Interactive: You Are The Jury: The General Auto Insurance Commercial
The General - 30 second clip
Case: The Cartoonist vs The General
Published by Rachael O'Halloran on May 22, 2014
Plaintiff Ron Satija, Trustee of the Bankruptcy Estate of David Mowder and Heather Lynette Mowder vs Defendant Permanent General Assurance Corp - Copyright Infringement With Laches
Welcome back to another Interactive You Are The Jury case. This one is still in progress, so there is no verdict yet. This hub will be updated as the case has important changes (but not the play by play rhetoric) and, if and when there is a verdict.
The use of, and the true ownership of the cartoon template for the above commercial is what is at the center of this case. The following drawings of the cartoon are the only exhibits in this case as of this writing. As the case progresses, there may be more exhibits.
This is a copyright infringement lawsuit with laches as a defense.
Laches can be different in each case, so let's explore first, what laches is, and secondly, how laches can make a difference in a copyright infringement lawsuit.
Consider the next two drawings and please answer the poll question with your opinion.
Permanent's drawing registered with copyright
David Mowder (Cartoonist) filed as an exhibit with lawsuit
Question about the drawings
Do you think the two drawings are similar or not similar at all?
Shows their trademark symbol near his boot
The Reason For A Trustee
You have probably noticed a trustee has been appointed on this case and here are extenuating circumstances for that:
A point of interest, not lost on the judge or on the Defendant, is that David Mowder has a bankruptcy case going on at the same time he is suing this multi-million dollar company for copyright infringement.
In filing the bankruptcy forms listing his assets, nowhere did Mowder list in his estate that he owned a copyright for "The General" cartoon.
Because Mowder is bringing this lawsuit by saying he owns the copyright to the General, and because while he is in bankruptcy he cannot own anything of value, the court appointed a trustee to represent his estate. Therefore his estate is the presumed copyright owner for the duration of these proceedings.
The trustee whose name appears in the title, Ron Satija, will litigate this lawsuit for the bankruptcy estate.
What is Laches?
Laches (la'-chez or lay'-chez) can work for you or it can work against you. This is how.
Most copyright infringements go through the civil court system as opposed to criminal court.
Important: In civil court, there is a three year statute of limitations to file a lawsuit and in criminal court, there is a five year statute of limitations.
If you happen to learn of a copyright infringement outside of those timeframes (let's say 10 years has gone by), you are not out of luck just yet. The courts created "laches" so that copyright holders can use it in part as a reason for their late filing of a lawsuit.
There are usually special circumstances in copyright infringement lawsuits using laches, but at the least you are asking the judge to disregard the statute of limitations so you can sue the infringer.
You do have to prove when you truly FIRST learned of the infringement. If it was before three years ago, you have to show why you waited so long and hope the judge believes you so he gives you the okay to sue. If you didn't know about the infringement before three years ago and you have only become aware within the last three years, you still have to prove that is when you FIRST became aware in order for him to approve the case to go forward.
If you are truthful in your reasons and have no ulterior motives, it is called laches with clean hands. If you purposely waited ten years until the company was worth a trillion dollars before you filed your lawsuit, and that you truly FIRST knew about the infringement ten years ago, it is called laches with unclean hands.
Most copyright holders play by the rules. But then, you get some who do not.
The infringer can use laches the other way: "Your Honor, he waited too long to bring this lawsuit and by granting it, I will suffer undue hardship because he wants to sue me using my present net worth, instead of my net worth at the time of the alleged infringement. I respectfully request you do not grant laches."
TIME IS OF THE ESSENCE in any copyright infringement case.
In some cases, laches can be used positively as a sort of loophole to claim losses for an infringement past the three year statute of limitations, especially if it is ongoing infringement over a period of years. We just saw Harper Lee use laches very effectively with her Trademark Infringement lawsuit in the "Interactive You Are The Jury" case To Kill A Mockingbird case I recently published. She sued the museum who for over 20 years abused her good nature by infringing on her trademark after multiple Cease and Desist notifications. It all depends on how a judge views it and if the evidence and testimony ring true to him or not.
