MEMORANDUM OPINION AND ORDER
LAMBROS, District Judge.
This action for copyright infringement was initiated by plaintiff Barbi Sargent against defendant American Greetings Corporation on June 7, 1982.
Plaintiff states in her complaint that in 1977 she created original works of art entitled "Strawberry Girl." Appended to the complaint are six (6) water color paintings and twelve (12) pencil sketches for which on May 14, 1982 she obtained copyright registration VAu 34-113. Plaintiff essentially claims that defendant has infringed her copyright by manufacturing and marketing various products that display a character entitled "Strawberry Shortcake." Plaintiff also states in her complaint that defendant has licensed the "Strawberry Shortcake" character to various manufacturers for display on a wide variety of products produced by the licensees. She claims that defendant has "aided, abetted, participated in, contributed to, authorized or benefited from the infringing acts" of the various licensees.
In addition to her copyright infringement claim, plaintiff claims that defendant breached a confidential relationship between them and misappropriated her "Strawberry Girl" artwork. She asserts that she has been an independent commercial artist since 1970, and in 1977 presented her "Strawberry Girl" artwork to defendant. She further alleges:
Complaint ¶ 17. The basis of this pendent state law claim is that defendant breached the confidential relationship by misrepresenting to plaintiff the value of her "Strawberry Girl" artwork and then misappropriating to its own use her rights in the "Strawberry Girl" artwork.
In its answer, defendant denies the substance of plaintiff's claims and raises numerous defenses. Defendant also sets forth two counterclaims. In its first counterclaim,
Answer and Counterclaims ¶ 41. Defendant claims it will be irreparably injured in the event plaintiff publishes, assigns, or licenses its "Strawberry Shortcake" character and therefore seeks to enjoin any such publication, assignment, or license.
In her reply to defendant's counterclaims, plaintiff denies the substance of the counterclaims. She also sets forth a number of detailed affirmative assertions concerning her involvement in the development of the "Strawberry Shortcake" character.
With respect to defendant's averment that in 1977 it created a series of wholly original drawings of the "Strawberry Shortcake" character, plaintiff states that she created four (4) pieces of color finished art depicting "Strawberry Shortcake" (then known as "Strawberry Patches") in early July 1977 and that the four pieces of artwork were transferred to defendant on July 7, 1977. Plaintiff further asserts:
Reply to Counterclaims ¶ 6. A photocopy of the July 7, 1977 invoice is appended to the reply as an exhibit.
With respect to defendant's averments concerning its copyright registration of various works of art depicting "Strawberry Shortcake," plaintiff states:
Reply to Counterclaims ¶ 7. The May 10, 1973 contract is appended to the reply as an exhibit.
With respect to defendant's claim that it assigned plaintiff to copy its detailed line drawings of the "Strawberry Shortcake" character and to produce finished color artwork, plaintiff states that in June 1977 she received such an assignment. She asserts that the assignment was completed in early July 1977 and that she tendered to defendant on July 7, 1977 four (4) "leader cards" depicting the "Strawberry Shortcake" character in full color. (Leader cards are used by defendant for consumer test purposes.)
Plaintiff further states:
Reply to Counterclaims ¶ 9 (emphasis in original) Plaintiff further addresses defendant's assertions of originality and her assignment to produce finished color artwork:
The following four motions are pending, each of which shall be addressed separately: 1) Defendant's motion for summary judgment; 2) Defendant's renewed motion for preliminary injunction; 3) Plaintiff's motion for leave to file an amended complaint; and 4) Plaintiff's motion to have "Strawberry Shortcake" licensing income placed in escrow.
I. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
The primary thrust of defendant's motion for summary judgment on plaintiff's copyright infringement claim is that plaintiff's artwork is not copyrightable by her. Defendant advances three reasons why plaintiff has no copyrightable interest in her artwork and argues that each of the reasons is alone sufficient to defeat her claim.
Defendant first asserts that plaintiff's artwork is not original with her because she copied the "Strawberry Shortcake" character from artwork provided to her by defendant. Defendant maintains that it conceived and created the "Strawberry Shortcake" character prior to any involvement by plaintiff and that plaintiff's alleged contributions, which were essentially color, are not copyrightable subject matter as a matter of law.
