendant can rebut it through contrary evidence.” 4 Nimmer § 19D.07[C]; see Mann, 128 Cal.App.3d at 647-48, 180 Cal.Rptr. 522. In breach of contract claims, the level of similarity that permits an inference of actionable use depends on the nature of the agreement between the parties. See 4 Nimmer § 19D.08. In cases of explicit contracts where the terms of the agreement are spelled out, the level of similarity required depends on those terms. See 4 Nimmer § 19D.08[B] (comparing Fink v. Goodson-Todman Enters., 9 Cal.App.3d 996, 1008-13, 88 Cal.Rptr. 679 (1970) (where contract required payment for any work “based upon” the submitted work, court required substantial similarity between the works), with Weitzenkom v. Lesser, 40 Cal.2d 778, 792, 256 P.2d 947 (1953) (theoretically, parties could agree that the defendants must pay for any use “no matter how slight or commonplace the portion which they used”), and Jay S. Kenoff & Richard K. Rosenberg, *631“Form 9-3 Producer Multi-Picture Employment Agreement with Commentary,” in Entertainment Industry Contracts (Donald C. Farber & Peter A. Cross eds., 2006) (form contract whereby studio agrees to pay for submitted ideas whether or not they are ultimately used)).
Where the contract is implied-in-fact rather than explicit, the parties have not specified any standard. In such cases, “the weight of California authority is that there must be ‘substantial similarity’ between plaintiffs idea and defendant’s production to render defendant liable.” 4 Nimmer § 19D.08[A] (citing Kurlan v. Columbia Broad. Sys., Inc., 40 Cal.2d 799, 809, 256 P.2d 962 (1953); Sutton v. Walt Disney Prods., 118 Cal.App.2d 598, 603, 258 P.2d 519 (1953); Whitfield v. Lear 751 F.2d 90, 93 (2d Cir.1984)). The requirement of substantial similarity for implied-in-fact contract claims “aligns this field with copyright infringement ... •. [and] also means that copying less than substantial material is non-actionable.” Id: “Courts have specifically rejected the contention that liability could be imposed on defendants on the basis of less than substantial similarities.” Id.
However, “[f|rom the invocation of the copyright term ‘substantial similarity’ it does not follow ... that plaintiffs in idea-submission cases must prove substantial similarity of copyright-protected elements.” Id. Rather, because the claim is based in contract, unauthorized use can be shown by substantially similar elements that are not protected under copyright law. “ ‘There is nothing unreasonable in the assumption that a producer would obligate himself to pay for the disclosure of an idea which he would otherwise be legally free to use, but which in fact, he would be unable to use but for the disclosure.’” Blaustein v. Burton, 9 Cal.App.3d 161, 183, 88 Cal.Rptr. 319 (1970) (quoting Chandler, 156 Cal.App.2d at 441-42, 319 P.2d 776). Therefore, our holding (above) that the Screenplay and the Film are not substantially similar for purposes of copyright infringement does not preclude a finding of substantial similarity for purposes of an implied-in-fact contract under California law. See Grosso, 383 F.3d at 967 (affirming grant of summary judgment for defendants on copyright claim due to lack of substantial similarity, but remanding claim of breach of an implied-in-fact contract).
Defendants argue that because the Benays submitted a completed screenplay we must analyze their contract claim in the same manner as their copyright claim. Defendants’ argument is counterintuitive. They concede that if the Benays had submitted in outline form the idea of an American Civil War veteran who helps modernize the Japanese Imperial Army and fights against the samurai, the Benays would be protected against unauthorized use under an implied-in-fact contract though not under copyright law. But they argue that because the idea was embodied in a completed screenplay, an implied-in-fact contract can provide no protection beyond that already provided by copyright law.
California case law does not support the proposition that when a complete script is submitted under an implied-in-fact contract, only those elements of the script that are protected under federal copyright law are covered by the contract. In Ware v. Columbia Broadcasting System, Inc., 253 Cal.App.2d 489, 494-96, 61 Cal.Rptr. 590 (1967), the court of appeal was unwilling to find breach of an implied-in-fact contract where the only similarity between the plaintiffs completed script and the defendant’s television episode was that the protagonists in both spoke to inanimate figures (a mannequin in one and a minia*632ture museum exhibit in the other) and in the end themselves became inanimate figures. Id. at 490-91, 61 CaLRptr. 590. The court in Ware did not hold that a plaintiff who has submitted a completed script can have no contract-based protection of the ideas in that script beyond that afforded by copyright law. The court suggested that the outcome might have been different if the plaintiff had submitted only the basic idea of a protagonist who speaks with inanimate figures and then becomes such a figure. But the plaintiff in that case alleged an implied contract in which the use of an entire “literary property,” rather than merely the use of a concept or idea, was offered for sale: “Plaintiff does not allege that the parties contracted with respect to any idea, synopsis, or format. Literary property is what plaintiff had for sale; that is what he submitted to defendants, and that is the subject matter of his complaint.” Id. at 494, 61 Cal.Rptr. 590.
In Donahue v. Ziv Television Programs, Inc., 245 Cal.App.2d 593, 597, 601, 54 Cal.Rptr. 130 (1966), the court of appeal held that actionable use existed if there were “enough similarities in basic plot ideas, themes, sequences and dramatic ‘gimmicks’ ” between plaintiffs’ submission of a “format in written form, together with twelve story outlines, one screenplay and a proposed budget,” and defendants’ television series. In Desny, the California Supreme Court reversed a grant of summary judgment for defendants after comparing elements of plaintiffs submitted synopsis to a synopsis of defendants’ photoplay. 46 Cal.2d at 746-50, 299 P.2d 257. In Blaustein, the court found a triable issue of fact as to use after comparing the defendants’ movie with plaintiffs idea to film Shakespeare’s “The Taming of the Shrew” in Italy, with Richard Burton and Elizabeth Taylor starring, Franco Zeffirelli directing, and various scenes cut from or added to the play. 9 Cal.App.3d at 184, 88 Cal.Rptr. 319.
In Grosso, we recognized that the analysis of similarity under an implied-in-fact contract claim is different from the analysis of a copyright claim, even where the plaintiff has submitted a full copyright-protected script. 383 F.3d at 967-68. In that case, we affirmed summary judgment for the defendant on the copyright claim because we agreed with the district court that the defendants’ movie was not substantially similar to the plaintiffs screenplay. Id. But despite this conclusion, we reversed the grant of summary judgment as to the implied-in-fact contract claim and remanded to the district court. Id.
As noted above, the Screenplay and the Film share a number of similarities. Most notably, in both works, the protagonist is an embittered American war veteran who travels to Japan where he meets the Emperor, trains the Imperial Army in modern warfare, fights against the samurai, and in the end is spiritually restored. Both works are set at the time of the Satsuma Rebellion of 1877; both works rely heavily on the historical figure Saigo Takamori; and both works share the same title. These similarities are substantial for purposes of an implied-in-fact contract under California law.
We emphasize that we do not here decide whether, and to what degree, these similarities are due to use of the Benays’ Screenplay by Defendants. Suffice it to say that there may be evidence in the record from which a reasonable fact-finder could find unauthorized use by the Defendants. We leave to the district court on remand the task of determining whether there was unauthorized use by Defendants of elements or ideas from the Benays’ Screenplay.
2. Statute of Limitations
Defendants argue that the Benays filed their claim more than two years after *633their claim accrued, and that the claim is therefore barred by the statute of limitations. See Blaustein, 9 Cal.App.3d at 185, 88 CaLRptr. 319 (two year statute of limitations for implied-in-fact contract claims, under California Civil Procedure Code § 339). The Benays filed their claim exactly two years after the release of the Film. Therefore, if their claim accrued at any point before the Film’s release, it is time-barred. The district court rejected Defendants’ argument that as a matter of law the statute of limitations began to run before the first public release of the film. We agree with the district court.
Defendants contend that the date of accrual depends on when the Benays became aware of Defendants’ use of the Screenplay. Defendants argue that the Benays knew about the development of the Film before it was released, and that their claim therefore accrued before that date. However, the accrual date of an implied-in-fact contract claim “depends on the nature of [Defendants’] obligation, if any, to[the Be-nays].” Blaustein, 9 Cal.App.3d at 185, 88 CaLRptr. 319. In Blaustein, the court of appeal refused to find on a motion for summary judgment that the action was barred by the statute of limitations:
A trier of fact might conclude that [the actionable] use was intended to occur the moment a preliminary script is written embodying [plaintiffs] idea, even if in fact no motion picture production, based upon such script, ever occurs. The court might also find that the implied promise to pay arose upon respondents’ disclosure of the idea to a substantial segment of the public since such use would tend to destroy any further marketability of the idea.
Id. at 186, 88 CaLRptr. 319.
Because the parties’ intent is difficult to ascertain in implied-in-fact contract cases, California courts generally assume that the accrual date is the date on which the work is released to the general public:
[In] implied contract cases, the parties will not have defined the requisite use. Accordingly, in the absence of any reason to hold otherwise, only a use that “disclosed the idea to a substantial segment of the public” should be regarded as the kind of use requiring payment. For only that type of use “would certainly destroy any further marketability of the idea.”
4 Nimmer § 19D.07[D] (quoting Thompson v. Cal. Brewing Co., 191 Cal.App.2d 506, 510, 12 Cal.Rptr. 783 (1961)).
In Davies v. Krasna, 14 Cal.3d 502, 511— 12,121 Cal.Rptr. 705, 535 P.2d 1161 (1975), the California Supreme Court noted that “[a] suit for breach of an implied contract not to exploit an idea without paying for it does arise only with the sale or exploitation of the idea.” 14 Cal.3d at 511-12, 121 CaLRptr. 705, 535 P.2d 1161. In Thompson, the court of appeal held that extensive “test” advertising in San Diego and Sacramento started the running of the statute of limitations only because it “immediately disclosed the idea to a substantial segment of the public,” which “would certainly destroy any further marketability of the idea.” 91 Cal.App.2d at 510, 205 P.2d 767. In Donahue v. United Artists Corp., 2 Cal.App.3d 794, 802, 83 Cal.Rptr. 131 (1969), the court of appeal wrote that “the private auditioning of a film to national advertising agencies” did not compare with “the exhibition of the idea to ‘a substantial segment of the public in two metropolitan centers in this state,’ ” and therefore did not cause the action to accrue. The court held that the cause of action accrued at the later time, when the idea was exhibited to a “substantial segment of the public.” Id.
