Cite as 795 F.Supp. 639 (S.D.N.Y. 1992)
While Peacock might be able to state a claim under the Lanham Act in theory, however, its present allegations are insufficient for the simple reason that they fail to state that MAJ has advertised its copyright in any commercially noticeable manner. The amended countercomplaint does not state where the copyright notice was placed on the charms, whether it was large enough to be seen by consumers, or whether it was actually seen by any consumers. Nor does it mention any formal advertising campaigns or marketing material that emphasized the charms’ copyrights or billed them as “original.” Under such circumstances, we find it difficult to discern a claim that MAJ has engaged in “false advertising” within the meaning of the Lanham Act.
Despite these apparent deficiencies, Peacock’s counsel has suggested in statements outside the pleadings that such an advertising campaign was conducted. During oral argument on November 21, 1991, for example, he made reference to a print advertisement involving one of the charms in dispute, in which MAJ represents that the charm design is copyrighted and original to MAJ. See November Transcript at 31. In light of the fact that Peacock may be able to assert a viable Lanham Act violation by including these unpleaded allegations, we dismiss the Lanham Act counterclaim at this time, but with leave to replead.
- 4. The Unfair Competition Counterclaim.
Peacock’s final counterclaim is for unfair competition under New York law. This counterclaim is based on MAJ’s allegedly improper placement of copyright notices on goods in the public domain (¶ 190) and on its alleged provision of prostitutes and cocaine to customers and employees (¶ 191).
In arguing that this counterclaim should be dismissed, MAJ contends that even if Peacock’s allegations were proven, they would not constitute unfair competition. Specifically, MAJ argues that the tort of unfair competition requires the “passing off” of a defendant’s product as plaintiff’s own, or at least the misappropriation of a “property interest” held by the plaintiff.
We first address the sufficiency of Peacock’s claims regarding the alleged copyright misuse. With respect to those claims, MAJ reiterates an argument made in connection with the mail fraud allegations: that because Peacock claims an interest only in charm designs in the public domain, it has failed to allege any property right misappropriated by MAJ’s actions.
MAJ is certainly correct that “[a]n unfair competition claim involving misappropriation usually concerns the taking and use of the plaintiff’s property to compete against the plaintiff’s own use of the same property.” Roy Export Co. Establishment v. Columbia Broadcasting Sys., Inc., 672 F.2d 1095, 1105 (2d Cir.), cert. denied, 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 (1982); see also Metropolitan Opera Assoc. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483, 489 (Sup.Ct. N.Y. County 1950), aff’d, 279 A.D. 632, 107 N.Y.S.2d 795 (App.Div.1951). MAJ’s error, however, is in its overly restrictive definition of “property” as it has developed in connection with the tort of unfair competition. Unlike the stringent “money or property” requirement under the federal mail fraud statute, New York Courts and federal courts construing New York law apply a broad definition of property rights to unfair competition claims. As the New York Court of Appeals stated in Fisher v. Star Company:
The rule that a court of equity concerns itself only in the protection of property rights treats any civil right of a pecuniary nature as a property right; and the right to acquire property by honest labor or the conduct of a lawful business is as much entitled to protection as the right
infringing good, it made clear that its decision was based on the plaintiff’s failure to allege that the defendant’s copyright notice was false or that the underlying matter “originated from any source other than [the defendant].” Id. at 710–11. In this case, by contrast, Peacock’s pleadings are replete with allegations that MAJ’s copyright registrations were fraudulently obtained and that MAJ copied the copyrighted matter rather than creating it independently.