So, is Mowder's laches clean or unclean? Let's take a look.
Permanent General Assurance Corporation of Ohio, from this point on, is referred to as Permanent.
Permanent states that they contracted with an ad agency, Saifman Richards Agency, and David Mowder as an employee of that agency worked with a team to create the cartoon character of the General. The ad agency does acknowledge that David Mowder was often hired to illustrate someone else's ideas but their sub-contractor paperwork has been destroyed for that ten year period.
Permanent maintains that they, Permanent, are the official copyright holder of the General, which was registered by them in November 2000.
They also stated the obvious: Mowder exceeded the three year statute of limitations in order to file a lawsuit for copyright infringement (which is why Mowder is invoking laches) and that the untimely filing of this lawsuit prejudices against them because ten or more years has passed so all former employment records of sub-contractors have been destroyed which could have shown Mowder's involvement in the project.
Permanent maintains that David Mowder, as a work-for-hire employee of the ad agency, signed a standard contract with the ad agency which assigned the rights of any of his creations to Permanent when he became a Saifman Richards employee. When Permanent contracted with the Saifman Richards Agency, their standard contract was that any work-for-hire creations became the property of Permanent.
Since this case was filed in January 2013, Permanent has repeatedly been asking the judge to dismiss the case and the judge has been consistent in giving them a "no" answer.
Therefore they have changed tactics and are now asking to have Mowder's request for a jury trial denied and they are asking for a summary judgment of this case - where the judge renders the verdict himself, without a jury. This request also has been denied.
The judge has ruled on February 19, 2014 that the case will go to jury trial, primarily because of the unusual circumstances.
If either party didn't like the judge's summary judgment, they could appeal and the appeals could go on for a very long time at great monetary expense and of court time. With a jury trial, the jury verdict will usually stand, eliminating endless appeals. In this case, the judge gets off the hook of making a decision on a case that might not be favorable to his popularity with voters.
1. David Mowder's side
In his lawsuit filed January 11, 2013, through his trustee, David Mowder says that fifteen years prior, in 1998, when he was living in Ohio and acting as an independent contractor for Permanent General Assurance Corporation of Ohio (from here on referred to as "Permanent"), he is the cartoonist who created the drawing of "The General" character with the understanding that it was only going to be used on a limited basis - per their request, to help Permanent promote their 1998 summer picnic.
He says that after the 1998 summer picnic, Permanent began to use the General in their advertisements and commercials without his permission and now are infringing on his copyright of the drawing.
Because the filing of this case is in excess of the three year statute of limitations, he is also asking for a laches defense.
Probably the most important and devastating blow to Mowder's case is his own testimony. Mowder lived in Kansas City from December 2000 until October 2009. He testified that after moving from Ohio to Kansas City, he said he thought he "might have seen an ad on TV here or there using the General" but he wasn't sure.
David Mowder stated he was not aware of how much Permanent had used the General in their promotions until he left Kansas City and came back to Ohio in 2009. He also testified that in 2009 he reached out to a former coworker at the Saifman Richards Agency where he was employed at the time in question, and the former coworker told him not to file this lawsuit. So acting on his advice, he didn't file.
Mowder testified that his late filing is due to the fact that his friend told him not to push this issue to file a lawsuit. (This is important because the judge will place a lot of weight on this statement, whether it is true or not.)
In 2009, the Saifman Richards Agency destroyed all purchase orders (including Permanent's) from their jobs from the previous ten years in a paperwork reduction measure, so now there is no record of which artists they employed were actually involved with the creation of the General.
In his January 11, 2013 lawsuit, David Mowder is asking for compensatory damages due to the alleged infringement, for the court to order Permanent to destroy all infringing material (drawings, video, prints, etc.), and for an injunction against Permanent so they stop using the General character now and so they can't use it into the future.
Mowder is also asking for a jury trial, which the judge granted on February 19, 2014.
Do Not Copy
Timeline from The General's website
This case, if the parties do not settle out of court first, may get interesting because there are some unusual challenges here -- not only with the laches defense (please read laches section to fully understand the concept because someday it may apply to you), but also with the company's timeline, their allegations that he was a work-for-hire employee, and the expressed stipulation for "limited use" of the drawing. Permanent has not confirmed or denied the "limited use" allegation.