*6343. Privity of Contract
Finally, Defendants argue that there was privity of contract only between the Benays and Bedford Falls, and that the Benays’ contract claim must therefore be dismissed as to all other defendants. Privity between the parties is a necessary element of an implied-in-fact contract claim. See Rokos v. Peck, 182 Cal.App.3d 604, 617-18, 227 Cal.Rptr. 480 (1986); Mann, 128 Cal.App.3d at 647 n. 6, 180 Cal.Rptr. 522. The Benays point out that Defendants did not make their privity-ofcontract argument in the district court. The Benays therefore did not have an opportunity to organize and present evidence in the district court in response.
We decline to reach the question whether there is privity of contract between the Benays and defendants other than Bedford Falls. We leave it to the district court to decide this question if and when it is properly presented by Defendants.
Conclusion
We affirm the district court’s grant of summary judgment for Defendants on the Benays’ copyright infringement claim. We reverse the grant of summary judgment on the Benays’ breach of contract claim and remand for further proceedings consistent with this opinion. We award costs on appeal to the Benays.
AFFIRMED IN PART AND REVERSED IN PART.
8.3 Blehm v. Jacobs 8.3 Blehm v. Jacobs
Copyright
Gary D. BLEHM, Plaintiff-Appellant, v. Albert A. JACOBS; John Jacobs; The Life is Good Company, f/k/a Life is Good, Inc.; Life is Good Wholesale, Inc.; and Life is Good Retail, Inc., Defendants-Appellees.
No. 11-1479.
United States Court of Appeals, Tenth Circuit.
Dec. 27, 2012.
*1196Conor F. Farley (Stephen G. Masciocchi, with him on the briefs), Holland & Hart LLP, Denver, CO, for Appellant.
Natalie Hanlon-Leh (Jared B. Briant, Joel D. Sayres, and Katie R. Schwalb, with her on the brief), Faegre Baker Daniels LLP, Denver, CO, for Appellee.
Before BRISCOE, Chief Judge, GORSUCH, and MATHESON, Circuit Judges.
Appellant Gary Blehm brought this copyright infringement action against brothers Albert and John Jacobs and the Life is Good Company (collectively “Life is Good”).1 Mr. Blehm is the creator of copyrighted posters featuring cartoon characters called “Penmen.” He contends that numerous Life is Good depictions of a cartoon character called “Jake” infringe on his copyrighted works. The district court granted Life is Good’s motion for summary judgment, holding that no infringement occurred because the copyrighted and accused works are not substantially similar.
Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
I. BACKGROUND
A. Factual Background2
1. Development and Distribution of Mr. Blehm’s Copyrighted Works
Mr. Blehm is a commercial artist who lives in Colorado Springs, Colorado. In the late 1980s, he developed characters called “Penmen.” According to Mr. Blehm, each Penman is “a deceptively-simple looking figure” that “engage[s] in a variety of activities pulled directly from [his] colorful life experiences.” Aplt. Br. at 2. The Penmen have “round heads, disproportionately large half-moon smiles, four fingers, large feet, disproportionately long legs, and a message of unbridled optimism.” Id. at 3. Below is an example of a Penman.
The Penmen are a product of Mr. Blehm’s commercial art training. Through his training, Mr. Blehm learned how to “add a slight bend to a figure’s limb to show weight bearing into it” and how, as he puts it, to apply negative space. Aplt. Appx., Vol. 2 at 539. Eventually, Mr. Blehm developed rules and guidelines for drawing each Penman. These rules and guidelines include a specific shape for each Penman’s head, specific length and height requirements for each character, rules on fluidity and perspective, and the “Penmen parallel curve,” which Mr. Blehm employs to “create eye-pleasing shapes within the negative space.” Id. at 540.
Between 1989 and 1993, Mr. Blehm developed six posters featuring Penmen and registered them with the U.S. Copyright Office (the “copyrighted works”).3 Each poster contains hundreds of black-and-white Penmen in a variety of poses. The Penmen are arranged on the posters in multiple rows with consistent spacing. Many of the characters interact with one another, and some have only slight differences. The posters, some of which have golf or galactic themes, challenge purchasers to find identical Penmen within each poster.
In 1990, Mr. Blehm began selling his posters to distributors. From 1990 to 2004, Prints Plus sold his posters nationally. Prints Plus stores in the Cambridge-side Galleria and the Emerald Square Mall, both in the Boston area, displayed his posters prominently and found them to be best-sellers during the holiday season. In the early 90s, Mr. Blehm began selling his posters to Image Conscious, which distributed Mr. Blehm’s posters to stores across the country, including some in the Boston area. Starting in October 1991, McGaw Graphics sold Mr. Blehm’s posters to numerous Boston-area stores, including the Harvard Coop, a student bookstore in Harvard Square.
After experiencing success with the posters, Mr. Blehm expanded the Penmen line. He began making Penmen t-shirts. He developed a Penmen comic strip, which eventually was printed in newspapers with a combined circulation of over five million. Mr. Blehm also created a Penmen book, which is sold nationally.
*11982. The Jacobs Brothers, Life is Good, and the Development of “Jake”
Starting in 1989, the Jacobs brothers designed and sold t-shirts “infused with a positive undertone as a reflection of their beliefs.” Aplee. Br. 2. The brothers sold t-shirts in areas around Boston, including Harvard Square, not far from the Harvard Coop. During the 1993 holiday season, the Jacobses sold t-shirts from carts in the Cambridgeside Galleria and the Emerald Square Mall, both of which had Prints Plus stores that sold Mr. Blehm’s posters.
According to the Jacobses, around April 1994 John Jacobs drew a sketch of a figure with a red face, wide smile, sunglasses, and a beret. The figure was enclosed in two circles. John hung the sketch on the wall of the brothers’ apartment.
The Jacobses recall hosting a party in August 1994 at their apartment and soliciting feedback on the sketch from their friends. After a friend stated that the figure in the sketch “really has life figured out,” John Jacobs wrote “Life is good” under the image. They named the image “Jake,” a spinoff of their last name.
The Jacobses soon made and sold t-shirts featuring Jake at street fairs and to retailers. As demand for the shirts increased, John Jacobs added a torso, arms, and feet to the Jake head. Jake was portrayed engaging in simple activities, such as biking, hiking, golfing, and playing soccer. Below is an example of an early Jake image.
The Jacobses incorporated Life is Good in 1997 with the “overarching themes of optimism, simplicity, humor, and humility.” Aplee. Br. at 5. In 2003, they hired Joseph Burke and William Gillis to help design shirts. Depictions of Jake have increased in complexity over the years — from Jake engaging in simple poses to Jake engaging in actions and wearing clothes.
The Jacobses, Mr. Burke, and Mr. Gillis contend they had never heard of the Penmen before Mr. Blehm’s lawsuit.
B. Procedural History
In December 2009, Mr. Blehm filed a complaint against the Jacobses and Life is Good alleging four causes of action. The complaint was later amended to allege one count of copyright infringement and one count of contributory infringement, claiming that various Life is Good Jake images infringed Mr. Blehm’s copyrighted works.
In April 2011, Life is Good moved for summary judgment on three bases. First, Life is Good argued it had provided evidence that the accused Jake images had been independently created, thus negating any evidence that the company had copied from Mr. Blehm’s posters. Second, it argued that Mr. Blehm had failed to show that Life is Good had access to the copyrighted works to copy them. Finally, it argued that the Jake images are not substantially similar to the copyrightable elements of Mr. Blehm’s works.
The district court held that material factual disputes precluded summary judgment on Life is Good’s assertion that the Jake images had been independently created. The court also held that Mr. Blehm *1199had provided sufficient evidence that the Jacobses had access and opportunity to copy the Penmen posters. However, the district court granted summary judgment to Life is Good and dismissed Mr. Blehm’s infringement claims because the Jake images are not substantially similar to the legally protectable elements of the Penmen images.
Mr. Blehm filed a timely appeal from the summary judgment order.
II. DISCUSSION
“To establish [copyright] infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991); see Jacobsen v. Deseret Book Co., 287 F.3d 936, 942 (10th Cir.2002). Because Life is Good does not dispute that Mr. Blehm owns a valid copyright in the Penmen posters, only the second element, copying, is at issue.
The copying element of an infringement claim has two components. See Country Kids ‘N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1284 (10th Cir.1996); 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.01[B] (2010) (hereinafter “Nimmer”). First, a plaintiff must demonstrate that the defendant copied the plaintiffs work “as a factual matter.” Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 832 (10th Cir. 1993). Second, the plaintiff must establish “substantial similarity” between the alleg edly infringing work and the elements of the copyrighted work that are legally protected. Jacobsen, 287 F.3d at 942-43. This second component, which is a mixed question of law and fact, determines whether a defendant’s factual copying constitutes actionable infringement. See id. at 942; 4 Nimmer § 13.01[B] (explaining that a finding of factual copying “does not vouchsafe resolution of the legal question whether such copying ... gives rise to liability for infringement”).
Mr. Blehm argues that the district court erred in granting summary judgment to Life is Good on the basis that the legally protectable elements of his copyrighted works are not substantially similar to the accused Jake images. If we agree with Mr. Blehm, Life is Good urges that we affirm the grant of summary judgment on either of two alternative grounds: (1) Life is Good presented unrebutted evidence of the independent creation of Jake, or (2) Mr. Blehm failed to provide evidence that Life is Good copied the Penmen as a factual matter.