Federal copyright law underwent a general revision with the passage of the Copyright Revision Act of 1976, 17 U.S.C. § 101, et seq. (the "New Act"). The New Act, which became effective on January 1, 1978, replaced the Copyright Act of 1909 (the "Old Act") and various principles of common law copyright. With respect to certain issues raised in defendant's motion for summary judgment, the parties dispute whether the Old Act or the New Act governs; in connection with those issues the question of which of the Acts governs will be addressed. With respect to originality, however, the New Act "incorporate[d] without change the standard of originality established by the courts under the [Old Act]." House Report No. 94-1476, 94th Cong., 2d Sess. 51, reprinted in  U.S.Code Cong. & Ad.News 5659, 5664. Moreover, based on the precedent cited in the parties' briefs, it appears that for the most part they essentially agree on the standard to be applied in resolving the originality issue. Their disagreement centers on the application of the standard.
The cases discussed in the parties' briefs focus on the standard of originality necessary to support a copyright in a "derivative work." The New Act specifically defines "derivative work":
17 U.S.C. § 101. The genesis of the standard may be found in the opinion of the United States Court of Appeals for the Second Circuit in L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir.) (en banc), cert. denied 429 U.S. 857, 97 S.Ct. 156, 50 L.Ed.2d 135 (1976). In Batlin, the defendant-appellant had arranged for the design and manufacture of a plastic Uncle Sam bank. The plastic bank was based on a cast metal Uncle Sam bank that was in the public domain. The plaintiff-appellee, who was also in the novelty business, had also arranged for the manufacture and import of a plastic Uncle Sam bank. When the
The standard for originality upon which the Court relied was expressly articulated:
536 F.2d at 490 (citations and footnote omitted). The Court concluded that the differences between the cast metal bank and the defendant-appellant's plastic bank were trivial variations inherent in and attributable to the translation to the medium of plastic from the medium of metal. Therefore, the plastic bank could not be copyrighted. The Court stated:
Id. at 491.
In Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905 (2d Cir.1980) the Second Circuit applied the originality standard set forth in Batlin to derivative works based on copyrighted preexisting works. 630 F.2d at 909. The Court set forth the following test:
Id. at 910 (citations omitted). The Court affirmed a grant of summary judgment in favor of the plaintiff on the defendant's counterclaims for infringement. The basis of the decision was that the plaintiff's plastic wind-up toys, which depicted various Walt Disney characters, lacked the necessary originality to support a copyright.
In Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27 (2d Cir. 1982) the Second Circuit applied the standard developed in Batlin and Durham to a fictional cartoon character. Eden Toys, Inc. (Eden) brought suit for the infringement of a derivative work of a now-famous children's character identified as "Paddington Bear." As the exclusive licensee of the original character, Eden had created a chain of two derivative works. Illustrations of the three levels of artwork are set forth in the Court's opinion. 697 F.2d at
Id. at 34 (citations omitted; emphasis in original). Applying the standard for originality, the Court held that the derivative works were sufficiently original to support Eden's copyright:
Id. at 35, citing Durham Industries v. Tomy Corp., 630 F.2d 905, 910 (2d Cir. 1980).
Defendant's position is that at the time of plaintiff's assignment, it provided her with detailed pencil line drawings, color samples, and instructions concerning color. It argues that plaintiff copied the line drawings and followed its color instructions and that her artwork is therefore "no more original ... than is a colored-in `paint-by-numbers' canvas." Defendant also maintains that plaintiff's addition of color to the pencil line drawings is, as a matter of law, a "trivial variation" within the meaning of the above-mentioned cases. Lastly, defendant argues that "color per se does not constitute copyrightable subject matter as a matter of law because colors are, by their very nature, in the public domain and available for use by all."
Although defendant correctly points out that color is in the public domain, its assertion that color is therefore per se eliminated from consideration when evaluating originality is incorrect. In Pantone, Inc. v. A.I. Friedman, Inc., 294 F.Supp. 545 (S.D.N.Y.1968), the plaintiff had developed a color matching system that was embodied in a copyrighted booklet entitled "Pantone Matching System." The system was designed to coordinate communications between artists, manufacturers, designers, and printers with respect to color. The goal of the system was to prevent errors and to insure understanding and proper reproduction of shades of colors for specific uses and media. The court described the plaintiff's booklet:
294 F.Supp. at 547. The Court reviewed several decisions setting forth the requisite standard for originality and articulated its understanding of the test:
Id. at 548 (citations omitted). Applying the test, the court accepted the plaintiff's argument and concluded that the arrangement and mode of expression embodied in the booklet constituted sufficient originality to qualify it for copyright:
Id. It therefore appears that an original method of organizing or arranging matters in the public domain is copyrightable. See also Trebonik v. Grossman Music Corp., 305 F.Supp. 339, 345-46 (N.D.Ohio 1969) (Lambros, D.J.; Copyright infringement action in which this Court concluded that the plaintiff's original method of organization and depiction of guitar chords in a dial-type teaching device was copyrightable.) Defendant's argument that color is per se excluded from consideration in evaluating originality is rejected.