The link shows the history of Permanent General Assurance Corporation's alleged usage of The General, as found on their website. This is their timeline which is not verified by an outside source.
I don't know if they intend to bring this timeline into their lawsuit. As of yet, none of Permanent's company history appears in the court documents that I have read, but I think the timeline here is what may become important as this case goes on.
If the drawing was made prior to the summer of 1998 to promote the 1998 summer picnic, Permanent's timeline may be a double-edged sword for both parties because the timeline says in April 1997 Permanent began promoting their product using "The General."
In November 2000, Permanent filed a copyright. That's a long time between announcing their use of "The General" and their actual filing for copyright to cover their collective butts on ownership. It's just my observation, nothing is in the court records about this.
If you were on the jury ...
What would be your opinion regarding Mowder's claim using laches (untimely filing for the statute of limitations) is concerned?
Summary of each side's position
Permanent sees it this way:
Mowder was a sub-contractor and anything he created while working for the ad agency becomes the property of Permanent; this has been the law for years for sub-contractors.
Permanent sees the General commercials have been so profitable for the company, that Mowder now wants a piece of the action BUT he also wants to plead laches and
- have the court overlook the fact that he didn't file his lawsuit back in 2000 (esp when The General wasn't worth as much in dollars if he were to have sued back then)
- to believe him when he said he didn't know about the commercials, and
- to believe him when he said a friend told him not to file.
Mowder sees it this way:
Mowder is saying Permanent has been using his cartoon since 1998 when they were only given permission to use it to promote a 1998 summer picnic.
In his defense of laches, he says he didn't notice until much later in the 2000s that Permanent was using his General design. (Even though these commercials have been running around the clock, often all night long in most US cities!)
He is claiming a couple of things here -and both are contradictory from my view. I've read the transcripts a couple of times and the links are at the end of this article for you to read too so you can see what you think.
On one hand he is claiming they've been using it since 1998 - Doesn't this show his awareness?
On another hand he is blaming bad advice from a friend as the reason he didn't file
And on yet another hand, he is saying that HE himself noticed it only after he moved to back to Ohio after living in Kansas City between December 2000 and October 2009. Both sides agree that he lived in Kansas City for the 9 years.
So Mowder is saying he wants his statute of limitations to start in October 2009 when he moved back to Ohio ... which is still six full years ago and clearly three years past the statute of limitations and to allow laches because a friend gave him bad advice about suing.
Permanent is saying this is a legal ambush, that Mowder was very aware of The General's popularity and that the company was making a profit. They are countering that this lawsuit will cause undue hardship on them to pay him for a claim that has no merit since:
1) Mowder was an employee for hire and therefore all his work belongs to the company and there are no records left at this point because they were destroyed in 2009.
2) Mowder lawsuit is well outside the 3 year statute of limitations.
3) Mowder waited an extensive period of time to file to make the lawsuit worth more in settlement dollars.
Is this case Mowder's goose who laid the golden egg?
What do you think is Mowder's chief motivation in bringing this lawsuit?
Ruling since February 19, 2014
Considering that Mowder's friend and coworker advised him not to file and this delayed the filing, The Court agreed to submit the defense of laches to the jury to let them decide whether David Mowder's delay was unreasonable and if so, whether Permanent is being burdened to pay a settlement.
On February 19, 2014, the Court order two experts to be consulted:
1) a Certified Public Accountant (CPA) to determine Permanent's net worth in 1998 and at present day, and
2) a Ph.D with a Masters in Business Administration (Ph.D, MBA) as an expert to determine if the character of the "General" was the driving force (the reason) behind Permanent's business success.
Naturally, Permanent objected to this and Mowder did not.
The judge also gave notice to each party that the jury will be made aware of Mowder's monetary claim for damages and the requested injunctions so that the jury can decide from there if Mowder's delay was reasonable or unreasonable and to include the reports from the two experts in their deliberations.
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© May 22, 2014 Rachael O'Halloran
© 2014 Rachael O'Halloran