“We review the ... grant of summary judgment de novo, applying the same standard as the district court.” Jaramillo v. Adams Cnty. Sch. Dist. II, 680 F.3d 1267, 1268 (10th Cir.2012), as amended on denial of reh’g (June 28, 2012). Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[W]e view all facts and evidence in the light most favorable to the party opposing summary judgment.” Morris v. City of Colo. Springs, 666 F.3d 654, 660 (10th Cir.2012).
After a de novo review of the substantial similarity between the protectable elements of the Penmen and the accused Life is Good images, we affirm the district court’s ruling that the copyrighted and accused works are not substantially similar. We therefore need not address Life is Good’s proposed alternative bases for affirmance.
A. Substantial Similarity
1. Legal Framework
“In order to prove copying of legally [protectable] material, a plaintiff must typ*1200ically show substantial similarity between legally [protectable] elements of the original work and the allegedly infringing work.” Jacobsen, 287 F.3d at 942-43. This commonly stated rule raises two questions: First, what elements of a copyrighted work are legally protectable? Second, how do courts determine whether a copyrighted work’s legally protectable elements are “substantially similar” to an accused work?
a. Legally Protectable Elements: The Idea/Expression Distinction
Section 102(a) of the Copyright Act states that a copyright protects the “original works of authorship fixed in any tangible medium of expression,” including pictorial and graphic works. 17 U.S.C. § 102(a). To gain protection, the work must demonstrate “at least some minimal degree of creativity,” but “even a slight amount will suffice.” Feist, 499 U.S. at 345, 111 S.Ct. 1282. “The vast majority of works make the grade quite easily, as they possess some creative spark, no matter how crude, humble or obvious it might be.” Id. (quotations omitted).
But legal protection does not extend to all aspects of a copyrighted work. Id. at 348, 111 S.Ct. 1282 (“The mere fact that a work is copyrighted does not mean that every element of the work may be protected.”). Section 102(b) provides, “In no case does copyright protection ... extend to any idea ... [or] concept ... regardless of the form in which it is described, explained, illustrated, or embodied in such work.” 17 U.S.C. § 102(b). This provision enshrines the “fundamental tenet” that copyright “protection extends only to the author’s original expression and not to the ideas embodied in that expression.” Gates Rubber Co., 9 F.3d at 836; see also Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 547, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (explaining that copyright protection extends only to “those aspects of the work — termed ‘expression’ — that display the stamp of the [plaintiffs] originality”); Rogers v. Koons, 960 F.2d 301, 308 (2d Cir.1992) (“[I]n looking at ... two works of art to determine whether they are substantially similar, focus must be on the similarity of the expression of an idea or fact, not on the similarity of the facts, ideas or concepts themselves.”).
Thus, courts comparing works must first distill the protectable elements of the copyrighted work — i.e., determine what aspects constitute protectable expression. See Jacobsen, 287 F.3d at 943 n. 5; Country Kids, 77 F.3d at 1284-85 (“[W]e separate the ideas ... which are not protectable, from the particular expression of the work.”).4 But this process, “although *1201sound in theory, is difficult to apply in practice.” Country Kids, 11 F.3d at 1285. More than 50 years ago, Judge Learned Hand recognized that “[t]he test for infringement of a copyright is of necessity vague.” Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 274 F.2d 487, 489 (2d Cir.1960); see also Nichols v. Univ. Pictures Corp., 45 F.2d 119, 122 (2d Cir.1930) (explaining that drawing the line between what is protected and what is not “will seem arbitrary, [but] that is no excuse for not drawing it”). Because “no principle can be stated as to when an imitator has gone beyond copying the ‘idea,’ and has borrowed its ‘expression[,]’ [d]ecisions must therefore inevitably be ad hoc.” Peter Pan Fabrics, 274 F.2d at 489. We follow this case-by-case approach, see Country Kids, 77 F.3d at 1286-87; Gates Rubber, 9 F.3d at 836, and are mindful “that copyright law seeks to achieve a proper balance between competition based on public ideas and incentive to produce original work,” Country Kids, 11 F.3d at 1285.
Because the idea/expression distinction is “the most complex part of the substantial similarity inquiry,” Murray Hill Publ’ns, Inc. v. Twentieth Century Fox Film, Corp., 361 F.3d 312, 318 (6th Cir. 2004), we discuss a few examples where courts have separated the two. In Country Kids, this court held that copyright protection did not “extend to the size, shape and medium” of wooden dolls. 77 F.3d at 1285. We explained that the Copyright Act is concerned with artistic innovation and excludes protection for a work’s “utilitarian qualities.” Id. at 1287. The idea of a wooden doll is not copyrightable, nor are “any basic and utilitarian aspects of the dolls, such as the shape of a human body and standard ... doll poses which are both friendly and inviting and also utilitarian in their ease of manufacture and adaptability to the attachment of various wardrobes.” Id.
Similarly, a copyright owner has no monopoly over the idea of “fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing.” Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904, 916 (9th Cir. 2010), as amended on denial ofreh’g (Oct. 21, 2010). Nor does copyright protection extend to the idea of creating a doll with “an upturned nose, bow lips, and widely spaced eyes,” even if the allegedly infringing work has explicitly taken this idea from the copyrighted work. Mattel, Inc. v. Goldberger Doll Mfg. Co., 365 F.3d 133, 136 (2d Cir.2004).
Copyright instead protects the “particularized expression” of the idea of a doll with such features. Id. For example, although a copyright owner has no monopoly over the idea of a muscular doll in a standard pose, the owner may have a valid infringement claim for copying of the “particularized expression of that idea,” such as “the decision to accentuate certain muscle groups relative to others.” Mattel, Inc. v. Azrak-Hamway Int’l, Inc., 724 F.2d 357, 360 (2d Cir.1983). A copyright owner’s original stylistic choices qualify as protect-able expression if the choices are not dictated by the underlying idea. See Aliotti v. R. Dakin & Co., 831 F.2d 898, 901 (9th Cir.1987) (stuffed dinosaur toys cannot be substantially similar because of shared physiognomy, but a distinctive “eye style and stitching” could qualify as protectable expression if they are “not dictated by the idea of stuffed dinosaur dolls”).
In architecture, there is no copyright protection for the idea of using “domes, wind-towers, parapets and arches.” Sturdza v. United Arab Emirates, 281 F.3d 1287, 1297 (D.C.Cir.2002). “[T]o hold otherwise would render basic architectural elements unavailable to architects generally, thus running afoul of the very purpose of the idea/expression distinction: promoting incentives for authors to produce original work while protecting society’s interest *1202in the free flow of ideas.” Id. On the other hand, the combination of common architectural elements and use of specific designs may constitute original expression that is protected. Id. An architectural design may infringe if its use of public-domain elements gives off a similar unique effect in decoration and design as the copyrighted work. See id. at 1298-99.
Thus, a sweater designer can have copyright protection over an original way of using squirrels as a design element in conjunction with fall colors, stripes, and panels, even though those elements individually constitute ideas in the public domain. See Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1004 (2d Cir.1995). A plaintiffs “selective and particularized” alterations of a public-domain carpet pattern also can constitute protectable expression. Tufenkian Imp./Exp. Ventures,, Inc. v. Einstein Moomjy, Inc., 338 F.3d 127, 136 (2d Cir. 2003).
Even factual compilations may contain protectable expression. In Feist, the Supreme Court explained that facts themselves “are not original and therefore may not be copyrighted,” but that copyright does protect “an original selection or arrangement of facts.” 499 U.S. at 350, 111 S.Ct. 1282. In that case, the plaintiffs compilation of facts in a telephone directory “lack[ed] the modicum of creativity necessary to transform mere selection [of facts] into copyrightable expression.” Id. at 362, 111 S.Ct. 1282.
Having addressed the “vital distinction” between ideas and expression, Murray Hill, 361 F.3d at 318, we next discuss the test for determining when a copyrighted work’s protectable expression is substantially similar to an accused work.
b. Test for Substantial Similarity: The Ordinary Observer
Once a court has distinguished between unprotected ideas and protected expression in a copyrighted work, it must determine whether the protected elements are substantially similar to the accused work. See Country Kids, 77 F.3d at 1287. This “is primarily a qualitative rather than a purely quantitative analysis and must be performed on a case-by-case basis.” Gates Rubber Co., 9 F.3d at 839 (citation omitted).
Courts must determine “whether the accused work is so similar to the plaintiffs work that an ordinary reasonable person would conclude that the defendant unlawfully appropriated the plaintiffs [protectable] expression by taking material of substance and value.” Country Kids, 77 F.3d at 1288 (quotations omitted). Stated somewhat differently, the substantial similarity test asks “whether the ordinary observer, unless he set out to detect the disparities [between the works], would be disposed to overlook them, and regard their aesthetic appeal as the same.” Id. (quotations omitted). The proper focus is on the similarities between the works, not their minute differences. Id.
In Jacobsen, we asked whether the defendant’s alleged copying of the plaintiffs copyrighted memoir was “so minor as to be beyond the outer limits of substantial similarity.” 287 F.3d at 947. We have not defined the “outer limits” of substantial similarity, likely because the line between substantial similarity and no substantial similarity is imprecise. See Peter Pan Fabrics, 274 F.2d at 489 (“The test for infringement of a copyright is of necessity vague.”). Nimmer explains that summary judgment for the defendant is appropriate if the court “determines that any similarity between the works is insubstantial.” 3 Nimmer § 12.10[B][3]. Put somewhat differently, a court may grant summary judgment for the defendant if the protectable expression in the copy*1203righted work and the allegedly infringing work is “so dissimilar ... that no reasonable jury could find for the plaintiff on the question of substantial similarity.” Sturdza, 281 F.3d at 1297; see also Walker v. Time Life Films, Inc., 784 F.2d 44, 48 (2d Cir.1986) (“[W]e must decide whether the lack of substantial similarity between the [protectable] aspects of the works was so clear as to fall outside the range of disputed fact questions requiring resolution at trial.” (quotations omitted)); Twentieth Century-Fox Film Corp. v. MCA, Inc., 715 F.2d 1327, 1330 (9th Cir.1983) (“[S]ummary judgment for defendant is appropriate where works are so dissimilar that a claim of infringement is without merit.”).