With respect to defendant's position that plaintiff's addition of color to the preexisting pencil line drawings constitutes trivial variations as a matter of law, it appears that defendant argues that the differences between the pencil line drawings and the full color finish artwork are inherent in and attributable to the color used by plaintiff. There is no question that changes from a preexisting work inherent to construction in a new medium, i.e. changes that are not attributable to independent artistic skill and endeavor, are trivial variations and are not copyrightable. L. Batlin & Son, Inc. v. Snyder, supra. The evidentiary materials submitted in connection with defendant's motion indicate that defendant rejected the color finish artwork of two color artists before approaching plaintiff. Therefore, it cannot be said that the color embodied in plaintiff's artwork is inherent to the medium in which she and the two previous color artists worked. Furthermore, whether a change from a preexisting work constitutes a trivial variation presents a factual question. Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d at 35. Although the appellate court in Eden Toys resolved the factual question itself, this is an action in which plaintiff has demanded a trial by jury. Inasmuch as it is the province of the jury to resolve issues of fact, this Court concludes that there exist questions of material fact for trial concerning the originality of plaintiff's artwork.
The second ground upon which defendant moves for summary judgment on the infringement claim is that plaintiff's artwork was "work made for hire" and that the copyright to the artwork was at all times vested in defendant. A threshold question that must be resolved before examining the merits of this issue is whether the Old Act or the New Act governs. Plaintiff argues that the New Act applies, while defendant's position is that the Old Act is applicable.
Plaintiff's position is predicated on § 301 of the New Act:
17 U.S.C. § 301(a) (emphasis added). Plaintiff essentially argues that because the alleged infringing activities upon which this action is based took place after January 1, 1978, her claims are governed by the New Act, including its provisions governing works made for hire.
In Roth v. Pritikin, 710 F.2d 934 (2d Cir.1983), the Second Circuit specifically addressed the retrospective application of the work made for hire provisions of the New Act. June Roth, a free-lance writer specializing in food and health matters, had been approached by a free-lance journalist named Patrick McGrady to explore whether she would be interested in creating recipies for a book McGrady was writing about Nathan Pritikin's diet and exercise program. The parties reached an agreement that Roth would receive a $3,000.00 flat fee, and in October 1977 she delivered the recipies. Published in the Spring of 1979, the book was entitled The Pritikin Program for Diet & Exercise. The book was a success, and Roth sought additional compensation from McGrady. After refusing an offer for an additional $2,000.00, Roth initiated suit, claiming that she had never entered into a valid contract for the sale of the recipies and, alternatively, that any agreement was rendered invalid by the passage of the New Act. Roth particularly relied on § 301(a) of the New Act to support her position concerning retrospective application. The district court, following a non-jury trial, found that the contract was valid and concluded that Roth had no copyright interest in the recipies pursuant to the law governing works made for hire extant at the time of the agreement. The Second Circuit affirmed the decision of the district court not to apply the work made for hire provisions of the New Act retrospectively:
710 F.2d at 938.
Having evaluated the parties' arguments concerning the retrospective application of the work made for hire provisions of the New Act, and in particular the decision of the Second Circuit in Roth, this Court concludes that the Old Act governs the work made for hire issue in this action.
With respect to the merits of the work made for hire issue, defendant's primary position is that plaintiff was its employee and that the copyright to her artwork vested in it by operation of law. Alternatively, defendant assumes arguendo that plaintiff was an independent contractor and argues as follows: 1) work performed by an independent contractor may constitute a work made for hire; 2) two factors determine whether the work of an independent contractor is a work made for hire — (a) that the work is created at the behest of the hiring party, and (b) that the hiring party has the power to direct and control the manner of the independent contractor's work —; and 3) plaintiff could retain the copyright to her artwork only by an express contractual provision, which defendant asserts she has not done.
