This image provided by Disney shows a teenage Elsa the Snow Queen, voiced by Idina Menzel, in a scene from the animated feature “Frozen.” 

Disney and its lawyers from Arnold & Porter have been handed a setback in one of the more ill-conceived lawsuits I can recall: Going after people who dress up as Disney-owned characters like Elsa from “Frozen” or Chewbacca from “Star Wars” to perform at children's birthday parties.

It's not just that the legal argument is weak. Or that the suit makes Disney look like a jerk. But as anyone who has ever planned a children's birthday party could tell you, it's also a dubious business move.

As first reported by The Hollywood Reporter, U.S. District Judge George Daniels in the Southern District of New York last week tossed claims of trademark infringement, unfair competition and false designation of origin brought by Disney and its affiliates Marvel Characters and Lucasfilm against Characters for Hire. However, the judge in his summary judgment decision kept alive Disney's trademark dilution and copyright infringement allegations.

Represented by the Feldman Law Group, New York-based Characters for Hire provides “costumed entertainment” for birthday parties and corporate events in major cities across the country.

The characters aren't outright copycats. As the company states on its website, “It is not our intention to violate any copyright laws. The characters that we offer are NOT name brand copyrighted characters…. Any resemblance to nationally known copyrighted characters is strictly coincidental.”

Hence “Big Green Guy” instead of Hulk and “The Dark Lord” for Darth Vader (suitable for your “Star Battles”-themed party, along with “Young Luke” and “The Princess”).

Disney isn't fooled. It complains that Characters for Hire provides “live costumed actors who pass themselves off as plaintiffs' trademarked characters, and who mimic their personas, attributes, and famous story lines. All of these unauthorized uses have caused, and are likely to continue to cause, confusion as to the origin, source, and/or sponsorship of CFH's unlicensed services.”

Moreover, continued Disney counsel Louis S. Ederer of Arnold & Porter, Characters for Hire has “shoddy services that are inimical to plaintiffs' reputation for high quality goods and services, and impeccable customer care.”

Daniels in his Aug. 9 ruling wasn't persuaded of the harm.

“The touchstone of a meritorious trademark infringement claim is likelihood of consumer confusion,” he wrote—and Disney fell well short.

Characters for Hire generally avoids using Disney's original fonts, styles or colors, and its characters have “facetious names that are clearly distinct from plaintiffs' marks,” Daniels wrote.

While Disney stressed that some customers in online reviews referred to the characters by their actual names (e.g. Chewbacca instead of “Smuggler's Co-Pilot”), the judge noted that “none of the customer reviews suggested the slightest sign of confusion as to origin, source, affiliation or sponsorship of CFH's services.”

Nor do the enterprises compete. True, Disney in its theme parks features actors dressed up as characters, but it's not in the entertainer-for-hire business. “Theme park guests are in a different market altogether from those looking to hire a costumed character to appear at a child's birthday party,” Daniels wrote.

Also, the judge noted that the relevant market here is not actually children—because “adults, not children, plan parties.”

Why yes. As a veteran birthday party planner, I can also tell you that if you're hiring an Elsa imposter for entertainment, you're definitely going to buy the (official Disney) Frozen party invitations and Frozen plates and Frozen cups and Frozen paper tablecloth and Frozen party favors and Frozen goodie bags.

And since you're having a Frozen-themed party, the parents of the guests are likely to buy your child a Frozen-themed toy. And when the faux-Elsa shows up at your house, she reminds every 7-year-old in attendance how awesome Frozen is, and why they too should covet all things Frozen.

But if Disney won't let you have the faux-Elsa, well, maybe go bowling instead? Or get a bouncy house? Or hire that guy who does show-and-tell with reptiles?

None of which benefit Disney in the slightest.

On the other hand, what if the fake Elsa is terrible and actually devalues or tarnishes Disney's reputation?

Daniels ruled that such a trademark dilution is an issue for the jury. If Characters for Hire's services “are of a markedly poor quality, a jury could reasonably find that plaintiffs marks may suffer from the negative associations formed as a result of defendant's conduct.”

The judge also declined to dismiss Disney's copyright infringement claim on summary judgment—though he sounded skeptical that the allegations have merit. So far, he wrote, Disney does “not point to any admissible evidence demonstrating that defendants have engaged in any of the alleged infringing conduct.”

Or as Elsa might say, let it go.  

 

Shout-Out: King & Spalding Spikes FX Suit

A team from King & Spalding prevailed—again—in a Forex securities fraud case when U.S. District Judge Kimba Wood in the Southern District of New York ruled that FXCM Inc. (now known as Global Brokerage, Inc.) and its CEO did not engage in any securities violations stemming from the FX market crash in January 2015.

“Plaintiff has failed to adequately allege that defendants made material misrepresentations or omissions and acted with scienter,” Wood ruled on Friday—the second time in two years she dismissed the complaint by the Retirement Board of the Policemen's Annuity and Benefit Fund of Chicago against FXCM.

“Our clients are very pleased with the court's ruling,” said Israel Dahan, a partner at King & Spalding, who led the defense of FXCM and its CEO, in an email. “Judge Wood's ruling supports what the company has repeatedly stated—that it has always been truthful to investors about the nature and risks associated with its retail trading model and that it did not perceive a credible risk that the Swiss National Bank would take the unprecedented actions it took in January 2015.”

King & Spalding partners Peter Isajiw, Paul Bessette and Mike Biles and associates Chelsea Corey, Ryan Gabay, Tyler Highful and Sal Subasinghe also represented FXCM and its CEO.

 

What I'm Reading

In Manafort Trial, Defense Lawyers Get Their Turn

The defense is moving to acquit all counts in Manafort's indictment, but with “particular focus” on allegations related to the Federal Savings Bank.

J&J Can't Dodge Pfizer's Antitrust Suit, Judge Rules

Pfizer says J&J entered into a rebate program with insurers and hospitals designed to curb competition with Pfizer's biosimilar anti-inflammatory medication Inflectra.

In Apparent Overdose, Litigation Funding Pioneer Found Dead at 51

Dennis Shields was also the on-again, off-again boyfriend of “The Real Housewives of New York City” star Bethenny Frankel.

LED Company Wins $66 Million Trade Secret Verdict Against Chinese Competitor

San Jose-based Lumileds, a private company previously owned by Koninklijke Philips NV, was represented by a Reed Smith team led by partners Brad Roche and Jennifer DePriest. 

2 Longtime Big Law Partners Set Up Small Firm in Dallas

The two litigators launched Arcadi Jackson on Aug. 6, after leaving Morgan, Lewis & Bockius' Dallas office three days before.

Plaintiffs Lawyers Eye More Roundup Lawsuits After $289M Verdict Against Monsanto

Why yes, I bet they are.