2. Comparing the Penmen and Jake Images
Mr. Blehm asserts that the district court’s substantial similarity analysis excluded protected expression from the Penmen and focused on differences between the Penmen and Jake images rather than similarities. When his works’ expression is considered and compared to the Jake images for similarities, Mr. Blehm argues, a reasonable jury could determine that Life is Good unlawfully appropriated protectable expression by taking material of substance and value.5
The district court viewed the Penmen as “simple” stick figures and explained that any similarities between them and the Jake images “result[ ]from common themes and general concepts such as the idea of a person skateboarding, playing [F]risbee, playing a musical instrument, holding a birthday cake, roasting a marshmallow over a campfire, or holding his hand in a peace sign.” Aplt. Appx. at 1219. These themes, the court noted, are unprotected ideas. It further explained that no copyright protection extends to Penmen poses that flow from the described activities, or to anatomical similarities between the Penmen and Jake images.
After parsing out these elements, the district court concluded that “the remaining original expression [of the Penmen] that is subject to protection is thin.” Id. It determined that the Penmen and Jake images are different “with respect to color, the orientation of the body, the relation of the body to the head, expression, clothing and other features,” and that any similari*1204ties “flow from considerations external to the Plaintiffs creativity, such as common themes and natural poses.” Id. at 1219-20.
The district court was correct that Mr. Blehm has no copyright over the idea of a cartoon figure holding a birthday cake, catching a Frisbee, skateboarding, or engaging in various other everyday activities. Nor can the Jake images infringe on the Penmen because the figures share the idea of using common anatomical features such as arms, legs, faces, and fingers, which are not protectable elements. See Baby Buddies, Inc. v. Toys “R” Us, Inc., 611 F.3d 1308, 1317 (11th Cir.2010) (no copyright protection over common anatomical features of teddy bear); Goldberger, 365 F.3d at 136 (copyright in Barbie doll cannot “prevent a competitor from making dolls with upturned noses, bow lips, and widely spaced eyes”). Mr. Blehm’s copyright also does not protect Penmen poses that are attributable to an associated activity, such as reclining while taking a bath or lounging in an inner tube. See Aliotti, 831 F.2d at 901 n. 1 (no protection in common dinosaur pose of open mouth); Azrak-Hamway Int’l, 724 F.2d at 360 (no protection over figurine’s “traditional fighting pose”). These everyday activities, common anatomical features, and natural poses are ideas that belong to the public domain; Mr. Blehm does not own these elements. See Goldberger, 365 F.3d at 136.
Although we do not consider these unprotected elements in our substantial similarity analysis, we acknowledge that Mr. Blehm’s works do contain some protectable expression.6 The Penmen at first glance might be considered simple stick figures, but they are more nuanced than a child’s rudimentary doodling. For example, the prototypical Penman has a rounded, half-moon smile that takes up a substantial portion of the face. Mr. Blehm has chosen to omit any other facial features on the Penmen. Each figure is filled in black, except for the white half-moon smile, and each Penman’s head is detached, hovering above the body. Many of the Penmen stand facing the viewer, flashing the half-moon smile.
*1205Mr. Blehm also drew the Penmen according to his own rules and guidelines. The figure’s head might be perceived as slightly disproportional to the body.7 Its arms and legs are thin, long, and disproportionate to the torso, which is relatively short. Mr. Blehm also chose to give the Penmen four fingers — each about as thick as their arms and legs — on each hand, as well as feet that are disproportionately long and thick compared with the rest, of the body.
Thus, each Penman reflects particular stylistic choices Mr. Blehm has made. It is likely that these stylistic choices contributed substantially to the success of his copyrighted works. See Goldberger, 365 F.3d át 136 (“We can surmise that in the highly competitive, billion-dollar doll industry, getting the doll’s face and expression exactly right is crucial to success.”). Although some may discount Mr. Blehm’s drawings as simple stick figures, we are mindful that each Penman follows a seemingly uniform standard to achieve a unique expression. We also are cognizant that under the law of copyright, “even a modicum of creativity may suffice for a work to be protected.” Universal Athletic Sales Co. v. Salkeld, 511 F.2d 904, 908 (3d Cir. 1975); see Feist, 499 U.S. at 345, 111 S.Ct. 1282. Mr. Blehm’s works easily clear that threshold.
Having identified protectable expression in Mr. Blehm’s drawings, we must determine whether that expression is substantially similar to the allegedly infringing Life is Good images. Life is Good is not entitled to summary judgment unless its Jake figures are so dissimilar from the protectable elements of the Penmen that no reasonable jury could find for Mr. Blehm on the question of substantial similarity. See Sturdza, 281 F.3d at 1297.
To show substantial similarity, Mr. Blehm provided the district court with an exhibit juxtaposing 67 individual Penmen with a corresponding, allegedly infringing Jake image. We have reviewed these images and agree with the district court’s grant of summary judgment in favor of Life is Good. We now address two of Mr. Blehm’s proposed comparisons, which he highlights in his appellate brief, and explain why the Life is Good images are so dissimilar from the protectable elements of Mr. Blehm’s images that no reasonable jury could find in his favor.
a. The Peace Sign Images
The first example in Mr. Blehm’s exhibit juxtaposes a Penman and Jake image standing and displaying the peace sign. Because we must separate unprotected ideas from expression, our analysis does not consider that both drawings share the idea of a cartoon figure making a common hand gesture. But we do consid*1206er whether the Jake image is substantially similar to Mr. Blehm’s expression of this idea.
Mr. Blehm urges us to find certain similarities between the images. He notes that both have round heads. See Aplt. Br. at 22. But Mr. Blehm has no copyright protection in general human features. Further, the figures’ heads are not similarly round. Jake’s head is more oval and somewhat misshapen, whereas the Penman’s head is circular and uniform.
Mr. Blehm suggests that the figures have similar proportions, such as the size of the figures’ heads, arms, legs, and feet compared with their bodies. A close review of the figures, however, yields the opposite conclusion. Jake’s head is very large compared with the body, while the Penman’s head is relatively proportional. The Penman’s arms and legs are long and disproportionate to its truncated torso. Jake, on the other hand, has more proportional limbs compared with his torso. The figures’ feet are distinctly different: the Penman’s are thick, long, and roll-shaped, but Jake’s are shorter and triangular.
Nevertheless, there are some similarities between the Penman and Jake. Both have black-line bodies, four fingers, and large half-moon smiles, and their feet are pointed outward. But even these similarities have important differences, or are not protectable expression. For example, Jake’s fingers appear stubbier. The choice to display the figures’ feet outward also naturally flows from the common idea of drawing a two-dimensional stick figure and is thus unprotected.
The figures’ smiles thus seem to be the crux of this litigation. The Penman and Jake both face the viewer with disproportionately large half-moon smiles. A smile can be drawn in various ways. Here, they share a crescent shape, but the idea of a crescent-shaped smile is unprotected. Rather, the expression of the smiles must be substantially similar and important to the overall work.
The Penman’s smile is all white, as is Jake’s. The smiles on both figures take up a large portion of the head. But the Penman’s smile is rounded on the tips, whereas the tips of Jake’s smile are sharper angled. Jake’s smile, by virtue of the size of his head, is much larger compared with his body than is the Penman’s. And although both smiles are white,, the Penman’s is set on an all-black head, making it appear different from Jake’s, which is the outline of a smile on a white head with black sunglasses.
Indeed, Mr. Blehm’s decision to omit eyes and other facial features on the Penman makes the figure susceptible to an interpretation that the Penman is not smiling at all. One interpretation is that the white space on the head is not a smile, but is the Penman’s face with no, features. The black above the half-moon shape can be perceived as hair swooping down over the Penman’s forehead. Thus, the Penman’s lack of facial features make it susceptible to different interpretations.8 The Jake figure is not susceptible to similar confusion.
Any similarity between smiles also is insubstantial in light of other differences between the figures. Jake’s head is attached to the body, and his head is white and has black sunglasses. The Penman’s head is detached and is black with no eyes. Jake sports a beret, and his whole figure is displayed on a color background, whereas the Penman has no headwear and is portrayed against a plain white background. *1207The Jake image’s arms are positioned differently from the Penman, with Jake’s left arm curved, rather than sharp and angular. Mr. Blehm also chose a unique feature for the Penman’s peace-sign expression — white space in the figure’s hand— that the Jake image does not share.
We conclude that no reasonable juror could determine that the Jake figure is substantially similar to the protected, expressive choices Mr. Blehm used for the Penman figure,
b. The Frisbee Images
In another example, a Penman and Jake attempt to catch Frisbees between their legs. The two figures’ poses are similar — suspended in the air with legs outstretched and a hand descending to catch the disc — but we do not consider the pose in our analysis. Such a pose is common to this activity and is not protected expression. Again, the figures have large, half-moon smiles. And unlike the “peace sign” Jake, this Jake image has legs that are disproportionate to a truncated torso. The Penman’s legs also are long with respect to the torso, but not as disproportionate as Jake’s.
Jake’s legs are curved, but the Penman’s are straightened. The Jake image’s head differs in the same important ways as in the “peace sign” images. Jake’s arms appear to extend from his head, but the Penman’s arms attach to the top of the torso. Jake’s torso is much thinner (and disproportionately shorter) than the Penman’s; Jake has three fingers on each hand (not four); and the Jake image, unlike the Penman image, incorporates color on the canvas and disc. Jake’s feet are defined — toes and arches are visible — but the Penman’s are not.
Although the images share a similar idea of catching a Frisbee between the legs, the protectable expression in the Penman is not substantially similar to the Jake image.
c. Other Images
Mr. Blehm highlights 65 other Penmen as having been copied. Attached to this opinion is the “Penmen-Jake Chart” Mr. Blehm submitted to the district court in an effort to demonstrate substantial similarity-
We have reviewed these images, and an analysis similar to the discussion above applies. We need not describe their similarities and differences in detail here, other than to note that other Penman-Jake comparisons have even more substantial differences than the “peace sign” and “Frisbee catching” images described above. For example, many of the Jake images wear clothes when the Penmen do not.9 Others are drawn in a more three-dimensional manner than the Penmen.10 Some Jake and Penmen images do not even share the half-moon smile directed at the viewer.11 Many Jake images have sub*1208stantial use of color.12
In sum, these images are so dissimilar as to protectable expression that the substantial similarity question need not go to a jury.