Defendant cites several decisions for the proposition that when one engages an independent contractor to create a work of an artistic nature, in the absence of an express contractual reservation of the copyright in the independent contractor, a presumption arises that the mutual intent of the parties is that the copyright vests in the commissioning party. E.g., Murray v. Gelderman,
In Yardley, the plaintiff's deceased brother had been commissioned by the City of New York to paint a mural on a wall of a newly-constructed high school. The written contract between the plaintiff's deceased brother and the City made no mention of copyright ownership, and the plaintiff was claiming ownership as an assignee of her deceased brother's estate. The court set forth the general rule of law it considered applicable:
108 F.2d at 31 (emphasis added). After recognizing that the terms of the agreement pursuant to which the plaintiff's deceased brother had painted the mural were not in evidence and could not be ascertained, the court applied the presumption:
Id. (emphasis added). Of the decisions cited by defendant, only in the Brattleboro Publishing Co. case did the court correctly recognize that the presumption established in Yardley applies only in the absence of evidence of the parties' intent:
Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d at 567-68 (certain citations omitted; emphasis added). The court proceeded to discuss the Yardley case as an example of a situation in which the parties' intent could not be determined.
Upon a careful study of the Yardley decision and its progeny, it becomes clear that the presumption on which defendant predicates its argument operates only in the event it is not possible to ascertain the express or implied contractual intent of the parties. Furthermore, the United States Court of Appeals for the Sixth Circuit has specifically articulated the rule in this circuit:
W.H. Anderson Co. v. Baldwin Law Pub. Co., 27 F.2d 82, 88 (6th Cir.1928) (emphasis added).
This is not a situation in which the intent of the parties cannot be ascertained. Plaintiff and defendant had a contractual business relationship for several years. The relationship spanned several contracts, and the parties have submitted considerable evidence concerning their relationship and the nature of their relationship. Having reviewed this evidence, this Court concludes that there exist questions of material fact for trial concerning the precise nature of the parties' business relationship. In addition, there exist questions of material fact for trial concerning the parties' intent with respect to the ownership of the copyright to plaintiff's artwork and whether the parties intended plaintiff's artwork to be considered work made for hire.
The third basis upon which defendant moves for summary judgment on plaintiff's copyright infringement claim is that plaintiff assigned to defendant any copyright interest she may have had in her artwork. Defendant argues initially that the sale of the artwork operated as an assignment of the copyright in the artwork. Defendant also argues that plaintiff assigned both the artwork and the copyright by virtue of an endorsement that appeared on the checks plaintiff received from defendant.
Defendant relies primarily on Yardley v. Houghton Mifflin Co., 108 F.2d 28 (2d Cir.1939) (cited above in connection with defendant's work made for hire argument) and Franklin Mint Corporation v. National Wildlife Art Exchange, Inc., 195 U.S.P.Q. 31 (E.D.Pa.1977) for the proposition that a sale of artwork operates as a transfer of the seller's copyright interest in the artwork. As previously noted, in Yardley, the plaintiff's deceased brother had been commissioned by the City of New York to paint a mural. The plaintiff was claiming a copyright interest in the mural as an assignee of her deceased brother's estate. After concluding that there was no evidence concerning the terms of the agreement between the plaintiff's deceased brother and the City, the Court applied the rule that, absent an express or implied contractual reservation of the copyright in the artist, the copyright in the artwork is presumed to vest in the commissioning party. As part of its articulation of the general rule of law it applied, the court stated:
108 F.2d at 31 (emphasis added). As noted above in connection with defendant's work made for hire argument, this action presents a situation in which there exist questions of material fact with respect to the parties' intent concerning copyright ownership. Therefore, it cannot be said that, as a matter of law, the copyright in plaintiff's artwork is vested in defendant pursuant to the rule articulated in Yardley.
In the Franklin Mint decision, the dispute focused on the ownership of the copyright in a water color painting entitled "Cardinals on Appleblossom." The artist orally agreed with the commissioning party to prepare a water color painting of cardinals with the understanding that the commissioning party, if he did not approve of the painting, would have no financial obligation to the artist. On August 25, 1972 the commissioning party approved the painting and delivered a check made payable to the artist in the amount of $1500.00. The following legend was placed on the back of the check by the commissioning party: "For Cardinal painting 20 × 24 including all rights — reproduction, etc." On August 26, 1972 the artist and the commissioning party met to discuss further the details of their proposed transaction. The commissioning party made a series of notes during the meeting, and he was to present the notes to his lawyer so that a formal agreement could be drafted. The draft
Defendant correctly points out that during its discussion the court in Franklin Mint stated, "Except in California and New York, it is generally accepted that purchase of a work of art includes all rights to copyright unless otherwise specified. Nimmer on Copyright, Page 541 (1976 ed.)." Nevertheless, the court recognized Professor Nimmer's criticism of such a rule and in substance focused on the parties' intent as evidenced by the check endorsement:
195 U.S.P.Q. at 36. It is apparent that in Franklin Mint the check endorsement was the sole manifestation of the parties' intent concerning copyright ownership. The court recognized that the endorsement transferred "all rights" in the painting and reached its conclusion accordingly. In this action, however, the check endorsement involves only the "exclusive right to publish." Furthermore, as previously noted, there exist a series of contracts between plaintiff and defendant with respect to their business relationship. The contracts, the check endorsements, and the relationship between the contracts and the check endorsements present questions of material fact with respect to the parties' intent concerning copyright ownership.
