Silberstein v. Fox Entertainment Group, Inc.

Ninth Circuit affirms dismissal of trademark infringement claims against Fox Entertainment Group Inc. relating to “Scrat” character from blockbuster film franchise “Ice Age,” applying principles of claim preclusion to find that a 2004 decision finding plaintiffs did not use alleged “Sqrat” mark in commerce precludes claims based on same facts.

Plaintiffs Ivy Silberstein and Silberstein & Silberstein LLC brought suit against Fox Entertainment Group Inc., asserting that the rodent character “Scrat” in the blockbuster film franchise “Ice Age” infringed their alleged trademark rights in a half-squirrel, half-rat character called “Sqrat.”

Ivy Silberstein applied for a word mark registration for “Sqrat,” a squirrel-rat hybrid character, with the U.S. Patent and Trademark Office in 1999. Silberstein also hired an artist to design a logo containing a cartoon drawing of the character and the words “SQRAT TM” and “www.sqrat.com.” In 2002, Fox released the animated film “Ice Age” containing depictions of a comic rodent, Scrat. That same year, Silberstein brought suit in the U.S. District Court for the Southern District of New York against defendants and others, alleging, among other claims, infringement of an unregistered mark under section 43(a) of the Lanham Act. In 2004, the district court dismissed the claim, finding that Silberstein had not demonstrated her use of the alleged Sqrat mark in commerce as required under section 43(a). Silberstein had previously distributed promotional items, such as T-shirts, containing the Sqrat logo, but the court found that this was only an effort to promote her Sqrat character and that Silberstein never actually sold any Sqrat products. The Second Circuit affirmed dismissal of the trademark infringement claim in 2007.

Silberstein obtained a registration for the mark “SQRAT” on the Supplemental Register in 2012 and, three years later, plaintiffs filed another action for trademark infringement against defendants in California state court. After removal to federal court, the district court dismissed the action on the basis of issue preclusion, finding that the issue of use in commerce was common to both actions and had been previously decided in the New York action.

On appeal, the Ninth Circuit affirmed, but looked to claim preclusion instead of issue preclusion as the basis for its decision. Claim preclusion may be invoked to dismiss an action where there is an identity of claims, a final judgment on the merits and privity between parties. First, the court noted that registration on the Supplemental Register did not create any substantive rights for plaintiffs’ alleged mark and did not impact the preclusion analysis. The court found that the earlier New York action was a final judgment on the merits and that plaintiff Silberstein & Silberstein LLC succeeded to Ivy Silberstein’s rights in the alleged Sqrat mark, establishing privity between parties. To determine if there was an identity of claims, the Ninth Circuit analyzed whether there was a common “transactional nucleus of facts.” Here, Silberstein relied on the same facts of her promotion of the Sqrat character prior to Fox’s use of the Scrat character in “Ice Age” to establish her priority of use in commerce. The Ninth Circuit therefore found plaintiffs’ action barred by claim preclusion.

Summary prepared by David Grossman and Joel Ernst