Mr. Blehm urges that we should focus on the images’ similarities, not their differences. He is correct that “[t]he touchstone of the [substantial similarity] analysis is the overall similarities rather than the minute differences between the two works.” Country Kids, 77 F.3d at 1288 (quotations omitted). But this does not mean we merely look at the images, notice they are similar because they are cartoon figures with big smiles engaging in like activities, and end our substantial similarity analysis in Mr. Blehm’s favor. Mr. Blehm’s copyright protection lies in the particular way he chose to express these works. And we must be careful not to grant Mr. Blehm a monopoly over all figures featuring black lines representing the human form. Our analysis cannot be so generous as to sweep in all manner of stick figures as potentially infringing on his works.
As Nimmer explains, the substantial similarity inquiry is a problem of “line drawing.” 4 Nimmer § 13.03[A], Truer words could not have been spoken about this case. We have focused on the unique expression in Mr. Blehm’s Penmen. Other than the half-moon smile — -a feature among the figures that is similar, but not substantially so — we see insubstantial similarity in expression between the Penmen and Jake.
Copying alone is not infringement. The infringement determination depends on what is copied. Assuming Life is Good copied Penmen images when it produced Jake images, our substantial similarity analysis shows it copied ideas rather than expression, which would make Life is Good a copier but not an infringer under copyright law.
III. CONCLUSION
For the foregoing reasons, we affirm the district court’s grant of summary judgment in favor of Life is Good.
8.4 Hanover Star Milling Co. v. Metcalf 8.4 Hanover Star Milling Co. v. Metcalf
Trademark
HANOVER STAR MILLING COMPANY v. METCALF. ALLEN & WHEELER COMPANY v. HANOVER STAR MILLING COMPANY.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.
APPEAL FROM AND CERTIORARI TO THE. CIRGÜIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.
No. 23.
Argued May 7, 10, 1915; No. 30..
Argued May 10, 1915.
Decided March 6, 1916.
Two District Courts in different circuits having'granted temporary -injunctions, and both Circuit Courts of Appeals having reversed upon grounds that went to the merits and differed upon fundamental ■ questions- affecting the same trade-mark,' writs of .certiorari .were allowed by this court before final decrees, notwithstanding the general rule to the contrary.
Where neither of the parties, citizens of different' States, has.- registered the trade-mark in- dispute under any -act- of Congress or un-. der thé law of any - State, and no local rule arising from statute .or decision)is shown., cases involving.the use of such tjrade-mark must be ■ determined according to applicable common-law prin..eiples.
Redress accorded in trade-mark cases, is based upon the party’s right *404to be protected in the good will of the trade or business; and the English rule that a trade-mark is not the subject of property, except in connection with an. existing business, prevails generally in this country. .
The common law of trade-marks is but a- part of the broader law of unfair competition.
While common-law trade-marks and the right to their exclusive use-may be classed among property rights,- the right grows out of uso and not mere adoption.
Where two parties independently employ the same trade-mark or name, not in general use and susceptible of adoption, upon goods of the same class but in separate and remote markets,- the question of prior appropriation is legally insignificant in the absence of in-,, tent on the part of the later adopter to take the benefit of the reputation, or to forestall extension of the trade, of the earlier adopter.
While property in a trade-mark is not limited, so far as its use has. extended, by territorial bounds, the earlier adopter may not monopolize markets that his trade has never reached and where the mark - signifies no.t his goods but. those of another.
So far as controversy over a trade-mark concerns intrastate distribution as distinguished from interstate trade the subject is not within the sovereign power of the. United States.
Trade-mark fights, like others that rest in user, maybe lost by abandonment,.. non-user, laches or acquiescence.
Where a later adopter, in good faith and without notice of its use in other territory by an earlier adopter, expends' money and effort in building up a trade in a territory, which'the earlier adopter has-left. ' unoccupied for a long period — in this case more than- forty years— and into which his trade would not naturally expand, the earlier adopter is estopped to assert trade-mark- infringement in that territory. - '
A third party who enters the territory of such second, adopter and attempts to use the trade-name in a manner, calculated to, and which does, deceive- by similarity of package, even though the name of the actual manufacturer is placed thereon, is guilty of unfair competition from which the user of the trade-mark is entitled to protection.
There being- diverse citizenship and the jurisdiction of the District - Court resting thereoif the. decision of the Circuit Court of Appeals in a trade-mark case is final and' an appeal from the' decree is dismissed and the decree is reviewed here on certiorari'.
*405■204 Fed. Rep. 211, reversed. ,
208 Fed. Rep. 513, affirmed on certiorari and appeal- therefrom dismissed.
The facts, -which involve the rights of manufacturers of and dealers in flour to the use of “Tea Rose” as a trade-' mark, for flour sold in certain territory, and the effect of non-user on, right to use a trade-mark, are stated in the opinion.
Mr. Edgar L. Clarkson and Mr. Henry Fitts, with whom Mr. James E. Morrisette and Mr. John London were on the brief, for Hanover Star Milling Company.
Mr. J. Fred Gilster and Mr. Edward Everett Longan for Metcalf.
Mr. J. Fred Gilster and Mr. Edward Everett Longan, with whom Mr. L. O. Whitney was on the brief, for Allen & Wheeler Company.
delivered the opinion of the court.
These cases , were argued together, and may be disposed of in a single opinion.
In No.'. 23, the Hanover Star, Milling; Company, an Illinois corporation engaged ip the manufacture of flour in that State, filed a, bill in equity on March 4, 1912, in the United States District Court for the Middle District of Alabaipa, against Metcalf, a citizen of the State of Alabama and a merchant engaged in the business of selling. flour at Greenville, Butler County, in that State, to restrain alleged trade-mark infringement and unfair competition. . The bill averred that for twenty-seven years last past complainant had been engaged in the manufacture óf a superior and popular grade of flour-, sold by it-at *406all times under the name of “Tea Rose” flour, in a wrapping with distinctive markings, including the words.“Tea Rose” and a design containing three roses imprinted upon labels'attached to sacks and barrels; that this flour had been marketed thus by complainant in the State of Alabama for the preceding twelve years, during which time, by maintaining a high and uniform quality, by expensive advertising, and by diligent work of its representatives, .it had built up a large and lucrative market, with annual• sales'of more than $175,000.of Tea Rose flour in that State, and had established a valuable reputation for the name “Tea Rose” and the distinctive wrappings in Alabama and other States, particularly Georgia and'Florida; that until'shortly before the commencement of the’ suit complainant’s Tea Rose flour was the only flour made, sold, or offered for sale under that name in Butler County or elsewhere in the State of Alabama, and the name “Tea Rose” had represented and stood for cómplainant’s flour f and that recently the Steeleville Milling Company, of Steeleville, Illinois, had, through Metcalf’s agency, been marketing in Alabama, and particularly in Butler County, flour of its manufacture, in packages and wrappings" substantially identical with complainant’s and bearing a design containing ' three roses and the name “Tea Rose” upon the labels, in a manner, calculated to deceive and in fact deceptive to purchasers, thereby threatening pecuniary, loss to complainant exceeding $3,000 in amount and destroying the prestige of complainant’s “Tea Rose” flour and damaging its trade therein. ,
Defendant’s answer denied all attempts, to deceive purchasers, and further denied complainant’s right to the, exclusive use of the words “Tea Rose” or the picture of a rose, as a trade-mark; averred that long prior to complainant’s first use of it, and as' early as the year 1872, the name.had .been adopted, appropriated, and used.as *407a .trade-mark for flour by the firm of Alien .& Wheeler, of Troy, Ohio, and used by it and its sugcessor, The Align & Wheeler Company, continuously as such; and alleged that the Steeleville Milling Company had used its'“Tea Rose” brand for more.than sixteen years last past,‘and as early as the year 1899 had sold flour in Alabama under that label. .
Upon consideration of the bill and answer and affidavits submitted by the respective parties, the District Court granted a temporary injunction restraining Metcallf from selling flour labeled “Tea Rose/’ manufactured by..the Steeleville Company or any person, firm, or corporation other than the Hanover Company,' at Greenville, or at any other place in the Middle’District of Alabama. Upon appeal, the Circuit Court of Appeals for-the Tifth Circuit reversed this decree and remanded- the cause with direcrtions to dismiss, the bill. 204 Fed. Rep. 211. A writ of certiorari .was then allowed by this court.
In No: 30, The-Allen & Wheeler Company, a corporation of the State of Ohio,'manufacturing flour'at the City of Troy in that State, filed a bill against the Hanover -Star Milling Company on May 23; 1912,'in the United States District Court for the Eastern . District of Illinois, averring that in or before the year 1872 the firm of Allen & Wheeler,, then engaged in the manufacture of flour at Troy, adopted as a trade-mark for designating’ one of its brands the words “Tea Rose,” and from thénce until the year 1904 continuously used that trade-mark by placing it upon sacks,1 barrels, and packages containing the; •brand and quality of flour designated, by that term and-sold throughout the United States; that in 1904 the Allen' & Wheeler Company was incorporated and took over the mills, machinery, stock, trade-mark,, and good-will of the firm, since which time the corporation had eon--’ tinued to,, use the trade-mark upon,flour of its manufacture, and had distributed and sold such flour in the mar*408kets of the United States, whereby the words “Tea Rose” had become the common-law trade-mark of the Allen & Wheeler Company; that recently it had learned that thej Hanover Star Milling Company had adopted the words “Tea Rose” as designating'a brand of flour manufactured by. it, and, notwithstahding notice of complainant’s rights, was persisting- in the sale of its flour under that name and threatening to continue so to do;- and that defendant had sold large- quantities óf Tea Rose flour, particularly in the markets of the States of Alabama, Florida, and Mississippi, with.large gross sales,' and profits approximating $5,000 per year for the past five years, causing damage, and loss to complainant in excess of $3,000. . An injunction and an accounting of profits were prayed. Upon this bill, a demurrer filed by the Hanover Company, and affidavits presented by both parties, the District Court'granted a temporary injunction restraining the use of the words “Tea ítosé” as a trademark for flour, without territorial restriction. The Circuit Court of Appeals for the Seventh Circuit reversed this decree, and remanded-the cause to the-District Court for further ‘ proceedings " not inconsistent with its opinion. Hanover Star Milling Co. v. Allen & Wheeler Co., 208 Fed. Rep. 513. An appeal was taken to this court, and a writ of certiorari was subsequently granted. The appeal must be dismissed for want of jurisdiction, and the casé will be disposed of undér the writ of certiorari.