Defendant has also moved for summary judgment on plaintiff's pendent claim for breach of a confidential relationship and misappropriation. Defendant essentially argues that such a claim is preempted by § 301(a) of the New Act. The preemption provision of the New Act preempts and abrogates all legal and equitable rights arising under the common law or state statutes that are equivalent to any of the exclusive rights within the general scope of copyright in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright, whether created before or after January 1, 1978. 17 U.S.C. § 301(a); Mitchell v. Penton/Industrial Publishing Company, Inc., 486 F.Supp. 22 (N.D.Ohio 1979) (Thomas, J.).
As plaintiff points out, however, it is necessary to read § 301(a) of the New Act in connection with the provisions of § 301(b) of the New Act. Plaintiff specifically relies on § 301(b)(3) to support her position that the pendent claim is not preempted:
17 U.S.C. § 301(b)(3). Plaintiff essentially argues that her breach of confidential relationship and misappropriation claim involves violations of rights that are distinct from the exclusive rights enumerated in § 106 of the New Act.
It appears that plaintiff's pendent claim is recognized in Ohio, is not redundant, and involves elements that distinguish
Alternatively, defendant assumes arguendo that the pendent claim is not preempted and argues that summary judgment should be entered in its favor on the merits of the claim. Defendant's position is that the evidence is uncontroverted and that there is no question that it neither breached a confidential relationship nor misappropriated plaintiff's artwork. As previously noted, however, there exist questions of material fact concerning the nature of the relationship between the parties.
For the foregoing reasons, defendant's motion for summary judgment is denied.
II. DEFENDANT'S MOTION FOR A PRELIMINARY INJUNCTION
Pursuant to Rule 65(a) of the Federal Rules of Civil Procedure, defendant American Greetings has moved to enjoin various courses of conduct on the part of plaintiff Barbi Sargent.
Portions of the discovery undertaken in this action have been performed pursuant to a stipulated protective order filed on August 30, 1982. The first paragraph of the protective order generally provides that artwork and other materials exchanged by the parties during discovery "shall be retained by such counsel and shall be used by such counsel for the purposes of trial preparation and trial of this action and shall not be used for any other purpose...." The second paragraph carves out a specific exception for plaintiff's leader card artwork:
On September 7, 1982 plaintiff formally notified defendant of her intent to register the leader cards, and defendant timely moved to enjoin any such registration. In addition, defendant has supplemented its original motion for a preliminary injunction and also seeks to enjoin plaintiff "from registering or attempting to register with the United States Copyright Office any artwork, or copies of artwork, produced by her pursuant to assignment from defendant and/or under contract with defendant."
The second portion of defendant's motion concerns plaintiff's copyright registration VAu 34-113, which covers the artwork appended to the complaint. Defendant seeks an order requiring plaintiff to cancel the registration on the ground that it was improperly and wrongfully obtained.
The third aspect of defendant's motion for a preliminary injunction concerns plaintiff's authorizing, selling, or licensing copies of the "Strawberry Shortcake" character. The fourth part of the motion is aimed at plaintiff's representations to others that she is the creator of the character and that she holds the copyright to the character.
The United States Court of Appeals for the Sixth Circuit has set forth the following four factors to be considered when evaluating an application for preliminary injunctive relief: 1) whether the movant has demonstrated a strong or substantial likelihood or probability of success on the merits; 2) whether the movant has demonstrated irreparable harm; 3) whether the issuance of the injunction would cause substantial harm to others; and 4) whether the issuance of the injunction would serve the public interest. Mason County Medical Assn. v. Knebel, 563 F.2d 256 (6th Cir. 1977).