• No .question is raised respecting the propriety of passing upon the questions at' issue on a review of decisions rendered upon applications for temporary injunction. Both District Courts granted, such injunctions, and both Cirr cuit Courts of Appeals .reversed upon grounds that went-to the merits.- These courts differed upon fundamental questions, and it was because of this , that the writs of certiorari Were allowed, the situation being such , that it was deemed proper' to allow them before fina} decrees *409were made, notwithstanding the general rule to the Contrary. American Const. Co. v. Jacksonville Ry., 148 U. S. 372, 378, 384; The Three Friends, 166 U. S. 1, 49; The Conqueror, 166 U. S. 110, 113; Denver v. N. Y. Trust Co., 229 U. S. 123,133.
In both cases it was shown without dispute that the firm of Allen & Wheeler.adopt'ed and used the words “Tea Róse” as a trade-mark for one kind or quality of flour’, manufactured by it as early as the year 1872, and continued that use until the year 1904, when the Allen & Wheeler Company was incorporated and took over the mills, machinery, stock, trade-mark, and good-will of the firm and succeeded to its business. But there is nothing to show the extent of such use or the markets reached by it, except that in the year. 1872 Allen & Wheleer sold three lots of 25 barrels each to a firm in Cincinnati, Ohio, and one lot of 100 barrels to a firm in Pittsburgh, Pennsylvania; that.in the early. 70’s another firm in Pittsburgh was a custonxer for this brand; and that in the later 7Q’s a firm in Boston, Massachusetts, was a customer for the same brand. As to the Allen & Wheeler Co., there are affidavits stating in general terms that since its incorporation in 1904, and “continuously down to the present time,”-the "company has used the brand “Tea'Rose” for flour; but there is a remarkable absence of particular statements as to time, place, or circumstances; in short, no showing whatever as to the extent of the use or the markets reached. .There 'is nothing to show that the Allen & Wheeler “Tea Rose” flour has been even advertised in Alabama or the adjoining States, and there is clear and undisputed proof that it has not .been sold or-offered for sale or known or heard of by the trade in Alabama, Mississippi, or Georgia'. In No. 30, there is uncontradicted proof, that the Allen & Wheeler Co. is selling flour in Alabama ahd Georgia, but under the brands “Eldean Patent” and “Trojan Special.”
*410In both suits, the Hanover Star Milling Company introduced affidavits- fairly showing that shortly after its incorporation in- the year 1885 it adopted for, one of its brands of flour the name “Tea Rose/’ and adopted for the package or container, whether sack or barrel, a label bearing the name “Tea Rose” and the design already referred, to; and- that this trade-mark was adopted and used in good, faith without knowledge or notice that the name “Tea Rose” had been adopted or used by the Allen- & Wheeler'firm, or by anybody else; I¿ 1904 the Hanover Company began and has since prosecuted á vigorous and expensive Campaign of advertising its Tea Rose flour, covering the whole of the State of Alabama, and parts bf Mississippi, Georgia, and Florida,' employing many ingenious and interesting devices that are detailed in the proofs, with the result that at the commencement of the litigation its sales of' Tea Rose flour in these markets amounted to more than $150,000 a year, the Hanover Star Milling Company has come to be known as the Tea Rose mill, the reputation of the mill is bound up with the reputation of Tea Rose flour, and “Tea Rose” in the flour trade in the territory referred to means flour of the Hanover Company’s manufacture. There is nothing to show any present or former competition in Tea Rose flour between the latter company and the Allen & Wheeler firm or corporation, or that either party has ever advertised that brand of flour in territory covered by the activities of thé other.
■ Metcalf’s purchases of competing Tea Rose flour, which gave rise to the suit brought by -.the Hanover Company against him, were made from the St'eeleville Milling Company; an Illinois corporation, which, appears to have adopted the name and design of a tea rose for flour in the year 1-895.
It should be added that, so far as appears,-none of. the parties here concerned has registered the trade-mark *411under any act of Congress or under the law of any Staté. Nor does it appear that in any of the States in question there exists any peculiar local rule, arising from statute or decision. Hence, the cases must be decided according to -common-law principles of general application.
Interesting and' important questions are raised concerning the territorial extent of trade-mark rights. In behalf.of the Hanover Company it is, in effect, insisted:
(a) that the failure of the Allen & Wheeler Company and its predecessors to enter'the south-eastern-territory with "'their Tea Rose flour, and the fact that such flour has been- and is wholly unknown there under that name, disentitle' it to interfere with the Hanover Company’s trade established in good faith in that territory under the same mark;
(b) that the same considerations entitle Hanover to affirmative trade-mark rights of its own, enforceable against the ' Steeleville Company and everybody else over whom it has priority in that territory; and (c) that Hanover is entitled to relief against Steeleville and against Metcalf as its agént, upon the ground of unfair competition in trade regardless of the trade-mark right. An affirmative answer to the first proposition will decide the Allen & Wheeler case (No. 30) in favor of Hanover, and an affirmative answer to the third proposition will decide the Met-calf case (No. 23) in favor of Hanover, irrespective of. the disposition that might be made of the second proposition. In view of possible consequences,to the rights of parties not before the court, it is desirable to limit the range of our decision as much as practicable, especially as the proofs now before us are incomplete and in some respects unsatisfactory.
■ It will be convenient to dispose first of No. 30. Herp the. bill is rested upon alleged trade-mark infringement, pure and simple, and no question of unfair competition is involved. The decision .of the Court of Appeals for the Seventh Circuit in favor of the Hanoyer Company and *412against the Allen & Wheeler Company was rested upon the ground that although the adoption- of the Tea Rose mark by the latter antedated that of the Hanover Company, its only trade, so far as shown', was in territory no^th of the Ohio River, while the Hanover Company liad adopted “Tea Rose” as its mark in perfect good faith, with no knowledge that' anybody else was using or had used those words in such a connection, and during many years it had built up and extended its trade in the- southeastern territory, comprising Georgia, Florida, Alabama, and Mississippi, so that in the flour trade in- that territory the mark “Tea Rose” had come- to mean the Hanover Company’s flour, and nothing else. The court held in effectjthat the right to protection in'the exclusive use of a trade-mark extends only to. those markets where the .trader’s goods have become known and identified by his use of the mark; and because of the non-qccupancy by the' Allen & Wheeler Company of the southeastern markets it had no ground for'relief in equity. Let us test this by reference to general principles.
-. The redress that is accorded in trade-mark cases is based upon the party’s right to be protected in the good-will of a trade or business. The primary and proper function of a trade-mark is to identify the.origin or ownershipi of the article to which it is affixed. Where a party has been, in the habit of labeling his goods with a distinctive mark, so that purchasers recognize goods'thus marked -as being’of his production, others are deb*413wrong consists in the sale of the goods of one manufacturer or vendor for those of another. Canal Co. v. Clark, 13 Wall. 311, 322; McLean v. Fleming, 96 U.S. 245, 251; Manufacturing Co. v. Trainer, 101 U. S. 51, 53; Menendez v. Holt, 128 U. S. 514, 520; Lawrence Mfg. Co. v. Tennessee Mfg. Co., 138 U. S. 537, 546.
This essential element is the Same in trade-mark cases as-in cases of unfair competition unaccompanied with .trade-mark infringement, ,. In fact, the common law of trade-marks is but a.part of*-the broader law of unfair competition. Elgin Watch Co. v. Illinois Watch Co., 179 U. S. 665, 674; G. & C.Merriam Co. v. Saalfield, 198 Fed. Rep. 369, 372; Cohen v. Nagle, 190 Massachusetts, 4, 8, 15; 5 A. & E. Ann. Cas, 553, 555, 558.
’ Common-law trade-marks, and the right' to their exclusive use, are of course tq be classed among property rights, Trade-mark Cases, 100. U. S. 82, 92, 93; but only in the tense that a man’s right to the continued enjoyment of his trade reputation ánd the good-will that flows from it, free from unwarranted interference by others, is a property- right, for the protection of which a trade-mark is an instrumentality. As was said in the same case (p. 94), the right grows out of .use, not mere adoption. In the English courts it often has'been said that there is no property whatever in a trade-mark, as such. Per Ld. Langdale, M. R., in Perry v. Truefitt, 6 Beav. 73; per Vice Chancellor Sir Wm. Page Wood (afterwards Ld. Hatherly), in Collins Co. v. Brown, 3 Kay &. J. 423, 426; 3 Jur. N. S. 930; per Ld. Herschell in Reddaway v. Banham, A. C. 1896,199, 209. But.since in the'same cases the courts recognised, the. right of the party to the exclusive use of marks adopted • to indicate goods of his manufacture, upon the ground that '“A man is not to séll his .own goods Under the pretense that they are the goods of another man; he cannot be per- ■ mitted to practise such-a. deception, nor to use the means which- contribute to that end. He cannot therefore be *414allowed,.to usé names, marks, letters, or other indicia, by which he may induce purchasers to believe,, that the goods . which he is selling are the manufacture of another person” (6 Beav. 73); it is plain that in denying the.right of property in a trade-mark'it was inténded only to- deny such property- right except as appurtenant' to an established business or tradé in connection with which the mark is used. This is evident from the ^expressions used -in these and other English cases. Thus, in Ainsworth v. Walmsley, L. R. 1 Eq. Cas. 518, 524,. Vice Chancéllor Sir Wm. Page Wood said: “This court has takemupon itself to protect a‘ man in. $ie use- of a certain trade-mark as applied to .a particular description of articlé. He has no property in -.that mark per se, any more than, in any other fanciful denomination he may assume for his, own private use, otherwise than, with reference to his trade. .If he does not carry on a trade in iron, but carries op a trade in linen, and stapips a lion on' his linen, another person may stamp a . lion on iron; (but when he has appropriated a mark to a' particular species "of goods, and caused- his. goods to circulate with this mark upon them, the court has said that no one shall' be at liberty to defraud that man by using that mark, and' passing off-goods of his manufacture' as being the goods of the owner of that mark.”
In short, the trade-mark is treated as merely a protection for the good-will, and not the subject of property except in connection with an existing busiPéss. The same rule prevails generally in this country, and is recognized in the decisions • of this court already cited. See álso Apollinaris Co. v. Scherer, 27 Fed. Rep. 18, 20; Levy v. Waitt, 61 Fed. Rep. 1008, 1011; Macmahan Co. v. Denver Mfg. Co., 113 Fed. Rep. 468, 471, 475; Congress Spring Co. v. High Rock Congress Spring Co., 57 Barb. 526, 551; Weston v. Ketcham, 51 How. Pr. 455, 456; Candee v. Deere, 54 Illinois, 439,457; Avery & Sons v. Meikle, 81 Kentucky, 73, 86.
*415Expressions are found in many- of the cases to the effect that the exclusive right to the use of a trade-ttiark is founded on priority of appropriation. Thus, iri Canal Co. v. Clark, 13 Wall. 311, 323, reference is made to “the first appropriator”; in McLean v.Fleming, 96 U. S. 245, 251, to “the person who first adopted the stamp”; hi Manufacturing Co. v. Trainer, 101 U. S. 51, 53, the expression is “any symbol or device, .not previously appropriated,which will distinguish,” etc. But these expressions are to'be understood in their application to’the facts of the cases decided. In the ordinary case of parties competing under the same mark in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second ■ adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like.
Of course, if the symbol or device is already in general use, employed in such a manner that its adoption as an index of source or origin would only produce confusion and mislead the public, it is not susceptible of adoption as a trade-mark. Such" a case was Columbia Mill Co. v. Alcorn, 150 U. S. 460,; 464, affirming 40 Fed. Rep. 676, where it appeared that before complainant’s adoption of the disputed word as a brand for its flour the same word uwas used for the like purpose by numerous mills in different parts of the country.
That property in a trade-mark is not limited in its enjoyment by territorial bounds, but may be asserted and protected wherever the law affords a remedy for wrongs, is true in a limited sense. Into whatever markets the use of a trade-márk has extended, or its meaning has become *416known, there will the manufacturer or trader whose trade is pirated by an infringing use, be .entitled to protection and redress. But this is not to say that the proprietor of a trade-mark, good in the markets where it . has been employed, can monopolize markets that his trade has never reached and where the mark signifies not his; goods but those of another. We agree with the court below (208 Fed. Rep.. 519) that “Since it is the trade, and-not the mark, that is to be protected, a trade-mark. acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where-the trader’s goods have become known and identified by his use of the mark. But the mark, of itself, cannot travel to markets where there is no article to wear the .badge and no trader to offer the article.” .
. To say that a trade-mark right is-not limited in its en- . joyment by territorial bounds, is inconsistent'with sayings that it extends'as far as the sovereignty-in which-it has been enjoyed. If the territorial bounds .of sovereignty do not limit, how can they enlarge-such a right? And-if ' the mere, adoption'and use of a trade-mark in a limited market sb,all (without statute) create an exclusive Ownership of the mark throughout the bounds of the sovereignty, the question at once, arises, ‘ What, sovereignty? ” So far as the proofs disclose, the Allen & Wheeler mark has not been used at all, is not" known at all in a market sense, within the sovereignty-of Alabama, or the adjacent States,' where the controversy with the Hanover, Star Milling Company arose. And so far as the controversy concerns . intrastate distribution as distinguished • from interstate trade, the subject N not within the sovereign powers of the United States. Trade-Mark Cases, 100 U. S. 82, 93.
We are referred to an expression contained in the opinion of this court in Kidd v. Johnson, 100 U. S. 617, 619: “The right to úse the trade-mark is not limited to any place, city, or State, and, therefore, must be deemed *417to extend everywhere.” But a reference to the facts of the case, and the context, shows that, the language was not used in the sense attributéd to it in the argument: The question presented for decision related to the ownership of a trade-mark used by complainants (Johnson .& Co.) on packages and barrels containing’ whiskey, manufactured and sold by them in Cincinnati, and this turned in part upon the force, to be given to a written transfer executed by one Pike and delivered to complainant’s predecessors in business in.connection with a sale of the distillery and its appurtenances', which were Pike’s individual . property. Kidd, the defendant, claimed the' right to use the same mark as surviving partner of a firm of which Pike had been a member. The court, speaking by Mr. Justice Field, said (p. 619): "That tránsfer was plainly designed to confer whatever right Pike possessed. It, in terms, extends the use of the trader mark to Mills, Johnson & Co. and their successors. Such use, to be of any value, must necessarily be exclusive.' If others .also could use it, the trade-mark would be'of no service in distinguishing the whiskey of the manufacture in Cincinnati; and thus the company would lose all the benefit arising from the reputation the whiskey there manufactured had acquired in the market. The right to use the trade-mark is not limited, to any place, city; or State, and, therefore, must be ‘deemed’ to extend everywhere.” This does not import that the trade-mark right assigned was greater in extent than the trade in which it was used. The record in the case showed that complainant’s trade had been extended to New Orleans, and the controversy arose out of sales made there by defendants as licensees of Kidd. It was admitted in the answer that they had sold whiskey in competition with that of complainants at Néw Orleans, and under the same trademark, and the case was by stipulation treated as .a test case to settle whether Johnson . & Co. or Kidd had the *418exclusive right, or whether they had a joint right, to the use of the mark.
We are also referred to Derringer v. Plate, 29 California, 292, 295, in which it was said by the court: “The manufacturer at Philadelphia who has adopted and uses a trademark, has the same right of property in it at New York or San Francisco that he has at his place of manufacture.” In that case plaintiff averred that he was a resident of Philadelphia, and upwards of thirty years before the action invented, a pistol and adopted as á trade-mark for it the words “Derringer, Philadel.,” which was and ever since had been his trade-mark, and which he had caused to be stamped on the breech- of all pistols manufactured and sold by him; and that the defendant since 1858 had been engaged in the manufacture of pistols at San Francisco similar to plaintiff’s, on the breech of which he had stamped plaintiff’s trade-mark, etc. The report of the case shows (p. 294) that the only question presented was whether the California statute of 1863 concerning trademarks had repealed or abrogated the remedies afforded by the common law in trade-mark cases. This was answered in the negative, and in the course of the reasoning the court said, p. 295: “The right is not limited in its enjoyment by territorial bounds, but, subject only to such statutory regulations as may be properly made concerning the use and enjoyment of other property, or the evidences of title to the same, the'proprietor may assert and maintain his property right wherever the common law affords remedies for wrongs;” continuing with what we have first quoted. Although not expressly stated, it is implicit in the report that plaintiff’s pistols were on the market in San Francisco, and his trade-mark known there and imitated by defendant for that very reason.' It was such a mark as could not be accidentally hit upon.
It results from the general principles thus far discussed that' trade-niark rights, like others that rest in user, may *419be lost by. abandonment, non-user, laches, or acquiescence.. Abandonment, in the strict sense, rests upon an intent to abandon; and we have no purpose to qualify the authority of Saxlehner v. Eisner, 179 U. S. 19, 31, to that effect. As to laches and acquiescence, it has-been repeatedly, held, in cases where defendants acted fraudulently or with knowledge of plaintiffs’ rights, that relief by injunction would be accorded although an accounting of profits should be denied. McLean v. Fleming, 96 U. S. 245, 257; Menendez v. Hott, 128 U. S. 514, 523; Saxlehner v. Eisner, 179 U. S. 19, 39. So much must be regarded as settled.. But cases differ according to their circumstances, and neither of those cited is in point with the present. Allowing to the Allen & Wheeler firm and. corporation the utmost that- the proofs disclose in their favor, they have confined their use of the “Tea Rosé” trade-mark to a limited territory,- leaving the south-eastern States untouched. Even if they did not know — .and it does not appear that they did know — That the Hanover. Company was doing so, they must be held to have 4aken the "risk that some innocent party might, during their forty years of inactivity, hit upon the same mark and expend money and effort in building up ,a trade in flour under it. If, during the long period that has elapsed since the last specified sale of Allen & Wheéler “Tea Rose”— this was “in the later 70’s ” — that flour has been sold in other parts of the United States, exchiding the south-eastern States, no clearer evidence of abandonment by non-user of trademark rights in the latter field could reasonably be asked for. And when it appears, as it does, that the Hanover Company in good faith and without nóticé of the Allen & Wheeler mark has expended much money and effort in building up its trade in the south-eastern market,, so that ‘“¡Tea Rose” .there-mean's Hanover Company’s flour and nothing else, the Allen & Wheelér Company is estopped to assert trade-mark infringement'as to that territory.
*420The extent .and character of that territory, and its remoteness from that in which the Allen & Wheeler mark is known, .are circumstances to be considered.' Alabama a]one — to say nothing of "fh.e other States in question— has an area of over 50,000 square miles, and by the census of 1910 contained a population of more than 2,000,000. Its most northerly point -is.more than 250. miles south of Cincinnati, which is the nearest point at which sales of Allen. & Wheeler “Tea,Rose” are shown to have been made, and these at a time antedating by approximately forty years ,the commencement of the present controversy. We are not dealing with a case where the junior appropriator of a trade-mark is occupying .territory that would probably be reached by the prior user in the natural expansion of his trade, and need pass no judgment upon such a case. Under the circumstances that are here presented, to permit the Allen & Wheeler Company to use the mark in Alabama, to the exclusion of the Hanover Company, would take the trade and goodwill of the latter company — built up at much expense and without notice of the former’s rights — and confer it upon the former, to. the complete perversion of the proper theory of trademark rights.