Defendant initially seeks to enjoin plaintiff from registering with the Copyright Office her leader card artwork. In light of the broad range of questions of material fact for trial identified above in connection with the denial of defendant's motion for summary judgment, it cannot be said that defendant has demonstrated the requisite likelihood of success on the merits. The first aspect of defendant's motion is therefore denied, and plaintiff shall be entitled to register with the Copyright Office her leader card artwork. In reaching this conclusion, this Court notes that registration is not a condition of copyright protection, 17 U.S.C. § 408(a), but is a condition precedent to maintaining an infringement suit. 17 U.S.C. § 411. Therefore, by allowing plaintiff to register her leader card artwork, the entire dispute between the parties concerning the "Strawberry Shortcake" and "Strawberry Girl" artwork will be presented and resolved. Furthermore, in the event defendant prevails on the merits and it is determined that plaintiff's copyright registrations are improper, it is within the power of this Court to order the cancellation of the improper registrations. See L. Batlin & Son, Inc. v. Snyder, supra. Lastly, to the extent that defendant seeks to enjoin the registration of artwork other than "Strawberry Shortcake" or "Strawberry Girl" artwork, this Court notes that such other artwork is not at issue in this action and concludes that an order of this Court with respect to such other artwork would constitute an advisory opinion. Defendant's request to enjoin the registration of artwork other than "Strawberry Shortcake" or "Strawberry Girl" artwork is therefore denied.
Secondly, defendant seeks an order compelling plaintiff to cancel her copyright registration VAu 34-113. Again, however, in light of the questions of material fact in this action, defendant has failed to demonstrate the necessary likelihood of success on the merits. The second aspect of defendant's motion for preliminary injunction is therefore denied.
The third and fourth portions of defendant's motion involve plaintiff's assertions of ownership and threatened selling or licensing of the "Strawberry Shortcake" or "Strawberry Girl" character. On January 4, 1983, pursuant to an agreement of the parties, this Court ordered that plaintiff shall not, until ordered otherwise, attempt any commercial exploitation of the "Strawberry Shortcake" or "Strawberry Girl" character. Nothing indicates plaintiff has or might breach that agreement and violate that order. Therefore, the concerns raised by the third and fourth aspects of defendant's motion appear to have been alleviated.
Summarizing, as to its first and second portions, defendant's motion for preliminary injunction is denied. As to the third and fourth aspects of the motion, the concerns therein have been alleviated by a prior agreement between the parties and a corresponding order of this Court.
III. PLAINTIFF'S MOTION TO HAVE PLACED IN ESCROW DEFENDANT'S STRAWBERRY SHORTCAKE LICENSING INCOME
Plaintiff has moved to have placed in escrow pending the outcome of this action the income of defendant attributable to its licensing the Strawberry Shortcake character to third parties. She maintains that she has demonstrated a reasonable likelihood
Defendant opposes plaintiff's motion. Initially, defendant argues that the precedent upon which plaintiff relies involving the escrow of patent royalties is inapposite. Defendant also argues that plaintiff has no evidentiary support for her assertion that defendant will be unable to pay the amount of a judgment entered in her favor. Appended to defendant's brief is a copy of its 1982 Annual Report.
Having reviewed the evidence submitted by the parties in connection with defendant's motions for summary judgment and for a preliminary injunction, it cannot be said that either party has demonstrated the necessary likelihood of success on the merits to justify any form of preliminary relief. Furthermore, a study of defendant's annual report indicates that it is financially healthy. Plaintiff's concerns with respect to defendant's ability to satisfy a judgment entered in her favor appear unfounded. Plaintiff's motion to place defendant's Strawberry Shortcake licensing income in escrow is denied.
IV. PLAINTIFF'S MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT
Plaintiff seeks leave to amend her complaint to conform to matters she has learned during the discovery process. In opposition to her motion, defendant characterizes plaintiff's claims as "frivolous" and asserts that this motion is merely an attempt to prolong this action and to avoid an award of summary judgment against her.
As previously noted, however, there exist many questions of material fact for trial in this action. Furthermore, by permitting plaintiff to amend her complaint, the entire dispute between the parties will be presented and will be resolved. Plaintiff's motion for leave to amend her complaint is granted.
Defendant's motion for summary judgment is denied. The first and second aspects of defendant's motion for a preliminary injunction are denied; the third and fourth aspects of the motion have been resolved by a prior agreement between the parties and a corresponding order of this Court. Plaintiff's motion to have placed in escrow defendant's Strawberry Shortcake licensing income is denied. Plaintiff's motion for leave to file a first amended complaint is granted.
IT IS SO ORDERED.