The case is peculiar in its .facts; and we have found none precisely like it. The recent case of Rectanus Co. v. United Drug Co. (C. C. A. 6th), 227 Fed. Rep. 545; 549, 553, is closely analogous.
We come now to No. 23. The Court of Appéals (204 Fed. Rep. 211) denied relief to the Hanover Company against Metcalf under the head of trade-mark infringement partly Upbn the ground that Allen & Wheeler were the first appropriators of the mark, and that it had been ' continuously used by that firm and its successor down to the time of the suit j but principally upon the ground that, irrespective of whether this use was so general or continuous as to exclude other appropriation, the evidence. *421showed .a use of the same brand by the Steeleville Company commencing in the year 1895 and- carried on in the States of Illinois, Tennessee, Indiana, Arkansas and Mississippi,' with occasional shipments into Alabama;; a use so extensive and continuous as to exclude the claim of the Hanover Company to either-first appropriation or exclusive use in any of the territory.from which it sought tO'expel Metcalf; and that “the Steeleville Milling Company’s first use and its extensive and continuous use established by the evidence in the territory of its selection -gave it the unqualified right to extend unhampered its trade in flour under the Tea Rose brand into any part of -the United States, and that too without incurring the legal odium of unfair competition.” Relief under -the -head of unfair competition was denied upon the ground that the Hanover ^Company had not clearly shown that it had established by prior adoption the exclusive right to dress its goods in the manner claimed.
Upon the question of trade-mark rights as between the,. Hanover and the Steeleville companies (leaving Allen & Wheeler out of the question), the proofs are somewhat conflicting. There is evidence that Hanover’s use of the Tea Rose brand antedated the year 1893, and probably began as early as 1886. The extent and particulars of such use, prior to the year 1903, are not made to appear. On the other hand, Steeleville appears to have adopted the brand in the year 1895, and used it in trade in Illinois., Tennessee, Mississippi, Louisiana,, and- Arkansas; the extent and particulars of the use not being shown. Sharp competition appears to have been carried on between the two companies in selling flour under the Tea Itose brand at Meridian, Mississippi, in the years 1903 to 1905, with the result that the Hanover Company, claiming that its use of the mark for flour had antedated that' of the Steele-ville Company, succeeded in obtaining a favorable decision in an informal arbitration by officials of the Millers *422National Federation; and for this or some other reason Steeleville appears to have retired and left the Hanover. Company in complete control of the .Meridian .market. Aside- from the business done by the Steeleville Company at Meridian, there is no proof of business done by it in the south-eastern States, except that it made an isolated sale of Tea Rose flour to a merchant at Whistler, Alabama, in the year Í899, the quantity not stated, and twp isolated sales, involving a small quantity in each case, one to a retailer in Tupelo, Mississippi, in the year 1910, the other to a retailer in West Point, Mississippi, in January, 1912.
As we regard the proofs, they do not sustain the view of the Circuit Court of Appeals for the Fifth Cifcuit either as to first use or as to extensive, continuous, or exclusive use of the Tea Rose brand by the Steeleville Company, and there is nothing in the history of the use of the brand in the disputed territory to deprive the Hanover Company of its right to be protected at least against unfair competition at the hands of the Steeleville Company or of Metcalf as its representative.
That there was such unfair competition, commenced by Metcalf shortly before the bringing of the suit, the proofs clearly show. Repeating that since the year-1904 the Hanover Company had extensively advertised its Tea Rose -floúr throughout the State of Alabama and parts of Mississippi, Georgia, and Florida, with the result that its sales of that flour in those markets amounted to more than $150,000 a year, while the Hanover Star Milling Coriipany had come to be known as the Tea Rose mill, and the words “Tea Rose” in the flour trade in that territory meant flour of the Hanover Company’s manufacture and nothing else, and that, except for isolated sales in' Mississippi in 1910. and 1912, already mentioned, ño Teft Rose flour'other than that of the Hanover Company had been sold in that territory for a. number of *423'years, it further should be stated that Hanover Tea Rose was distributed in Butler County ,and adjoining counties in Alabama by the McMullan Grocery Company, whose place of business was at Greenville: . They-had built up a large trade for. this flour in Butler County and the neighboring counties, of Conecuh, Covington, Lowndes, and Crenshaw. The McMullan Company had the exclusive sale of the Hanover Company’s Tea Rose flour, so that Metcalf, who likewise did. business at Greenville,- was unable to procure it for distribution to his customers. A short time befoie the suit was commenced, however, he announced-to the public and the trade in Butler County, that he had secured Tea Rose flour, and on receiving % consignment from the Steeleville Company, which wa's' labeled “Tea Rose” and put up in packages closely resembling those used by the Hanover Company — so closely that, according to the undisputed evidence,. they are “calculated to and do in fact deceive the ordinary and casual purchaser of flour into the belief that he is purchasing the article of that'name manufactured by the said Hanover Star Milling Company” — Metcalf put large banners on his mules and dray advertising to the public that he had received a shipment of Tea Rose flour, and that it was “Steeleville Milling Company’s Tea Rose flour, best quality.” Metcalf, and his traveling salesman who marketed the greater part of this consignment, and several parties who purchased it in lots of from one to ten barrels, deposed that it was not sold under a representation that it was manufactured' by the Hanover Company, but, on the contrary, that it was Tea Rose‘flour manufactured by the Steeleville Milling Company. But Met-calf’s purpose' to take advantage of the reputation of the • Hanover Company’s Tea Rose flour is so manifest, and the tendency of the similarity of the brand and accompanying design, and of the make-up of the packages, to mislead ultimate consumers is so evident, that it seems to *424us a case of unfair competition is made out. The circumstances strongly indipate a fraudulent intent to palm off the' Steeleville Tea Rose flour upon customers as being the same as the Tea Rose flour made by complainant, the reputation of which is shown to be so well established. The mere substitution of “Steeleville” in the place of “Hanover” on the labels is not convincing either that the intent is innoeent or that the result will be innocuous, since it is. accompanied'with the words “Tea ftose,” (shown to have acquired a secondary meaning), and with the distinctive wrapping, both indicative, in that market of complainant’s flour. Complainant is thus shown to be entitled-to an injunction against Metcalf, irrespective of its claim to affirmative trade-mark rights in that territory. Coats v. Merrick Thread Co., 149 U. S. 562, 566; Elgin Nat'l Watch Co. v. Illinois Watch Co., 179 U. S. 665, 674. Adjudication of the latter claim may be made, if necessary, upon final hearing, when the proofs will presumably be more complete than they now are.
It results that the decree under review in No. 28 should be reversed, and the cause remanded for further procéed,ings in accordance with this opinion, and that the decree in No. 30 should be affirmed.
Decree in No. 23 reversed.
Appeal in No. 30 dismissed.
Decree in No. 30 affirmed.'
concurring.
I am disposed to agree that the decree dismissing the bill of the Hanover Star Milling Company should be reversed and that the. decree denying a preliminary injunction to the Allen and Wheeler Company should be affirmed, and I agree in the main with the reasoning of the court, so far as it goes. But I think it necessary to go farther even on the assumption that we are dealing with *425the question'of trade-marks in. the several States only so far as commerce among the States is not concerned. The •question before us, on that assumption, is a question of state law, since the rights that we are considering are conferred, by the sovereignty of the State in which they are acquired. This seems to be too obvious to need the citation of authority, but it is a necessary corollary of the Trade Mark Cases, 100 U. S. 82. Those cases decided that Congress cannot deal with trade-marks as used in commerce wholly between citizens of the same State. It' follows that the States can deal with them, as in fact they sometimes do by statute, Mass. Rev. Laws, c. 72,. §§ 2, 3, and when not by statute by their common law. '
As the common law of the’several States has the same origin for the most part and as their law concerning trademarks and unfair fcompetition is the samp in its general features, it is natural and very generally correct to say that trade-marks acknowledge no territorial limits. But it never, should be forgotten, and in .this casé it is important. to remember, that when a trade-mark started in one State is recognized in another it is by the authority , of a new sovereignty that gives its sanction to the right. The néw sovereignty is not a passive figureheád. It creates the. right within its jurisdiction, and what it creates it may condition, as by requiring the mark to be recorded, or it may deny. The question then is what is the common law of Alabama in cases like these. It appears to me that if a mark previously unknown in that State has been used and ■ given a reputation thpre, the State well may say that those who have spent their money innocently in giving it its local value are not to be defeated by proof that others have used the mark earlier in another jurisdiction more or less remote. Until I am compelled to adopt a different view I shall assume that that is the common law of the State. It appears to me that the foundation of the right as stated by the court requires that conclusion. See *426further Chadwick v. Covell, 151 Massachusetts, 190, 193, 194. Those who have uséd the mark within the State, are those who will be defrauded if another can come in and reap the reward of their efforts on the strength of a use elsewhere over which Alabama has no control.
I think state lines, speaking always of matters outside the authority of Congress, are important in another way. I do not believe that a trade-mark established in Chicago could be used by a competitor in some other part of Illinois on the ground that it was not known there. I think that if it is good in one part -of the State it is. good in all. But when it seeks to pass state lines it may find itself limited by what , has been done under the sanction of a power coordinate with that of Illinois and paramount over the territory concerned. If this view be adopted we get rid of all questions of penumbra, of shadowy marches where it is. difficult to decide whether the. business extends to them. We have sharp lines drawn upon the fundamental consideration of the jurisdiction originating the right. In most cases the change of jurisdiction will not be important because the new law will take up and apply- the same principles as the old, but when, as here,.justice to its own people requires, a State to set a limit, it may do so, and this court cannot pronounce its action wrong.